Disaster response and corporate citizenship

For the head of Japan’s largest parcel delivery service, the twin tsunami and nuclear disasters that hit the country in March 2011 were a litmus test of the company’s philosophy and commitment to be a good corporate citizen.

Ultimately, says Yamato Holdings president Makoto Kigawa, despite the immense challenges he found that philosophy to be thriving.

Yamato Holdings has been in business for 92 years and now employs 117,000 staff in logistics, delivery, maintenance and other segments.

Its Ta-Q-Bin delivery service handles 1.3 billion parcels a year – about 42% of Japan’s domestic shipments – and Kigawa says it’s a service that has become interwoven into the fabric of Japan’s daily life.

“Looking at our performance, Yamato’s Ta-Q-Bin ‘The Last Mile’ delivery service can almost be considered part of the infrastructure in Japan – much like water supply, electricity and gas,” he said, speaking in English to a standing-room-only crowd at NUS Business School.

At the time of the March disasters, the company had 269 offices in the area of eastern Japan hit hardest. The magnitude nine earthquake struck off the coast of the port city of Sendai, triggering a massive tsunami that swept several kilometres inland.

According to the World Bank, the impact of the combined quake and tsunami, plus the subsequent nuclear collapse at Fukushima, caused economic losses of up to $235 billion.

Destroyed

For Yamato Ta-Q-Bin the impact was immediate. Seventeen of the company’s distribution offices were destroyed, cutting its delivery capacity by six per cent.

But Yamato’s operations in the region were normalised in just 10 days – an achievement made possible Kigawa says because the company has always given its workers leeway to make decisions on their own.

“The field workers are given authority to make decisions about what to do for the customer and how to do it within a specific set of rules. This time around it was no different,” he told the audience.

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In the immediate aftermath of the disasters, Kigawa says Yamato decided to play a leading role in the reconstruction of the devastated area.

With relief supplies pouring in from around theworld, Yamato put together an “urgent relief aid logistics support team” to sort and deliver the supplies.

The company also pledged to donate 10 yen for every domestic parcel delivered over the subsequent year to the reconstruction effort.

This company has been in the market for many years… It’s like it’s in our DNA to help people

Makoto Kigawa

Based on previous volumes that adds up to about 13 billion yen, or 40 per cent of the company’s net income.

In an interview, Kigawa says he was initially concerned it would be difficult to sell the idea to shareholders. But on the contrary, they praised the idea.

“Basically this company has been in the market for many years,” he said through a translator. “It’s like it’s in our DNA to help people. So investors understood this concept.”

The company was also able to convince the Japanese government to establish a tax-free scheme for donations. Kigawa hopes that will set a precedent for Japan, but acknowledges it will take a significant change in Japan’s corporate culture to create a sustainable financial assistance scheme.

Flexibility

Still, he says it’s one of the paradigm shifts the industry needs to implement in ordinary times so that it will be ready for the next disaster.

ThinkAloud7He’s also urging a shift from a centralised supply chain to a more flexible, less vulnerable decentralised chain, allowing emergency supplies to be rerouted quickly.

He says that following the March disasters, procurement of emergency supplies went quickly. But the logistics of delivering those supplies where they were needed was slower than it should have been, hampering the start of reconstruction.

While Yamato helps in the reconstruction of eastern Japan, it must also keep focusing on its own growth.

Expansion

yamatotruck280Kigawa’s appearance at NUS in October 2011 came just a month after the company launched its Ta-Q-Bin service in Malaysia. They also have an eye on expanding into Thailand and Indonesia as they prepare for their second century of business.

“We want to continuously look for business partners and we want to widen the network in Asian region,” he says. “In 2019 it’s the 100th anniversary of the company. So by then we want to establish a solid network in Asia.”

There are lessons to be learned from Yamato’s response to the disasters – and NUS Business School students will be among the first to dissect them. The school has announced that NUS will develop a case study on how Yamato recovered.

Yamato will also support other research at NUS. Kigawa presented a check for S$150,000 to the university to establish the Yamato Faculty Research Fund.

It will support studies in green logistics and innovative delivery operations – another part of the company’s commitment to be a good corporate citizen.

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