MHD Supply Chain Solutions
COVER STORY
Celebrating 50 years in Australia
JULY / AUGUST 2018
REVERSE LOGISTICS
And Toyota is poised for even more exciting times to come
It isn’t simply a reverse gear
DEMAND PLANNING Realising its full potential
IN FOCUS:
MATERIALS HANDLING AND MANAGEMENT
CE
LEBRATING
19 6 8 2018
MHD FROM THE EDITOR
MHD Supply Chain Solutions
CELEBRATING AN ESSENTIAL INDUSTRY
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
THE TEAM Managing Director: Simon Grover Editor: Charles Pauka Sales: Ralph Merry Production Manager: Jacqui Cooper Graphic Designer: Alyssa Coundouris Head of Circulation: Chris Blacklock
FOR ADVERTISING OPTIONS Contact: Ralph Merry rmerry@intermedia.com.au
SUBSCRIBE Australian Subscription Rates (inc GST) 1yr (6 issues) for $78.00 2yrs (12 issues) for $120.00 – Saving 20% 3yrs (18 issues) for $157.50 – Saving 30% To subscribe and to view other overseas rates visit: www.intermedia.com.au or Call: 1800 651 422 (Mon – Fri 8:30-5pm AEST) Email: subscriptions@intermedia.com.au
DISTRIBUTION Average Total Distribution: 6,764 AMAA/CAB Yearly Audit Period ending 31 March 2018.
CONTRIBUTORS MHD Supply Chain Solutions magazine is recognised by the Australian Production and Inventory Control Society, 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.
I
t was fifty years ago this year that Toyota began its materials handling enterprise in Australia. A mean and purposeful-looking yellow machine, it grounded the company’s presence in this country and established its tough, no-nonsense reputation – so much so that in no time at all, in fact less than thirty years later, it reached its 25,000th machine landmark. In what is a small market by world standards, growing from none to 25,000 machines in just 28 years, an average of almost 1,000 per year, is a remarkable achievement. As the chairman of TMHA Toshi (Tom) Nakazawa says, fifty years of Toyota forklift sales in Australia is a significant milestone, and goes on to put it into perspective: “Looking at the world material handling market, the USA is the largest market, but Australia as TMHA is an impressive eighth in the world sales volume as a single sales company. This shows how well we have been supported by our customers and means we can truly celebrate our 50th year anniversary.” In other materials handling news in our annual feature, we report on specialist customised MHE maker Combilift’s fantastic new manufacturing plant opening in the lovely emerald green town of Monaghan ($80m worth and under an 11-acre roof, not bad, is it?), while more locally the city of Newcastle gets a magic new Crown centre. The ever-popular forklift feature begins on page 14 with all the information on Toyota’s 50th anniversary, and a lot more.
SUPPLY CHAIN SOFTWARE SURVEY: YOUR CHANCE TO CHANGE IT! MHD magazine and Transport & Logistics News’ new Supply Chain Software Users’ Survey starts in July, with a comprehensive (but, I promise, short and easy to digest!) list of questions to find out what’s good, what’s bad and what’s missing from the IT landscape in the supply chain world. This is your opportunity to praise what works, put the boot into what doesn’t, and tell the good people on the supplier side what is missing, what you want, what would make your everyday working life so much easier. Head to www.TandLnews.com.au and follow the tags to enter the survey. And as always, enjoy reading your MHD magazine!
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.
All express or implied terms, conditions, warranties, statements, assurances and representations in relation to the Publisher, its publications and its services are expressly excluded save for those conditions and warranties which must be implied under the laws of any State of Australia or the provisions of Division 2 of Part V of the Trade Practices Act 1974 and any statutory modification or re-enactment thereof. To the extent permitted by law, the Publisher will not be liable for any damages including special, exemplary, punitive or consequential damages (including but not limited to economic loss or loss of profit or revenue or loss of opportunity) or indirect loss or damage of any kind arising in contract, tort or otherwise, even if advised of the possibility of such loss of profits or damages. While we use our best endeavours to ensure accuracy of the materials we create, to the extent permitted by law, the Publisher excludes all liability for loss resulting from any inaccuracies or false or misleading statements that may appear in this publication. Copyright (c) 2018 - The Intermedia Group Pty Ltd.
MHD JULY / AUGUST 2018 | 3
CE
LEBRATING
19 6 8 - 2018
Toyota Logistic Design Competition (Europe) - finalist
WE’RE EVEN MORE EXCITED ABOUT THE NEXT 50 YEARS For over 50 years Toyota Material Handling has been at the
unparalleled range of logistics and automation solutions to
forefront of the Australian materials handling market.
our Australian customers – including market leading counter-
From our first Toyota forklift sold locally in 1968 to the
balance forklifts, warehouse equipment, AGV driverless
TM
introduction of our award winning System of Active Stability
forklifts, work platforms, sweepers and scrubbers, plus a
safety technology, it’s this spirit of innovation, productivity
comprehensive range of warehouse racking solutions.
and customer service that is at the core of everything we do.
To find out how our spirit of innovation can help give your
Today, Toyota Material Handling is proud to offer an
business a lift, contact us today.
1800 425 438 www.toyotamaterialhandling.com.au
S O L U T I O N S
F O R
E V E R Y
P A L L E T®
JULY / AUGUST 2018
ISSUE #4 VOLUME 48
THIS ISSUE NEWS
COVER STORY
06 The 2018 MHD Supply Chain Software Users’ Survey is opening soon. Check it out at www.TandLnews.com.au.
COMMENT 08 There are millennials in the warehouse! 10 QR is a must
TECHNOLOGY
14
12 Project i-TRACE is transforming the rail industry
IN FOCUS: MATERIALS HANDLING AND MANAGEMENT 18 Automation is the star 20 Hyster goes with hydrogen 21 Newcastle gets bigger and better; Crown launches an electric hand truck 22 Combilift means business 24 See ahead
18
SUPPLY CHAIN 26 Spotlight on: Outsourcing transport and warehousing 30 Reverse logistics – who does it well? 33 ERP goes SaaS 34 Where it counts 36 Leadership development 40 Lockdown! 42 Time to move online 44 Plan4demand
MHD Supply Chain Solutions
COVER STORY
Celebrating 50 years in Australia
JULY / AUGUST 2018
REVERSE LOGISTICS
And Toyota is poised for even more exciting times to come
It isn’t simply a reverse gear
DEMAND PLANNING
THE LAST WORD
Realising its full potential
47 We need control
DEPARTMENTS AND REGULARS IN FOCUS:
MATERIALS HANDLING AND MANAGEMENT
CE
48 ASCI – contacts, courses, news. 50 From the Supply Chain and Logistics Association of Australia. 51 Subscription information.
LEBRATING
19 6 8 2018
ON THE COVER Toyota forklifts have come a long way since the first rugged and dependable 5LR models were imported into Australia in 1968. See page 14
24 MHD JULY / AUGUST 2018 | 5
MHD NEWS
YOUR CHANCE TO CHANGE IT! MHD magazine and Transport & Logistics News’ 2018 Supply Chain Software User Survey can help you ask for the answers. The survey will give you the opportunity to reflect on your experiences with your current packages, what you’re missing, what you’re looking for. “Today’s software is smarter, faster, cheaper than ever before,” said group managing director of Bestrane David Sanders. “In addition, many applications are available through an internet-connected browser to all types
ERP, WMS, Excel, etc.: tell us what you think, what you want when IT comes to supply chain software. Plus win a $2,000 prize package!
I
f you are in the supply chain business, whether as a wholesaler, retailer, distributor, 3PL or transport operator, you will be using ERP, WMS, Excel, or any of the many specialist software applications available for the supply chain and logistics industry. You are operating in possibly the most diverse and confusing sector IT-wise. Because while there are software packages that will look after everything from voice picking, vehicle scheduling to full automation, many users today admit to still being almost inseparably wedded to their Excel spreadsheet and paper printouts. “The explosion of e-commerce is pushing companies to rethink their supply chain management strategies," said Mark Dawson, managing director of Microlistics, Australia’s only company recognised in the Gartner 6 | MHD JULY / AUGUST 2018
Magic Quadrant for WMS. "This has also led to a significant increase in the number of 3PL and fulfilment operators in the Australasian market place, where premium customer service remains critical. The competition between traditional ‘Bricks and Mortar’ (B&M) retailers and the e-commerce players is also putting pressure on the inventory holding split between traditional and e-commerce orders. Many traditional B&M retailers are finding the operational and systems challenges of managing omni-channel orders and the competition for ‘one inventory’ difficult to manage. This is driving implementation of new supply chain and e-commerce technology particularly in the WMS and parcel management technology space.”
TELL SUPPLIERS WHAT YOU NEED, WHAT YOU WANT Which one of these are you? Could you possibly be divorced from your spreadsheets, if you are still using those as your primary solution? What do you need, what will you look for, when you finally decide to make the break? Or, if you’re already on a dedicated software package, how is it going? What is good, what is bad? What are you missing?
of sensors that is rapidly expanding the number, type and location of ‘users’.” This survey not only seeks to ask you the Good, Bad and Ugly of how supply chain software is currently being used, but also looks over the horizon to detect the key issues and trends driving the requirements of the future. Your responses to the survey will give supply chain software suppliers a chance to evaluate what users are thinking, wanting, and needing in their packages. Available to enter from July 2018, entering the survey will allow you to outline, or tell them in great detail, your opinions and insights into what you look for when you decide on a new software package, what you need, what is important for you.
AND YOU COULD WIN A $2,000 PRIZE PACKAGE! To help prompt you to enter the survey, we have an amazing $2,000 prize package for one randomly selected winner from the respondents. The lucky winner will not only receive a travel voucher worth $1,000, but will also have the opportunity to nominate their charity of choice, to which we will donate the other $1,000. That’s right, by entering the survey, you will have the chance to win $1,000 for the charity of your choice plus a $1,000 travel voucher! The 2018 Supply Chain Users’ Survey is open now. Simply visit www. TandLnews.com.au and click on the IT survey button to participate. ■
IMPROVING YOUR DISTRIBUTION CENTRE‘S PERFORMANCE As a single-source supplier with more than 75 years of designing warehouse and logistics systems for a wide range of industries, SSI SCHAEFER partners with you to improve the performance of your distribution centre. • Innovative storage solutions • Automated order fulfilment systems • Flexible warehouse management software ssi-schaefer.com
MHD COMMENT
THERE ARE MILLENNIALS IN THE WAREHOUSE! How to work with millennials in the warehouse
RAGHAV SIBAL
B
y now, we’re all aware of some of the stereotypes associated with millennials in the workplace. This generation of 20- and 30-somethings has amassed a number of negative – as well as some positive – labels about work ethic, interaction style and loyalty. Whilst it is of course unfair and inaccurate to assume all millennials embody these common characteristics, the stereotypes pinned to this generation have emerged for a reason. As e-commerce continues to grow and more and more baby boomers and older workers retire, millennials’ presence in the retail warehouse and throughout the supply chain is becoming increasingly crucial. The challenge now becomes how to manage this important group of employees. This article looks at how millennials in the workplace differ from previous generations, the steps managers can take to improve relations with this group, and why effective management of this group is so important.
UNDERSTANDING THE MILLENNIAL EMPLOYEE Millennial workers want more than their predecessors. In generations past, engagement in the warehouse was measured based on progress and productivity – employees getting their jobs done well and at a reasonable pace. Those measures are not enough for today’s worker. Millennials want to feel engaged, fulfilled and motivated in the workplace, and chances are that if they don’t, they’ll jump ship. Gallup Research (https://bit.ly/2MrlVO1) found that millennials who are engaged at work are 64% less likely to consider a job change than those who are disengaged. So to make use of today’s younger workforce, reduce churn and improve employee retention, managers must learn how to work to adapt to the needs of this generation. 8 | MHD JULY / AUGUST 2018
REACHING THE NEXT GENERATION In an effort to cater to millennials, warehouse leaders should actively change their management approach. An effective strategy is to focus on enhancing individual employee engagement and boosting satisfaction. This can be achieved in part by aligning individual employee activities with established organisational goals and metrics and by providing employees with frequent feedback on their performance. It’s important for millennials – all employees, really – to understand how their performance contributes to the overall success of the organisation. Knowing their contribution makes a difference and can instil a sense of satisfaction, it can help drive motivation. One way warehouse managers can actively boost engagement is to emulate consumer applications like Fitbit, the popular fitness wearable that sends its users a weekly email summarising their physical performance. Warehouse managers can also tap available mobile technology in this way and share regular reports with employees via their smartphones. This approach utilises popular gamification concepts to engage, motivate and incentivise success, and it reaches millennials in a familiar and non-threatening way. Getting a regular performance snapshot helps employees better understand how their work contributes to overall company progress, as well as how they rank against their peers, which encourages a friendly sense of competition.
them daily and have been doing so for most of their lives. Warehouse managers should take advantage of this familiarity and use it for workplace communications as well. Creating an intuitive user interface that is familiar and part of employees’ everyday experience, and connecting with millennials via a medium they’re comfortable and familiar with, can go a long way towards promoting engagement and driving their success. Additionally, finding ways to send quick performance summaries and feedback can help change the oftennegative feelings toward ‘workplace assessments’. Instead, approaching engagement and performance from a more mobile, user friendly ‘push notification’ direction is more likely to motivate employees.
THE TAKEAWAY
ADAPTING COMMUNICATIONS
Millennials are a growing percentage of the workforce, and as older generations retire, this group is becoming increasingly important to companies. Additionally, it benefits any organisation to focus on retaining employees, and millennials are notorious for job hopping. In fact, the Gallup study found that 60 per cent of millennials are open to switching jobs and only half say they plan to be at their current job a year down the line. Unengaged millennials are more likely to job-hop, which increases recruitment and training costs for new workers. Focusing on engaging the millennial workforce is in the best interest of warehouse managers. Failing to adapt to the needs of this generation could mean decades of employee churn ahead – and millions lost on unnecessary hiring and training costs.
When it comes to communication with the millennial workforce, most warehouse managers have significant room to improve. Stereotypically, millennials are addicted to their smartphones – they engage with
Raghav Sibal is Manhattan Associates’ managing director for Australia and New Zealand. For more information call +61 2 9454 5400, email anzinfo@manh.com or visit www.manh.com.au. ■
Productivity With Every Move
The Crown FC 5200 Series. Make Every Move Count. The Crown FC 5200 Series lift truck gives you the strength to lift the heaviest loads and the manoeuvrability to work in tight aisles and on crowded docks. It also offers the speed and acceleration to get more done in less time, and the control and precision to give the operator more confidence. Add Crown’s proven reliability, and you get a lift truck that goes the distance while getting the job done faster than ever before. 1300 909 827 crowninfo@crown.com crown.com
MHD COMMENT
QR IS A MUST Just how responsive is your current supply chain?
PATRICK ELLIOTT
I
f you’re the person responsible for your organisation’s supply chain operations, take a moment to ask yourself these three quick questions: 1/ Would you be able to pinpoint the location and contents of a shipment on its way from Beijing to Melbourne within a few minutes? 2/ How quickly would you be alerted that a truck from Brisbane to Cairns had been delayed by floodwaters after a storm? 3/ If a client in Adelaide is waiting for a delivery from Singapore that will be delayed by a union strike in Sydney, how quickly could you update them with a revised delivery time? To stay competitive, it is important that a company can know, and quickly act upon, answers to these and many other constantly shifting logistics questions. Yet such quick decisionmaking is a struggle unless you have real-time visibility into the entire supply chain.
