MHD May 2020 by Prime Creative Media

MAY 2020

TURNING A NEW LEAF

How T2 Tea handled a 120 per cent increase in digital sales

REMOTE WORKING: THE NEW NORMAL?

What does the supply chain and logistics workforce of the future look like?

COVER STORY

SOLVING CHALLENGES WITH AGVS Improving productivity, reliability, efficiency andÂ flexibility in a hypercompetitive environment

MHD FROM THE EDITOR

MHD Supply Chain Solutions CONTACT MHD Supply Chain Solutions is published by Prime Creative Media 11-15 Buckhurst Street, South Melbourne VIC 3205 Telephone: (+61) 03 9690 8766 Website: www.primecreativemedia.com.au

THE TEAM CEO: John Murphy Publisher: Christine Clancy Group Managing Editor: Sarah Baker Editor: Melanie Stark Journalist: Brittany Coles Business Development Manager: Bowie Phillips Design Production Manager: Michelle Weston Art Director: Blake Storey Graphic Designers: Kerry Pert, Madeline McCarty Client Success Manager: Janine Clements

FOR ADVERTISING OPTIONS Contact: Bowie Phillips bowie.phillips@primecreative.com.au

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ACKNOWLEDGEMENT MHD Supply Chain Solutions magazine is recognised by the Australian Supply Chain Institute, the Chartered Institute of Logistics and Transport Australia, the Supply Chain and Logistics Association of Australia and the Singapore Logistics and Supply Chain Management Society.

ARTICLES All articles submitted for publication become the property of the publisher. The Editor reserves the right to adjust any article to conform with the magazine format. COPYRIGHT MHD magazine is owned by Prime Creative Media. All material in MHD is copyright and no part may be reproduced or copied in any form or by any means (graphic, electronic or mechanical including information and retrieval systems) without written permission of the publisher. The Editor welcomes contributions but reserves the right to accept or reject any material. While every effort has been made to ensure the accuracy of information Prime Creative Media will not accept responsibility for errors or omissions or for any consequences arising from reliance on information published. The opinions expressed in MHD are not necessarily the opinions of, or endorsed by the publisher unless otherwise stated.

SUPPLY CHAIN AT THE FOREFRONT

n 22 March, Prime Minister Scott Morrison announced a shutdown of all nonessential services in a bid to combat the spread of coronavirus. Federal and State Governments were quick to confirm that freight, logistics and home delivery were to be considered essential services and will continue to operate during Australia’s COVID-19 lockdown. During these challenging times, the fundamentals of access to food, medical supplies and clothing are central to the health and wellbeing of Australian communities. Supply chain and logistics are at the very core of this. In the very early stages of this crisis, the logistics and supply chain industry was thrust into the limelight. The words supply chain featured in almost every news bulletin, while the general public started to ask why they couldn’t find essential goods on supermarket shelves. After the national shortage of items such as toilet paper, curiosity levels peaked. Soon after the initial panic buying started, a social media post of a warehouse worker in a fully stocked Kleenex factory in South Australia urging the public not to panic went viral. People started to recognise the issue was around supply, not demand. The immediate challenge for logistics companies was the speed at which it could get stock into stores to meet peak demand. The industry was quick to adapt and deliver, and the shortages around supply didn’t last long. Thankfully, stock levels in grocery stores are now returning to normal. The industry continues to innovate. Leading grocery retailers have established mini distribution centres to better service consumers. Australia Post, couriers and food delivery providers now offer what they are referring to as ‘contactless delivery’, a term that is now commonly used across the industry. We’ve seen collaboration like never before, with the ACCC granting authorisation for supermarkets to coordinate with each other when working with manufacturers, suppliers and transport and logistics providers. We’ve also seen collaboration as a force for good, with Australia Post, DHL and Woolworths joining together to ensure that society’s most vulnerable people have access to essential goods and services. One thing that has changed, is the public conception and understanding of supply chain and logistics. People are starting to recognise that supply chain and logistics is an important part of our country’s economy, and vital to keeping people fed, safe and secure. Logistics and supply chain will also play a crucial role in our recovery as we move to the other side of the pandemic. I hope the interest and curiosity in the work of our industry remains.

Melanie Stark Editor melanie.stark@primecreative.com.au

MHD Supply Chain

MHD MAY 2020 | 3

MAY 2020

ISSUE #4 VOLUME 50

THIS ISSUE COVER STORY

COVER STORY

22 Solving industry challenges with AGVs

MATERIALS HANDLING 18 Taking advantage of the economic stimulus package 46 Juice giant’s main squeeze: Toyota reach forklifts 52 Putting drive technology on the map 58 COVID-19: shutdown of a distribution centre 60 A transformed approach to business

E-COMMERCE 26 Turning over a new leaf 32 A time of opportunity 54 Omnichannel strategy during a pandemic

SUPPLY CHAIN 20 Cohesio and HighJump to become Körber Supply Chain 30 Accelerating the movement of goods 38 The biggest mobility and IoT trends to hit Australian supply chains 44 Out of adversity comes innovation

TECHNOLOGY MAY 2020

TURNING A NEW LEAF

How T2 Tea handled a 120 per cent increase digital sales

REMOTE WORKING: THE NEW NORMAL?

What does the supply chain and logistics workforce of the future look like?

COVER STORY

SOLVING CHALLENGES WITH AGVS

40 Remote working: the new normal? 48 Into the Blue Yonder

STORAGE SOLUTIONS 36 Safer measures and stronger systems

Improving productivity, reliability, efficiency and flexibility in a hypercompetitive environment

DEPARTMENTS AND REGULARS 08 News 57 Product showcase 62 Property focus 64 The last word 66 ALC 69 ASCI

ON THE COVER MHD sits down with Tony Raggio, General Manager Sales – AGV at Dematic to find out why more and more local companies are making the switch to AGV technology.

30 MHD MAY 2020 | 5

We will become one &

We will be stronger as one Conquering supply chain complexity koerber-supplychain.com

MHD NEWS

Online retailer reports 300 per cent increase on household goods sales

nline retailer Catch.com.au has reported sales of household goods on the site soared by 290 per cent in the first two weeks of March. Last month, Roy Morgan reported that online grocery sales increased by over 45 per cent, putting logistical pressure on retailers’ delivery networks. Data indicates that consumers are continuing to stockpile grocery and medical items, and supermarket continue to face distribution pressure to meet demand and fill shelves with essential products. Catch.com.au has reported a major uplift in site activity in recent weeks as consumers gravitate online, with traffic to its grocery pages up 467 per cent YoY. As online retailers experience a

surge in sales, Catch.com.au has ramped up supply chain operations and the focus is on maintaining stock and a reliable delivery service throughout this period of unprecedented demand. Household, pantry, health and baby products have been the most popular items in demand from online consumers. Sales of household goods on the site soared by 290 per cent compared to the same period last year, pantry goods, such as pasta, noodles and rice, rose 234 per cent, while health and beauty lifted 233 per cent. Wesfarmers acquired Catch.com. au in a $230 million deal last year and now operates as an independent business unit under the Kmart group.

Nati Harpaz, Managing Director, Catch.com.au said the online retailer has put limits on certain high-demand products such as wipes and soaps like other major retailers including Coles and Woolworths. “Our number one priority during these uncertain times is our customers and making sure they have access to the products they need, when they need it. We will continue to bring our customers a convenient shopping experience from the comfort of their home across a huge range of products,” she said. “By working with our partners to source extra stock and by imposing a limit on certain items, we aim to help those in need of products such as kitchen and pantry essentials.

Traffic to Catch.com.au’s grocery pages is up 467 per cent YoY.

8 | MHD MAY 2020

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MHD NEWS

High demand for large distribution and warehouse facilities

emand for large distribution and warehouse facilities is expected to continue its strong run due to pressure on national supply chains. Luke Crawford, Colliers International Associate Director said last-mile locations for food companies, logistics companies and warehousing has shown how important distribution and warehouse facilities are in times of “social distancing” and keeping the supply chain open. “The panic buying of consumer staples during uncertain times like these has put food manufacturers and suppliers in the position of making sure their network of distribution and warehousing facilities are adequate to handle these types of demand spikes on a regional basis,” he said. The latest Colliers International radar paper ‘COVID-19 Industrial Implications’ found that due to the recent growth in demand for transport

It is expected that some companies may need to expand their industrial footprint in metro areas to keep up with demand.

10 | MHD MAY 2020

and logistics, its industrial property will remain secure through the months ahead. It is expected that some companies may need to expand their industrial footprint in metro areas to keep up with the increased demand. In late March Coles announced it will open three ‘pop-up’ distribution centres in New South Wales, Victoria and Queensland to cater towards the rapid growth in food and grocery purchases. Colliers paper notes that the e-commerce sector in particular, continues to expand structurally, and the coronavirus outbreak is expected to result in a pick-up in online retail sales and subsequent demand for industrial space. “With stores adjusting their hours and political leaders asking the public to stay home, the value of e-commerce has increased

exponentially,” Crawford said. Malcom Tyson, Industrial Director at Colliers International said notwithstanding the short-term impacts, fundamentals within the Australian industrial and logistics market remain favourable with several structural and cyclical changes playing into the hands of the sector. “Bringing it back to basics, the key drivers of the industrial market in recent years have been population growth, infrastructure investment, growth in e-commerce and low cost of debt,” he said. Malcom said that although population growth is expected to take a hit over the short term, as net overseas migration drops significantly off the back of travel restrictions and the closure of the Australian borders to non-citizens, the outlook for the other key drivers in the current environment remains unchanged.

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MHD NEWS

New $20m warehouse for a major temperature-controlled logistics operator

major temperature-controlled logistics operator has announced a new $20 million cold storage warehouse in Victoria. Fernhurst, whose clients include meat packers, food processors and supermarkets has committed to a 7,070-square-metre facility on a 16,185-square-metre site located at National Drive, Truganina. Fernhurst partnered with Charter Hall, ESR and property and supply chain firm TM Insight in designing, sourcing and project managing the build of this new facility, which will be consolidating their operations from three sites in

Truganina and Hoppers Crossing. The new development will also house Fernhurst’s new 388-squaremetre head office space and the facility will feature freezer, chiller and blast freezing zones for various product types. Graeme O’Brien, Fernhurst Managing Director said the new modern facility will create significant efficiencies throughout the company. Nathan Bingham, TM Insight director of property said the consolidation of operations, the use of renewable energy and the elimination of dead running between sites will dramatically improve Fernhurst’s service capability.

These energy intensive operations will be offset with a significant 440-kilowatt solar installation that will span almost the entire roof of the facility, plus energy conserving refrigeration equipment from Europe. Charter Hall’s Industrial and Logistics development pipeline now exceeds $2 billion Andrew Simons head of development, industrial and logistics at Charter Hall said the demand for the company’s industrial and logistics estates reflects the benchmark set by the group in delivering high specification, modern logistics space in strategic locations.

Consumers are expecting more long-term loyalty from retailers

new Australian consumer and retailer research survey by Manhattan Associates found that more than 68 per cent of consumers said value for money was the biggest way for a retailer to gain their loyalty. The survey of 2000 Australian consumers and 100 large-end retailers also revealed that 47 per cent of respondents said great products guaranteed their repeat business. 53 pe rcent of consumers surveyed by Manhattan Associates said that a consistent shopping experience across different shopping platforms with the same retailer was important. According to global technology solutions provider Honeywell, most retailers now rely on technology to offer the best customer experiences, with 59 per cent of retailers believing that technology has enhanced their customer’s shopping experience.

12 | MHD MAY 2020

Raghav Sibal, Managing Director for Manhattan Associates, ANZ, said that while it’s not a huge surprise that influences like value for money and product quality sit at the top of consumers’ list for attracting their ongoing business, the research had also found that retailers weren’t always connected with the factors influencing consumer loyalty. “It’s important to listen to your customers and deliver on what they want,” Raghav said. “Our research has shown that while retailers may perceive actions like having a strong social media presence are key to maintaining customer loyalty today – with 37 per cent indicating they offer an excellent social media presence to attract loyalty – what consumers actually want in many respects is more basic.” He said retailers need to provide all arms of their business with access to

relevant, timely business information to enable consistent end-to-end customer experiences that span physical and digital channels. “Access to real-time data and predictive analytics will further bolster omnichannel capabilities and support seamless online and instore experiences,” Raghav said.

Value for money is the biggest motivator in gaining consumer loyalty.

MHD NEWS

7-Eleven Australia transfers to e-commerce

ranchised convenience chain 7-Eleven Australia has launched a new contactless delivery service. The new delivery service for household and food items is being tested in select Melbourne stores, mostly franchised outlets, to ensure the technology and logistics is performing. The eCommerce service will use the online delivery platform Tipple, which the group acquired in 2018. Angus McKay, 7-Eleven’s CEO said had tapped into one of its fellow brands, the on-demand alcohol delivery service Tipple. “The 7-Eleven Group acquired a majority stake in Tipple in 2018, as part of our investment in on-demand ‘last-mile’ delivery and technological capability,” he said.

“By working with their network of delivery drivers, we’re able to provide consumers with more options to get the things they need while minimising how often they need to leave their house.” Angus said the initiative is rolling out in Melbourne for most suburbs and the group will look at other states in the coming months. “This new service is ideal for people who are unable to get out to get basic essentials or ready to eat foods and need delivery within a shorter time frame,” he said. “In some suburbs there are within the hour delivery options, but for most suburbs, customers can order for next day delivery.” The sales go through the store that fulfils the order, with the same profit

The e-commerce service will use the online delivery platform Tipple, which the group acquired in 2018. share arrangement as an over the counter transaction. 7-Eleven has more than 700 stores trading, providing essential items for healthcare workers and other shoppers seeking fuel and grocery staples.

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MHD NEWS

Australia’s first Android Voice solution goes live

leading food service provider has gone live with Cohesio Group’s Android Voice Tech Solution, becoming the first-ever company to implement this technology in Australia. Centre State Food Service (CSFS), owned and operated by leading Galipo Foods, is a leading South Australian wholesale food distributor. Founded in 1982, CSFS is the first-choice supplier for hundreds of businesses across country South Australia. From March 2020, CSFS is operating Cohesio’s Android Voice Tech Solution at three of its warehouses in South Australia, becoming the first-ever Australian company to introduce Android Voice for its warehousing and logistics operations. The solution has enabled the food provider to radically simplify workflows, increase workload and better meet spikes in demand, offering CSFS the added advantage of being able to scale up and down without an increase in assets such as hardware. In addition to being the first in Australia to implement this solution, this is also the first-ever food service company in the Asia Pacific region to use an Android Voice solution in a temperature-controlled environment. Cohesio Group’s Android Voice Tech Solution offers CSFS operators the power of hands-free, voice-led technology with the addition of migration capabilities to all Android devices. CSFS engaged Cohesio in September 2019 to explore similar technology solutions that Cohesio had implemented for its parent company, Galipo Foods. After initial discussions the business decided to go with one of Cohesio’s new Android Voice offerings, powered by the Honeywell Voice Guided Work Solution (GWS), and the project went live in March 2020. “After initial reviews of the existing workflows, along with an in-depth process analysis, we determined that while an existing dedicated voice solution like at Galipo would meet CSFS’s requirements, there was significant opportunity to deliver further

14 | MHD MAY 2020

benefits with our newly developed Android Voice Tech Solution,” Paul Phillips, Senior Business Consultant at Cohesio Group said. The Android Voice Tech Solution is cost-effective, scalable and can be supported and managed remotely. Cohesio has implemented the solution for CSFS to pick larger customer orders, batch pick for small orders, catch-weight capture and confirmation and a new consolidation pick process. “This consolidation workflow allows for frequently picked items to be isolated and picked separately, allowing the driver to complete a secondary pick on their route. This reduces double handling and speeds up the picking process. The solution is spread across three temperature-controlled zones, ambient, chilled and frozen, and is the first of its kind on Android Voice in the APAC region,” Rizan Mawzoon, Head of Transformation at Cohesio Group said. “As the market leader in voice technology, I am excited Honeywell Voice can continue to support its partners and customers, by providing more dynamic and scalable alternatives to our existing enterprise voice solutions,” Anthony Beavis, Regional Leader – ANZ at Honeywell Voice said. CSFS delivers a high standard of service to its customers throughout South Australia and as a result was looking at ways to improve the experience for its customers. “By working with Cohesio at Galipo Food’s distribution centre we managed to double our picking rates with its voice and AMR solutions. After this experience, we wanted to explore similar opportunities for efficiency gains at CSFS with Cohesio. The technology provider understands our business and therefore can adapt and offer solutions that are flexible and nimble. We knew that they would be able to deliver significant efficiency and productivity gains and we are absolutely thrilled with the solutions we now have at both our Galipo and CSFS sites,” Nathan Narayanan, General Manager at Galipo Foods said. The Cohesio Android Voice Tech

The Android Voice Tech Solution is cost-effective and scalable. Solution has reduced lead times from order to delivery, while also increasing accuracy through its product imagery feature. The solution offers the picker the same image of the item that the customer sees when they order it, enabling the operator to identify products much faster and with increased accuracy. “Our goal was to simplify and rapidly reduce the complex workflows and to increase workloads. We also wanted to empower our existing operators with an easy and flexible, but also scalable technology that could cater to our peak periods and additional operators when required. Cohesio managed to deliver all of our requirements in a very short implementation period and we’re extremely pleased with the initial application and final design,” Erik Skinner, Manager at CSFS said. Based on the principles of voiceguided technology, Android Voice gives organisations the power to optimise and simplify operations including goods receiving, picking, replenishing and putaways. It also offers efficiencies when it comes to stocktake, inspection and maintenance and retail front-ofstore operations. Cohesio Group is also a certified Android Zero Touch partner on Google’s zero-touch partner program. This means that all their design and development methodologies are certified by Google and the API integration automates the Android integration allowing users to be more productive and give Cohesio the ability be more proactive with support.

