Samsung SDS, a logistics partner from Brabant with a consumer electronics mindset
In 2016, the logistics activities of Samsung Electronics in Europe were transferred into Samsung SDS, a separate division for its logistics and IT operations. This marked a major change for the logistics activities in Tilburg and Breda. Until then the division’s operations in the Netherlands were almost solely doing the logistics for Samsung Electronics. But Samsung SDS started operating for the ‘open market’. Any company that needs logistical support is potentially a customer.
Samsung SDS, which is an acronym for Samsung Data Systems, is now for about 60% IT service provider and for 40% logistics service provider and has two locations in Tilburg and one in Breda. The first one in Tilburg is for Samsung Electronics and the other one focuses on non-Samsung business. Breda delivers spare parts for Electronics.
Because Samsung SDS needs more space for Samsung Electronics in addition to the two locations in Tilburg and Breda, it has now rented an extra location in Breda. Real growth should come from the open market. As Samsung SDS is gradually getting more open market customers, its location for non-Samsung has also become too small. Late in 2021 SDS will open a new location at the Maasvlakte and in spring 2022 one in Born, Limburg, both for the open market.
Less Samsung Electronics, more open market
Samsung SDS competes with the likes of DHL, Kuehne & Nagel and Schenker and is ranked 37th on the list of top-100 logistics service providers in the Netherlands. The company has the potential to rise on that list, because it has some advantages compared with the competition, explains Lars Breedveld, Samsung SDS’s director of operations in the Netherlands.
“Many of our competitors still work with legacy IT systems. We, as a relatively young company, don’t have that problem. Thanks to the close cooperation with the IT side of our company , our systems and solutions are superior,” says Breedveld. “Also, most of us were around 3,4 years ago when we were customers in the logistics market ourselves, so we still have that mindset. We can tell our new customers that we know what problems they are going through because we also experienced them. Generally, that resonates with the customers.”
Breedveld expects that by spring 2022 his company will generate about 60% of sales from Samsung Electronics related business, down from approximately 99% in 2016. Because of its experience in electronics and in fast moving consumer goods, many of Samsung SDS’s customers from the open market are consumer electronics companies that do not compete head-on with Samsung.
In Tilburg and Breda Samsung SDS has a headcount of almost 500 during the high season, from September to January. From January to September that number drops to just over 300. Many of them are on a Samsung contract, but the company is also being helped by two temp agencies close to its Tilburg location. They mainly help to fill the teams that work in shifts, both in Breda and Tilburg.
Brabant’s can-do mentality
The locations in Brabant have excellent connections with the outside world, for instance with the Port of Rotterdam and the barge terminal that Samsung SDS uses in Tilburg for its goods. The location in Tilburg, where Samsung has been since 1999, has developed into a hub for temp agencies, transport companies but also some of its customers, such as CoolBlue, Breedveld explains.
There is a clear can-do mentality in Brabant. Things that are not possible, are not possible. But that's only the case if they've been tried", he says. “The people in Brabant are very pragmatic. That works very well for us.Lars Breedveld, Director of Operations - Samsung SDS
He is regularly in contact with the Brabant Development Agency (BOM). As Samsung SDS is fully concentrated on gaining market share in logistics, it does not always have time to explore the market and see how it is developing. Because the company aims to grow in the open market segment, it is more important to keep track of the market than before. And there the advice from BOM, which has a clear overview of the market, comes in handy.
Besides the infrastructural advantages of the province, that Samsung SDS uses to the full extent, and contact with BOM, Lars Breedveld also appreciates the way of working in Brabant. “There is a clear can-do mentality in Brabant. Things that are not possible, are not possible. But that’s only the case if they’ve been tried,” he says. “The people in Brabant are very pragmatic. That works very well for us.”
Not everything is being tried and tested. As the logistics industry is very traditional, new techniques like blockchain have not been widely introduced in the industry. This is partly because the ERP (enterprise resource planning) of a customer should be compatible with Samsung SDS’s systems and to implement a new system is costly and time-consuming. The company has been experimenting with new ways of working, especially with algorithms.
In one of its warehouses Samsung SDS has experimented with a program that uses an algorithm which builds up pallets with a maximum of goods on the pallets and with most pallets in a truck. As algorithms are always smarter than a planner or a warehouse supervisor, the warehouse staff has to do what the screen indicates instead of the other way around, Breedveld mentions.
He expects all kinds of changes in the near future, including with payments for services between companies. “One expects that algorithms would have played a bigger role in logistics already, but because of resistance, fear, ideological or other reasons that hasn’t happened yet”, Lars explains. “At present, financial managers and controllers are still heavily involved in the settlement of costs. I would be surprised if that won’t be fully automated in the next ten years. In that process, blockchain will probably play a big role.”
Japan & Korea