Switch to Agile Model in E-Commerce Logistics

Stating that they have switched to the agile model in human resources, IT infrastructure, and all processes in accordance with the structure of rapidly changing and ever-developing e-commerce, Arvato Türkiye General Manager Umur Özkal said that they offer their customers "Plug & Play" infrastructures that they can integrate very quickly thanks to the order management (OMS), warehouse management (WMS), and distribution management (TMS) systems they have developed specifically for omni-commerce. Thanks to this structure, they make e-commerce effortless by increasing efficiency.

Arvato, a subsidiary of the German giant Bertelsmann AG, which has a turnover of approximately 18 billion euros and 120 thousand employees, provides services to brands in the field of supply chain, information technologies, and financial solutions. Arvato, on the other hand, has more than 15 thousand employees in 85 locations around the world on a total area of 1.7 million square meters. In Türkiye, it offers end-to-end supply chain solutions to its customers in an area of 130 thousand square meters with 6 platforms located in Istanbul. Pointing out that in a rapidly changing and constantly developing sector such as e-commerce, the infrastructure should be flexible and the processes should be fast, Arvato Türkiye General Manager Umur Özkal said, 'He said that they have designed their resources and systems accordingly.' Underlining that brands can set up their supply chain infrastructures effortlessly, especially in this period when multi-channel sales such as offline & online and marketplaces gain importance, Özkal said, 'Thanks to our order management (OMS), warehouse management (WMS), and distribution management (TMS) systems that we have developed specifically for omni-commerce, we offer our customers "Plug & Play" infrastructures that can make their integrations very quickly. Thanks to this structure, we can easily manage how a product in the warehouse will be stored at optimum cost and conditions, how it will be shipped in the fastest and most efficient way, and with which packaging materials the product can reach the consumer with high quality but low cost.

Can you tell us about the distribution and storage capacity in Türkyie?

We maintain more than 500 thousand kinds of products, 10 million stocks and a daily online output volume of over 200 thousand units in our 6 facilities with a total closed area of 130 thousand m2. I can say that these numbers will increase with new collaborations. The number of orders we packed in our factories exceeded 18 million in 2019. The number of online orders that we distribute to homes using TMS exceeded 22 million desi in 2019. During the pandemic period we are in, it has become the most important issue for us to protect the health of our employees and to ensure the business continuity of our customers in parallel. As a natural result of the closure of shopping malls and people staying at home, we experienced an increase in online business volumes up to the Black Friday period. In particular, there were increases of up to 3-4 times in the home-life, cosmetics, personal care, and consumer electronics product categories. We anticipate that this momentum will continue to decrease slightly with the return to normal until the end of the year. Because even consumers who have not shopped online before have experienced the reliability and convenience of online shopping. We will see this reflected in the year-end reports together.

COMPLETED A PROJECT IN 10 DAYS

How do you support your customers with your e-commerce logistics services and what kind of advantages do you offer?

We are the strategic growth partner of the brands we work with. Our focus is on e-commerce and omnichannel services. We support our customers at every point in this journey, from the installation of websites to the delivery of their products to the consumer and after-sales services. Together with our customers, we aim to meet the demands of consumers and keep their satisfaction and trust high. We are aware that we need to be very fast while doing this. E-commerce is the fastest-changing of all sectors and the most sensitive in terms of time sensitivity. Because as consumers, we all demand it, because we need it.

For this main reason, our human resources, IT infrastructure, and processes are designed to be super-fast and are carried out in a way that is "agile", in the most used term recently. When the pandemic first started, we understood how much the "Plug & Play" infrastructure was needed and how important it was. For example, we started online order shipments within 10 days for the urgent need of a very valuable and well-established cologne brand in Türkiye. Designing processes from scratch, integrating, and testing even meetings online due to social isolation, and implementing the project in 10 days by making sure that everything works correctly in the field has been a record we have broken within ourselves. Each special period contains various opportunities in itself; we have experienced this.

With our plug & play infrastructure, we support our customers who want to sell on different platforms in the management of platforms as well as the integration infrastructure. We support our customers to quickly implement their dreams at the time they demand by designing their dreams in advance and turning them into a ready-made structure. By carrying out continuous improvement studies with our technology and R&D teams, we closely follow global applications. We implement automation/semi-automation applications at points that will positively affect the cost. For example, we systematically separate all order packages according to cargo companies with the TMS algorithm and physically with the conveyor. By printing common labels, we ensure that the packages are loaded into the cargo vehicles without waiting. In this way, tens of thousands of packages can be shipped to the consumer without waiting in the warehouse or branches of the cargo company, and we can prevent errors caused by density. All these setups turn into experiences that reinforce the trust of consumers and reflect positively on the sector.