MHD NEWS

Global retailer joins Toll Group at new logistics hub in Melbourne

idwest Logistics Hub in Truganina in Melbourne’s West has a new tenant who has signed a 10-year term. Global retailer Uniqlo has secured a 46,000sqm pre-lease to commence in early 2021. On completion, Midwest Logistics Hub will be a prime logistics estate in Melbourne valued in excess of $500 million. Development of Midwest Logistics Hub commenced in October 2019, with the first pre-lease to Toll Group for a temperature controlled 44,000sqm facility to service its fulfilment contract with Mars Wrigley Australia, acting as a distribution centre for storage and dispatch to customers. The technologically advanced warehouse will store all of Mars Wrigley’s products under one roof for the first time in the company’s history, with the capacity to store up to 49,000 pallets or more than 700 million MARS® Bars and use Automated Guide Vehicles to move

pallets around the warehouse. Andrew Simons, Charter Hall’s Head of Development, Industrial & Logistics Wrigleysaid Uniqlo’s pre-lease reinforces the changing nature of retail supply chains with the commitment of Fastline Retailing (the owner of Uniqlo), a global leader in the retail industry, to establish their own facility to manage both their existing national store network and their expanding ecommerce business. Andrew said the facility will consolidate their operations into one purpose-built facility featuring cross dock operations with a super awning, 14.6 metre warehouse clearance height and container rated hardstand. 50 per cent of the Midwest Logistics Hub estate is now committed. Richard Mason, CPIF Fund Manager said this can be credited to the estate being in a preferred location for national distribution centres due to its proximity to the port and customers and the area’s large investment in

road infrastructure. All civil and infrastructure works will be completed in June 2020 and the construction of the Toll facility is on track to complete in September 2020. Each facility at Midwest is targeting a 4 -star Green Star Design and As-Built rating and will incorporate various sustainability initiatives including 100-300kw solar PV systems, LED warehouse lighting and rainwater harvesting. Richard Stacker, Industrial & Logistics CEO, said modern logistics space in strategic locations across the Eastern Seaboard continues to attract quality tenant covenants for its real estate funds and their investors. “Charter Hall’s Industrial & Logistics development pipeline now exceeds $2 billion, providing the scale and flexibility to satisfy the growth aspirations of our existing and prospective tenant customers, while also delivering high quality real estate and investment outperformance to our investors,” Richard said.

Uniqlo has secured warehouse space in Truganina, Victoria.

MHD MAY 2020 | 15

MHD NEWS

C.H. Robinson help distribute over 200,000 face masks

.H. Robinson has helped move 225,000 masks from Shanghai to distribute across Australia to support essential workers during the COVID-19 pandemic. Logistics have taken on a new meaning for all Australians who are concerned about shortages and running out of essentials. Manufacturing, by and large is

continuing, but getting products to the end user can be problematic. Last month C.H. Robinson began delivery of essential items in a bid to unplug the distribution bottleneck and keep retail staff safe in the workplace. A spokesperson for C.H. Robinson said the company pulled out all stops and successfully orchestrated the delivery of 225,000 disposable face masks to

help protect a major retailer’s store and warehouse staff, ensuring they could continue their inspirational work keeping Australians fed. “This was an incredible effort by the world’s largest third party logistics company, which meant that these vital goods were delivered to staff all across Australia by 31 March, a week ahead of schedule,” the spokesperson said.

C.H. Robinson has pulled out all the stops and delivered 225,000 disposable face masks to Australia.

Every Australia Post plastic satchel to be made from recycled materials

ustralia Post has announced that 100 per cent of its entire range of plastic satchels will be made from recycled materials. The initiative was announced at the National Plastics Summit in Canberra earlier this month and will be in effect by 2021. Nicole Sheffield, Executive General Manager Community and Consumer said the commitment underlined Australia Post’s drive towards a sustainable future. “Australia Post continues to incorporate sustainable design principles in the development of our packaging, as we reduce greenhouse gas

16 | MHD MAY 2020

emissions, non-renewable resource use and water consumption,” she said. The announcement follows major retailer and Australia Post customer, Country Road, to launch its first recycled plastic satchel in December 2019. Nicole said as online shopping grows, Australia Post is focused on reducing the quantity of non-recycled packaging that moves through the network. The new satchel is made of recycled plastic, sending a clear signal to the market that major Australian brands are committed to eliminating the use of virgin plastic across its packaging supply chain. Australia Post has been a signatory

of the Australian Packaging Covenant Organisation (APCO) since 2005, joining other major businesses and Government to set the ambition to achieving national packaging targets. Since the launch of its Environmental Action Plan in 2018, Australia Post has been incorporating sustainability principles in the design and production of its packaging, a commitment that is reiterated in its 2020-2022 Group Corporate Responsibility Plan Last year Australia Post also teamed up with REDCycle to offer its customers access to more than 1,800 soft plastics recycling points at major supermarkets across Australia.

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MHD MATERIALS HANDLING

TAKING ADVANTAGE OF THE ECONOMIC STIMULUS PACKAGE

MHD explains how the supply chain and logistics industry can leverage the government’s recent stimulus package to enable new business opportunities.

he Australian federal government announced an initial stimulus package on 12 March 2020, in response to the challenges the COVID-19 global pandemic is presenting for businesses. The stimulus package focuses on keeping Australians in jobs and keeping businesses in business so the nation can bounce back. Australia has over three million small and medium businesses. Prime Minister Scott Morrison said the government was acting in order to cushion the blow from the coronavirus for businesses. “We want to help businesses keep going as best they can and for as long as they can, or to pause instead of winding up their business. We want to ensure that when this crisis has passed Australian businesses can bounce back,” the Prime Minister said. “We know this will be temporary. That’s why all our actions are geared towards building a bridge, keeping more people in work, enhancing the safety net for those that aren’t and keeping businesses alive so they can get to the other side and stand up their workforce as quickly as possible.”

WHAT DOES IT MEAN FOR SUPPLY CHAINS AND LOGISTICS? For business, the package includes increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020. For transport operators the introduction of a time limited 15-month investment incentive until 30 June 2021 is aimed at supporting business investment and economic growth 18 | MHD MAY 2020

over the short term, by accelerating depreciation deductions. Cash flow assistance will be provided for up to 70,000 businesses challenged by the economic impacts of the coronavirus and to help with employee retention. According to the Australian Logistics Council (ALC) the range of economic stimulus measures announced by the Prime Minister must be matched by other practical actions from governments at all levels to ensure supply chains remain resilient. “Many aspects of the Federal Government’s stimulus package today will be welcomed in the logistics sector, in particular the extension of the instant asset writeoff which can be used by businesses to modernise equipment and vehicles, delivering a range of safety and productivity benefits,” said ALC CEO Kirk Coningham. “However, economic stimulus measures need to be matched by a commitment to additional practical actions in order to meet some of the supply chain challenges that the COIVD-19 situation is presenting.”

WHAT FINANCIAL SUPPORT IS AVAILABLE? The federal government will invest $6.7bn to boost tax-free cash flow for employers. The payment will provide cash flow support to businesses with a turnover of less than $50m that employ staff from the beginning of this year to June. Up to $25,000 is available to help pay wages or for investment to protect against a downturn in activity. Businesses with turnover less than $500m will be able to access a 15 month investment incentive by accelerating depreciation deductions.

These businesses are also eligible for an expanded instant asset write-off for asset investments of up to $150,000. Similar to the relief provided following the bushfires, the Australian Taxation Office (ATO) will provide administrative relief for certain tax obligations on a case-by-case basis. If you’re a quarterly pay as you go (PAYG) instalments payer you can vary your PAYG instalments on your activity statement for the March 2020 quarter. Wisbey noted that thresholds here limit the amount of available assistance, The 50 per cent allowance on PAYG capped at $25,000 limits the target pool and those companies still need to pay net wages and super. From March 12, businesses with a turnover of less than $500m will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset cost. A time-limited 15 month investment incentive to support business investment and economic growth over the short term, by accelerating depreciation deductions.

WHAT ABOUT ACCESS TO THE NEW INSTANT ASSET WRITE-OFF THRESHOLD OF $150,000? This is available to businesses with an annual turnover of less than $500 million. As a manufacturer in Australia, you can now access up to $150,000 in instant asset write-offs (IAWO) and instant depreciation on assets over $150,000. This can include manufacturing machines. It applies to eligible assets acquired after announcement and first used or

MHD MATERIALS HANDLING installed by 30 June 2021. The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets. Expanding the threshold will mean an additional 5,300 businesses who employ around 1.9 million Australians will be able to access the IAWO for the first time. This proposal applies from announcement until 30 June 2020, for new or second-hand assets first used or installed ready for use in this timeframe. This measure is estimated to have a cost of $3.2 billion over the forward estimates. It will support business investment and is estimated to lower taxes paid by Australian businesses by $6.7 billion over the next two years.

AROUND THE NATION “These extraordinary times demand extraordinary measures,” Scott Morrison said. In late March, state governments announced its own packages in an effort to support Australian businesses during this unprecedented time. NEW SOUTH WALES $1bn funding package to boost employment

“

in Services NSW and defer payroll taxes and other levies.

We want to help businesses keep going as best they can and for as long as they can, or to pause instead of winding up their business. We want to ensure that when this crisis has passed Australian businesses can bounce back.

”

VICTORIA $1.7bn economic survival package including $500m to support workers to transition to new jobs and a $500m business support fund for the hardest-hit sectors, including retail. QUEENSLAND $4bn package including rebates and waivers amounting to five months of payroll tax for businesses. WESTERN AUSTRALIA $1bn package including extra assistance for small businesses’ energy bills. SOUTH AUSTRALIA $350m package to bring forward infrastructure spending and start new projects in road maintenance and $300m for businesses and industries. TASMANIA $565m package including $150m to purchase essential equipment and supplies, and provide additional staff to combat Covid-19. ■

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COHESIO AND HIGHJUMP TO BECOME KÖRBER SUPPLY CHAIN In a move that will see some of the world’s top supply chain technology solution providers unify to become one united entity, international technology group Körber AG has formed a new global brand called Körber Supply Chain.

örber Supply Chain is set to reinforce the combined capabilities of its eleven strategic companies and conquer supply chain complexity globally. Together, this new unified brand will lead the way for the future of global supply chain technology and will be unique in providing a diverse range of capabilities spanning software, automation, voice, robotics and materials handling. Cohesio Group and HighJump along with the rest of their eleven sibling companies Aberle, Aberle Software, Cirrus Logistics, Consoveyo, DMLogic, Inconso, Otimis, Langhammer, Riantics and Voiteq will become Körber Supply Chain as part of this global rebrand. This move goes beyond a new name and a rebrand. Körber Supply Chain will boast the combined experience of their 1,300 in-house professionals and nearly 100 strategic partners across the world dedicated to advancing supply chains. 20 | MHD MAY 2020

MHD SITS DOWN WITH NISHAN WIJEMANNE, CEO OF COHESIO GROUP TO LEARN WHAT THIS UNIFIED BRAND WILL MEAN TO THE SUPPLY CHAIN INDUSTRY IN AUSTRALIA AND NEW ZEALAND “Cohesio Group and HighJump, two of Körber’s prominent tech providers in Australia and New Zealand have been at the forefront of delivering innovative solutions and expertise. In September last year, Cohesio was acquired by Körber Group. This strategic acquisition has helped us to accelerate to our next phase of growth and continue pushing the boundaries of what our people can deliver in the supply chain tech space. We have never stood still. Our team is uniquely suited to creating and delivering tailored supply chain technology and we have continued delivering transformative projects across

warehousing, logistics and retail. Our tech solutions have evolved from voice and mobility through to new generation Android Voice and Autonomous Mobile Robots (AMRs) offering a suite of enterprise-grade solutions that now tick the boxes of ease, rapid deployment, user readiness and cost-effectiveness, along with our support, solutiondesign and consultation capabilities for the best possible workflow optimisations. Our fundamental principles of flexibility and agility have enabled us to adapt and grow and we have now grown to become one of Asia Pacific’s leading automation and technology providers in the logistics and distribution space. We work with some of this region’s top brands including Kmart, Linfox, Wesfarmers and Cotton On Group and partner with several others to bring emerging technologies to the forefront. Autonomous Mobile

MHD SUPPLY CHAIN Beauty and T2 Tea. Both Cohesio and HighJump will continue and expand under the Körber Supply Chain brand in this region and customers will undoubtedly benefit from the range of new ideas and combined stack of technologies that this unified brand will bring to the forefront. Our people will continue to come up with the new ideas that make us the market leader in this space and this transition to Körber Supply Chain gives us the further opportunity to develop those ideas, along with the access to even more experts across the entire supply chain spectrum. Robots (AMRs) was one such goodsto-person automation solution that Cohesio successfully pioneered in Australia in 2018 and has since completed numerous AMR projects across APAC as well as developed an in-house competency in scoping, designing and delivering a wide range of AMR solutions. Pairing this flexibility and integrity with a people-first culture makes what the Cohesio team do nearimpossible to replicate. Our team of specialists are integral to everything we do here because they evolve with our enterprise values. We will always stay true to these values. But to be the best we can possibly be, we need to continue breaking the glass ceiling that holds back innovation and the delivery of new ideas, new expertise and an even wider range of capabilities and experts to our supply chain industry. This is why Cohesio is welcoming the global rebrand and a unified Körber Supply Chain with excitement. This was by far the most logical step for Cohesio after the acquisition to ensure that we are offering the best of our combined enterprisegrade solutions, capabilities and expertise to conquer supply chain complexities, together. Cohesio and HighJump’s synergies commenced well prior to Cohesio becoming a sibling of HighJump under the same parent company. HighJump’s presence in this market along with its success rate is an important ingredient in the new unified brand under the parent name that we are both about to embrace.

Highjump is a leading international provider of supply chain management software and cloud solutions and became a part of Körber’s ecosystem via acquisition in August 2017. This acquisition enabled Körber to have a stronger world-wide foothold for advanced supply chain software platform and enabled their competencies to expand beyond the US to APAC and LATAM as well. Since 2017, HighJump has experienced significant growth and has earned an enviable spot in APAC as a leading WMS provider. The software provider has helped some of the leading retailers in Australia and New Zealand meet unprecedented online demand, including retailers Adore

WHAT’S NEXT? We will soon become Körber Supply Chain. We will transition entirely to Körber Supply Chain in due course. We will power ahead with our people and continuous delivery of tried, tested as well as innovative, new and exciting tech solutions. We will conquer supply chain complexities, together. While we take these steps, there will be no change for our customers or for our people. We will continue delivering on our values and continue our commitment to transforming this region’s supply chain industry. With even more access to industry leading expertise and innovation, I can’t wait to explore new possibilities with you and your businesses.” ■

After the rebrand, the team at Cohesio will continue delivering on their values and commitment to transforming the region’s supply chain industry.

MHD MAY 2020 | 21

MHD COVER STORY

SOLVING INDUSTRY CHALLENGES WITH AGVS

In a competitive environment like food and beverage logistics, AGVs can present a number of efficiency and productivity benefits. MHD speaks with Tony Raggio, General Manager Sales – AGV at Dematic to find out more. Dematic has helped Lactalis Australia to achieve increased productivity at its Lidcombe Milk Site in NSW.

ood and beverage (F&B) companies across Australia and New Zealand are facing increasing challenges in a hyper-competitive environment, including cost pressures and the squeeze on margins, reduced availability of labour, and the need to maximise customer service levels, improve occupational health and safety, and increase visibility and traceability across operations. According to Tony Raggio, General Manager Sales – AGV at Dematic more and more local companies are replacing manual forklifts with Automated Guided Vehicles (AGVs) to address these specific challenges and improve productivity, reliability, efficiency, and flexibility in their manufacturing and warehousing facilities. 22 | MHD MAY 2020

COST PRESSURES The imperative to optimise productivity and reduce costs in supply chains has never been greater for F&B manufacturers, Tony says. “While labour costs continue to rise and drive the need to increase productivity, these cost pressures are being compounded like never before by the increasing concentration of the grocery retail market, and increasingly price conscious consumers,” he says. Grocery retailers putting pressure on manufacturer margins Grocery retailers are in a unique position of strength and this has major implications for F&B manufacturers. In Australia, the market share of the two top grocers stood at 68 per cent in

2017-18 according to IBISWorld, one of the most concentrated grocery retail markets in the world. The New Zealand the concentration is even higher, with the top two grocery holding 79 per cent market share. Major grocers are also consolidating market share in liquor retail. Australia’s two major grocers – with their big box liquor outlets and aggressive pricing – now control 67 per cent of the alcohol retail market. “The grocers have leveraged their position to drive strong agreements with suppliers, eroding suppliers’ margins and enabling them to offer low store prices that smaller outlets find difficult to compete with. They are also using their position to drive their own

MHD COVER STORY private label ranges at the expense of branded products, further cutting manufacturer’s margins,” Tony says.

LABOUR: RISING COSTS, DECREASING AVAILABILITY According to Tony, the challenge to reduce costs is compounded by increasing labour costs. “Furthermore, operators who want to work in warehouses and distribution centres are becoming hard to find and retain. Nowhere is this more acute than in cold storage facilities,” he says. Customer service pressures In a highly competitive, consumer-driven market it is imperative for F&B manufacturers to get the right product in the right quantity at the right time to customers, more so than in any other industry. “Grocers are less tolerant of missed delivery windows or incorrect products that lead to out of stock store shelves, imposing penalties for late or incomplete deliveries,” Tony says. Manufacturers need to ensure there are no bottlenecks to operations – such as an operator leaving a pallet at the end of a palletising line – which can lead to production lines being stopped. In turn they need to ensure they have the correct product in the required stock quantity, and that orders are complete and accurately despatched in a timely manner.

THE KEY BENEFITS OF AGVS Increasing productivity to reduce operational costs, reliance on labour F&B companies are investing in AGVs to drive productivity gains in their warehouses and distribution systems, switching from manual forklifts to automated operations with AGVs to reduce operational costs and reduce reliance on scarce labour. “In a two-shift operation, a typical company can expect a return on investment in around two years. These savings increase with the number of AGVs on site due to scale,” Tony says. Tony states that if an operation runs three shifts a day, five days per week, the annual cost per forklift is approximately $240,000. This cost includes the wages of three drivers, capital expenditure or leasing for the vehicle, and running costs. Over ten years the cost of a forklift equates to approximately $2.4 million per forklift. “Over a ten-year period, businesses can potentially save nearly $2.1 million per forklift by investing in an AGV system,” Tony reveals. Businesses that run their warehouse for over eight hours per day can achieve substantial cost savings by switching to AGVs. And the more

AGVs create a safer working environment. shifts there are, the more money businesses can save because AGVs can run 24-hours per day without any additional staffing costs or the need to pay any overtime or holiday rates.

“

Thanks to their safety and accuracy features, AGVs create a safer working environment. Dematics AGVs comply with all current safety standards.

