TNT opens dedicated national life science distribution centre in Shanghai

TNT, a leading provider of global express and logistics services, today unveiled one of Asia’s most sophisticated medical logistics facilities in Shanghai, China. Constructed at a cost of 1 million Euro, the state-of-the-art facility in the WaiGaoQiao Free Trade Zone is TNT’s first dedicated Life Science National Distribution Centre (NDC) and will complement its Regional Life Science Distribution Centre (RDC) in Singapore.

A first-of-its-kind facility in China, the National Distribution Centre (NDC) offers unique temperature-controlled warehousing, kitting services and regulatory and customs expertise required by the Life Science industry. Leveraging TNT’s extensive door-to-door, time-definite service to over 74 cities in China, the NDC enables healthcare manufacturers to send products directly to distributors, hospitals or clinics in any province in China within 24 hours, complete with the assurance that temperature-sensitive goods are maintained at their optimal temperature throughout the process.

Expanding the Life Science RDC Approach to Capitalise on China’s Growth

TNT’s China NDC was set up in response to the needs of the industry for bespoke services to cater to the world’s fastest growing healthcare market. With TNT’s China NDC, customers can now choose to engage TNT’s services solely for the China market, or to deploy the service to streamline their distribution in other Asian countries, using TNT’s established Singapore RDC.

“The state-of-the-art facility in Shanghai is a key addition to TNT’s growth of the Life Science RDC model. TNT’s Singapore RDC remains a pivotal hub because of its ability to reach almost all parts of Asia within 24 hours; but the China NDC provides a valuable domestic service for manufacturers who seek to be closer to customers,” said Steve Stine, Life Sciences Industry Director, TNT Asia.

“China spends approximately US$8 billion a year on medical devices and equipment imports, with demand rising close to 15 per cent year-on-year. At this pace, China is set to become the eighth largest healthcare market in the world by the end of this decade. Yet, leading manufacturers face serious supply chain problems, which stem from a lack of visibility and inventory control. TNT brings to China supply-chain services designed specifically for manufacturers and distributors of these high-value medical products,” said Bryan Chan, Managing Director for Express Division, TNT China.

Challenges in China

Multinational companies in China and other parts of Asia have traditionally operated through distributors and resellers. In this model, stocks are replenished directly from manufacturing sites across the US or Europe directly to hundreds or thousands of distributors throughout Asia. Apart from long delays in order replenishment[1], maintaining multiple warehouses and dealing with as many suppliers and customs points throughout the region, the traditional approach leaves manufacturers with little visibility and control over inventory and often exposed them to high inventory holding costs and the risk of product obsolescence.

In China, the need for manufacturers to know where, when and how their products are used is even more pertinent because the law holds manufacturers legally responsible for third party violations. This means that a manufacturer is responsible if for example, its distributor or reseller provides an expired or defective product (as a result of improper handling and storage) to a hospital or patient that malfunctions.

The Life Science Regional Distribution Centre Approach

Regardless of whether a manufacturer uses TNT’s National Distribution Centre for China, or the Singapore Regional Distribution Centre for other countries in Asia, this integrated supply-chain approach provides customers benefits in the form of reduced overall costs and risk of product obsolescence, faster order cycle times, improved customer satisfaction and overall, a more efficient supply chain management.

Customers who use TNT’s Asia life science service platform receive end-to-end visibility at every point in the supply chain, even at remote stock-holding locations such as a distributor warehouses or hospital storerooms. Using low-cost handheld scanners or installed RFID readers, manufacturers can capture real-time data on remote inventory levels, which are fed back to TNT’s core warehouse management system, giving businesses access to data on inventory at any point in time. Minimum stock levels can also be pre-set at remote locations to automatically trigger replenishment delivery when stocks fall low.

The benefits for manufacturers are significant. One customer now using TNT’s regional distribution centre approach has seen a 10 per cent decrease in overall supply chain costs as a percentage of its total operational costs over three years. Order response time has been reduced from ten days to 24 hours, dramatically improving customer satisfaction. During this same period, this TNT customer has seen sales increase by more than 100 per cent; and product obsolesce shrink from 30 per cent to just 2 per cent.

RFID – Enhancing the Network

To complement the Life Science Distribution Centres, TNT has continued to invest and enhance its network capabilities to cater to the changing needs of the industry. In addition to its established Cold-Chain management capabilities to provide temperature-controlled shipment of Life Science products, the company has pioneered the use of RFID (Radio Frequency Identification) technology to capture data on the temperature of delicate goods in transit. RFID tags on individual temperature-sensitive items monitor the temperature of the goods every fifteen minutes in transit. Upon reaching the destination, these tags are taken off and examined to ensure complete temperature control throughout the journey.

“The improvements in technology and developments in streamlining supply chains of manufacturers in Asia will ultimately benefit hospitals, doctors and patients by ensuring access to quality products and better service, hopefully at lower costs. With healthcare spend expected to increase at an annual rate of 11 percent till 2010 across Asia, increasing efficiency and reducing costs will be a priority for governments, public and private hospitals across the region,” said Steve Stine, Life Sciences Industry Director, TNT Asia.