MHD Supply Chain Solutions JANUARY / FEBRUARY 2019
4 STEPS TO IT SUCCESS
Giving your implementation the best chance
DISRUPTED DEMAND
Disruption to demand management will power future supply chains
IN FOCUS:
DATA CAPTURE, IDENTIFICATION AND PRODUCTIVITY TECHNOLOGIES
COVER STORY
CUSTOMER FIRST Crown Equipment’s customer-centric philosophy at work
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MHD FROM THE EDITOR
MHD Supply Chain Solutions CONTACT MHD Supply Chain Solutions is published by The Intermedia Group Pty Ltd ABN 940 025 836 82 41 Bridge Road, Glebe NSW 2037 Telephone: (+61) 02 9660 2113 Fax: (+61) 02 9660 4419 Email: mhd@intermedia.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.
THE CUSTOMER IS STILL KING (OR QUEEN)
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o much so that a new term has been invented for the milieu in which the modern customer operates: the IConomy. Consider this: “Today’s consumers want full control of their buying experience, from location to delivery. These consumers are part of the on-demand and in-control generation – and they are irrational, emotional and uneconomic to boot.” This quote is taken from the ICurve (another new term!) article (page 42) by last-mile services technology company Localz, describing the results of their survey of the mindset of the online consumer and the current status of the Australian logistics industry in response. The results are revealing and fascinating.
THE INDUSTRIAL CUSTOMER But of course you, dear reader, are a customer, too. The vast majority of MHD magazine’s readership is management members of the supply chain community, who make selections on anything ranging from packaging materials to forklifts to real estate and million-dollar automation projects. Being the decision-maker in industrial-size purchasing transactions goes with a great deal of responsibility, and being convinced of the reliability of a supplier’s products as well as follow-up service and support would have to be at the top of your list of critical factors. It is, therefore, good to see that industrial suppliers take no less, and probably even more, care and effort in ensuring that the customer’s needs and wants are thoroughly considered and satisfied, right at the start from product design and development. For example: “At Crown we’ve always had success with building and maintaining strong, productive relationships with businesses, from start-up companies through to global entities,” [managing director] Mr Simmonds said. “At our head office in Sydney we have a dedicated team focused on measuring our customer service performance. Our management, as well as the culture throughout the organisation, is focused on acting on what we learn to make us a better fit for our customers. “Our aim is to be number-one in one specific area: customer service.” And that’s what we, the customers, want to see.
Charles Pauka Editor charles@intermedia.com.au
DISCLAIMER: This publication is published by The Intermedia Group Pty Ltd (the “Publisher“). Materials in this publication have been created by a variety of different entities and, to the extent permitted by law, the Publisher accepts no liability for materials created by others. All materials should be considered protected by Australian and international intellectual property laws. Unless you are authorised by law or the copyright owner to do so, you may not copy any of the materials. The mention of a product or service, person or company in this publication does not indicate the Publisher's endorsement. The views expressed in this publication do not necessarily represent the opinion of the Publisher, its agents, company officers or employees. Any use of the information contained in this publication is at the sole risk of the person using that information. The user should make independent enquiries as to the accuracy of the information before relying on that information.
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MHD JANUARY / FEBRUARY 2019 | 3
*AITA Statistics Ytd December 2017.
DELIVERING MORE THAN JUST FORKLIFTS. THAT’S THE TOYOTA ADVANTAGE.
At Toyota Material Handling we recognise that choosing the right supplier is just as important as choosing the forklifts and warehouse equipment
CE
LEBRATING
that will meet your needs. As Australia’s number one forklift company,* it doesn’t matter whether we are supplying you with a single spare part, a rental forklift, or helping
19 6 8 - 2018
you manage your entire fleet, our objective and commitment remains the same – adding value to your operation. That’s the Toyota Advantage.
1800 425 438
www.toyotamaterialhandling.com.au
S O L U T I O N S F O R E V E R Y PA L L E T ®
JANUARY / FEBRUARY 2019
ISSUE #1 VOLUME 49
THIS ISSUE NEWS
COVER STORY
06 Celebrating the winners of the 2018 ASCL Awards
COMMENT 08 Moving into gear: where will the future take us? 10 Ten talent trends for 2019
IN FOCUS: DATA CAPTURE, IDENTIFICATION AND PRODUCTIVITY TECHNOLOGIES 16 Lean & clean: how paperless working can support lean manufacturing 18 Get your FACT right 20 No sleep: the ‘always on’ wholesaler in the e-commerce age 22 ‘Make it’ in I4.0 24 Reverse right 26 Software success 30 Waste not, want not 32 The new paradigm 33 Connected + intelligent
12
SUPPLY CHAIN
MHD Supply Chain Solutions JANUARY / FEBRUARY 2019
16 4 STEPS TO IT SUCCESS
Giving your implementation the best chance
DISRUPTED DEMAND
Disruption to demand management will power future supply chains
34 Get more space 36 Disrupt demand 38 Plan4demand: Realising the full potential of demand planning–Part 4. in a series 41 Neuromarketing 42 The ICurve 44 Rail works 45 Don’t fear CoR 46 Prepare for a hit
DEPARTMENTS AND REGULARS
COVER STORY
CUSTOMER FIRST
Crown Equipment’s customer-centric philosophy at work
47 Materials handling and management 48 ASCI – contacts, courses, news 50 From the Supply Chain and Logistics Association of Australia 51 Subscription information
IN FOCUS:
DATA CAPTURE, IDENTIFICATION AND PRODUCTIVITY TECHNOLOGIES
ON THE COVER Crown Equipment’s customercentric philosophy is shaping the way the company develops its products as well as how it interacts with customers. See page 12
34 MHD JANUARY / FEBRUARY 2019 | 5
WINNERS CELEBRATING THE
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he Supply Chain & Logistics Association of Australia in conjunction with Wisetech Global, Vertical Talent, Australian Trusted Trader, Bondi Labs, Freight Assist, Localz, Xtreme Freight and LMA celebrated the winners of the 2018 Australian Supply Chain & Logistics Awards at the annual awards night dinner held at the iconic Luna Park, Sydney. These prestigious awards have been held annually for the last 58 years by the Supply Chain and Logistics Association of Australia (SCLAA). The awards allow a fantastic opportunity for people and companies involved in the supply chain industry to celebrate and be recognised for their particular contribution, success and hard work. There were eight categories, with seven open for submission. Each of the seven categories attracted a significant number of high-calibre submissions. Award winners were announced as follows: 6 | MHD JANUARY / FEBRUARY 2019
2018 TRAINING, EDUCATION & DEVELOPMENT AWARD Training, education and development remains a vital part of allowing knowledge to be utilised for new ideas and supply chain improvements to be discovered and then implemented. This award is presented to a company that can best demonstrate their commitment/ application and results of providing training, education and development of their people. The trophy was first awarded in 2002 and is dedicated to the late Professor Peter Gilmour.
Winner: Wesfarmers Chemicals Energy & Fertilisers.
2018 INFORMATION TECHNOLOGY AND MANAGEMENT AWARD Information remains the most important requirement of any supply chain. Information technology is where the majority of supply chain improvements have been made.
Nominees for this award demonstrate where their use of existing or new technology has provided significant improvements to their management of information and/or their supply chain processes. The trophy was first awarded in 1994 and is dedicated to the late Len Smith FAIMM.
Winner: BlockBit Solutions.
2018 INDUSTRY EXCELLENCE AWARD Recognises and acknowledges outstanding achievements and contribution by an individual currently engaged across the supply chain industry. Persons nominated for this most prestigious award will be leaders and will have made significant change to the way a supply chain is managed and improved either academically, physically or technologically. Originally awarded in 1987 and dedicated to Mike Munns, FAIMM, this award remains a cornerstone of SCLAA’s commitment to recognising
MHD NEWS MAIN IMAGE: The Coca-Cola Bottlers Japan and XAct Solutions (Shinsei Project) team. LEFT: Kathryn Esler, winner of the Future Leader Award.
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Don’t miss your opportunity in 2019 to nominate an individual or company for these prestigious awards! and promoting the importance of the supply chain industry and its people to continuously improving organisational strength and growth.
Winner: Rob O’Byrne, Logistics Bureau Group.
2018 INTERNATIONAL SUPPLY CHAIN AWARD This is an award that recognises that supply chains know no boundaries. The ASCL International Supply Chain Award is given to a company, association or an individual that may operate internationally and are able demonstrate their capability, commitment and achievements across any spectrum of the sciences, practices, disciplines or efforts to promote and improve the knowledge and acceptance of the importance of the supply chain.
Winner: Coca-Cola Bottlers Japan and XAct Solutions (Shinsei Project).
2018 SUPPLY CHAIN MANAGEMENT AWARD Supply chain management (SCM) is the overview of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. This award recognises an organisation that can demonstrate significant achievement within a section or across their entire supply chain. Nominees should be able to clearly state the design and achieved results of the project or process that was envisaged and then implemented. The trophy was first awarded in 1984 and is dedicated to Doug Beattie.
Winner: Fremantle Ports.
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2018 LOGISTICS MANAGEMENT AWARD This is a new award and is awarded for one of the oldest disciplines of any supply chain and replaces the Storage and Materials Handling Award. Recipients may stem from nominees for any of the other SCLAA awards at the judges’ discretion, or from a direct application, where the demonstrated achievement, improvement or results have required a logistical approach to improvement or major change to their logistics management.
Winner: Richard White, WiseTech Global.
2018 ENVIRONMENTAL EXCELLENCE AWARD The ASCL Environmental Excellence Award recognises corporate leadership contributing to the solution of environmental sustainability within our industry through performance and action. The trophy was first awarded in 1966 and is dedicated to Mr Ken Pike.
Winner: PGT-Reclaimed.
2018 FUTURE LEADERS AWARD The purpose of this award is to provide incentive and recognition to young supply chain professionals who are both currently working in and wish to continue their career path. Nominees for this award should be able to demonstrate their passion and commitment to taking the supply chain toward tomorrow. The SCLAA wishes to showcase finalists and provide impetus to continue to attract the brightest to the industry. First awarded in 2009 and dedicated to Vince Aisthorpe.
Winner: Kathryn Esler. The 2018 ASCL Awards Gala Dinner was a memorable evening with MC Michael Gallacher, CEO Ports Australia, and guest speaker Commissioner Michael Outram APM, Commissioner of the Australian Border Force (ABF). Significant SCLAA announcements were made by our chairwoman Amanda O’Brien, one of these being that SCLAA had formed an alliance with the Australian International Trade Association in the implementation of the ‘Belt and Road Australia-China Supply Chain and Logistics Alliance’. The awards were attended by local, national and international guests and provided ideal networking opportunities. The SCLAA extends its congratulations to all finalists, high commendation recipients and award winners. Don’t miss your opportunity in 2019 to nominate an individual or company for these prestigious awards that are recognised industry wide. To join this exciting national association please contact the National Secretariat on 1300 364 160 or email secretary@sclaa.com.au. ■ MHD JANUARY / FEBRUARY 2019 | 7
MHD COMMENT
MOVING INTO GEAR Transport and logistics industry: where will the future take us? One of Volvo Trucks’ autonomous electric commercial vehicles prototypes.
RYAN EAGLE
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he transport and logistics industry generates approximately $100bn for the Australian economy on an annual basis, which is predominantly derived from road, rail, sea, air, warehousing and transport support. Despite road transport accounting for more than 25% of this figure, this is a highly fragmented sector for the 40,000 operators in it. The industry’s low entry barriers mean that inexperienced operators can have poor financial discipline, be prone to ego-based decisions and unaware of the safety regulation requirements. Increased performance and growth in the transport and logistics industry requires experienced leadership and operators who are willing to adapt to market trends.
KEY INDUSTRY TRENDS 1/ Where is the investment?
The Australian economy is forecast to achieve strong growth in the decades to 2050 based on our geographical proximity to economies that continue to grow at unparalleled rates such as China and India. The Asia-Pacific region will make up half of the world’s global economic output by 2050. The development and growth of the Australian economy has been traditionally tied to investment in infrastructure to support the increasing movements of freight. This is evident in the increase in freight moved by transport companies 8 | MHD JANUARY / FEBRUARY 2019
exceeding the level of infrastructure spend in the Australian economy in the last 10 years. However, Australia’s aging population has prompted greater levels of government spending to be directed towards aged care and pension funding and significantly less towards infrastructure, likely to force changes to how transport infrastructure is funded moving forward.
2/ The people’s power As Australia’s population continues to increase, anticipated to be almost 42 million in 30 years’ time, traditional modes of transport will need to be more effectively and efficiently utilised to reduce traffic congestion and carbon emissions as the number of commuters progressively increases. The transport and logistics sector has the second oldest workforce in Australia. High rates of WHS incidents and the cost and time required to obtain the necessary qualifications indicate that the shortage of qualified personnel across the industry is set to remain for the foreseeable future. Incentivising key personnel is critical if a skilled and younger workforce are to be attracted to the sector. Offering more attractive remuneration and utilising more innovative and effective resources to establish a forward-thinking and revolutionary business model will aid this movement.
3/ Technology driving the sector forward The emergence of blockchain and the increasing use of cryptocurrency will
streamline the way transport operators conduct business and reduce additional third-party costs, in turn increasing margins and operational efficiencies. Transport companies must embrace new technology to support higher freight volumes and increasing freight demand, in part borne by population growth and increased trade activity, especially with Asia. By 2020, there will be over 50 billion ‘Internet of Things’ devices world-wide and estimates state that by 2025, up to $2.5 trillion (USD) of additional value will be generated by IoT devices for the global logistics industry. As more retailers move to an online platform to sell stock, the purchasing behaviour of consumers has also changed as a wider variety of delivery options are available (e.g. next-day, same-day delivery). Freight can also be measured, tracked and analysed by both business and consumer. This allows freight operators to identify areas of performance improvement to increase the pace and reliability at which goods are shipped. The IoT is dramatically accelerating the pace of innovation in the transport industry and will remain at the forefront of technological development in this industry in the long term.
WHAT IS THE FUTURE OF THE INDUSTRY? Value to the industry will be found in showing clients how eliminating middle layers and complicated steps from their supply chains can optimise their efficiency and performance. This value will be found when operators focus on their core operational strengths that align with the state of the economy and consumer demand. Ryan Eagle is a partner of Ferrier Hodgson based in Sydney and leads Ferrier Hodgson’s special situations team. He has almost two decades of experience in a variety of corporate restructuring roles and advising on distressed and special situations. For more information call +61 2 9286 9949 or email ryan.eagle@fh.com.au. ■
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A survey conducted earlier this year showed that 86% of logistics decision-makers see technology as the best way to drive efficiency and reduce costs.
10 TALENT TRENDS FOR 2019
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NICK DELIGIANNIS
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alancing automation with human workers, the impact of chatbots on an employment brand and a widening talent mismatch are among the trends that will shape the recruitment market in 2019. Organisations in Australia want to position for growth in 2019. With demand and supply issues intensifying, they’ll need to up the talent ante to achieve growth while striking the right balance between technological integration and human skills. Our ten top talent trends for 2019 are:
1/ THE INTEGRATION OF THE ‘HUMAN’ FACTOR WITHIN SUCCESSFUL AUTOMATION DEPLOYMENT ‘Could a robot do my job?’ This was a common question asked in 2018, but with employers now focused on the optimal balance between human workers and robotic automation the question for 2019 becomes: ‘How will automation be integrated into my role?’ As Elon Musk admitted in 2018 on Twitter in response to delays in manufacturing Tesla’s Model 3 sedan, “Excessive automation at Tesla was a mistake... Humans are underrated.” Organisations are learning from such mistakes and, in 2019, will look for the 10 | MHD JANUARY / FEBRUARY 2019
most effective, ethical and value-adding amalgamation of automation and staff beyond simply the most productive.