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IMPROVE OCCUPATIONAL HEALTH AND SAFETY Occupational Health and Safety (OH&S) is regularly cited as the number one priority for many F&B manufacturers. The movement and storage of heavy pallet loads, potential breakages and spills, all pose dangers to operators. Apart from the human factor, Lost Time Injuries are becoming increasingly costly to operations. And an aging workforce only increases the imperative to address OH&S challenges. According to SafeWork NSW, the main reasons why people are killed or seriously injured by a forklift include: • H it by a forklift because of driver error, working too close to the forklift or inadequate traffic management • H it by a load a forklift was moving because the driver did not use an attachment when one was needed, or assisting to adjust or steady the load • N ot wearing a seat belt in a tip-over. The forklifts mostly tipped because operators were turning on uneven or sloping ground. “Thanks to their safety and accuracy features, AGVs create a safer working environment. Dematics AGVs comply with all current safety standards,” Tony says. AGV systems are suitable for materials handling applications in harsh applications including cold stores. AGVs can also operate around the clock and run at night with the lights out in the freezer warehouse, which has a temperature of minus 25 degrees Celsius. The addition of AGVs in the warehouse provides a reduction in occupational health and safety concerns as well as eliminating human error. MHD MAY 2020 | 23

MHD COVER STORY It is worth reiterating with regards to safety, with their multiple sensors AGVs are able to work safely alongside operators and other material handling equipment such as forklift trucks.

INCREASED VISIBILITY AND TRACEABILITY Food Standards Australia New Zealand (FSANZ) requires food to be tracked through all stages of production, processing and distribution (also known as farm to fork). The aim is to enable quick and effective corrective action in the event of something going wrong, such as a product recall, and prevent contaminated product from reaching consumers. Supply chain management systems need to capture sources of raw materials, additives and other ingredients and all other inputs, and provide product batch or lot identification, production and expiry dates. In addition to meeting Food Standards Code requirements, F&B companies recognise that product traceability systems help protect their brands by enabling a rapid and effective response to any incident. Apart from batch and lot tracking, Warehouse Management Systems (WMS) need to effectively manage inventory and First In First Out (FIFO) rules; in many cases, major grocers will only accept consecutively numbered batches and expiry dates. By fully automating transport and storage tasks, and fully tracking all movements, AGVs provide full visibility of operations and complete traceability of product from production through to warehousing and despatch. “AGVs are very reliable and significantly transform the efficiency of manufacturing logistics operations. When an AGV transports and puts a pallet somewhere, it constantly updates the WMS, so all materials handling is conducted in real time,” Tony says.

FLEXIBILITY AND SCALABILITY F&B companies’ operations change, and they need the flexibility to be able adjust any systems accordingly. AGVs are a flexible automation solution and can scale or flex as required. “Adding new machines or reallocating AGVs from one area of a facility to another is quick and easy. AGVs are able

24 | MHD MAY 2020

to communicate with each other and the control system for the AGVs is also very smart, so if one AGV is closer to a task than another, they’ll swap tasks.,” Tony says. The AGV management software is shared so that changes can easily be made to one machine and replicated to all. New machines can be operational in minutes after arriving at a facility, minimising any disruption to operations. Because today’s AGVs use laser and vision-based navigation, modifying or changing a guide path is an easy operation. Simple software changes to the fleet management software can allow guide paths to easily be changed or modified. Changing the guide path only needs to be done once, and all the machines in the system get the change. Redeploying AGVs to different locations is equally easy. This allows AGVs to be shared among multiple facilities or areas within a facility to alleviate seasonal demands.

LOCAL PRODUCTION AND SUPPORT Another important factor when considering the installation of AGVs here in Australia, is whether the provider can offer support at a local level. Dematic manufacturers AGVs for its Asia Pacific market at its site in Belrose, New South Wales. “We’re capable of manufacturing around 120 AGVs a year at this site. In addition to local manufacturing, the biggest advantage for us is that we don’t have to rely on overseas resources to service our customers,” Tony says. The software for the AGVs is also developed by Dematic locally. “Our warehouse control system, AGV Manage has been developed at Belrose and is tailored to each customer. Allowing us to offer hardware and software support in Australia,” Tony says. Many providers in this field are based in Europe or the US, and therefore need to send an engineer to the site for the installation, adding significant cost to the solution. This may also present an issue for ongoing maintenance and support. “While there are some fixes that can be done remotely, with a lot of AGV equipment there is a significant safety consideration, so some things you need to have the engineer on site. If that is the case it could cost upwards of $20,000

sending someone over from Europe or the US, while we have engineers based here in Australia,” Tony says. During the current challenge of borders closing due to COVID-19 restrictions, this has become even more critical. “Now more than ever this is a huge advantage for our customers. We don’t need to rely on expertise from overseas, we are here in Australia and can support our customers during this crisis,” he says.

CONCLUSION F&B companies have always faced challenges due to being part of a fast-paced and demanding grocery environment, and as technology advances and consumer expectations around product availability increase, the challenges facing F&B companies have also increased. With growing cost pressures and customer service pressures, F&B companies need to improve productivity, increase visibility and ensure that their warehouse operations have the flexibility and scalability to keep up with future demands. In order for F&B companies to accommodate and also capitalise on the changing demands of the market, they will need to think carefully about how supply chain processes can be optimised to better suit the needs of the F&B market. Investing in technology allows F&B companies to improve warehouse operations and address a number of these key challenges, and many F&B companies are already choosing to implement AGVs in the supply chain. AGVs increase productivity, reliability and improve OH&S through minimising the need for human workers in the warehouse, which also allows companies to bypass labour shortages and run operations 24/7 without incurring added wage costs. “AGVs provide better visibility of warehouse operations by automating processes that were previously manual, as well as providing the flexibility needed to support any future growth of a company,” Tony says. The significant benefits that AGVs provide to F&B companies enable businesses to remain competitive in an increasingly challenging environment, and ensure they are well positioned to address any future changes to the industry. ■

MHD COVER STORY

ARNOTT’S IMPLEMENTS DEMATIC AGVS FOR IMPROVED RELIABILITY EFFICIENCY AND SAFETY Australia’s largest and most quintessential biscuit brand, Arnott’s, has introduced Automatic Guided Vehicles from Dematic to increase manufacturing productivity and reliability. Arnott’s recently successfully completed the roll-out of six Dematic’s AGVs at its head manufacturing plant in Virginia, Brisbane, Queensland. The advanced, self-charging Dematic AGVs are designed to increase efficiency, accuracy and safety in manufacturing and distribution centres, achieving this with high precision laser guidance and multiple collision avoidance sensors. Tim Morgan, Arnott’s Group Plant Manager QLD & SA, says it partnered with Dematic in order to find a solution that enhanced the efficiency of its manufacturing operations. “We elected to partner with Dematic as they are the market leader for AGVs in Australia,” Tim says. “The implementation of AGVs in our manufacturing has helped us to achieve automated movement of product loads to improve reliability, increase flexibility and provide better sanitation for handling goods. This means we

can focus on delivering our products to Australians in the best way we can.” The AGVs work systematically to carry large pallets of product from end-of-palletising stations to drive-in storage racking areas. From there the AGVs take the pallets to handover stations where forklifts transport them to manufacturing lines. The overall process of using the AGVs increases reliability, with the AGVs capable of working non-stop 24/7 every day of the year. This is in addition to improving efficiency and accuracy of operations, thereby minimising mistakes and workplace accidents which provides significant improvements in occupational health and safety standards. “We are very pleased to be working alongside such a well-known and respected Australian brand as Arnott’s,” Tony Raggio, General Manager for AGVs at Dematic says. “Our AGV automated technology is a very exciting product for us here at Dematic, and it’s fantastic to see it making such successful improvements to Arnott’s warehouse processes.” To find out more, watch the video here: https://youtu.be/VmbG51tOLXw

AGVs have helped Arnott’s to improve reliability, increase flexibility and provide better sanitation.

LACTALIS BOOSTS PRODUCTIVITY WITH AUTOMATED GUIDED VEHICLE 24/7 OPERATIONS AT LIDCOMBE MILK SITE Dematic has helped Lactalis Australia to achieve increased productivity at its Lidcombe Milk Site in NSW, with the roll out of a new automated guided vehicle solution. Lactalis Australia (formerly Parmalat) is owned and operated by the Lactalis Group, a third generation, French family owned business. Its Australian operations date back to the original Pauls milk business which has been running since 1932. Locally, Lactalis has 2,500 employees who work closely with up to 500 Australian farmers. “One of Lactalis’ key goals is to invest in and grow the Australian dairy industry, as well as to promote Australia as a high-quality producer for the Asia Pacific region,” Kristian Brennan, National Logistics Optimisation Manager at Lactalis says. “To support this growth, Lactalis is always

looking for new ways to improve our operations by boosting efficiencies and productivity. “The new AGV solution has successfully helped us to significantly increase productivity at our Lidcombe site, as it allows us to run a faster operation 24 hours a day, seven days a week.” The AGV solution chosen by Lactalis, Dematic’s Counterbalance Series AGV, manages the transportation of pallets of milk at the Lidcombe site and is capable of lifting loads of up to 1.2 tonnes to a height of six metres. The AGVs are well suited to working at the site, which is a chilled environment that has a temperature of 2 to 4 degrees Celsius. Four AGVs work to retrieve pallets from an inbound conveyer system from production, and then feed the pallets into an order buffer, releasing the pallets

at a declined angle onto pallet live storage racking. They operate in a small space and manage tight traffic at high speeds of up to 1.7 metres per second. The AGV solution’s accuracy and safety around workers and any obstacles is ensured through sensors and laser scanners that help them navigate with precision. The AGVs are powered by Lithium Ion batteries and can drive themselves onto charging floor plates at times of inactivity and be fully charged in 2 hours. “The need to optimise productivity and reduce costs in food & beverage supply chains has never been greater,” Tony Raggio, General Manager AGVs at Dematic says. “We’re excited to see Lactalis Australia has increased its productivity, while also being able to receive a good ROI from its investment in Dematic AGVs.”

MHD MAY 2020 | 25

MHD E-COMMERCE

TURNING OVER A NEW LEAF

Leading home-grown tea retailer, T2 Tea, experienced a 120 per cent growth across its digital sales channels in 2019 and as a result needed to rethink its WMS provider. MHD sits down with the technology and logistics team to find out more.

ustralian tea retailer, T2 Tea, opened its first store in Fitzroy, Melbourne in 1996. Two years later the tea producer opened its second store in Chadstone, by Christmas that year both stores had sold entirely out of stock, as the company became more and more popular. Before long, the gourmet tea business found itself operating 40 stores across Australia and New Zealand. In September 2013, Unilever acquired the tea producer in a multimillion dollar agreement, with the view to transform the chain into a global business. T2 Tea is now one of the world’s largest tea retailers, with more than 90 stores worldwide, including 60 shops in Australia and New Zealand. The innovative retailer also offers a 26 | MHD MAY 2020

number of additional ways to shop the brand, including via various digital marketplaces, resellers, grocers, cafes and direct to consumer via the global T2 website. According to T2 Tea, it’s in the organisations DNA to do things differently. It was born out of a desire to be unlike anything else and prides itself on being unique and individual. Innovation is a core value of the business, especially when it comes to ensuring that its customers get the very best products in the most timely and convenient way possible. T2 Tea has seen its customers move towards its digital sales channel offerings over the last few months, with the company reporting an increase of up to 120 per cent in 2019. “We’ve seen a massive shift to e-commerce

in the past twelve months and we are expecting this to continue, with a projected 20 per cent year-onyear growth into the future,” Rohan Penman, Global Head of Technology at T2 Tea says. The company runs its logistics and warehouse operation out of Laverton North in Victoria, and from this site it services all of its retail stores in Australia and New Zealand as well as its wholesale, marketplace and e-commerce operations. “We’ve got around 5,000 to 6,000 pallets in our Laverton North site, and approximately 1,400 SKUs. We operate with around 20 to 30 staff at our lower periods and then around 100 plus when we are meeting peak period demands,” Aaron Calleja, Business Analyst at T2 Tea says.

MHD E-COMMERCE SERVICING E-COMMERCE GROWTH As the business started to see growth across its e-commerce offering, it struggled to keep up with consumer demand. “For us, it really was a J curve in terms of growth in e-commerce, and we were struggling to get our goods out the door quick enough. Especially with regards to meeting demand during events like Singles Day or Black Friday. It was taking us quite a few days to catch up on our orders,” Aaron says. T2 Tea was operating a Warehouse Management System (WMS) that was nearing end-of-life and used this opportunity to rethink its logistics and warehousing operations. “We were using a product that had ongoing issues, it was an old solution that was not fit for purpose. When the provider made the decision to stop offering this solution, we started the process for looking for a new WMS,” Aaron says. T2 Tea first started looking for a new software provider in October 2018, and after considering all the solutions available in the market opted for HighJump’s Warehouse Advantage solution. “It was a very close call for us but in the end, we found that the HighJump offering was exactly what we were after,” Rohan says.

SET FOR THE FUTURE T2 Tea is now one of the world’s largest tea retailers.

T2 Tea made the decision to go with HighJump’s solution at the end of

2018 and started the project with one of HighJump’s Australia-based implementation partners in February 2019, the project then went live in June 2019. During the WMS selection process, T2 spoke with fellow Australian retailer Adore Beauty, who has also implemented the HighJump WMS offering. “We were lucky to chat with the team at Adore Beauty who are fulfilling thousands of orders a week, they have had a great experience with the HighJump product and this really gave us the confidence that we would be able to meet the demand that we are forecasting for the e-commerce part of the business,” Rohan says. “The team at HighJump have been great in terms of flexibility, guiding us around best practice and providing creative solutions. Both HighJump and its implementation partner, iWMS, have been very supportive and helpful through the entire process,” Aaron says. Aaron also recently attended HighJump’s Elevate Conference in Orlando, Florida and says that it was great to see so much technology on offer. “We’re very interested in voice and automation and how that can help us meet demand further into the future, and it’s great to know that the HighJump product will allow us to utilise these kinds of technologies,” he says. The HighJump solution was originally designed to deliver over 10,000 shipments a week, which Aaron says is modelled around T2 Tea’s busiest periods. “It’s certainly streamlined the e-commerce picking and packing process. We’re getting efficiency gains of 30 per cent for our e-commerce picks and for general replenishment we’re still getting around 10 per cent efficiency again even though the process has remained much the same,” Aaron says. According to Rohan, the key for this implementation was to achieve those efficiency gains around e-commerce. “This is where the business sees a growth channel and this software has opened so many doors for us around flexibility and efficiency,” he says.

UNLIMITED SCALABILITY The company runs its logistics and warehouse operations out of Laverton North in Victoria.

T2 Tea opted for HighJump’s cloud offering, which according to Rohan has presented the business with a number of benefits around risk MHD MAY 2020 | 27

MHD E-COMMERCE

Over the past few months, T2 Tea has seen its customers move towards its digital sales channel offerings.

T2 Tea prides itself on being unique and individual.

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management and scalability. “By utilising HighJump’s cloud offering, we now have greater confidence in our infrastructure. When it comes to infrastructure on premise, there is the increased risk of downtime due to outages or issues with the infrastructure. We know, that by using HighJump’s cloud offering, that there is a greatly reduced risk of an outage. “If you have an outage in the warehouse, it can cost you more than you realise because you’re not shipping and not utilising your WMS. That downtime can be really significant, especially when you’re experiencing a peak in demand. By moving to the cloud, it’s essentially like having an insurance policy against this kind of loss in productivity and profitability,” Rohan says. With HighJump’s cloud option, the solution and infrastructure are managed and supported by the software provider, giving T2 Tea the added benefit of ongoing support from HighJump. “With the likes of Black Friday and Singles Day, where you have a huge uptake in sales and volume, when your infrastructure is on the cloud you have the sense of confidence that the solution will scale up accordingly. It’s basically unlimited scalability,” Rohan says. HighJump’s cloud-first initiative was launched three years ago and is called HighJump Now. The software provider has seen a considerable move to cloud-

MHD E-COMMERCE based infrastructure and provides solutions across a number of global cloud-based providers, with global agreements currently in place with Amazon Web Solutions and Oracle Cloud Infrastructure. Over the past three years, seventy percent of HighJump’s new customers have opted for cloud-based solutions. Additionally, there has been a twenty percent year-on-year uptake in conversions of of HighJump’s long-term customers to a HighJump hosted service. HighJump has been a leading provider of hosted WMS solutions for over ten years and has built a deep domain expertise in this field.

PERSONALISATION AND CUSTOMISATION Another area of development for T2 Tea is the ability to offer personalisation and customisation for its online consumers and HighJump will also support T2 Tea in this.

“We’re ready for when we want to do some quirky things around customisation in the future. We haven’t quite finalised what that will be yet, but this WMS is very flexible and offers us the opportunity to add a value-added service lane so we can have some fun with our e-commerce offering,” Rohan says. This project is part of a larger strategy for the retailer and according to Rachel Chaloner is the first step in the organisation’s strategic road map. “This was a big piece in the puzzle for us, to make sure that we get more efficiency out of our warehouse and distribution. We’re also in the process of upgrading our website and the WMS is absolutely critical to that initiative. We wanted to make sure our warehouse was operating as efficiently and effectively as possible and I’m happy to report that it’s so far, so good,” she says. HighJump boasts a portfolio of a

number of leading retailers worldwide, with more than 4,400 businesses using its software solutions. According to HighJump’s Director of International Sales, Jamie Sterling, T2 Tea was a great company to work with. “We’re thrilled to have the opportunity to work with such a recognised Australian brand and innovative retailer. The growth that T2 Tea is currently experiencing is setting it up as one of the world’s leading boutique tea retailers and we have enjoyed developing a solution that will offer them efficiency gains, while also offering flexibility around peak times. We worked closely with the team to deliver the project to a tight timeframe and ensure that they are ready to meet the projected demand across its e-commerce offering over the next few years. At HighJump we are extremely proud to call T2 Tea a partner and I look forward to working with the T2 Tea team into the future,” he says. ■

T2 Tea now has more than 90 stores worldwide.

