In early April I had the opportunity to visit Promat 2019 in Chicago. Promat is North America’s largest materials handling equipment and systems exhibition, featuring over 950 exhibitors and 150 educational seminars. Read more
Amazon continues to change the face of retail and recent news hints that the e-commerce giant will have a greater impact on logistics providers in the future. The retailer recently ramped up its ocean freight services and has begun trying to woo shippers from FedEx and UPS as it aims to gain more control of its supply chain. With Amazon showing no signs of letting up, this could signal changes that may bring great transformation to the supply chain industry. Read more
The Amazon effect
Industry experts are still divided on the impact services like Amazon Prime will have on the retail sector. Many believe the behemoth doesn’t do enough to differentiate itself in Australia, and that consumers are unlikely to get on board – however Woolworths CEO, Brad Banducci, calls it out as a new benchmark in terms of consumer expectations of delivery.
“We think Amazon Prime is the key vehicle, we see them being successful with that in the US and we will simply need to be better at on-demand,” he said, in line with the news of Woolworths-owned Endeavour Drinks Group’s 4.5 percent sales increase. “F18 was the year of pick-up for us.”
In the US, more than 50% of shopping journeys start with Amazon – and there’s no reason to believe Aussies won’t follow suit.
Amazon’s logistics, product range and deep knowledge of its customers pose a significant threat to Australian retailers. The e-tailer knows everything about its customers, to the point where it can predict what they will buy based on past transactions, and what they might like to buy in the future.
“Unless you’re using data effectively, you’re fighting with one arm tied behind your back.” Jonathan Reeve.
According to speaker, author, e-commerce fulfilment consultant and General Manager of Eagle Eye ANZ, Jonathan Reeve, local businesses are too focused on selling. “What I’ve seen over the last 17 years is that 80% of everyone’s attention has been on the digital challenge of selling,” he says. “The physical challenge of actually getting the products to the consumer has been given 20% of their attention.”
This trend needs to be reversed, says Reeve, as customers are buying an experience. They want cheaper and more convenient delivery, and that is what Amazon is providing.
With the entrance of Amazon, the continued presence of eBay and local operations like Catch.com.au, e-commerce in Australia will continue to grow rapidly whether we like it or not. To survive this surge, retailers must enhance their ability to collect, analyse and store data, and collaborate with other businesses and consumers to offer better service and better delivery.
“Customers are buying an experience. They want cheaper and more convenient delivery, and that is what Amazon is providing.” Jonathan Reeve, General Manager, Eagle Eye ANZ.
The changing face of brand loyalty
According to Councillor Susan Riley, who is responsible for the City of Melbourne’s Small Business, Retail and Hospitality portfolio, “customers come back [to boutique stores] because they like you and they know they’re going to get the service they want. Online doesn’t provide that.
“Online is a real issue for Melbourne. So many customers come in to the store – look, feel, shake – and then go buy it online,” she says.
But brand loyalty looks very different than it used to. The in-store/online balance is key for small businesses – they must become more experiential, so that people will come in-store for the activities that surround the buying experience, as much as the buying itself.
Retail industry executive at Telstra Gareth Jude said: “Based on our studies, Australian retailers achieve up to 20% attachment rates on sales for click’n’collect. Customers buy online then come in-store – and because of the great service and experience they’ve received, they decide they need to purchase something else while they’re there.
“Boutique retailers can complement their physical, in-store experience with an online presence and function.”
While Councillor Riley may be concerned about the notion of a “city of empty shops”, e-commerce provides a significant value-add for physical retailers. As Localz’ CRO James Westlake explains, when you use Woolies’ click’n’collect, you go in to pick up your shopping – but you browse around and shop in-store first before picking it up. Or even if you don’t, by the time you get home, you’ve forgotten something you needed to include in your order.
“Brand heritage now is a reduced value compared to convenience,” he said. “When a retailer gives customers back the time they were going to lose [by enabling them to shop online], they reward the business by doing more shopping. Gifting customers this time is what creates brand loyalty.”
Mr Westlake refers to UK clothing company, River Island, as another example.
“River Island has repositioned itself as a tech company that sells clothes, so it can fulfil customer journeys. It realises clothes are its commodity – but its ability to form a relationship with its customers and help them with their lifestyle is what maintains brand relevance and loyalty.”
