Looking at the firsts in the duty free industry, the name of Lotte Duty Free Shop pops up in almost all areas. In particular, this trend stands out in logistics. Among many of the achievements in the duty free industry, the ‘one-packing system, which Lotte started for the first time, is thought of having enhanced both efficiency and customer convenience at the same time.

Photograph=Kim Seon-ho/ A panoramic view of the first Integrated Logistics Center of Lotte Duty Free Shop

The ‘one-packing system’ that started as a solution to the congestion of the delivery area
As buyers must pick the goods, which they purchased at downtown duty free shops, in the delivery areas at the airport, it was inconvenient to both customers and employees. If a customer purchased three items, he/she had to move to different delivery areas according to the bills of exchange to pick up the goods. Not only was the delivery area congested, but also the waiting time was long. It was not a big problem in the past when the volume was not that big, but as sales increased and the volume gradually increased, a new solution was needed.

The answer Lotte Duty Free Shop came up with after much thought was the one-packing system. This system is a service that makes it possible to pack and deliver the goods purchased by one customer at several shops in one package. Lotte Duty Free Shop introduced it in 2007 for the first time in the duty free industry. As a result, the delivery time, which used to be 4~5 minutes, was reduced to about 60 seconds, and made it possible to make better use of the space in the delivery areas.

“Lotte Duty Free Shop needed the one-packing system all the more because it had many downtown duty free shops,” said a Lotte Duty Free Shop logistics official. “The concept of one-packing began in the delivery areas 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.”

The one-packing process…divided into about 10 steps
The Lotte Duty Free Shop Integrated Logistics Center has a U-shaped structure so that items brought in and taken out can be seen at a glance. Looking at the one-packing process, it can be largely divided into 10 steps. First of all, the bonded goods in bulk (1) are brought into the warehouse, and (2) the first inspection is conducted right away in the receiving room to check if there is anything wrong appearance-wise. Then, (3) the second inspection is conducted right away in the non-inspection area located right next to the receiving room. Here the bulk boxes are opened and checked closely one by one to see if there is anything wrong with individual packing. Individually packed goods that pass the inspection will be (4) stacked in designated locations in the warehouses for individual items, and the steps until this point can be classified as the work for inventory management.

Afterwards, the unstoring work is conducted in a sophisticated manner. According to the sale information, employees (5) check each bill of exchange, scan the stacked goods and put them in the digital cart. Employees gather the scanned goods (6) in a box for each customer, (7) start packing them individually, and (8) start the one-packing process. They finish the process by putting the goods for one customer in one bag. After this process, the goods are sorted by departure date/time/region, and (9) taken out of the logistics center in the bonded goods pouch under the supervision of the customs, and (10) customers pick up the transported bonded goods in the delivery areas. As it requires several steps before one package is made, the second floor of the warehouse is called the ‘area of goods sold’, where customers goods, which were ordered up to a month prior to departure, are packed in advance.

Photograph=Kim Seon-ho/ (1) bonded goods are brought in.

Photograph=Kim Seon-ho/ (2) non-inspection area (first inspection)

Photograph=Kim Seon-ho/ (4) stacking

Photograph=Kim Seon-ho/(3) second inspection

Photograph=Kim Seon-ho/ (5) sorting by bill of exchange

Photograph=Kim Seon-ho/ (6) sorting by customer

Photograph=Kim Seon-ho/ (7) individual packing

Photograph=Kim Seon-ho/ (8) one-packing

Photograph=Kim Seon-ho/ (9) pouching and taking out

Reinforced logistics competitiveness proven by official certifications
A Lotte Duty Free Shop logistics official said, “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.” Thanks to these efforts, Lotte Duty Free Shop was highly rated by Korea Customs Service in terms of the internal control system, safety management and legal compliance, and acquired the AEO certification this year. As AEO certification is included in the detailed evaluation criteria of license screening, it is considered an important factor in the ability to operate and manage duty free shops. “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,” said a Lotte Duty Free Shop logistics official. “We will always try and find the best method for efficient logistics management.”

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