SEEING THROUGH COMPLEXITY Like many people in the supply chain ecosystem, logistics professionals deal with mind-numbing levels of complexity on a daily basis. They’re often bogged down by unwieldy spreadsheets and legacy software systems in their own organisations, as well as by process complexities imposed by external suppliers and partners. In a perfect world, these professionals would be able to accurately forecast all logistics demands, adjust those forecasts in real time, and make wellinformed, cost-optimised decisions based on customised dashboards of trusted data. Unfortunately, most logistics professionals today don’t even have time to dream about having such capabilities, but with the advent of modern supply chain software platforms, the impossible is not only possible: it’s a must-have. As supply chain professionals move to cloud-based technologies that enable 10 | MHD JULY / AUGUST 2018
end-to-end supply chain visibility, they can reduce or eliminate data silos, perform complex calculations in real time, leverage in-memory processing capabilities, and respond to changing conditions as they occur.
IMPROVED VISIBILITY DELIVERS BETTER CAPABILITIES Often, the goal of implementing cloud-based technologies is gaining an end-to-end visibility that enables a business to be more competitive and provide a better customer experience. Yet achieving real-time visibility in the supply chain can also create opportunities for innovation. Three of these opportunities are: 1/ Sensing demand: Real-time visibility into the supply chain enables business leaders to keep a finger on the pulse of ever-shifting demand by capturing market and customer data in near real time. Variations and pattern may emerge in the ebb and flow, allowing the organisation to sense consumer demand more accurately. 2/ Shaping demand: New technologies can run “what-if” scenarios based on emerging patterns, and can optimise supply chain processes
for specific variables such as cost, customer demand, and delivery date. End-to-end supply chain visibility allows business leaders to factor in data from finance, marketing, and sales, as well as data from trading partners, customers and suppliers. 3/ Orchestrating demand: When leveraging end-to-end supply chain visibility to sense and shape demand, supply chain leaders can make better-informed, more collaborative decisions with newfound transparency, then monitor the results and repeat the process to fully orchestrate demand. The advantages of achieving endto-end supply chain visibility are clear: better decision-making, more efficiency, and greater profits. To remain competitive, companies should reassess their supply chain needs and implement a technology that enables them to sense, shape, and orchestrate demand as required. The result will be significantly improved levels of customer service. Patrick Elliott is the vice president for Australia and New Zealand at Anaplan. For more information call +61 2 8415 9743 or visit www.anaplan.com. ■
Genuine Dexion It’s all about SAFETY
Each component (made from engineered steel) in the Dexion range has been designed and tested, for AS4084:2012 and EN15512:2009 compliance, by our highly experienced professional structural engineers. These components are then independently tested to verify their structural integrity and code compliance by University of Technology Sydney (UTS). This ensures all genuine Dexion racking performs exactly as per the structural specifications. It is all about SAFETY and providing peace-of-mind to all our customers.
1800 100 050 www.dexion.com.au
MHD TECHNOLOGY
I-TRACE
GETTING THE INDUSTRY READY FOR ITS NEXT DESTINATION
Project i-TRACE is transforming the Australian Rail Industry
T
he Australian Railway Industry is working towards implementing Project i-TRACE by 1 January 2019. Project i-TRACE will set the foundation for standardising the way parts and components are identified, barcoded and/or tagged across the sector using GS1 global data standards (GDS). The Australasian Railway Association (ARA), with the support of the ARA board, has been driving this initiative in collaboration with GS1 Australia for the last few years. Investing in GS1 standards and new technologies will bring significant improvements to reliability, safety and quality across the value chain. CEO of the ARA Danny Broad said: “Improving how the rail industry traces and tracks assets through their lifecycles is critical to unlocking improvements in efficiency and safety. “This is why the Australasian Railway Association is working closely with GS1 Australia to standardise how materials are identified in the value chain through Project i-TRACE.”
ON TRACK FOR 1 JAN 2019 GS1 Australia’s senior manager – Trade, Transport & Heavy Industry Bonnie Ryan said Project i-TRACE is gaining pace with key focus on the long-term benefits of full lifecycle tracking and predictive maintenance for more effective asset management. 12 | MHD JULY / AUGUST 2018
“GS1 Australia continues to work in close collaboration with the ARA to get the industry ready for the adoption of GS1 open global standards for identifying, barcoding and tagging parts and components used across the Australian Rail Industry. “With the critical date of 1 January 2019 approaching, the ARA and GS1 have been busy running a series of supplier workshops in capital cities around Australia to get suppliers up to speed with the project and to learn about the range of tools and technologies available for the implementation of GS1 standards.” The workshops were very successful where operators shared insights with suppliers as they explained the benefits of the new rail requirements while suppliers asked questions about the integration of open standards with other technologies and the process for marking and barcoding. Mr Broad added: “The ARA has been working closely with GS1 Australia over the past six months to lay the groundwork for the 1 January 2019 commencement date for the i-TRACE initiative. This has involved working with rail industry members to ensure they are prepared for the implementation of GS1 global standards in the rail industry, which will deliver significant benefits for our industry. “These include more efficient and transparent inventory management processes and improved traceability across components’ lifecycles, which will deliver significant efficiency and safety dividends.”
The ARA and GS1 Australia have also successfully implemented a number of other Project i-TRACE initiatives and industry activities to gear up the industry for establishing the foundational data layer of standard and unique identification. “We held a Rail Day at the GS1 Supply Chain Week in late 2017 to exchange knowledge about the investment in GS1 standards and modern technologies available to improve reliability and quality across the Australian rail industry value chain,” Ms Ryan commented. Project i-TRACE also featured at AusRAIL PLUS 2017 where Ms Ryan spoke at the Rail Suppliers Stream about the benefits of standards for the identification of parts and components across the industry. An i-TRACE technical workshop was also held at the same event. Ms Ryan said: “Other activity in the industry has been our support to assist a range of operators including Melbourne Metro Trains, Yarra Trams, V/Line and Queensland Rail to move the industry forward. “GS1 Australia also partnered with Department of Industry, Innovation and Science to promote grant opportunities to assist SME organisations to work towards GS1 compliance in response to Project i-TRACE.”
JUMP ON BOARD “The focus over the next six months will continue to be working with GS1 Australia to support the rail industry prepare for the commencement of this important initiative,” added Mr Broad. To keep the industry up-to-date, a Project i-TRACE newsletter has been developed and is available to find out about the latest developments and how to get ready for 1 January 2019. Subscribe to Project i-TRACE news here: www.gs1au.org/project-itrace-news. For more information about Project i-TRACE, contact Bonnie Ryan at bonnie. ryan@gs1au.org, or Duncan Sheppard at dsheppard@ara.net.au. ■
THE PLACE TO GO FOR YOUR DAILY NEWS ON TRANSPORT & LOGISTICS www.TandLnews.com.au
13,500 monthly visitors
HAVE YOU SUBSCRIBED TO TandL’S FREE E-NEWSLETTER? TandLnews online offers breaking news and concise accessible coverage of current industry issues and developments. Delivered to your inbox every week!
REACH YOUR TARGET MARKET DIRECTLY BY ADVERTISING Advertise on TandLnews and reach over 13,500 monthly visitors. Simply contact our advertising manager below for more information or to request a media kit.
10,000+ news subscribers
UPDATE OR ADD YOUR COMPANY FREE OF CHARGE TO THE TRANSPORT AND LOGISTICS INDUSTRY’S NEW TRADE DIRECTORY The TandLnews team is building a directory for the transport and logistics industry that will be accessed by the 13,500 visitors who read www.TandLnews.com.au each month. In addition, every week, 10,000+ news subscribers will have access to the directory. If your business has anything to do with supply, manufacturing or procurement to or from the road, rail, sea or air transport industries, then you should take a few moments and ensure your business is included.
Ralph Merry T: 02 8586 6109 | E: rmerry@intermedia.com.au
MHD COVER STORY
Toshi (Tom) Nakazawa
CELEBRATING 50 YEARS IN AUSTRALIA TMHA CHAIRMAN’S INTRODUCTION Fifty years of Toyota forklift sales in Australia is a significant milestone and I want to thank our customers for their continued support and loyalty to Toyota Material Handling Australia. The mother company of TMHA is Toyota Industries Corporation or TICO, which has now been in operation for 92 years and has become the world’s largest manufacturer of forklifts. TICO has three main business sectors – Solution, which is material handling, logistics and textile machinery; Key Component, which includes air compressors and electronics; and Mobility, which is automobile and engine. TICO has been number one in the global forklift market share since 2002 and within this corporation material handling is the biggest business sector, accounting for more than 60 per cent of global revenue. 14 | MHD JULY / AUGUST 2018
Looking at the world material handling market, the USA is the largest market, but Australia as TMHA is an impressive eighth in the world sales volume as a single sales company. This shows how well we have been supported by our customers and means we can truly celebrate our 50th year anniversary. Now, we need to look to the future and where we can grow as partners. Toyota’s famed QDR – Quality, Durability & Reliability – is the base of our products. In addition, customer satisfaction is always Number One priority for Toyota. We will continue to enhance our quality services and product line-up, striving to stay ahead of the times and contribute to our customers as a Total Solution Provider. We thank you again for your continued support for TMHA and look forward to the next 50 years working together.
Toshi (Tom) Nakazawa, chairman, TMHA.
TMHA PRESIDENT’S INTRODUCTION Toyota forklifts have come a long way since the first rugged and dependable 5LR models were imported into Australia in 1968. A watershed moment occurred in 1999 with the launch of the 7-Series forklifts. At that moment we understood the value of Toyota’s extraordinary investment in research and development, and how it paid direct dividends for our customers. The 7-Series featured Toyota’s world-first System of Active Stability, a computer-controlled stability device protected by over 300 patents and developed in conjunction with technology from Toyota’s automotive division. It was not only groundbreaking technologically, but a true innovation in improving forklift
TOYOTA FORKLIFT MILESTONES
First Toyota forklift prototype sent to the automobile factory for three months’ testing.
1956 Toyota forklift LA, one-ton internal combustion model, is launched in March; towing tractor based on it launched in December.
1958 First Toyota forklift exports from Japan.
1959 New Toyota forklift factory built, capable of producing more than 150 forklifts per month.
1963 Toyota’s first international specification forklift is announced, the 5LR - it gives Steve Takacs
Toyota the lead in the twoton forklift market; first major export contract to Port of
productivity and efficiency, and most importantly, enhancing operator safety. This brings us to the current Toyota forklift, the magnificent 8-Series, which has built upon the legacy of the Toyota 7-Series and become the leading counterbalance forklift model in Australia. Toyota’s counterbalance forklift models have been Australia’s number one consecutively since 1987, representing 31 years of undisputed market dominance. To date, more than 50,000 Toyota forklifts have been sold into the Australian market. Backing this fleet is Toyota Material Handling Australia, which has a rental fleet of more than 23,000 units and a fully factory-owned network of 17 Australian branches. Those outlets are all committed to giving valued customers the best possible forklift products, coupled with the best possible people in the material handling industry. Our product lines have also expanded. TMHA is now proud to offer an unparalleled range of logistics and automation equipment to our Australian customers – including warehouse equipment, AGV (driverless forklifts), elevated work platforms, scissor lifts, sweepers and scrubbers, a comprehensive range of warehouse racking and state-of-the-art fleet management software. So, to our very valued customers nationwide, I say thank you for your ongoing support and for helping us achieve these truly amazing milestones. A lot has changed in the last 50 years, and it is truly a joyous occasion for TMHA to be able to celebrate this golden anniversary.
Singapore Authority.
1968 First Toyota forklift imported
1985-88 500,000th Toyota forklift produced; Toyota forklift exports exceed 200,000 units for the first time; 5-Series forklifts launched with improved operator comfort and full floating powertrain; local assembly begins in France and then the USA.
1992 One millionth Toyota forklift produced.
Mid-1990s 6-Series forklifts introduced with special attention to ergonomic design, increased productivity, easier operation, lower noise and improved styling.
into Australia.
1996
1970s
25,000th Toyota forklift sold in Australia.
Toyota builds the Takahama plant, the world’s largest facility devoted solely to
1999
specifically for industrial vehicles.
Toyota’s breakthrough System of Active Stability (SAS) introduced on 7-Series 1-3 ton petrol models, along with innovative AC power system and SAS on 7FB electric models; In Australia, Toyota wins national OH&S award for its in-house developed swingdown gas-bottle bracket.
1975
2000
manufacturing industrial vehicles; develops technology to address issue of air pollution, including positive crankcase ventilation.
1973 Toyota develops engines
Evolution of Toyota battery electric forklifts begins, with smoother control and 48-volt electrics; 3FBRE first Toyota reach truck with sit-down operator launched.
1978 4-Series forklifts launched with
Steve Takacs, president & CEO, TMHA.
1968
1955
improved travel speed and load handling.
Toyota acquires BT Industries and Raymond forklifts.
2001 Toyota combines all its lift truck operations into a single business area called Toyota Industries Corporation (TICO), later renamed Toyota Material Handling; TICO world congress held in Nagoya. MHD JULY / AUGUST 2018 | 15
MHD COVER STORY
THE BIRTH OF TMHA
T
oyota Material Handling Australia can trace its beginnings as the factory owned national distributor to the inaugural world Toyota industrial equipment congress in Nagoya in 2001. Toyota Industries Corporation (TICO, or TAL as it then was), had just purchased BT Industries of Sweden. In a breakthrough decision, TICO directors decided to create a separate forklift company in Australia – by buying Toyota Australia’s Industrial Equipment Division. “That happened in 2003, with Hank Ogata as the founding president and
CEO. Hank had extensive experience in TICO’s other acquisitions and amalgamations in France and the USA,” said TMHA president Steve Takacs. As a result, the Australian operation head-office grew in 18 months from 13 staff to 40, and to a total of around 350 staff. “Key people were left in place, because they knew their territory better than anyone else, as well as the product and the customer base.” The BT integration was a fouryear project as the new Australian team worked with TICO to create both a separate company for Toyota industrial equipment in Australia and to bring together the Toyota, BT and Raymond brands.
“With BT and Raymond products, we could supply 100 per cent of the warehouse equipment market place as a one-stop shop for material-handling equipment. Previously, we could only compete in 70 per cent of the marketplace,” Mr Takacs said. Toyota Industries Corporation Australia (TICA) officially incorporated BT Lift Trucks into its national operations on April 1, 2005, creating a company with one-third share of the Australian forklift market. TICA initially purchased the existing Toyota forklift dealerships in New South Wales and South Queensland, and progressively acquired the majority of other Toyota forklift dealerships nationally.
TMHA, WHERE TO NOW?
T
oyota Material Handling Australia is poised for even more exciting times in the coming years, as new technology and software create greater efficiencies, cost savings and safety increases. Fresh from the 50th anniversary celebrations for Toyota forklift sales in Australia, TMHA is looking to expand its distribution network, opening further branches, and broadening its product range – so customers can benefit from the company’s unique ‘one-stop experience’. President and CEO Steve Takacs pointed to the new branch in Toowoomba, which serves a fast-growing regional hotspot and its new airport. “Now, we’re looking beyond our traditional core product-base of forklifts, skid-steer loaders and towing tractors,” he said. “Last year we introduced a range of pallet racking. Next to arrive will be scissor lifts, lift platforms, and sweepers and 16 | MHD JULY / AUGUST 2018
“
For some time, Toyota has been operating semiautonomous forklifts that are intended to not only streamline functions such as order-picking but make it safer and more cost effective.