For High Street stores, brand is something that keeps their customers coming in the door. But now shoppers can come in the door, try something on, then go online to buy it – with next day delivery included and at a lower price than in-store.
Today’s retailers need to consider brand value versus convenience. If you’re relevant to your customers at this moment, they will like you. If you’re not relevant, the customer won’t be interested.
So, what is the answer for small and medium-sized retailers who can’t count on brand loyalty to get customers through the door (or clicking online?) According to Localz’ Louise Robertson, they need to become more experiential.
“Where you used to find a coffee shop on the high street, today you’d find a coffee shop in the back of a hairdresser’s, or with art on the wall,” she said. “Businesses are merging and becoming more experiential, which is critical for them to reinvent themselves. It’s not good enough to do what they did 20 years ago.”
“We think Amazon Prime is the key vehicle, we see them being successful with that in the US, and we will simply need to be better at on-demand. Brad Banducci, CEO, Woolworths.
Data is knowledge is power
Consumers want complete control over their experience – and to provide this, businesses must know their customers intimately.
The key to getting e-commerce right comes down to data – and lots of it – about your customers and their habits, likes and preferences.
“As a retailer, you can always serve your customer better if you know more about them than the next guy,” said Telstra’s Gareth Jude.
Major e-tailers are continuing to turn data on its head, in stark contrast to the early periods of e-commerce when companies gathered plenty of information about their customers but didn’t know what to do with it. Businesses implemented complex CRM systems – only to have the data lay dormant.
“There’s a competitive imperative to get data right,” continued Mr Jude. “If you’re not doing anything with your data, Amazon, Alibaba and all the rest of them certainly are. And they’re going to eat your lunch.”
Jonathan Reeve concurred: “Unless you’re using data effectively, you’re fighting with one arm tied behind your back.”
Computing power and analysis are readily available as services – so there’s no excuse for Australian businesses not to be leveraging them. “Many technologies are converging, and there’s a lot more processing power available,” said Charles Edwards, Manager of supply chain management consultancy GRA. “This enables us to drive more insights from data with more data collection points, and we have the technology and computer power available to analyse it.
“It’s all about driving insights from consumer behaviour.”
“Boutique retailers can complement their physical, in-store experience with an online presence and function.” Gareth Jude, Retail Industry Executive, Telstra.
Over the horizon: the inevitable consumer mindset shift
The irrational, emotional, uneconomic Australian consumer is coming – and local businesses need to be ready. Although we might be reluctant now to share our data, the mindset shift is just over the horizon. It’s a journey that will organically happen.
Mr Edwards: “The first time I used an Uber, I thought – ‘I’d never get in to a stranger’s car!’” But his mindset changed as soon as he used the service and was amazed at its accuracy and cost-effectiveness.
Furthermore, there’s already a cognitive dissonance around how consumers share their data, and who they share it with. NBN Co’s Megan Park exclaimed: “Everyone’s opting out of MyHealthRecord – but they’re sharing their whole lives on Facebook!”
Pressure from consumers is also now being felt in the field services arena, with everyone wanting to know who, when and where their service will be delivered. The increased criticism and regulation of the European utilities is sector is driving a flow-on impact, and confidence in the Australian utilities sector is at an all-time low.
“Expectations of service delivery and parcel delivery are becoming converged,” said Localz’ regional sales director for A/NZ, Gareth Phillips. “Customers want more control and visibility of what they experience when they have their internet connected or their solar panels fitted. The Iconomy conversation is an important one for utilities and service companies to be involved in, as much as retailers.”
“Customers want more control and visibility of what they experience when they have their internet connected or their solar panels fitted. The Iconomy conversation is an important one for utilities and service companies to be involved in, as much as retailers.” Gareth Phillips Reg, Sales Director, Localz.
Online retail is only going to grow, and it remains an opportunity to be lost for local brands if they don’t take control of their own destinies and make the most of the data and the delivery services they have.
Australian businesses need to get their data analysis and deep learning right to give irrational, emotional and uneconomic consumers command of their delivery experience.
Localz’ Louise Robertson concluded: “It’s all about the human. Whatever technology we put around them, it’s all about emotions and data.”
Part 1. of this article appeared in the January-February issue of MHD Supply Chain Solutions magazine, which you can read here: https://bit.ly/2TZ3qnB. For more information visit www.localz.com.
Collaborative business and AI are reinventing the digital economy.
