Photograph=Kim Seon-ho/ the panoramic view of the first Integrated Logistics Center of Lotte Duty Free Shop in the Yeongjongdo Free Trade Zone

Lotte Duty Free Shop, operating the first and second integrated logistics warehouses of a combined area of 16,300 pyeong (54,000m2) in the Yeongjongdo Free Trade Zone, opened its advanced logistics system to the public.
It is no exaggeration to say that the driving force behind Lotte Duty Free Shop, which has maintained the first place in the domestic duty free industry for 35 years, lies in its ‘advanced logistics system.’ As its sales exceeding KRW4 trillion suggests, Lotte Duty Free Shop is currently operating two large integrated logistics warehouses in the Incheon Free Trade Zone alone to handle the huge volume of logistics. The first logistics center mostly handles cosmetics, perfumes, whereas the second logistics center handles electronic products, cigarettes, alcoholic beverages and sundries. These warehouses control the supply and demand of goods at the delivery area and shops in each airport. Individual business parts and working methods are connected to intellectual property rights, and as tight security is ensured, e.g. prevention of the leakage of bonded goods, it is difficult to open it to the public, but Korea Duty Free News, a magazine for the duty free industry, got an opportunity to take a close look at the logistics centers. Through the 3-part series we are going to conduct an intense analysis of the advanced logistics system of Lotte Duty Free Shop.

-Order of the series-
(1) The structure of the logistics centers of Lotte Duty Free Shop and analysis of the overall logistics process
(2) Excellence of the gloB system (information system network program)
(3) The introduction of one-packing service and the logistics process system based on it
Highly efficient despite the huge volume…The busiest duty free shop logistics warehouse
The first impression of the Integrated Logistics Center of Lotte Duty Free Shop that I witnessed with my own eyes was that ‘it was busy.’ Its total area is 54,000㎡(about 16,300 pyeong), and over 460 people are working here nonstop for 24 hours a day for 365 days a year. The Integrated Logistics Center of Lotte Duty Free Shop can hold an inventory of 8.5 million items, and handles 40,000 cases of bonded logistics on average a day, and up to 80,000 cases a day. It is faithfully fulfilling its role as the logistics supplier for duty free shops that are continuously growing year after year. In provisions against market expansion, Lotte Duty Free Shop has been concentrating on implementing the logistics system since early 2000’s for the sake of inventory management and smooth flow of logistics. In February 2007, Lotte Duty Free Shop became the first in the duty free industry to build the Integrated Logistics Center and introduced various advanced systems and processes. Until now, it has invested KRW60 billion to improve the logistics system. Continuously supplying huge volumes of logistics in a stable manner, it has firmly established itself as a top-notch company leading advanced logistics trends. In the duty free industry, Lotte Duty Free Shop is rated as having led the paradigm shift in bonded transportation.

Breaking the conventional frame and delivering innovations
Before building the Integrated Logistics Center, Lotte Duty Free Shop had to send the goods sold in downtown duty free shops from the shops to the delivery area at the airport according to the departure schedules of customers through bonded transportation. As sales exploded and the capacities of the bonded warehouses at the duty free shops went beyond their limits, however, Lotte capitalized on ‘the Yeongjongdo Free Trade Zone,’ a non-tariff zone, to innovatively revamp the overall logistics system. Without having to moving the bonded goods brought to Korea from overseas to the free trade zone and then to the duty free shops, Lotte sent them directly to the delivery area at the airport. As a result, passengers departing from the Incheon International Airport now can purchase goods online until 3 hours prior to their departure, improving shopping convenience. On top of that, Lotte was the first in Korea to introduce the innovative one-packing system so that buyers can receive the goods they purchased in a single package for each bill of exchange.

Photograph=Kim Seon-ho/ Workers are inspecting the goods the 2nd time around.

Until a package is delivered to the customer
The ‘one-packing system,’ first introduced by Lotte Duty Free Shop, is a duty-free delivery service that conveniently packs the goods a single customer purchased in several shops in one package. “We needed the one-packing system all the more because we have several downtown duty free shops,” said an official of Lotte Duty Free Shop logistics team. “The concept of one-packing began at the delivery area before the logistics center was built, but due to the narrowness of the space, there were many difficulties. Since the opening of the Integrated Logistics Center, however, the organized system and process improved work efficiency and productivity.” This one-packing system reduced the time it takes to handle the duty free goods of each customer to less than 60 seconds, thereby improving the operational efficiency of the delivery area as well. “We found the most efficient methods for all processes of the logistics system based on our long experience, and we are making various attempts to find a more advanced method,” said an official from one of the logistics vendors of Lotte Duty Free Shop. “As the logistics infrastructure is a very important factor in evaluating the bonded management competency, we are planning to realize zero-defect bonded cargo management through continuous investment and development.”

Photograph=Kim Seon-ho/ Customers’ bonded goods sorted by departure dates. All of them are processed according to the one-packing system.

The competitiveness of the globally recognized logistics system
Lotte Duty Free Shop acquired the Information Security Management System (ISMS) certification for its online service division last year in recognition of the excellence of this logistics management system, and in July 2015 it acquired the AEO (Authorized Economic Operator) certification too. These achievements are greatly attributable to ‘gloB,’ the integrated logistics data processing system that Lotte Duty Free Shop introduced two years ago. If this program, which Lotte Duty Free Shop invested KRW20 billion to make, is used, the customs declaration server is compatible with its own inventory management system, thereby enabling integrated data processing. As the gloB manages various kinds of logistics information, such as orders, sales volume, logistics warehouse inventory and in/out data to reduce errors, work efficiency was greatly improved.

Photograph=Kim Seon-ho/ The digital cart can scan stacked goods and sort them by bill of exchange. The digital cart, designed by Lotte, is playing an important role in reducing errors.

Like this, Lotte Duty Free Shop redefined the bonded transportation procedure in Korea. It has built the world-best logistics systems so far, and has been leading the qualitative growth of the industry. When Mr. Lee Hong-kyun, CEO of Lotte Duty Free Shop, said in public with pride that “Lotte Duty Free Shop does not have a competitor in Korea,” we can now understand why he said so. The Integrated Logistics Center enabled Lotte Duty Free Shop to reduce logistics costs, greatly improving logistics efficiency and productivity, and then enhancing the efficiency of downtown duty free shops, which is regarded as its greatest achievement. “As the Integrated Logistics Center can now handle most goods, which used to be transported to the warehouses of duty free shops, we can increase the shelf space and thus improve the efficiency of the shops,” said a Lotte Duty Free Shop insider. “We will continuously think about more efficient ways with the aim of reducing costs, rationalizing inventory and increasing sales.”

김형훈 다른기사 보기