”
scrubbers. And the next 12 months will see more product lines. All these products will be supported by branch network service centres and a huge mobile service fleet. “There are synergies in offering these products, with customers who have forklift fleets also needing to keep large floor areas clean and maintain the interiors of high buildings.”
TOYOTA FORKLIFT MILESTONES
In terms of future material-handling products, the key word is ‘automation’. “The car industry shows us that this is the next big thing,” Steve Takacs said. “We are fortunate in the Toyota Group of companies, in being part of a global automotive leader. Self-driving cars are now in prototype production and the expectation for when we’ll see them in everyday use is surely a case of when, not if. “Already we’re seeing self-driving Uber cars and trial deliveries of fast food and parcels by drones, with more applications to come. “For some time, Toyota has been operating semiautonomous forklifts that are intended to not only streamline functions such as order-picking but make it safer and more cost effective. “Productive is of course the main advantage. But a secondary benefit is safety, with reduced risks on the warehouse floor – this is another excellent reason to embrace the new technology. “It is an area that will continue to grow and applications will become broader, as the technology becomes more sophisticated – particularly when it is coupled with the developing area of virtual reality.” Toyota’s massive year-by-year investment in research and development means its technology results in continual progress and refinement in material-handling technology and product. Advances such as lithium-ion batteries will see battery electric increasingly supplant internal combustion as the main fuel source for forklifts, with obvious benefits for both OH&S and the environment. Logistics companies, from giants to minnows, are increasingly relying on their equipment suppliers to develop solutions for new high-density warehouses. “Once again, this is an area where Toyota’s material handling engineers have access to the corporation’s automotive research and hence can take advantage of this ever-developing technology,” Steve Takacs said. “At the 2018 CeMAT fair in Hanover, Germany, Toyota Material Handling Europe unveiled its all-new Traigo 80, a 6-8-tonne payload battery electric forklift. It is a heavy-duty counter-balanced forklift with 80-volt electrics, so it rivals an IC truck for performance. This would have been unheard of just a few years ago.” Mr Takacs also said advancements in telematics will increasingly drive the material handling industry. “Just four years ago, Toyota Material Handling Europe devised, patented and launched one of the world’s leading on-board forklift fleet management systems. “Toyota ‘I-site’ was developed in Europe to provide a real-time GPS wireless on-machine monitoring and management protocol, to reduce cost, increase productivity and improve health and safety outcomes. “Now when we service major fleets we’re able to compare the performance of identical forklifts, sometimes on different sites or even different states, and provide a solution for the most productive use of each forklift as well as the entire fleet. “We can indeed look forward to the next 50 years.”
2018
2003
2012
Toyota Industries Corporation
A quarter of a century of Toyota IC counter-balance market leadership in Australia, achieving 34 per cent market share.
Australia (TICA) established to distribute and sell Toyota industrial equipment and one year later wins TICA Global Excellence Award; Toyota’s worldwide sales and supply network now covers 170 countries and 80 distributors.
2005 TICA becomes authorised Australian distributor of Raymond forklifts.
2006 Toyota’s 50th anniversary of forklift manufacture and 80th anniversary of Toyota Industries Corporation, which now has 35,000 employees worldwide; 8-Series 1.0-3.5-tonne forklift
A wave of TMHA branch activity, with new premises in Brisbane, Albury and Gladstone, and Toyota’s first direct presence in Darwin, Townsville and Tasmania.
2016 Toyota launches BT-branded Automatic Guided Vehicles – automated forklifts.
2016-17 TMHA wins back-to-back Toyota Material Handling International president’s awards for record years in 2015-16 and overall business excellence.
range launched.
2017
2007
25-year anniversary of Toyota skills contest in Australia, highlighting excellence in training forklift technicians; TMHA staff build show-stopper V8 forklift.
Toyota Material Handling, as it is now known, celebrates 21 years of consecutive Australian market leadership in counterbalance forklifts.
2018
2009
Toyota tops the Australian IC forklift market for the 31st year in a row and the overall forklift market for the ninth consecutive year, with approximately 5100 units sold in 2017.
World’s first engine-powered hybrid forklift launched – diesel-electric GENCO-Hybrid; new product action on several fronts with BT Reflex electric reach trucks, new pedestrian pallet trucks and 5-Series Huski SSL range, followed in 2010 by new electric towing tractors, in 2011 by 7-Series 6-8 models with segmentfirst SAS and in 2012 by new Raymond reach trucks, BT
For more information call 1800 425 438 or visit www.toyotamaterialhandling.com.au. ■
2012-13
Optio order pickers and 8FBN 4-wheel forklifts.
Ongoing The Takahama Plant, constructed in the 1970s, is continuously upgraded in equipment and facilities. Toyota’s industry-leading R&D investment in material handling equipment continues, giving customers leading QDR, safety, ease of operation and efficiency: the Toyota Advantage. MHD JULY / AUGUST 2018 | 17
MHD FEATURE
AUTOMATION IS THE STAR
The modular and scalable CarryStar can adapt to businesses as they grow and expand, or as needs change in dynamic markets
S
wisslog is introducing to Australasia its new CarryStar fully automated order fulfilment system, which combines automatic guided vehicles (AGV), KUKA Star Robots and the latest Swisslog SynQ software for optimum efficiency, flexibility, reliability and sustainability. The CarryStar will be displayed for the first time at CeMAT 2018 at the Melbourne Exhibition Centre from July 24-26 (Stand F12), along with live demonstrations of Swisslog’s new KMP600 AGV, augmented reality (AR) and virtual reality (VR) technologies, and the latest collaborative robots from its parent company, KUKA. Swisslog and KUKA’s highly advanced technologies and automation are designed to improve efficiency and return on investment for industries such as e-commerce, retail, food and beverage, pharmaceuticals, manufacturing, logistics, and fastmoving consumer goods (FMCG). The scalable and modular, fullyautomated CarryStar is suitable 18 | MHD JULY / AUGUST 2018
for small, mid-size and large layer and stack picking operations. With minimal fixed infrastructure required and the ability to grow as a business expands its operations, CarryStar is ideally suited to retail, FMCG and pharmaceutical companies looking for hygienic and efficient warehouse automation. The fully automated process starts with a pallet infeed station, where KMP600 or KMP1200 mobile platforms (carry bots) receive the pallets and transport them to buffer positions or the picking area around a Star Robot. These KUKA high-performance Star Robots are the workhorses of the CarryStar system, and can pick approximately 200-300 layers or stacks per hour to form mixed or rainbow pallets, depending on the requirements to fulfil the order. Once complete, Swisslog’s Carry AGV then transport pallets to the pallet wrapper where it also will be labelled, and finally to the dispatching area to be sent to the required destinations.
Productivity and sustainability can be enhanced by negative picking, which allows for the conversion of source pallets into order pallets to minimise wastage. The entire system is driven the intelligent SynQ software, which not only manages the system, but collects valuable data and uses this to recommend further efficiencies. “The CarryStar provides an insight into the factories of the future. It’s an automated pallet-to-pallet transfer of goods system that needs minimal fixed infrastructure to operate, making it suited to companies looking for hygienic and efficient warehouse automation,” said Swisslog Australia senior consultant Paul Stringleman. “The highly customisable nature of the machine makes it suited to dynamic businesses, where order fulfilment needs may be constantly changing. It also helps growing businesses, because modular units can be added on as the business expands,” Mr Stringleman said.
BENEFITS Scalable: The modular and scalable design allows for growth in line with business growth. In addition to needing only minimal fixed infrastructure, it does not require any conveyors, which adds flexibility when updating or expanding operations. CarryStar is well-suited to small, mid-size and large layer and stack picking operations. Flexible and sustainable: CarryStar’s safe and energy-efficient design provides traceability of expiry dates and batches, as pallets are scanned when they enter and leave the system. Source pallets are converted into order pallets to enhance productivity and minimise wastage. With minimal fixed infrastructure required (i.e. it does not use conveyors), it is flexible, hygienic and cost-efficient warehouse automation. Efficiency: Both quality and quantity are increased with the CarryStar, as one robot can palletise approximately 200-300 layers or stacks every hour, with error-free operation. Reliability: Fully controlled by SynQ software, CarryStar reduces picking errors. The high redundancy of the Carry AGVs’ performance allows the process to be managed effectively at any time.
COMPONENTS Carry AGV: An innovative and automated picking system designed to efficiently move the pallets around the CarryStar. These mobile vehicles combine Swisslog and KUKA’s extensive experience (KMP600 and KMP1200) in automation systems, hardware and software intelligence. The vehicles navigate using a grid of QR codes to deliver stacks to the Star Robots through the infeed, move the pallets around the robots, and to buffer positions, and subsequently deliver the racks to the outfeed for shipment. These AGVs are intuitive and safe, simultaneously reduce picking error rates and maintaining efficiency. Star Robot: These are chosen based on SKU, volume and the type of picking that will be completed (crate stack, carton and tray layer or mixed SKU stack picking). These six-axis robots are available in different payload capacities to suit different warehouses and stock picking needs. SynQ software: The machines are managed by Swisslog’s intelligent management software, SynQ. In addition to the core processes that are used to manage the AGV, SynQ also provides access to analytical tools. These tools evaluate and make smart decisions in a warehouse, based on gathered data. SynQ manages CarryStar to create an intuitive, efficient, data-driven and error-
free operation. SynQ also manages energyefficiency levels by using un-sequenced order data by SKU and pallet, re-sequencing this data for CarryStar by SKU and order pallet to result in minimal product pallet movements.
THE CARRYSTAR PROCESS 1/ Goods arrive in homogenous pallets. 2/ Pallets are automatically stored in the pallet storage area. 3/ The pallets move through an infeed into the CarryStar area. 4/ Once inside, the Carry AGV move the pallets around the robots and/or to buffer positions 5/ If in the buffer position they remain there until required and if so the Carry AGV move the pallets to the correct position. 6/ Alternatively, the pallet is positioned around the Star Robot, where pallets are picked (crate stack, carton and/or tray layer). 7/ The Star Robot layer or stack picks the pallets depending on whether a single SKU, mixed or rainbow pallet is required. 8/ Once pallets are complete, the Carry AGV move the pallets to the pallet wrapper, whereby the order pallets are labelled before they leave the CarryStar area via the outfeed station to the dispatch/shipping area, then loaded securely on a wrapping machine and wrapped efficiently. Carry AGV then move the secured pallets to the pallet labeller where they are labelled using SynQ’s intelligent software. 9/ Once complete, the Carry AGV move the pallets to the outfeed where they are ready for dispatch.
“
The highly customisable nature of the machine makes it suited to dynamic businesses, where order fulfilment needs may be constantly changing.
”
For more information call +61 416 865 553, email ruby.wannous@swisslog.com or visit www.swisslog.com. ■
MHD JULY / AUGUST 2018 | 19
MHD FEATURE
HYSTER GOES WITH HYDROGEN The new hydrogen fuel cell-powered forklifts can be fully re-fuelled in as little as three minutes, which saves significant downtime compared with battery operated forklifts, that can take up to eight hours to recharge. This means the whole fleet can be used to its full potential – maximising product and operator utilisation – and the gains in uptime and productivity.
HOW THEY WORK
H
yster claims to have released Australasia’s first hydrogen-powered forklifts. The forklifts are being demonstrated by Hyster for companies seeking environmental high performance, coupled with the convenience and workplace efficiency of rapid refuelling for maximum uptime. The new machines offer the performance and refuelling speed of typical conventionally powered alternatives, but with the sustainability of electric motors. The new forklifts comprise a productiontested Hyster range that is backed by the distribution and technical resources of the Hyster-Yale group, which produces forklifts in capacities from 1-52 tonnes. “The new hydrogen powered forklift trucks are aimed particularly at companies seeking the combination of environmentally harmonious indoor and outdoor performance, without having to interrupt production cycles or have vehicles out of service for lengthy charging or battery changing. The company believes that not only are these the first hydrogen powered forklifts in Australia or New Zealand, but also that such practical hydrogen-powered vehicles as these show the way ahead for a whole new generation of future-focused work vehicles. Hyster’s hydrogen-powered ranges – which complement its broader materials handling technologies – utilise durable high-performance Nuvera fuel cell systems, which are fast-fuelled power options that replace lead-acid batteries in Class I, II, and III electric lift trucks. The Nuvera fuel cell system is designed and built to provide customer return on investment over the lifecycle of the product. 20 | MHD JULY / AUGUST 2018
“
The new hydrogen fuel cell-powered forklifts can be fully re-fuelled in as little as three minutes.
”
Fuel cell vehicles are fuelled and refuelled by a hose from a dispenser in the same way that typical work vehicles and cars and trucks are refuelled at a petrol or diesel bowser. The hydrogen dispenser pumps hydrogen into the cell’s hydrogen storage tank. As long as the fuel cell is supplied with hydrogen and oxygen, it will generate electricity to power the forklift’s electric motor. In the process of the hydrogen fuel’s conversion to electricity through a chemical reaction in the cell, electricity is produced, and this is used to power the electric motor that drives the vehicle. The process is very clean because, unlike a conventional fossil fuel engine, a fuel cell doesn’t burn the hydrogen. Instead, it’s fused chemically with oxygen producing electricity and water, this being the primary emission from the vehicle giving the vehicle outstanding clean, green credentials.
WHO WILL USE THIS TECHNOLOGY? The sustainability delivered by Hyster’s new work vehicles is applicable to an entire range of future-focused industries, including particularly materials handling, manufacturing, warehousing, distribution and processing operations,. It is also directly relevant to major resources companies (such as mining, oil and gas) that are seeking to reduce their operations’ environmental footprint in remote and sensitive areas, as well as environmentally aware utilities including local authorities, energy, water and waste water engineering facilities and transport and automotive service facilities where workers may be exposed to environmental and workplace OB&S hazards. More information on hydrogen power is available here: https://bit.ly/2K0D4MR. For more information call Tony Kim on +61 2 9795 3842, email tony.kim@hyster-yale.com or visit www.hyster-yale.com. ■
NEWCASTLE: BIGGER & BETTER
C
rown Equipment is facilitating growth in the New South Wales Hunter region with the relocation of its Newcastle branch to a purpose-built, centrally located company-owned facility in Beresfield, close to the regional city. The new location, which benefits from the latest in environmentally friendly building practices, was selected for its proximity to major highways and convenient location for customers in warehousing, logistics, mining, manufacturing and agriculture. The site makes accessing Crown’s team of sales and service professionals easier for customers in need of material handling equipment, racking and shelving, dock levellers and other warehouse infrastructure. The branch houses new and used Crown lift trucks and a comprehensive array of spare parts. It also serves as a base for 18 Crown service vans to meet the needs of customers as far afield as Grafton, Inverell and Umina. Crown Equipment managing director Greg Simmonds said the investment in the new facility reflects the growing need for the company’s products and services in the area. “The recent growth in Sydney has had a knock-on effect in the Hunter region just as it has in Wollongong, where Crown has also recently increased its footprint,” Mr Simmonds said. “Our new branch is home to an experienced team that has been
meeting the material handling needs of customers in the region since 1982, with products that have been helping grow Australian businesses for over 50 years.” Mr Simmonds said the new branch also helps Crown meet its own goals of reducing environmental impacts, from both sustainably engineered products and better management of its facilities. “The branch’s building design incorporates new generation skylighting, highly efficient LED lighting and water-harvesting equipment,” Mr Simmonds said. “As they do at our Australian headquarters in Smithfield, New South Wales, these measures help to minimise the building’s environmental footprint and demonstrate Crown’s Ecologic sustainability philosophy.”
