Envisioning the Face of the Customer

So Fast creates products that satisfy end users.
by Burritt Sabin

Visit So Fast and you realize you have arrived at no ordinary logistics company. The place bursts with animation as staff in white polo shirts rush about the outer office. The beaming receptionist sounds his sonorous greeting and presents you with a hairnet and slippers. You don these and shuffle from reception office to warehouse proper, hesitating to glance down, for fear the sheen of the buffed green linoleum might hold the reflection of a man in suit and hairnet.

You are greeted by the ebullient president of So Fast, Keiichi Ito. He corroborates your initial impression: So Fast is different. You compliment him on the spic-and-span warehouse, and he corrects you. It's not a warehouse, but a factory. The correction points to the core of the company's philosophy and success.

So Fast does not simply store goods until shipment. Rather it "creates" products for shipment to consumers. This factory's sinews are workers rather than machines. Creation involves producing the package, preparing the explanatory leaflet, packaging, shipping, and method of return.

So Fast's workers are not only creators but also problem solvers. At other logistics companies warehouse management is hierarchical, with a supervisor, manager, assistant manager, and workers. The people at the job site are the bottom of the pecking order. Theirs is not to question why but to do or die. It is a feudalistic world.

In contrast, So Fast practices "total factory-floor control." Ito explains. "Problems occur at the job site. So people at the site are the first to discern these and the first to be able to come up with solutions. So on-site workers are at the top of the totem pole. We strive to incorporate their ideas. Knowledge of their contribution energizes them."

One merit of total factory-floor control is obvious: the capacity to quickly implement improvements. At the average warehouse company a suggestion takes weeks to go up the chain of command, and months might elapse before a directive comes from the front office.

Besides an ossified vertical structure, Japanese warehousing companies suffer from an overemphasis on keeping costs down. They judge a system adequate if it is inexpensive. This deeply rooted, pervasive belief nips innovative proposals in the bud. If creative solutions cost a little money, there is resistance to their adoption.

On this point, too, So Fast is different. "A logistics company must keep in mind the end user’s face as it goes about its work," stresses Ito. He reiterates his concept of the warehouse as factory. "In order for its customers to grow, a logistics company must create products that satisfy end users. It must understand the importance of this."

Ito is an innovator in the logistics industry. He worked his way up at Yamato Transport, the legendary parcel-delivery company, until he was in charge of its entire road transport system. But after 23 years with Yamato, in 2002 and middle aged, he quit and struck off on his own, founding So Fast Corporation Ltd., a logistics company, with a warehouse in Heiwajima, Tokyo, near both Haneda Airport and Tokyo Port. From the start, he eschewed automated warehouses and up-to-the-minute tracking systems in favor of a simple low-cost system that provides fast, accurate delivery with minimal customer complaints. He relishes playing David to Goliaths like Mitsui Warehouse Co., Ltd. His nimble, low-cost, end-user-oriented approach to logistics makes So Fast a hand-in-glove fit for companies planning inroads into Japan. They seem to agree.

Ito cites one thing that distinguishes foreign from domestic companies when they choose a logistics partner in Japan: Their presidents are the first to visit the warehouse. They want to see with their own eyes if the company is flexible, neat and organized, quick to implement improvements, and capable of logistics besides warehousing. So Fast gets high marks on all points. "Eight out of ten foreign company presidents who visit So Fast choose us," says Ito.

Start Logistics Package
Since May, foreign entrants to the Japanese market have had another reason to choose So Fast. In that month the company inaugurated the Start Logistics Package. The aspiring foreign entrant faces a bewildering array of tasks. It must contract with an importer, acquire an import license, arrange for warehousing and distribution, establish a system for bill collection, and set up a call center. In short, a Japan launch is divided into segments, and the would-be market entrant must get a quotation at each one. It is a laborious process that can take three or four months. The Start Logistics Package consolidates the segments at a cost below the sum of the separate costs. The prospective client can receive a quotation for, say, one thousand units B to C. One quotation instead of seven or eight allows the company to arrive at a speedy decision.

Thus far two companies have chosen the package. One of them, a Swiss cosmetics company, asked for quotations from So Fast and Mitsui Warehouse. So Fast’s quotation was 30 percent lower.