In today’s connected economy, organisations are increasingly reliant on collaborative business with existing and new trading partners (customers, suppliers and regulators). The latest innovations in artificial intelligence (AI) are equally contributing to the rapid augmentation of business models. The use of AI is becoming pervasive in how products and services are designed, built and delivered – ushering in a new wave of economic growth. In fact, more than half of outperforming supply chain executives surveyed said their top investments in the next three years will be cognitive or cloud. 86 per cent said cognitive computing will transform their demand planning and forecasting capabilities (Institute of Business Value, 2017).
“Every business is impacted by two types of activities in varying degrees – there are no exceptions.”
Business friction impedes collaborative performance
Any hindrance or business friction in collaborative-styled trading partner interactions and internal processes contributes to significant loss of national productivity, increased operational costs and lowered working capital. Friction is costing Australian businesses $29 billion a year (CMO from IDG, 2018). The economic impact can be expected to grow in the Australian economy as supply chains have lengthened for all sectors over the last 50 years. This is largely-driven by production being fragmented across more countries (Rachel Adeney, 2018). If organisations are to meet increasing demands to become more efficient and competitive, they must tackle the friction and fragmentation challenge.
Compliance can also increase business friction
The annual regulatory compliance cost imposed on the Australian community is estimated around $65 billion with about 72 per cent being attributed to tax, financial system, corporations, competition and consumer laws and regulations (The Mandarin, 2018). Most compliance regimes (regulatory and corporate governance, risk and compliance based) are introduced with an intent to increase performance in some form, shape or the other. However, in many instances they tend to increase business friction.
Friction impacts every business to varying degrees
Every business is impacted by two types of activities in varying degrees – there are no exceptions. The first being procurement-related activities, with the most common amongst all businesses being accounts payable and accounts receivable (sending and receiving invoices, payments and remittance advices). The second type of activity is compliance and the degree of impact depends on the type of business – tax (company, payroll and indirect) and superannuation affects every business. It is also important to emphasise that compliance activities are sometimes inseparable from other activities, for example, GST compliance is embedded in procurement related activities.
“The use of supply chain capabilities and fit-for-purpose AI can reduce friction and raise performance.”
Supply chain capabilities have evolved over time to reduce friction and raise performance
Supply chain capabilities have evolved in leaps and bounds over the last decade to create efficient ecosystems of organisations, people, activities, information and resources.
A supply chain philosophy can be applied to digitally transform typical or common areas of friction:
- Enriched digital interactions – trading partner onboarding and subsequent interactions are enriched via digital channels.
- Collaborative business to business – processes and activities are optimised and automated via B2B integration techniques.
- Insights and optimisation – visibility and advanced insight enabled by AI.
Leveraging the full power of AI for visibility, insights and optimisation
Watson Supply Chain Insights includes advanced AI capabilities specifically designed to give supply chain professionals greater visibility and insights. Companies can create situational awareness by combining and correlating the vast swathes of data they possess and see the impact of external events such as weather and traffic.
Using the operations centre, supply chain professionals can drill down in any given event to understand what orders are impacted and the potential financial implications. Watson can correlate all relevant information about a supplier or customer to quickly get a 360 view for impact analysis. It can help supply chain practitioners plan for mitigations based on a complete view of a supplier or customer. In turn, this allows supply chain professionals to look beyond their own operations and align with business and customer needs.
An example of harnessing AI
Lenovo took part in the Watson Supply Chain Fast Start program, enabling it to complete its first analyses with IBM Supply Chain Insights in just five weeks (IBM, 2018). In this short and focused exercise, the IBM team helped Lenovo complete three AI-driven use-case analyses using supply chain data from its production system. Lenovo is using IBM Watson Supply Chain Insights to rapidly predict, assess and mitigate the risk of disruptions to its supply chain. The average response time to supply chain disruptions shrinks from days to minutes — up to 90 per cent faster than before.
Lenovo’s supply chain professionals are now gaining the visibility to drive faster, better-informed decisions. If a key link in the supply chain is disrupted, they can drill down to identify which of its orders are affected, determine the potential financial implications, and act to mitigate the impact.
To support this new way of working, Lenovo is embracing a collaborative approach to decision-making. Today, supply chain managers from across the business meet in ‘resolution rooms’ — digital spaces that bring key stakeholders together quickly for even shorter response times.
