THE JAPANESE TAKUHAIBIN SYSTEM - MODEL FOR A UNIVERSAL SOLUTION FOR THE LOGISTICS CHALLENGES OF E-BUSINESSES? Dr Claus Eberhard formerly: Institute for Transport Policy Studies, Tokyo, Japan now: PTV AG, Karlsruhe, Germany; Email: [email protected] Abstract The growth of E-shopping creates the need for efficient and modestly priced distribution solutions. It is investigated whether “takuhaibin style” distribution systems can offer solutions for the challenges of E-business logistics. Takuhaibin, or “home delivery service”, is highly popular in Japan: Every year, nearly 2 billion parcels are sent in Japan – more than 15 per inhabitant and year. Yamato Unyu, the company that had invented and developed the first system in the mid-1970s under the brand name “Takkyubin”, now handles a volume of more than 2 million parcels per day. In contrast to the well-known international actors like UPS, Federal Express, DHL or TNT, the Japanese takuhaibin companies have a strong focus on the private customer. On the other hand, little is known outside Japan about the highly competitive and efficient system and its actors. Takuhaibin nowadays includes a broad range of services for the convenience of the customers, such as baggage delivery, transport of sports equipment; or temperature-controlled food delivery. With its nationwide networks for the distribution of small parcels, it offers an ideal channel for the shipments of E-tailers. Since 1998, Yamato itself has entered the world of E-business by setting up an Internet portal through which other companies can offer their products. Yamato provides its distribution services, but as well added-value services like storage, order picking, packaging and payment collection that are not at the core of E-companies. The main competitors have followed the model or are planning to do so. In the paper, it will be assessed how the logistics of the several competing takuhaibin system works, looking at the advantages (high service levels; “convenience” offered to its private and commercial users throughout Japan) and apparent shortcomings (environmental and traffic problems arising from the increasing fleets of delivery vehicles). Whereas in other countries the logistics of distributing efficiently to private customers appears to be a major factor delimiting growth and profitability of E-businesses, Japan looks well prepared on that front. Therefore, in a concluding step, it will be analysed whether the takuhaibin approach as such, or which of its elements, appear to be transferable to other countries and markets with different business environments. © Association for European Transport 2001 1. INTRODUCTION E-commerce has become a buzzword in recent years. For the private consumer, it is visible and available through Internet shopping, which allows ordering products or services through a few mouse clicks. Progress has been fast e.g. in the travel market where Internet travel agencies send tickets to their customers by mail. However, if products heavier than a few hundred grams have to be distributed, the services offered by the traditional post offices may be insufficient. Efficient and modestly priced distribution solutions are looked for. This paper aims to investigate whether a “Takuhaibin style” distribution system as existing in Japan can be a model for the challenges of E-business in other parts of the world. Takuhaibin, or “home delivery service”, is highly popular in Japan: Every year, nearly 2 billion parcels are sent in Japan – more than 15 per inhabitant and year. In this highly competitive and efficient market, Yamato Unyu, the company that had invented and developed the system in the mid-1970s under the brand name “Takkyubin”, now handles a volume of more than 2 million parcels per day. In contrast to the well-known international actors, the Japanese takuhaibin companies have a strong focus on the private customer, and are little known outside Japan. Another important element is the dense network of agents that can act as pick-up and drop points if needed. 2. DEVELOPMENT AND TAKUHAIBIN SYSTEM 1 ORGANISATION OF THE JAPANESE Japan has a service culture and a history of home delivery – mainly in the form of cooked food, nowadays delivered by motor scooters. As for parcel delivery, the Japanese national post office had a quasi-monopoly for a long time. Takuhaibin, which is Japanese for “home delivery service”, came to Japan some 25 years ago when the company Yamato Unyu (Yamato Transport) introduced the first home delivery service on January 20, 1976 under the brand name “Takkyubin” (express home delivery service). Figure: Vehicle in a global player’s livery in contrast to the ubiquitous scooters used for food delivery; the “classic” Takuhaibin delivery van, built to Yamato’s specifications. (Source: Claus Eberhard) In the following, the focus is on the Yamato Unyu Company as the pioneer and biggest player in the market. As the story goes, Mr. Ogura, who was then © Association for European Transport 2001 managing director of the Yamato transport and forwarding company, was