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MHD SUPPLY CHAIN

ACCELERATING THE MOVEMENT OF GOODS C.H. Robinson recently opened a new facility at Melbourne’s Tullamarine Airport as part of its continuing expansion in Oceania. MHD catches up with Andrew Coldrey, Vice President Oceania at the company to find out more.

ne of the world’s largest logistics platforms, C.H. Robinson, is on a significant growth trajectory. The business is investing heavily in the Asia Pacific region to ensure it is well placed to meet the growing demands of its customers. Late last year, Bob Biesterfeld, CEO at C.H. Robinson, announced the company’s largest investment in innovation and technology to date. He revealed that C.H. Robinson will invest $1 billion USD in technology over the next five years, doubling its previous investment of the same amount every ten years. According to Andrew Coldrey, Vice President Oceania at C.H. Robinson, the new purpose-built facility at Melbourne’s Tullamarine airport is an example of C.H. Robinson’s investment in its future growth in this region. “We had outgrown our previous facility and we wanted to expand the services that we offer to our clients. This new facility has enabled us to significantly improve our throughput for our ocean and air customers across this region,” Andrew says. C.H. Robinson’s previous facility handled inbound air freight, but was struggling to manage the outbound freight, Andrew says. “It was tight, and we couldn’t do much with our coastal shipping offering or have the opportunity for the more flexible and specialised solutions we offer our customers,” he says. The facility is just over 5,000 sqm, with the warehouse approximately 4,000 sqm in size and the rest used for office space. The site is a multi-user site and features a number of different types of cargo and customers and will handle freight for approximately 30 per cent of C.H. Robinson’s Oceania customers. 30 | MHD MAY 2020

The new facility is just over 5,000 sqm, with the warehouse approximately 4,000 sqm.

MHD SUPPLY CHAIN “We have some exports to Europe, which cover medical goods, machinery, motor vehicle parts as well as lots of food exports to Asia. We also operate domestic shipping from here and we are starting to see that growth significantly,” Andrew says.

INCREASING THROUGHPUT RATES In addition to increasing capacity, a main priority for C.H. Robinson was to increase the throughput and efficiency of handling cargo for its customers. “As well as better servicing our clients, we wanted to reduce delays that were incurred due to third party scanning,” Andrew says. From 1 March 2019, the Government announced new export screening requirements for air cargo. All outbound international air cargo, regardless of its destination, is now required to be examined under the Enhanced Air Cargo Examination (EACE) program before it is loaded onto the plane. According to Andrew, this was causing delays for a number of C.H. Robinson’s customers. “Before we opened this site, we would have to load the cargo earlier so that the airline could scan it, or alternatively use an external company to scan it,” he explains. C.H. Robinson has invested in new scanning technology at the new Tullamarine site. The site boasts a Rapiscan 632DV x-ray machine which enables C.H. Robinson to do all required scanning onsite. “The new machine removes the need for third-party warehouses and circumvents the bottlenecks and delays at cargo terminals for the screening of cargo, allowing customers shipments to reach their destination on average one to two days earlier,” Andrew says. Andrew says that it is expected that these new regulations will also come into effect for all domestic cargo, so C.H. Robinson will be prepared to also offer these efficiency gains when these changes come into effect. “Once this requirement also comes in for domestic air freight, it will put even more pressure on the airlines. Now, with us being able to scan it ourselves onsite, it helps relieve that pressure at the airport and ensures that our freight is moved much faster,” Andrew says. For Andrew, anything that can

Andrew Coldrey is Vice President Oceania at C.H. Robinson. shorten the supply chain translates to better customer service or a cost-saving, so he is confident this throughput will be of a huge benefit to C.H. Robinson’s customers.

PEOPLE FIRST Andrew says that as C.H. Robinson is not an asset-based business, people are everything. “We’re really focused on safety and well-being. People are absolutely everything to us. It’s not just about attracting good people, but about keeping them safe and happy,” he says. People are the most important aspect of the business, Andrew says. “While technology is paramount to success, it’s people that solve problems. They are the ones who utilise the technology and get the most out of it.” The organisation operates in the oil and gas sector, where Andrew says safety is absolutely paramount. “We’ve learnt a lot from our customers in this area, while a lot of the focus on safety is on the physical handling or goods, we have also translated this focus into the office environment.” The new facility at Tullamarine boasts an ergonomic working environment, with standing desks, ergonomic chairs and multiple kitchen facilities. “We want to make this space a good

one so that people can bring their best selves to work every day,” Andrew says. The new site has also presented opportunities for the workforce to upskill and develop professionally. “As we can now offer our customers more services, we have had to upskill our workforce in these areas. We’ve expanded our coastal services and we’ve also started doing the trading part of some of our Asian exports. It’s a huge learning curve but it keeps our people engaged,” Andrew says. For him, it’s hard to be a successful company and stay one size. The growth trajectory that C.H. Robinson is on in Asia Pacific has allowed the business to keep its workforce engaged and challenged, which Andrew says is important when retaining talent. “Our people need to keep growing and this project has given so many opportunities for that,” he says. Andrew sees significant growth for C. H. Robinson’s customers in this region and is confident that this new site will support that growth. “We’re proud to offer our customers this faster throughput as a result of our investment in this facility and the technology we have in place. We’re excited to see where this facility will take us over the next five years,” he says. ■ MHD MAY 2020 | 31

MHD E-COMMERCE

A TIME OF OPPORTUNITY As more and more consumers switch to shopping online, the time is now to invest in scalable, flexible and agile automation technology.

AMR technology is proven to offer efficiency gains accross the entire fulfilment process. 32 | MHD MAY 2020

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n Australia, e-commerce is booming. According to research by Australia Post, in 2019 the national year-onyear average growth was 17.2 per cent, with Victoria leading the way with 19.9 per cent growth. Additionally, next business day deliveries grew above average in 2019, up 21.1 per cent. Within that growth, fashion and apparel purchases accounted for more than half of all next business day deliveries. During the COVID-19 pandemic, shoppers have turned to e-commerce outlets and providers more than ever before, and many are predicting this shift in consumer behaviour is here to stay. Kmart recently turned three of its physical stores into distribution centres, as online demand for the retailer continues to soar during the pandemic. Many stores have converted to online only models, and those who were yet to launch online stores have had to get them up and running in a matter of weeks. Some local businesses are now committing to same day delivery, something we were yet to see take place here in Australia. Millions of people who have never shopped online before, have been forced to over the last few weeks. Retailers that

fail to meet the changing and rising demand of the consumer will fail to survive this challenging time. Among Australia Post’s recommendations for 2020 are for retailers to look at their choice of delivery options, make speed a point of difference and lock in the required technology to make that happen. Retailers and third-party logistics providers (3PLs) without the technology in place to meet this increase in demand and flexible options for consumers will struggle, throughout and after the pandemic. We saw this most recently with major supermarket retailers having to cancel online ordering because they simply didn’t have the capabilities to deliver the spike in demand. When life gets back to normal, consumers will expect that the increase in service offering and speed of delivery will be something that is here to stay. According to Nishan Wijemanne, CEO at Cohesio Group technology solutions that are agile and flexible, and can scale up as demand increases are how retailers and 3PLs will meet this increase in demand. “If e-commerce retailers and logistics providers want to keep up with demand, they need to increase efficiencies.

Automation, in particular Autonomous Mobile Robots (AMR), is proven to offer efficiency gains across the entire fulfilment process” Nishan says.

THE CHALLENGE: SPEED AND COST Meeting consumer demands on speed and cost of delivery is at the top of the agenda for any e-commerce retailer, and 3PLs also need to ensure that they have the processes in place to meet these expectations. Many consumers expect next-day delivery as standard, and if you can’t meet this demand, you’ll simply miss out. AMRs offer significant efficiency gains, they work collaboratively with humans to move shelving, transport goods, sort parcels and handle returns quicker than any other operational process, Nishan says. “We recently delivered a goods-toperson project for one of the world’s largest 3PL providers here in Australia. Featuring eight robots across 400 sqm of warehouse space this logistics provider was able to increase picking rates by an impressive 400 per cent,” Nishan says. This project significantly reduced the need for pickers to walk long distances

Bollore Logistics managed to increase picking rates and throughput at its Sydney site with AMR technology.

MHD MAY 2020 | 33

MHD E-COMMERCE

to pick up stock, providing a much faster throughput and picking rate. AMR offers the perfect solution for e-commerce, as it is agile and flexible so can scale up as demand increases and decreases. Additionally, it’s easy to set up anywhere in the warehouse and can be moved around depending on which products are in demand at any given time. This could be seen in this project, while the 3PL operates across more than 400,000 sqm of warehouse space, the initial AMR project was only introduced across 250 sqm of space. Allowing the 3PL to scale up when needed. For the 3PL provider, the project was a test case and the business demonstrated that AMRs provided its client with a cost-effective way to meet the rising demand. “With AMRs you can take things one step at a time. It’s not necessary to jump straight in and install large-scale automation to reap the benefits of automation technology,” Nishan says.

BENEFITS BEYOND EFFICIENCY Cohesio Group has delivered AMR projects for a number of retailer and 3PL providers. Most recently the tech solutions provider was appointed by Bollore Logistics to deliver the first ever AMR implementation by a 3PL in Australia. The project included 28 AMR at Bollore’s Sydney warehouse, and the robots were used to facilitate the delivery of luxury goods across various brands via multiple e-commerce platforms and retail outlets across Australia and New Zealand. “Through this AMR project, in addition

to the increased picking rates and high throughput, we also managed to reduce costs around space and increase storage density. The end product was a faster and more accurate order fulfilment for one of the world’s highest value fashion brands,” Nishan says. With AMRs, the benefits reach far beyond increased efficiency rates and throughput rates. According to Rizan Mawzoon, Head of Transformation at Cohesio Group companies that utilise AMRs can also expect to see an increase in order accuracy. “AMRs are programmed to do and repeat tasks in the most efficient way possible, which means they can learn and re-learn optimum routes to specific items and fulfil orders with higher rates of accuracy,” Rizan says. They also provide a better utilisation of space, something which is becoming more and more critical, as distribution centres move closer to populated areas where land is expensive and difficult to acquire. “Warehouse space is limited. AMRs can navigate tight spaces and carry out package retrieval and replacement in small areas. They also offer the ability to use vertical storage options, allowing you to increase storage space without having to increase the size of your warehouse,” Rizan says.

A SOLUTION FIT FOR ALL Cohesio also recently implemented an AMR solution for one of Australia’s largest providers of industrial supplies. “The challenge with this project was that the retailer’s catalogue equates to more

The Cohesio tam has delivered AMR projects for e-commerce and 3PL providers across the Asia Pacific region.

34 | MHD MAY 2020

than 200,000 stock-keeping units (SKUs). When we first started working with this retailer, we saw that they were running a very manual heavy picking operation. They needed to ship stock faster and hold more stock,” Rizan says. Cohesio designed a solution that gave this supplier and distributor of critical industrial and safety gear increased picking rates, from 30 to 50 items an hour to 150 to 200 items an hour, an improvement of around 400 per cent. The AMR solution comprises of 35 robots, across ten workstations picking and putting away stock from upwards of 83,000 product locations. “The goods-to-person technology has significantly reduced travel time, as the goods are presented to the team members from the AMRs, enabling the business to improve picking rates and meet its aim of getting orders out the door faster,” Rizan says.

STAY CURRENT AND REMAIN COMPETITIVE Struggling to keep up with consumer demand is no longer an option, Nishan says. “An increase in demand or workload is a good thing, but it can cause complications if you can’t meet that demand. You only have to look at the recent issues with the grocery supply chain to see that a spike in demand comes with a number of issues and challenges.” AMRs can help bridge the gap between demand and the ability to meet consumer expectations without having to invest in large-scale automation systems. “With AMR, you can take things one step at a time, you can explore your options and decide what’s right for your business both today and further down the track,” Nishan says. The Cohesio team has delivered projects for e-commerce and 3PL providers across the Asia Pacific region. The team of experts work with businesses to bring together a number of different leading technology solutions across automation and voice picking technology. “We recognise that different e-commerce providers have different challenges. Whether it be high-value fashion goods, industrial supplies, fashion and apparel or general household goods we can design a solution that will offer efficiency, accuracy and storage capacity benefits without the need to introduce large-scale permanent automation,” Nishan says. ■

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SAFER MEASURES AND STRONGER SYSTEMS Matt Bell, Safer Storage Systems Managing Director shares the importance of local manufacturing and how business operations can be sustained during COVID-19.

housands of Australians and businesses have shifted to homeworking, grappling with IT systems, video conferencing apps and adjusting to the new psychology of remote working. However, for warehouse workers and the supply chain industry, most daily duties can’t be switched to a home working model. In fact, warehouse workers are having to work harder than ever. Warehousing and logistics workers are essential in keeping Australian supply chains operational. Due to the nature of the work, many workers must continue to interact with workers and other persons in their workplace. It has taken the Covid-19 pandemic for many supply chains networks to realise the nations reliant on export of low-value commodities and the import of high-value and skillintensive manufactures. With local manufacturers rising to the challenge to support essential services and supply chains within the Australian economy, it is clear the country has enormous opportunity to leverage local manufacturing. Safer Storage Systems is based in Dandenong South in Melbourne’s eastern suburbs. Last year the company commenced the local manufacture of some components in Melbourne. Matt Bell, Safer Storage Systems Managing Director says the company is proud to be manufacturing in Australia and is passionate about growing Australia’s manufacturing presence through the company’s new global partnership with Gonvarri Material Handling (GMH). Since the partnership 12 months ago, Safer Storage Systems has become GMH’s biggest export partner outside Europe. Trade and exporting challenges will slowly be overcome as the pandemic curve flattens. Whilst growing local capabilities, it has been

36 | MHD MAY 2020

From left to right: Matt Bell, Tony Bell and James Hardy. apparent that global partnerships are important to maintain during this unprecedented economic nature too. Partnership is highly valuable for Safer Storage Systems, which is why they teamed up with GMH last year. This provides Safer Storage Systems with a strong supply of customised solutions, including market leading shelving systems, mobile racking, pallet shuttle systems, crane racking and vertical lift machines, all year round.

MADE IN AUSTRALIA Just in the last decade the Australian manufacturing sector has seen a significant reduction in its workforce. Many businesses have been forced

to rethink its industrial policy after realising dependence on China and other global manufacturing hubs. As part of the country’s effort to tackle its coronavirus outbreak, Canberra has promised to nurture local manufacturing to ensure it is less reliant on global supply chains. More companies are looking at onshoring key capabilities as the manufacturing reboots in Australia. For local businesses such as Safer Storage Systems, they’re one step ahead of the pack by already having an established manufacturing presence. “A lot of customers and businesses alike across the nation have committed to projects months in advance prior to

MHD STORAGE SOLUTIONS this pandemic, so it’s our priority to continue to service that,” Matt says. Suppliers in the industry have been experiencing issues with their supply chains and raw materials due to global restrictions on trade and lockdowns. Due to Safer Storage Systems’ wellknown local presence, Matt says some people have contacted the company to assist in navigating their projects and materials during this challenging time. “Our benefit with our partnership with GMH is the ability to access multiple manufacturing locations, so we can draw stock out of Europe from places such as Germany, Romania and Finland,” Matt says. Manufacturing locally as well as exclusive access to the global GMH product range has put Safer Storage Systems in a desirable position. Matt says Australia initially lost growth in the market due to demands to keep up with international manufacturing pressures. Now, self-sufficiency is more important than ever and leveraging national capabilities is on par with global partnerships. Matt says the company is proud to manufacture quality products right here in Australia, which has maintained a high degree of engagement with customers as they continue to see the benefits of a qualified solution with future capabilities.

ADAPTING WAREHOUSES The company, which has been operational for the past 14 years, believes that warehouses are just for keeping the rain off the storage solutions inside as they are the number one asset for efficient operation. Inside company warehouses and distribution centres are systems and people that run an essential service. Matt says the most important part of installing a new solution are the years to come to ensure services, maintenance and smooth operation processes are in place for the customer. During this time, warehouse operations are constrained, and Matt says a scalable solution and effective communication will ensure effective processes within businesses warehouses. Safer Storage Systems was proactive with its own operations, taking action as stricter restrictions were

beginning to roll out across the nation. The company split its staff into five groups, anyone with underlying health concerns began working remotely from home and a fortnightly working from the office and home roster was established. Matt says administration workers and executives have enhanced their communication and technical skills. “Our disciplines in place for communication is working really well electronically. Certainly, it’s proven a lot can be achieved remotely, especially in terms of having interaction from a distance via technology,” Matt says. A driving component of Safer Storage Systems is the company’s daily warehouse operations. Its partner, GMH, like all major organisations, closely monitors the current situation in terms of its impact on the supply chain to ensure that all operations are carried out safely and in a timely manner. Matt took the initiative to put protocols in place to keep the warehouse moving to ensure installation to its customers. Safer Storage Systems has maintained contact-less warehouse operations as best as possible, putting in place strategic measures that Matt is encouraging other operations to adopt. “When we went to stage two restrictions, the warehouse was isolated from all office staff,” Matt says. The company has isolated warehouse tools and machinery, designating forklifts to specific drivers. Safer Storage Systems has also set up zones on-site for file transfer, so in an enclosed spot, labour crew and crew leader can share construction packages safely without contact. “We’ve isolated groups of our business, which means communication is just as essential as the service,” Matt says. Customers can be assured the company is focused on reliability, maintainability and availability. “It’s a new way of working for labour crews and office staff alike not only for our business but for customers and the industry as a whole. We’ve always been committed to being on-site for our customers, and although that physical presence has shifted to video conferencing technology during these times, we’ve adjusted to ensure successful solutions are still implemented,” Matt says.

ENHANCING CAPABILITIES Safer Storage Systems provides ongoing scalable solutions to some of Australia’s most trusted retailers including Reece plumbing, JB HI-FI, Dulux, and footlocker. “We do a lot of work currently with Reece plumbing Australia, New Zealand and USA operations. They’re an essential service too so we are continuing to service and manage their sites as well as repairs and maintenance,” Matt says. Despite the global uncertainty, businesses are coming together to keep supply chains and essential services moving and accessible and Matt says the company is proud to continue fulfilling commitments to its customers. “We have Installers in every state and in New Zealand as well. Materials continue to be made and imported as an essential service, we are fully capable of delivering required projects,” Matt says. Whilst the entire industry adjusts to a new reality of remote working, businesses are reflecting on solutions to enhance their own capabilities beyond the pandemic. Matt says discussing openly with customers and people in the industry looking to enhance operations following unprecedented demand and challenging restrictions has been a helpful conversation for businesses. “Customers have their own commitments too, so it’s our aim to keep delivering for businesses and its operations by meeting individual requirements, analysing what they need, and developing a storage solution to last,” Matt says. “We’re continuing to develop our Australian manufacturing capabilities. We’re working on some engineering to further enhance this in the near future, Matt says. He says the company is quite agile and can respond quickly to requirements due to having multiple factories and steel readily available. “Whilst social distancing remains in place and everyone adapts their workplaces for the foreseeable future, collaboration and communication is at the forefront. Our ability to reconfigure a whole warehouse with storage systems becomes customers best value because they know we do things thoroughly and properly,” Matt says. ■ MHD MAY 2020 | 37

MHD SUPPLY CHAIN

THE BIGGEST MOBILITY AND IOT TRENDS TO HIT AUSTRALIAN SUPPLY CHAINS MHD looks at why investing in mobile technology and IoT is the way forward for the industry and in doing so how to leverage the advantages of increased mobility.