Supply chain capabilities can create a digital fabric to power the economy
Organisations are constantly challenged to move resources, assets, inventory and personnel much more effectively to ensure they exceed client expectations. From better insights to driving down operational costs, AI can help organisations build more agile, intelligent and customer-centric supply chains.
The use of supply chain capabilities and fit-for-purpose AI can reduce friction and raise performance. In many cases compliance rules can also be seamlessly embedded into everyday collaborative business activity as a convenience or operational efficiency as opposed to compliance burden. This approach raises performance by a factor of two and used within the enterprise and across a trading community will create a new ‘digital fabric’.
- CMO from IDG, 2018. Friction is costing Australian businesses. [Online] Available at: https://www.cmo.com.au/article/645973/facebook-friction-costing-australian-businesses-29-billion-year/ [Accessed August 2018].
- IBM, 2018. Lenovo Watson Customer Engagement Supply Chain Case Study. [Online] Available at: https://www.ibm.com/case-studies/lenovo-watson-customer-engagement-supply-chain [Accessed October].
- Institute of Business Value, 2017. Operations and supply chain thought leadership. [Online] Available at: https://www-35.ibm.com/services/us/gbs/thoughtleadership/cognitivesupplychain/ [Accessed September 2018].
- Rachel Adeney, 2018. Structural Change in the Australian Economy. [Online] Available at: https://www.rba.gov.au/publications/bulletin/2018/mar/structural-change-in-the-australian-economy.html [Accessed September 2018].
- The Mandarin, 2018. Agency heads allowing regulations to wilt. [Online] Available at: https://www.themandarin.com.au/97428-agency-heads-allowing-regulations-to-wilt-until-failure-warn-treasury-insiders/ [Accessed August 2018].
Levine Naidoo is the IBM Watson Supply Chain Leader A/NZ. For more information email email@example.com.
Managing a supply chain has never been simple and in an era of evolving trade barriers and global economic uncertainty, it’s more complex than ever. While new technologies such as blockchain and automation continue to up-end old ways, Australian organisations that rely on legacy systems to coordinate their internal and external supplier networks will struggle to keep pace.
Here are four things to keep in mind as you review your supply chain for the 2019 financial year and beyond.
- Agile planning
Supply chains are rarely static. These days they’re under constant pressure to evolve and adapt, for a multitude of reasons. They include regulatory changes, such as new emissions standards, digital disruption and the emergence of competitors offering better value products and services.
“Optimising the supply chain is important for organisations of all stripes, but in one sector it’s critical.”
Effective, connected planning and the ability to adapt quickly can mean the difference between thriving and struggling. ‘Siloed’ sections of the supply chain are more likely to lead to the latter outcome. Unfortunately, that’s just the model legacy solutions tend to promulgate. By contrast, cloud-based software allows a bird’s eye view of operations, from supplier status to customer demand. Australian organisations which embrace it will be better placed to anticipate bottlenecks and breakdowns in their supply chain before they become problems, rather than scrambling to remediate after the fact.
- Making planning an enterprise-wide affair
Joined-up planning can’t occur across the enterprise if business units – IT, sales, finance, operations – continue to do their own thing. Collaboration is crucial to success in an era where supply chain networks are no longer linear but, rather, more akin to sprawling spiderwebs. It’s tricky to achieve without the right tools. Putting them in the hands of decision makers and frontline staff, rather than in the IT department where they’ve typically found their home, makes it possible for companies to adapt their supply chain planning models quickly and simply.
- Embracing blockchain
It’s the high-tech development that’s shot to prominence in recent years – but when it comes to blockchain, interest and adoption are two different things. Expect that to change in 2019 and beyond as larger organisations progressively implement aspects of the technology within their supply chains. Smaller players that fail to follow suit may struggle to keep up.
- Retail alert
Optimising the supply chain is important for organisations of all stripes, but in one sector it’s critical. For retailers with an omni-channel model, featuring both bricks and mortar outlets and an online presence, having a supply chain that can service both efficiently is imperative. There are significant differences between supplying one or several stores and supplying thousands or millions of individual customers. For organisations attempting to make a go of these two very different business models simultaneously, tools that provide a holistic view of inventory aren’t nice to have – they’re essential. Without them, it’s impossible to enact the sort of connected planning that allows market opportunities to be identified as they arise and peaks and troughs in activity managed well.