2/ TAKING EMPLOYEES ON THE AI CHANGE MANAGEMENT JOURNEY Once the decision is made to introduce robotic automation or artificial intelligence to drive operational efficiency, organisations will need to engage their employees within a robust and considered change management plan to mitig ate risk of implication on morale. It’s important that this is done in a way that alleviates the perceived threat that many workers see such technology posing to their livelihood. Part of this involves talking about the rationale behind it, and explaining how it can help individuals perform their job and potentially develop their career through learning new skills.
3/ THE RETENTION BENEFIT OF DIGITAL UPSKILLING TO BE REALISED With major brands such as Walmart already investing in the digital upskilling of their staff, expect constant learning to become mainstream in 2019. Whilst upskilling existing staff provides an organisation with a pipeline of employees who can fill current skill gaps, an arguably greater benefit comes
MHD COMMENT in the form of an employee benefit that staff actually want to receive and will stay for. According to our 2018-19 Hays Salary Guide, 59% of Australian workers want a job offering ongoing learning and development opportunities. This is behind only flexible work practices and career progression.
4/ BIG DATA GETS BIGGER Big data is no longer the exclusive domain of big business, with technological barriers falling away as more and more off-the-shelf data management tools close the gap with enterprise level organisations. Organisations of all sizes will be able to rely on big data for business insights. In 2019 the focus will be on recruiting talent who can capture more information from an increasing number of data points, such as the Internet of Things (a market that will double by 2021) and previously unused dark data, but, crucially, also derive actionable insights from that data. We also expect to see greater regulation surrounding data protection and privacy, which will impact the skills employers require.
5/ THE LURE OF CHATBOTS, THE POTENTIAL IMPACT ON AN EMPLOYER BRAND The use of conversational artificial intelligence within the recruitment process will rise in 2019, but organisations will need to assess and address the potential impact on an employer brand. The technology now exists for an organisation to use advanced chatbots to offer personalised responses to initial candidate telephone enquiries and common queries based on set rules and algorithms. While the automation of such conversations can free hiring managers to focus on non-routine job tasks, organisations will need to consider its impact on their employer brand – and if the caller should be informed that they’re not talking to a person.
6/ DIVERSIFYING DIVERSITY The business benefits of a diverse and inclusive workforce and workplace are becoming more widely understood, but various surveys show that in 2019 organisations will want to accelerate the pace of change to achieve genuine results in this area. The focus will also shift to diversifying diversity, or in other words, to widening terms of reference to cover more demographics, such as Aboriginal and Torres Strait Islander, people living with disclosed disabilities, people who identify as LGBTIQ+, and mature-age.
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Once the decision is made to introduce robotic automation or artificial intelligence to drive operational efficiency, organisations will need to engage their employees within a robust and considered change management plan.
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7/ FAILURE TO OFFER FLEXIBILITY CREATES AN ATTRACTION AND RETENTION DRAWBACK Few professionals work 9-5 anymore, but the concept of set hours every day was heavily under the spotlight in 2018. An Irish study of 1,000 workers found 32 per cent would accept a longer workday for a shorter working week. Meanwhile, a New Zealand financial firm, Perpetual Guardian, allowed workers to work a four-day week following a trial that found it improved productivity and reduced stress. With more employees considering flexibility – of hours or place – the norm, any organisation that doesn’t review its flexible working policies will face an attraction and retention shortcoming in 2019.
8/ BEWARE THE TALENT MISMATCH Australia’s talent mismatch, between the skills jobseekers possess and those employers want, will expand even further after growing for the past five years. Despite an existing pool of labour, in 2019 employers will find it harder to hire people with the expertise they need, particularly in high-skill industries and for roles that require highly skilled professionals, such as IT, engineering, financial services and professional services. This will lead to employers exploring a wider range of talent attraction and retention strategies in 2019.
9/ FOCUS ON SPECIALISATION AND STRATEGIC THINKING Employers will focus on expanding their teams with deep expertise and wide perspectives. Given increased technological change and the fast-paced nature of today’s world of work, employers look for candidates who can think strategically to leverage new technologies, trends and opportunities to add greater value and benefit the organisation.
10/ A NEED FOR STAKEHOLDER ENGAGEMENT SKILLS Technological disruption will increase the requirement for all departments to possess staff with strong stakeholder engagement and management skills. Organisations will look for staff who, in addition to possessing the necessary technical skills a role requires, can also understand and improve engagement with internal and external stakeholders. Nick Deligiannis is the managing director of Hays in Australia & New Zealand. For more information visit www.hays.com.au. ■ MHD JANUARY / FEBRUARY 2019 | 11
MHD COVER STORY “At Crown we’ve always had success with building and maintaining strong, productive relationships with businesses, from start-up companies through to global entities,” Mr Simmonds said. “However, technology is constantly improving and these days there are better ways of holding a mirror up to your own performance when it comes to meeting customers’ needs. “At our head office in Sydney we have a dedicated team focused on measuring our customer service performance. Our management, as well as the culture throughout the organisation, is focused on acting on what we learn to make us a better fit for our customers. “Our aim is to be number-one in one specific area: customer service. “We see this as being just as important as the new technology and commerce platforms we are rolling out to customers, which include e-commerce, semi-automation and other new technology that will have a strong impact on the interaction between humans and increasingly advanced machinery.”
ONLINE AND FACE TO FACE Crown’s newest reseller Adam McGilvray of Lift’n’Rack in Port Macquarie, NSW, attending Rural Aid’s hay bale drop in Tamworth, NSW.
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Higher levels of productivity can be achieved through attention to design, ergonomics and user interfaces.
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12 | MHD JANUARY / FEBRUARY 2019
Crown has adjusted its ratio of online versus face-to-face sales to bring added convenience to customers while providing the right advice where it really counts.
CUSTOMER FIRST Crown Equipment’s customer-centric philosophy is shaping the way the company develops its products as well as how it interacts with current and prospective customers
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he company has been bringing innovation to the Australian material handling industry for more than 50 years and is constantly reviewing and refining all of its customer touch points to position itself at the forefront of customer service in the industry. This focus has been driven in parallel with the evolution of its products, which helps provide customers with productivity improvements whilst also ensuring operators receive the latest technology to make their jobs safer and easier. Managing director Greg Simmonds said Crown’s customer-focused philosophy has always guided its decisions but has become a more crucial element in a world where customers are expecting more.
The company entered Australia’s online material handling sales arena in December 2016 with a website dedicated to selling Crown PTH Series hand pallet trucks. Following a positive reaction from customers and ongoing research into business-to-business buying preferences, Crown is now expanding its e-commerce activities to include other products that are well suited to this streamlined approach. The company’s increasing use of online sales has enabled its sales force to increase its focus on the areas of material handling that require specialised knowledge and experience to determine best-fit solutions for particular applications. According to director of sales Craig Kenchington, creating the right balance
of online and face-to-face sales is an important part of the company’s customer focus. “Crown is increasing its online sales presence and the launch of our website selling hand pallet trucks online was an instant hit,” Mr Kenchington said. “Our practices are backed up by experience as well as industry data showing dramatic changes in business-to-business buyer behaviour, with a large and growing number of customers who prefer to do their own research online for certain products. “The convenience of being able to buy our robust hand pallet truck, which works well in any environment, straight from our website with competitively priced shipping has proven very attractive to many of our customers. “They are asking for additional product options so we’ve updated our e-commerce site to include WP Series power pallet trucks and M Series stackers, with more to come.” However, many customers must deal with warehouse variables including size, shape, ceiling and doorway openings, racking systems, mezzanine levels, power capabilities, fire extinguishing systems and warehouse management systems. Managing these factors requires a trained professional and a company prepared to back its products. Companies that only sell material handling equipment online are at a disadvantage in these situations which can, in turn, put the customer at a disadvantage. “Finding the right products to perform material handling tasks as efficiently as possible, which fit the physical dimensions of the warehouse and racking system and suit the budgetary requirements of the customer, is a job that requires consultation based on solid expertise,” Mr Kenchington said. “Now more than ever, the guidance of a genuine material handling professional is essential to meet operational efficiency and compatibility expectations when populating a warehouse with lift trucks and reach trucks.” Involving a material handling expert in warehouse equipment procurement brings the potential to identify areas of the business that can benefit from existing and upcoming technology, including semi-automation and fleet management. An increasingly important
Crown has increased its focus on its customer-centric culture.
Crown has updated its e-commerce site to include WP Series power pallet trucks and M Series stackers in addition to its hand pallet trucks.
element in running a lift truck fleet is the fitment and compatibility of fleet management systems. “Crown’s InfoLink fleet management system has become one of the most important factors in the sale of lift trucks to medium and large businesses,” Mr Kenchington said. “That is because of its potential to reduce impacts – and therefore damage – while providing valuable information on lift truck usage and improve the overall safety culture within a warehouse. “A material handling professional who visits a site to gain an understanding of a company’s practices is able to make a judgement on how much a company can benefit from its use and make recommendations for its implementation.
“Further to that, these systems initially require fine-tuning onsite to get the full savings and safety benefits they are capable of providing.” Whilst online sales can add convenience to the purchase of simple products, companies that operate as a ‘one-stop shop’ for material handling needs add another dimension of simplicity for dealing with what can be a complicated task. “In addition to helping you find the right lift truck for your conditions and setting them up with fleet management systems, Crown personnel are also experts in racking, shelving and accessories and can help develop an empty space into a fully functioning warehouse through dealing with just the one organisation,” Mr Kenchington said. “We can also train operators with the skills required in a material MHD JANUARY / FEBRUARY 2019 | 13
handling environment, either onsite or through our extensive branch network throughout Australia. “We believe in the convenience of the products we offer and our e-commerce activities reflect Crown’s customercentric approach. It’s an important complement to our sales channels.”
AUTOMATIC FOR CUSTOMERS Crown’s customer-centric approach is also guiding the roll-out of its semi-automation technology into the Australian lift truck market. Throughout the Crown global regions, Crown’s technology business development strategy focuses on integrating new technologies into mainstream organisations in a measured fashion. It was created to provide improved operator management, safety and productivity that fully tested semi-automated equipment can offer, while shielding customers from the potential dissolution that can follow the hype and excitement associated with technological advancements. The strategy has resulted in a semiautomated product suite consisting of Crown’s Auto Positioning System (APS) and Auto Fence operatorassistance for VNA equipment. These will be offered alongside Crown’s award-winning Quick Pick Remote (QPR) order picking technology, which has already proven to provide significant case picking productivity in applications where material flow optimisation is understood.
However, according to Crown Pacific Rim director of technology and business development Chris Ansell, the company’s approach is not about ‘technology for the sake of it’. Instead, Crown will be assessing interested customers’ businesses for the best solutions to their current and future material handling needs. “Our aim has always been to provide customers with an equitable return on investment from every one of our products, whether it be a hand pallet truck or a turret stock picker,” Mr Ansell said. “Some companies advertise their automated material handling products as ‘must-haves’ for businesses, without explaining that they are not necessarily the silver bullet they are searching for to provide optimal warehouse efficiency. “Therefore our approach in discussing automation with our customers will be to first find out where they stand with material flows. “In many cases we have been able to advise customers on how to extract more performance and efficiency from non-automated lift trucks, instead of taking on the commitment of an automated solution. “Once we’ve established that automation is the right path to increased productivity for a particular customer, we will work with them to come up with the best solution for their needs. Currently Crown has designated the MPC 3000 Series and GPC 3000 Series
Crown’s proprietary fleet management system InfoLink has become one of the most important factors in the sale of lift trucks to medium and large businesses.
14 | MHD JANUARY / FEBRUARY 2019
pallet transporters and the TSP Series turret lift trucks for production with integrated semi-automation technology.
PEOPLE POWER While Crown has invested considerably in semi-automated equipment, the company expects humans to remain an important part of material handling well into the future. “At Crown we’ve always believed that higher levels of productivity can be achieved through attention to design, ergonomics and user interfaces,” Mr Ansell said. “Automated products currently make up less than two per cent of the global market but we’re expecting that to grow steadily over the next decades and our future offerings will accommodate this trend with thoroughly developed equipment. “However, none of our projections suggest that humans will be removed from the equation in material handling.”
NUMBER-ONE IN CUSTOMER SERVICE Crown built its reputation through great customer service and its increased focus on its customercentric culture is what the company’s management believe will allow it to be seen as number-one. “At Crown we don’t take any form of interaction with customers for granted,” Mr Simmonds said. “More than ever, being able to listen to customers properly, find the best solution which makes them the most profit, while supplying and maintaining it as effectively as possible, is crucial for our mutual success. “Working with Crown is a collaboration which, to us, begins as soon as we answer an enquiry. “We have always used customer feedback to improve our operations but it’s now a systematic part of our procedures, management and culture. It’s become both a science and an art here at Crown. “We know that customers are expecting and demanding more. We’ve got the technology, infrastructure, products and experience to deliver this, as well as the passion and drive to serve customers better than the rest.” For more information call 131 604 or visit www.crown.com. ■
MHD COVER STORY
CLEANING UP C
rown Equipment has joined forces with Australian industrial cleaning machinery supplier Conquest Equipment Technologies to expand its equipment range. The partnership means Crown can now supply heavy-duty cleaning equipment along with racking, shelving and other infrastructure that is part and parcel of a complete warehouse fit-out. Crown Equipment’s general manager for warehouse solutions Brett Stewart said the partnership with Conquest was born from a combination of customer feedback and the company’s focus on increasing its capability as a ‘one-stop shop’ for warehouse solutions. “The idea of getting involved with a commercial cleaning equipment supplier came about because Crown sales staff were frequently being asked if we could supply industrial sweepers and other types of cleaning equipment,” Mr Stewart said. “We looked at a number of industrial cleaning equipment suppliers and we chose to work with a reputable, family-run company with Australia-wide support. “Conquest is a natural fit for Australia’s number-one electric lift truck company.” Through Conquest, Crown can now supply Australia’s most advanced range of commercial cleaning products with floor sweepers, floor scrubbers and street sweepers for industrial, retail, corporate, and healthcare applications. The comprehensive range includes walkbehind and ride-on sweepers and floor
Crown Equipment has joined forces with Australian industrial cleaning machinery supplier Conquest Equipment Technologies.
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The comprehensive range includes walk-behind and ride-on sweepers and floor scrubbers as well as a range of street sweepers and commercial floorstripping machines.