Financial strength is very important for all investments. Of course, the fact that we can quickly provide the financial resources required for all investments thanks to our financial strength makes our job easier. We take the future plans of our customers one by one, analyze their future capacity needs, and support them to grow with on-site and timely investments. Especially during the pandemic period – that is, even in an environment of high business uncertainty – we continue our investments without interruption thanks to the trust of the Arvato Bertelsmann center in Türkiye and in us. In this way, we were able to include new projects in our facilities and create additional capacity for the growth of our existing customers. In this way, we will continue to grow together with both our potential customers and our customers we work with and support them to increase their e-commerce business volumes.

How much growth did you close in 2019? What is your goal for 2020?

As Arvato Türkiye, we closed 2019 with a growth of 60%. We have become one of the few most successful countries of the group in this sense. Although it has been a difficult year, we are very happy to have shown Türkiye's potential once again. In 2020, our primary wish is for the pandemic to end all over the world and for its social and economic effects to be minimal. As Arvato, we focus on meeting the changing demands and needs of our customers in the most effective way by adapting to the new world order established under the influence of Covid-19. Our top priority is to prioritize the health of our employees and to ensure that current operations continue uninterrupted. In this short and intense period, we created and implemented new working models. In 2020, we will further develop these models. We are in the category of essential sectors that must remain alive even in times of crisis. All of our employees, from senior management to the field, felt this awareness more intensely. This imposes additional responsibilities on us. We will expand our business processes in a way that can continue uninterrupted under all conditions and to carry them to an even more diverse area from hygiene to health, from FMCG to food. We will continue to develop remote working models in a structure that suits us. We will listen to our employees more. Because our most valuable strength is our human resources. And of course, we will continue to facilitate and simplify the processes of all companies that want to sell online/offline not only for branded companies and online, but also for SMEs but have concerns, without creating an additional fee burden.

BOOSTS CARGO PERFORMANCE

What kind of changes are expected in supply chain processes? How is Arvato preparing for the future?

Robots will become very effective resources in the supply chain over time, as in every field. In this context, both in our facilities in Europe and in recent fairs, what we observe is significant changes will be made, especially in warehouse technologies. These new technologies will have two major impacts. The first is to easily manage the fluctuation of business volumes, and the other is to create an advantage in unit costs in large-scale and standardized works. In terms of cost management, we expect the return on these investments to reach reasonable levels in the medium term, but we can say that they are still not at a preferable level in the short term for today's Türkiye. As a country in the center of the world, Türkiye; We should not forget that we should set the goal of becoming the logistics base of Europe, the Middle East and Africa together and that the most important thing is to produce technology. On the other hand, we think that the transition from offline to online will continue to increase after the pandemic. We think that the need for system infrastructures where we can place online orders on behalf of our customers from selected stores as well as from Arvato warehouses will increase. We have pilot applications in this regard. In distribution, we increase and diversify our cargo volume according to consumer needs. We have added and will continue to add new ones to our supplier portfolio in order to meet the increasing demands of "intraday delivery" and to be better prepared for peak campaign periods. Thanks to the Arvato Control Tower team, we are able to track the orders of all our customers who use the Arvato system infrastructure without leaving the Arvato warehouse. We monitor and report the current status of the orders that are expected to be delivered, and if there is a deviation in the delivery, together with the reasons. Thanks to this close monitoring and reporting, we can take actions to increase cargo performance throughout the country.

What are your expectations for the e-commerce sector?

When we look at the e-commerce penetration rate in global markets, it is very clear that Türkiye has a great growth potential. In 2019, the ratio of online retail to total retail was 12.3% in developed countries and 6.7% in developing countries, while this rate was 6.2% in Türkiye. However, growth continues to occur in the 35-40% band every year. When we look at both the development of European countries and the past growth data in Türkiye, we expect this rate to reach 10% in Türkiye in the next 5 years as one of the countries where internet use is most common.

WE NEED TO BUILD OUR DIGITAL DNA

Emphasizing that companies and people, like all countries, have to adapt to the digital age in order to exist in the future, Umur Özkal said: "Because digital transformation is a paradigm shift and we must be ready now. While trying to prepare for digital transformation, with the beginning of 2020, everything in the world was divided into 'pre-pandemic and post-pandemic', and it was not CTOs or CEOs who drove digital transformation, but corona. Now, we are doing this transformation within our own structure like everyone else. We're going to melt it, we're going to make it fit our DNA. Every challenging period brings its own opportunities, as long as we want to see and change. In this respect, of course, we will all continue to do what we do best, even better. In doing so, we will try new ways. Being aware of this responsibility, we will continue to prepare our employees and then our business partners for the new world order while designing all our infrastructures.