Transform and grow
Supply chains are going through a period of unprecedented transformation, in Australia and abroad. Organisations that aren’t alive to the possibilities that connecting the planning process can offer – and alert to the dangers of not doing so – may struggle to stay competitive in 2019 and beyond.
Patrick Elliott is the vice president, ANZ, for Anaplan. For more information call +61 2 8310 6342 or visit www.anaplan.com.
Simon Popley and Kim Winter
Leaders working in demanding roles tend to get little or no time to develop their own leadership ability. Focused on getting the job done and developing their own people, their own leadership growth often goes by the wayside. Australians work some of the longest working hours in the developed world, a study has found. About one in five Australians, or two million people, work more than 50 hours a week, the University of Sydney study shows, and many in the logistics and supply chain sector routinely work more than 60 hours a week.
“The lack of investment – of both time and money – is at odds with a plethora of evidence that indicates the magnitude of potential returns.”
Another trap that limits leadership development is under-investment in the area by corporations. Research by Australia’s leading human performance technology specialist DTS International found that more than one in five companies (21%) have no leadership programs at all, while 36% of organisations are yet to establish a leadership development strategy. Only 58% of organisations spend more than US$1,000 per learner on training for senior leaders, compared to just 39% for high potentials and 32% for mid-level management.
The lack of investment – of both time and money – is at odds with a plethora of evidence that indicates the magnitude of potential returns. For example, a recent report by the Human Capital Institute states that organisations that allot more than 31% of annual training and development budgets to leadership development are 12% more likely to report increased revenue.
Train to survive
However, under-investment in leadership development isn’t just a missed opportunity, it’s a major threat to a company’s long-term success. The fact of the matter is – when your leadership gets stale, so do results and the teams and leaders working with you. Everything becomes an effort and leadership feels like it’s sucking your will to live, rather than energising you and lifting up your people.
The fallout of neglecting your own leadership development is that you only have the same old skills, experiences and advice to hand down to your leaders and teams. It becomes a bit like leadership beans on toast, each and every night. After a while, the people to whom you serve your leadership learnings get bored and stop hearing the messages you want them to hear.
Your messaging is experienced as bland and your followers begin to feel that you have nothing new to offer or inspire them with. Preaching career development to them also invites hypocrisy that further diminishes your own leadership standing. This is demonstrated by the fact that only 7% of senior leadership in an international survey by Deloitte finds themselves capable of developing ‘millennial’ leaders, signalling an impending leadership vacuum.
“The most fruitful outcome is when your own leadership style becomes an example for others.”
Here are a few practical ideas to assist you in developing some new thinking and raise the energy to revive your leadership.
Tips for revitalising your leadership
- Set time aside to think about your current leadership – getting time to think about what changes you need and want to make is crucial. You may need to improve your ability to delegate work to be able to create this space to think: remember, thinking is working!
- Ask for feedback from your direct leader and other leaders in your business – what areas do they see in which you need to develop further? What is it they most notice about your leadership? Feedback is the fertile soil in which great leadership grows, without feedback we cannot grow. Feedback can also be hard to process and deal with if you are unfamiliar with getting feedback – think about working with a coach to navigate this journey.
- Discuss taking on new leadership challenges. Take on leading a new team or project. Get involved in a different work experience that takes you outside of your current comfort zone. If you are beginning to feel the slight discomfort of being outside of your familiar way of leading, you are probably beginning to grow – this is good pain!
- Read some latest thinking and research in leadership development. Read something about leadership you would not usually look at, and share this with another leader.
- Develop your ability to reflect on your own leadership experiences. Consider reflective journaling as a means to develop greater insight into your own leadership practice from viewing situations from multiple perspectives. Learn to become comfortable with the ambiguity that leading creates.
- Find and join a leadership community of practice – build your own leadership network. The CEO Institute in Australia also organises various networking events, such as the CEO Connect Conference and the CEO Institute Summit that feature top industry leaders. Chief Executive Women is specifically geared towards empowering women through leadership networks that aim to close the gender gap in senior leadership roles across Oceania.
- Attends events and conferences that are specifically geared towards leadership development, that offer the opportunity to learn directly and network with inspiring leaders in your field and beyond. A good example is the Annual Leadership Summits organised by the Australian Institute of Management across the country. Logistics Executive Group, an Australia-based international talent management and executive coaching firm, also organises year-round networking events, including a CEO Breakfast Series and the international LogiSYM Conference Series.
