Sankyu is Japan’s leading logistics company. Sankyu has a wholly-owned information systems subsidiary which has traditionally developed and operated all information systems in the company using in-house development. There are many advantages of in-house development when considering system investment and cost. Everything can be created freely, and all functionality can be implemented according to operational requirements.
On the other hand, there are disadvantages to in-house development of systems. When large-scale system maintenance is being carried out, a quick response to all support issues is not possible. As new functions are added and patches are applied, the system becomes a “patchwork system”, and time (labour cost) is required for new, additional development work. Furthermore, problems arise when responding to multiple individuals’ requirements. Operations become complicated owing to the addition of too many functions and features. For example, in a previous case, entering one B/L required users to navigate through five different screens.
In 2013, Sankyu considered a total revamp of its existing system, which had been in operation for over ten years. One of Sankyu’s options was to use a software package solution for its forwarding operations. Sankyu’s Forwarding Division acts as an agent for its customers’ global logistics operations. The process of delivering cargo consigned by a customer to its destination begins with collection of the cargo, followed by storage at ports, shipping, customs declarations, and so on. This process involves many standard operations. Compared to in-house development, Sankyu’s cost of operations could be reduced by implementing a software package for core processes, in conjunction with additional development for individual requirements. This is the approach that Sankyu decided to pursue.
“Global” is a keyword for Sankyu. All 86 of its worldwide locations were targets for the system refresh. A software package, in addition to having multi-language and multi-currency capabilities, must support the specific requirements of various countries, including local taxation. A major benefit of using a software package is the vendor’s support for countries’ local requirements. With a package solution, it is possible to upgrade the system through a maintenance agreement in order to stay current with any changes to local requirements in various countries. According to Kazuhiro Suzuki, Chief Specialist, Logistics Solution Division at Sanyu, “All employees worldwide would be able to use the same system for operations if we were to standardise on a software package. By doing so, we estimated that data entry tasks, which we had made quite complicated, could be reduced by 30 per cent. This should lead to higher productivity.”
Kewill, the top choice
When Sankyu began doing its research on core software packages, it discovered that there were only a few package solutions dedicated to freight forwarding that could be deployed globally. Sankyu found that the solutions offered by ERP vendors were costly. Therefore, this option was eliminated because, “The cost of internal development would be lower than that of a system from an ERP vendor. We could easily develop a custom solution which best suits our needs”. On the other hand, the software packages available domestically could only provide optimisation for individual tasks, and were not able to meet global needs, according to Mr Suzuki.
Back then, Sankyu had only three options: In-house development; local software package; Kewill. Of these, Sankyu selected Kewill Enterprise Forwarding with which it could achieve a balance of cost and expected results. Kewill’s software incorporates a wealth of experience of other customers. Sankyu’s legacy system had to be implemented at each and every local office. It was therefore, akin to, “an assembly of systems across local offices”. By using one software package solution, each local office and operation could be coordinated and integrated into one large information systems infrastructure.
According to Mr Suzuki, “If we were to use a software package, disparate systems could be linked together to form one complete surface from which data could be retrieved more easily. This not only applies to simple transactions related to quantities, number of items and cases handled. All data could be extracted and utilised as management information. We set our expectations on Kewill Enterprise Forwarding, as it has sufficient functionality for this.”
Migrating off the legacy system early in a phased implementation
During the course of the fit and gap analysis, managers and section heads from local offices came together to validate the new system with respect to their specific business operations. Examination of the system, including data maintenance, was carried out, and the implementation project commenced soon after the contract was signed. Over a two-week period, training on the architecture of Kewill Enterprise Forwarding was given to system engineers at Sankyu’s subsidiary information systems company, all of whom have an in-depth knowledge of business operations. During this time, they acquired valuable skills required for the project. Much of their time was spent on data aggregation and creation of documentation and reports.
In December 2014, after extensive testing, it was time to commence a phased global rollout of the new system. A crucial step in the replacement of a legacy system is training of the new solution for on-site employees in operational roles. Since it is not possible to roll out the new system in all locations simultaneously, Sankyu selected Guangzhou in China as the first location for rollout. With almost fifty employees, Guangzhou is a small office compared to other Sankyu offices. It was the ideal location for Sankyu’s Phase One release.
As there were only a few senior systems engineers located in Japan, operations staff from each of Sankyu’s international offices came to Japan for a month of training to coincide with the release of the new software. These operators were the main users of the system and enabled the legacy and new system to run in parallel for one month. The results of this phase of the implementation were good. Sankyu successfully replaced its legacy system and continued full operations. The rollout of the new system to other locations began to gain momentum. In China, employees who had gained experience and knowledge from the Guangzhou office rollout, helped to sequentially roll out the system in other domestic offices in China. Similarly, software engineers who had gained experience in the Guangzhou office rollout, become trainers of their fellow employees. The phased rollout of the new system continued throughout Sankyu’s offices worldwide.
Following cutover to the new system, there was some confusion related to differences in the user interface. However, the situation gradually improved after conducting operator training. According to Mr Suzuki, “Although overtime work increased immediately after the new system went live, as the operators became more accustomed to using it, productivity improved. Historically, operators in the Forwarding Division clocked many hours of overtime. Today, this is one department in which employees are able to finish work on time. As per our initial estimate, we achieved a 30 per cent reduction in operation time.”
Benefits of using one standard system globally
Servers located in Japan are connected to Sankyu’s offices around the world via dedicated lines and VPN. Security is ensured. In the unlikely event that there are issues with response time, this is dealt with by isolating the problem within the network or the server. In the past, each office sent separately aggregated data by email to headquarters. Now that all information is consolidated, so are the data required for reporting.
“Since summary data come from accumulated daily data, it is extremely difficult for fraud or irregularities to occur,” Mr Suzuki said, “While this may not be applicable for Japan, we believe that an appropriate governance structure is now in place for our overseas offices.” Going forward, Sankyu will further utilise the Kewill Enterprise Forwarding solution. The company plans to use accumulated data to derive the latest trends and to create more sophisticated management reports. Mr Suzuki has observed that the focus of employees in the offices is shifting from daily management to the application of performance data.
“Employees in the field are beginning to realise that they can now view information from various angles. Then, they start requesting specific data. Utilisation of data follows improvements in operations,” Mr Suzuki said. “This is well-timed, as we are looking to start full utilisation of centrally managed data with Kewill Enterprise Forwarding.”
About the Author
Kewill is a worldwide leader in logistics software (FMS, TMS, WMS, Customs). We empower organisations to efficiently MOVE® goods and information across the global supply chain. Companies driving value from our solutions include DHL, Kerry Logistics, Crane Worldwide, HAVI Logistics and Sankyu.