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scrubbers, and a range of street sweepers and commercial floor-stripping machines. Mr Stewart said Conquest shares similar business values with Crown. “Crown and Conquest are utilising similar synergies – our customers are the same as their customers when it comes to us meeting their needs and finding solutions.” Mr Stewart says the partnership is a complimentary business model that will position well with Crown and perfectly benefit customers. “For our customers it means dealing with one salesperson rather than numerous companies for warehousing needs and that has to make things easier.” Conquest Equipment Technologies’ managing director Michael Mathews said Conquest always finishes with the right solution and believes the Crown alliance is 100 per cent the right way to go. “We’ve been dealing with Crown for a number of years now and we’re excited to work with a market leader with a good reputation. Like us, customer service and support is Crown’s number-one priority.” In global terms, Conquest is a successful Australian business that has been operating for more than 40 years at a national level, competing against big international companies in the broader marketplace. Crown Equipment’s national sales team members are trained with the knowledge needed to provide expert advice on Conquest equipment in addition to Crown’s lift truck and Warehouse Solutions ranges. ■ MHD JANUARY / FEBRUARY 2019 | 15
LEAN & CLEAN How paperless working can support lean manufacturing
JOHN YOUNG
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aper is thought to have been first invented in China at the court of the Han Dynasty in 105AD. Since then, the paper trail across many organisations has soared, so much so that reports suggest the average office worker handles around 10,000 sheets of paper every year. As many manufacturers look to implement lean processes the concept of paperless lean manufacturing can bring a wide range of benefits. The writing is on the wall — paper is being phased out of our daily lives, from digital magazine subscriptions to paperless banking. The same is being implemented across the manufacturing industry as lean manufacturing processes become the norm and organisations look to streamline their facilities. Removing paper from standard practice is one way of creating a truly lean and clean site.
BOTTLENECK BOTHER Paper-based systems can provide a huge bottleneck for data management and communication systems across a facility. Having to wait for paperwork to be printed and then physically transferred between people, departments or even separate sites brings a significant delay. As a result, and with the introduction of digital and cloud-based systems, many 16 | MHD JANUARY / FEBRUARY 2019
manufacturers are turning to paperless processes to help simplify their facilities. To begin the process of going paperless, leaders must look beyond the basic benefits and boundaries of paperless working to envision an electronic system that heightens the entire facility, from management to shop floor, to an increased level of performance and productivity. Departments or teams cannot just implement their own paperless system in a silo. An evaluation process should identify the current use of paper and communication methods to devise an all-encompassing paperless strategy. Ensuring that everyone on site, regardless of their role, is a considered part of the new working system will put it on the road to success. Once implemented, a paperless system brings clear and significant benefits across an organisation, particularly in relation to lean manufacturing.
OPERATIONAL FLEXIBILITY Derived from the Toyota Production System (TPS), lean manufacturing or production, often referred to as simply ‘lean’, is a systematic method for waste minimisation, without sacrificing productivity. With modern technology systems literally available at our fingertips, implementing a paperless system can significantly reduce both physical and theoretical waste.
Aside from pieces of paper being eliminated from the workspace, whether that is on the factory floor or in office departments, the ability to access immediate and real-time information from digital displays increases the speed with which information between key stakeholders is shared. Digital records offer the operational flexibility for information to be shared instantaneously across multiple sites and even internationally, removing the tether of on-site presence that is inevitable through paper-based working.
RAPID RESPONSE The development of digital processes offers the opportunity to increase the speed of reaction by facility equipment or staff to changing factors. Accessing real-time information about the efficiency of equipment, as well as being able to alter levels of production based on accurate and instantaneous information means that production levels can be reactive to actual requirements, rather than being reliant on often out-of-date information supplied through paperbased systems. Digitally accessible information can help to eliminate wasted product or time in a facility at the touch of a button. For instance, consider the implications of a product recall situation, where having real-time traceability information
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supplied to digital displays to all required parties could help to isolate and deal with the issue more efficiently.
DEAL WITH DOWNTIME Digital processes can help to eliminate weak spots or unnecessary downtime from production schedules, as predictive maintenance plans can be put in place and followed seamlessly across the required teams, another factor of lean manufacturing. Often, without predictive or preventative maintenance plans in place, production or maintenance staff are left waiting for issues to arise, rather than pre-emptively tackling them. This means production can be unexpectedly halted when parts or equipment break and replacement parts need to be sourced or even ordered in especially.
Having a process that keeps machines effective and productive over long periods of time also means that a better plan for replacing parts is in place and should an unexpected fault occur, the required fix is already on site for installation. By knowing the requirements much earlier in the process than when the part or machine breaks, you can engage with suppliers earlier and can save significant cost in the long run. Many may think that to be working as a lean facility, you need to be using the most modern and up-to-date equipment and parts – however, this is not the case. By knowing your maintenance and repair schedule in advance of downtime, and by working closely with obsolete parts suppliers to source equipment and machine elements that may no longer be produced, older equipment can still be used effectively in lean plants. When you think of a plant and what signifies that a facility is implementing lean manufacturing processes, you may expect to see a series of production lines working seamlessly in sync and at full capacity. Staff are looking cool, calm and collected and have all the information they need on screens and they can tell you the exact levels of efficiency or productivity at any moment in time. The one thing these staff don’t have is reams of paper that not only take time to understand correctly, but also create a lot of waste and clutter. So when you’re considering transitioning to a lean and clean way of working, ditch the paper and take your data to a screen that puts the information you need, right at your fingertips.
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Digitally accessible information can help to eliminate wasted product or time in a facility at the touch of a button.
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John Young is the sales director of obsolete industrial automation equipment supplier EU Automation. For more information email jonathan.wilkins@euautomation.com or visit www.euautomation.com. ■
MHD JANUARY / FEBRUARY 2019 | 17
GET YOUR FACT RIGHT MAL WALKER
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eople often ask me: what is the secret to distribution centre (DC) design? I’m not sure that I have a secret to share, just logic, common sense, and experience (including a lot of mistakes on the way). However, I will share four design tenets that I’ve found useful and formed into the acronym FACT. 1. Flow. 2. Accessibility. 3. Capacity. 4. Traceability.
1/ FLOW – is about ensuring that goods can be moved around the DC in an efficient manner. Easy? Not so! For your facility to flow properly, there are six critical processes to cover: 1. Receiving. 2. Inwards goods staging. 3. Storage. 4. Picking and packing. 5. Outwards goods staging. 6. Dispatch. Depending on your business, there maybe two additional ones: returns and value-adding tasks. 18 | MHD JANUARY / FEBRUARY 2019
Bottlenecks and double handling can occur at any one of these points, if flow has not been correctly addressed. How do you know if your flow is suspect? Symptoms include multiple handling of goods, waiting time, pedestrians mixing with forklifts, long travel distances to goods, and accidents. In planning for optimal flow, it is useful to think ‘one way’, and to allow plenty of room for movement. Avoid giving in to the temptation of jamming storage into a building. If you do, you will more than likely suffer from excessive operating costs.
2/ ACCESSIBILITY This is related to flow. It is critical that all products, in their various forms, e.g. pallets, UBC, cartons, units, litres, etc. are available when they are required. The rule here is: unfettered access to your stock. No blockages, hinderances or bottlenecks. Easy? Not so! Too often, operators find that the stock they need to pick is hidden behind banks of other items. Recently I was asked to review a timber yard that specialised in various sizes of
timber beams. I noticed that all the same profiles were stored together, regardless of length (which were in 0.3m increments). So, when it came to picking two beams of 5.7m long for an order, the operator spent 42 minutes to complete the pick: 40 minutes to travel to the pick face, move all the other goods, and put them back, and only 2 minutes to pick the required two beams. In terms of the pick to total time ratio, it is 2/40 or 5%. Only 5% when it should be 90%. In this operation, if we can improve accessibility of stock by providing more pick faces for the range of sizes, we have the potential to improve the ratio by 85%. That’s worth going for.
3/ CAPACITY – is about providing enough space within storage modes, for current and future operations. Capacity is related to flow and accessibility - you might have guessed that by now. But here’s a mandate for you. Always provide for enough capacity to satisfy your storage and operational needs. Easy? Not so!
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Avoid giving in to the temptation of jamming storage into a building.
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Consider an example that I came across recently. I was asked to review a DC that had outgrown its capacity, to the extent that stock was being stored in aisles and staging areas. This badly affected flow and accessibility. I was told that the DC had 10,000 pallets in capacity. To be sure, I checked, and counted all the locations. Yes, there was indeed 10,000 pallet storage locations! But something disturbed me. This warehouse was in ‘gridlock’. They could barely operate, and moving pallets in and out required multiple movements. But there was something else: 250 pallets were stored in aisles and staging zones, and 9,000 saleable pallets were recorded as ‘in stock’. My survey revealed a combination of storage modes, i.e. block stacking, drive-in racking and selective racking. Also, I noticed 150 pallets of returns, and 500 pallets of obsolete stock awaiting write-off by the accountant. What is the capacity of this warehouse, and what would I advise my customer? Before I cover the maths, here a few truisms to consider: 1. All storage modes have different utilisation factors. 2. A warehouse cannot operate at gross capacity. 3. Obsolete stock and returns take up valuable storage locations and detract from overall efficiency. So, what is the capacity of this warehouse. My survey of the facility revealed: • 1500 pallet spaces (gross) of blockstacking in 5 deep x 3 high configuration. • 1000 pallets of drive-in racking in 3 pallets deep x 5 high configuration. • 7,500 pallets of selective racking including ground-level pick faces in 5-high configuration. Now for the maths. To determine capacity, we must consider utilisation factors associated with the use of specific storage modes. Then, we must discount gross capacity to net capacity – net capacity being the maximum that I would recommend to avoid gridlocked operations. Once we have done that, we deduct the non-saleable stock since these pallets are taking up valuable locations for saleable stock. In this case, my customer has 1,525 more pallets in the facility than it can feasibly operate with. That’s what is causing gridlock, bad flow, lack of access, multiple handling and a capacity crisis. What should be done to improve the situation? Firstly, speak to the accountant and purge returns stock and obsolete stock as much as possible, redesign the facility considering
alternative storage modes, and if necessary, move excess reserve stock off-site to an alternative facility. Finally, never forget this truth: never, ever plan your warehouse operations on gross capacity. Only its net capacity.
4/ TRACEABILITY Supposing we have flow, accessibility and capacity nailed. Our next focus is traceability. We must make sure that when stock is moved in, out and around the facility, that it is correctly traced. Easy? Not so! With volume increases, expanded ranges of SKU, batch management and use-bydate sequencing, stock management has progressively become more complex. To the point that without sophisticated management and recording systems, operators cannot guarantee accuracy of their operations. Thus, it’s imperative that distribution centre operators invest in appropriate systems to trace and control stock. These include radio frequency (RF) scanning equipment and/or voice and visual technologies. Logistics processes will be different for each DC, but all processes should have a check and confirm transaction sequence tuned to the physical movement of goods. That brings me to the physical vs. electronic rule: physical processes have priority over electronic processes. In other words, design the electronic recording of stock movements to suit the physical process, not the other way around. Sadly, many systems are implemented by well-meaning, but often misguided IT people who do not understand physical logistics. Are you with me? Physical movement is where you burn your costs. Logisticians, please do not forsake the physical, for expediency in recording electronic data. To recap, applying the FACT tenets, Flow, Accessibility, Capacity and Traceability, is useful to guide one’s thinking in reviewing, designing and running a DC. The outcome of good planning around each of these is reduced risk of gridlock, design flaws and excessive operating costs. Mal is manager, consulting with the Logistics Bureau, where he works with local and international organisations to guide them in specification preparation, establishment and review of outsourcing contracts. He holds qualifications in engineering, business operations and logistics. For more information contact Mal on 0412 271 503 or email mwalker@logisticsbureau.com. ■ MHD JANUARY / FEBRUARY 2019 | 19
NO SLEEP BRUCE MINTY
The ‘always on’ wholesaler in the e-commerce age
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unning a profitable wholesale business increasingly depends on how efficiently you can sell and deliver – this is perhaps more important than what you’re selling. The adoption of e-commerce has changed not only the way retailers operate, but is having a significant impact on the way wholesalers do business. According to the NAB Online Retail Sales Index, Australians spent $24 billion online over the 12 months to November 2017, representing a year-on-year growth of 14.4 per cent. This rise in online shopping has created new service expectations 20 | MHD JANUARY / FEBRUARY 2019
around order-to-dispatch timeframes, and consumers penalise retailers who perform poorly. To build loyalty, it is also essential that retailers have sufficient stock of top-selling items, ahead of their competition. If there were any doubt on the relevance of e-commerce habits for wholesale distributors, you need to look only at Amazon and Alibaba. Two of the largest e-commerce platforms in the world now offer similar service levels on their business-to-business (B2B) platforms as they do on the business-to-consumer (B2C) side. For wholesalers, this shift means that traditional supply chain methods - relying on manual processes and labour-intensive spreadsheets - are no longer good enough. Retailers now demand their wholesale partners
streamline their back-end processes and help them create opportunities to win new business, based on the strength of their service standards.
GREAT EXPECTATIONS FROM CUSTOMER TO CONSUMER The concept of ‘just in time’ inventory was pioneered by automobile manufacturer Toyota in the 1980s and quickly spread to all areas of stock delivery. For ‘just in time’ delivery to work, the wholesaler or supplier needs to deliver stock just as it’s needed, reducing overheads for the retailer. Of course, the timeline from order to delivery has become shorter and shorter over time. While major retailers in the United States are offering two-hour delivery services, in Australia the peak delivery guarantee
MHD FEATURE in the fashion space is currently a same-day service – but I am confident this will change. To help retailers achieve this, wholesaler supply chains must be finely tuned so they recognise what is needed, it is delivered when required, and to a high level of customer satisfaction. In the world of retail, as soon as an order comes in, the clock starts ticking. Wholesalers that rely on outdated, complex manual methods for order entry and fulfilment simply won’t be able to compete and offer the same speed as a business that is fully automated.
WAREHOUSE EFFICIENCY SEPARATES A GREAT WHOLESALER FROM A GOOD ONE To become fully automated, a wholesaler needs an intuitive system that will calculate the quickest picking route and direct the picker, define the best order allocation and automatically print dispatch notes, barcode labels and the invoice, if required. Many retailers use enterprise resource planning (ERP) software to automate these processes and track business performance easily. Warehouse efficiency is another key area of distinction between a highly profitable wholesaler and a mediocre one. Metrics such as order-to-delivery time and picking accuracy of the order all have an impact on customer satisfaction, as well as financial performance. A wholesale business can’t improve its delivery times if it doesn’t know what those delivery times are in the first place. It also can’t measure the time taken for pick-and-pack if it doesn’t know what steps are involved. Returns can also have an effect on the bottom line, and goods returned through inefficient processes touch many hands and departments on the way back to the warehouse, with each step incurring an additional cost. By pooling together business data, powerful ERP systems deliver actionable insight that businesses can leverage to identify gaps and opportunities they can take advantage of. The cumulative effect of new efficiencies at each step in the orderto-delivery process will provide significant speed and accuracy improvements, all of which are felt at the customer level and the bottom line. The rise of e-commerce has also had an impact on the way retailers source their suppliers. If an item is out of stock at one wholesaler, a retailer is also likely to shift their business. For the wholesaler, this ‘no second chances’ environment means that they must have deep insight into inventory
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The adoption of e-commerce has changed not only the way retailers operate, but is having a significant impact on the way wholesalers do business.