ELECTRIC HAND PALLET TRUCK LAUNCHED Crown has released the WP 3010 Series, a more compact and economically priced package that is now available Australia-wide through Crown’s national branch network and its online store. Designed and manufactured by Crown Europe in Roding, Germany, the WP 3010 features an AC drive motor combined with the e GEN regenerative braking system for performance, reliability, long battery life and maintenance-free braking. The WP 3010 Series’ short (500mm) head length, fork length of up to
1150mm, built-in charger and low weight (279kg without battery) make it nimble and convenient, suitable for back-of-truck work. Its load capacity of 1,600kg, heavyduty gearbox, robust helical gear set, optimised steel structure and hightensile steel forks ensure it is rugged. The WP 3010 Series also features the same cast aluminium Crown X-10 handle with easy-to-use-ergonomic controls used on the rest of the WP Series range. Crown Equipment director, sales and marketing Craig Kenchington said the WP 3010 Series’ competitive pricing will introduce the Crown product to a whole new market segment. “Crown has made a power pallet truck with compact dimensions, so it’s ideal for moving and positioning loads quickly and safely in confined storage spaces,” Mr Kenchington said. “In doing so, it has also compacted the entry price of the Crown WP Series. “This new model is perfectly at home doing kerbside deliveries, transport on truck beds as well as retail applications and even manufacturing environments,” he said. The Newcastle branch is located at 21 Yilen Close, Beresfield. For more information call 131 604 or visit www.crown.com. ■ MHD JULY / AUGUST 2018 | 21
MHD FEATURE With 11 acres of roof space, Combilift is one of the largest manufacturing operations under one single roof in Ireland.
COMBILIFT MEANS BUSINESS
2
00 new jobs will be created in Monaghan, Ireland, with the announcement that innovative forklift and MHE maker Combilift is to expand its workforce. The announcement was made at the opening of the new €50 million (AUD 80m) global headquarters and manufacturing facility. The 200 new jobs, to be created over the next three years, will be for skilled technicians, design engineers, logistics and supply chain specialists and those with mechanical and electrical mechatronics skills. Combilift currently employs 550 people for the manufacture of its forklifts and material handling products. When the company was founded 20 years ago, it had three employees, an innovative concept, and the ambition to make it a reality. Built at a cost of AUD 80m, the new 46,500sqm global headquarters and manufacturing facility will allow Combilift to double production. Established in 1998, Combilift currently exports 98% of its products to 85 countries through its 250-strong international dealer network. Combilift managing director Martin McVicar said the investment will 22 | MHD JULY / AUGUST 2018
enable Combilift to meet its ambitious growth plans. “We have employed an additional 230 people since we announced our plans for this factory in 2015, and we are planning to recruit an additional 200 in the next three years. The combination of this state-ofthe-art production plant and a skilled workforce will allow us to double production within the next five years.”
MASS CUSTOMISATION Mr McVicar attributes the company’s impressive growth to mass customisation. “Combilift has set the benchmark for the mass production of customised innovative products. Mass customisation is the new frontier for both the customer and the manufacturer. Increasingly, customers are expecting products to be tailored to meet their needs.” Since 1998, Combilift has been manufacturing customised products tailored to suit client requirements. “The flexibility in our new facility means that Combilift can continue to accommodate any customer request for a customised material handling solution,” said Mr McVicar. “The new factory enables us to double production
and remain focused on the needs of our customers and dealers.”
GROWTH OF COMBILIFT Established by Robert Moffett and Martin McVicar in 1998, Combilift is a privately held and fully capitalised company. It developed the world’s first multidirectional all-wheel drive IC engine-powered forklift in 1998. In its first year of operation, Combilift produced 18 units, 17 of which were exported. The company has more than doubled in the last five years and now has 40,000 units in operation in over 85 countries. Combilift’s product range has expanded way beyond its first multidirectional Combilift, with product development and customisation being a cornerstone of the company’s ethos, according to Mr McVicar.
NEW FACTORY The new 46,500sqm purpose–built factory is set on a 100-acre site with room for expansion. With 11 acres of roof space, it is one of the largest manufacturing operations under one single roof in Ireland.
Incorporating lean manufacturing processes with a focus on sustainability, the new factory will enable Combilift to double its output in a single shift across all production lines. Four, 90-metre moving assembly lines produce a finished truck every 15 minutes. 30% of its roof space is covered in skylights enabling staff to work in natural daylight without the assistance of artificial lighting. Lighting is provided through 1,100 LED lights with individual sensors. Solar panels supply 185 kW of energy with a 1 MW biomass plant fuelled by recycled wood (pallets, etc.) to heat the spray booths and assembly area. 110,000 litres of rain water is harvested for use throughout the facility. More than 50 truckloads of finished products are dispatched to 85 countries each week. Spare parts are also shipped across the world from Monaghan to the dealer network. Certified to international quality and safety management standards, the new headquarters and manufacturing facility has been awarded ISO 9001 international quality management system, ISO 14001 Environment Management and OHSAS 18001 Occupational Health and Safety Assessment Series.
“
Combilift founders Robert Moffet and Martin McVicar.
NEW PRODUCTS, TOO
The Combi PPT is a high-capacity powered pallet truck with carrying capacity up to 16mt, while the Combilift OP is the world’s first purpose-built order picker designed specifically for handling long loads. The Combi PPT comes with lift capacities of 3,000kg and 6,000kg, and models with even higher capacities of 7,000 to 16,000kg are available on request. The optional operator’s platform enables stand-on or walk behind operation. Equipped with the patented multi-position tiller arm, the Combi-HC-PPT offers safer operation, maximum operator visibility and narrowaisle performance. The Combilift OP features a long platform to enable the operator to access long products stored at height. It is fitted with guide rollers to enable it to operate in existing guided narrow aisles of just 1.4m, the same width as those needed for Combilift’s GT truck. It enables operators to easily and safely handpick orders for customers from the elevated platform and it has a capacity of 450kg. Its overhead guard, light anti-slip floor, self-closing platform gate and guard rails guarantee safety, as does the travel speed and steering angle, which automatically adjusts according to lift heights.
The opening ceremony of the Combilift factory also saw the announcement of several new models, amongst them the Combilift PPT and the Combilift OP.
For more information call Chris Littlewood on 1300 552 422, email Chris.littlewood@combilift. com or visit www.combilift.com. ■
The company has more than doubled in the last five years and now has 40,000 units in operation in over 85 countries.
”
MHD JULY / AUGUST 2018 | 23
MHD FEATURE
SEE AHEAD KEVIN HILL
How to increase efficiencies in your warehouses to compete in a global environment
W
ith the increasing competition from global players such as Amazon and Alibaba, logistics and supply chain managers in Australia need to be up to speed on new warehousing and logistics trends such as 3D visualisation of warehouses in real time to deliver efficiencies and a competitive edge. Managing the workforce and the associated costs of material handling is the single biggest challenge for all logistics and supply chain managers. For many years, warehouse labour management has been conducted using printouts, scanners and labels, and it has been notoriously hard to keep track of exactly where people were and what they were doing in the warehouse. With the trend for building bigger warehouses and mega-distribution centres gathering pace across the country, nowadays it is much harder to keep track of the workforce to 24 | MHD JULY / AUGUST 2018
really know who’s doing what and how they are performing when using a paper-based solution. Especially with the trend of more temporary workers being employed to supplement warehouse labour needs during key sales periods. Imagine how much more efficient your warehouse and supply chain would be if you could optimise the pick routes and pick paths. Your warehouse management and labour force would be optimised and you would reduce your company’s outgoings. JDA Software has recently partnered with SATO, a global barcode and RFID technology company, to offer logistics and supply chain managers a complete system for their warehousing labour management needs. Using SATO’s latest technology it is possible for warehouse and logistics managers to see a 3D visual warehouse in real time and adjust their labour needs as required. To help build insight on the performance of supply chain and logistics managers, JDA Software and SATO’s product involves workers wearing sensors that allow managers to track their movements in real time. This data is used to plan the route to the next pick location, detailing each
turn and advising the shortest way to get there. It also tells the worker if they’re in the right or wrong location when they come to pick. The time saved on warehouse travel alone is huge. In one sample with a customer, there was a 38% saving on travel time, based on multiple picks (picking 12 items on average). The actual travel time was reduced from four minutes down to two and a half minutes. This time saving translates into a huge cost reduction when applied across a substantial workforce. Using the data collected from the sensors, logistics and supply chain managers are also able to make detailed observations on the detailed minute-by-minute performance of workers and compare this to industry standards. This is because the device records where the workers go and how long it took, whereas in the past it was hard to tell until after it happened. The ability to view this data in real time makes it possible to identify any potential training needs as well as highlight any bottlenecks in the warehouse making it necessary to change the layout, for example, when everyone’s trying to get down the same aisle.
In addition, the warehouse labour management system allows logistics and supply chain managers access to the granular detail from the operational data of their warehouses so they can model and simulate situations, for example: if I change my forklifts to quicker models, how does that impact pick paths and the time taken to collect goods? According to Kerry Langley, head of SATO for Oceania, optimising pick routes and other aspects of warehouse operations using real-time feeds, and using that to leverage the system, opens up a number of opportunities for improvement. The technology will be hugely beneficial for managing labour force in real time. In addition, the ability to make better decisions based on time-and-motion analytics can generate impressive bottom line returns. The ultimate aim is to help supply chain and logistics managers plan for the future in their warehouses. Using the recorded data from the SATO visual warehouse, managers are now better equipped to forecast labour requirements for special events and ensure the stock is replenished to cope with the
“
The ultimate aim is to help supply chain and logistics managers plan for the future in their warehouses.
�
increased customer demand. The aim is to move warehouse labour management from the rear-view mirror - enabling the ability to forecast and providing a more statistical long-term and efficient view. Kevin Hill is the industry strategy director, sales, at JDA Software. For more information contact Nik Hinduja at JDA Software on +61 401836484 or email Nik.Hinduja@jda.com. â–
combilift.com Increase your storage capacity by up to
8
50%
VISIT US STAND E12
MHD SUPPLY CHIAN
SPOTLIGHT ON: MAL WALKER
OUTSOURCING TRANSPORT AND WAREHOUSING How to be successful when you outsource your logistics
O
ver the last 20-25 years, outsourcing of logistics activities to third-party logistics service providers has become increasingly popular. Key findings of the 2016 Third-Party Logistics Study: The State of Logistics Outsourcing (J Langley and Cap Gemini) indicate the following: • Although economic conditions vary significantly among countries and regions of the world, modest improvements have been experienced in many key areas. Armstrong & Associates reported aggregate global revenues for the 3PL sector growing by 9.9% from 2011 to 2012, 2.7% from 2012 to 2013, and by 6.5% from 2013 to 2014. • Users of 3PL services report an average of 50% of their total logistics expenditures are related to outsourcing compared to an average of 36% reported last year. 26 | MHD JULY / AUGUST 2018
This increase helps explain how improving economic conditions have impacted aggregate shipper spending on 3PL services as a percentage of total logistics expenditures. • This year’s Annual Third-Party Logistics Study reports that 73% of the shippers surveyed are increasing their use of outsourced logistics services, while 35% report a return to insourcing many of their logistics activities. With an expanding sector, and increased expenditure on thirdparty logistics, why is that 35% are returning to insourcing? What have they discovered, or struggled with, to the extent that its driven them back to insourcing? In this article I will outline, firstly, the reasons why organisations outsource logistics activities, and secondly, what the key drivers are for outsourcing success.
WHY DO ORGANISATIONS OUTSOURCE LOGISTICS OPERATIONS? There are many apparent motives why companies outsource, but from my experience there are four principal reasons:
1/ Warehousing and distribution management is not a ‘core’ skill. Peters and Waterman in their best seller In Search for Excellence identify one of the eight factors of organisational success as ‘sticking to the knitting’. They warn that companies that stray from their core business risk their employees’ attention being diverted from that business to the point where they lose focus. Many enterprises have taken heed and determined that inbound and outbound transport and warehousing are ‘consequential’ processes of their business, rather than ‘fundamental’ or ‘core’ processes. This has fuelled
growth of the third-party outsourcing industry and expansion of scores of logistics service providers. While many logistics service providers commenced as transport companies, they have diversified to engage in contract warehousing logistics, freight forwarding plus many other value adding services. On a world scale there are thousands of providers offering third-party services, yet there are only a handful of very large ones with the ability, network, systems and infrastructure needed for multinational customers. The top ten are:
COMPANY
USD MILLIONS
DHL Supply Chain
17,748
CEVA
4,933
Kuehne + Nagel
4,047
Wincanton
3,794
CAT Logistics
3,744
Penske Logistics
3,282
UPS Supply Chain Services
2,990
FIEGE Logistik
2,684
DB Schenker Logistics
2,338
Ryder System
2,318
Source: Transport Intelligence
2/ Performance is sub-optimal Related to the ‘core skill’ issue, often organisations that have a stratewgic focus, other than in transport or warehousing, cannot attain the desired performance levels and key performance indicators (KPI) required by their customers. For example, companies that have their own in-house vehicle fleets often struggle to deliver products on time. For instance, a service ratio of less than 98% of deliveries delivered on time is a major issue for modern consumers as they have become far more demanding. Merely dealing with the complexity of transport networks, contractors, inventories, industrial unions, and cost control is tough enough for many enterprises, so achieving 98% on-time performance is, for some, just a dream. On the warehousing front, checking performance against just a few industry KPI can quickly help managers determine how effective their operations are. Telling signs are low levels of inventory accuracy, low
“
Warehouses and vehicles are expensive to purchase or lease and can tie up millions of dollars that could otherwise be invested in the core business of the firm.
”
stock turns and low order output ratios per labour hour, high levels of unexplainable losses or damage to goods, high operating costs, customer performance complaints and high employee turnover. When these signs are evident firms often choose to outsource rather than waste time developing their own remedies.
3/ Reduction in asset capital Warehouses and vehicles are expensive to purchase or lease and can tie up millions of dollars that could otherwise be invested in the core business of the firm. Consequently, there is a trend for firms to remove warehouse assets from the balance sheet and redirect capital gained from the sale of assets to working capital and/or core asset investments. In choosing to outsource, firms can therefore transfer all the costs of distribution to their profit and loss account. This is a blessing for third-party logistics providers that have won large amounts of new business for this reason alone. MHD JULY / AUGUST 2018 | 27
4/ Flexibility and scalability With the advent of e-commerce, increasing globalisation and rationalisation of industries, today’s Australian market place demands fast, flexible and efficient supply chains. Coupled with shorter strategic planning horizons, the use of logistics service providers gives organisations flexibility to expand or change their method to market and volumes handled with almost immediate effect. Enterprises will typically negotiate one- to two-year agreements with Termination for Convenience exit clauses in case they wish to change their short- to medium-term strategy to market. It is simply not possible to respond quickly to market changes if there is a fully owned or leased network of warehouse and transport assets in place.