impressed by the UPS delivery model he saw during visits to New York2. After adapting the UPS approach to Japanese conditions, he was able to overcome the serious resistance of his Board of Directors to enter that new and seemingly risky business field. In the first year, 1.3 million parcels were delivered, mainly in the Greater Tokyo area. Success and growth followed swift, attracting a number of competitors. By 1981 the number of parcels shipped annually had increased to 10 million, in 1985 the figure reached 50 million. Ten years later the volume had increased tenfold to 500 million, and in 2000 around 800 million parcels were handled by Yamato Unyu, which equals a market share of around 40% of the Japanese parcel market standing at around 2 billion parcels. The brand recognition of Yamato’s ‘black cat’ (kuro neko) symbol is extremely high; Takkyubin has become the colloquial name to describe all Takuhaibin services. The current figure means that the average Japanese household uses Yamato’s services 18 times per year, or once every three weeks. The nationwide infrastructure built up to deliver such a performance is likewise impressive: Yamato has 75,000 employees and 29,000 vehicles. As system hubs and sorting centres, 67 bases are linked with each other in a raster system, and connected to 1.395 distribution centres from which the parcels are collected and distributed by one and two ton delivery vehicles from and to offices, households and 300,000 (!) agencies (which is 1 per 420 inhabitants) acting as pick-up and drop points. More than 90% of shipments are scheduled for delivery within 24 hours; the more remote islands are reached within a 48-hour time frame. For the collection and distribution leg between customer and distribution centre, small vans with carrying capacities of 500 kg or 1 tonnes are employed – in the case of Yamato Unyu, 24,000 out of the fleet of 29,000 vehicles are used for this purpose. For vehicles carrying one tonne or more, a standardised unit load system of wheeled palettes is used. One unit (1100 x 1100 x 1850 mm) can hold about 70 parcels. 4-tonne-lorries connect each base with (on average) 20 distribution centres. These 67 system hubs are connected with each other; transports are performed overnight using lorries that can carry 16 of the standardised loading units. As a result, more than 4000 relations are served each night. Near Nagoya, on the main corridor between Tokyo and Osaka, more than 700 Yamato lorries can be counted every night on the motorway. The parcel flow is accompanied by information flow, making use of state-ofthe-art technology. The time-critical elements - base-to-base transports and sorting of shipments – are monitored closely. The loss or wrong delivery rate is 0.005% or better. The tracking & tracing system, accessible to each customer by telephone or Internet, achieves a response time of 40 seconds or better. The volume growth was enabled by continuous product innovations and improvements, which were often tested on a trial-and-error basis within a test area before being either abandoned or extended to a national scale. As © Association for European Transport 2001 competition in the market is tough, most inventions spread quickly among the main competitors Yamato Unyu (Kuro Neko Takkyubin), Nippon Express (Pelican-Bin), Nihon Unsoo (Footwork) and Seino Unyu (Kangaroo-Bin). In the early 1980s, the service was extended to carry not only classic parcels, but as well sports equipment, namely skis and golf bags. In 1986, a payment collection service was introduced, through which products delivered could be paid on receipt. This made Takkyubin a useful distribution channel for catalogue and mail order companies. A year later, Yamato and a publishing house formed a joint venture and book delivery through Takkyubin started, with orders taken by phone, fax or postcard. In 1988, Yamato introduced Cool Takkyubin, a complete temperature controlled distribution chain for three temperature bands (-18, 0 and 5 degrees centigrade). These catered for the quick shipment of local specialties and fresh delicatessen, which are highly popular in Japan. Local and regional products are often marketed directly by their producers and agricultural cooperatives through catalogues, cutting out the long chains of intermediaries for which Japan’s distribution system is often (in)famous. In 1989 airport baggage delivery services were introduced, following in 1990 by a joint venture with UPS for international services. The standardized product was supplemented by premium products, e.g. guaranteed delivery until 10 a.m. on the following day (in many regions) or the option to choose 2-hour time slots for the delivery. For the handling of documents, the Kuro Neko Mail Service was introduced in 1997. The Kuro Neko Maintenance Service for spare parts started in the same year. 3. THE ROLE OF CONVENIENCE STORES Convenience stores (CVS) have come play a major role in Japan’s retail business over the past two decades. The mainstay is food items. Typically, CVS have an average size of