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levels. Using an ERP system combined with intelligent forecasting based on historical sales can help a wholesaler automatically generate the appropriate purchasing prompts to maintain stock levels. Wholesalers also benefit from business intelligence (BI) that helps uncover insights and drive better performance through realtime monitoring tools and historical trend analysis. For example, BI insights could help a sales manager realise that some markets are being underserved, or that customer appetite for express shipping is larger than anticipated at certain times. Taken together, a combined ERP and BI can help a wholesale business better meet the needs of retail customers. It can bring efficiencies to the wholesale sector, allowing wholesalers to ditch manual methods entirely and fully automate their supply chain to offer the rapid delivery guarantees that consumers and their customers are demanding. This provides the wholesaler with a solid differentiation that allows them to service and add value to the retailer, delivering a long-term and future proof solution. Bruce Minty is the supply chain management and manufacturing product manager at Pronto Software. For more information visit www.pronto.net. ■
MHD JANUARY / FEBRUARY 2019 | 21
‘MAKE IT’ IN I4.0 JASON LOW
Technology helps manufacturers ‘make it’ in the age of Industry 4.0
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Today, RFID is used to vastly improve order accuracy and traceability of an item. By 2022, only 9% of the factories will be devoid of RFID.
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22 | MHD JANUARY / FEBRUARY 2019
ou snooze, you lose! That’s probably the best phrase to sum up what manufacturers across the world are experiencing in today’s highly competitive landscape. Manufacturers can no longer take a ‘wait and see’ approach as they are met with the opportunities and challenges posed by the concept of Industry 4.0. Well, it’s actually not just a concept, but a reality, that defines how manufacturers automate and adopt technologies that make them smarter. A nation’s economy is tightly intertwined with its manufacturing output. According to the World Trade Organisation, 80% of the global trade activity between all regions is classified as manufactured goods, versus 20% as services. It is no wonder, then, that countries around the world are locked in a competitive race to become the next manufacturing hub. And many nations in the Asia Pacific are strong contenders. For the last 20 years, China has been a steadfast superfactory for low-cost, lowvalue manufacturing, supplying the world with everyday commodities from food to apparel. As China moves into high-value manufacturing, a vacancy for low-value manufacturing has opened up. With its huge local market of 1.2 billion consumers, a large base of university graduates and engineers, and a friendly policy environment, India exhibits the potential to take over China to become the powerhouse for low-value manufacturing in the near future.
Comparatively developed countries like Australia, Japan, Korea, and Singapore are already in the business of manufacturing complex, innovative products. Singapore has sustained strong manufacturing growth for the last 12 months as of August, painting a bright picture for the future economy. Thailand retains a strong foothold in highvalue manufacturing, enjoying a stable production in the automotive, electronics, food, and chemical-related industries. Indonesia’s manufacturing sector continues to be the nation’s biggest GDP contributor, despite a decline in the past three years. Although these APAC countries are at different stages of transformation, they all have their eyes on technology adoption to boost their manufacturing sector. Their intentions are telling from the findings in Zebra Technologies’ Manufacturing Vision Study.
INDUSTRY 4.0 WILL SHAKE THINGS UP FOR MANUFACTURERS One key insight from the study is the rise of Industry 4.0 in the region. This refers to the creation of smart factories that give manufacturers actionable visibility of their operations at every stage. Manufacturers will be able to gain visibility of their goods at every stage of production, and the status of their assets through both proactive and reactive services to minimise downtime. In addition, the increased operational visibility will allow these manufacturers to ensure that its people are accounted for and optimise their productivity on the plant floor. With smart technologies, smart factories can ensure that
MHD FEATURE enterprise processes and regulatory compliance are met throughout the manufacturing cycle. Finally, smart factories also benefit from increased security and safety. To accomplish that, employees and plant floors are equipped with a range of technologies such as wearable technologies, Internet of Things (IoT) connectivity, radiofrequency identification (RFID) solutions, and real-time location systems (RTLS) to achieve visibility over every aspect of their operations, including goods, assets, and processes. The study estimates the number of manufacturers in the region supporting fully connected factories would nearly triple over the next five years to reach 46 per cent by 2022, significantly ahead of the worldwide average.
TECHNOLOGY ADOPTION IS NON-NEGOTIABLE While there are lingering concerns that automation and robotics will eventually displace the low-skill jobs on the factory floor, many industry experts and economists concede that it will be an irreversible trend. The earlier the manufacturers shore up technology and start upskilling the workers, the less painful the transition will be later. In today’s vast and busy factories, it can be daunting to do everything manually, not to mention it is extremely slow, inefficient, and prone to mistakes. Increasingly, factory workers are offloading tasks to their technological helpers. The Zebra survey shows that in 2022, 72% of factories will arm their workers with mobile technology such as handheld computers, printers, and scanners. These mobile devices can assist the workers in looking up and recording information, and generating and inputting product labels. Wearable and voice-directed technology are on the rise too, with 65% and 51% of respondents planning to implement them for the workers. While wearable technology is relatively new, it unlocks potential for monitoring worker safety and locations in the factory, therefore allowing operation managers to quickly attend to workplace safety events and more effectively allocate manpower in different stages, leading to improved productivity.
Voice-directed technology, on the other hand, is proving to be popular for large companies managing immense factories. Voice technology allows workers to carry out a task with both hands and receive or give instructions at the same time, elevating efficiency and productivity. What’s more, many of the big manufacturers also rely on voice technology to efficiently coordinate for just-in-time (JIT) shipments, which are typically hectic and labour intensive. RFID, a cousin to barcode technology and a building block for IoT, is also playing a key role in connecting the factories from point to point, corner to corner, by giving the goods a digital voice and allowing them to be ‘heard’ and, therefore, tracked in real time. An RFID tag can contain much more information than what is traditionally printed on a pallet, including detailed work instructions, bill of materials, and tracking numbers, helping workers better move the goods through a production line. Today, RFID is used to vastly improve order accuracy and traceability of an item. By 2022, only 9% of the factories will be devoid of RFID. Finally, RTLS are becoming popular among manufacturers, too. In the past, manufacturers only tracked their products at the goods-in and goodsout stages of the process, making it extremely challenging to accurately locate the source of a quality issue should one occur. This has contributed to unnecessary spending on rectifying the issue. RTLS comes to the rescue by illuminating the typically dark, obscure
production process and monitoring quality issues. That is not the only benefit. Manufacturers can also deploy RTLS to collect critical data about assets including location, stage, and condition – actionable information for factory managers to make better business decisions. These data can also be sent quickly to internal and external suppliers, so they can respond to restocking requests or demand surge swiftly. Unsurprisingly, by 2022, more than 55% of factories will be furnished with RTLS.
CONCLUSION Manufacturing is no longer about simply making things. It will be about making high-quality things in the precise moment when they are needed – and even where they are needed (with 3D printing). Manufacturers also need to increasingly diversify their product variants, adding to the complexity in production. With trends such as mobility, robotics, automation, and IoT, the competition is heating up in the manufacturing industry. By 2022, half of the manufacturers in APAC will have smart factories, compared to one third as the global average. Are you ready to make it big by turning your operations into an intelligent enterprise? Jason Low is the APAC lead for Specialty Printing Group, Zebra Technologies Asia Pacific. For more information call 1800 457 439, email TSAPAC@zebra.com or visit www.zebra.com/us/en/products/ mobile-computers.html. ■
MHD JANUARY / FEBRUARY 2019 | 23
REVERSE RIGHT PATRICK VINEY
Managing the inevitable influx of goods post Black Friday and Cyber Monday sales events
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ew consumer research from JDA Software is demonstrating the importance of putting effective reverse logistics processes in place. Black Friday and Cyber Monday are becoming large sales events globally, with spending in Australia expected to reach over $1billion this year and, according to new
Warehouse operatives need to be aware of whose responsibility it is to manage the returned stock, where the goods go and how the next steps are managed. If the items are indeed genuinely faulty then they will need to be returned to the manufacturer in exchange for a credit note, but otherwise if there’s nothing wrong with
consumer research from JDA Software and Centiro, nearly three quarters (74 per cent) of Australian shoppers admit to spending more than anticipated during big sales events. wThe way retailers manage this process is actually extremely important for the shoppers we surveyed, as the results demonstrated that 80 per cent said the ease of returning goods bought online factors into their decision before they even buy a product.
them, there’s no reason why they can’t be repackaged and resold. Ensuring the goods are available for resale within a very short timeframe is going to be crucial. Decide whether to ship them back
GETTING IT RIGHT We believe the first step for all retailers is to provide a simple way for customers to return their purchases in store. Demand on store employees increases during sales events and pressure on customer service teams also increases, so it’s vital to ensure there are clear processes around the returns service. Store assistants need to know what to do when a return comes into store and then how to ensure it goes to the right person in the warehouse. Having a slick returns process is the difference between retaining a customer and losing one as over three quarters (83 per cent) of respondents said they would switch to an alternative retailer if they received a poor returns service. But how can logistics managers also handle this effectively? In the warehouse as well as in store, it is vital to have effective returns processes in place as most returned goods will need to be identified as faulty or repackaged and resold in store. Most warehouses have a quarantine area, and we often see this is where ‘goods go to die’ as they are sometimes not processed for weeks or even months later! 24 | MHD JANUARY / FEBRUARY 2019
MHD FEATURE into store or whether to make them available in the warehouse to support online sales. Particularly in these busy sales periods, the key is having warehouse returns processes clearly defined and, ultimately, the products processed in a timely manner.
AVOID STOCK UNDERFOOT Having worked with both large and small retailers, I’m able to recognise one of the biggest bugbears in the industry - obsolete inventory - and the aim is to avoid this outcome at all cost. We see many logistics managers up in arms when products are discovered sitting on a warehouse shelf for three weeks when, if they had simply been processed in a day or two, they could have been back in store available for sale. It’s really important to enable visibility of the inventory levels through a warehouse management system, especially to track the stock in the quarantined or damaged areas. This visibility should be shared right across the business from logistics managers to inventory managers, so they can manage the process of going through those goods and making them available for sale.
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Inevitably, not everything shoppers buy during the sales periods will be kept, and we often see a large number of goods being returned across the country after such sales events.
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For example, when dealing with inventory with particular size and colour considerations, let’s imagine a blue dress in size 10, 12 or 14 (which could be your most in-demand sizes). If it has run out in store but knowing there’s stock in the warehouse, this can help speed up the process of helping the goods get back to store. Even more critically, as we get towards the end of the season, moving as much stock as possible out of the warehouse and into the store is essential to avoid the items hanging around post-season. In summary, there’s no need for anyone in the industry to fear the process of returned goods in busy sales periods or at any other time of the year. In fact, handled effectively and with the right systems, processes and visibility in place, it can actually be the difference between gaining loyal customers or losing them. Patrick Viney is the head of retail strategy, APAC, at JDA Software Australia. For more information call + 61 3 9225 4200 or visit www.jda.com. ■
MHD JANUARY / FEBRUARY 2019 | 25
SOFTWARE SUCCESS Giving your software implementation the best chance to succeed
NATHAN SINGHAVONG
Figure 2.
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oftware implementation projects are not always straightforward. You set your deadline and budget, appoint the right team, develop a solid plan — and it all comes together. Right? Projects can run over budget, the team isn’t as synchronised as expected, the scope changes, and in the end, the project doesn’t meet its initial expectation. As a project manager, you are ultimately responsible for delivering a successful project, so what can you do to give your project the best chance of success? Traditionally, the Project Management Triangle has been a staple model to determine the overall quality of a project — whereby each point of the triangle represents a different project constraint. By successfully managing these three (often competing) constraints, it is theoretically possible to successfully manage a project. In reality, project managers need to be ready to accept that these three points can often move. See Figure 1.
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The Prep Work
The Design
The Execution
The Learning
Scope reduction may need to occur if there are hard cost and time constraints, and the project is slipping behind schedule. Cost may increase if scope and time are fixed, as more resources need to be allocated to the project. Time implications may come into play if scope and cost are constrained and either are not tracking as expected, as project redesign takes place and resourcing is shuffled. On the flip side, if all three elements are constrained, then only the business outcome can be impacted. It is especially important to note that some flexibility is required to achieve a business outcome. So long as the adjustment is measured and well thought out, success can be attained.
Scope
Value to Business
Cost
Time
Traditional Project Management Triangle
Figure 1.
Success Quality of Product or Service
Constraint Management
Extended Agile Triangle 26 | MHD JANUARY / FEBRUARY 2019
The Extended Agile Triangle captures not just the traditional triangle, but also the quality of the product/service being delivered, and its value to the business — thus defining project success as “embedding a change within an organisation that achieved the desired business outcomes, while satisfying key stakeholders and learning from the experience.” Nonetheless, navigating the triangles is difficult, but achievable. This article revisits recurring themes and observations through supply chain software implementations, categorised in four stages to best set up your project for success. See Figure 2.
THE PREP WORK Planning is paramount to the success of any project, and the amount of required effort should never be underestimated, nor should it be hardcapped to a timeframe. A project that rushes into design and execution with an inferior plan is far more likely to experience rework than a project that spends an extra two weeks developing a solid plan. See Figure 3.
1. Support from the top The impact of executive managerial support, or lack thereof, has a direct bearing on a project’s success, with one in three failed software implementation projects citing a lack of senior management involvement. Executive sponsorship and active involvement are crucial in ensuring that the project team, and those impacted by the project, have assurances that the project (and its desired outcomes) are in line with the
MHD FEATURE business strategy, and more importantly, have a positive effect on their individual day-to-days. With executive sponsorship, there is a higher level of engagement, communication and accountability, all of which contribute to and improve overall risk awareness and collaboration. Sponsorship doesn’t just provide executives with an ear into the project, it sends the message: “what you are doing is important.” So how do we secure interest from busy individuals? It can be as simple as keeping them updated on developments outside of the regular (or irregular) steering committee cycle, asking for their input, and keeping a close working relationship with their direct reports. Additionally, subtle ongoing reminders of the benefits (not just to the business, but even directly to individuals) will assist greatly.
2. Identify your influencers Within any project (or group of people, for that matter), there will always be one whose opinion towards which others will gravitate. Taking the time to have one-on-one discussions to build a personal relationship with your influencers will go a long way to embedding change within the organisation. By detailing the whys-and-hows you will not only make that individual feel more valued, but it allows you a reference point in group environments: “So-and-so, what are your thoughts?”
3. Manage expectations All too often, when the go-live switch is turned on, you may hear a voice in the corner go: “Oh, is that it?” All of this comes down to managing expectations — those of management, those of team leaders, and especially of those using the software day in and day out. With supply chain APS implementation projects, there will be those who expect benefits from day one. From decreased inventory to service level improvements, workload reductions to full RCCP visibility. When the go-live switch is turned on, it is important to note that:
Figure 1. The Project Management Triangle. Figure 2. The four stages to best set up your project for success. Figure 3. Rework due to inadequate planning often results in schedule imposts, loss in momentum and trust in the process and outcomes.
Figure 3.
Plan
Design
Develop
Test
Implement
• There will be an increase in inventory. Different APS software run on different methodologies. While the system will aim to balance inventory and orders will be recommended to address understocks, overstock actions take time to conduct. • There will be an increase in warehouse receipts. With a direct output of rebalancing and purchases for understocks, warehouse staff may be greeted with an initial surge of workload. • System configuration settings will require ongoing analysis and maintenance. Parameters in-system require continual evaluation – status codes, lead times, order minimums are never set and forget levers. Manage your inputs, not your outputs. • Not everything will be perfect. It is impossible to test for every possible scenario. Once-offs will occur, so it is important that these are addressed as soon as possible and does not derail the momentum gained at Go Live. Communication is key when it comes to managing expectations. During the planning phase of the project, it is critical to calculate expected outcomes… not just the quantitative value, but also the timeframe — and to clearly state any assumptions. During the course of the project, these expected outcomes need to be revisited, refined, and re-communicated. Prior to go-live, impact assessments detailing the pre- and post- pictures are essential, as are subsequent reporting mechanisms to track against. MHD JANUARY / FEBRUARY 2019 | 27
MHD FEATURE
41%
Change in Organisation’s Priorities
39%
Inaccurate Requirements Gathering
36%
Change in Project Objectives
30%
Inadequate Vision or Goal for the Project
30%
Inadequate/Poor Communication
Figure 4. Pulse of the profession 2017: Top 5 primary causes of project failures (respondents were able to choose more than one cause).