BUT WHAT ABOUT COST OF SERVICE? Surprisingly cost of service, although important, is seldom a deciding factor, or driver for outsourcing decisions. Why? Very rarely do companies save money through merely ‘outsourcing’ warehousing and transport. They 28 | MHD JULY / AUGUST 2018
may attain savings over a period e.g. 3-5 years, but not simply from the ‘act’ of outsourcing. The reason is elementary. Third-party logistics companies must pay almost the same operating costs as other organisations (sometimes more). While they do develop purchasing power and discount rates with transport sub-contractors and other vendors, there is often little disparity between the costs of a logistics service provider and would be customers. Why? The provider must add a margin to their costs to be profitable. In my experience the profit margin can range from 7-15%. This means that if a firm is seeking to bank savings after outsourcing they may well be disappointed. As a rule of thumb, companies can expect to pay from 10-20% more than current costs for outsourcing. You will recall the four reasons for outsourcing, to which cost is subservient. However, cost is a critical factor in judging the value proposition of potential providers who are quoting to do the work and in their ultimate appointment. So, to be clear, cost is not a reason to outsource, but a means to assist the decision as to whom to outsource.
THE KEY DRIVERS FOR SUCCESS IN A GOOD CUSTOMER AND 3PL RELATIONSHIP 1/ Strategic alignment
The outsourcing decision must align with the company’s strategic direction. This is a ‘common-sense’ statement, but unfortunately not well practiced. Amazingly, many companies have suffered after outsourcing decisions were made at an operational level, without due regard to the board’s supply chain strategy. Alas, in some cases, there is no supply chain strategy to speak of. This can cause organisational stress and is a nightmare to remedy after contracts are established. These days, thirdparty providers are aware that their clients may be deficient in strategy formulation, so they include clauses in contracts that enable them to change pricing and performance mechanisms.
2/ Attention to detail When seeking third-party quotations and contracts, there is no room for intuition, or best guesses on order velocities, volumes, processes and service requirements. Very
MHD SUPPLY CHAIN mistake. It must be a joint exercise. The best implementations are those that have a key member of the customer on the team to lead, organise and develop the relationship to full implementation with the provider. Such implementations are usually augmented by robust project management methods to ensure that all milestones are achieved.
4/ Raise potential issues early From my experience, issues that are not dealt with proactively and in good time can fester into ‘relationship breakers’ and end in disaster. Therefore both parties should take a long-term perspective and be mature in their outlook and approach, always avoiding disrespectful behaviour to the other party. It never helps if one party is kicking the other. During implementation planning phases representatives from each company should meet weekly to discuss implementation tasks. Some may argue that this is too often, but in my experience the regularity maintains momentum and full attention to successful outcomes.
5/ Use KPI to manage
detailed specifications must be prepared by enterprises with full disclosure of all available data before a quotation from service providers is attained. There is rarely too much information that you can gather. But where there is an absence of sensible interpretation of data, this can cause major issues in the outsourcing relationship. Surprisingly, some companies agree to pricing mechanisms that are based on Customer Cost of Goods Sold, Volume Sold or Percent of Revenue. On the surface these appear to be simple pricing gauges, but often they force one party, either the customer or logistics service provider to prosper or lose unfairly. The supply chain interactions of physical movement and electronic information is complex and overly simple charging mechanisms deserve scrutiny.
3/ Resource wisely Both during implementation and the ongoing partnership a competent team is essential. Each company’s team should include senior relationship managers from across the organisations, who meet regularly to discuss and monitor progress and performance. Too often, once an agreement is signed implementation is left under the stewardship of the logistics service provider. This is a
“
As a rule of thumb, no more than six KPI should be used. But make sure you choose the ones that are most meaningful to your business.
”
The contract and agreement should be subject to regular reviews of KPI. Data speaks volumes in terms of performance. For both warehousing and transport, KPI should be agreed at the outset. Typical measures include delivery in full on time, goods lost in transit, stock damage, ullage (unexplained loss or damage), inventory accuracy, time to receive goods, and time to dispatch goods. As a rule of thumb, no more than six KPI should be used. But make sure you choose the ones that are most meaningful to your business. In this way, a focus on the ‘facts’ can help remove ‘emotionally charged’ opinions or feelings by either party. Whether you are an organisation seeking to outsource, or a third-party logistics provider, by following these tips you will be equipped to enter into an outsourcing agreement that is ‘fertile for growth, and well placed to build into a mature and successful partnership. In my next article I will be covering the different types of outsourcing relationships and issues to be aware of when entering contracts. Mal Walker is manager, consulting with Logistics Bureau where he works with local and international organisations to guide them in specification preparation, establishment and review of outsourcing contracts. For more information contact Mal on 0412 271 503 or email mwalker@logisticsbureau.com. ■ MHD JULY / AUGUST 2018 | 29
WHO DOES IT WELL?
REVERSE LOGISTICS ROB O’BYRNE
I
t would be tempting to think of reverse logistics as forward logistics done backwards. Tempting, but wrong. Reverse logistics isn’t simply a reverse gear. Almost everything can change. Products come back in dribs and drabs, not in neatly packaged batches. They don’t come back to predefined schedules. They don’t even come back in the same state in which they went out. Reverse logistics can also have a dramatic effect on steering a company’s fortunes. Go one way and you can boost profitability, customer loyalty, and brand image. Go another way and you’ll leak dollars, lose customers, and even run afoul of regulations about what to do with stuff that people no longer want. Reverse logistics is therefore worth doing, and worth doing properly. Looking to real-life examples for inspiration, we can ask, ‘Who does reverse logistics well?’ Companies like Sears, Dell, and Zappos are often pointed to as models to follow for reverse logistics. Yet given the changeable nature of the beast, we also need to ask what ‘doing it well’ means in this context, especially if we want to know how much of others’ success can be applied to one’s own organisation. 30 | MHD JULY / AUGUST 2018
FIRST, UNDERSTAND ‘WHAT’ AND ‘WHY’ Let’s take a step back. Reverse logistics, while not being the opposite of forward logistics, is still about products moving backwards in the supply chain. Often, the term reverse logistics is used for products that have already reached the final point of sale or been bought by a customer. However, remember that products or subassemblies that never made it out of the factory may need to travel backwards one or more stages along the supply chain. This also qualifies as reverse logistics. Reasons why reverse logistics are necessary can be diverse. Customers may find a product to be faulty or unsuitable for their needs. They may have ordered more than they need. They may have simply changed their mind. Manufacturers may recall stock because of flaws or to replace older products with newer ones. They may recall inventory from retailers or reprocess it because it has passed its sell-by date or demand is insufficient.
MANY VIEWS OF REVERSE LOGISTICS PERFORMANCE Different parties judge whether reverse logistics is done well or poorly in different ways. For customers, the
quality of reverse logistics revolves around the ease with which they can return a product and be reimbursed. US retail pioneers Sears and J.C. Penney understood this a century ago, when they offered moneyback guarantees to their clientele. That meant that customers felt safe when shopping, increasing sales and customer loyalty. From a shipping standpoint, reverse logistics works well when the product being returned is routed directly to the correct location. In a manufacturing plant, reverse logistics performance is tied to the money or materials that can be recovered cost-effectively from the returned product. This might be by reselling, repairing, remanufacturing, or reclaiming parts of value. For regulators and the public, reverse logistics may be judged by how safe and how green the process is, for example, recycling products instead of throwing them into a landfill. Some estimates put product returns at 6% of total sales revenues. In addition, returns typically cost more to handle than outbound shipments – 3 to 4 times more for traditional retail companies, for example. Clearly, successful reverse logistics cannot be left to luck. A plan is necessary, possibly based on one of the following strategies.
MHD SUPPLY CHAIN REVERSE LOGISTICS STRATEGY 1: DON’T DO IT! We’re not talking about just sweeping returns under the carpet. Instead, we need a way to constructively avoid the need for reverse logistics. • Persuade the customer otherwise. IT vendor Dell, for example, handles requests for returns via its support organisation. Reps work with customers to get computers installed and working as required, rather than shipping them back. Customer satisfaction goes up, reverse logistics costs come down. • Pay for the return not to happen. Procter and Gamble developed its ‘zero returns’ policy a couple of decades ago. Also known as a swell allowance or adjustable-rate policy, there is no physical return of products. Instead the supplier (such as P & G) issues a credit allowance. • Get product marketing involved. Reverse logistics is often seen as the last part of a product lifecycle. Yet reverse logistics is largely the result of marketing and product design decisions at the beginning of the lifecycle. When marketing sees why products are being returned, it can improve product features like quality, packaging, and usability. • Forecast demand better. As market and buying trend data becomes more abundant and IT systems more connected, retailers can better estimate demand and adapt their ordering. Sectors like publishing of software, books, music, and so on, also offer another way to reduce returns. They increasingly make their wares digital instead of physical and sell on demand.
REVERSE LOGISTICS STRATEGY 2: MAKE IT PAINLESS Pain is a sign that something is wrong. When something is wrong, it usually ends up costing more, either in real money or lost opportunity. • Make it painless for customers. Increasingly, ecommerce vendors understand the advantage of an easyto-print, free-of-charge return shipping label for a customer to stick on a box and return by post. The cost to the vendor is compensated by increased customer satisfaction and brand loyalty. • Use simple, streamlined processes. Take the hurdles like who pays for the shipping out of the equation. Sort items early in the return journey, routing products directly to their correct destination, whether for resale, refurbishing, or other means of disposal. Note that this may require extra
“
Clearly, successful reverse logistics cannot be left to luck. A plan is necessary.
”
training for people who will do the sorting. • Automate. A barcode on a return label can be scanned, and refund, storage, disposal and other decisions taken automatically. Retailers have often been faster than manufacturers to move to the requisite technology.
REVERSE LOGISTICS STRATEGY 3: MAKE IT PROFITABLE It makes sense to run reverse logistics as a profit centre with corresponding KPI and metrics. Speed will be an important factor. The faster a returned item moves through the system, the greater the net value that can be recovered. • Design reverse logistics into operations. Network analysis will be crucial for finding the best configuration of return centres, given factors like retail locations and transport facilities with backhaul possibilities. Grocery retailers have been innovators here, obliged to maximise performance from returns in the face of already slim profit margins on forward logistics. Several large 3PL now leverage their resources to offer tailored reverse logistics services. • Design reverse logistics into the business model. Online shoes and apparel seller Zappos has made a name for itself with its return policy extending up to 365 days. Supported by reverse logistics, MHD JULY / AUGUST 2018 | 31
skilful product recalls ever, when it had its cyanide-adulterated Tylenol product returned from pharmacies and shops in 1982. Unfortunately, it did not exercise the same skill and transparency in recalling its Motrin product in 2009, to the extent that congressional investigators became involved to find out what was going on.
WHO WILL DO REVERSE LOGISTICS WELL IN THE FUTURE?
“
Now is the time to stand up and be counted among those who do their reverse logistics well.
”
32 | MHD JULY / AUGUST 2018
this becomes a means of encouraging consumers to buy more and to recommend Zappos to others. Zappos’ focus on products of a certain type and within a certain range of weight and volume helps simplify its reverse logistics processes.
DIFFERENT SOLUTIONS FOR DIFFERENT NEEDS There is no one-size-fits-all solution for reverse logistics, even within the same industry sector. In the fashion sector for example, US department stores like Saks 5th Avenue and Nordstrom have second-tier sales outlets (off-5th and Nordstrom Rack) to which they can hand off excess inventory at marked down prices. On the other hand, a very high-end fashion company might insist that all excess inventory was returned to the factory for recycling, rather than see its brand in low budget shops. In addition, getting it right once is no guarantee of getting it right the next time. Pharmaceutical company Johnson & Johnson conducted one of the most
The immediate future of logistics and distribution is omnichannel – order anywhere, buy anywhere, collect a nywhere, return anywhere, including web, post, and any physical point of sale. Recent survey information from magazine DC VELOCITY suggests that supply chains are moving towards omnichannel mostly to increase sales, market share, and customer loyalty. Improving margins comes in as a distant fourth reason. Yet margins are likely to be under even more pressure because of the added complexity of omnichannel reverse logistics. Good solutions are therefore likely to be specific to the supply chains they serve and leverage the specific configurations of those supply chains. For example, online retailer Amazon recently moved to buy physical retailer Whole Foods. For reverse logistics for this part of its business, Amazon could allow or even encourage any returns from online sales to be made in-store. This would increase the number of visitors to the physical store and decrease reverse logistics costs by batching together returns instead of transporting them one by one as small parcels. Whatever the reverse logistics solution, it will need to be planned. Also, it might not look anything like your forward logistics. But for all the reasons above, including financial, reputational, ecological, and regulatory, now is the time to stand up and be counted among those who do their reverse logistics well. Rob O’Byrne is a consultant, coach and author in the field of supply chain and logistics. He publishes regularly at www.logisticsbureau.com/blog This topic and many others are covered at Supply Chain Leaders Insights in Melbourne and Sydney this August. It’s a roundtable event for delegates to ask all their burning questions on supply chain. Experts from right across the industry will be running training and Q&A Sessions throughout the day. Readers can use the promo code MHD for tickets at only $47! Visit www.supplychainleadersinsights.com.au. All ticket proceeds will go to charity on the day. ■
MHD SUPPLY CHAIN
A
ERP GOES SAAS
s a leading retailer of kitchen, bathroom and laundry appliances based in Melbourne, e&s aims to ensure that all customers benefit from purchasing only the very best kitchen, bathroom and laundry products; from a stable of worldrenowned brands. This philosophy extends to how they deliver and install products to homes, offices and commercial building sites with their dedicated fleet of delivery vehicles. Customer service is at the core of the e&s philosophy and a key differentiator for them in a competitive market. In 2016, e&s set about a complete transformation of how they use technology to improve customer service and reduce costs. This transformation had four components: • Replace an aging ERP. • Optimise route for their vehicles subject to operational constraints as well as desired e&s policy. • Track deliveries using a mobile application that communicates in real time wit the planning engine. • Provide customers with visibility of delivery status using notifications sent directly to customers mobile device based upon the real time status of their delivery fleet. A key plank of the technology transformation was to ensure that it was all available via the internet on a Software as a Service (SaaS) basis. This avoided the requirement to purchase and maintain expensive IT infrastructure and allowed e&s to focus on the business processes and the data that feeds them. e&s selected a best-of-breed architecture with ERP from NetSuite, optimised planning and execution (proof of delivery) from Descartes Systems Group and Glympse for customer notifications. Whilst ERP and route optimisation software improves internal business processes and the e&s mobile application provides real-time location updates, proof of delivery and job status updates, they also supply the ‘fact base’ to enable the technologies that touch the customer directly. Having these in place has
led to one of the biggest impacts on customer service for e&s with the ability to provide real-time delivery status updates directly to the mobile device of end customers. “No one likes to sit around waiting for their deliveries to arrive, especially when it’s a substantial purchase that becomes a highly functional and visible part of their home,” said group managing director of Bestrane David Sanders. By incorporating Glympse technology, e&s is able to provide updates, real-time location information, and estimated time of arrival (ETA), including a live map of their technician on the day of delivery. “Today’s customers expect more. They expect retailers to inform them of delivery statuses and ETA... nobody wants to contact a call centre,” Mr Sanders said. “But providing automatic updates to end customers does require improved quality of internal business processes and customer data. What e&s has achieved is a great example of an ‘end-to-end’ reengineering effort.” By tapping on a link in the text message notification, the customer is able to see the Glympse Live View map that displays the approach of the delivery truck to their location and estimated time of arrival. The ETA and truck position on the road is displayed directly on the customer’s mobile device and updated every few seconds, in real time.
FEEL THE DIFFERENCE The impact to customer service was immediate. e&s CFO Adam White said: “Customers were delighted from the commencement of this upgrade. They benefited by being directly advised of their pending delivery. Not only did this allow them to ensure that they were ready for collection, but it demonstrated that our commitment to outstanding customer service extends right to the point of delivery.” Additional benefits that have surprised e&s have been realised through improvements in delivery efficiency. e&s warehouse & logistics Manager Craig Mills said: “We have noted a major reduction in the number
“
The customer is able to see the Glympse Live View map that displays the approach of the delivery truck to their location and estimated time of arrival.
