Dematic in China on a clear path of growth

Through a window in the office you can see into the warehouse of Le Ren Tang, with its ten high storage bays. Yellow stacker cranes emblazoned with the Dematic lettering buzz up and down the narrow aisles, carrying blue pallets, laden with boxes, to their sorting points. The aisles only need to be 20 centimetres wider than the pallets. Standing at the sorting points are a smattering of workers, who scan the codes on the boxes and then place them on a roller conveyor that transports them to the shipping area. At the end point of the system, boxes rattle off the conveyor belts and into the shipping hall where, as if by magic, they are diverted onto multiple lanes. The sliding-shoe sorter has to constantly keep switching points – and yet still handles up to 5,000 boxes an hour. Packers stack them up on uniform blue pallets. From there the boxes only have to get across the hall to the delivery truck ramps. The packages contain medicines made by various Chinese and foreign manufacturers. Things like painkillers, cough syrups and ointments.

Le Ren Tang, which belongs to the state-owned Sinopharm Group, is one of the biggest distributors of medicines in the northern Chinese province of Hebei, whose capital Shijiazhuang is where the company has its head office. Every year the Le Ren Tang warehouse, which opened in late 2010, handles goods worth around 30 billion yuan (approx. €4 billion) – but it employs just 60 people. Its customers include hospitals in the Hebei province and smaller distributors that supply the district hospitals in smaller towns. Business is booming. According to general manager of Le Ren Tang logistics centre Zhai Dongmei, revenue is growing by 25 per cent a year.

“We have zero tolerance for errors": Dematic as reliable partner

Operation Manager, Zhu Fan, says that efficient intralogistics are essential for the company, and that Dematic was chosen because it is a global leader and can offer one-stop solutions. In addition to its fully automated high-bay storage facility and its sorting system for shipping, Le Ren Tang also operates a Dematic system for packaging individual medicines, which uses pick-by-voice and pick-by-light technology. The order picker is given either verbal instructions via a set of headphones or light signals that guide the picker to the correct bin. He or she then places the medication in a blue shipping container for individual customers. These are then sent to the packing station on roller conveyors.

"We have zero tolerance for errors. So the system has to be very reliable."


Zhu Fan

Operation Manager at Le Ren Tang

Dematic has been active in China for 20 years. Today the company is one of the leading intralogistics suppliers in the country, serving nearly 80 different customers. It operates in the upper segment – the top tier of customers who are looking for the best and are prepared to pay for it. Most of its projects are large-scale, complex and highly automated, and feature sorting machines, ultra-fast conveyor belts and full system integration. In the last five years the business has grown by an average of 15 per cent annually. It’s no surprise that China, as one of the world’s fastest growing markets, is very important for Dematic, the newest member of the KION Group.

This is evident by comparison with the USA, where expenditure on logistics makes up 7 to 9 per cent of GDP. It China it is 17 per cent, an indication that logistics in the country is not yet quite as efficient as in more developed countries. Experts are aware that too much money is being spent, that too much is done by hand. Heavy-goods vehicles are often not used to maximum capacity.

Workers are becoming scarce and expensive in China too, forcing more and more companies to automate their warehouses and distribution systems. Dematic’s customers are mainly involved in clothing, food and pharmaceuticals and in China’s booming e-commerce sector. One of its biggest customers is the clothing chain Heilan Home, which has more than 5,000 stores. In just one Heilan Home warehouse, the total length of Dematic conveyor belts comes to 20 kilometres.

Dematic’s Chinese headquarters are in Shanghai. In nearby Suzhou, the company makes hardware for stacker cranes and conveyor belts. Demand is strongest for automatic high-bay storage facilities, which can reach up to 40 metres in height, high-speed conveyance and sorting systems, and complex one-stop solutions. Only a handful of companies have as much experience in these areas as Dematic. Interest is also growing in what’s known as goods-to-person picking, in which the storage bins are sent at high speed to a sorting station, where workers pick out the goods that are needed for specific customer orders.

Every industry places different demands on intralogistics. “We have zero tolerance for errors. Any time that we deliver medication to the wrong person could prove fatal,” says Zhu Fan. “And because the goods are so valuable, Le Ren Tang also cannot tolerate any downtime.” So the system has to be very reliable.” Zhu is full of praise for Dematic’s maintenance service: “Engineers are always available to speak to and they visit twice a year to do a general service.

Dematic is on a clear path of growth in China and is aiming for market leadership. To achieve this, it’s important that the products are more closely aligned to local needs – and not only so that they can be supplied more cheaply. At Dematic they know that demanding Chinese customers expect the software and the engineering to be localised, for example in terms of language.

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