So Fast Makes Distribution Work

Back to Contents of Issue: April 2006

Delivering lofistics in its true sense

by Eri Minagawa

Any company that sells a product, whether the company be foreign or local, requires a logistics infrastructure integrated into its business. The problem is knowing whether or not the right solution has been chosen and how much it will cost. Going with a proven brand name in logistics is one way to get the equation right, while another is getting a solution that allows you to make changes along the way. Both of these are the hallmarks of So Fast, a small but rapidly growing company, and its indefatigable CEO, Keiichi Ito.

So Fast, as its name implies, is the company that every new-to-Japan gaishikei (foreign - affiliated) firm needs to know about. The company provides both a full catalog of logistics services and end-customer support, with prices and a level of flexibility that incumbent vendors can't match. "Keeping it simple and making distribution work" is the So Fast motto, and since J@pan Inc. last interviewed CEO Ito in April 2005, observance of that motto has won the company even more business. The "work" part of the motto applies to So Fast's realistic, responsive and effective approach to logistics management, ensuring that start-ups can focus on marketing and channel development, and that larger firms can focus on quality control and end-user satisfaction.

CEO Ito knows his business well. Building on over 23 years' expertise in transport and warehousing at Yamato, he started So Fast in November 2002. He witnessed a number of failed "big bang" implementations by foreign brands trying to ensure that their global infrastructures were competitive in Japan as well, making him realize that sometimes it's better to start small and flexible, and successfully establish a beachhead. He decided that So Fast would provide the bridge between start-ups (by both big and small foreign firms) who are testing and servicing the market on an initial basis, and experienced players who are starting to roll out the full-blown internal logistics preferred by head offices.

Ito appears to have read the market correctly and struck a chord. So Fast has once again achieved phenomenal growth, increasing sales by 200 percent for the fiscal year of 2005.

Breaking the Status Quo
Foreign firms getting started in Japan have traditionally depended on domestic trading firms to establish and operate the local business, market products, and then provide logistics. Unlike their clients, trading firms consider each business in terms of margins year by year, and, sometimes to the foreign customer's detriment, will focus on milking the profits rather than reinvesting. This is most typically seen by the fact that instead of subcontracting logistics to a neutral party, trading companies will allocate the business to subsidiary companies ninety-nine percent of the time -- thus capturing every piece of revenue along the supply chain. This focus on sheer margins, while understandable, can lead to a reduced focus on quality control and forward thinking.

A virtual folklore of "how to do it wrong" has developed, and modern foreign CEOs are now more aware of the need to have greater control. According to Ito, this newer breed of manager comes to Japan armed with third-party market research and a much better understanding of how to find the right resources. These managers are more interested in representing themselves, building the company's own brand (rather than that of a trading company) and controlling marketing and sales to consumers in Japan. Thus, whenever there is a need for logistics, today's CEOs personally inspect the facilities of their logistics partner candidates. Ito says that after they've been to So Fast, he frequently gets a quick request for a proposal, which then leads to a contract shortly thereafter.

Ito prefers the speedy bottom-down decision making of foreign CEOs and those Japanese CEOs working for new-age foreign firms. These CEOs better understand the importance of logistics to the overall quality model of a successful business. After all, if after a highly successful marketing campaign, your products wind up at customers' homes dirty and broken, you are undermining future sales and tarnishing your company's reputation.

Although Ito now has a track record with foreign firms, he doesn't take all business that comes his way. He says, "I've been known to have to turn down attractive offers because the client in question has wanted to outsource their core business to So Fast. I remember thinking when I heard the proposals, 'Without the core, what more is there to their business?' I find it difficult to get excited about companies that don't have a sense of vision and 'being.' "

Natural Health Trends, Japan
One company that does have a sense of identity, however, is a fast-growing newcomer in the network-marketing segment, Natural Health Trends Japan Incorporated (NHT). Ito is particularly familiar with the demands of this sector, and has earned both respect and references from two of its major players, Guthy-Renker, Japan and DMC, K.K. Recently, NHT, headed by ex-Amway Japan CEO Richard Johnson, asked Ito how closely he observes the So Fast motto. The result was the fastest logistics contract either side ever concluded (three weeks), said Johnson. "So Fast is indeed VERY FAST! I have never gone from one meeting into another unplanned one in Japan!"

But the quick signing of a contract is not the only key to Ito's success. NHT, which manufactures skin-care products and nutraceuticals in the USA, needed to get its products ready for the company's Japan launch in July 2005. But prior to that, it had to wait for an import license. The problem was that approval of the license could take months, delaying the launch and putting the investments already made to set up in Japan at risk. Ito was able to contact one of his associates who already had a nutraceutical license to help bring the products in as a partner, and thus get basic logistics going.

"So Fast has made a Herculean effort to live with the concept of 'You can never interact too much,' " says Johnson. Fred Almeida, his Director of IT, concurs, saying, "They have allowed us to integrate into their team at every level."

Why So Fast?
Many companies fail to recognize the challenges and complexities of managing outsourced relationships. However, So Fast has made it a priority to focus on building relationships with clients such as NHT. Its end goal is to create a cross-functional relationship team that can manage multiple aspects of a client's logistics performance and ensure close linkage with relevant parts of the So Fast organization. This lets the clients retain strategic control, yet helps maintain service quality levels and, in the process, provide scalability for expansion and innovation.

Everything about So Fast is geared towards helping small and medium-sized foreign firms set up shop or revamp their existing infrastructure in Japan. And with the company's current rate of expansion, it is well set to help even larger firms gain their first entry into Japan.

Of particular interest is the 24-hour call center established in December 2004, which has polite, trained customer service operatives and also a superior customer data security system. A unique feature of the So Fast call center is that it is multitasking. For example, clients in the TV-shopping business can avoid having to subcontract a dedicated late-night call center, and simply have So Fast operators answer calls until early morning, after which the same people move to packing and dispatch and other back-office tasks. The upside of this approach is that operators take a much higher level of pride in the presentation of product because they personally know customers. Products are sent out in perfect condition and on time. That's a powerful proposition!

With the recent April 2005 reforms in pharmaceutical laws, the future looks even more promising for So Fast, which is now strengthening its expertise in customs clearance and systems development consulting while continuing to educate its staff that "service starts with a smile." Ito strongly believes that as long as the end-users of their clients' products are happy, business will come.

And it sure is coming so FAST! JI

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