”
of futile deliveries where the customer wasn’t at home. They can see us coming, so they can make sure that they are there! “Furthermore, there have been some great examples of customers actively preparing their sites in anticipation of their forthcoming delivery. This may be something as simple as moving cars out of the driveway to provide access for the delivery truck, but it reduces the time our teams are spending on site, which is leading to direct cost savings. Interesting, too, the drivers themselves have become key advocates of the system as they are directly seeing the benefits with reduced run times and delighted customers.” The Glympse concept can also be extended to other types of notifications including day-before, and links to post-delivery surveys as well as a platform for branding and delivery for very targeted marketing offers. “One of the watch-outs when using any system to contact customers directly is to make sure key company data is timely and accurate - you don’t want to send the right notifications to the wrong customer,” Craig continued. “We now have a solid fact base as we have had some great results so far, and look forward to increasing our reach to end-customers with other types of notifications.” This upgrade for e&s was designed, implemented and supported by Bestrane, the exclusive partner of Descartes Systems Group and Glympse in Australia and New Zealand. For more information visit www.bestrane.com.au. ■ MHD JULY / AUGUST 2018 | 33
WHERE IT COUNTS DAVID GONZALEZ
How to gain competitive advantage using logistics
L
ogistics has always been a critical component of a company's supply chain, but it’s historically been an overlooked and underinvested cost burden in many organisations. This is now changing, as companies such as Amazon and Alibaba disrupt the logistics industry by developing the function to a point where it’s now a differentiator that drives growth and delivers customer value. This is great news for the industry. Over the past five years, about $8 billion has been invested in the logistics sector globally by venture capitalists. In addition, the introduction of new technologies such as artificial intelligence, robotics and big data analytics has accelerated digitisation of the sector. Logistics isn’t without its challenges. Some companies readily point to growing capacity constraints, labour and talent shortages, increasing costs and fuel price fluctuations. However, some iteration of those challenges has been prevalent in logistics for as long as the function has existed. 34 | MHD JULY / AUGUST 2018
As company attitudes evolve, logistics is no longer just about dealing with issues such as reducing logistics costs, managing capacity constraints and closing service gaps. Today, it's increasingly enabling positive outcomes. To unlock greater and more sustainable benefits, organisations need to shift focus to enabling opportunities, such as investing in third-party logistics (3PL) partnerships, evolving their logistics strategy and maturity; and investing in logistics capabilities. Logistics leaders are working hard to change the perception of their logistics functions and to shift the conversation away from cost and toward value. There are a number of ways they are achieving this
1/ SUPPORTING OVERALL BUSINESS OBJECTIVE DELIVERY It may be wishful thinking on the part of chief supply chain officers to believe that every function within their organisation is perfectly integrated, aligned and in support of the overall business objectives. When it comes to logistics, many companies rollout what has become the industry mantra of "the highest level of service for
the lowest possible cost". A leading approach to logistics, however, must be more imaginative than that. Leaders are increasingly aligning their logistics strategies with the overall business goals, designing and deploying capabilities, processes and metrics that capture and demonstrate the logistics contribution to overall success. For example, linking how on-time and in-full deliveries contribute to growth in market share through customer experience, or how speed to market can influence long-term customer buying decisions and loyalty. One of the world's leading fastfashion retailers, for example, uses air freight to transport up to 70 per cent of inventory across its global network. The logistics function understands that given the average shelf life of the company’s products is a few weeks, they cannot afford to lose six weeks moving the product by ocean freight. By being more strategic in their thinking about air freight, this company is able to leverage the lower transit times to drive a range of benefits in other areas across other supply chain functions. The cost of air freight is more than offset by making new products available more often to customers who are willing to buy them now.
MHD SUPPLY CHAIN Logistics strategies are becoming more integrated as companies respond and adjust to the overall business climate. Assuming one course of action or direction is no longer good enough to support today's changing logistics landscape.
2/ GOING BEYOND RESPONDING TO DEMANDS Given the level of competition in every industry sector, companies are seeking to differentiate their offers and stand out from competitors. Companies like McDonald's and ASOS are best-practice examples of how to leverage logistics and use it as a competitive advantage. Expectations on the logistics organisation are so high that companies require their logisticians to think creatively about new solutions rather than simply seeking to process tasks. A great example is an industrial manufacturing company that successfully deployed a change to the way it engaged with suppliers, which significantly improved its transportation networks and broader distribution operations, including the efficiency of its warehouses. By simply negotiating to collect orders rather than having them delivered, shifted control of the inbound logistics process. It used transport as the differentiator. Thinking beyond what’s the traditional approach or accepted practice is critical to succeeding in logistics solution design and execution.
3/ ENGAGING LOGISTICS FROM THE BEGINNING Being at the end of the supply chain process stream means that logistics is sometimes considered somewhat of an afterthought. Consequently, it’s often left with an almost impossible task to deliver on its goals of
“
Logistics is no longer just about dealing with issues such as reducing logistics costs, managing capacity constraints and closing service gaps. Today, it’s increasingly enabling positive outcomes.
”
consistent and reliable service at the optimal cost. Companies that use logistics as a competitive lever start with what the customer wants, and therefore, they design into the process what needs to be made logistically possible to deliver it. They then work back along the supply chain to understand how upstream supply chain decisions can enable different logistics solutions and ultimately deliver the customer requirement. Some organisations are fixated on designing the perfect product with the latest materials and in the best manufacturing location. However, they often neglect to consider how that finished perfect product will get to the consumer in a timely, safe and cost-effective way. Empowering and engaging logistics at the start of the process saves time, effort and expense and uses logistics as the source of subject matter expertise that is best able to standardise or customise logistics capabilities across the organisation. One of the world's leading healthcare and beauty companies, for example, views logistics as a key enabler, not only of its supply chain organisation, but also of its overall business. Logistics doesn’t inhibit or constrain what the company is able to offer in terms of product portfolio or distribution services. But what it does do is set out the different possibilities and evaluates the risks associated with each one at the start of the supply chain decision-making process. David Gonzalez is a research director at Gartner, focused on supply chain. David has more than 20 years’ experience working with international supply chains and global logistics networks within the service, manufacturing and retail sectors. For more information visit www.gartner.com/supplychain. ■
MHD JULY / AUGUST 2018 | 35
LEADERSHIP DEVELOPMENT Is it money up in smoke?
SIMON POPLEY AND KIM WINTER
Y
ear after year organisations invest large sums in an attempt to improve their leadership capability as a means to create organisational cultures that deliver for customers and shareholders. Whether the organisation operates within upstream or downstream, manufacturing, resources, operations, logistics or the wider supply chain, in the majority of cases, many of these leadership development interventions deliver none of the intended promised changes in performance. In recent years, leadership development strategy and programs have begun to find traction in the resources sector and throughout the Australian supply chain industry, however, poorly designed, deployed and executed, the failure of leadership development programs can actually result in increased organisational cynicism and a further decline in employee engagement, as employees perceive management wasting money they have been asked to cut or save. Leadership development begins to be perceived as a waste of time, where leaders are seen to indulge themselves in management ‘love-ins’ and ‘off36 | MHD JULY / AUGUST 2018
sites’ in stylish hotels. The leaders who attend leadership development programs that fail to deliver can also be left feeling helpless, as despite completion of such programs they are still unable to cope with the demands their leadership roles expect of them. When the promised changes do not eventuate, and when employees do not experience the change in leadership behaviours promised, cynicism and resent are natural and predictable responses. If you want to understand how leadership development is viewed in your organisation, ask someone who is not privy to it. If the results of such programs are not visible here, it is likely they are not creating the change you seek. New research from the Centre for Workplace Leadership at the University of Melbourne, funded by the Australian Federal Government, on the state of Australian leadership, was published recently. The findings point to mediocre leadership capability being a systemic issue leading to poor business performance across Australian organisations. Many of these organisations are global brands. Without too much of a stretch of the imagination, it is likely the findings might be similar for organisations
in other countries as approaches to leadership development, globally, are not that diverse.
WHY DO LEADERSHIP DEVELOPMENT PROGRAMS FAIL? If an organisation were a garden and you were the gardener, to which plants would you give water and attention? The new shoots, the seedlings and smaller plants, or the mature trees? One of the key findings of this research points to a huge underinvestment in frontline leadership. For every $10 spent on senior leaders, only $1 is invested in developing frontline leadership. This has negative implications for creating a pipeline of future leadership and is impacting business performance. Again, imagine you are the gardener, conditions are harsh, and you only have limited water and resources to spare. Do you pour it over the established trees? Or do you sprinkle it over your precious seedlings that have just broken through the soil? At the moment, from a leadership development perspective, we seem to be preoccupied with watering the trees, a strategy that has not delivered
MHD SUPPLY CHAIN the required change. For organisations to flourish, it is clear we need to think differently about where investment is focused and how the development of leadership throughout the leadership lifecycle is approached. Many businesses in Australia and NZ tend to be very hierarchical, with most investment in the highest level of executive leadership. Treating leadership development as an elitist reward for making it to the senior ranks does nothing to move the organisation forward into a highperforming space, and focusing leadership development on so-called HIPO talent neglects the leadership experienced by the majority of employees in the organisation. Employees inherit failing, unsupported leaders, because the organisation does not consider them high-performing. This is a perfect recipe for low employee engagement, something we are all too familiar with. It is also a dereliction of a duty of care to those employees. Ineffective leadership fails to serve the legitimate aims of the organisation, and it also fails to recognise the potential and of individuals and teams.
“
DESIGNED TO FAIL?
If an organisation were a garden and you were the gardener, to which plants would you give water and attention?
�
The way leadership development programs are designed and structured is a key reason why they fail to deliver the desired change in leadership capability. Many development programs focus on what is termed horizontal development, that is, the acquisition of new skills and information. The premise being that leaders lack the required skills and information, therefore to become effective leaders they need to acquire new skills and information. This approach is actually leadership training and should not be confused with leadership development, though it does have its place. Leaders need to acquire new skills and information as thinking in the leadership space evolves. It is not this acquisition, however, of new information that builds inspiring leaders. What fuels leadership development is exposure to real-work situations where a leader's perspective taking capacity is challenged, and where, as a result of the experience, the environment creates in a leader an ability appreciate multiple differing perspectives simultaneously. That is to say, the leader is now able to sit comfortably
A NEW ERA OF LOGISTICS AUTOMATION IS HERE
Join us on Stand F12 on 24-26 July at CEMAT Melbourne 2018 Experience Swisslog and KUKA's smart intralogistic solutions and explore cyber-physical systems with virtual and augmented reality technologies that combine warehouse automation with robotics. Speak to one of our experts to discover how your business can benefit from a modular and automated solution that will grow with your business.
To learn more visit us at swisslog.com MHD JULY / AUGUST 2018 | 37
KEY ELEMENTS OF SUCCESSFUL LEADERSHIP DEVELOPMENT PROGRAMS 1/ Ensure a thorough collaborative diagnostic process is undertaken by an external independent party, which creates a clear understanding of the systemic challenges facing developing leaders in your organisation. 2/ Focus the investment where it will have the greatest sustainable impact on your pipeline of leadership. 3/ Continually adapt your approach to leadership development, understand that any leadership development program needs to continually evolve. What might deliver success today may not deliver the same success tomorrow. Successful leadership development is contextual, always be aware of the context. Programs that adapt to changing conditions remain relevant and deliver results. 4/ Leadership development programs need to be designed around exposure to real work situations. Real work situations provide the context and real-world experience for developing leaders where development can be directly translated into their daily leadership roles. 5/ Successful programs provide differing ways for leaders to develop, depending on their individual needs and context. Not one-size-fits-all, the approach must be multifaceted. 6/ Involving stakeholders in the development of leaders is a key element to assist in generating insight and supporting change. It is also a great way to build relationships with stakeholders. 7/ Build and maintain support structures such as coaching and mentoring programs to support and embed new ways of making sense of situations and to help embed new approaches to leadership. 8/ Identify clearly the ROI the BU/ organisation expects from the program(s), initiate related agreements, and hold all stakeholders accountable for the investment.
38 | MHD JULY / AUGUST 2018
with situations others might describe as paradoxical. The development experience may be described as the ‘heat’ in the experience: the leader is taken out of their comfort zone, where they are stretched into unfamiliar territory, where growth happens. Exposure to being mentally stretched in real-work situations provides leaders with the capacity to grow and develop; it is this realisation that cascades ongoing future development for many leaders. The knowledge that discomfort gives way to development and growth. Many leadership development programs are designed without first undertaking an extensive diagnostic process that identifies the key issues within a system that limit the development of leadership talent. It is unlikely that a diagnostic process undertaken internally can deliver the required insight, the premise being that you can't see the problem if you are already part of it. Internal politics and power relationships may also bias findings that identify unpopular issues requiring attention. This is not to say that an external diagnostic is not subject to bias. The promise of an ongoing business
relationship with a leadership development provider may be sufficient to taint the messaging the provider communicates to an organisation. The organisation is given what it wants to hear, rather than what it needs to hear. Perhaps the answer resides in a collaborative approach driven by a strong desire for authentic understanding? Many third-party providers of leadership development programs are selling products and tools, or what some term leadership systems. The sale of these products or systems forms the basis of the intervention. It is not necessarily what the organisation needs. It is unlikely that a range of leadership products will meet the unique needs of the organisation in question. It is not to say that certain leadership development tools are not useful, they can be. It is just to say that alone, they are not the solution to all leadership woes – buyer beware. We have all heard the adage “it takes a village to raise a child”. Well, it also takes a whole range of other people to help create amazing leaders. Leadership development programs need to involve stakeholders as an
MHD SUPPLY CHAIN integral part of the developing a leader's growth journey. Gaining feedback from these stakeholders on areas for development, and also progress against set goals, is a wonderful way to develop leaders and also a fantastic way to engage and build trust with key stakeholders. This is where being vulnerable builds capital in relationships.
TAKE YOUR TIME There is great pressure on leadership development practitioners throughout Australia & NZ to deliver changed leaders quickly, however, real change does not occur overnight. The industrialised world may have accelerated at light speed over the last 200 years, but human evolution moves at a much a slower pace. Human beings are slow to change, and change is hard for people to make. Leadership development programs need to be long enough to achieve the goals of development programs and embed new ways of leading. Leadership development programs that run over a few months have little chance of effecting sustained change. There is also a need for support structures to be in place, such as coaching and
“
We have all heard the adage “it takes a village to raise a child”. Well, it also takes a whole range of other people to help create amazing leaders.
”
mentoring programs to support leaders while they make sense of new ways of seeing the world, and embed those changes in the way they lead. Support is a key element of success in development programs. For many leaders being experienced differently by others is a painful process, support to develop new ways of leading and these new ways of sense-making of the world is key to success. The structures created by the leadership development program need to be left in place once the program has ended to ensure leader growth continues – they should not be considered temporary structures. Simon Popley is senior partner, leadership and coaching, and Kim Winter is the global CEO of Logistics Executive Group. Logistics Executive Group is celebrating its 20th Anniversary of talent acquisition, development and deploying bespoke leadership programs from their offices throughout Australia, Asia, India and the Middle East. Contact Simon Popley at email simonp@logisticsexecutive. com, or Kim Winter on +61 411 883 368, email kimw@logisticsexecutive.com. ■
making complexity simple KNAPP features its latest technologies and complete solutions for the fashion and textile industry in the limelight. The smart solutions for hanging and flat-packed goods adapt flexibly to suit your demands and guarantee an impressive appearance in any season. Trends come and go – KNAPP is always in vogue. The little black dress of intralogistics – the OSR Shuttle™ is your reliable companion for countless processes throughout the warehouse. The all-in shuttle combines more than 10 years of know-how and experience, ensuring safe, efficient and flexible processes. And you always have an eye on your fashion line – your collection is available whenever you need it.
retail solutions
Tailored to perfection.