just under 100 square meters, and are open for at least 14 hours during 7 days per week. About 60% of the 40.000 CVS in Japan are open 24 hours/365 days per year 3. The biggest CVS chains are Seven-Eleven and Lawson with ca. 8,000 outlets each. The key products offered change up to five times per day, with fresh food products and lunch packets (“bento”) being of special importance. As store sizes and storage space are small, and Japanese are very concerned about the freshness of products, CVS receive several deliveries per day from a variety of suppliers. A highly developed POS (Point of Sale) system, consisting of networked electronic cash registers with laser scanners; the software allows for itembased inventory control and dynamic replenishment. For each transaction, customer sex and age group is registered, producing a stream of valuable marketing data 4. Enabled by the networked and standardized POS systems, CVS have developed into service centres for all kind of transactions: Paying bills (utilities, telephone, TV, insurance) at CVS is common. Facsimiles can be sent and received. Some CVS chains co-operate with banks and are have equipped their stores with cash dispensers. Nearly all CVS have contracts with Takuhaibin express parcel companies: The stores are convenient pick-up-and-drop points, solving the “last mile” © Association for European Transport 2001 problem for both the express parcel company and the consumer who does not need to be present at their home to receive a packet or wait for the pickup. The customer gets a small discount for foregoing the home delivery; the CVS gets a small compensation for handling the parcels. An additional benefit to the CVS is clearly that the customer, once in the premises, will very likely not leave with empty hands. In fact, not only the 40.000 CVS act as agents for the Takuhaibin companies: A huge number of traditional rice stores, liquor stores, laundries and other “mom and pop” stores are under contract. Yamato Unyu as the biggest express parcel company alone has 300.000 agents – one for every 420 inhabitants, which virtually means that the nearest pick-up-and drop point is rarely further than a few minutes away. 4. WEBVAN, PEAPOD & CO. – A SNAPSHOT OF US E-GROCERS The future of E-commerce focused on the private customer, which looked so bright only one year ago, has become more cloudy after the world-wide collapse of share prices throughout the new market, followed by the bankruptcy or closure of a number of US companies like Streamline or eToys that were considered the heralds of the new economy only months ago. Others were rescued from the same destiny by brick-and-mortar chains: One such example is the e-grocer Peapod, which was bought by the Royal Ahold conglomerate in spring 2000 5, in the following moving away from ambitious growth targets, out of some markets, and changing its original distribution model. In fact, the current trend points towards a combination of “old economy” distribution recipes and some “new economy” marketing and service ideas. Many incumbents e.g. in the catalogue order business reposition themselves, adding the Internet to their current portfolio of sales and marketing channels. In the light of these recent developments, the forecasts about the growth of ecommerce, especially B2C shopping over the Internet, as presented in 1999/2000 by Forrester Research or Jupiter Communications, appear to be overly optimistic. The (original) concept of companies like Webvan, Streamline, HomeGrocer or Peapod foresaw the replacement of recurrent shopping activities for groceries with home delivery – catering for the bulk volume, on top of which extra services like video rental, and delivery of books and other goods ordered via the internet could be placed. In Japan, the delivery of some 2 billion parcels per year forms exactly these base loads, which allow piggybacking specialty services and e-commerce deliveries. In the US, UPS handles a similar volume. But in contrast to the Japanese Takuhaibin companies, UPS focus is on the business segment and bulk market. There are different philosophies whether and to which extent owns distribution systems are a necessary part of successful E-business models. A number of companies claim that it is crucial to cover everything including the “last mile” to have direct, personal customer contact. Some companies © Association for European Transport 2001 optimise their websites and leave distribution to third-party specialists; others run own distribution centres and only leave the transportation to delivery companies. Furthermore, the preferred solution may change over time, as experience and handled volumes increase if the business is successful. The use of 3PL (Third Party Logistics) and its infrastructure and facilities allows keeping control over costs during the start-up phase. In case the “demand density” (customers per area) is not very high, 3PL may be the only way to achieve a desired full coverage: The population of Greater Tokyo is more than half of that of the whole of the UK. None of the