Figure 4.
The measuring stick for success needs to be in your court. Don’t leave it to others to decide. Manage the definition of success.
THE DESIGN When it comes to solution design, maintaining a central repository for design artefacts is critical. Design encapsulates both the front end (how users interact with the software), as well as the back end (how data interacts and procedures and processes are sequenced), and the framework it sits on. A team that is well informed of the solution design is able to develop to tighter (and better defined) requirements. In PMI’s yearly survey, it was found that 39% of organisations reported inaccurate requirements as one of the primary reasons for project failure – see Figure 4. Additionally, organisations classed as ‘champions’ far outperformed those classed as ‘under-performers’ when it came to projects that met their original requirements (92% vs. 33%).
“
4. Tight configuration control
”
(i) Up-to-date documentation
Sponsorship doesn’t just provide executives with an ear into the project, it sends the message: ‘what you are doing is important’.
28 | MHD JANUARY / FEBRUARY 2019
At first glance, between all the functional and technical specifications, system architecture definitions and process flows and interface file policies and configuration templates, it may be seen as overdocumentation, and project overhead. If managed incorrectly, this is definitely the case. If managed correctly though, it provides the project team with central reference points, and design SME (subject matter experts) to confer with.
Decisions must be documented. All too often undocumented changes result in confusion
during the development and testing phases, due to a misalignment in expected results. On the minor end, a simple undocumented screen layout change may result in configuration scripts not being updated, which results in a rebuilt environment differing to what a user would expect. On the more serious end, an undocumented architecture change could result in the rebuilt environment not running all at (incorrect certificates, incompatible plug-in versions, etc.). Even something as small as a calculation change may cause distrust in the data. This causes great amounts of nervousness when detected close to go-live, and even worse if detected afterwards.
(ii) Version control A lack of version control management is the bane of configuration control. Instances where a single ‘live’ document is used throughout the life of the project does happen. This must be avoided. Project teams need to get into the habit of using a standardised method of version control. Similarly to software, documentation can be managed via both ‘dot’ and ‘full’ releases – dot releases for incremental updates, and full releases for milestones. The updater does not need to create a new version for each individual update (i.e. V1.02: “changed field XY to blue.” V1.03: “changed field YY to red”), but they need to keep to the mantra: “if I need to send it to someone, it’s a new version”.
(iii) Communication Not only do decisions require documentation; they require communication. Be selective with your recipients too—the entire project team rarely requires each update to each document, only those whom would fit on the RASCI. Email as a traditional medium is often sufficient. However, with larger project teams, other tools may add more value. Even if you can’t get access to top-end tools such as Rational ClearCase, tools such as DropBox are more than enough to house prior versions and communicate active versions. This article will continue in the March-April issue of MHD Supply Chain Solutions magazine. Nathan Singhavong is a manager at GRA. Nathan has delivered supply chain process and software solutions across commercial, defence and government spaces, specialising in software process design and analysis. For more information call +61 3 9421 4611 or visit www.gra.net.au. ■
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NICOLE HARDIN
The business case for reducing food waste in the supply chain
A
WASTE NOT WANT NOT 30 | MHD JANUARY / FEBRUARY 2019
s anyone familiar with the manufacturing supply chain will know, food waste is nothing new. Food companies have generally accepted a certain amount of waste as part of the cost of doing business, thereby relegating the issue down the C-suite priority list. As a result, waste has become an invisible cost for many in the industry, largely because it has been normalised as an overhead for too long. That said, food and drink manufacturers work in an unstable landscape, forecasting weeks or even months in advance and having to cater to unpredictable weather conditions and constantly-changing customer preferences. However, with sustainability now high on the agenda for regulators and consumers alike, there is increased pressure on manufacturers to reduce waste and make their operations more environmentally friendly. But going green isn’t the only driver – there are also plenty of valid business reasons for cutting down the amount of waste that is being produced, including reduced costs and profit increases. But change won’t happen by itself. Companies need to actively seek to understand the real implications of wastage and explore opportunities to effect change. So, with that in mind, why should businesses be looking to reduce the amount of food wastage in the supply chain and what tools can help them achieve this goal?
FOOD FOR THOUGHT According to research from the Food and Agriculture Organisation of the United Nations, roughly one-third of the food produced for human consumption around the world every year gets lost or wasted somewhere along the supply chain (www.fao. org/save-food/resources/keyfindings/en/). Globally, this is equivalent to approximately 1.3 billion tonnes and more than $1 trillion in wasted food. But why should this matter to manufacturers? From a financial point of view, with the cost of running a business continuing to grow, reducing food waste can have a larger-than-expected effect on a company’s bottom line, either through reducing purchasing costs or allowing a company to produce more finished product.
MHD FEATURE So, the business case for reducing food waste in the supply chain is clear, and the good news for sustainability advocates is that more and more businesses are recognising the potential benefits on offer. The challenge for manufacturers is how they actually make change happen.
PUTTING PLANS INTO ACTION
Indeed, improving supply chain efficiency across key areas such as production, handling & storage and processing & packaging, is believed to be able to cut food waste by $700bn globally, which would have a direct monetary impact on the businesses involved. What’s more, according to a 2017 report from Champions 12.3, over half of businesses that invested in reducing food waste earned a 14-fold or greater return on their investment (www.greenbiz.com/article/companies-cutfood-waste-stop-wasting-profits). Then there is the environmental aspect, which has quickly become more important to businesses and consumers alike. For example, if food waste was a country it would be the third-biggest emitter of greenhouse gases after the USA and China. If that wasn’t enough, food loss and waste generates more than four times as much annual greenhouse gas emissions as the entire aviation industry (https://fareshare.org.uk/the-environmentalimpact-of-food-waste). Manufacturers that are seen to be taking steps to reduce their carbon footprint will likely be looked on favourably by today’s consumers, who are more interested in environmental issues than previous generations – potentially resulting in increased sales and customer loyalty.
“
Waste has become an invisible cost for many in the industry, largely because it has been normalised as an overhead for too long.
”
With more and more supermarkets and manufacturers around the world pledging to reduce ‘farm to fork’ waste, positive steps are certainly being taken to drive change at every stage of the supply chain. But how do they go about meeting this pledge? Ultimately, it all comes down to reducing inefficiencies and generating insights, which is where technology can play a key role. For example, implementing digital tools to better match supply and demand, track loss and waste, and allow for dynamic pricing could save manufacturers millions in lost food. More specifically, manufacturers should be deploying business management solutions such as ERP software to connect all areas of their business, enabling the factory and the supply chain to work more effectively. Business management tools bring critical information from different systems together – inventory and order management, for example – to significantly increase operational insight through realtime data analysis. As a result, manufacturers will be able to identify the most inefficient areas of the supply chain, as well as streamlining processes and improving collaboration. Manufacturers can also turn to the handful of start-ups now offering food waste management software to track and monitor freshness or deploy IoT solutions to monitor the temperature and location of containers in real time. Whichever road manufacturers choose to go down, it’s vital that they take an integrated approach by looking across the entire supply chain. Successfully reducing food loss and waste lies in the ability to streamline the different stages and ensure that they are all connected. Software will be central to making this happen, enabling manufacturers to modernise their business processes, improve collaboration and drive greater efficiency – all of which will contribute to a reduction in food waste and, ultimately, increased profits. Nicole Hardin is the director of product management at Sage. For more information visit www.sage.com/au. ■ MHD JANUARY / FEBRUARY 2019 | 31
MHD FEATURE
THE NEW PARADIGM KATIE KINRAID
Changes in delivery shaping the future of supply chain
R
ecent research has revealed a direct correlation between supply chain and logistics companies leading the pack and customer experience (www. supplychainresearch.info). The companies that are market leaders place customer experience at the centre of supply chain design, whereas those that are lagging behind when it comes to innovation are driven by reducing costs. What does customer experience look like today? One of the customer experience trends soaring in importance is what has been dubbed ‘the now economy’ — a time when consumers are expecting fast, premium fulfilment and delivery at little, or no, extra cost. However, constant demands of an
this space. One of which is Amazon — no surprises there! Take Amazon’s Treasure Truck (www. amazon.com/tt/webview/oobe/proposition). This is a truck that cruises around towns in the United States and is stocked with a hand-picked, must-have items at a discount. Customers are alerted via text about that day’s must-have item, they can then buy it on Amazon and meet the truck and pick up their goods at a convenient location. Another example is anticipatory shipping, a system of delivering products to customers before they even place an order. Anticipatory shipping uses analytics and algorithms to anticipate what consumers will order and begin the delivery process by shipping the
always-on economy mean businesses must transform to meet the growing expectations of consumers. The now economy really comes down to this: consumers want choice and control. They want instant visibility of the cost of delivery and a clear view of the returns policy. Consumers expect to see their delivery driver moving on a map. And they would like to be informed in advance of delays and of failed delivery.
product to a nearby distribution centre — all before they’ve even added it to their cart.
1/ CROWD LOGISTICS
“
Organisations must alter their business model in a way that allows them to keep up with changing consumer preferences and expectations.
”
32 | MHD JANUARY / FEBRUARY 2019
The concept of crowd logistics or crowd shipping first came into play via the ridesharing community. Large enterprises such as DHL and Walmart quickly identified this as a potential market for shipping items with customers already ‘travelling’. Within the crowd logistics marketplace, there is a wide variety of service offerings: peer-to-peer, crowd-sourced logistics, crowd logistics, alternative logistics and aggregators. These businesses often charge a delivery fee and, in some cases, a surcharge on the goods themselves — and consumers don’t seem to mind. These providers have achieved this by delivering a personalised, relatable and transparent service. Driver location and delivery timescales are more visible than ever, and drivers are encouraged to communicate with the customer and respond to delays in real-time, rather than after the fact.
2/ INSTANT DELIVERY Instantaneous service and delivery are a critical part of the new economy. Several companies are really upping their game in
3/ INVESTING IN TECH Manufacturers, retailers and logistics service providers are investing in transport, warehousing and improving supply chain visibility. Despite the hype surrounding blockchain, drones and driverless trucks, the reality is many organisations are taking a ‘wait-and-see’ approach to emerging technology. Instead, they’re investing in mobile devices and apps, control tower visibility and automation and robots. That’s not to say emerging technologies do not have a role to play. Going back to consumers wanting a view of their goods, the industry has seen a lot of advancements in geotech. A good example is what3words, which has divided the world into a grid of 3 metre by 3 metre squares, each assigned with a three word address (www.what3words. com). The idea is anyone can talk about anywhere with three simple words—even if it doesn’t have a street address! The supply chain and logistics industry is undergoing fundamental changes. Organisations must alter their business model in a way that allows them to keep up with changing consumer preferences and expectations. It isn’t necessary for organisations to rework their models entirely. Rather, the industry should focus on nailing the basics and putting the customer at the centre of everything they do. Katie Kinraid is the general manager, APAC, at BluJay Solutions. For more information visit www.blujaysolutions.com. ■
MHD FEATURE
CONNECTED + INTELLIGENT MARK MORLEY
Moving towards a connected and intelligent supply chain
W
e are at an inflection point of disruptive technologies and market demands that are transforming businesses. Artificial intelligence (AI) and the Internet of Things (IoT) are being increasingly embedded in almost every industry, whilst interest in blockchain is increasing rapidly. Using AI and IoT in supply chain logistics to automate processes isn’t necessarily new, but integrating these technologies to work together seamlessly will alter the way the supply chain operates. It will create what’s known as the autonomous supply chain: a connected and intelligent ecosystem. In order to begin implementing these technologies, organisations must first ensure they operate an entirely digitised supply chain. This means removing any kind of paperbased orders, invoicing, etc. Without a digital foundation, it is impossible to realise the full potential of these technologies, let alone harness the benefits of an autonomous supply chain. Organisations must also ensure their staff have the adequate skills to work with these technologies, and this may require recruiting new staff or training existing members.
Utilising AI is the first step towards supply chain automation. If used effectively, AI can enable businesses to better manage inventory, track supply and demand, adjust pricing data, plot the most efficient route in the product transport, streamline customer service and improve overall business efficiencies. Reaping the benefits of AI depends on the data and information it receives, hence the importance of digital foundations. IoT devices can be used to feed data into an AI platform. While these devices help to automate stocktake procedures, they can also be used to gain granular insights about the journey of a product, at scale, which is otherwise impossible. For example, a sensor can be used to determine the temperature that perishable goods have been stored at as they are transported. This data can be input into the AI platform to determine the optimum temperature for keeping the goods fresh, impending best before dates (to inform stock rotation), and even to identify more effective ways to transport the goods, i.e. a faster route to the destination. While blockchain is still a young technology, it’s easy to see its potential for the supply chain, largely to improve transparency and provenance throughout a trading network. Blockchain is defined as a decentralised, distributed and
public digital ledger that is used to record transactions across many computers. The record cannot be altered retrospectively, without the alteration of all subsequent blocks and the consensus of the network. This means that for anything to be changed or added to the blockchain, all parties involved must agree and accept the change. This creates increased transparency, ultimately leading to greater trust between parties. Given that data is captured via IoT devices and fed through AI for insights, the data cannot be falsified. The other major benefit that can be derived from blockchain technology in the supply chain is the ability to identify and trace any issues that occur back to the source. For example, if a batch of perishable goods is found to be spoilt by the time it reaches the supermarket, not only can the batch number be identified and recalled immediately, it can also be traced to the source. By analysing the data at hand (acquired via IoT devices), it may be found that during one leg of transport the goods were stored at too high a temperature, or perhaps the goods took too long to reach the supermarket from when they were first made or harvested. This means the manufacturer can recall only the goods affected, eliminating the need to recall stock en-masse, saving time, money and resources for all parties involved. It’s easy to see how these technologies can improve certain aspects of supply chain logistics, when used independently. However, the transformative opportunity lies in integrating them. To shift towards a connected and intelligent supply chain, companies must first ensure they have a pervasive digital backbone, across their organisation and among their trading network. With the right foundation and talented teams embedded, organisations can then implement AI, IoT and finally, blockchain, creating an autonomous supply chain that delivers intelligent analysis and insights and traceability like never before. Mark Morley is the director of strategic product marketing at OpenText Business Network. For more information call +61 2 9026 3400 or visit www.opentext.com.au. ■ MHD JANUARY / FEBRUARY 2019 | 33
When you start getting tight in your warehouse, optimisation and scaling your operations can boost your space
GET MORE SPACE
34 | MHD JANUARY / FEBRUARY 2019
1. OPTIMISING YOUR WAREHOUSE STORAGE SPACE Warehouse functions are an integral part of business operations, so getting the storage flow and functionality right should be at the top of the list of priorities. But all too often, we see warehouses operating with workarounds and outdated racking, resulting in an ineffective storage space and a potentially hazardous work environment. No two businesses have exactly the same storage requirements, so the pallet racking layout should be designed accordingly to get the most out of the space. Ideally this is something that should be planned prior to selecting a warehouse, as warehouse size and location are also important factors. A well-optimised storage space takes careful planning and a good understanding of the storage options available. Each storage system has different features that can accommodate different products and carton flow. Perhaps there is also a need for different storage systems for specific areas of your warehouse. So, when planning to move into a new warehouse or reconfigure your existing facility, we encourage you to take the time assess your existing operational needs and carton sizes to plan your storage facility for the most efficient use of the space.