KNAPP Australia Pty. Ltd. Lindfield, NSW 2070 | Australia Tel: +61 2 9413 8414 sales.au@knapp.com www.knapp.com
LOCKDOWN! Time to lock down supply chain risk
MARK LUKIE
VISIBILITY AND CONTROL
C
Visibility is often a major issue for manufacturers, with many not having access to enough information to assess their risk exposure, while others may not have the technical processes in place to assess risk. Part of the challenge here must come down to the extended and complex supply chains modern organisations run today — not just in manufacturing, but across all sectors. These supply chains can be large, complex webs of interdependencies through which products and services are exchanged; increasingly digital ones, too. But it can get difficult for IT managers to keep track of where their dependencies lie. This is a problem when it comes to cybersecurity. According to a 2017 threat report from the government’s Australian Cyber Security Centre (ACSC), sophisticated cyber activity against third parties — vendors that provide services to a company or agency – in a supply chain has increased. It states that the extent of the threat is largely dependent on the relationship between the outsourced provider and customer, and in particular, on the extent of the provider’s access to client networks and databases.
yber threats are a given today across geographical boundaries, industries and organisations of all sizes. But one sector perhaps more exposed than most is manufacturing, particularly as the industry becomes more automated and connected online. Many new innovations have transformed the industry, from robots operating automated warehouses to driverless vehicles and drones improving transport and delivery, chatbots enabling orders and returns, blockchain enabling smart contracts or traceability and authentication… and more. Unfortunately, these supply chain innovations also increase the risk of security vulnerabilities, with more access points for potential cyberattacks – and cybercriminals are finding them. Threats have the potential to shut down or significantly disrupt operations, or to put commercially sensitive information at risk. Nearly half of manufacturers have been the victim of cybercrime and a quarter have suffered some financial loss or disruption to business as a result, according to new research from UK manufacturing industry body EEF. Smaller manufacturers may think they don’t have anything that would be of value for a hacker, but their electronic links to larger companies may be seen as valuable, offering a backdoor into something far more substantial. All businesses along a supply chain must take cybersecurity seriously, particularly the way they handle customer or supplier data. 40 | MHD JULY / AUGUST 2018
SUPPLY CHAINS UNDER ATTACK The NotPetya ransomware attack last year demonstrated the damage cyber attacks can inflict on supply chains. In the first instance, the ransomware was seeded via a popular Ukrainian accounting software — high up in the digital supply chain. Once it spread
beyond its intended targets, NotPetya infected companies including global shipper Maersk and logistics giant FedEx, impacting countless other supply chains in the process. In Australia, production at Cadbury’s Tasmanian chocolate factory halted after the company fell victim. The bottom line is that suppliers and partners expose your organisation to huge extra risk. It just takes one phishing email to a contractor and the keys to your Amazon Web Services (AWS) data stores or network access could be in the hands of the black hats. They could also provide a channel for ransomware, email fraud and other types of malware. Irrespective of who is doing the attacking, however, it’s vital to start mitigating supply chain risk effectively. In fact, over half of respondents to the EEF study said they’ve been asked by a customer to demonstrate or guarantee the robustness of their cyber security processes, and 58 per cent have asked the same of a business within their supply chain. Unfortunately, just 37 per cent of manufacturers said they couldn’t do this if asked today.
THE COMPLIANCE BURDEN Aside from the financial and reputational repercussions of a major supply chain breach or related malware infection, organisations must also think about the impact of a new regulatory landscape. Regulators are increasingly keen to enforce greater levels of accountability and transparency around how consumers’ personal data is used and protected by organisations.
MHD SUPPLY CHAIN Europe’s General Data Protection Regulation (GDPR), which came into effect on 25 May, is a great example, impacting Australian organisations that have European customers. The regulation imposes strict requirements on the way organisations collect, create and use the personal data of these customers. The fines are significant for non-compliance. Closer to home, new privacy laws that came into effect in Australia in February regulate the reporting and notification of eligible data breaches under the Privacy Act. The Notifiable Data Breaches (NDB) scheme introduced an obligation to notify individuals whose personal information is involved in a data breach that is likely to result in serious harm, as well as the Australian Information Commissioner. These new regulations demonstrate how important it is to improve your vetting of partners and suppliers, ensuring baseline cloud and email security standards pass the new guidelines. Start by auditing all your suppliers and partners for compliance and ensure you write this into new contracts with them. Also consider:
“
Organisations that get a handle on supply chain risk and lock down threats via cloud and email channels will ultimately be in the driving seat.
”
• Mandating suppliers to put in place best practice security controls to bring them into line with your organisation. Consider email and web gateways, next-gen firewalls, back-up tools, web application firewalls and more. • Training supply chain staff with antiphishing awareness programs or ensuring that your partner organisations do. • Conducting background security checks on third party employees. Organisations that get a handle on supply chain risk and lock down threats via cloud and email channels will ultimately be in the driving seat. They’ll stand a great chance of escaping punitive fines and other financial and reputational liabilities stemming from breaches, but they’ll also be able to protect cloud-driven digital investments to accelerate differentiation and growth. Mark Lukie is a senior sales engineer for Australia and New Zealand at Barracuda Networks, with over 16 years of experience in networking, security, backup/disaster recovery, public cloud platforms, and systems integration. For more information visit www.barracuda.com. ■
AS JUNGHEINRICH
AS NEW!
Jungheinrich JUNGSTARS: Our best used trucks in 5-star quality • 12 Months truck warranty • 12 Months battery warranty • 10 days right of return
• Great diversity and quickly at hand • Attractive financing and service options • Availability of genuine spare parts during lifecycle
Jungheinrich
JUNGSTARS
«««««
www.ntpforklifts.com.au
MHD JULY / AUGUST 2018 | 41
MHD SUPPLY CHAIN
“
TIME TO MOVE
ONLINE
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.
”
Web-based delivery services are meeting the demands of the online economy
W
hen it comes to logistics, every business, no matter the industry, or where it’s based, has the need for an express parcel service. Whether it’s part of core business or for occasional ‘emergency’ deliveries, there is often the need for companies to quickly deliver important documents and small parcels. Traditionally, distribution, shipping and postal services have offered these types of services. However, with everchanging technology and instant access to internet services, there is increased demand for a service that is not only quick and convenient, but also delivers real-time information on your shipment. Increasingly, web-based delivery services have been filling this gap. These services, often offered as an-add-on feature to standard forwarding operations such as Rohlig’s web-based ‘Rohlig Courier’, essentially provide an online shipping platform for express, domestic and international shipments - one designed to make it easy for users to manage their express parcel shipments, from any location, at any time.
DOING IT ALL ONLINE Designed to be as simple as possible, these services demonstrate how providing customers an online portal for express shipping can streamline the entire process, 42 | MHD JULY / AUGUST 2018
making it much more efficient. The shipping process breaks down into five distinct stages: quote, book, label, pickup and track. The interactive dashboard relays all the information needed to manage deliveries, including shipping history, monthly spending reports, and access to invoices. Actions such as getting a quote are automated – useful as customers no longer need to make a call, send an email or wait for business hours before getting a response. The online workflow makes it possible to get a quick quote by completing a web form with the details of the shipment. If the price is right, one more click and the quote can generate an immediate shipment booking. When entering details of individual shipments, a database will intuitively bring up the addresses of regular shipping destinations to accelerate the process. Users then input details such as pick-up date and time, any customs related information and attach commercial invoice documentation to the shipment. All that remains is for the package to be prepared for pickup (with labels created by the system). Users can log into the system at any time, from any device, to manage their shipments, view the status of booked shipments, resend documents or download and reprint invoices. Shipment history is available for reporting purposes and data can be downloaded into a csv format for applications such as Excel.
IMPROVED VISIBILITY FOR STAKEHOLDERS Real-time visibility is critical to the supply chain. Using an online service offers realtime information on shipments. This means that a package can be tracked at any given moment via the website. For high-value shipments, most systems can customise important shipment notifications. For example, updates on shipments can be sent to stakeholders via email or SMS. Transparency on costs can be a big advantage, too. Typically, logistics customers may not know the final cost of a shipment until billing – usually long after the shipment had been delivered. This system allows the shipping costs to be invoiced at the time of booking – hugely advantageous when it comes to budgeting and forecasting.
ACCELERATING THE SHIPPING PROCESS One of the biggest advantages of online systems is time savings. If customers are able to initiate the booking process at any time of day or night without needing a response from the shipping agent, the whole process is accelerated. This means earlier collection of shipments and, in turn, faster delivery. Additionally, these platforms are designed to streamline the data collection process to make the booking process as quick and repeatable as possible. While most of these systems are currently web-based, the next logical move would be to create either a SaaS or Web App for companies with employees working on the move.
IN PRACTICAL TERMS Hedgehog Group is an Australian technology and logistics company specialising in managed services and permanent store fixture and fittings management.
Get real-time visibility into your warehouse activities for super speed action!
“
Products with larger dimensions required a different shipping option.
”
When using standard operating methods of delivery, Hedgehog began experiencing shipment delays that were affecting customers. The company wanted to increase the number and speed of deliveries in order to enhance customer service and boost the organisation’s reputation. The Rohlig Courier team worked with Hedgehog to understand these challenges and find a better solution for shipping their cargo. They found that the express service worked best for small parcels falling under dimension and weight limitations. However, products with larger dimensions required a different shipping option. The recommendation was a customised mix of consolidated airfreight services and express courier services. This resulted in more efficient operations, reduced shipment delays, a greater understanding of online parcel service advantages and limitations, and improved cost efficiency. Hedgehog was able to increase the number of shipments to customers by using two methods – express courier and air freight. This meant shorter delivery timeframes, operational improvements and cost savings. For more information visit Rohligcourier.com. ■
TYPICAL FEATURES OF ONLINE SHIPMENT MANAGEMENT SYSTEMS Moving to an online shipment management system can offer significant benefits for end-users of every size, such as: • Create and print customs documentation. • Download records, such as shipment history and financials. • Send email notifications and shipment updates to stakeholders. • Track shipments in real-time. • Cut administration costs. • Add third parties and set user permissions/security controls. • Platform can be available on most operating systems. • 24 hour access for shipment booking and management.
Visit jda.com/super-anz or call us 02 80351119
JDA Warehouse Management Solutions Scan here!
PLAN4DEMAND Realising the full potential of demand planning: let's start with the mechanics of good process
ROD HOZACK
I
n this series, we explore how the longer-term demand plan should play a more prominent role in businesses. The first two parts will deal with the key elements in setting up the demand planning and forecasting process, and later, we will explore what are the key behavioural elements, i.e. what do we do with the process and the outcomes when we get them. Demand planning and forecasting is a critically important ‘front end’ of not only supply chain planning processes but business planning processes. Often, however, the whole organisation misses the opportunity to use the demand plan – both in the short term and the longer term – to guide the rest of the business. The longer-term part of the forecast (or more appropriately, the demand plan) is often ignored by the sales team and there is often very little marketing overlay and input into setting direction for the longer term. Improving forecast accuracy is proven to have numerous significant business benefits, and best-practice companies are typically ‘all over’ accuracy, especially in the near term. Why is it, though, that the integrity of the longer-term demand plan does not always have the same focus? As 44 | MHD JULY / AUGUST 2018
one senior executive was overheard saying recently, “If you get the month right, then the longer term will take care of itself”. Unfortunately, there is a chicken and egg aspect to this statement as we’ll see later in this paper. The real reason probably lies in the inability, or unwillingness, to communicate bad news early. It is too common for the sentiment about the emergence of a gap to strategy later in the year, that is ‘we’ll deal with that when we get there’.
ANCHORING A fundamental psychological element is to have a mechanism to gain an objective view of the future. It is called ‘anchoring’ and is about making sure there are boundaries to the demand projections. The primary way to do this is to use statistical forecasting techniques and predictive analytics to ensure the sales projections are as objective as possible. Research has demonstrated that in many environments, statistical algorithms are better at predicting the future, at least in the short term, than human beings. Hence, statistical forecasting techniques can serve as a powerful anchoring effect, so any large deviations to projections that Marketing or Sales may suggest, can be anchored back to something
more objective. This tends to take the emotion out of the numbers and starts a dialogue on the differences in thinking and perspective instead. So that’s the good news. However, using only history to predict the future is fraught with danger. The two main issues are: 1/ Statistical algorithms rely on historic sales and the assumption is that the trend, or curve of ‘best fit’ from this past data, will continue – in other words, statistical forecasting won’t be able to predict what is going to be different about the future. 2/ This is linked to the first issue in that trend analysis and using algorithms is the easy bit, but what is critical about longer-term projections is predicting change. So what we really need to know is: a. When is the trend going to change? b. By how much is it going to change? c. How long will the change last? The problem we’re trying to solve then becomes: how can we use history, and our knowledge of the future, to create a robust longer-term demand planning environment, one that aligns with strategy and that everyone understands and trusts? What I mean by ‘understand’ is that while there is an acceptance that predictions are never going to be perfectly right, agreement
MHD SUPPLY CHAIN needs to be gained on the bandwidth of variability and inherent uncertainties in trying to predict future outcomes. This needs to be built into the planning process.
5 KEYS OF DEMAND PLANNING It is important to keep in mind the working assumption that the demand plan is the plan that underpins all other plans in a business, e.g. supply, inventory, financial, strategic, people, and infrastructure. Without this in place, plans are just unaligned guesses, and highly likely to be different from one department or function to the next. So, back to our topic of ‘Realising the Full Potential of Demand Planning’: there are 10 keys to making sure we have congruence between our demand plans and strategy – we will cover five in the first two articles and the remaining five in following ones.
ANNUAL PLANS
1/ Make sure the monthly management process horizon is at least a rolling 24 months “We used to take three months to do the ‘latest estimate’, and then another three months to do the budget ... this left only six months of the year to be actually doing anything valuable. Now budget is a significant non-event.” — A CFO’s delight When it comes to demand planning, many companies focus their time on the next month; maybe the next quarter. Thereafter the budget (and sometimes an un-reviewed statistical forecast) is inserted to flesh out the rest of the financial year, but this encourages ‘hockey stick forecasting’ (see Figure 1.), which is particularly commonplace when sales are consistently tracking behind budget. In this situation most organisations will still be forecasting throughout the year that they will achieve budget, so there is a resultant cumulative error, commonly known as bias.
“
Improving forecast accuracy is proven to have numerous significant business benefits, and bestpractice companies are typically ‘all over’ accuracy.