cited companies came anywhere near a nationwide coverage, typically only 6 to 12 high-density cities of areas are (or were) served. The upfront investment to open up new local markets with customized distribution systems is large and probably has been underestimated by hopeful e-grocers aiming to quickly tap an as-large-as-possible share of the online market: Webvan’s operation to serve the Dallas market employed 220 workers when Webvan announced to withdraw in February 2001 “in order to conserve operating capital and focus on the profitability of its nine other markets” 6. Another online grocer, NetGrocer, achieves national reach for its offer, which are only non-perishable goods. From one single distribution centre, delivery is within 1-4 days through Federal Express. If the customer agrees, the order can be left at the customer’s doorstep if the FedEx driver “feels it will be safe”. The customer has to pay the hefty delivery charges, which are in the range of 5-10% of the order value7. Looking at the American case, it may be said that the Japanese takuhaibin companies could have fulfilled most of the given distribution needs and service profiles from scratch. 5. CONGESTION AND POLLUTION, WASTEFUL TRANSPORT The volume and service level of the delivery services adds to or in some cases creates a congestion problem: In Tokyo, about 30% of all vehicles are delivery vans, they comprise about 50% of all vehicles which are parked (often illegally) on public roads. There is no night or weekend ban on vehicles that would limit the operation in residential areas. As air quality in the big cities is perceived to be unsatisfactory, most big express parcel companies in Japan operate some non-diesel vehicles to reduce local emissions. Electric vehicles were not successful in the past; LPG (liquefied gas) is the preferred alternative where local rules in the largest cities restrict the introduction of new diesel vehicles for delivery purposes. About 10% of Yamato’s fleet in the two largest cities, Osaka and Tokyo, is gas-powered. Customer service levels offered influence both cost and environmental impact of a distribution system: Nationwide same-day delivery promises or tight delivery time slots from which the customer can choose add largely to the costs of distribution. And, at least the latter is likely to decrease vehicle capacity usage and increase the time and mileage needed to fulfil a given number of orders, adding to the environmental and traffic burden in the © Association for European Transport 2001 serviced areas. While in the Japanese case, the volume of shipments may necessitate several delivery rounds per day for some areas, service promises may be in some cases overdone: Half-hour delivery time slots from which the customer can choose add largely to the costs, mileage driven and the resulting environmental burden without adding real value. Figure: Typical road scenes in Tokyo: Vans and delivery vehicles dominate road traffic; vehicles stopping for loading and unloading clog up narrow streets. (Source: Claus Eberhard) The opportunities in offering “convenient” pick-up-and-drop points especially for orders over the internet – which in Japan often means orders over the Imode service of the mobile phone – is recognized by many parties: The large railway company JR East wants to use its railway stations for such purposes. The argument is the reach: Seven-eleven or Lawson with around 8000 convenience stores nationwide has around 8 million customers per day, but 10 million commuters and shoppers are channelled every day through the 82 JR stations in the Greater Tokyo area. Space is available in principle at many stations, as former freight handling facilities are no longer used. The takuhaibin company Yamato Unyu has an answer to such approaches as well: It plans to cooperate with private commuter railways for the same purpose. With the very large number of convenience stores and other agents around, identification of the correct pick-up point may become a problem, but every regular user knows her or his local railway station, and in the large conurbations most pass through it twice a day for commuting. 6. A NEW ROLE FOR RAILWAYS? Like in other countries, political circles wish to shift some long-distance goods traffic towards rail, but the tight delivery time promises are not compatible with the current services offered by the JR Freight company. A specific Japanese problem is the loading gauge restrictions, as the conventional railways in Japan operate on 1067 mm track, making piggyback transports impossible without specialized equipment. On the high-speed Shinkansen network, only passenger trains operate, and permissible axle loads are unsuitable for heavy freight services along these lines. However, Yamato Unyu is actively exploring the feasibility of a parcel freight version of a Shinkansen train8: Such a service would enable to reach the markets and customers on the two large islands of Kyushu and Hokkaido overnight, which is not possible by road due to the distance: The 1200 km between Tokyo and Hakata on Kyushu take approx. 