- Undertake some coach training to become a better-skilled coaching leader so that you are more effectively able to develop the potential of your own people.
- Find yourself a qualified and experienced coach and begin a conversation about how to grow and develop your leadership capability.
Regardless of your seniority level and the nature of your organisation, effective leadership is necessary for your success, as well as the success of your team and your stakeholders. Therefore you cannot afford to let your leadership style get stale. Yes, it takes some time and some sweat, some investment on your behalf as well as your organisation and perhaps even the odd tear or two, but the reward is well worth the effort.
The most fruitful outcome is when your own leadership style becomes an example for others. This stimulates a domino effect as your mentees, peers and even seniors attempt to emulate your strategy and foster creative, productive and effective leadership across the organisation. Be the change you wish to be, as Gandhi said. The power rests with you.
Simon Popley is senior partner, leadership and coaching, and Kim Winter is the global CEO of the Logistics Executive Group. The 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 Dubai. Contact Simon Popley at firstname.lastname@example.org, or Kim Winter on +61 411 883 368, email email@example.com.
Swisslog 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 fast-moving consumer goods (FMCG).
The scalable and modular, fully-automated CarryStar is suitable 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.
“The highly customisable nature of the machine makes it suited to dynamic businesses, where order fulfilment needs may be constantly changing.”
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.
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 excellent 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), CarryStar 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.
“SynQ manages CarryStar to create an intuitive, efficient, data-driven and error-free operation.”
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 energy-efficiency levels by using un-sequenced order data by SKU and pallet, manually re-sequencing this data for CarryStar by SKU and order pallet to result in minimal product pallet movements that are communicated to the Star Robots.
The CarryStar process
- Goods arrive in homogenous pallets.
- Pallets are automatically stored in the pallet storage area.
- The pallets move through an infeed into the CarryStar solution area.
- Once inside, the Carry AGVs move the pallets around the robots and/or to buffer positions depending on where they are required to be positioned.
- If in the buffer position they remain there until required and if so the Carry AGVs move the pallets to the correct position.
- Alternatively, the pallet is positioned around the Star Robot, where pallets are picked (crate stack, carton and/or tray layer).
- The Star Robot layer or stack picks the pallets depending on whether a single SKU, mixed or rainbow pallet is required.
- Once pallets are complete, the Carry AGV’s 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 AGVs then move the secured pallets to the pallet labeller where they are labelled using SynQ’s intelligent software.
- Once complete, the Carry AGVs move the pallets to the outfeed where they are ready for dispatch.
Logistics 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.
“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.”
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
- 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 fast-fashion 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.
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.
- 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.
- 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 consistent and reliable service at the optimal cost.
“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.”
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.
Manufacturers today live in a very competitive, price sensitive and crowded world. Companies that operate in developed economies can no longer compete on cost alone and are looking at how to achieve a more stable revenue forecast. The need to differentiate from competitors is also a key priority. One way this can be done is to look at servitisation – the shift from selling just a product to selling a product and a service – as a way to provide a complete solution to customers.
Why manufacturers are servitising their businesses
The main benefit for companies adopting servitisation is that it will introduce a brand new revenue stream, one of selling services and/or service contracts. It also helps reduce the cost to the customer. With more information about the customer’s products, for example, you can be more efficient in the way that you maintain them.
“The opportunities of servitisation are a major game-changer for the entire manufacturing industry and the supply chains that surround it.”
Servitisation leads to a better understanding of customer needs by forging closer working relationships with them and analysing the data acquired in the process. This transition from making goods to selling services represents a huge change that creates major challenges for many traditional manufacturers, as their product effectively becomes the platform from which to deliver those services.
The three levels of servitisation
Manufacturers can adopt varying levels of servitisation within their operations, starting with a base level where they centralise the supply chain for product consumables and spare parts within their remit and revenue model. At this stage, additional resource requirements in terms of people and materials are minimal and there is no great financial commitment.
The next level of servitisation requires a service team to oversee customer requirements for product maintenance and service. This demands either a level of internal investment, or outsourcing to a third-party supplier. It does, however, bring opportunities for upsell from a well-trained service team.