”
Figure 1. below. Figure 2. above. Typically, the gap between forecast and reality only becomes visible through a quarterly or half-year ‘latest-estimate’ process and then the solution is to just say something like, ‘with all the new initiatives we’ve put into plan, or that we can bring forward from next year, we’re still going to hit budget’. When the impact of these ‘recovery plans’ are time-phased into monthly buckets, the resultant graph looks Figure 1... ‘mission impossible’. The reverse situation is also true. If companies are tracking ahead of budget, there is a tendency not to show the full potential of the plan, and worse still, as they get towards the end of the year, push sales into the following 12 months. Imagine the chaos this causes if all other plans in the business are linked to those projections. Of course in such circumstances, people try to be clever and don’t link their plans directly to the demand plan, using their discretion to hedge against this ‘game playing’. Unfortunately, this results in multiple numbers; the value of integration is lost. So, what’s the solution? Some organisations resolve this by looking out to the end of the current financial year, and while this keeps some focus beyond the current quarter, it very quickly becomes compressed into conversations about ‘how are we going to end the year?’ This is also known as a ‘compressing horizon’ or the ‘accordian horizon’ (see Figure 2.). MHD JULY / AUGUST 2018 | 45
MHD SUPPLY CHAIN
More sophisticated organisations take the next step and insist on a monthly process that assesses an 18-month horizon and this at least gives visibility of next financial year, six months in advance. However, in reality, it’s barely enough, since many companies start their budgeting process around six months out, so the first cut of the budget, is only at that 18-month horizon. Anyone who has been in business for a little while knows that the first draft, or ‘roughly-right’ budget plans, become the anchor to which all subsequent deviations must be explained. So a better approach is to make sure the monthly review cycle has at least a rolling 24-month horizon (see Figure 3.). This means there are six months to get the first draft of the budget as good as it can be, but avoids a 12-month budgeting process. In this way, the senior leadership team gets a view of the next year’s plan in full, right at the time the financial year is starting. As the team learns more about the integrity of the underlying assumptions through 46 | MHD JULY / AUGUST 2018
Figure 3. above. Figure 4. below.
the execution of ‘this year’s plans’, the underlying assumptions about next year can be iteratively refined and applied in readiness well before the point of commitment. The result is that senior managers are so confident of ‘delivering this year’, they are freed up to focus on strategy. It may take two or three iterations before their confidence reaches the appropriate level, but the important thing is to make a start. It also makes the whole budgeting process a significant non-event – ‘significant’ in that it is vital to have a budget, but a ‘non-event’, because the budget comes automatically from the rolling monthly projections. These days, many companies are even projecting out to a 36-month horizon because they know how important it is to spend time anticipating future issues and opportunities, before they become today’s problems. If you think this is just hypothetical, when I left industry in 1996, our IBP process was routinely looking out 36 months, with technology that was way less sophisticated compared to what is available today. With the tools that are available today, there really is no excuse. A simple test of having a valid budget is that when the senior team looks at the opportunities and risks to achieving the plan, they are evenly balanced either side of the most likely outcome (see Figure 4.). Most companies, however, tend to 'bank' all their opportunities in their annual budgets, and then spend the rest of the year dealing with risks of not delivering the plan, which is not a very uplifting environment to be in. This article will continue in the SeptemberOctober issue 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. ■
MHD LAST WORD
WE NEED CONTROL Australia needs to take control of its international supply chain
TRAVIS BROOKS-GARRETT
S
ince 1998, with the sale of Australian National Line (ANL) to French giant CMA CGM, Australia has not owned its own container shipping fleet. In more recent times, we have privatised the Port of Melbourne, NSW Ports (Port Botany and Port Kembla) and the Port of Brisbane, the largest container ports in the country. This all begs the question: are we losing control of our international supply chain costs? Our domestic supply chain costs are inextricably linked to our international export competitiveness. The Australian Grain Export Innovation Centre (AEGIC) predicts that ‘supply chain costs are consistently about 30% – 35% of the total cost of grain production’. The Australian Logistics Council (ALC) believes that for every 1% increase in efficiency in the sector, GDP will be boosted by $2 billion. A number of current events are pointing towards increasing volatility in Australia’s domestic and international supply chain costs, most of which are beyond the control of Australia’s importers & exporters. This is typified by the recent introduction of an ‘Emergency Global Bunker Surcharge’ by the world’s largest
container shipping lines, with Maersk first introducing the charge of USD 60 per twenty-foot equivalent unit (TEU), quickly followed by ANL (USD 55 per TEU), CMA CGM and others. While the US Government was able to enforce a mandatory notification period for American shippers, no such requirement was placed on the shipping lines operating in Australia. The shipping lines have presented an argument that the extra surcharges are justified with increases in bunker fuel prices (Maersk has claimed increases of 20% since January), but shippers have rejected these claims on the basis that this should be captured in their freight rates. The global shipping line market is experiencing a period of aggressive consolidation, which is making any pushback on rates and charges much harder. According to Sea Maritime Intelligence, the 10 largest carriers now operate around 80% of global capacity, compared with a little over 10% in 1998. There is some risk in Australia’s dependence on foreign shipping lines. According to the Department of Infrastructure, Transport and Regional Development, 99% of Australia’s trade by volume is carried via sea freight. The Australian Peak Shippers Association (APSA) is the peak body for Australia’s sea freight exporters, designated under Part X of the Competition and Consumer Act 2010 and by the Federal Minister of Infrastructure of the Day. APSA was first designated by the Minister in 1994 with the specific role of protecting the access of Australian exporters to regular and affordable shipping line services. With the major consolidation of shipping lines, this role is more important than ever. APSA also has a role in negotiating the ‘Minimum Levels of Service’ that foreign shipping lines provide to the Australian market, including the frequency of sailings, the TEU capacity and the reefer capacity. In addition to shipping lines, importers and exporters are
also seeing major increases in ‘infrastructure charges’ imposed by the major stevedores in Sydney, Melbourne, Brisbane, Adelaide and Fremantle. In the case of DP World Australia in Melbourne, this represents an increase of more than 1000% in a 12-month period. The stevedore charges have been introduced to ‘tax’ port users for entry to the terminal. While this is not directly connected to the privatisation of our ports (the ports lease land to the stevedores), some freight commentators have drawn a connection between the two events. Major supply chain cost increases don’t just sit with the private sector. The Federal Government has recently introduced a ‘Biosecurity Levy’ in this year’s Federal Budget. The Biosecurity Levy has been announced as $10 per TEU on every laden or empty container imported into the country. This fee will be levied by the stevedores. Industry is concerned that this revenue will not be used to improve frontline services at the Department of Agriculture and Water Resources (DAWR) but will instead be funnelled to general consolidated Government revenue. Industry was not advised of this budget measure before the announcement. Ultimately, global markets are becoming more competitive. The Black Sea Region is competing with Australian grain exporters in our traditional markets. If our domestic supply chain costs – our toll roads, our stevedores, our shipping line rates – are more expensive than our competitors, it makes life hard for our exporters. At a time when the Federal Government is developing a National Freight & Supply Chain Strategy, these conversations are more important than ever. Travis Brooks-Garrett is a director of Freight & Trade Alliance and the Secretariat for the Australian Peak Shippers Association. For more information email tbrooks-garrett@ftalliance.com.au or visit www.ftalliance.com.au. ■ MHD JULY / AUGUST 2018 | 47
UTS THE FIRST UNIVERSITY TO JOIN AUSTRALASIAN SUPPLY CHAIN INSTITUTE
A
ustralasian Supply Chain Institute (ASCI) and the University of Technology Sydney (UTS) are pleased to announce UTS as the first University to become an ASCI Corporate Member, taking an active role in ASCI’s mission to professionalise Supply Chain Management in Australia (Professional Registration). ASCI has collaborated with UTS for the past five years, and will now be able to enrichen its programs with relevant and focussed learning opportunities for ASCI members as UTS seeks ASCI Endorsement for supply chain management programs and courses
including Master of Strategic Supply Chain Management programs and the MBA major and sub-major in Operations and Supply Chain. This program is designed for practitioners and students who wish to gain significant insight and skills in supply chain and value network management, procurement strategies, operations and logistics management, complexity and risk management, as well as services productivity and data analytics. The collaboration between ASCI and operations and supply chain group from UTS will help to achieve the objectives and goals of the various programs UTS Business offers.
UTS will benefit from the Corporate Membership’s unlimited ASCI Memberships for our staff and PhD students and exposure to a professional network in the supply chain community; presentations to the community; free resume uploads to the ASCI Supply Chain Careers site, resources; scholarships and internships as students and graduates build careers in supply chain management. UTS staff and PhD students are also available to ASCI members to assist in research, customised training programs, and assist and participate in ASCI events.
Demonstrate your organisation’s commitment to supply chain best practice and excellence and find our more information about our Corporate Membership offerings on 1300 557 175, enquiries@asci.org.au or visit www.asci.org.au/membership/corporate.
48 | MHD JULY / AUGUST 2018
MHD ASCI
CORPORATE SPONSORSHIP WITH AUSTRALASIAN SUPPLY CHAIN INSTITUTE
T
hrough education, support and volunteer work, ASCI Corporate Sponsors are service providers who have a proven track record of assisting to develop and sustain the Australian supply chain community. In partnership, ASCI Sponsors work with ASCI to develop member benefits that add true value. Becoming an ASCI sponsor demonstrates and promotes your company’s commitment to the supply chain community. ASCI Corporate Sponsorship delivers five key benefits to your organisation: 1/ Aligns your brand with Australasia’s premier professional supply chain community since 1963
2/ Demonstrates your commitment to the supply chain industry 3/ Generates valuable relationships and partnerships 4/ Creates opportunities for you to be seen as a thought leader 5/ Creates opportunities to collaborate on exciting new member services
SO, WHAT ARE YOU WAITING FOR? Call the ASCI National Office today for more information to be ASCI Corporate Sponsorship! Contact 1300 557 175, enquiries@asci.org.au or visit www.asci.org.au/corporate-sponsorship-0
HOW MANY TYPES OF CORPORATE SPONSORSHIP ARE AT ASCI? Type 1: Premium sponsorship for $25,000 per annum Type 2: Thought leader sponsorship $10,000 per annum
Join our community by registering to our newsletter via our website, to receive valuable content, webinars, news and participate in forums or networking events. 1300 557 175 | enquiries@ASCI.org.au | www.ASCI.org.au MHD JULY / AUGUST 2018 | 49
MHD NEWS FROM SCLAA
CHAIRWOMAN’S REPORT
T
AMANDA O’BRIEN
“
By 2050, the number of people living in cities will triple and put pressure on energy demands and generate more pollution.
”
he SCLAA continues to grow its presence in global markets. Attending as a guest of LogiSYM for one of Asia’s largest logistics and supply chain conferences in Singapore, it was evident that supply chains face the greatest challenge in the next decade. Resilience, innovation, and internal capabilities of organisations were highlighted as key themes to sustain long-term viability. The ability of companies to maintain speed and flexibility in a highly technological market are essential to sustaining robust supply chains. There are great benefits generated from increased supply chain pipeline velocity, profitability and performance. The two-day conference was hosted at the NUSS Kent Ridge Guild House in Singapore and brought together 300+ shippers, manufacturers, 3PL, forwarders, logistics professionals, educators and technology solution providers from around Asia. This is the fourth time LogiSYM has hosted an event in Singapore in partnership with the Logistics and Supply Chain Management Society, and the symposium aimed to bridge the gap between supply chain concepts and technology and real world implementation. We need to collaborate to compete and can we really predict the next 40 years, or even a decade, of what requirements are needed in the supply chain areas? Certainly not. In the new normal everything and anything is possible. We have come to expect natural disasters and faster choices. We are already working in the midst of megatrends, globalisation, urbanisation, shifting economic powers and scarcity of natural resources, next generation technologies and climate change. Efficient urban logistics is an increasing requirement and distribution centres or hubs on city outskirts will be required to accommodate increasing population and demanding consumer driven online buying.
ARE THE AIRPORTS BIG ENOUGH? The existing capacity of airport terminals needs to be taken into consideration and new and expanded terminals are needed to handle the growing rates of inbound airfreight. By 2050, the number of people living in cities will triple and put pressure on energy demands and generate more pollution. Air pollution will be a growing problem and more than half the world’s population may not have adequate access to water. 50 | MHD JULY / AUGUST 2018
We need to protect our energy grids from natural disasters, blackouts are becoming commonplace. Global transport demand will grow by 50% by 2050 and green urban neighbourhoods will be important to sustain our standards with population growth. Freight is set to grow threefold between 2018-2050 so electrical rail, greener transport modes and moving 50% of road freight over 300km by rail will be critical not only to our roads, which suffer gridlock, but also problems to energy efficiency that are yet to be solved. Utilisation of road freight is important as 20% to 40% improvement in load and maintaining existing vehicles more effectively to cut energy use and emissions per tonne or kilometre, will give us more robust trading environment. Key issues for trade are: 1/ Infrastructure development. 2/ Carbon efficiency in transport. 3/ Supply chain visibility and security. 4/ Customs regulations. 5/ International trade agreements procure a reduction in red tape.
WOMEN IN TRANSPORT Presenting at the 2018 Transport Women Australia Limited ‘Creating Connections Conference’, it was evident that transport, both domestic and international, is growing in complexity and diversity. The panel discussion highlighted the challenges and opportunities the freight industry will have over the next decade. It has been said and proven that more diversity in companies, and particularly in the supply chain, leads to growth and economic benefits. And on the horizon, the SCLAA’s Women in Logistics 2018 ‘The Great Debate Luncheon - Progress or Paralysis?’, to be held on Friday 3 August in Melbourne, will gather leaders in industry to discuss today’s changing climate and the reality of women working in the logistics industry. The SCLAA is hosting a multi-generational, multigendered panel discussion. Please go to the ‘Women in Logistics’ event page on the SCLAA website to book for this event. For more information on how you can join the association and take part in the awards visit the website sclaa.com.au or call our secretariat on 1300 364 160. Amanda O’Brien is the national chairwoman of the Supply Chain and Logistics Association of Australia. Email amandao@xtremefreight.com.au. ■
Save 50% off MHD
Supply Chain Solutions Subscribe to MHD for only $39.00 for one year!
MHD Supply Chain Solution JULY / AUGUST 2018
REVERSE LOGISTICS
It isn’t simply a reverse gear
s
COVER STORY
Celebrating 50 years inNormally Australia even And Toyota is poised for come more exciting times to
$78
DEMAND PLANNING Realising its full potential
CE
A LEBR TING
IN FOCUS:
MATERIALS HANDLING AND MANAGEMENT
19 6 8 2 0 1 8
For over 45 years, MHD Supply Chain Solutions magazine has been bringing its readers leading-edge supply chain management information from the world’s leading thinkers and practitioners, together with in-depth case studies and the latest innovations in equipment and software.
To subscribe, simply call us toll free on 1800 651 422 and quote MHD18 *Available for delivery within Australia only.
LEARN. CONNECT. WIN. THERE’S NOTHING LIKE MANHATTAN EXCHANGE. OCTOBER 25TH 2018, GRAND HYATT MELBOURNE
Seize the opportunity to meet, learn from and be inspired by true pioneers in the world of supply chain and commerce. Manhattan Exchange is a one-day, can’t-miss event featuring: keynote presentations, special guests, retail technology and supply chain technology breakouts, thought leadership roundtables and great networking opportunities. Speakers include: Dylan Alcott Paralympian Gold Medallist and 4-time Grand Slam Wheelchair Tennis Champion
Catherine Van Der Meulen Event MC
Eddie Capel President and CEO, Manhattan Associates
And speakers from these leading companies:
More exciting announcements coming soon.
REGISTER NOW:
www.manh.com.au/exchange * Registrations are strictly limited to individuals who work in Supply Chain, Operations, IT, eCommerce, Customer Engagement and Logistics-related roles in retail, wholesale, transport and manufacturing. If you are a service provider or consultant and would like to attend, this can only be done through sponsorship.
SUPPORTING PARTNER