Safe Rates on the horizon: TWU welcomes Labor commitment

The Transport Workers’ Union has welcomed the Labor Party commitment to establishing a system to tackle what it calls the downward spiral in the road transport industry.
The Labor Party National Conference heard that since the Coalition Government abolished a road safety watchdog in 2016, 469 people have been killed in truck crashes. In August a Monash University study confirmed again that trucking is Australia’s deadliest job, with drivers 13 times more likely to die at work than any other profession.
The commitment to improving road safety will see the party engage with the TWU and key industry players in developing a system of safe standards that will apply to all parties in the transport supply chain and raise standards across the industry.
“This is an important day for our industry because we can be assured that under a Labor government, there will be a priority to make transport safer and fairer. The industry is on its knees because of the way wealthy companies at the top demand that their goods be delivered for the bare minimum. In trucking this means constant financial pressure on transport operators and drivers. This sees drivers pushed to work long hours, speed and skip rest breaks and it means vital maintenance on trucking fleets is delayed. This is why transport is Australia’s deadliest industry and why there are such high numbers of deaths and injuries in truck crashes. Today the transport industry has a brighter future, with a plan for sustainable businesses, quality jobs and safer roads,” said TWU national secretary Michael Kaine.
Truck driver John Waltis told the Industrial Deaths Inquiry earlier this year that he’s attended more than 50 funerals for truck driver colleagues.
“I’ve seen the consequences of fatigue, the pressures to meet deadlines, and crashes due to mechanical faults. The devastating effects of these pressures goes beyond the 51 funerals I’ve attended. I’ve consoled far too many wives, sons, daughters, brothers, sisters. It’s time for change,” Mr Waltis said.
When it comes to insolvencies, transport also faces difficulties. Data from the Australian Securities and Investments Commission shows that 469 companies entered into external administration in the transport, postal and warehousing industries between July 2016 and June 2017. The main reason for the insolvencies was inadequate cash flow.
Labor will also tackle the exploitation of transport workers in the on-demand economy.
“For on-demand workers the plan for Safe Rates means an end to exploitation and eighteenth century working conditions via an app. These workers, regardless of their label, will be able to seek rights and collectively agitate for conditions that will bring fairness, safety and stability to the industry,” Mr Kaine added.
A survey of riders has shown three out of every four riders are paid below minimum rates. Almost 50% of riders had either been injured on the job or knew someone who had. A Melbourne delivery rider recently won a landmark unfair dismissal case against Foodora.
References:

  1. Truck crash deaths statistics

Bureau of Infrastructure, Transport and Regional Economics fatal truck crash statistics.
Safe Work workplace fatality statistics.

  1. Safe Rates

In April 2016 the Federal Government abolished a system backing safe rates that was holding wealthy clients such as retailers, banks, oil companies and ports to account for low cost contracts, which do not allow their goods to be delivered safely. This was despite the Government’s own reports showing a link between road safety and the pay rates of drivers and that the safe rates system would reduce truck crashes by 28% [PricewaterhouseCoopers “Review of the Road Safety Remuneration System Final Report January 2016” (PWC Review 2016 – published by the Commonwealth Department of Employment on 1 April, 2016)].

  1. Evidence of pressure

A Macquarie University study in February criticised a ‘critical gap” since the Government abolished the regulation that the independent tribunal represented, “that can eliminate existing incentives for overly tight scheduling, unpaid work, and rates that effectively are below cost recovery”.
The study also showed that:

  • One in 10 truck drivers work over 80 hours per week.
  • One in six owner drivers say drivers can’t refuse an unsafe load
  • 42% of owner drivers said the reason drivers do not report safety breaches was because of a fear of losing their jobs

A Safe Work Australia report in July 2015 showed:

  • 31% of transport employers say workers ignore safety rules to get the job done
  • 20% of transport employers accept dangerous behaviour, compared to less than 2% in other industries.
  • 20% of transport industry employers break safety rules to meet deadlines – this compares with just 6% of employers in other industries.
  1. Senate report on road safety

In October the Rural and Regional Affairs and Transport References Committee approved a report recommending industry-led talks to set up an independent body on “supply chain standards and accountability as well as sustainable, safe rates for the transport industry”.

  1. Transport company insolvencies: the full ASIC report.

AI power – from MHD magazine

Levine Naidoo

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’.
References:

Levine Naidoo is the IBM Watson Supply Chain Leader A/NZ. For more information email levine.naidoo@au1.ibm.com.
 

Study reveals winning logistics strategies for the last mile

Increasing urbanisation is making the last mile of delivery more complex and critical for the success of e-commerce companies, according to new research and market research.

