Borusan Lojistik makes a difference in digitalization
The digitalization of supply chains is now inevitable in order to adapt quickly and effectively to the complex networks increasing with globalization, the increasing diversity of customer expectations, and changes in customer demands. Borusan Lojistik, which attaches importance to innovation and digitalization and is very active in this respect, provides solutions to its customers’ needs on the digital platform. Having turned two digital projects, namely ETA and Bukoli, into companies, it has been pioneering fast and accurate decisions with its digital projects.
I met up with İbrahim Dölen, who recently took over the position of General Manager of Borusan Lojistik to talk about the company’s investments, especially when it comes to digitalization. İbrahim Dölen has been in the industry for a long time and also made striking statements about the sector.
What have you been doing since you became Borusan Lojistik General Manager? Could you share your goals with us?
For along time at Borusan we have been working with five-year plans, and we are now in the midst of one. When we look at it in this sense, not much has changed. An organization that has a turnover of $560 million and serves more than 2,000 customers is not supposed to change overnight. You can’t make too many changes regarding the location of customers in the supply chain, but for the future we are questioning the process and reconsidering it. We are trying to evaluate how the fluctuations experienced in the exchange rates last year and the political developments that have taken place this year will affect us. There will definitely be changes in our strategies, we are in the planning stage right now.
How will the sector be affected when you consider the political and economic conditions in the country?
I think the industry is going through a difficult period. After the 2009 crisis there was a serious slowdown. The fact that the growth that was anticipated afterwards did not happen adversely affected all logistics companies across the globe and these effects still continue in the logistics sector. In 2007-2008, very serious investments were made in the world in almost every sector except the logistics sector. These investments have significantly increased supply in every aspect globally. The 2009 economic crisis turned the world upside down. Demand has dropped in particular and we see that since then, global-scale logistics companies have suffered very seriously. The best and well-known result of this emerged in the maritime sector. Right now the logistics industry is still dealing with this. It is not easy at present to foresee how events in Turkey will impact the logistics sector. According to our figures, there is a small shrinkage in domestic demand. But it is not a shrinkage that will lead Turkey completely off path, it seems that it will be easily overcome. As a manager who has experienced all of these crises, I see the recent crisis in Turkey as a crisis that has been overcome. You said that the maritime industry was very badly affected by the 2009 crisis. Which is the profitable mode of transport, especially for Borusan Lojistik?
The kind of profits that were being made before 2008 are no longer heard of. You’ll see the same picture in every sector. At Borusan Lojistik, we see ourselves as more fortunate in the sector. We lost our profit margins, but we have recovered most of our losses, especially with the work we have done in the company. We do not have an area of activity that is completely in the red, but events have affected all of them at varying levels.
What do you need to do to gain a better position in the logistics sector?
There are actually two different strategies that we try to follow here. One is constantly increasing our scale in business areas where scale is important, and the other involves productivity and digitalization. Which of our processes can we make more digital and how far can we reflect this onto our customers? We are working on this. We are trying to make more accurate and faster decisions by reducing labor as much as possible. This is the issue we are spending time on right now.
Do you have investments in the field of digitalization? Have you made any concrete ventures?
We are very active in innovation and digitalization. Apart from the work that we have already done, we are working on how to provide for the customers’ needs in the digital platform and how to meet customer needs in different ways with digital solutions. We turned two of our projects into companies. One of these is ETA. I am talking about a structure that has grown by 15% every month and that will turnover $20 million at the end of the year. It brings small tradespeople and truckers together in the electronic environment. It has a very successful future ahead of it. It is a process that starts with the question of whether we can build a digital structure in which we can eliminate the inefficiencies of our current customers or sector. The other one is the Bukoli project we started last year. Bukoli is a new and reliable delivery model that you can access to give you time and location flexibility when you buy products from the internet. In this model, instead of getting products delivered to your home or work address, you choose Bukoli points where you can pick your order up from. Convenience stores, supermarkets, cellphone accessory shops, stationery shops, florists, and pet shops are also serving as Bukoli points at the same time. By choosing the nearest delivery point, the internet user can ensure the delivery of the order to that point. He or she can then pass by and pick up the product at the Bukoli spot on both weekdays and weekends. Bukoli was established as a company as of April. We are currently the solution partner of many electronic trading companies.
What should your customers wanting logistics solutions look for?