Businesses that fully embrace servitisation commit to investing the entire supply chain in the success of the project for an agreed time – one, three, ten or more years – beyond delivery of the product. As such, they may accept responsibility for service and maintenance for a fixed term under a contract, which means if unexpected failures or repairs are necessary they will bear the costs. However, to compensate for this risk they will be rewarded with regular revenue. With significant projects where costs are high, there is the potential to receive a share of the profits from the project on a performance-related basis.
From the customer’s point of view, this is an incentive for manufacturers to focus attention on maintaining the asset in peak condition. Accordingly, this should ensure an investment in a high-quality product to begin with, and a focus on preventative maintenance rather than just responding to failures as they occur.
How technology can enable servitisation
Digital transformation is a critical enabler of servitisation. With recent technology advances, specifically around cloud and the Internet of Things (IoT), manufacturers can now look at using digital technologies to add new services/offerings to their portfolio.
These technologies can and do include predictive analytics to forecast future breakdowns, remote monitoring of usage, and allowing updates to be proactively pushed out to customers. If you use IoT technology then you will be able to receive data about how long the product has been used, which in turn will help you be more predictive about when maintenance work will be required.
With sensors detecting when your product or equipment needs service, data can trigger an automated service action that will realise significant benefits to make your service organisation more effective. This type of automated predictive maintenance will become more and more common as it is a natural next step after implementing IoT to optimise service efforts. It will also allow you to gain insight into when and how products are being used – with the potential for game-changing competitive advantages.
Manufacturers need to change their mentality
However, manufacturers also need to change their mentality from a ‘Let’s make it and then sell it’ to more of a ‘Let’s support it throughout its lifecycle’. There are risks with this approach, since it needs buy in and to be driven by top management. This conscious shift in mindset and strategy is easier said than done.
Companies will need to invest in skills training since a more customer-centric approach will be needed, new departments may be created, and existing job roles may need to evolve. There are many challenges they will encounter and need to overcome. As a result, 70% of manufacturers see ‘availability of resources (people, materials, financial)’ as the principal hurdle for increasing their service portfolio (source: The Annual Manufacturing Report 2016).
From a people perspective, the main issue is that salespeople need to be trained to sell an outcome as opposed to a product, which for many is a difficult cycle to break. When looking at materials used in the product structure, designers may have to change the way they develop a product, since they want to ensure that it is built for service as opposed to just built to last the warranty period.
Lastly, when it comes to the financial aspect, the big issue is that from a short-term revenue point of view, there will be a big impact, as it will now be spread over many months/years and not received all in a single payment upon delivery and acceptance.
Transformation from manufacturer to consulting company
IFS has a number of customers who have adopted the servitisation approach. One of them is Nowy Styl, a company that transformed itself from a pure manufacturer of furniture to a world-class office interior consulting company.
Founded in 1992 in Poland by the Krzanowski brothers, Nowy Styl originally set out to supply office chairs to its domestic market. They made the early decision to invest in ERP software and chose IFS Applications, even before the complexities of supply chain and production demanded it.
The initial implementation involved Nowy Styl, which distributed customer orders, and Fotel Style, the principal assembly company. Within a few years, IFS Applications was rolled out through other Slavic territories and into France, Germany and the United Kingdom.
The design gurus at Nowy Styl were not happy to stop at office chairs – and why should they when the entire office environment was their canvas? The business now delivers an all-encompassing Workplace Space Planning service that embraces all the drivers of workplace efficiency: light, acoustics, air-conditioning, and the need for meeting places and communal areas.
The opportunities of servitisation are a major game-changer for the entire manufacturing industry and the supply chains that surround it. New digital technologies, integrated with enterprise software solutions, are now available to drive this change. However, the challenges of transforming the mindset of those who will need to adopt and adapt to the new business model should not be underestimated.
Antony Bourne is the global industry director of industrial and high-tech manufacturing for enterprise software company IFS. For more information visit www.ifsworld.com/au.
Management of product recalls in a supply chain
Faster recalls and improved consumer safety should be part of any organisation’s traceability capability and product recall management plan.
Retailers, manufacturers and consumers are growing increasingly concerned about the number of products being recalled or withdrawn.
According to the Australian Competition and Consumer Commission (ACCC), there were 593 products (excluding therapeutic goods) recalled in Australia in 2017, 66 of those from the food and grocery sector alone.
As supply chains continue to span the globe, these product recall events have shown that delivery of timely and accurate information to trading partners and regulatory agencies is paramount in the protection and safety of the consumer, the company and the brand.
