BUSINESS AND LOGISTICS

produced by DIAMOND, Inc.

Building Industry-specificLogistics Platforms
Nippon Express Acceleratinga New Global Strategy
Nippon Express is evolving its global business strategy. This involves shifting to industry-specific logistics
platforms from its conventional client-specific optimization to build a business structure that can adapt
quickly to changes in industrial structure. This will position Nippon Express to provide one-stop “optimizedsolutions” to global supply chains that are becoming broader and more complex.

Takaaki Ishii
Executive Vice President,
Chief Operating Officer andRepresentative Director
Nippon Express Co., Ltd.
Nippon Express operates an international logistics network (pictured is Amsterdam, Netherlands)

Evolving Global Strategy by Transforming
Conventional Business Approaches
Nippon Express operates the largest global network of any Japanese logistics provider. The company expanded outside of Japan beginning in the1950s and grew its business footprint together
alongside the overseas expansion of Japanesecompanies. Today, Nippon Express continues its
growth ambitions. It operates 711 sites in 293 cities in 45 countries around the world (as of March31, 2018) and employs more than 20,000 people
outside of Japan.
It was in 2010 that Nippon Express re-focused its growth strategy on global logistics.
This new approach was meant to address theaccelerating trend of globalization as well as
the change in the company’s business structure
following its exit from the Pelican-brand parcel
delivery service.
Mr. Takaaki Ishii, Executive Vice President
in charge of sales, explains, “Given the majorchanges taking place inside the company, weannounced a plan to grow as a global logistics
provider focused on B-to-B logistics. In par-ticular, we exited the parcel delivery service inJapan, so we had to transform our thinking to
aim for growth from tapping into global business in Japan.”
The company’s three previous management
plans used the slogans Sekai-Nittsu and New
Sekai-Nittsu to speed up its global strategy
from a new angle.
The greatest change in terms of businessstrategy is reinforcement of industry-specificsales and marketing. Nippon Express changed
directions to focus on markets and specific industries, from the conventional focus on specific client companies.
“Focusing on individual client companies
tended to result in offerings limited to specificbranches or areas, or transport modes such as
air freight or ocean freight. By switching directions to industry-specific logistics platforms, wepushed ahead with building a structure that canquickly address changes in industrial structure”,
says Ishii.
As part of its organizational restructuring in2015, Nippon Express eliminated business divisions focused on transportation modes suchas air freight and ocean freight for the first timein 53 years, resulting in an integrated organization encompassing ground, ocean and air.
With “globalization” as the keyword, Nippon
Express also eliminated the segmentation of“domestic/overseas”. Furthermore, the company
reinforced its solutions for industries by establishing branches dedicated to the automotiveindustry, starting with the Automotive Business
Branch in Tokyo followed by offices in Nagoya
and Kyushu, for example.

Responding to the “Once-a-Century” Transformation Taking Place in the AutomotiveIndustry
Nippon Express is already seeing the effects of its
efforts in the automotive industry.
In recent years, riding the wave of electrification symbolized by the electric vehicle, the automotive industry finds itself in the middle of aso-called “once-a-century” transformation. Electrical components accounted for only around 3%of an entire vehicle in the 1980s, but by 2005 this
proportion had reached about 20%, and in 2015

–1–it had grown to around 40%.
This change, of course, has transformed theface of the automotive industry. As a result, in Japan, the conventional business affiliations wheresuppliers are linked to specific automakers arebeginning to crumble. Automakers are no longer
able to adapt to change using their own pyramid supply chains, which has resulted in a rapid
opening-up and globalization of their supply
chains.
Nippon Express has successfully increased
market share by providing optimized logistic
solutions with an eye on such changes in industrial structure.
“By creating an organization that adapts to industrial structure, we have been able to identify
the issues and needs of our clients in their supply
chains in a timely manner, as well as speed up
the decision-making process. We are now sharing information in-house on a global scale andwe are in the process of establishing our visionof one-stop services and account management,”
says Ishii.BUSINESS AND LOGISTICS

Building a logistics system that can swiftly respond to changes in industrial structure

Utilizing its Success Story in the Semiconductor Industry
Nippon Express utilized its success in the automotive industry to address the large-scale structural changes that occurred in the semiconductorand LCD areas.
Initially, LCD panels were primarily used inthin-screen TVs, but demand has grown explosively following the emergence of the smartphone since the latter half of the 2000s. The main
manufacturing hubs of the semiconductor industry are located in East Asia, mainly in China,
Taiwan and South Korea, with large volumes ofcargo moving night and day within strong supply
chains that stretch from parts procurement tomanufacturing.
1

