Managing Asia

Managing Asia

The drones are coming: How the YCH Group is staying competitive with technology

Why Asean economies are key to this logistic firm's growth

One company is making the traditionally staid world of warehouse management exciting, with a little help from technology.

Manually counting inventory is a chore, says Robert Yap, the executive chairman of YCH Group. It makes for dull work, and if items are counted wrongly, everything has to be counted from the top all over again.

"If you use the manual system, it could effectively take you two days to count inventory. With drones, it's just one, two hours," Yap tells CNBC's Managing Asia.

Among the high-tech logistics solutions the company has adopted are automated storage and retrieval systems, drone inventory management and radio-frequency identification (RFID). All of these are put to use in Supply Chain City, the YCH Group's $163 million automated flagship warehouse -- the largest of its kind in Asia.

Drone inventory management and radio-frequency identification (RFID) are some of the technologies the YCH Group uses.
Dorin Lim

The YCH Group has a history of switching things up. The company had originally been in the passenger transportation sector when Yap first joined the family business.

"I changed [our focus] to cargo transportation and from [that], we moved up the value chain to include warehousing, international freight forwarding and integrated logistics," Yap explains, "As we were migrating the value chain, I sort of fell in love with [the business]."

Despite his current enthusiasm, Yap had initially been resistant towards joining the family business after university. "I said, if you retire and I run it my way, I might consider it," Yap says on the exchange with his father, "And he said, you got a deal. I took over and kept my word ever since."

In the thirty-nine years he's been with the company, Yap has expanded the YCH Group's regional presence. It is now in more than a hundred cities throughout Asia Pacific. Yap also says that he is not worried about the slowdown in the Chinese economy, citing growth from other emerging economies, including Vietnam, the Philippines and Indonesia, as a reason to be optimistic about the logistics industry.

Even though the YCH Group might not be the biggest player in the Asian logistics scene, it is one of the most technologically advanced. Yap believes that investing heavily in technology will enable the company to differentiate itself from its competitors. "We are not adverse to investment [and] we are not afraid to invest for the long haul," he says.

This has led to the development of the company's standalone IT arm, Y3 Technologies. Yap refers to this as his "secret weapon".

Also operating in the supply chain logistics space, Y3 provides a range of next generation solutions, including cloud computing, e-commerce and customer relationship management products. Unlike the YCH Group, which deals in large scale solutions, Y3 operates on a shared services concept so that even small businesses can utilize its services on a pay-per-use basis.

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Yap also dabbles in angel investing, having set up a $14 million venture arm that invests in supply chain start-ups. This has been especially helpful for incubating innovations more quickly and at a lower cost than if the YCH Group were to do so internally. "When you [take] too long, you will miss the market," Yap says.

Yap points to the drone and RFID system that has been trialed in Supply Chain City as proof of the incubator's success. He intends for the technology to go live in the YCH Group's warehouses by the end of the year.

The pursuit of technology has fueled the rise of YCH over the years and Yap continues to remain open to innovation. He says that the company has been built on a vision that involves something called the "Logistics Super Highway", which involves the integration of physical, informational and financial flows to enable the 60-year-old company to stay competitive.

"You have to dream, right?" says Yap, "It's important for any leader to be very committed to what they want to do … [and] also be daring enough to take that risk and dream."

Looking at where the YCH Group (which bears the initials of his late father, Yap Chwee Hock) stands today, Yap says that he believes his father would have been very happy. "Every distribution park we opened, I would make sure [my father] went and cut the ribbon [at the opening ceremony]," he fondly recalls.

Fast forward to the present, Yap continues to be the driving force behind the YCH Group and the many new ventures he started along the way. "Why [would I] want to retire? I'm having fun," he says, "I'm not working, [it's more like] playing because it's a lot of fun."

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