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The term logistics refers to the overall process of acquiring, storing and transporting resources to their final destination – but for SCG Logistics, it means so much more. While many of its competitors offer individual services like sea freight or air freight, it instead focuses on delivering “integrated, end-to-end solutions” catering to what Managing Director Paitoon Jiranantarat sees as a gap in the market.
Founded in 1997 as Bangsue Transportation, the logistics department of SCG’s conglomerate, the company has dramatically transformed over the years and now serves customers both in the business-to-business and business-to-consumer worlds.
“We can provide software as a service to the customer, which gives us a better margin than investing in the hard assets where we would face stiff competition.”
“Our competitors mainly focus on investing in harder, heavier assets like trucking, warehouses and so on,” Paitoon tells The CEO Magazine. “Whereas we heavily invest in digitalisation. We can provide software as a service to the customer, which gives us a better margin than investing in the hard assets where we would face stiff competition. We go into the blue ocean, rather than fight with them in the red ocean – we are differentiating ourselves from them.”
This type of approach is crucial because, according to Paitoon, the margins in the logistics business are “even slimmer than tissue paper”. “Cost is one of the factors where we have to remain competitive to all of the players, so the challenge is how we can increase revenue all the time in the face of such steep costs,” he explains.
It’s no simple task, which is why SCG Logistics has devised a new way of doing business that tackles the challenges facing the industry. “We have a new model of doing business which we call B2B2C,” he says. Rather than focusing on B2C or B2B, the company instead combines the two pieces of the puzzle.
Traditionally, manufacturers produce a product that they sell to their dealers or distributors who then oversee the retail process to the consumer. “The manufacturer doesn’t have the consumer information – the one who holds that data is the retailer,” Paitoon points out. “So how can the manufacturer find out about the end user and their preferences?” Such data is invaluable when devising new products or coming up with marketing strategies, he adds.
As a result, the company has partnered with Thai startup MyCloud Fulfillment to offer fulfilment services from storing and packing to delivering products, as well as analysing customer data for online sellers.
Via an online platform, it can now feed crucial real-time data back to the manufacturers, giving them an insight into exactly what their customers want. They can then produce goods according to those needs and desires.
It also offers fulfilment services, storing products in its warehouses, then picking and packing as required when orders come in. “We deliver to the consumer through our last-mile logistics,” Paitoon says.
As part of this last-mile approach, SCG Logistics also offers consumers set-up and installation of their purchased goods – “white-glove services” to help those consumers who do not know how to or simply don’t want to do it themselves.
“We have more than 300 partners on board with us. We have a good management team.”
While Western markets like Europe and the US have bought into the do-it-yourself model, Thailand is not quite there yet, according to Paitoon. Even IKEA in Thailand offers an assembly service, he adds. “We see these gaps of service to the market, which is why we provide service and consumer data to our customers and also installation and fulfilment for this new supply chain business model.”
Paitoon is proud of the fact that the company doesn’t own even one single truck. “We have more than 300 partners on board with us. We have a good management team,” he stresses, adding that the arrangement works well for both parties. “They give us trucking services and they get a better management system and a better return.
“They are quite happy to work with us because our revenue is growing all the time, every year. Their jobs are increasing year by year. It is mutually beneficial.”
SCG Logistics’ commitment to digital-driven logistics has seen it adopt digital technologies such as object recognition, robotic process automation and chatbots in order to better accommodate customer needs.
When it comes to working with its partners, particularly those offering trucking services, this focus on digitalisation offers multiple advantages. The company distributes jobs to its partners via an online platform and, once they accept, it runs a safety check to make sure they are ready to hit the road. ‘They need to do a breath test to check their alcohol content and also do a blood pressure check to make sure that they are ready for the job,” Paitoon explains. Instructions are then automatically sent to them so they can do the pick-up and then the delivery.
“The customers know the estimated time of arrival at the destination. They can also rate the service and quality of the driver and whether they were punctual.”
It’s a centralised system that not only offers benefits to the drivers, but also to its customers. “In the past, if they wanted to know where their cargo was, they had to contact the call centre and sometimes the lines are very busy,” he says. Now, they can simply enter the tracking number into the platform, or in an interaction with a chatbot, which will connect with the GPS to show the location of the goods.
“The customers know the estimated time of arrival at the destination. They can also rate the service and quality of the driver and whether they were punctual,” Paitoon expands. “At SCG Logistics, we are concerned not only with service quality, but also about safety. If the driver performs well in terms of safety all the way from the start to the destination, they are going to get a high score.” Those with the highest scores will be given priority when distributing new jobs.
Bringing staff along on this journey has also been key to ensuring the success of this ambitious transformation. SCG Logistics has therefore placed great emphasis on upskilling and reskilling its employees to better understand these new technologies as they come into play. It does this through a 70–20–10 training course with 70 per cent of the training on the job, 20 per cent through mentoring and 10 per cent through theoretical study.
Doing its bit for the environment is also high on the priority list. To this end, the company is implementing a green logistics system using electric forklift trucks to help drive the expansion of its business while reducing pollution, creating cost efficiencies and enabling it to better manage storage space in its warehouses.
“At SCG Logistics, we are concerned not only with service quality, but also about safety.”
The electric vehicle forklifts are made by Chinese electric vehicle manufacturer BYD Auto Industry. The transition to the new technology is expected to save up to 70 per cent on energy costs. A consultancy firm has been brought in to help oversee this transition, part of a wider decarbonisation of SCG’s fleet. These efforts are part of a broader strategy to help Thailand stabilise its use of resources to benefit the environment.
But with SCG operating right across Asia, it is able to offer its customers a holistic service. “We have many operations in many countries,” Paitoon says.
And although he firmly believes that the customer should come first, he has an even greater focus. “I would like to make all of the stakeholders happy – that means our staff, our shareholders and also our customers.”