Given this, Nippon Express helped suppliers
speed up their supply chains using its closely
connected air freight network covering East Asia
and, in the process, established a position within
the industry as a logistics partner. The semiconductor market continues to see rapid growtheven today, which has become a major driver behind the company’s business performance.
“We have been able to establish a position as aplayer within the supply chains of the semiconductor and LCD industries. Looking ahead, weplan to reinforce our business presence in theUnited States where semiconductor manufacturing is designed and expand our footprint in theseindustries,” says Ishii.

Tackling New Challenges in Pharmaceuticals and Fashion
Having provided optimized solutions as a platform focused on changes in industrial structure, Nippon Express is now looking to thepharmaceuticals industry as its next growtharea.

The same rules as GoodD ist r ibut i on Pr a c t i c e(GDP) adopted in Europeand North America will
shortly be established inJapan, transforming thedistribution process ofpharmaceuticals dramatically.
This will result in stricter quality standards indistribution, including
temperature management
and traceability, which will
require a higher degree oflogistics management thanbefore.
“Pharmaceutical companies will find it difficult
to address these changes
through organic investments.
As such, there will be aneed for a platform withintegrated managementof processes from manufacturing to marketing,including globally. By participating in this platform,
companies will be able to lower costs,” explainsIshii.
Nippon Express will now speed up its platform
development, including building an IT infrastructure that will digitize temperature management history during transport and provide thisdata to pharmaceutical companies.
“Nippon Express has already built up knowhow and insight in Europe and other locations.
Based on this experience, we will construct anoperational system that can be used by the pharmaceutical industry in Japan. The key is to apply
the same rules and build a mechanism with thesame worldwide standards,” says Ishii.
Another area where Nippon Express is setto tackle new challenges is high fashion, whichmeans international luxury brands. The fashionindustry has split into fast fashion and high fashion, and Nippon Express is pursuing a strategy
that reinforces its presence in high fashion.
Nippon Express is in the process of building an operational platform that comprises thesupply chains of multiple brands in response tomarket growth, and within this segment there is3
1 Voice picking order fulfillment

at a warehouse in Rotterdam

2 Nippon Express is alsobuilding logistics facilities withstrict temperature and quality
controls for pharmaceuticals

3 Traconf’s warehouse inVerona, Italy handling global
luxury brand merchandise

2–2–

steady growth in contract services.
M&A, too, represents a key component of
Nippon Express’ strategy.
Nippon Express acquired Franco Vago in 2013
and Traconf in 2018, both logistics companies
headquartered in Italy that specialize in highfashion.
“For each brand, the production system is globalized, but in most cases the headquarters anddesign functions are located in Italy. By acquiring these two companies with established trackrecords, we can expect to expand our businesspresence in Europe and generate synergistic effects using the Nippon Express Group’s globalnetwork,” explains Ishii.
“In the field of high fashion, each brand has acommitment and passion for its own products,
so naturally this is reflected in logistics operations. There are very few logistics providers capable of sharing the brand’s passion,” adds Ishii.
Nippon Express is set to lay the groundworkfor growing its footprint within high fashion
market in Japan and Asia.

True Globalization by Tapping into Non-Japanese Companies
The globalization of supply chains will continue at an even brisker pace. The time for Japaneselogistics providers to simply follow the overseas
expansion of Japanese companies is over.
International sales accounted for 37.6% of theNippon Express Group’s total sales in the fiscal
year ended March 2018. The company is now
seeking to increase this share to 50% over the
medium to long term. To accomplish this, Nippon Express will need to tap into non-Japanesecompanies.
“To become a business partner to a non-Japanese company, we must understand the businessculture of that particular country. While thebarriers are high, Nippon Express can’t become
truly globalized without earning business from
non-Japanese companies,” says Ishii.
Starting this year, Nippon Express made English the lingua franca of its global business conference. It is also actively appointing local humanresources to head up its subsidiaries outside ofJapan. In Europe, the company has appointed
local people as presidents of its subsidiaries in
Switzerland, Italy, France and Spain.
Nippon Express is set to continue tackling thenew challenges of New Sekai-Nittsu.