Consumers want their purchases straight away and expect retailers and e-commerce businesses to provide better delivery options.

ne of the world’s most trusted providers of mobility and IoT management solutions has grown its workforce in Australia by more than 50 per cent over the past 12 months. As mobility and the number of IoT endpoints within the retail sector continue to explode, due to increased consumer demand, SOTI expects to see more retailers needing to streamline the management of these devices. Michael Dyson, Managing Director Australia & New Zealand at SOTI tells MHD the biggest mobility and Iot trends that are set to hit Australian supply chains this year. 38 | MHD MAY 2020

How is Mobility and IoT making an increasing impact on the supply chain? Michael: A survey conducted by SOTI revealed that only one in five respondents claimed to have complete visibility into their business-critical mobility solutions, limiting their ability to quickly diagnose and fix issues. Across the supply chain, this can have an impact on dispatching, customer relationship management, asset management, mobile point of sale (mPOS) and warehouse management. For transportation and logistics companies, adopting a mobilefirst strategy can improve workforce performance efficiencies, increase sales, improve decision making speed and scale

and, ultimately, a company’s competitive advantage. Moreover, the research found that when mobility solutions fail, they have a big impact on workflows and contribute to sharp drops in productivity. With each incidence of failure, workers lose over a hundred minutes of productivity, which can cause a ripple effect throughout an organisation as others who depend on the outcome are impacted. What are your thoughts on emerging delivery methods? Michael: Immediacy is an increasingly crucial aspect of the shopping experience. Consumers want their

MHD SUPPLY CHAIN purchases straight away and expect retailers and e-commerce businesses to provide better delivery options. If retailers want their online delivery options to be in line with customer expectations, their supply chain and 3PLs need to provide a faster and more convenient delivery process. Some retail and e-commerce companies have started offering same day delivery options. This adds pressure on logistics providers to ensure they are able to keep up with this and encourage them to look at new timesaving delivery options like drones. While not appropriate to handle all online deliveries, such as bulky items, I believe that we will see a growth in drone usage in the coming years. What are the current technology trends in the supply chain sector? Michael: Data and the visibility of assets are the most powerful tools available to organisations and they are currently underutilised across the supply chain sector. Broadening the use of technology to analyse data and better plan, forecast and manage all elements of the supply chain will be key trends. Once this data analysis is conducted, intelligent decisions around the implementation of IOT, artificial intelligence (AI) and automation can be made. What trend do you think will most impact Australian supply chains this year and in the future? Michael: The events thus far in 2020 have changed the supply chain forever. Whilst completely unpredictable, the impact of COVID-19 will in fact expedite the development of new solutions to meet the unprecedented growth in demand for last mile delivery and the facilitation of better supply chain solutions to service these needs. E-commerce has instantly become critical in supporting those whose movement has been restricted, no longer a choice but for some the only option. This will clearly have a permanent impact on brick and mortar retailers, who will have to rethink how they engage with their customers. What do consumers want from retailers? Michael: Retail customers want the best of both worlds – the immediacy of online shopping with the personal touch of brick and mortar stores. The State of Mobility in Retail Report

looked at how ready consumers are to engage with new technologies that satisfy their hybrid retail desires. When it comes to meeting consumer demand in the current climate, retailers have a tough task. Blending the speed and convenience of digital, with the personal touch of more traditional human-based interactions, is no small feat, especially given the understandable resistance among shoppers to indulge in brand new digital tools right away. Overall, the general theme suggests that personalisation is key – if personal information is kept secure. While more than three-quarters (76 per cent) of consumers want personalised in-store experiences from mobile devices, onethird (32.6 per cent) are unwilling to sacrifice personal data security to improve their in-store experience. Why is it important to strengthen technology as part of industry 4.0? Michael: Technology and mobility are transforming organisation’s operations and represent a crucial channel for interfacing and interacting with customers and employees. Access to increasingly powerful mobile devices, intuitive and immersive applications and robust networks, has significantly changed the way we work. With more than 50 per cent of the workforce mobile – representing 1.7 billion workers – mobile solutions are no longer a luxury but rather a necessity for many of these mobile workers to perform their jobs. Whether it’s supply chain workers, field service technicians, delivery drivers, nurses or first responders, many of these workers depend on reliable access in real-time to critical information at the point of interaction. However, mobility has also represented a game of compromises, especially with respect to both the performance of the network, the application and the mobile device. Considering the criticality of the workflows supported by many of these enterprise mobile solutions, the impact of failure can be significantly disruptive. In fact, according to research conducted by SOTI, the consequence of each failure incident can result in over 100 minutes in lost productivity – or 23 per cent of a daily shift. The nature of mobile and wireless

technologies, and the environments they are used in to support businesscritical applications, dictates that failures will occur. The challenge is how prepared organisations are to respond to the outages to minimise the disruption. Given the critical nature of mobile solutions for many organisations today, providing support staff with real-time visibility into the performance characteristics of these solutions, and the tools to expeditiously address problems, substantially reduces the disruption caused by poorly performing solutions. How does SOTI services help supply chains keep up with rising e-commerce demands in Australia? Michael: SOTI works with many of the major retail and transport and logistics organisations across Australia and with the emergence and now rapid expansion of e-commerce, the SOTI ONE Platform plays an integral role in the demand for better and faster services. Universally, SOTI and our partners are seeing the deployment of Android technology, the broad digitisation of work practices through application deployment and the focus on more intelligent use of data across the industry. Our customers rely on SOTI in conjunction with our partners to efficiently and effectively deploy, update, manage and support their mobile technology. How can supply chains advance in the current climate? Michael: Supply chains must seamlessly integrate new and existing supply chain technologies so they can be sure the technology works for both the consumer and business. Consumer expectations are higher than ever before, and when brand loyalty comes down to consumers easily ordering and receiving their purchases as quickly as possible, there is no room for error in the supply chain. Australian retailers and logistics providers can achieve smooth running of their supply chain technologies if they have a trusted mobility and IoT management solution in place that helps ensure technologies work the way they’re meant to all the time, with no downtime, while ensuring security and compliance. ■ MHD MAY 2020 | 39

MHD TECHNOLOGY

REMOTE WORKING: THE NEW NORMAL? Since the outbreak of coronavirus, businesses have had to adapt quickly in enabling large parts of their workforce to be set up remotely. Here MHD delves into the developments that are taking place across the supply chain as we adapt to this new way of working.

Video software provider, Zoom, has seen daily users more than quadruple since the COVID-19 outbreak.

n the midst of the coronavirus pandemic, many workers have had no choice but to switch to remote working. While many roles in the logistics and supply chain are essential roles that will continue to be carried out in warehouses and distribution centres across the nation, there are many service providers, leadership teams and support staff who are now carrying out their entire job responsibilities from home. 40 | MHD MAY 2020

Google, Apple and Twitter were among the first organisations to order all employees to work from home, but now as the nation is tasked with flattening the curve of the coronavirus, organisations both small and large have ordered their entire workforce to work remotely. Before COVID-19, remote working was already a trend on the rise, with research published by online job search site Indeed revealing in early 2019 that 60 per cent of respondent’s

workplaces allowing them to work from home. However, recent research from a Gartner HR survey reveals that 88 per cent of organisations have encouraged or required employees to work from home due to the coronavirus, this was published at the start of March so may well be even higher as Australia moves towards a more severe lockdown. According to a report by JP Morgan, Zoom, a video conferencing software provider, has seen daily users more than quadruple and technology provider

MHD TECHNOLOGY Microsoft says its cloud usage has grown nearly 800 per cent since the COVID-19 outbreak. Lots of organisations are having to adapt and innovate quickly to be able to deliver the same service in this new working environment. Leading technology solutions provider, Cohesio Group, part of Körber Supply Chain Solutions, was quick to adapt the way that it communicates to its customers. One example of this is its implementation team now carrying out virtual distribution centre tours with its customers.

“

Organisations will see value in this kind of work and will continue to utilise aspects of this kind of working in the long-term.

”

Additionally, as Cohesio specialises in the implementation of Automated Mobile Robots, there is an opportunity for automation to really deliver the advantage in a situation such as this one. “The good thing about robotics, as much they work collaboratively with the human operators, their throughput doesn’t change. So, in a situation such as the COVID-19 outbreak, distribution centres have the ability to continue their operations while staff may be required to quarantine, practice social distancing or work from home,” Nishan

Wijemanne, CEO at Cohesio Group says. Cohesio is also working on developing a recorded video version of its Android Voice training capabilities. “We know that many of our customers are experienced an unprecedented demand in essential goods and are therefore employing additional casual labour. We are working on sharing pre-recorded and conducted virtual real time training video so that new employees can be trained on voice picking technology as quickly and accurately as possible remotely,” Nishan says. Many companies are hosting sales meetings online and Friday afternoon work drinks has now moved to shared video platforms such as Zoom, Google Hangouts, Microsoft Teams and Houseparty. According to Archival Garcia, Vice President at Microlistics, some of the remote working practices were already in place for the Warehouse Management System (WMS) provider. “This move to servicing customers remotely was something that we had already started for certain aspects of the implementation, and we were already seeing great benefit in using this kind of strategy,” he says. “We had invested in this kind of technology just before COVID-19 hit. While there were still a few aspects of the implementation that we would still do onsite, we have also found ways to deliver this remotely,” he says. Ordinarily, the Microlistics team would hold a five-day workshop onsite, however due to COVID-19 limitations these now take place remotely over the course of two weeks. “We’ve found that by holding part of the implementation across two weeks and moving this to half day sessions there has been benefits around customer participation. We’ve found that this kind of schedule gives customers the time to reflect and have their own discussions around the project, coming back with ideas of how the project moves forward,” Archival says. For Archival, some of these steps have given more power to the customer. “I think any way of giving the customer more knowledge and power across any project implementation is a good thing, and we’re finding some of these kinds of advantages come out of this way of working,” he says. Microlistics is also ramping up communication between its customers. “We are connecting with our customers a bit more now. Once a week may have been okay when it was in person but we are finding twice a week is better while we can’t reach them in-person,” Archival says. MHD MAY 2020 | 41

MHD SUPPLY CHAIN EXTRAORDINARY CIRCUMSTANCES According to Dr John Hopkins, Innovation Fellow and Discipline Leader of Supply Chain Management course at Swinburne University this overnight shift to enforced home working is “extreme” and has resulted in many organisations and employees with no previous experience of working from home move to a full-time work from home model. John, who as well as his role in supply chain education, is also a specialist in flexible working and work from home strategy. His interest in flexible working started in 2014 when he investigated the potential of flexible working to decrease congestion in cities. “My background is largely in supply chain, but six years ago I was working on a logistics research project looking at urban congestion. We looked at how different cities tackle congestion and found that most tackle it from a cure perspective rather than prevention,” John says. The study found that one effective way to tackle congestion is to allow people to work from home more often, eliminating the need for everyone to travel at the same time, to the same place every day. “We started to ask questions around why we travel to a computer in an office in the city every day when we have the technology, we need at home to work. We found that if people didn’t travel every day there was a massive decrease in congestion,” he says.

THE IMPORTANCE OF ROUTINE John offers advice for those working from home during the COVID-19 pandemic and suggests that one of the most important things is to establish a routine and structure to the working day. “I think the very first thing to mention for working from home during COVID-19 is that this isn’t normal working from home, this is something completely different. For anyone who hasn’t done this before, this is pretty extreme,” he says. The normal benefits of working from home, like finding a better work-life balance and having time to do the things you otherwise may not, do not apply in the same way during this time.

42 | MHD MAY 2020

“People will struggle during this time and may find it difficult. Their first impression of working from home might be negative, but it’s not really ‘flexible’ working if it’s something you have to do, with no other alternative,” he says. So how do workers go from a standard 9 to 5 Monday to Friday working environment to a full-time work from home environment? John says that firstly there needs to be structure. “You have structure in the office. There are consequences to leaving late, you miss the train or tram, traffic will be bad, you will be late for the after school pick up, etc. But when you work from home you don’t have the same kind of consequences that lead to structure,” he says. Without structure many people might end up working more than they usually would, sometimes opening the laptop in the morning and not even taking a break until the end of the day, John says. “This can have a huge impact on wellbeing and health, so it is important to take regular breaks. Even scheduling a formal meeting in your calendar to ensure you take lunch is good to maintain productivity and a healthy balance,” he says. Another way to find structure is in regular contact with team members. “We have informal and formal meetings throughout the day with our colleagues, so it’s important to emulate that when working from home,” John says. John suggests regular communication with each other, and that this can be for work or non-work purposes. In this environment, John suggests that video is more advantageous than just audio. “Regular contact is more important than ever, and I recommend video over audio. Video is not as good as face-to-face, but better than audio,” he says. “Work isn’t all about the work – it’s also very much about the social aspect. There’s the camaraderie and team spirit, it’s important to maintain those things, have a meeting where you don’t even talk about work, this can really help reduce stress levels during this time,” John says. The underlying message during this time is that everybody is in the same

situation, so it’s a great leveller in some respect and an opportunity to bring people together, John says. He also suggests taking regular breaks and getting outside whenever you can. “I know these things sound quite straightforward but when you are working from home it is easy to forget how important they are.” John acknowledges that many people who are currently working from home might also have their entire family at home with them, and reiterates again that these are not the normal circumstances for flexible working. “You might have kids home-schooling as well as your partner at home during this time, so it’s important to establish some boundaries between schedules and workspaces,” he says.

DON’T NEGLECT CYBER SECURITY Ordinarily an office environment and professional network will have a team of people regularly checking and ensuring its safety, however working from home does not have the same level of security. “Security needs to be considered during this time. For example, if you’re using your own personal computer do you have up-to-date antivirus software? Are you connected to the VPN and if so, is this safe? Is your WiFi network safe? Do you have sensitive information on your network?” John asks. While a home working environment will never be as safe as an office one, John says it’s still important to consider these things and make sure passwords are safe and regularly updated.

BEYOND COVID-19 This time also presents organisations with an opportunity to reassess its current position and analyse what the business actually wants to achieve. “During a new threat like this is also a good time to perform a new SWOT analysis, to identify what you might be good at, where you need to improve and even what opportunities may come from this,” John says. One of John’s main takeaways from this period is that while people will miss aspects of the office, they will have started doing things differently, and as a result are more comfortable with this

MHD SUPPLY CHAIN

Cohesio’s Implementaton team is now carrying out virtual distribution centre tours with its customers. new way of working. “I’ve had so many meetings on online video conferencing software this week and have probably done more new things in the last two weeks than I have over the last two years,” John says. This forced shift to remote work has made people become comfortable with new ways of working. “People will see value in this kind of work and will continue to utilise aspects of this kind of working in the longterm,” he says. These long-term changes will be particularly felt in the supply chain and logistics sector, where John says the industry was lagging behind when it comes to flexible and remote working. “Flexible working is based around time and place, when and where you perform your work tasks. As a lot of logistics roles require people to be onsite, at specific times, it’s also less common for their managers to work from home. But after this experience, when non-operational staff are now being forced to work from home, they will realise that certain things actually can be done from home, which will likely result in more of this behaviour continuing in

the future,” John says. While nobody could foresee the catastrophic scale of COVID-19, John believes that there will be an increase to more automation and artificial intelligence as a result of this pandemic. “Supply chains have been tested in terms of how agile and robust they are, and I think there will be an increase towards automation after this. The reason that factories and distribution centres have had to close down is because they cannot run without people. If you have more robots and automation in place, it would be easier for them to keep running if anything like this were to happen again,” he says. One thing that John is sure of is that this pandemic has raised awareness around supply chain issues. “It has really put supply chains on the map. People are starting to look behind the curtain. They now know what a distribution centre is, they understand the concept of buffer stocks and are interested in what causes product shortages, I think they are starting to appreciate just how important they are. From an education perspective, I think we will see an increased interest in students studying logistics and supply chain courses in the future,” he says. ■ MHD MAY 2020 | 43

MHD SUPPLY CHAIN

OUT OF ADVERSITY COMES INNOVATION As the world continues to grapple with the challenges and demands of battling COVID-19, MHD sits down with two industry leaders to gain insight into what this may mean for the future of supply chain and logistics in Australia.

he public awareness of supply chain and logistics management has risen as almost every news bulletin over the last three months has mentioned these words supply chain and logistics. Consumers have taken an increased interest in how and why certain goods have been difficult to acquire during this challenging time. They have wanted to know why there is no toilet paper on the shelves and as a result have taken a keen interest in supply chain and logistics operations. According to Henry Brunekreef, National Practice Leader for Supply Chain Management at KPMG Australia, out of adversity comes an opportunity for innovation, something that he is already seeing taking place across the logistics and supply chain industry. “You only have to look to food retailers to see the pace of innovation and change that they have gone through during this crisis. They have been very quick to adopt new ways of operating. At the big end of retailing, they have set up mini distribution centres to try and meet demand. You can see something similar in the hospitality industry. At the smaller end, many restaurants have had to convert to takeaway and have even introduced their own delivery models,” he says. Once we get through the COVID-19 period, Henry thinks innovation will also be found at a macro level. “One lesson to be learned from this challenging time is the idea of extending visibility across the supply chain operation. There are pockets where there is clarity about what is going on but there are also pockets where visibility is seriously lacking,” he says. This is exacerbated when operating a global supply chain. The sentiment

44 | MHD MAY 2020

Peter Lidell is ASPAC Head of Supply Chain at KPMG Australia.

offshore. This has highlighted where the critical choke point is in the supply chain and made it clear where we may need to address these points and build resilience,” Henry says.

