Electronics powerhouse Nikai boosts its fleet efficiency in the Middle East with a state-of-the-art GPS system.
There was once a time when delivery drivers for electronics firm Nikai were able to take long naps in their trucks between drops. Today, they speed back to the company's warehouse headquarters in Dubai Investment Park in order to pick up another load.
The drastic change means that the firm is better placed than ever to live up to its own catchphrase - 'Mr Reliable'.
But the transformation only came as a result of the adoption of a sophisticated tracking system, which allows managers to watch the movement of goods on a minute-by-minute basis.
"When drivers left here, after delivering the first load it was a convention that they didn't have to come back," says Nikai logistics manager Vikas Bansal. "Because they were not seen, they were not traceable. They went out and then they vanished, only to be seen the next day.
Now I have complete minute-to-minute visibility of my vehicles, allowing me to know exactly when my packages have been delivered. The results show that the efficiency and capacity utilisation of the entire fleet has increased by at least 20%."
Despite not having the brand recognition of rivals such as Panasonic and Sony, Nikai has gone from strength to strength and its broad range of products is now stocked in the majority of retailers across the UAE.
But since Nikai does all its domestic logistics ihouse, it became clear that the company needed to up its game to compete with rivals who had outsourced to dedicated third party logistics firms.
Their golden bullet came in the form of the Exactus Aware Supply Chain Management Solution, installed by Business Systems Group.
"Prior to having this solution in place we were trying to manage with the Orion VRP (vehicle routing problem) package," explains Bansal. "It manages inventory but does not manage logistics operations in the true sense. That is why we felt the need for a software solution that can actually help in controlling our operations. We decided on a fleet management solution, and a warehouse management system, both from Exactus."
The tightly integrated package is complemented by Infotouch's TrackOn GPS units, which have been installed in the company's 30-strong fleet. Such technology allows the managers at Nikai to track the speed and position of their trucks from space.
The solution files a number of automated reports, which means that drivers are no longer able to idle at a certain location or claim that they had worked for longer hours than they had.
Bansal said that in addition to the increased efficiency, it would also mean improved customer service.
"The objective of the tracking system is that we have to adhere to very stringent delivery parameters," continues Bansal.
"When you buy any of our gadgets, we are the ones who have to commit to an agreement that within 48 hours of your order we have the goods delivered to your doorstep. Suppose a trucker has left here with 20 home deliveries, but decides that he wants a siesta at 1pm, despite the fact that my customer was promised a delivery at 1pm. As a result, that delivery has now arrived at 3pm. Because I have full visibility of my operations, I now know that for two hours that vehicle was not operating."
An additional benefit is that GPS data/voice communications and GPS tracking means that locating pick-up and delivery points is now easier for drivers as well as dispatch staff.
Moreover, Nikai has elected to use the open architecture of the Exactus software to develop a truly innovative supply chain management solution. It has installed a warehouse gate tracking system which registers when a vehicle enters or leaves the warehouse and files an automatic report.
"As far as I know, in this region nobody is using this software," remarks Bansal.
"The reason that prompted us to go for it or rather to conceptualise it, came out of our own need. What has been happening is that a driver arrives, parks his vehicle and the loading process begins. It's at that point that the driver often vanishes - it's a big facility - which means you have to keep calling them. By that stage, you have wasted a lot of time, during which the vehicle has idled for as much as two hours."
The introduction of the new gate-monitoring system now gives Nikai a report clarifying exactly how long it has taken between the vehicle checking in and leaving the premises.
"This will give us a fair idea how much time is spent in loading and how much time the vehicle idles in our premises," continues Bansal. "If we can cut down on that, productivity can be really increased."
In addition to the warehouse and transport solutions, the company has also adopted a fuel tracking system. This allow managers to keep tabs on how much fuel is being used on trips and enables them to ensure that none goes missing.
"The cost of maintaining a fleet is going up so rapidly," observes Bansal. "In the last three or four months you have seen that the price of diesel has gone up by nearly 50%. We can now monitor the fuel consumption of the vehicle, because with diesel being so expensive there is a small but growing chance of pilferage. So we needed complete visibility on all our operations in terms of efficiency, productivity and also fuel consumption. So this is where this type of solution is proving to be extremely handy."
Nikai has two facilities in Dubai, one in Jebel Ali Free Zone and the other in the Dubai Investment Park (DIP). Goods are received in the Jebel Ali facility by sea freight and divided into those products which need to be distributed within the UAE and those which need to be stored for international delivery.
Those which are distributed domestically are taken to the DIP facility and couriered out to retailers via the company's 30 trucks (16 of which are owned directly by Nikai).
However, the operator only manages domestic delivery. International delivery to other GCC countries, Africa and Iran are the onus of buyers and are mostly handled by third party logistics firms.
Having said that, it appears that the UAE represents a growing market. The DIP facility is 100,000mÃ‚Â² and the company owns an additional facility of roughly the same size.
Gesturing at the warehouse, which lies opposite the main facility, Bansal commented that it was at this location that the company's plans for expansion lay.
Earlier, the logistics manager had mentioned that the company might opt to use its newly found competitive edge in supply chain management to branch out into third party logistics.
"We have developed so much expertise now that we might float an off-shoot of the company which can actually provide 3PL services," he indicates.
"It's in a very nascent stage as yet, because we are stabilising our own system, but yes, three or four months down the line we will have gained considerable expertise in that."
It was only two months ago that the company began deploying the software, which by all accounts was fairly expensive. Although Bansal wouldn't give an exact price for the amount that the company paid, he makes it clear that he expects the software to pay for itself sooner rather than later.
"My capacity utilisation of the fleet has gone up by 20%, drivers are forced to come back, idling time has gone down and the service level has improved," says Bansal.
"Returns have already started coming in, because with all these systems you have complete traceability and visibility. So it is possible that it may take quite a while before these three packages get fully integrated, but individually, in all three cases, the results are already there and we are slowly but surely seeing the benefits."
A further cost saving may come in the form of streamlining the workforce. Because so much of the new system is automated, it is less labour-intensive and may herald staff cuts.
But aside from the massive financial savings the company is expected to make as a result, one of the biggest gains is the improved customer service levels.
"In this market, we don't have the advantage of a big brand name," Bansal states.
"We are actually competing with the Panasonics, Sonys and the LGs of this world, all of which are multinational industry giants. So our unique selling point can be the provision of exceptional customer service - this is what we want our edge over others to be."
Recognition for Bansal personally has already come in the form of the Logistics Manager of the Year prize at the 2008 Supply Chain and Transport Awards, and it is clear that this achievement is spurring him on to greater success.
"Yes, we want to be faster, we want to be better in comparison to all our rivals, and these solutions definitely help us in achieving that," Bansal concludes.