MHD FEATURE What are the benefits of optimising your storage facility? Optimising a warehouse for pallet flow and business scalability offers a number of substantial benefits. Benefits that keep paying off for many years – such as reducing the time it takes to pick orders, improving work processes and the ability to adapt to changing business environment. By optimising your warehouse with the right storage system, you can even increase the number of pallet spaces available. A much more economical solution compared with moving into a larger warehouse.
What does an optimised storage space consider? • The dimensions and weight of products to be stored. • Stock levels. • Stock movement (frequency in and out of warehouse). • Materials handling equipment. • Slotting. • Staging areas required. • Building compliance. • Workplace health and safety. • Temperature requirements (i.e. freezer or cold storage).
improved warehouse management system can also have a big impact on stock management and order fulfilment.
2. WAREHOUSE SCALABILITY: IS YOUR BUSINESS READY FOR GROWTH? Businesses are growing and developing constantly, and remaining agile is key to maintaining a high level of success. Outgrowing your existing facility too quickly can cause costly setbacks, and underutilising your space could mean wasted opportunities. Planning for scalability ensures your materials handling and storage solutions continue to be effective and efficient now, and well into the future.
What does it mean to have a scalable warehouse? Businesses aren’t something that you can set and forget. And neither is your warehouse. Scalability allows for your storage space to adapt over time. This means your racking system can easily grow or change with your business to accommodate your storage and materials handling needs. Whether it be the need to quickly add pallet spaces, re-arrange the storage flow, or streamline the racking configuration, building flexibility into your storage system will allow you to remain in your existing warehouse for many years to come.
Why is scalability important?
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Warehouse operations is a vital part of your business and an ineffective space can cause congestion with goods receiving and order picking.
”
Warehouse operations is a vital part of your business and an ineffective space can cause congestion with goods receiving and order picking. The ability to adjust the size of your warehouse infrastructure allows you to keep up with the growth or streamlining of your product flow. As the market or your business strategy changes, you can re-optimise your storage system to suit.
Designing your storage space To determine your specific storage and warehouse requirements it’s important to conduct a comprehensive analysis of the space using data, logic and observation. This will help to determine the number of pallet spaces needed, the specific locations of your products and how much area is required for staging. Once your storage system has been developed around your business requirements, the optimisation process doesn’t stop there. Further refining your space with appropriate safety line markings, racking labels and compatible materials handling equipment is essential. Reviewing warehouse processes or implementing an
How to increase the scalability of your business Building scalability into your warehouse takes forethought. It pays to engage your storage systems supplier as early as possible to assist with planning and analysis. An experienced industrial storage provider can even help with your warehouse selection. With the right team of industrial storage experts, your storage system will be designed around your business needs rather than having to adapt your business to fit your storage space. For more information email info@dexionsolutions.com.au. ■ MHD JANUARY / FEBRUARY 2019 | 35
DISRUPT DEMAND TOM ENRIGHT
H
ighly predictable future demand is the dream of most supply chain executives, all striving for an effective end-to-end supply chain. Companies have long struggled with average forecast errors of more than 27 per cent, according to a Gartner survey. This challenge will only become tougher as supply chains become increasingly disrupted by new competitors, new business models and digitalisation. Demand will also shift to parts of the world where companies don’t have mature infrastructures. You’ll need to improve your demand-sensing, shaping and forecasting capabilities to be successful. Move away from owning assets. Instead, move toward accessing and using them through implementing more collaborative supply chain network designs.
NEW OPPORTUNITIES TO BETTER PREDICT DEMAND The sheer volume of data currently available is greater than most current demand technology can absorb and 36 | MHD JANUARY / FEBRUARY 2019
use for effective insight and decision making. This data needs to be used in a different way than it is today to improve demand planning and forecasting. Improving demand accuracy is now intrinsically linked to the use of analytics to recreate the environment in which historical demand occurred. This means including more inputs than those of sales, inventory and variable prices in statistical forecasting today, which don’t sufficiently create a comprehensive set of attributes that influence historical demand. Instead, elements such as weather, social commentary, demand transfer, competitor pricing, and shipping and returns policies need to become inputs to demand calculations. All of these influence how customers purchase, whether in B2B or B2C environments, across multiple industries. All of these elements should be considered when predicting future demand. This new set of data inputs need advanced machine learning algorithms to learn from richer historical data to sense demand, predict and prescribe
Disruption to demand management will power future supply chains
action. Unlike statistical forecasting, a machine learning approach uses a wider variety of data inputs, which can produce a more accurate demand plan. Viewing technology as a source of competitive advantage is critical to understand the impact of disrupting demand, as well as appropriately reacting to it.
PARTICIPATE IN TRADING PARTNER NETWORKS To gain new insights from the proliferation of data and increase demand management performance, you’ll increasingly need to pool resources with other partner companies in your extended supply chain. Each company will play a role in this network of suppliers and service providers, sharing people, information and technology. Rather than extracting value from its own asset, your company will gain value and advantage using data, people, technology and services belonging to others. Isolated companies will become weaker in influence in the overall supply chain.
MHD SUPPLY CHAIN Most companies will need to leverage an asset-light network that enables them to be flexible and timely in a cost-effective manner. Instead of looking internally and only optimising your own assets, connect with an ecosystem of third parties to share assets. This builds more responsive supply chains. Individual customer orders will be fulfilled by whatever combination of partners meets the demand requirements at the time of execution.
KEEP AHEAD OF MARKET FORCES
The need to develop multi-enterprise collaborative supply chain infrastructures will define the future of supply chains across global industries. Extracting value from information, assets and people will no longer be based on ownership, but instead on accessibility and usage. The sharing of supply chain assets will be accelerated by the emergence of digital platforms across manufacturing, warehousing and logistics. Ecosystems as a platform have been emerging for many years. Cars have evolved to become platforms, for example, delivering a customer experience that draws on a cross-industry ecosystem of partners, from the car manufacturer to companies that specialise in communications, entertainment and navigation. What’s new about ecosystems today is the infusion of digital connections, and the fact that they’re delivering digital products. Forces such as globalisation, government pressure, network capacity constraints, freight margin reductions and increased outsourcing will drive companies to explore how to become more efficient in using their networks and resources across their ecosystem platforms.
“
You’ll need to improve your demand-sensing, shaping and forecasting capabilities to be successful.
”
A global shift in population growth, wealth and workforce resources requires better demand-sensing and shaping capabilities. Wealth and demand for products and services will increasingly shift to parts of the world where companies lack mature infrastructure in terms of sales, supply and recruitment. It’s likely we’ll see a large increase in purchasing power in lessdeveloped countries in the coming decades. These shifts in economic power will change demand and potentially how customers will buy. Will they want value products, or will demand for more choice and for premium products increase? Will they buy in urban stores, rural locations or will most purchases be done online? Companies that fail to take action will find their existing markets declining in terms of spending power and as older consumers age. Advanced analytics technologies – spanning predictive and prescriptive analytics – are playing an important role in helping companies to keep ahead of these market forces. The impact on supply chains is significant. Predictive analytics are undoubtedly a powerful competency that enable companies to be proactive and take advantage of a future opportunity, or mitigate or avoid a future adverse event. Prescriptive analytics on the other hand can improve decision making in functional areas like supply chain planning, sourcing, logistics and transportation. More importantly, prescriptive analytics can be deployed to improve the supply chain performance by recommending course of action that best manages trade-offs among conflicting functional goals. Tom Enright is a VP analyst at Gartner, specialising in supply chain strategies and operations across the retail sector. His focus areas include distributed order management, in-store logistics and lastmile fulfilment. For more information visit www.gartner.com/supplychain. ■ MHD JANUARY / FEBRUARY 2019 | 37
PLAN4DEMAND Realising the full potential of demand planning – Part 4. in a series
ROD HOZACK
I
n this series, we explore how the longerterm demand plan should play a more prominent role in businesses. The first two parts dealt with the key elements in setting up the demand planning and forecasting process, and this time, we will explore what the key behavioural elements are, i.e. what we do with the process and the outcomes when we get them. You can read Part 1. here: https://bit.ly/2MpyPzS and Part 2. here: https://bit.ly/2ALsebk. Part 3. is available here: https://bit.ly/2sff6pU.
8. Make the gap visible Most companies can easily identify the gap to budget but a couple more things are needed to make it really work: 1) How do we achieve gap visibility to the longer-range three-to-five-year plan and 2) even further out, to the five-to-10- year strategic plan? There are several layers that can be deployed to give visibility at the same time as not ‘drowning in the data’ (see Figure 1.). The first and most common layer is to use a three-year management horizon in the IBP process. This resolves the medium-term gap analysis, but also means assumptions need to be time-phased over the same period, and time also needs to be set away each month for the review. 38 | MHD JANUARY / FEBRUARY 2019
“
‘For nine or 10 months of the year, I’m told only good news about hitting the budget, not to mention strategy, and then all hell breaks loose in the last two months as we do everything possible in the hope of achieving budget,’ CEO’s dilemma.
”
RIGHT: Figure 1. Making the gap visible: top-down, bottom-up.
Top Down
Process
Bottom Up Process
Strategy 5 Year Horizon Business Plan 3 Years
24 Month Horizon
To augment this, and make sure we’re not looking at too much data, it is common for the three-year horizon to be aggregated into quarters, or even just annual time buckets, while the shorter term is kept in monthly buckets, e.g. as a rolling 12-month view. The next layer is to make sure we define critical success factors, or key strategic drivers, that are linked to the strategic outcome. This can be as simple as several traffic light indicators on the management information pack each month, or more popularly, using a balanced scorecard to assist with strategy deployment. The final layer is to ensure the monthly management meeting has a quarterly deep dive section. The important element is that there is a more thorough check on key strategic characteristics of the business as a matter of routine.
MHD SUPPLY CHAIN
BEHAVIOUR CHECKLIST 3. a. Gaps need to be visible for the whole business planning horizon, not just budget. b. Cycle through deep dives of business model characteristics to uncover ‘bad news early’.
A TYPICAL CADENCE IS: Month 1: review key metrics for relevance, tolerances, and targets, and adjust accordingly. Month 2: review relevance of key assumptions for alignment with strategy and their effectiveness as a ‘hard-wired’ driver of plans. Month 3: review the cost of managing uncertainty, i.e. inventory policy, which includes safety stock, customer promise by SKU by customer, SKU rationalisation, demand-supply strategy, and segmentation. Month 4: strategic initiative review and relevance of critical success factors. Month 5: start the cycle again. There are many variations on this cycle of ‘deep dives’, but the important point is that changes need to be captured early. Key 9. expands on this further.
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The problem with keeping aligned to strategy is that small changes to assumptions noted today, can lead to a massive gap in two-to-three years if left unaddressed.
9. Focus on the gap The gap is not the main point here, the important thing is to make sure change is accepted early while the impact is small. Golfers will know that unless you get the club face absolutely square to the ball at impact, the ball may take off straight enough but the spin created by the off-square strike will eventually tug the ball sideways. So, instead of landing in the middle of the fairway, it could be as much as 100 metres
Latest View § §
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Figure 2. Focusing on the gap and underlying assumptions.
§
Significant Financial Impact identified in feed Reviews
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Assumptions Vulnerabilities and Opportunities
b. Impact assessment needs to be done to extrapolate out those small changes occurring today. c. Contingencies need to be developed and owned.
10. Integrated business model
“Who is responsible for taking the actions ? When will they do so?”
Business Plan GAP
Latest Plan Today
BEHAVIOUR CHECKLIST 4. a. Pay attention to the small deviations today – they could lead to massive changes in the future outcomes.
With
Operational Changes
either side. The same with small gaps and changes occurring in the short term. Impact assessment has to extrapolate out to the longer term to make sure you give yourself time to respond without a knee-jerk reaction. Once the impact assessment is done to identify whether a larger gap could arise in the future, contingencies need to be put in place to close the gap. Keep in mind, that this is not only for the current budget year, but what might happen over the next twoto-three years.
12
Months
24
In a robust integrated business planning process, everything hangs from the demand plan, especially the longer-range projections. This monthly process is designed to re-evaluate the three core plans (product portfolio, demand, and supply) each month. The major elements are closely aligned with the previous nine keys and become the decision-making framework for the business. It is a forward-looking, assumption- driven process that is designed to continually align back to strategy. MHD JANUARY / FEBRUARY 2019 | 39
MHD SUPPLY CHAIN
“
‘There is no simple mechanism for the senior team to come to a consensus.’ When growth stalls.
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BEHAVIOUR CHECKLIST 5. a. Senior leadership continually re-plans and re-optimises monthly plans to achieve strategy. b. Assumptions are critical elements in ‘tying it all together’.
BELOW: Figure 3. Oliver Wight Integrated Business Model.
There are many articles written about the IBP model (Figure 3.), which can be found on the Oliver Wight website, so there’s no need to go into further detail in this paper but this behaviour checklist captures the important elements. With acknowledgment to the authors of ‘When Growth Stalls’, the overarching sentiment for ‘Fully Realising the Potential of Demand Planning, can be summed up as follows: 87 per cent of the root causes for successful companies to lose momentum and stall, are within management’s control.
c. Most of the monthly review time needs to be spent on the future.
IN SUMMARY The key to minimising this potential is to ensure the process of generating the business’ forward projections are robust, routinely re-aligned with strategy, underpinned by a raft of quantified and time-phased assumptions, and mechanisms for identifying and managing the inherent uncertainty that predicting the future brings. If that wasn’t evidence enough to drive focus on the demand planning and forecasting process, then consider this. Only three companies that were in the top 10 of the Global Fortune 500 list in 1996 are still there, and there are only five still in the top 20. So, do you have enough focus and rigour being applied to the 10 keys of fully realising the potential of your demand planning process? This article is the concluding one in this series. Watch out for more Oliver Wight articles in future issues of MHD Supply Chain Solutions magazine. Rod Hozack is a partner at Oliver Wight. For more information email information@ oliverwight.com or visit www.oliverwight.com. ■
40 | MHD JANUARY / FEBRUARY 2019
MHD SUPPLY CHAIN
NEUROMARKETING Neuromarketing leads to better packaging design
Combining measurements of visual impressions with sensory measurements of packaging’s haptics – how it is experienced when it is held by someone – is ingenious.