AGILE WORKFORCE

is echoed by Henry’s colleague, Peter Liddell, ASPAC Head of Supply Chain at KPMG Australia. “The further the supply chain extends, as it moves across borders, the less visibility organisations have,” he says. While organisations may have visibility across their Tier 1 suppliers, it is often lacking when it comes to Tier 2 or 3. “Interaction with your direct supply chain is one thing but as it extends, especially beyond borders, that’s where it gets critical as many supply disruptions occur upstream and without visibility of such events, wholesalers and retailers can only react when it reaches their direct control, by which is time it is far too late,” Peter says. A further examination of Tier 2 or Tier 3 suppliers can highlight a bottleneck. One example is of manufacturers building more ventilators to meet the increase in demand due to COVID-19. “People are jumping onboard and offering to build ventilators, which is fantastic. But some of the core components come from one supplier

With so much innovation and digitisation, Peter Liddell suggests it’s important to make sure that a business workforce is also agile and ready to adapt. “We have to ask ourselves, how well equipped is our workforce for the digital age” he says. Whilst working from home has presented a new approach for many employees, for Peter this extends beyond having a laptop and a good Internet connection. “We’ve been on the cusp of digital transformation for a while but recent circumstances have shown us that now might be the time to make the most of digital transformation,” he says. If an organisation is continuing to bring in digital change and technology then it is also important to ensure that the effort is put into upskilling the workforce who will utilise this technology and advanced capability.

SUPPLY AND DEMAND One aspect of the challenge of COVID-19 for Henry is a focus on shifts in current demand. “In March 2020, we saw stockpiling of consumer goods. As a result, I would say there is several weeks of inventory at people’s homes. There will be a correction in that at some point; at the moment we don’t know when that will be. When it does come we might expect it to be as disruptive as when the demand first spiked,” he says. Indeed, Peter and Henry are helping clients with inventory management,

MHD SUPPLY CHAIN network structures and flows to help ensure production capacity can meet spikes in demand but also avoid product oversupply.

LOGISTICS IN THE SPOTLIGHT One point on which Henry and Peter agree is that there is likely to be an increased understanding and appreciation of the supply chain and logistics industry after COVID-19. “I think first and foremost there will be a clearer acceptance of what supply chain is and how it is important to achieving successful business outcomes. People will see that it’s a vital part of our country’s economy. A well managed supply chain helps to keep people fed and moving,” Henry says. Peter sees now as an important time to ensure that the future supply chain leaders of tomorrow are given the opportunity to see what critical role they could play in supply chain and logistics. Henry agrees that during this time we might also focus on enhanced leadership and upskilling and professionalising the supply chain and logistics industry as a whole. “The supply chain sector is about people moving and storing goods using trucks and sheds. That is the lifeline of the industry. Successful supply chain management is also about leadership and using data to provide insights that support good strategic

“

You only have to look to food retailers to see the pace of innovation and change that they have gone through during this crisis. They have been very quick to adopt new ways of operating.

”

Henry Brunekreef is National Practice Leader for Supply Chain Management at KPMG Australia.

decisions at the board table,” he says. “The logistics and supply chain industry is a key part of the drive to manage through the challenges posed by COVID-19. Beyond that, it is a sector at the forefront of making sure that Australia emerges in good shape. Now is a fantastic time to be part of a vital service which can help the efficient flow of goods and services,” Peter says. ■

Peter asks who led the digital transformation in your business, the CEO, CTO or COVID-19?

MHD MAY 2020 | 45

MHD MATERIALS HANDLING

JUICE GIANT’S MAIN SQUEEZE: TOYOTA REACH FORKLIFTS

Tasmania’s largest non-alcoholic beverage manufacturer, Juicy Isle, has recently added three new Toyota RRE160M electric reach forklifts to its fleet.

he new Toyota RRE160M reach trucks replaced three units in a fleet of seven such models. Located in Cambridge Park, outside of Hobart, Juicy Isle is an Australian owned and run business producing a wide range of high-quality beverages, including juices made from Tasmanian organic fruit and also locally sourced still and sparkling mineral water products. The business was founded in Tasmania nearly 50 years ago and employs between 80 and 100 people, seasonality-dependent. Juicy Isle General Manager, Michael Goward, says in addition to its beverage production the business has a sales distribution network covering all of Tasmania and distributing beverages, snacks and confectionary for global FMCG brands. We service everything

Juicy Isle adopted a purchase outright model in light of Toyota’s Reach Truck’s proven longevity.

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from the local corner store to national accounts.” The Toyota Reach forklifts are at the heart of the business’ warehouse operations, helping it squeeze out material handling efficiencies. Juicy Isle warehouse and logistics manager, Glen Mackenzie, says the businesses’ latest warehouse facility was designed with input from Toyota Material Handling Australia (TMHA), particularly in regard to the Toyota reach trucks’ turning circle. “We constructed our purposebuilt facility 13 years ago and we had suppliers such as Dexion and TMHA involved in its design and layout, to help maximise area and the racking space,” he says. “Part of that was minimising the space between the racking so you can get more of it into the warehouse,

making the most efficient use of our footprint. “That process involved consultation with TMHA and their rep’, Rodney Jones, who examined the technical data for the warehouse layout and matched it to machine performance. “Rod advised the Toyota forklifts would be the most suitable because of their manoeuvrability and tight turning circle - it was mainly worked around the turning circle - and high-reaching capabilities, allowing them to go all the way up to our ceiling. “That’s how we managed to achieve maximum racking efficiency.” “We always try to understand our customers’ specific needs in as much detail as possible, to help them make the most informed and appropriate equipment selections,” he says. “We refer to this as Tailored Business Solutions and it’s a cornerstone of the Toyota Advantage,” Rodney Jones, TMHA Hobart/Southern Region area sales manager says. Juicy Isle’s Michael Goward says the relationship between Juicy Isle and Toyota Material Handling goes back 20 years. “Rod Jones delivered the very first Toyota reach truck in the state to assist our Hartz Mineral business and it’s something of a book-end that he’s just provided a new replacement for this unit before he retires.” TMHA’s Rodney Jones says the service life of Juicy Isle’s Toyota reach trucks points to another key part of the Toyota Advantage: “Some of their reach trucks are very old but still in service, which is remarkable because Juicy Isle is close to what we call a ‘grocery-line’ operation.” “They’re pretty much working the forks at six- or sevenmetre heights all day, so a lot is

MHD MATERIALS HANDLING

The relationship between Juicy Isle and Toyota goes back 20 years. demanded from them. “Juicy Isle has been very pleased with the reach trucks because they’ve had such a good run out of them; they’ve been up-tothe-task with long service life. “It’s another example of our famed reputation for quality, durability and reliability.” Michael says that Juicy Isle adopted a purchase-outright model in light of the Toyota Reach Trucks’ proven longevity. “I come from a finance background and we historically had machines on an operating lease, but given the performance and longevity of the Toyota reach trucks I saw a strong value proposition in us purchasing them outright and extracting the longest service life from them as is practicably possible.” Along with Toyota petrol forklifts, the Toyota reach trucks comprise the bulk of Juicy Isle’s material handling fleet and TMHA are its preferred supplier for all forklift equipment. “Due to growth opportunities, we’re in the process of building a new warehouse next to

“

We constructed our purpose-built facility 13 years ago and we had suppliers such as Dexion and TMHA involved in its design and layout, to help maximise area and the racking space.

”

our existing one and will certainly once again be looking to TMHA to ensure our material handling equipment meets our expansion requirements as efficiently as possible.” “Toyota is our preferred supplier for all forklift equipment. We have a couple of other brands in counter-balance and order-pickers, but we’ll be looking to replace those with Toyotas as they wear out,” Glen says. “I’ve used other brands in this role and in previous roles at other companies and to me the Toyotas are first-and-foremost more reliable and also superior to operate in terms of the ergonomic controls, the comfort and visibility. “Safety is another consideration for our reach trucks. When the Toyota’s are at full extension - in our case 7.5 metres-high their operations automatically slow down. “Once the mast gets down to two metres, it resumes all its normal speeds and capacities again. It’s an inbuilt feature and greatly contributes to the safety of our operators and their colleagues.” For more information freecall 1800 425 438 or visit www.toyotamaterialhandling.com.au ■ MHD MAY 2020 | 47

MHD TECHNOLOGY

INTO THE BLUE YONDER

It’s a new yonder for JDA Software, who has now rebranded as Blue Yonder. Brittany Coles speaks with Antonio Boccalandro during his first trip to Australia as APAC President to discuss the importance of digital framework during supply chain disruption.

n Australian fashion, with a coffee in hand and floor to ceiling views of Melbourne CBD, Antonio Boccalandro sat down with MHD to share his professional insight in today’s unpredictable world. Antonio was appointed as APAC president for Blue Yonder, formerly known as JDA Software in February this year.

He calls Texas home and has been the Latin America president for the company since 2017. Antonio has more than 20 years of global supply chain experience, and he is determined for a new challenge following his successful management and service footprint across the USA, Mexico, Chile, and Brazil. The company is headquartered in the USA and for the past 35 years JDA Software has been heavily associated with supply chain solutions. To adapt with the

evolution of traceability, software and supply chain processes, it has repositioned itself as a leading supply chain management provider by re-branding as Blue Yonder. The company’s customers in Australia include some of the country’s largest grocers, third party logistics operators and manufacturers. It’s no secret that Antonio has big shoes to fill in his new role to grow the APAC region through customer, partner and associate engagement. Girish Rishi was appointed as the CEO of JDA Software four years ago. However, the rebranding of the company this year marked a significant change too. The recent changes have allowed strong supply chain solutions to be leveraged by analytics and machine learning. Antonio says formulating a new framework for the company has enabled Blue Yonder to establish itself as leading global digital fulfilment platform

RE-BRANDING INITIATIVE Florence Douyere, vice president and country manager for Blue Yonder Australia and New Zealand accompanied Antonio during his inaugural visit down under as APAC president. She says the company has completely pivoted in the last four years by leveraging the capabilities of the cloud, machine learning, artificial intelligence and digital transformation. “Our new name is a true representation of who we are today and who we want to be tomorrow,” Florence says. Antonio says the company questioned if it should continue to grow under the same name, but after internal and external considerations the company saw value in re-branding to reflect its 48 | MHD MAY 2020

MHD TECHNOLOGY innovative solutions. “We have top customers in retail and logistics across every region. What we’ve been doing in supply chain management has changed dramatically,” Antonio says. There has been major disruption to the retail market due to changing eCommerce trends and retailers are still navigating through solutions that meet their unique demands. Antonio says new product introductions, consumer product customisations and traceability have also influenced supply chain management solutions in the current market. This creates complexity and pressure on the retailer to meet demands and Antonio says these ever-changing industry trends are allowing further versatility of software in order to achieve outstanding customer experience for Blue Yonder’s clients.

SAAS TRANSFORMATION Antonio says the company’s mission is to power and fulfil and it has fully embraced the move to the cloud. He says that Blue Yonder’s competitive advantage is utilising software-asa-service (SaaS) to power digital transformation. “Traditionally, companies spend a lot of time and money on software. With the SaaS model, we can have you up and running quickly because of the fast business cycle,” Antonio says. Blue Yonder’s SaaS revenue backlog topped $650 million and bookings were up 51 per cent in 2019 relative to the previous year. He says the company’s cloud capabilities stems off its internal Luminate Digital Fulfilment Platform. “It’s an essential digital framework for supply chains, as it enables any business to prepare, optimise and fulfil the right product at the right price at the right time through any channel or location,” Antonio says. “It really is the one and only digital fulfilment platform that practically every industry from retail soft lines, manufacturing, grocery, third party logistics and wholesale distribution is taking advantage of.” The Luminate Digital Fulfilment Platform is expanding the company’s market coverage. Antonio says throughout the company’s re-branding phase, the last few years

has been strongly focused on big data, machine learning, and predictive supply chain. “The SaaS model has predictive measures, which has proven to be more important than ever. It can take the weather and even coronavirus into consideration, which is essential when providing an accurate forecast,” he says. Some Blue Yonder clients have over 200 variables to consider before formulating a forecast and Antonio says this is only capable through artificial intelligence and machine learning. He says the enhanced digital capabilities have allowed increased speed and agility that has accelerated business’ path to innovation. “The whole industry has shifted because of disruptions and trends. We have shifted with it and all these digital changes in our company are allowing our clients to be more agile in their respective markets.” Antonio says.

MAINTAINING SUSTAINABILITY Antonio says he is extremely proud of Blue Yonder’s sustainability. The company has been advancing its digital capabilities for over 35 years and at the same time, enhancing the three pillars of sustainability. Economic, environmental and social sustainability make up the three pillars of standards. “We’ve been making a positive impact on the environment by keeping it as a priority focus throughout any advancements,” Antonio says. Blue yonder helps businesses improve its forecast. Antonio highlights that this process is reducing truck mileage, less packaging and waste. “When we help customers improve a transportation plan, especially for retail and 3PL industries, we are creating an economic solution that is reducing stops and the larger carbon footprint,” Antonio says. He believes supply chain management should be fore fronting a positive impact and re-branding as Blue Yonder has revitalised the sustainability vision. Australia’s large open space provides a unique market, says Florence. If a transport plan can minimise truck stops or if a warehouse can reduce its physical size, then energy and resources are saved and can better be

Antonio Boccalandro is APAC President at Blue Yonder. utilised. However, Florence notes that clients who have leveraged technology are the ones who see dramatic success with sustainable operations. “Australia is a very competitive market that can be price driven. The level of automation that is utilised by some of our major clients shows that unique challenges and objectives can be achieved when a trusted digital framework is in action,” Florence says.

NAVIGATING APAC THROUGH CURRENT CHALLENGES Each APAC market has its own complexities. Antonio says Australian clients are as sophisticated as other Asian, American and European clients. He believes that the distance of Australia to other countries is a challenge but also an advantage but Blue Yonder is determined to grow the Australian market. “Australia is a top market in the APAC region, it’s leading along with Japan and China,” Antonio says. Agility in the supply chain is a key performance value, and that’s where machine learning and artificial intelligence comes in. “It’s time to re-think the answers to critical questions. It’s not about reviewing processes after, it’s about asking could I have known the problem before there MHD MAY 2020 | 49

MHD SUPPLY CHAIN

Antonio says now is the time to benefit from the digital framework. was going to be one?” Antonio says. He says autonomous supply chains review variables to ensure risk management and performance objectives are met. “There is a disruption happening now, and we need to take action now. There is no point reviewing processes down the track, it can be done simultaneously with disruptions to enhance business performance during this challenging climate,” Antonio says. He believes that technology will be the driver to help the supply chain industry thrive amidst the coronavirus crisis. Antonio says he will be guiding APAC clients to visualize, provide scenario planning and predict possible disruptions through the Luminate Digital Fulfilment Platform, that will give its clients the strength to learn and adapt their businesses to the current climate. “We call it a PCCA. You need to plan, you do, you check and then you adjust, and this process needs to happen quickly,” Antonio says. Florence says digitisation will harmonise data. “If you look at the strength of analytics, data needs to be reliable and consistent to make the right prediction. Now is the time to benefit from the digital framework,” she says. Antonio says it is reassuring

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that every market and sector will experience disruption due to current global challenges, but he is determined for the APAC region to excel and leverage growth during this time. He didn’t expect he would be Blue Yonder’s APAC president. Antonio helped triple the growth of the Latin America region and believes that can be done here too. “60 per cent of the population

A trusted digital framework collaborates with automation to offer a sophisticated supply chain operation.

resides in the APAC region, it is the epicentre for manufacturing, my vision is to work with clients and innovate industry 5.0,” Antonio says. “Why are we waiting on other regions to innovate first, APAC is a leading market with infinite opportunity. I’ve been very vocal on the impact of the supply chain, I’m excited to be here and grow this market,” Antonio says. ■

MHD Supply Chain

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MHD MATERIALS HANDLING SEW Eurodrive looks behind the scenes to improve materials handling operations.

PUTTING DRIVE TECHNOLOGY ON THE MAP

SEW Eurodrive has extensive experience in drive technology warehousing and parcel and post industries, here the company offers a sneak peek of the backbone of material handling solutions and associated infrastructure.

s consumer demands increase, there is more pressure than ever on material handling systems and processes to deliver and continuously meet expectations without fail. According to SEW Eurodrive it’s time to think more carefully about what takes place behind the scenes and start to reap the benefits of a well thought out material handling system. “When it comes to materials handling, it’s important to not just think about the now, but what your future demand may look like. This has been demonstrated with the increase in demand on grocery and consumables around the COVID-19 situation,” Osem Jibrail, National Industry Specialist Airports & Parcel Logistics at SEW Eurodrive says. While many organisations design a system based on current demand, SEW outlines that it’s important to map out and study how future growth may impact those systems from a throughput and performance-based perspectives, as well as a component level perspective. 52 | MHD MAY 2020

When it comes to processes and component selections, it’s important to consider a number of different aspects. Anything from electrical, mechanical or control device components all play a major role in the profitability, flexibility and availability of the system to and for operations. How suitable the nominated drive technology and communication infrastructure implemented into a material handling system, is said to be proportional to the success of the system and its ability to fulfil its intended purpose. Additional aspects such as system sustainability and subsequent maintenance costs & efforts, are topics that should play a vital role in selecting a suitable drive system, as opposed to mainly focusing on the initial costs and outlays along. Another aspect to consider is system performance at the component level. Drilling down into the data feedback concept from a Drive and Sensor level, not

just for real time monitoring and event generation, but also for historical record keeping, benchmarking and therefore event predictions and forecasting. With this in mind, the drive systems’ capabilities of data transmission, monitoring and handling is somewhat of a crucial building block for future proofing. “At SEW Eurodrive, we work on staying as involved as possible in the project design and implementation phases with our customers, so that we are able to assist in cost savings and efficiency gains and drive system optimisation,” Osem says. At SEW recognise that its endcustomers are the ones who are left to operate, cover and maintain the sold and commissioned drive systems and other components, therefore the business is eager to make their technical, operational and financial experiences as pleasant and profitable as possible, now and throughout the complete life cycle of their investment. ■

MHD Supply Chain

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MHD E-COMMERCE

OMNICHANNEL STRATEGY DURING A PANDEMIC A recent study revealed 20 per cent of retailers don’t think they have the right technology to execute their omnichannel strategy. Brittany Coles reports how the current pandemic is encouraging retailers to rethink omnichannel technology.

ast year, many retailers were thinking about putting plans in place to invest in technology to support their omnichannel strategies. Due to the current pandemic that is sending shockwaves through global supply chains, these retailers are now needing to not only think about investing in technology, but to quickly start putting plans in place for their omnichannel strategies. Omnichannel strategies are still a work in progress according to recent research on omnichannel fulfilment. Forrester conducts the annual “The State of Retailing Online” study by the National Retail Federation (NRF). The 2019 research summarised attitudes and investments that retailers and digital business professionals are making for both their store and their online businesses. Findings in the research suggest that retailers were starting to make investments in order management systems to shore up inventory accuracy and order routing last year. However, when the sudden and unexpected challenges that came with COVID-19 hit retailers, many of them would have found that their plans for investing in technology to support their omnichannel strategies hadn’t progressed very far. COVID-19 highlights the importance of having a risk-aware supply chain with visibility, resiliency, flexibility and collaboration. As the pandemic continues, supply chain leaders are assessing their supply chains and seeking out risk-aware solutions. Having technology in place that helps to effectively execute their omnichannel strategy, while also meeting an individual business’ 54 | MHD MAY 2020

return on investment (ROI) goals, will be at the forefront of retailers’ investment plans. However, nearly a quarter of survey respondents said finding the right ROI metrics for a fulfilment program was very challenging. Raghav Sibal, Manhattan Associates’ Australia and New Zealand managing director says investment in technology allows a flexible and multichannel supply chain, which is focused on efficient order

fulfilment and a unified customer experience across all channels.