With over 600 million more people forecast to live in urban environments by 2030 and new technologies creating opportunities for both service enhancement and disruption, online retailers and their logistics partners are being challenged to embrace bold new approaches in order to survive and compete. In the white paper, Shortening the Last Mile: Winning Logistics Strategies in the Race to the Urban Consumer, DHL and Euromonitor have identified the four main trends that are shaping urban last mile transportation –localised delivery, flexi-delivery networks, seasonal logistics and evolving technologies –and ways in which companies can adapt their supply chains to the changing market environment and achieve competitive advantage.

“The last mile is increasingly becoming the key battleground in the e-commerce supply chain, and companies will have to develop targeted strategies in this area to compete effectively. It’s not just about transportation, but about companies’ overall approach to managing inventory –getting the right items to the right place at the right time. DHL is developing focused solutions to help e-commerce companies reach their end customers quickly and efficiently, from using machine learning to better route shipments within cities to adding more automation to our delivery networks,” Katja Busch, Chief Commercial Officer, DHL said.

The white paper found that the major urban trends all create various challenges in terms of cost, service impact and organisational strain. For example, the growth of seasonal logistics as a result of increasingly popular holidays and promotional days such as Asia’s Singles’ Day or national Cyber Days, places significant pressure on logistics companies to build up additional capacity and hire resources to cope with short-term volume surges, which can in turn be difficult to predict. Urban customers’ demands for speed and convenience are forcing retailers to overhaul their warehousing networks, replacing centralised networks with local fulfilment and distribution infrastructure, which can require more accurate balancing of inventory.

 

Is your supply chain fit? – from MHD magazine

Steven Hayes

Businesses in Asia Pacific face what is arguably the most critical ‘customer experience’ imperative in the world. With 71 per cent of consumers making online purchases, investment in e-commerce is constantly on the rise. Meanwhile, consumers are becoming more demanding; 76 per cent of consumers in the Asia Pacific region now say that customer service should be a company’s top priority. Therefore, businesses must do all in their power to raise the bar and create winning customer service that keep people coming back for more.
Today’s business leaders are challenged with delivering differentiated ‘customer experiences’, and this has led many to rethink their supply chain operations. These organisations must cope with exponential demand, and supply chains need to become much faster and precise. 2018 looks set to be a critical year, with 94% of supply chain leaders saying that digital transformation will fundamentally change supply chains this year. Business leaders are moving quickly and investing in digital tools to obtain real-time demand data, shorten replenishment cycle times, optimise deliveries, and predict future demand. The rest will be left behind.

“Businesses must do all in their power to raise the bar and create winning customer service that keep people coming back for more.”

Who exactly are these leaders? There are many to choose from: the Asia Pacific market brings together the right combination of logistics and e-commerce expertise required to drive breakthrough innovation. Where this innovation happens, customer service is taken to new heights.
Supply chain transformation in action
Take SpeedFactory by Adidas, for example. SpeedFactory uses advanced 3D printing technology from Carbon, Adidas’ supply chain partner. The printers allow athletes to order hyper-personalised running shoes with unique soles that are tailored to the individual’s weight, foot contour and running style. The shoe design even incorporates data that takes account of conditions in different cities, thereby meeting the needs of runners in the exact environment in which they’re running.
By rethinking its supply chain, Carbon has enabled something special: marketing on a truly individual level. In part, it has been able to do this through advanced cloud applications for areas such as customer service, procurement, inventory, order management, manufacturing, and supply chain. The cloud has made it easier for Adidas to interact with a global supply chain in an economical way – essential as it ramps up production with global brands.
But it’s not only consumer brands that are enhancing the customer experience through supply chain transformation. Take Bac Ky Logistics. This Vietnamese logistics company has embraced automation to deliver stronger overall customer service. The company has completely automated the scheduling of transportation and delivery management, in the process enhancing transparency and speed of service for customers. The company has also used advanced, data-driven cloud applications to better visualise its supply chain, logistics and trade information in real-time. This has helped it optimise resourcing and reduce the number of empty containers.
Supply chains in the digital age
Such companies are disrupting the supply chain to drive innovation. They are doing this by using data to better join their back- and front-offices, influence product and service development, enable hyper-personalisation and drive efficiency.
According to Bain & Co, companies that integrate digital technologies into their supply chain can quickly improve service levels while cutting costs up to 30 per cent. Agile supply chain operations are, therefore, critical to ensuring that front-office innovations are a success – but most companies are not yet rebuilding their back-office functions fast enough. In fact, according to research from Accenture and HfS, over 50 per cent of enterprises say it takes months or even years for their support business functions to make changes in response to evolving business needs. The reasons given for this include siloed internal processes, which approximately 80 per cent of organisations cite as barriers preventing them from achieving their business goals.
Successful companies build a short-term roadmap with concrete initiatives that will start delivering benefits quickly and provide flexibility in reaching long-term supply chain goals.
We believe the cloud roadmap, with Software-as-a-Service for supply chain operations as the core, is the answer. The cloud brings together the disparate data, systems, and partners that comprise supply chains and facilitates their integration across the enterprise. As such, the cloud provides the basis through which back-office operations can be made agile rapidly and with minimal disruption to the business. When you start adding AI- and IoT-led business applications into the supply chain operations, this transforms businesses into intelligent enterprises, further fuelling innovation and customer service differentiation.
Act now
Begin by debating questions at your next board meeting – what will business in Australia look like in five years, and what supply chain capabilities would you need? Organisations that are leading the way in the adoption of cloud and data technologies are making e-commerce faster and more personalised than ever. Other innovators are using data from manufacturing and post-sales to improve their services and create additional revenue streams through new business models. The supply chain is a fundamental driver of success in the digital age and all organisations need to act now by looking at how their own supply chain is set up and whether it is still fit for purpose.
Steven Hayes is the vice president of sales at Oracle Applications ANZ. For more information visit www.linkedin.com/in/stevenhayes.
 