H
ow can neuromarketing – using combinations of biometric measuring techniques to analyse consumer reactions – be a tool that makes packaging development more efficient? “With eye tracking, you can measure customers’ visual attention to and experience with your packaging design, you can test before production to ensure you get the wanted result and catch the consumer’s eye in the store. “The majority of shoppers’ decisions are made in store, therefore capturing the shopper’s attention and interest through effective packaging formats is key in a competitive market landscape,” said Ali Farokhian, who heads up the research consultancy team Tobii Pro Insight at packaging company Tobii. “Getting it wrong can be quite expensive – both in the form of direct costs when you have to redo designs and material, and of course in the form of lost revenues.” Iggesund Paperboard is the maker of the high-quality paperboards Invercote and Incada, said to be the two strongest brands on the European paperboard market. Tobii Pro is a division of Tobii Group and began by developing eyetracking hardware for research in 2001, and then grew into supplying a range of tools from hardware (desktop and wearable), software and cloud, to the research consultancy Tobii Pro Insight, which is Iggesund’s project partner. They focus on studying visual attention to help businesses understand human behaviour in situations such as how consumers perceive packaging. “Consumers often function on autopilot, so the key issue is how to arrive at a design that captures attention and interest in a relevant way, persuading the consumer to dare to try something new. In the hunt for the optimal solution, we are offering a powerful tool,” Mr Farokhian said. Iggesund not only supplies paperboard but also works actively to convey knowledge about how to get
the most out of it. This joint project is one step in spreading knowledge about packaging and packaging materials. “We want to make our customers aware of the possibilities that are available to them at an early stage so they can evaluate various design alternatives,” said director of business development at Iggesund Paperboard Jonas Adler. Combining measurements of visual impressions with sensory measurements of packaging’s haptics – how it is experienced when it is held by someone – is ingenious. The psychological concept called ‘the endowment effect’ – that we have difficulty getting rid of things we own – can also be applied to something we are holding in our hand. The more pleasant that experience is, the longer we want to keep on holding it. “We often hear from customers that one reason they choose Invercote is the experience when they hold a piece of packaging in their hand,” continued
Mr Adler. “We really welcome the opportunities to measure this, because until now the feedback has mostly been word of mouth. Now we can actually measure the haptic differences between materials.” Clemson University in South Carolina, USA, offers a highly ranked educational programme in packaging expertise. The university have built a laboratory there equipped with eye tracking tools from Tobii Pro, a store environment where types of packaging can be tested. “The use of eye tracking will result in design that is more consumer oriented,” said Associate Professor at Clemson University Andrew Hurley. “By that I mean packaging that makes it easier for consumers to find the right product faster, and enables us to more rapidly and more efficiently find the products that satisfy our needs.” For more information visit www.iggesund.com. ■ MHD JANUARY / FEBRUARY 2019 | 41
THE ICURVE
On-demand and in control: the irrational, emotional, uneconomic consumer
M
elbourne-based last-mile services technology company Localz has delved into the mindset of the online consumer and the current status of the Australian logistics industry in response. Their articles present a fascinating insight into an industry on the boil.
THE CALM BEFORE THE AUSTRALIAN ICONOMY STORM Today’s consumers want full control of their buying experience, from location to delivery. These consumers are part of the on-demand and in control generation – and they are irrational, emotional and uneconomic to boot. In the US, Europe and the UK, consumers will no longer accept being told when something will be delivered, or when a service is going to be turned on. The new marketplace is consumer driven, to the exclusion of all other considerations. If once, the customer was king, today they are an absolute monarch, and businesses must move heaven and earth to support their 42 | MHD JANUARY / FEBRUARY 2019
demands. Customers will buy from brands that meet their expectations, and they won’t return to brands that don’t deliver the ultimate in service. Although Aussie consumers are somewhat more complacent, they cannot be ignored. Research has revealed that 65 per cent of Australians have been disappointed in a company because of the delivery service they use, and 11 per cent say that they are disappointed regularly. However, while consumers are highly motivated to get the best service, recent research reveals that most Australian logistics companies do not expect to provide same day delivery until 2023. For the Australian consumer, this is simply too late. Given the technology is readily available to enhance the consumer experience, why are Aussie businesses not using it? Smartphones have reached market saturation, while location services are almost universal. A company like Uber gets it right – when you order an Uber, the customer
can see everything – including how far away the car is, how much the ride will cost, what the car’s license plate is and the rating of the driver. So why are local businesses so slow to adopt? The surge in the Individual Economy – or IConomy – will continue to expose fundamental challenges in the way Australian businesses operate and serve their customers. They are under pressure to let go of old processes and operations to create systems that deliver to discerning consumers. The Australian retail sector’s Uber moment is coming – so what can businesses do to prepare themselves?
TAKEAWAY TRAUMA THE takeaway trauma experience goes like this: A customer orders a pizza. Their initial feeling is one of elation because they have chosen their meal – and 90 per cent of the time it’s exactly what they have chosen in the past. The customer uses their smartphone, choosing their pizza with
MHD SUPPLY CHAIN their thumb, because no one uses the phone to talk on anymore. After the feeling of elation, anxiety sets in. It’s been ten minutes and their friends are telling them they should have used a different pizza company. Thirty minutes into the experience they’ve lost faith in the pizza company because its app won’t tell them where their pizza is – is it in the oven, is it on its way, or is it somewhere else? When it eventually arrives, the customer is disappointed because it didn’t arrive on time. Takeaway trauma is a common experience with not only pizza, but most online deliveries. Australians are dedicated online shoppers, with user penetration set to surge. In line with this will be an increase in expectations – with consumers demanding more and more control and visibility over their shopping experience. “There’s a fundamental misalignment between what logistics companies are delivering, and what the consumer wants,” said marketing director of Localz Louise Robertson. “You want to know when the goods are coming, and then you want to be able to change your mind. It’s all about continuous verification for the consumer.” One company that has completely turned itself around based on consumer experience and sentiment is NBN Co. According to Megan Park, its general manager for security confidence and risk, NBN Co had to reinvent itself following a number of issues that affected the network’s end-users. “The company had to stop what it was doing and conduct a complete turnaround over a three-month period. This was driven
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There’s a fundamental misalignment between what logistics companies are delivering, and what the consumer wants. Louise Robertson, marketing director, Localz.
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solely by the experience of Australian consumers,” she said. “Today, the message ‘Australia, we’ve taken action’ remains on the homepage of NBN Co’s website.
BEHIND THE GLOBAL 8-BALL – THE CHALLENGE OF THE LAST MILE In Europe and the US, regulation is driving change. Online shoppers receive their packages the next business day, at a time and place that’s convenient for them – and retailers are ready and willing to oblige, committing to delivery times of around 15 minutes in metropolitan areas. Consumers in these regions don’t care that their fluid demands are uneconomic to the business delivering to them; that’s the business’s problem. In these overseas regions, delivery companies have all the data required to make deliveries easy. They use every technology they have available, including beacons and smart labels, to ensure customer demands are being met. But Australian businesses – particularly traditional businesses – that want to compete for a piece of the online pie are still behind the 8-ball. Ulf Fransberg, from Pocketmobile Communications, says Australian retailers are still struggling with the amount of data generated, what to do with it, and how to analyse it. “There are big disconnections between local companies’ systems and data,” he said. “The information on the goods being transported isn’t available, so how can we send a notification to let the recipient know it’s on its way? “In Europe, no big logistics company would touch a box without the data that comes with it.” Senior manager – trade, transport & heavy industry at GS1 Bonnie Ryan said logistics companies and retailers in Australia often operate in silos. “Rather than think about supply chain versus supply chain, we need to think about being one part of a whole,” she says. “It’s not just about inventory, it’s also about movement. If a package is passing through five different pairs of hands, we need to be able to track it – and we can’t do that yet. Consumers are driving an urgency to fix what are still some very manual, inefficient processes.” For more information visit www.localz.com. To be continued in the next issue of MHD Supply Chain Solutions magazine with ‘The Amazon Effect’. ■ MHD JANUARY / FEBRUARY 2019 | 43
MHD SUPPLY CHAIN
RAIL WORKS Making the case for rail investment in Australia
IVAN KLADNIG
A
ustralia is heading for a big infrastructure boom. Last year, Australia’s population hit the 25 million mark – more than 30 years earlier than predicted. This rapid population growth has put an undeniable strain on existing infrastructure, manifesting through traffic congestion and overcrowding on public and freight transport in state and territory capitals. It’s a problem the Coalition has focused its attention on in its new population policy, proposing structural changes to population distribution and infrastructure planning to ‘decentralise’ cities and encourage people to move to regional cities. In the lead-up to the Victorian state election, the Labor Government was sticking with big infrastructure projects, with the promised $50 billion suburban rail loop the centrepiece of its campaign. The lead times are long and at this stage it’s not even certain which of the projects are confirmed or which will proceed. What is clear from the growing pains in capital cities, is that infrastructure has fallen behind population growth and Australia is now playing catch-up – when Australia should be the world’s best practice in infrastructure funding, planning and delivery. 44 | MHD JANUARY / FEBRUARY 2019
This is no more evident than in rail. Despite its great distances, Australia continues to lag behind the rest of the world, with existing rail services often using antiquated tracks built in the 19th century and running well below speeds and frequencies that modern rail can achieve. There is an undeniable case for large-scale investments in rail in Australia, in particular high-speed rail networks, to improve liveability and mobility in cities, and stimulate urban renewal and growth in regional centres. Australian government and industry stakeholders often point to the efficacy of European-style high-speed rail networks. Yet Australia need not look further than its neighbours, with countries like China taking an integrated approach to urban development through rail, to solve pressing economic and social challenges. Unsurprisingly, the future of rail technology resides in China. What Europe and Japan accomplished over 40 years, China has effectively quadrupled in little more than a decade. China has actively pursued its high-speed rail development to streamline immigration and promote the integration of crosscity economies – and today it’s paid off. The country’s operating 25,000 kilometre high-speed network, which stretches to Hong Kong and provides a direct connection to 44 mainland
destinations, has increased the growth and market potential of second-tier cities by 59 per cent and property prices by 4.5 per cent on average. The early success of China’s high-speed rail program should be considered in the context of Australia’s burgeoning population. The rollout of an east coast high-speed rail network in Australia would create opportunities for development in regions around Melbourne, Sydney and Brisbane. The benefits are twofold: enabling companies operating in the cities with access to a new workforce and to local suppliers located across the country; whilst in turn, making those regional centres more vibrant and viable for housing, recreation, and employment. A high-speed rail link just between Melbourne and Sydney has the potential to create suburbs 200 kilometres from either city. The opportunity to strengthen Australia’s leadership role in AsiaPacific was emphasised by the United Nations Under-Secretary, Dr Joan Clos in May 2017, who said ‘as a key regional player and highly urbanised country itself, Australia has the potential to influence urbanisation processes in the Asia-Pacific region in many positive ways’. This is still true today. Governments across the region are dedicating larger budgets to invest in rail infrastructure like the proposed Kunming-Singapore railway (Pan-Asia rail network), with Asia set to account for over 50 per cent of the global infrastructure investment until 2040, and with Australia’s largest trading partner China, generating 30 per cent of this demand. By setting clear policy direction and funding for bold rail infrastructure projects, Australia can not only create sustainable cities and regions for the future, but position itself as a world leader in urban transport to its rapidly urbanising neighbours. This will also require an urban development focus on integrating ‘smart’ technology like Internet of Things and investing in emerging technologies like artificial intelligence, robotic building and 3D printing, into the development of new infrastructure. Ivan Kladnig is the senior sales and account manager for rail at Amadeus. For more information visit www.amadeus.com/en. ■
MHD SUPPLY CHAIN
DON’T FEAR COR BEN MAGUIRE AND ANDREW ROSSINGTON
Chain of Responsibility is not a burden for businesses – it’s an opportunity
T
he fatality rate in the road transport industry is over eight times higher than any other industry, according to a 2016 report by Safe Work Australia. This study, alongside the Australian Work Health and Safety Strategy 2012 – 2022, identified the road transport industry as a priority area for safety infrastructure. So, as of October 1st, changes to the Heavy Vehicle National Law and Regulations (HVNL) have created new regulatory requirements to combat harmful work practices, impacting businesses across Australia. But rather than seeing these changes as a burden, they should be considered an opportunity.
WHAT DO THE NEW LAWS MEAN FOR TRANSPORT? The new Chain of Responsibility (CoR) regulations mean that every individual in the transport supply chain has a duty to proactively manage risk to ensure the safety of their activities. This extends to employers, drivers, prime contractors, operators, loading managers and anyone else involved in managing, assigning, loading or driving vehicles. Failure to comply with these new laws could result in fines of up to $3 million for businesses, $300,000 for individuals and up to 5 years imprisonment. There is a clear incentive for organisations to step up their compliance and minimise breaches, but it’s not about adding more paperwork for managers or penalising drivers. It’s an opportunity to build safety into every part of the business, from top to bottom – across the entire supply chain.
1. Adapting to a safety-first mindset In the past, fingers have often been pointed at drivers when an accident
occurs on the roads. The new laws shift the onus away from primarily focusing on drivers, now giving everyone in the supply chain equal responsibility for safety. There’ll be more focus on all the contributing factors in a safety breach: fatigue rules, loading requirements, unfair contracts, unrealistic schedules. Shared responsibility will protect drivers from unsafe driving conditions, helping to reduce risk within businesses and create a happier, safer workplace. Adapting to this kind of safetyfirst mindset may be a challenge for businesses, particularly those caught up with the costs of implementing compliance measures. The good news is that CoR laws are inherently flexible, allowing for businesses to do “all that is reasonably practicable” to stay compliant. This not only allows for smaller businesses to adapt to change at a scaled level but puts them on an equal playing field to larger corporations. Meeting these regulations requires tiered change management, but these processes can be as simple as taking small steps towards a safetyfirst approach in the business.
2. Implementing compliance measures With the introduction of new technologies and procedures, safety practices can become a fundamental part of business infrastructure. By identifying and managing key issues such as driver fatigue, organisations can proactively address emerging risks and ensure compliance with CoR. This is where technology like telematics becomes useful, allowing businesses to capture vehicle performance and driver behaviour, to see what the biggest risks are. It’s important to note that success requires investment, and cultural change is a process that takes time – but it can be achieved. Some industries are still on their journey to a safety-first culture, and education is another important step in compliance. For example, farmers or agricultural workers present while
goods are being loaded may now be responsible for ensuring the vehicle is loaded safely. This shift requires a streamlined rollout that works with employees to implement change.
THE OPPORTUNITY FOR BUSINESS IMPROVEMENT Too often, organisations only see compliance and safety cultures as a cost, not an opportunity. The reality is that working towards safety will have a variety of benefits, including new business opportunities, a better safety record and higher levels of competitiveness. Investing in compliance and safety also shows care for employees and customers, who have their own safety obligations to manage. Proving a commitment to change can include introducing new safety management systems, risk assessment processes, monitoring and detailed incident reporting, or implementing new technologies such as an electronic work diary to prevent breach of fatigue laws. Businesses can also become a part of TruckSafe, an industry initiative that provides accreditation based on minimum standards for responsible and safe trucking operations. TruckSafe accreditation ensures businesses keep vehicles wellmaintain and drivers safe through their management systems. Ultimately, there’s no silver bullet. Addressing CoR is about investing in compliance, safety, and technology, which will all pay off in the long term. While greater education and investment are needed to effectively implement new compliance procedures, the advantages for all parties far outweigh the time spent on any additional paperwork and will lead to a more productive and fundamentally safer workplace for everyone. Ben Maguire is the CEO of the Australian Trucking Association (ATA) and Andrew Rossington is vice president, transport solutions, at Teletrac Navman Australia. For more information visit www.truck.net.au and www.teletracnavman.com.au. ■ MHD JANUARY / FEBRUARY 2019 | 45
MHD THE LAST WORD
PREPARE FOR A HIT TRAVIS BROOKS-GARRETT
New shipping line regulations will hit supply chain costs hard in 2019
W
hat do you know about the International Maritime Organisation’s new low sulphur fuel requirements? Chances are, very little. Not only are these regulations only directly applicable to ships at sea (and in port), but the shipping industry is only just beginning to raise awareness amongst customers, even though they may begin cost recovery as soon as 1 January 2019. Yet these changes are global, mandatory and unavoidable – and the cost will inevitably flow right through the supply chain. The background to this is that most ships use heavy fuel oil (HFO), which is essentially the ‘rubbish’ that remains after crude oil has been refined into petrol, diesel, avgas, etc. It’s dirty stuff and burning it creates toxic emissions. The IMO, a United Nations body, has voluntarily adopted a policy of cutting air pollution from ships’ engines by 85%, and since 2005 has been gradually reducing the discharge of sulphur oxides allowable under the MARPOL convention. From 1 January 2020, the level will be cut to 0.50% m/m (mass by mass) from 3.50% m/m. Shipowners and operators have two ways of meeting this requirement. They can continue to use HFO, but this requires the installation of exhaust filters called scrubbers, at a price of around US$1 million per vessel. Or they can use low sulphur fuel (LSF), which
46 | MHD JANUARY / FEBRUARY 2019
is both considerably more expensive than HFO and in short supply. Either way, ‘going green’ comes at a cost and this will have to be fairly shared. In the last month or so, major container lines have begun to release details of their proposed approaches to IMO 2020 and there is very little consistency, so far. However, the global number one and two, Maersk Line and Mediterranean Shipping Co, have each estimated the impact of the new regulations at north
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To raise awareness, we have developed an industry Fact Sheet that can be shared throughout the supply chain.
