Nov 01, 2004
|Delivery the goods
Find out how CEO Teong Teck Lean turned GD Express around
(# Issue 39, November 2004)
|( Mary Anne Tan )|
Having been an institutional dealer with OSK Bhd for more than a decade, Teong Teck Lean was used to analysing and reporting on the strengths, weaknesses and performance of various companies. As part of his value-added service to customers, he also dispensed advice to companies that were finding it tough to meet their financial numbers.
But never in his wildest dream did he imagine that one of the companies he had followed closely would offer him a chance to act on his own advice. It was a challenge he found irresistible.
GD Express Sdn Bhd, founded by his friend Yong Phee Long, had entered the courier service fray in 1997 but competition was so stiff that it became mired in problems within two years. The shareholders wanted to get out, so Yong turned to Teong for help.
"I told him I didn't want to be a passive investor that I must be allowed to have a free hand to change things. He agreed and allowed me to take majority stake, slightly more than 50% in the company. Today, he heads the courier division. And many of the other shareholders are still with us," says Teong.
One of the first things Teong, who is also managing director of the company, did upon taking over GD Express in 2000 was to conduct a thorough check of industry. He discovered that the "mess" market, with a pricing war that was making tough for business.
"Price had dropped from RM25 for the first 500g in 1982 to RM4 for the same weight in 2003. Then between 1989 and 2000, some 13 small companies alone had become road kill in this 'mess' market sector," he says.
He describes the market as being divided into three levels - the premier, the mid-market was occupied by the global players like FedEx [Federal Express] while the mass market was overcrowded. It was therefore important to position GD Express within the mid-market segment because this was a sweet spot in the domestic industry."
One of the first things that Teong did was focus on quality; for the first 1ï¿½ years, he concentrated on making sure that the company met ISO standards. Cutting cost and making the customer its key focus were also part of his reorganisation.
"There were times when my friends, who had wanted to support me, agreed to use our courier service but were disappointed when no one turns up to collect the items. No one was willing to take responsibility for this, so we had to remedy that fast. I felt if we couldn't get the first point of contact with the customer right, we shouldn't be in the courier business."
His key priority was three-fold - grow and sharpen the firm's competitive edge, leverage on IT and develop and train its human capital and infrastructure.
Why IT? Teong says his experience in stockbroking made him realise that IT could be the engine of growth. So, Teong turned to singapore-based GDX Pte Ltd (part-owned by him) to develop the customised logistics solutions needed to get the company on track.
As a result, things improved tremendously. A bank was able to use GD Express' customised solutions to get the costing of all items couriered by its various branches within two days instead of the usual two weeks. By last year, the web-based tracking and tracing of shipments by the customers themselves had helped raise transparency and responsibility levels.
When Teong took over the helm, not many employees were happy with the changes, but those who stayed the course were able to reap the benefits of the revamp. For example, a driver was so good at his job that he was promoted to manager of transport. To ensure prompt collection of documents and goods, collectors are paid a bonus for every document they collect. Introducing closed-circuit cameras in the hub also helped solve problems in the mailroom and goods handling and delivery, and increase efficiency greatly. These moves also spruced up GD Express' performance on the corporate front.
Today, daily shipment volume handled by the 50,000-sq-feet GD Express hub in Jalan Tandang ranges from 13,000 to 15,000 consignments, with international shipments accounting for around 7% of its revenues. The company's losses have been cut from 1% in 2000 to 0.02% while shipment consignments have increase from 3,000 (per staff) in 2000 to 13,000 today.
This improvement has not gone unnoticed and in late 2002, GD Express was appointed the domestic partner of FedEx. The latter preferred to concentrate on servicing the international market while outsourcing all Malaysian deliveries to GD Express. This gave the company and Teong, in particular, a much-needed boost.
What was the most interesting item couriered by GD Express? According to Teong, it has to be the blood sample that PathLab wanted couriered before mid-night of the same day. When GD Express managed to deliver in record time, it became PathLab's preferred courier. Now hospitals, clinics and many in the medical field use GD Express' services.
More importantly, the company boasts of 65 stations (comprising 30 branches, 10 affiliate stations and 25 agents) nationwide, a fleet of 150 trucks and vans, 700 employees, 300 PCs powered by four servers with 40 station linked to the company's servers. Teong says he expects to spend some RM15 million to RM20 million on improving the processes, but its customised one-stop logistics solutions now account for 20.6% of its turnover, which is expected to hit RM29 million. It has more than 20,000 corporate customers, ranging from banking and finance to retail, manufacturing industrial legal, shipping and logistics and medical.
For Teong, the logistical journey has been tough but it's been worth it and the icing on the cake for his express entrepreneur will be a listing on Bursa Malaysia in the near future. Now, his one mission is to ensure that every parcel or document, if possible, will be "GDex'd", in the same way companies say "FedEx it". And when that happens, he will know he has succeeded as a true-blue entrepreneur.