17 hours by lorry, 24 hours given the current railway offers by JR Freight, but © Association for European Transport 2001 could be managed in 7 hours (including loading/unloading) by a Freight Shinkansen comparable to the “TGV Poste” high speed trains in operation in France for the French post office. The current daily parcel flow on the southern route to Kyushu would fill capacity of a full train, the same holds for traffic towards Hokkaido in the north. The main obstacles appear to be not financial or technical, but are rooted in a missing willingness of the JR Passenger companies to enter the express freight business. 7. TAKUHAIBIN & E-COMMERCE In 1998, the “Kuro Neko Exploration Corps” Internet portal 9 was created. Not only tracking & tracing over the Internet is possible, through the portal some 2.400 (Sept. 2000) customer sites and e-shops become accessible for which Yamato provides distribution services. Actually, Yamato does not only provide the delivery, but also offers a fill range of 3PL services, ranging from warehousing, stock management, packaging to payment collection. Apart from developing a new business field, Yamato aims to use unused capacities (e.g. at the second and third floor of transshipment centres and bases) and to balance out fluctuations in workload. Cooperation with partners, e.g. Softbank, allows entering new market segments in the C2C field: For the increasingly popular private auctions, Yamato offers an “escrow service” which includes the money transfers between buyer and seller. Japan is often blamed to be on the slow side in adoption of IT and the internet: The ratio of internet users is lower than in many western countries and even lower than that of the Asian neighbours South-Korea, Singapore and Taiwan10. A number of other factors play a role: One is language, as the use of the Internet is at times cumbersome given the complex Japanese alphabets. Access fees are high, to a large part attributable to a telecommunications market with little deregulation. Another cause – hampering E-shopping - is that Japan is still very much a cash society, leading to a little ownership rate of credit cards, and a considerable hesitance to use it for payments on the net. But then, a further factor may be that Japan already enjoys a very high level of services of all kinds readily available to the customer. E-shopping often is not perceived to fulfil urgent needs, it is not trivial to find market niches not occupied by existing delivery services. There is an area where Japan can claim world leadership in IT: Already in 1999, the number of mobile phone has overtaken the number of fixed lines. Most of the newer mobile phones are internet-ready: In July 2000 there were nearly 23 million subscribers of the “imode” service11 with no end of growth in sight. Timely order fulfilment is at the core of e-commerce. Even in the cyber-era, warehousing means “pallets in and packets out”, with picking, packing, labelling and order processing as processes that have to work smoothly. Therefore, there may well be an advantage for companies that are affiliated to “brick and mortar” businesses and can hence built on proven warehousing operations, albeit possibly with different requirements concerning response times and integration of the information system. In Japan, costs are often kept © Association for European Transport 2001 under control by sourcing out labour while using relatively simple technology, which leaves room for adaptations to changing demands. In some cases it is favourable to separate e-business distribution with its small or even singleitem shipments into separate warehouses. On the other hand, companies like catalogue-order companies will find little change on the distribution side, whether the orders were received by mail, phone, or online. Of course, warehouses are only the one-but-last step in the distribution chain; therefore the efficient and timely organization of the supply chain and the whole distribution channel is crucial. This may be less of a problem to achieve for non-perishable and rather homogenous products like books, which is probably the reason why books have been among the first products added to the portfolio of takuhaibin companies, and later among the first offered on the Internet. For more “advanced” products like fresh fruits a control of the whole distribution channel and even manufacturing is at least helpful: For big Japanese Takuhaibin companies this is daily practice since about two decades. One of the services offered through temperature-controlled distribution chains (in the form of catalogue business, so far) are fresh fruits, vegetables and food specialties, which are produced by companies founded as joint venture with participation of the express parcel company. In an ideal e-commerce world, the production would be completely integrated into the information chain, so that every order triggers action on the manufacturing side. The highly developed POS systems in use in Japanese convenience stores show the way to solutions