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of US$2 billion per annum. Another Top Five member, CMA CGM, expects the extra cost to importers, exporters and freight forwarders will average USD 160 per TEU. Maersk, MSC and others are introducing their new fuel surcharge mechanisms from 1 January 2019 - a year before the regulation kicks in – justified by the need to transition to the 2020 effective date of the regulation. Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) have a number of concerns with the implementation of yet more surcharges, although we acknowledge they will be (and should be) unavoidable.
We consider that shipping lines have not provided a sufficient explanation of the capital investments that they will be undertaking from now until 1 January 2020 that justifies the early application of a surcharge, and most of those cost recovery mechanisms will ‘average out’ the costs per vessel and per trade lane, whereas in reality, each vessel will vary in their sulphur emissions. Our biggest concern is that this will be a ‘cost plus margin’ scenario where the shipping lines use this new regulation as a revenue opportunity, not as a true cost recovery exercise. FTA and APSA have held meetings with the Registrar of Shipping in Canberra to better understand how the department and the Australian Maritime Safety Authority (AMSA) will be monitoring the compliance of shipping lines. FTA and APSA are also working with Scope 3 - an Australian company specialising in transport and logistics emissions - to explore different models of calculating the true costs of these regulations and how the regulators can best monitor shipping line compliance. To raise awareness, we have developed an industry Fact Sheet that can be shared throughout the supply chain. It’s available by emailing the author at tbrooksgarrett@ftalliance.com.au. Travis Brooks-Garrett is a director of Freight & Trade Alliance and secretariat, Australian Peak Shippers Association. If you would like to participate in any FTA/APSA initiatives, or if your company would like to make their voice heard with state or federal governments, don’t hesitate to get in contact via tbrooks-garrett@ftalliance.com.au. ■
MHD MATERIALS HANDLING AND MANAGEMENT
ON A HYDROGEN CHARGE T
oyota Material Handling Australia (TMHA) has put the first Toyota hydrogen fuel cell-powered forklifts outside of Japan into action during trials at Toyota Motor Corporation Australia’s parts centre located at its former manufacturing plant at Altona, Victoria. The zero CO2-emission Toyota hydrogen fuel cell (FC) forklift demonstration is an extension of Toyota’s simultaneous trial for its Mirai fuel cell electric vehicle (FCEV), which share the same hydrogen-powered technology. The Toyota hydrogen FC forklifts with a nominal rating of 2,500kg lift capacity were also featuring in the official opening of the new Toyota Parts Centre in Western Sydney’s Kemps Creek. Toyota hydrogen FC vehicles take pressurised hydrogen that is fed into a fuel cell stack, where it is combined with oxygen to create a chemical reaction that produces electricity to drive various motors depending on demand for motive power or hydraulic power for steering, braking or lifting loads. Toyota hydrogen fuel cell forklifts will be especially suitable for logistics and warehouse operations given they can be conveniently refuelled in just a few minutes, offering obvious productivity efficiencies.
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It takes around three minutes to fill the hydrogen tank.
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Toyota Material Handling Australia general manager - corporate compliance and project development Bob Walmsley said with the hydrogen FC forklifts, it takes around three minutes to fill the hydrogen tank compared with around eight hours to recharge a conventional battery. “This means we can use these forklifts more often, without having to significantly wait between charges or use second-shift batteries to achieve the same utilisation,” said Mr Walmsley. TMHA president and CEO Steve Takacs said the Toyota hydrogen FC forklifts are another example of the synergies available from Toyota’s automotive arm. “In much the same way Toyota’s range of forklift products are researched and developed using Toyota’s advanced manufacturing technologies, our engineers collaborate across the Toyota Group to incorporate the latest technologies acquired from our automotive sector,” Mr Takacs said. “We at TMHA are committed to constantly developing new and better technologies that raise the bar in terms of safety, performance, efficiency and sustainability, which will ultimately benefit our customers. These hydrogen FC forklifts are a clear demonstration of our commitment to the environment through the adoption of new and sustainable technologies. They have excellent environmental credentials as they do not emit CO2 or substances of concern (SOCs) during operation. The Toyota hydrogen FC forklifts and Mirai are not for sale in Australia mainly due to a lack of hydrogen refuelling infrastructure. Toyota’s mobile hydrogen fuelling station installed on a Hino 700 Series truck fuelled the FC forklifts and Mirai during the trials. For more information call 1800 425 438 or visit www.toyotamaterialhandling.com.au. ■
MHD JANUARY / FEBRUARY 2019 | 47
Each event is “ASCI Endorsed” and is awar ded half a CPD poin t, allocated when even attendance t has been co nfirmed. Points can be retrieved from your ASCI Memb er Portal. Ev ent are subject to ch ange. Email: even ts@asci.org .au
ASCI NETWORKING BREAKFAST SERIES 2019 NEW SOUTH WALES 7 FEBRUARY
16 APRIL
Quality Conversations Workshop*. This session focuses on challenges we experience when working in groups and how to converse in a way that enables learning, collaboration and creativity and helps to better adapt to internal and external complexity we face in today’s world.
Advanced Analytics Workshop. In today’s fast paced world, the ability to rapidly evaluate multiple scenarios and drive smart business decisions can be the difference between success and failure. Find out how to harness new data sources to boost business planning.
19 FEBRUARY
28 MAY
Quarterly Round Table Series for Pharma. Unique characteristics of the supply chain for the pharmaceutical industry is tabled and shared at this regular gathering.
Quarterly Round Table Series for Pharma. Unique characteristics of the supply chain for the pharmaceutical industry is tabled and shared at this regular gathering.
19 MARCH
25 JUNE
Keynote Presentation. The New South Wales Chapter will invite a special guest to this month’s keynote presentation.
Systems and solutions. Bringing together the best technical minds to share latest solutions on supply chain and procurement technology.
Address: Michael Page; Level 32, Grosvenor Place, 225 George Street, Sydney. Cost: Free for ASCI’s Members and their guests $25 for Non Members per event.
VICTORIA 20 FEBRUARY
22 MAY
Procurement Round Table Discussion. A new white paper will be tabled for this lively discussion on sustainable procurement, tougher regulations around modern slavery, and how to work towards an increased focus on the bottom line for businesses globally.
Expert Panel: e-Commerce and its effect on logistics. Industrial property trends; Amazon; last mile delivery; reverse logistics; consumer buyer behaviour are all drivers putting logistics experts under the pump to contain costs on their cost to serve. Hear our panel of experts offer some solutions and predictions that will help you prepare for the future.
20 MARCH Supply Chain’s Role in the S&OP Process Keynote. ASCI’s Corporate member, Oliver Wight, addresses how supply chain can participate in a mature S&OP process to drive competitive advantage for an organisation.
26 JUNE Demand Driven Supply Chains (DDMRP) Round Table. Corporate Members will form a panel this month and share their challenges and successes in their demand driven projects.
Address: Michael Page; 19/600 Bourke Street, Melbourne. Cost: Free for ASCI’s Members and their guests Free for Michael Page guests $25 for Non Members. 48 | MHD JANUARY / FEBRUARY 2019
MHD ASCI
QUEENSLAND 27 FEBRUARY
23 MAY
Advanced Analytics Workshop. In today’s fast paced world, the ability to rapidly evaluate multiple scenarios and drive smart business decisions can be the difference between success and failure. Find out how to harness new data sources to boost business planning.
Keynote Presentation. The QueenslandwChapter will invite a special guest to this month’s keynote presentation.
28 JUNE Round Table Discussion. A procurement white paper will be tabled and discussed within the group.
27 MARCH Practitioner Registrations Workshop. This session allows for you to realise the benefits of Registration; identify your preferred area of specialty (procurement, logistics or operations management) and understand the requirements of the CPD program to maintain registration.
Address: Michael Page; Level 17, 100 Creek St, Brisbane City. Cost: Free for ASCI’s Members and their guests $25 for Non Members per event.
WESTERN AUSTRALIA 31 JANUARY
2 MAY
Procurement Round Table. Tabling a white paper on procurement and its vulnerability for disruption with discussions around sustainable procurement, tougher regulations around modern slavery, and an increased focus on the bottom line for businesses globally.
International Keynote. We test the power of Skype this month and invite an international keynote of your choice to our timezone for a meet and greet briefing and an insight into their day-to-day supply chain challenges and opportunities.
28 FEBRUARY
30 MAY
Systems Thinking Workshop. Taking a look at systems thinking, how we can get into this mindset and how it is used in the real world.
Practitioner Registration Workshop. This session allows for you to realise the benefits of Registration; identify your preferred area of specialty (procurement, logistics or operations management) and understand the requirements of the CPD program to maintain registration.
28 MARCH Supply Chain & Network Design. Following on from last month, we dig deeper into the various ways to cut the data and design the very best solution for your supply chain.
22 JUNE Panel Discussion on Business Acumen. This panel discussion brings together some experts in identifying and building business acumen and why its essential for a supply chain professional.
Address: Michael Page; Level 6, Westralia Plaza, 167, Saint Georges Terrace, Perth. Cost: Free for ASCI’s Members and their guests $25 for Non Members per event.
ASCI GUIDED LEARNING SESSIONS TERM 1
TERM 2
Certified in Production and Inventory Management (CPIM) Part 1 7 weekly Thursday 1-3pm/7- 9pm AEDT
Certified in Production and Inventory Management (CPIM) Part 1 7 weekly Thursday 1-3pm/7- 9pm AEST
Commencing 7 February until 21 March 2019
Commencing 2 May until 13 June 2019
Certified in Production and Inventory Management (CPIM) Part 2 13 weekly Tuesday 1-3pm/7- 9pm AEDT
Certified in Production and Inventory Management (CPIM) Part 2 13 weekly Tuesday 1-3pm/7- 9pm AEST
Commencing 29 January until 23 April 2019
Commencing 9 April until 2 July 2019
Certified Supply Chain Professional (CSCP) 13 weekly Wednesday 1-3pm/7- 9pm AEDT
Certified Supply Chain Professional (CSCP) 13 weekly Wednesday 1-3pm/7- 9pm AEST
Commencing 30 January until 24 April 2019
Commencing 10 April until 3 July 2019 Certified in Logistics, Transport & Distribution (CLTD) 7 weekly Thursdays 9.30-11.30 AEST Commencing 2 May till 13 June 2019
MHD JANUARY / FEBRUARY 2019 | 49
MHD NEWS FROM SCLAA
A YEAR IN REVIEW
2
AMANDA O’BRIEN
“
2018 has been a very successful year forthe Supply Chain & Logistics Association of Australia.
”
50 | MHD JANUARY / FEBRUARY 2019
018 has been a very successful year for the Supply Chain & Logistics Association of Australia. As we head towards 2019 it is time to reflect on the year and the great initiatives and value to our members that have culminated in our association growing from strength to strength. The strong financial and progressive implementation of new developments that have been brought to fruition from a two-year long strategy has worked towards cementing the SCLAA as the association of choice for all individuals working across the supply chain. There have been too many highlights to mention them all however, of the more than 50 events held nationally and a number of initiatives, there are some which have made a significant impact. Without a team effort, these events and initiative would not have been possible. To our national partners, corporate partners, individual members, future leaders and all volunteers thank you for your ongoing support your contributions have been significant and highly valued. To the hardworking divisions in New South Wales, ACT/Southern NSW, Victoria/ Tasmania, South Australia/Northern Territory, Queensland and Western Australia a big thank you for the contribution and hard work in bringing principal initiatives to professionals, industry and practitioners in Australia. Of particular note with technology and ‘blockchain’ being at the forefront of people’s discussions in industry circles, SCLAA representatives attended the unveiling of the Trade Community System in Brisbane showcasing the future of international trade. Presentation and live display witnessed how technology is transforming Australia’s international trade environment and opening the arena up to some interesting questions about how data security and the monopoly of Intel would be telling factor in future collaborative alliances to enable this technology to fulfil its prophecy of a transparent, seamless and integrated supply chain. This theme will be further explored in 2019 with the launch of our new website and interactive technology offerings on display. SCLAA’s Women in Logistics event held in 2018 ‘The Great Debate Luncheon – Progress or Paralysis?’ really pushed the boundaries of what diversity means and how leaders in industry can progress an inclusive agenda rather than an exclusive agenda in corporate Australia. This event resonated with many
across industry and it was great to see the impact the event had and the conversation for change will surely continue right into 2019’s event. It is with this need for inclusion that it was opportune to attend the group meeting of the Data Reference Group for the development of the National Freight and Supply Chain Strategy and National Action Plan. It was evident that data is needed to improve freight and supply chain productivity and competitiveness. The reference group is assisting the Freight and Supply Chain Taskforce to refine the approach and scope for policy development. Another highlight was meeting with the Queensland committee and discussing the incredible work they are doing to enhance the supply chain industry and promote wider recognition of defence and SCLAA in the state. It was a big year of travel and meeting the committees and it was incredibly humbling to see the passion, expertise and drive they bring to the association. Over the last few years the SCLAA has strived to deliver a competitive advantage to our members, corporates and partners to improve their experience in all areas of education, IT, networking, information and insight to enhance supply chain professionals working in this important industry. It has also been the SCLAA’s mission, through its collaboration with industry, to be the association of choice for the advancement of supply chain and logistics throughout Australia. The supply chain adds 130 billion to the Australian Economy and for every 1% increase in efficiency in the sector, GDP will be boosted by over 2 billion dollars a year. In addition, every sector and industry has a supply chain function and it is our goal to continue to advance the efficiencies and education in the sector to best represent the wider groups and companies to bring about increased efficiency, safety and security to our sector which is the lifeblood of our economy. On behalf of the SCLAA national board, divisional committees and all the volunteers at the SCLAA, we look forward to working with you in 2019. Amanda O’Brien is the national chairwoman of the Supply Chain and Logistics Association of Australia. For more information contact the national secretariat at secretary@sclaa.com.au or call 1300 364 160. ■
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DISRUPTED DEMAND
Disruption to demand management will power future supply chains
COVER STORY
CUSTOMER FIRST
Crown Equipment’s customer-centric philosophy at work
IN FOCUS:
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