Most importantly, we need to make sure that our customers’ problems and their approach to the problem are being perceived and understood correctly by the service provider. Because at the point where we are now, many companies can transport a certain product within a certain time. The issue is not only meeting today’s needs. The issue is that it is more appropriate for our customers to be able to work with suppliers who can offer different perspectives in order to create solutions for the problems they suffer or may suffer from in a competitive environment. This is how we try to do it. We are working on joint projects to address the needs of our customers and to solve the problems that may arise in the future.
You said you have over 2,000 customers. Which sectors do your customers predominantly come from?
There is no sector we haven’t worked for. We are most active in the automotive sector. Our customers are primarily from the iron and steel, fast consumption, textiles and durable goods sectors.
Which sector is the most difficult for you?
You can’t really say “difficult”. The automotive sector is the sector that requires the most planning. We are now in the business of procuring the daily produced spare parts of many automotive companies as well as the durable goods sector. Just one momentary problem with planning and you need to solve it immediately. But every industry has its own unique challenges. When we look at the fast-moving consumer sector, there are concerns both regarding the large numbers of delivery locations in Turkey and the delivery of goods to markets. For Borusan Lojistik, the more engineering solutions we can incorporate into our work, the more easily we can reveal our difference from the competition.
Which area is the most competitive in the sector?
The international transportation sector is one of the areas where competition is the most common. When you look at the number of vehicles in Turkey, the number of international transportation vehicles and the sum of vehicles based in Turkey, there are as many vehicles as Europe has in total. It is an incredible capacity.
How do you organize your shipping processes? For example, how is the route planned for the freight? What kind of feedback is provided to the customer during the transportation process?
We have a commitment for every job. We provide solutions to our customers according to their need to receive information from us. We also have customers who say, “I want to see the vehicle that is carrying my products and where they are.” Some of our customers say, “You already know this business. I don’t want to track the vehicles or get information all the time. Just tell me when there is a problem.” We have standards for all our customers. We can also show particular flexibility in specific cases if the customer requests it.
Besides digitalization, are there any areas where you think the sector is lacking?
The problems at the Kapıkule border are very serious for us. For example, we can deliver goods to Germany within five days, but we spend two days waiting for them to pass through Kapıkule. This is a major problem that needs to be solved in Turkey, but I know that there are some initiatives underway. In an environment where digitalization is discussed, work can be done to resolve such problems. Customs is a field that needs to always be improved on and sped up. Connections between railways and ports are an important issue for both the incoming and outgoing goods in order to transport them faster and at lower cost to ports or to withdraw them from the ports. You have to find new areas of development in every business and there will always be deficiencies. But we see that there are many projects both in the private sector and in the public sector working on this. For a long time, a railway route from Turkey to Europe was out of the question. An important step was taken in this direction with the construction of Istanbul’s third Bosphorus bridge. If we can quickly adapt, we can create significant opportunities from Europe to China.
How do you see the future of the logistics sector when we consider all these problems together?
The biggest problem in the logistics sector is that there is too much competition and too many companies. I believe that corporate mergers and partnerships need to grow further. Global players are constantly entering the Turkish market and putting serious unwanted pressure on prices, so you no longer have the chance to play this game on a small scale. If we anticipate that costs will be higher than today in the near future, I think that small firms need to be merged. And we are entering a period in which every firm has more digitalization needs.
Will you be making any new investments in the near future at Borusan Lojistik?
We started our investments early this year. We have three basic major investments. One of these, the site enlargement area filling at our port was completed in June. The area we are new to and have invested in this year is project transportation. We made an investment of approximately $2.5 million into new equipment and infrastructure used in project transportation for the first time in Turkey. As a continuation of the first of the projects we carried out in the wind energy sector last year, we will be having a lot of such projects again this year with our own equipment. Project transportation is an area where we believe we will make a difference in the sector as well. By combining our engineering solutions and our new equipment, we will be able to present the differences to our customers, especially in the field of wind energy.
Will you invest in warehousing?
At present, we have 26 storehouses and about half a million square meters of closed area in Turkey. Every year we are opening new warehouses in line with the needs of our customers. We are working on what we can do to make our existing storehouses work faster with different methods of electronics. The storehouse is a structure we build in line with customer needs, so we are investing in the direction of our clients’ requests. We have two big investments planned for next year. We are working on two warehouse projects with an area of 60,000m2 in total; 40,000m2 in Istanbul and 20,000m2 in Izmir.