Don't delay! Take part in the SCM IT survey

If you work in supply chain management, you’ll want to enter the MHD magazine and Transport and Logistics News SCM IT survey. Apart from the chance to win a $2,000 prize package, here is why…
If 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 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?
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 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 now, 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. Click here to participate!

Swinburne launches supply chain course

Swinburne has partnered with international logistics and freight management company CEVA to co-create and co-deliver its Master of Supply Chain Innovation course in what the institute calls an Australian-first collaboration.
The postgraduate course commenced earlier this year with the aim of upskilling those already working in the supply chain industry and ensuring new entrants into the discipline have the most up-to-date skills.
Delivered through Swinburne’s Australian Graduate School of Entrepreneurship (AGSE), the Master of Supply Chain Innovation continues to build collaborative partnerships with industry that will prepare graduates for the future of supply chain management.
Director of the AGSE Alexander Kaiser said this partnership is an important component in facilitating the delivery of industry-embedded postgraduate courses to Swinburne students.
“We are delighted to forge this collaboration that will add great value to the AGSE’s Master of Supply Chain Innovation,” Mr Kaiser says.
The partnership will see students working with CEVA on a core component of the degree, the Innovation in Transport and Logistics applied project unit.
While being mentored by CEVA’s logistics experts, students will work with the company on real-world projects and produce practical solutions to its issues.
With active university partnerships around the world in Asia, North America and the United Kingdom, this new relationship cements CEVA’s commitment to higher education links with industry.
Director of the Master of Supply Chain Dr John Hopkins said this partnership in Australia will give students an invaluable insight into the current landscape of the industry.
“At Swinburne, we believe that graduating career-ready means having a deep understanding of and connection with industry. This partnership will allow students to acquire contemporary skills aligned with the challenges that logistics companies face today,” he said.
 

From MHD magazine: Sshhhh… it’s a secret!

Helen Masters

Imagine a world where customers care about how products are sourced, made, and delivered, understand what goes into pricing, and generally take great joy in the experience. A world where customers are fluent in the language of supply chain.
It’s not as far-fetched as you may think.
Supply chains solve complex problems, and in the company of supply chain professionals, we use big words and complicated terms to talk about it. Words like multi-modal logistics and global transportation, mass-customisation and postponement, procurement and letters of credit, demand management, the cost of inventory and buffer stock, assurance of supply, warehousing, and the last mile.
We nit-pick over the differences between distribution and fulfilment centres, debate the true definition of supply chain visibility and the role of control towers to support orchestration across a complex network of suppliers, trading partners, and carriers. And we’re still not sure if our industries are facing an apocalypse or simply working through the growing pains of transformation in the digital age.
It’s a mouthful. And as we dive into the technical details and jargon that comprise the modern language of supply chain, one can’t help but picture the average consumer’s eyes glazing over.
But that’s not necessarily the case. There’s mounting evidence people care more about supply chain than ever – they’re just not using our words for it.
Therein lies the secret.

“[The] supply chain can also be related in common terms, as a story of what went into the creation and delivery of a product, and the meaning it has to the all-important customer.”