Case Study: SNOVA
Since 1995 SNOVA Corporation has been importing from Russia pig placenta materials produced by the Russian Academy of Science in Moscow for the manufacture of cosmetics at factories in Japan. SNOVA contracted Kainzu Shohai to transport the cosmetics by refrigerated courier from Moscow to Tokyo.

SNOVA originally distributed the cosmetics to local aesthetic salons. Salon patrons raved about the results. Women’s magazines caught wind of the popularity of SNOVA’s products. A spate of articles touting the cosmetics' efficacy followed. SNOVA outgrew a marketing model that resembled door-to-door sales.

In those days the trend in Japan was toward establishing local facilities to reduce land and administrative costs. However, Tokyo-based SNOVA realized there was a downside to decentralization. For one thing, distance impeded improvements and rising to fresh challenges. For another, the frequency of site visits proved inversely proportional to local facilities' distance from the head office, resulting in degradation of the system of inspections. In short, decentralization blurred SNOVA's image of its customer.

It was in 2005 that Yamato Transport introduced SNOVA to So Fast. That would seem a mismatch; after all, So Fast is a company providing logistics services to foreign companies in Japan. SNOVA, on paper, is a Japanese company, but not in Ito’s eyes, for its president, Keiko Hyuga, was the first person from the cosmetics maker to visit So Fast - just like a foreign company president.

Many observers might have imagined that the greatest challenge to marketing SNOVA products was their being manufactured from pig placenta; the vascular membrane of swine hardly seems the stuff of beautifying agents. Yet Japan has an ancient tradition of using placenta. Moreover, Ito intuited that the nature of SNOVA's products was to its advantage.

"Cecile and other catalog houses won't grow," he avers. "They lay in products, but their heart is not in their work. They lack passion. Companies that grow are companies that concentrate on one product category. SNOVA is a good example of such a company."

No, the problem was not in the nature of SNOVA's product line. Ito sensed that the problem involved its sales method: It depended too much on the "Shop Channel," a cable shopping program, for its B-to-C business. Its attitude seemed to be that the manufacture and shipment of products was sufficient. It was oblivious to package design, product explanation, and packaging. In short, SNOVA didn't visualize the end user.

"Pleasing the customer will make SNOVA a better company," recalls Ito. "We didn't set out to improve SNOVA but to satisfy its customers. In an average month we are sending SNOVA products to five or six thousand customers. In some months we send ten thousand. That scale of delivery let's us gauge customers' degree of satisfaction."

Arata Hyuga, Manager of the Planning Department at SNOVA, had dropped by So Fast to exchange ideas with Ito. I caught up with him in the So Fast call center and asked him what So Fast has done for SNOVA.
“Previously we had equated distribution with the dispatch of merchandise. In other words, we measured cost performance in terms of cost. Now we spend money and evaluate performance.

"The biggest merit of switching to So Fast is that we started to deliver our products with each customer in mind. We realized the product experience begins when she receives the package. We have become very conscious of packaging and product appearance. The first impression is crucial. If you cut corners, the product will not meet customer expectations."

I wondered if these efforts could be gauged in statistics.

"Complaints dropped, " he said. "Before So Fast handled our logistics we received about 10 complaints a month. Phone operators would receive customer complaints about soiled products or squashed boxes. Now we have zero complaints.

"In a sense, complaints were welcome, in that they provided an agenda for improvement. Customers who complained were preferable to customers who stopped purchasing our products. Switching to So Fast has given us the capability to retain this silent majority as SNOVA customers.

"I should add that lead times shrank. Deliveries that required two days now take one."

SNOVA's goal is to deliver customers the desired products by the desired time. In other words, it measures success by customer satisfaction rather than market share.

"Our next goal is to be able to find solutions through visualizing the customer's face from the perspective of the factory floor." Déjà vu? No, I had heard those words before. Then Hyuga clarified their origin. He said, "We were awoken to this goal by So Fast."

As I left the So Fast "factory," I saw my reflection in the polished floor, which, luckily, reminded me to hand my hairnet to the smiling receptionist. JI

So Fast Corporation
Nippon Express Co., Ltd.
Omori Branch C-7
1-2-20 Heiwajima, Ota-ku, Tokyo 143-0006
Tel: 03-5753-3101
Fax: 03-5753-3102
Email: info@so-fast.co.jp
URL: www.so-fast.co.jp/en/index.html