Case study: Growing the supply chain

This leadership case study examines the story of Singapore-based supply chain mangement and logistics provider YCH, growing from a small family firm to a major regional player.

From small beginnings as a local, family-oriented transport company in 1955, YCH Group has evolved into a sophisticated pan-Asian logistics and supply chain management business. Today the firm has more than 4,000 staff, operating in hubs across the Asia-Pacific, moving more than $50bn worth of products annually, and has ambitious plans to go global over the coming decade.

The driving force behind that change has been Dr Robert Yap, the dynamic chairman and CEO, and a graduate of NUS Business School (BBA 1976). He joined YCH more than three decades ago.

At the time the Singapore-based firm had 103 drivers and no retrenchment policy, he recalls. “We ran the company like one big family business. We would go bankrupt than retrench them. With that kind of a pressure, you have no choice but to work hard to succeed.” It’s from those origins that YCH retains its entrepreneurial spirit, he says.

Handed control of the company by his father two years after joining, Yap hasn’t looked back. The journey has been tough and challenging, he says, but the focus has never been about just increasing profits. “Slowly over time, we migrated up from simple transportation, to an integrated logistics company to a supply chain management (SCM) company and now we are actually in the very high-end – what we call a Supply Chain Solutions Company.”

Today, YCH provides end-to-end supply chain solutions to a diverse range of customers, including big names such as Dell computers, Exxon Mobil and LVMH, supporting them throughout Asia. Yap’s vision is to build the company into a fully integrated “logistics superhighway” built around cutting edge technology, but at the same time retain a sense of family and sense of fun among his workforce. That’s important to build an emotional connection between the employee and their job, he says.

A promise to deliver

Yap’s tenure began when his father handed him the reins of YCH, shook his hand and retired. “That is our famous YCH handshake. If we give you a handshake, and we have been taught from when we were young: ‘You promise something, you deliver.’ A handshake is a promise, something to the end,” Yap says.

When we give you a commitment, we make sure we deliver at whatever cost

Dr Robert Yap,
Chairman and CEO,
YCH Group

That remains YCH’s mantra and the basis for its growth. “When we give you a commitment, we make sure we deliver at whatever cost.”

Since taking the reins Yap has been a passionate advocate of embracing the best technology, using it creatively to grow the business and move YCH up the value chain. The firm is committed to achieving the highest levels of knowledge management, as well as cost and operational efficiency for its clients, he says. Fifteen per cent of profits are invested in IT every year, developing smart solutions for clients and investing in its own Supply Chain Management systems.

This belief in technology was triggered by an early twist of fate, when a computer distribution company Yap had invested in went bust. Left with a huge inventory of unsold computers, he decided to use them but realised he needed the software to do so. The result was that YCH became the most IT-savvy company in the industry, he says.

“Over time as I was investing in technology we could build our own solutions to be able to exploit the PC platform. That was actually one of the big turning points for YCH.”

Building trust

As the business grew Yap realised it was time to expand beyond the familiar territory of Singapore. But it wasn’t an easy leap to make.

YCH shifts more than $50bn worth of products annually across the Asia-Pacific“When you are on home turf you manage the business well as you know what’s happening. People are giving you inventories worth hundreds of millions so you have got to ensure that every cent is accounted for. It’s a trust,” he says. Going beyond Singapore meant building systems that could carry that trust to new markets and bigger networks.

Drawing on its growing technological expertise, YCH built systems and processes to ensure that it was in control of everything and knew every stage of the logistics process. The perfecting of those systems gave YCH the confidence to be able to then take the processes abroad, Yap says. That gave the firm control over every stage of the logistics process, allowing YCH to give its clients a consistency of a service “regardless of whether we operate for them in Singapore, in Malaysia, in India, in China, or anywhere.”

Today the high consistent level of service is a hallmark of YCH.

Indeed, with its focus on technology as a strong differentiator for the company, YCH set up it its own dedicated IT subsidiary which currently employs some 200 staff.

That decision to break off the IT department into a separate entity was important to ensure it delivers the best products, Yap says. While the subsidiary naturally serves YCH as its main customer, it is also free to serve other customers as well. To be an industry leader, it has to be able to fight and stand on its own, the thinking goes.

Innovation

Carving off the IT group also made sense, Yap says, because of the different nature of its work. YCH’s IT staff are more focused on creativity and innovation, a very different skillset from the hardcore business of logistics operations management.

One of the latest manifestations of YCH’s application of technology is the firm’s extensive adoption of smartphone-based apps, with all managers issued with them.

“The whole idea is that a lot of our KPIs [key performance indicators] are pushed into the apps. So they know exactly what is happening,” says Yap. “If they are managing a particular warehouse for example, they can monitor the flow.  If things are not going the way they are supposed to be, then it will give them an alert signal and they can set things right.”

Yap says the phones enable his staff to combine their personal and work activities on one device that, rather than a chore, is easy, attractive and fun to use.

“I think that’s one thing that I felt good about because I like to have fun. And I like my people to have fun. We work very hard. This is a tough business because if you do everything right, it’s almost taken for granted. It has to be right all the time.”

Value-added

Yap has been a passionate advocate of embracing the best and latest technologyFor Yap, keeping the fun element in work means it remains interesting and employees stay engaged with their jobs. In a highly competitive, commoditised and fragmented business, YCH’s stress on technology has been a key enabler in its drive to become a higher value-added company and differentiate itself from some of the much bigger global players such as DHL.

That is backed up by the nimbleness and survival instinct that comes from the firm’s family origins, says Yap.

“We have a very strong attitude of ‘never say die’, a very strong attitude of perseverance, a very strong attitude towards a commitment, and a pledge that we deliver at all costs.”

YCH remains an entrepreneurial-driven company where decision-making is short and sharp, he says. “If we have a handshake, we do it, we just do it. There’s no right or wrong or good or bad in this. I like to run it this way than any other way because I like to treat the company like a family.”

Despite numbering over 4,000 employees and growing, Yap says YCH still retains its family-business approach through the culture and values it exemplifies, focusing on collaboration rather than individualism.

Family ethos

Looking to the future, Yap says that the family ethos will remain as the company continues its growth, focusing on creating depth in the markets it is already in, rather than trying to do too many things. From a network managing less than 1 million sq feet (100,000sqm) of DistriParks/warehouse space in 2002, to over 7 million sq feet in 50 cities in 2012, YCH is now looking to grow to up to 20 million square feet of facilities employing around 10,000 staff across the Asia-Pacific.

“We continue to build and strengthen the network that we have to deepen our roots in each country by aligning with local partners, not taking away from them but bringing them into an inclusive growth environment to be with us,” says Yap. In the coming 10 years the YCH boss says he hopes to take the company to the world level, although much depends on how the pace of recovery or otherwise shapes up.

While YCH is making its mark today in the Asia-Pacific region, “we will gun soon for the global stage” Yap says. “At that point of time, we will replicate what we are doing in Asia-Pac into Europe and the US. Maybe we will look into some M&As or even alliances with some of the partners in those countries.”

He’s particularly optimistic about prospects offered by emerging “BRIC” economies  – Brazil, Russia, India and China – as they become part of the global value chain, and his company is already working on the technology and supply chain innovations with a view to growing in those areas.

It’s a transformation Yap calls YCH 2.0: “the move towards a more professional and effective company, but at the same time maintaining the family culture.”

This is the first in a series of SME case studies produced by NUS Business School in collaboration with SPRING Singapore (http://www.spring.gov.sg/Pages/homepage.aspx).