The way to total recall
In recognition of the need to build consumer safety into the supply chain, the GS1 Australia Recall service was developed in collaboration with Food Standards Australia New Zealand (FSANZ), the Australian Food and Grocery Council (AFGC), the ACCC, national retailers and a number of Australian and international food and grocery manufacturers.
Launched in partnership with the AFGC in August 2011 for the food and beverage industry, Recall has assisted over 300 Australian food and beverage companies with the development and implementation of their product recall and withdrawal management process. In 2013, a healthcare sector portal was launched, followed by one for the general merchandise and apparel industries in 2014. Total Recall service subscriptions now approach 700, demonstrating a growing Recall community.
The Recall service is a web-based portal that enables manufacturers, suppliers and distributors to efficiently, accurately and securely communicate product recalls to customers and regulators. Where relevant, these trading partners can advise via the portal their updates and status for each recall advice.
Based on GS1 standards and global best practice, the service is designed to increase the speed and accuracy in the removal of unsafe or unsuitable products from the supply chain.
Industry continues its involvement with the development and support of the Recall service through an advisory group consisting of associations, retailers / recipients, distributors and manufacturers. The advisory group ensures the Recall service meets the ongoing requirements of industry to properly create, exchange and manage recalls and non-recall notices.
Recall – part of an organisation’s traceability capability
GS1 Australia’s head of supply chain improvement Peter Chambers said the increasing demands for product safety for consumers and an effective product recall management process is a fundamental building block in today’s supply chain pyramid.
“GS1 Recall should be part of every organisation’s traceability capability. The service uses global GS1 standards and ISO standards and is clearly supported by industry and regulators including FSANZ and ACCC,” said Mr Chambers.
In the event of a product recall or withdrawal, Recall ensures affected products are correctly identified and expressly removed or quarantined, targeting all affected parties with the right information to allow them to remove only the items identified in the notice.
“Ensuring your company is trained and ready to execute a recall effectively and accurately in a highly stressful situation minimises consumer harm and business interruption.”
Managing director at Drury Orchards Rick Drury said: “If we have to notify our customers of a recall, we know we will be able to do so quickly. With GS1 Recall, we can be sure that the notification will reach the people it needs to, when it needs to, so they can act quickly.”
GS1 Australia provides complete training and ongoing support for both Recall sponsors and recipients so users can be reassured they will be adequately prepared to action a recall or withdrawal notice, safely and securely online.
“Recall is the only product recall notification system that is documented in the FSANZ Food Industry Recall Protocol. Therefore, companies using the Recall portal to communicate a notice can be assured they are meeting their regulatory requirements,” Mr Chambers said.
“The ability of Recall to assemble, exchange and receive information from and between trading partners enables companies to record and report on the progress of a product recall.”
With current subscribers including major retailers such as Coles, Woolworths, Metcash, Costco, Priceline and Harris Farm Markets, Recall is the key to a more effective product recall management process.
Nestlé eBusiness manager Mandeep Sodhi said: “Nestlé has integrated GS1 Recall within our own product recall and withdrawal processes as it provides far greater speed, accuracy and control over such a critical event.”
Recall has also been certified by HACCP Australia as being effective and suitable for businesses operating a HACCP food safety program and is also mentioned in the FSANZ Food Industry Recall Protocol.
‘Mock recalls’ get you ready for the real thing
Recall is also helping organisations with a critical part of product recall preparation – undertaking ‘mock recalls’.
In the Recall portal, a mock recall is required twice a year for all businesses that manufacture, import, distribute or wholesale food products as part of their recall procedure in line with the Food Industry Recall Protocol set by FSANZ for annual mock events. Mock recalls are an essential part of HACCP, ISO and many other quality certification programs.
“Ensuring your company is trained and ready to execute a recall effectively and accurately in a highly stressful situation minimises consumer harm and business interruption. It is of critical importance for businesses of any size to put recall plans and procedures into practice with mock recalls,” Mr Chambers said.
Effective mock recall drills provide valuable insights into handling the real thing when it happens. The ‘mock recall’ function in Recall is designed to be part of a full mock recall process in a secure environment, helping organisations find and bridge any gaps before they encounter a real-life recall situation.
For more information contact GS1 Australia on 1300 BARCODE or visit www.gs1au.org/our-services/recall.