THE YEAR OF UNPRECEDENTED DEMAND Raghav says in today’s fast-paced, digital economy, new trends in retailing such as the rise of e-commerce and new and evolving consumer technology, such as smartphones, AI, geotargeting and more, have heightened customer expectations of service, which is why

MHD E-COMMERCE an omnichannel strategy is vital for a supply chain to remain competitive in this new landscape. He says the COVID-19 pandemic has caused supply chain networks to become stressed due to unprecedented demand. Empty grocery shelves, both physical and digital, have become a symbol of how COVID-19 has had far-reaching impacts on communities and supply chains around the globe. Unfortunately, due to self-isolation measures and the resulting reduction in customer foot traffic across Australia, many retailers have closed their physical store doors, but online shopping is

AUSTRALIA’S LEADING RETAILERS’ OMNICHANNEL SECRETS Major retailers Chemist Warehouse Group, who is part of Manhattan Associates’ customer base, as well as other pharmacy businesses and the major supermarkets in Australia are facing unprecedented challenges during COVID-19. “They’re really on the front line, delivering essential goods to Australian consumers at this current time of panic buying,” Raghav says. He says Coles’ and Chemist Warehouse Group’s supply chain networks are paying extra attention

Empty grocery shelves, both physical and digital, have become a symbol of how COVID-19 has had far-reaching impacts on communities and supply chains around the globe.

allowing them to continue to trade and fulfil the needs of their customers. Raghav says those retailers that are able to continue to meet customer expectations well during this difficult time, when a number of retailers are having to constrain their operations, will have an advantage. “Planning for increased demand and implementing new measures and technology immediately has been successful for some retailers,” he says.

to managing inventory levels, which is what every operation should be focusing on too. In March this year, during the consumer peak of panic buying, Coles opened three new pop-up distribution centres in New South Wales, Queensland and Victoria to meet demand. Whilst this may be a luxury short-term measure to cope with unprecedented demand compared to the average retailer,

Raghav says for many retailers it is a chance to look at their supply chain restraints and how they can make their omnichannel strategy more flexible into the future. “We’ve seen some creative temporary measures, but we also have to think about the long term too,” he says. “Due to the increased pressure for eCommerce delivery, Coles has introduced more points to distribute its products from and changed the way in which supermarkets typically fulfil eCommerce orders,” Raghav says. In the past, most supermarkets were picking eCommerce orders directly from their stores overnight, however due to the current situation where many shelves are quickly being emptied of stock, eCommerce is having to be serviced in an alternate manner. DHL assists Woolworths with its ‘Woolworths Basics Box’. The boxes contain essential food and household products for customers unable to leave their home. DHL are responsible for the packing and they work with Australia Post, who distribute. “DHL’s systems have allowed this operation to have the agility that is needed for such a large project to be rolled out at short notice. If you look at the value it brings to the community, it has been quite amazing,” Raghav says. Chemist Warehouse has seen demand for some of its products skyrocket too. “Chemist Warehouse uses demand forecasting and inventory optimisation solutions, which has been continuing to be a valuable asset every day,” Raghav says. He adds that following the challenges of COVID-19 many Australian retailers will be reflecting and looking to and learning from these kinds of companies that were able to successfully adapt, be flexible and react to meet customer’s needs through this period. “A sophisticated inventory solution would know that spikes in demand, like those currently being experienced, are not permanent demand. When we look at forecasts, you want to smooth it out and not continue to buy certain products at this current level on an ongoing basis. It’s important companies leverage the benefit of omnichannel flexibility,” Raghav says. MHD MAY 2020 | 55

MHD E-COMMERCE

In today’s fast-paced, digital economy, new trends in retailing such as the rise of e-commerce and new and evolving consumer technology, such as smartphones have heightened customer expectations of service.

MANAGING INVENTORY LEVEL The most important investment for any omnichannel strategy is to ensure that shoppers, store associates, and suppliers all know which products are where – whether they’re in store, in the warehouse, in transit or out for delivery. According to the findings in the 2019 NRF survey, 56 per cent of respondents said that inventory accuracy was a problem for their omnichannel efforts. Furthermore, 65 per cent said that another challenge was having inventory planning systems that forecast crosschannel demand. Raghav says increasing flexibility to fulfil orders from different inventory location points is key to the success of retailers’ multi-channel operations. “In this current environment, a lot of distribution centres have gone down to skeleton staff, so it’s even more important now to have visibility of where all products are in the network, so order fulfilment can be 56 | MHD MAY 2020

processed from a range of locations, including both the warehouse and stores,” Raghav says. Before the pandemic unfolded, supply chain networks were focused on just in time operations and efficiency. Raghav says having a sophisticated omnichannel strategy in place is the best way retailers can effectively position themselves to manage inventory levels during COVID-19, as well as for future operations. “Retailers don’t want to hold a large amount of safety stock. It’s a balancing act - obviously chief financial officers want to see the overall inventory level on the balance sheet to go down.” Raghav says. If there is safety stock in stores and distribution centres, then it becomes multiple points of buffering which affects the overall cost of inventory management. “Managing this in an efficient manner is only possible if businesses look at network inventory across all points - like in transit inventory, stores

and distribution centres - as points of fulfilment and efficiently forecast demand at each level and across all channels,” Raghav says. “Inventory visibility is very important. Fulfilling orders from the most efficient point is able to be leveraged when accuracy is high. Omnichannel related tools will enable that desired level of network inventory visibility and accuracy,” Raghav says. He adds that the current COVID-19 pandemic is an opportunity for retailers to uncover challenges in their operations and supply chains, so they can strengthen their omnichannel strategies. “Even in this difficult period, technology is proving to help many of our customers. Investment in a digital omnichannel strategy is the best way forward for all retailers, as the heightened capabilities are ready to help meet the demands of sudden changes and challenges within their businesses at any time,” Raghav says. ■

MHD PRODUCT SHOWCASE

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CM3C – SYNCHRONOUS PERMANENT MAGNET MOTOR High dynamic performance, high precision in positioning applications, compact design, space saving, light weight, high Short-term overload capacity and smooth surfaces. All traits of the new SEW CM3C synchronous permanent magnet motor product range. An ideal choice for food and material transport applications, involving frequent stop/starts, medium-high inertial loads. The smooth and hygienic design of this motor series allows it to be robust, dust-repellent and therefore suitable for any warehouse, parcel & post related conveyor and non-conveyor application. For more information, visit www.sew-eurodrive.com.au.

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From pallet racking and shelving to semi-automated materials handling machines, Safer Storage Systems is equipped to create specialised warehouse fitouts for all industries, including eCommerce, Food & Beverage, as well as the Pharmaceutical and Healthcare sectors.

P90+ Pallet Racking is an advanced storage system, providing an effective and flexible solution for any warehouse facility. Available in a range of widths, depths and heights this range can be completely customised and adjusted to suit your organisation’s needs.

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With the right skills and knowledge in place, the team at Safer Storage Systems takes the time to analyse your business needs and operational data to develop a comprehensive solution. This expert approach, coupled with an extensive product range, provides you with a completely tailored and highly effective storage facility. For more details, call (03) 9792 0101 or visit www.saferstoragesystems. com.au.

MHD MAY 2020 | 57

MHD MATERIALS HANDLING

COVID-19: SHUTDOWN OF A DISTRIBUTION CENTRE Matthew Wragg, Chairman of Supply Chain and Logistics Association of Australia (SCLAA) shares his thoughts on staying ahead of the curve and maximising supply chain risk management.

omeone presents on site at your distribution centre with COVID-19, what do you do? It’s an interesting question to ask and very valid in Australia today, but it was a question I was just asked on the phone. I wonder what would have been the reaction just three months ago. As a risk management professional, I am always looking at the potential fall out for my clients, whether it be financial, cost or legal. Staying ahead of the curve is critical in managing your risks and from my perspective only the top 10 per cent of supply chain managers do that really well, even if they haven’t achieved their plan, they are still considering and working all of their risks. There has been a lot of panic from coronavirus fall out and we’ve seen toilet paper shortages among other things.

But let’s take a moment to step back from the fact that someone may actually present to your workplace with coronavirus, also known as COVID-19. As a principle place of business, you have a duty of care to your workers, full stop. You must do everything in your power to protect them and those who frequent your site as well, whether it be delivery drivers, cleaners, security or any other persons as a PCBU (or persons undertaking a business undertaking). On top of that, we all want to see the back of COVID-19 and we all want to ensure socially that we can make an impact and ensure we do not pass this on as our elderly and vulnerable as they are at significant risk. So, lets run through the process, one supply chain professional to another. In the UK during the GFC and other

distribution centres around the world I have worked, I have been involved with the shutdown of distribution centres. But they were all planned, whether it be Christmas, Good Friday or other types of shutdowns. Not many DCs run 24/7, 365 days per year, but they do exist I’m sure. Industries that come to mind are freight forwarding and petroleum for example, even power stations of old would have a supply chain of coal behind their operation. But if someone presents with COVID19, tomorrow morning, that isn’t going to qualify as a planned event and if you must shut down, it certainly would be planned. If everyone had to walk off site right now, how would you even go about that? The planning comes from before that moment, when someone presents with Covid19. It comes now, before someone rocks into work with a dry cough or temperature.

ENTRY AND EXIT

As a princple place of business, employers have a duty of care to workers and must do everything in their power to protect them.

58 | MHD MAY 2020

Most large workplaces have multiple entries and exits in place, and the suggestion to use one and not all and ensure that one is used only, is so that you can open others up. A known ‘clean’ area(s) that may be used in case an area in your building is at risk of exposing others. We know COVID-19 will live well on plastic for 12 hours and metal for 24 hours, so the risk of someone touching a space while infected and then an uninfected person touching the same place is very real. If there is a security station on site which people must pass, please ensure there is a place to wash your hands and ensure that your protocols consider the washing of hands before anyone walks

MHD MATERIALS HANDLING on site. Controlling who and when people come on site is a large factor and will help you answer any questions later down the track if health officials ask questions as to who may have been on site. Ultimately, one entry and exit point is a great way to ensure that a singular pathway on and offsite is used by everyone.

PERSONAL BELONGINGS Ensure that people do not bring large amounts of personal belongings or anything that may not be left behind. If you do have someone present with COVID-19 on site, you may have to advise others that they cannot enter a space that has been contaminated. That space may hold belongings of others. Many DCs are security controlled and bags must not enter the DC at any time in those circumstances. I would highly recommend that bags are not brought on site for any reason. Therefore, people on site would not have a reason to go back to their belongings for any reason, should you need to quarantine an area.

OUTSOURCED LOGISTICS As a CoR professional, I know how important it is to ensure that you do not put drivers at risk, in any circumstance. But a planned shutdown has cut off times pre-planned for those delivering or picking up from site. So how do you manage this aspect. If you need to shut down your DC at this very moment? Two main options come to mind immediately. The first is easy and that is to redirect inbound trucks to other points in your greater supply chain to be unloaded. Then send everyone from your infected DC home. The second is a little more difficult but may be the preferred option in most circumstances. I’d like to write more on this point, but I will simply sow the seed in this instance. This option would require you to split your workforce into two groups. Group A, along with their resources such as forklifts and reach trucks and Group B with their forklifts and reach trucks as well. If group A has an employee present for work, you can be assured that this will be contained to group A resources and Group B will have access to clean resources. For a short time, whilst the risk is still present within the workplace, you could

Planning comes from before someone presents onsite with a temperature or a dry cough. potentially shut down group A and allow Group B to work the necessary areas to unload inbound vehicles only, in the areas only associated with Group B. Whilst it may seem difficult to have almost an apartheid scenario in your DC, it may allow you time to wind your DC down with necessary resources working critical aspects of your Supply Chain, until the storm passes.

LAVATORIES This is a critical element. Firstly, soap and disposable hand towels are critical. If you’re relying on hand dryers, I would remove them immediately as they are known to ‘blow’ particles including bacteria around the toilet area when in use. Unless you have HEPA-Filters on your hand dryers, stop using them! Ensure to close off one toilet block if you can, to allow for the toilet block to be opened if you need to quarantine any other areas. If you’re trying to ensure a clean slate for a period of time, this is critical, to ensure a clean space in case another has been deemed unsafe due to infection. Even better if it is in a different part of your distribution centre.

SECURITY Ensure you always have sufficient security on site, to ensure you can have sufficient crowd control. You want to ensure that people do not go where you do not want them, and you want to ensure that those who come on site are prepared sufficiently before they walk on site and should something go wrong, while they are on site. You may need to ensure that 100-200 employees are directed offsite in a

particular manner at the drop of a hat, so please ensure you consider this in your plans.

TRAFFIC MANAGEMENT We all have (or should have) traffic management plans in operation. But please get them out and consider where your staff are working on site at any given time, the areas that you may need to use in an evacuation, not to mention areas that you may still need to consider using whilst you wind down your DC.

RESPONSE PLAN Once you have considered these elements, it is critical that you brief your teams and ensure you have strict plans in place to wind down your DC. It will take time to wind your DC down potentially, so please ensure you factor in reasonable time frames to do this effectively. Consider your risks, which are your staff and inbound freight, not to mention your customers, whether they be other DCs, retail outlets or residential. You must notify those which critically must know what is going on to ensure the safety of those around you. You don’t necessarily have to call out the air raid sirens, keep it brief and to the point.

CLOSING In closing don’t forget to log anyone who may have been onsite. You will all require testing and the health officials may need to speak with you and ask many questions later. Keep your data safe and sound. Best of luck. ■ MHD MAY 2020 | 59

MHD MATERIALS HANDLING

A TRANSFORMED APPROACH TO BUSINESS Martin Broglia, Managing Director for Bonfiglioli ANZ believes that consistency is key and that finding the right supplier will make all the difference. He reveals why.

“I

started with the company in July last year and since then, we’ve spent most of our time refining our processes for improved customer satisfaction and service delivery,” Martin says.

IT’S ALL ABOUT THE CUSTOMER Martin says that as a customer centric organisation, there is always room for improvement. “We’re taking stock and upping the ‘ante’. The company has a history spanning more than 60 years and 80 countries. It’s underpinned by its values and is committed to excellence, innovation and sustainability. Bonfiglioli has also been widely known for their

60 | MHD MAY 2020

strong industry solutions and their number one position in the planetary and worm gear market. “We do however believe there is still room for improvement in terms of customer service,” Martin says. According to Martin, one can never be complacent and every interaction with a customer is an opportunity to do better. As with any established organisation, Martin recognises where things could be improved and he and his team are working on addressing these areas. “While this is an ongoing process, we have put measures in place to focus on delivery in every aspect of our business right now.”

THE BONFIGLIOLI DIFFERENCE “We’ve created a name for ourselves in terms of design and quality but beyond this, working with Bonfiglioli should be an experience which makes the customer want to work with us again. An experience which builds trust and forms the basis of an ongoing business relationship,” Martin says. He says the company’s customer journey is now an experience. “We have invested in top industry talent, in addition we have reworked our factory layout for improved workflows and enhanced service delivery.” Amid COVID-19, Martin notes that the company offers a large local stock holding and is adequately equipped to meet its customers’ needs during this

MHD MATERIALS HANDLING

“ Martin Broglia is Managing Director at Bonfiglioli ANZ.

difficult period. “Bonfiglioli carries a large local stock holding and offers in-house service and technical staff to assist with field service and commissioning. Our engineering team is available to help with more technical applications,” he says. “We are hungry for success and are committed to our clients. We want to continue building relationships – the type that is built for the long haul. Just because a business has been around for 60 years

We’ve created a name for ourselves in terms of design and quality but beyond this, working with Bonfiglioli should be an experience which makes the customer want to work with us again. An experience which builds trust and forms the basis of an ongoing business relationship.

”

doesn’t mean they keep doing things the same way. My team and I are committed to meeting and exceeding customer expectations.”

SERVICING THE INDUSTRY Martin notes that its wide range of planetary gearboxes remains a firm industry favourite. “Our precision planetary gearboxes are optimised for AGV applications. They can handle high load capacity and are designed to transport, stack, store and retrieve heavy loads on a continuous basis. “They’re energy efficient, compact, can be customised and are compatible with a wide range of motor types.” Furthermore, Martin offers a wide product range for the logistics industry with the ability to handle anything from a small to a large product. Years of experience in this industry both locally and globally ensures they can offer customers best in class solutions for their materials handling and logistics applications.

YOU’RE IN GOOD HANDS To conclude, Martin assures the industry of its continued commitment and its renewed approach to business. “Our people are passionate, and we are here to deliver. You’re in good hands.” ■

Martin says success is about building relationships that are for the long-haul.

MHD MAY 2020 | 61

MHD PROPERTY FOCUS

ALL ROADS LEAD WEST Colliers International works with industrial property clients to maximise the potential of property and accelerate their success. This month, we focus on the Melbourne West industrial market and the current industrial environment with Hugh Gilbert, Director at Colliers International.