on the software side. 8. CONCLUSIONS AND OUTLOOK The Japanese combination of takuhaibin companies taking care of all kind of nationwide home deliveries including frozen food and cooled, fresh produce, baggage and sports equipment, up to flowers or dialysis liquid. Synergies are achieved with the omnipresent 24-hour-7-days-a-week convenience stores where quick shopping for foodstuffs is combined with the possibility to pay bills and post or receive parcels. Hence, most segments that American or European-style e-commerce start-ups have hoped to fill are already occupied. The difference is, that in Japan the system is mature: Logistics and information flows are proven and integrated, and include solution for reverse logistics. Takuhaibin systems have proven to be scalable, leaving scope for further growth in volume or product innovation. So the Takuhaibin parcel delivery systems in combination with the convenience stores (CVS) offer a model for requirements of modern (retail) logistics: • A high frequency of small deliveries is achieved, including specialities like cooled foodstuffs. • Material, information and monetary flows are integrated making extensive use of the possibilities of information technology (IT). • Strong competition ensures continues innovations, and choice and competitive prices for customers. • The large Takuhaibin companies have large transport volumes, enabling to achieve economies of scale and synergies. © Association for European Transport 2001 Some developments in America or Europe appear to follow the recipe that made takuhaibin so successful in Japan: FedEx has launched FedEx Ground, recognizing that its technology in place for B2B operations is not well suited for B2C/C2C services with its specific problems of the presence of the addressee and the handling of returns. A solution could come from SevenEleven in North America, which was taken over by their former subsidiary Seven-Eleven Japan some time ago: There are apparently plans or tests the offer of drop-and-pick-up services for express parcel delivery companies in the United States, following the Japanese model. The largest German express parcel service, Hermes, is moving into a similar direction by building up a network of pick-up and drop agencies: Due to the absence of Japanesestyle convenience stores, which in turn is attributable at least partly to the rigid German shop-opening hour legislation which is in the process of being liberalized, shops like newspaper kiosks, dry cleaners, and small grocery stores are approached to become agents for Hermes, currently forming a network of 3300 agencies throughout Germany 12. Takuhaibin systems are at the top of the logistics trend towards an evergrowing number of smaller and more frequent shipments in industry, trade and to/between private customers. Similarly, convenience stores sell small quantities frequently, while minimising stock keeping. On the downside, this leads to a relatively high environmental burden, as modes like rail and ship are normally to slow to be integrated into such logistical chains. As well, vehicle size and capacity utilisation tends to decrease the more specialised services are demanded and supplied. The situation in big Japanese cities, where a large share of the pollution and congestion problems are attributable to delivery vehicles operating independently, shows the limits of the perfection of customer service. Cooperative solutions as sought for e.g. in city logistics concepts may offer the way ahead. Nevertheless, for many North American or European companies engaging in the distribution of parcels and other goods to private customers as a result of the E-logistics boom, a closer look at Takuhaibin companies, convenience stores, and their business models would be very instructive and helpful. References • • • • • Asahi Shimbun (ed.) (2000), Japan Almanac 2001, Asahi Shimbun, Tokyo. Claus Eberhard (2001), The Japanese Takuhaibin System -Prototype for a Universal Solution of the Distribution Challenges in the Age of EBusiness?, Proceedings of the 36thAnnual Conference of the Canadian Transport Research Forum, Vancouver. Evan Schwartz (1999), Digital Darwinism, Penguin Books. N.N.(1999), A run for the money, Tokyo Classified No. 285, Tokyo. N.N.(2000), Return to Sender, Modern Materials Handling 05/15/2000. © Association for European Transport 2001 Notes 1 based various Yamato company brochures translated from Japanese N.N., A run for the money, Tokyo Classified No. 285, Tokyo, 1999 3 Japan Almanac 2001, Asahi Shimbun, 2000 4 Memo, Prof. Iwanari, Tokyo Univ. of Fisheries, Oct. 2000 5 www.ahold.nl/INTERNET.NSF (press notice) 6 Press notice, 20. Feb. 2001, www.webvan.com/WV/Marketing/ zGlobalPrel/pr021601.asp 7 www.netgrocer.com/fedex.cfm? 8 Memo, Mr. Masatoshi Tsuru, Gen. Manager Yamato Unyu, 18.12.00, 9 www.kuronekoyamato.co.jp/index.html 10 State of the Internet 2000, usic.wslogic.com/into.html 11 Japan Almanac 2001, Asahi Shimbun, 2000 12 www.hermes-vs.de /business / index.html 2 © Association for European Transport 2001
© Copyright 2026 Paperzz