Melbourne’s West is now front of mind for so many occupiers that are making supply chain decisions.

t should be no secret to most that the Melbourne West industrial market has in recent times been (by far) the most active industrial market in Australia. In fact, in 2019, the Melbourne West institutional market was responsible for 80 per cent of the development between Victoria’s two key industrial markets (West & SouthEast). Not only that, the Melbourne West market became Victoria’s biggest in 2019 after overtaking the South-East that calendar year. Clocking in at the end of the calendar year at 8,015,323Sqm the Melbourne West industrial market counts over 55 per cent of its ownership as controlled by institutional owners such as Charter Hall, Blackstone, Frasers amongst others.

SO, WHAT IS DRIVING ALL THE ACTIVITY? Quite simply – occupiers – businesses like yours that lease industrial real estate. In 2019, there was just under 1,000,000 Sqm taken up by occupiers 62 | MHD MAY 2020

in Melbourne’s West with just under 400,000 Sqm (675m) of that activity being via pre-commitment development of purpose-built facilities.

SO WHAT IS DRIVING BRANDS LIKE UNIQLO, SUPER AMART & ROCKET LOGISTICS TO MELBOURNE’S WEST? While there are various factors favouring the West Melbourne market, one overarching factor for the wider industrial market is of course changes in consumer behaviour with large occupiers reconsidering their supply chains and their footprints. Traditional bricks and mortar retailers are either leading with innovation or having their hands forced into the online arena. The resulting impact is creating a surge in demand for warehousing to store product reserved for online orders. So understanding the structural shifts in the industrial sector are driven by changes in buying behaviour (Online retail grew at 23.5 per cent 2019/20), what are the other factors that are

putting the West as front of mind for so many occupiers that are making supply chain decisions, and why are so many occupiers making the move to Melbourne’s West (In 2019, 35 per cent of occupier activity was driven by occupiers migrating from other state and interstate markets)? Well there are various factors! Displacement in other markets – The old saying is ‘they’re not making any more land’ and as the wider industrial market has begun it’s boom under the structural shift of E-commerce and all of the desired and promised delivery times that come with it, many markets have been restricted in being able to satisfy requirements or at least satisfy them economically. This was evident with Isuzu’s Head Office migration to the West Melbourne market from Port Melbourne after Colliers International brokered the deal. While Port Melbourne was a long-term home to Isuzu, it was no longer viable due to cost and lack of choice. In terms of land supply Melbourne’s South-East has circa 200

MHD PROPERTY FOCUS

Hugh Gilbert is Director at Colliers International.

Ha’s of zoned industrial land at present while Melbourne’s West has close to 1,000 Ha’s but of course, it’s not only the sheer amount of available land that Melbourne’s West has to offer but the ownership profile of that very land. As any occupier that has completed a large scale leasing transaction with an institutional landlord will know, they are accustomed to heavily incentivising occupiers to transact with them (in comparison to their private landlord counterparts) and in the West a whopping 71 per cent of land is controlled by institutions with the majority (what is available to build on today) of it being offered for pre-leases. In other words, the institutions are open for business and competition is rife! In 2019, Colliers International brokered a 29,000 Sqm pre-commitment for Electrical Wholesaler ‘Arlec’. Despite the facility being one and a half times the MCG football oval, Colliers International were able to present ten options put forward by credentialed developers. In other markets, there may not have been the same depth of choice Being a land-rich market has long meant there is little pressure on supply which in turn, has (for the moment) kept rents comparatively lower than other key industrial markets (South-East 15-20 per cent - North 10-15 per cent). In 2019, institutional developers created an additional 145,000 Sq. of supply. While these buildings were all committed (such as Secon’s 33,310 Sqm commitment to Dexus) unconditionally in the calendar year which speaks to underlying demand, institutions continue to demonstrate a willingness and ability to create more supply. In 2020, there is an additional 125,000 Sq. slated to be constructed via

institutional landlords. This comes after small early commitments in 2020 with GPT committing Godfrey Hirst Carpets (14,402Sqm) and Pet Stock (12,088Sqm) and Logos committing EFM Logistics Services Group (23,222Sqm) to their site in Altona. While headline rents in the West are favourable, it’s the effective rents via larger incentives that tend to most compel occupiers towards Melbourne’s West as opposed to other state and interstate markets. While headline rents in the South-East and North are 15-20 per cent and 10-15 per cent higher respectively, effective rents (after incentives) would see rents closer to 20-30 per cent and 15-25 per cent higher in those markets. The main factor driving incentives in our view is institutional ownership. Due to the ability to create product via development, being able to gain scale through large warehouses and the long-term outlook for the Melbourne West market, institutions are extremely prevalent. Over 55 per cent of The Melbourne West (4,000 Sq.+ market) is controlled by institutions as opposed to 29 per cent in the South East and 26 per cent in the North. While institutions are typically a great driving force for headline rental growth, they tend to be more aggressive than private landlords in acquiring occupiers. While effective rents are compelling, occupancy costs alone will never be compelling enough to justify any major industrial market as occupancy costs tend to come far behind transport costs, so there are factors that are driving the exceptional growth an elevated activity of this market that reach far beyond effective rents. The market is exceptionally well located with Truganina (Truganina is the West’s most active market – 81 per cent of speculative development occurred here in 2019) only 28km’s from the CBD, 26km’s to the Port of Melbourne and only 25km’s to Melbourne Airport, not to mention Connectivity without the incursion of tolls that can service the Eastern Seaboard via the Western Ring Road and Hume Highway. Not only is the Western market well positioned in terms of major landmarks, it’s also surrounded by some of Australia’s fastest growing council areas and populations being The City of Wyndham and The City

of Melton. The future for the welllocated West looks brighter again with Victoria’s flagship infrastructure project, The Westgate Tunnel Project set to move the market even closer to the Port. The $6.7 Billion project is being estimated to reduce travel time from the core market to the Port by up to 50 per cent. A long with low occupancy costs and an optimum logistics location, there is of course another factor driving demand for Melbourne’s West and it’s the growth of the eco-system – it is becoming self-fulfilling as major occupiers relocate to Melbourne’s West, it is creating a need for those that support them (Transport & Logistics) to relocate to the core markets themselves. This was evident when Colliers International relocated Victorian Freight Services (VFS) from the premium industrial market of Altona to Truganina under a 7,750 Sqm pre-commitment with Charter Hall. VFS noted that relocating to be closer to their customers was a key driver.

SO WILL IT ALL CONTINUE? We certainly think so. The location attributes of the Port, CBD, Victoria’s growing population and links to interstate may have been overlooked in the past but with transport and logistics traffic increasing exponentially to meet changes in buying behaviour, these landmarks are more important than ever. The West is now well and truly on the radar for all major occupiers. Not only is Melbourne West Victoria’s biggest industrial market but it’s also the most accommodative and in the best position to capture future requirements with still considerable land supply in comparison to other key markets. While we fully expect that with so much activity will come severely diminished supply over time and with that, rental growth, the ecosystem in our view is becoming too large to deny and that will offset the market becoming less desirable due to increased occupancy costs. To learn more about how we can assist your real estate decisions, and for more information on West Melbourne’s industrial precinct, contact Hugh Gilbert on 0409 730 858. Hugh Gilbert is Director, Industrial at Colliers International. ■ MHD MAY 2020 | 63

MHD THE LAST WORD

COVID-19 SUPPORT MEASURE DEFERMENT OF DUTY, GST AND IPC

t the time of writing (8 April 2020) Freight & Trade Alliance (FTA) was involved in discussions with key Treasury, Australian Taxation (ATO) and Australian Border Force (ABF) representatives looking at import COVID-19 support measures.

RECOMMENDATION While the significant Federal Government support measures (including the JobKeeper payment, the Cash Boost for Employers, and the SME Guarantee Scheme) is welcomed by FTA members, it is unlikely that this will provide adequate relief to support the import supply chain. The sector is not looking for another government “hand out”, simply a mechanism to allow importers to pay Duty, Goods and Services Tax (GST) and the Import Processing Charge (IPC) direct government on a significantly deferred basis. It is recommended that any such relief be extended with deferred payments direct by the importer for a minimum of 6 months to support industry during the current COVID-19 health and economic crisis. FTA has no preconceived view how to best achieve this outcome. Options could include a deferment arrangement encompassing all payments or perhaps adopting different strategies for each component (perhaps including consideration for reducing or waiving the IPC for an agreed period).

IMPORT PAYMENTS Licensed customs brokers play an essential service role within the international supply chain completing Full Import Declarations (FIDs) to comply with import border, community protection and biosecurity statutory provisions. Importantly, customs brokers also facilitate the following payments to government: 64 | MHD MAY 2020

DUTY is generally paid prior to release of the goods into home consumption - the exception being importers that are accredited as Australian Trusted Traders that can defer Duty payment to the 21st day of the next calendar month after the goods were entered into home consumption. GST on imported goods is due on a transactional basis prior to release of the goods into home consumption, but may be deferred until the next BAS for approved reporters under the GST Deferral Scheme. The criteria for approval under this Scheme includes the lodgement of monthly Business Activity Statements. IPC for both border and biosecurity purposes in all instances must be paid on a transactional basis prior to goods being released into home consumption. While an option does exist for importers to make direct EFT payments, in a highly competitive market, many customs brokers have contractual arrangements with importers whereby they make Duty, GST and IPC payments to ensure release of cargo from our ports, airports and depots. These payments are subsequently recovered by the customs broker on a disbursement basis. Currently, many large customs brokerages provide 60 day terms to their import clients, although it is rare for small and medium brokerages to be able to offer this facility. Increasingly, customs brokerages are being asked by importers to either provide 90 - 120 day terms for these payments or set up payment terms. This process is not sustainable for our industry as payment of Duty, GST and IPC is required prior to delivery of the goods. Customs brokerages do not hold these cash reserves and are unable to meet this need. The magnitude of these payments is demonstrated with data

highlighting the cash flow needs of a small, medium and multi-national customs brokerage to making Duty, GST and IPC payments prior to cargo being release into home consumption. Example 1 Customs brokerage typically completes 1000 sea freight FIDs per month for a large mix of importers (some of whom report GST quarterly). Example 2 Customs brokerage typically completes 1200 sea freight FIDs per month, for a large mix of importers (some of whom report GST quarterly). Example 3 Large multi-national customs brokerage - unlike the previous two examples, the multinational has a large percentage of clients that defer GST

Duty

GST

IPC ABF

IPC DAWE

The customs brokerage paid out on behalf of importers $1.77M to clear goods into home consumption for March 2020 Duty 18% GST 72% IPC (Australian Border Force) 7% IPC (Dept. of Agriculture, Water and Environment) 3%

MHD THE LAST WORD GST deferred during March 2020 = $47,168,500 GST paid at time of entry into home consumption during March 2020 = $3,235,775

“ Duty

GST

IPC ABF

IPC DAWE

The customs brokerage paid out on behalf of importers $7.1M to clear goods into home consumption for March 2020 Duty

GST

IPC ABF

IPC DAWE

The customs brokerage paid out on behalf of importers $4.47M to clear goods into home consumption for March 2020 Duty 8% GST 87.5% IPC (Australian Border Force) 3% IPC (Dept. of Agriculture, Water and Environment) 1.5%

The scale of the Duty and ABF component of the IPC across industry is outlined below (source: https:// www.homeaffairs.gov.au/reports-andpublications/reports/annual-reports)

THE RISK OF DOING NOTHING In this unprecedent economic environment, the reality is that many importers are failing to make timely disbursement payments to customs brokers. This in turn is affecting cash flow for customs brokers and their ability to complete payments down the supply chain to transport operators and to other key logistics services. This also jeopardises the ability for customs brokers to make timely Duty, GST and IPC payments required for release of cargo at the border. Furthermore, many customs

Duty 39% GST 46%

It is recommended that any such relief be extended with deferred payments direct by the importer for a minimum of six months to support industry during the current COVID-19 health and economic crisis.

”

IPC (Australian Border Force) 10% IPC (Dept. of Agriculture, Water and Environment) 5% brokers face the genuine risk of being unable to maintain business continuity. While state government and port corporations are currently contingency planning and examining staging sites as required to store containers in the event of supply chain failures, this will be a futile exercise if goods cannot be cleared from customs control into home consumption. Australian container terminals are likely to become quickly congested affecting both export and import processing with obvious impacts including: • C ongestion at the ports, leading to increasing delays to all containers that are “block stacked” at terminals, jeopardising the timely release of essential goods; • W hile limited storage may be available off port, the goods must be held under customs control until they are paid and released and therefore that storage cannot be availed of. • A s the port congests, trade slows,

equipment such as shipping containers, required for exports will not be available. • i ncreased costs across the supply chain, with precedent suggesting that stevedores and shipping lines would give little (if any) reprieve for associated storage or late empty container return penalties, this in turn compounds costs faced by importers (including increasing Infrastructure Surcharges administered by stevedores) and the cash flow of customs brokers; and • d elays in returning empty containers within required timeframes and then able to be used for exports. FTA looks forward to progressing the policy discussions with Treasury, the ATO and ABF to address solutions that will keep trade moving and assist in maintaining the commercial viability of trade in the Australian economy. By PAUL ZALAI – Director, Freight & Trade Alliance (FTA) / Secretariat Australian Peak Shippers Association (APSA) ■

Year

18/19

17/18

16/17

15/16

14/15

13/14

12/13

Duty $m

15,943

15,689

14,195.2

14,044.7

10,882.3

9,279

8,171.1

IPC $m

426.2

417.2

394.9

373.8

353.4

242.4

149.8 MHD MAY 2020 | 65

MHD FROM ALC

LEARNING EARLY LESSONS IN THE COVID-19 WORLD

ike every other industry, Australia’s freight and logistics sector has spent the past two months grappling with the realities of doing business in a changed world. While for many this has meant transitioning to ‘working from home’ arrangements, contemplating shifts from ‘bricks and mortar’ retail arrangements to online sales in retail and a changed focus for hospitality businesses towards takeaway and delivery sales, the challenge for this sector is somewhat different. The simple reality is this; those on the frontline of Australia’s freight logistics industry can’t ‘work from home’. Our ports, stevedores, road, rail and air freight operators are working

tirelessly to keep supply chains flowing and make sure Australian communities can access the goods they need day-to-day. As challenging as the COVID-19 crisis is, it would be far worse without the dedicated support and service offered by those working in Australia’s logistics industry. All levels of government have made it clear that freight transport and logistics remain an essential service. In turn, this means that those who are working around the clock to support households and communities at this challenging time deserve the strongest levels of support and flexibility from governments and from the wider community.

China is already seeing a pick up in consumer spending. 66 | MHD MAY 2020

In the difficult circumstances that all of us are currently enduring, the health and security of our workforce must remain paramount. As instances of panic buying occurred in the early days of the COVID-19 event, it was distressing to hear instances of transport workers and in-store retail personnel being accosted by angry consumers. The current situation is having an impact on the day-to-day lives of all Australians – and perhaps it is inevitable that this is causing frustration and irritation for some. However, taking those frustrations out on delivery drivers or retail workers is completely unacceptable. Far more positive has been the

MHD FROM ALC determined and collegiate way in which all parts of the supply chain have worked effectively to address challenges as they have arisen, to ensure that freight can continue getting to the places it needs to go, efficiently and safely. This has included working to remove barriers that prevented overnight deliveries to supermarkets and retail outlets such as noise curfews that prevented heavy vehicle access and the use of loading docks. Industry worked quickly with state and territory governments around Australia to either remove these curfews or have their enforcement suspended for the duration of the COVID-19 crisis. This helped stock levels to recover and reduced the occurrence of panic buying. The decision of several state and territory governments to effectively close their borders posed significant potential threats to the efficiency of road freight movement. Likewise, restrictions that initially saw roadhouse catering, driver lounges and even shower and toilet facilities closed were a threat to driver safety and well-being. However, the road freight sector’s various representative industry associations (at both national and state levels) were able to collaboratively work with ministers to secure improved arrangements that will mean minimal disruptions for road freight. These outcomes will benefit consumers, help drivers to discharge their responsibilities safely and allow them to protect their own health. Perhaps the most difficult aspect of the COVID-19 situation is the uncertainty over its duration. Naturally, this causes anxiety in the community and makes business planning especially difficult. However, what is certain is that in addition to ensuring the community can continue to access essential goods, the freight and logistics sector also has a vital role to play in providing economic opportunity. Already, there is evidence of some pick-up in consumer demand and economic activity in China, which will remain a critical export market for Australia. As we look to sustain Australian businesses and create employment opportunities, our freight sector will be

Freight operators are working tirelessly to keep supply chains moving. essential in supporting our exporters’ efforts to get their goods into recovering markets. Governments and local communities must understand the importance of their task as part of Australia’s economic recovery, and provide every support possible to help our workforce achieve it. Of course, however long the COVID-19 crisis lasts, the reality is that the world that emerges on the other side may look very different. In terms of the operation of Australia’s supply chains going forward, the pandemic is likely to force industry and governments to more urgently consider some key questions. Already, there is some commentary about the extent to which Australia relies on China, both for the import of manufactured goods and as an export destination. Although Australia has concluded trade agreements with other key growth markets over recent years, including Japan, South Korea and Indonesia, there remain opportunities to expedite similar arrangements with India and the United Kingdom. This would stimulate further employment growth in Australia’s key export sectors, help to further diversify our supply chains and enhance their resilience. Some of the disruptions to global supply chains witnessed in the earliest days of the COVID-19 crisis may also give Australian companies reason

to consider the global-local balance within their supply chains – and engineer an uptick in some aspects of local manufacturing that, prior to COVID-19, was thought by some to be in terminal decline. The level and sophistication of technology in our supply chains is likely to be another discussion with a renewed sense of urgency in the wake of the COVID-19 experience, particularly if the pandemic endures for longer than initially forecast. The automation and digitalisation of manual and paper-based processes will become especially important if the health impacts of COVID-19 affect labour supplies in the freight and logistics sector. Consumers may also be more alert to the provenance of their goods as they emerge from the crisis, wanting greater assurances about the safety and security of goods – including food products – as they move through the supply chain. This will require a more sophisticated approach to supply chain visibility than some parts of the industry have taken until this point. None of these questions represent insurmountable challenges – and they may well present the industry with significant new opportunities. But they will require a deep consideration of how we can more effectively protect and enhance the resilience of our supply chains, so that they can better serve our communities. ■ MHD MAY 2020 | 67

MHD May 2020

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The last word

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Product showcase

Putting drive technology on the map

Omnichannel strategy during a

hit Australian supply chains Out of adversity comes innovation

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Juice giant’s main squeeze: Toyota

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Safer measures and stronger systems

Accelerating the movement of goods

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Turning over a new leaf

A time of opportunity