The words used to describe supply chain were different at the recent Shoptalk Europe conference in Copenhagen, Denmark, a gathering of more than 2,500 retailers, start-ups, technologists, and investors all focused on the worlds of retail, fashion, and ecommerce. Though most attendees weren’t purely in the business of operations and supply chain, all were exploring how to reach, engage, and enlighten the customer wherever and whenever they might choose to shop.
And as technology continues to smooth the seams of commerce, the lines between supply chain, stores, digital, and omni-channel have all seemed to blur, and the only thing that really matters (or that’s always mattered) is the customer at the centre of it all.
 Stop and listen
Listen closely enough to your customers and internal stakeholders, and you’ll hear discussions about supply chain’s growing role in an increasingly digital world. People understand and talk about things like visibility and logistics, pricing, and how products are made more than ever – and the effect they have on people’s lives.
Customers care about logistics. They expect to know when and how a product will arrive, what it costs, and what happens if they’re not available to receive it. Gone are the days where a three- to five-hour (or day) delivery window was an acceptable practice.
One example of this evolution is Picnic, a Dutch grocery start-up that, in the words of founder Joris Beckers, has reinvented the milk man. Like the delivery services of yore, Picnic focuses on the direct relationship between the service provider – in this case a delivery driver – and the customer. Picnic solves for the last mile not with stores or outsourced delivery services, but with a fleet of custom-designed electric trucks built for urban areas and driven by delivery people who consistently work the same route in the same neighbourhood every day.
The result is a customer base that’s not only loyal, but that in many cases has adopted their driver as a part of the community. That direct relationship is backed by technology that, similar to Uber, shows customers exactly when their order will arrive and where it is – from the distribution centre all the way to their front door. Though the company started small, Picnic grew fast and grabbed investors’ attention along the way. And while Beckers doesn’t talk supply chain directly, the business has clearly won its customers on shipment visibility, real-time logistics data, and the seamless integration of assortment, inventory, payments, and delivery.
For better or worse, we live in an age of instant access to information. And that access has given customers more insight into how products are made and their true cost. Some businesses are turning that into a competitive advantage.
Dollar Shave Club founder Michael Dubin also presented at Shoptalk, as his company – now owned by Unilever – plans to scale the business and expand overseas. In its rise from modest subscription start-up to a $1bn business, Dollar Shave Club won its customers not only with clever marketing, but with a price and delivery scheme that gave customers greater transparency into what shaving and grooming products actually cost. The company built up a base of more than 4.25m subscribers – all of whom care about receiving products from a low-cost supplier at consistent service levels and with an assortment tailored to their specific needs. To Dubin, DSC is as much a community as it is a business. One that grew because of its supply chain.
For a growing number of people, it’s not just important to know how a product’s made, it’s true cost, or whether or not it’s in stock. Many consumers also want to know whether a product is ethically sourced, has a low environmental impact, or is made under humane working conditions.
One example of customers pushing brands to show their work in supply chain is fast-fashion retailer H&M. The apparel industry is notorious for its waste, environmental impact, and treatment of workers, a fact that makes fast fashion that much more sensitive a space. To help mitigate these concerns, H&M not only adopted practices like clothes recycling, annual sustainability reports, and product listings that go beyond price and description, but also show where a garment is made and what raw materials and processes go into them. Clear signs that customers care about the supply chain even if they don’t use the same words as we practitioners do to describe it.
Ultimately, the supply chain was a big part of Shoptalk Europe – even though only a small slice of its presentations were explicitly about supply chain. And as research has shown, 61% of millennial shoppers will switch brands because of some issue directly related to the supply chain, whether it’s quality, availability, how it treats its workers, or its impact on the environment. They just don’t use the same words as most people in operations and supply chain to describe their feelings.
In any industry, not just fashion and retail, the supply chain has a wider impact than we may think. After all, delivery methods, shopping experiences, transparency, and product insight all derive from some aspect of supply chain. Whether we’re trying to sell customers on this fact or even internal stakeholders within a different part of the company, it’s important to remember that the words we use matter. Indeed, supply chain is a space ripe for analysis, data science, academic study, and creative thinking.
And with the high complexity and widely distributed nature of today’s global supply chains, it’s no wonder we often describe them in polysyllabic and seemingly monolithic terms. But it’s worth remembering that supply chain can also be related in common terms, as a story of what went into the creation and delivery of a product, and the meaning it has to the all-important customer.
Perhaps the secret to making people care about the supply chain is to not talk about supply chain itself, but about the difference it makes in peoples’ lives. There is commonality among all these examples. It’s not just about changes to the world – it’s about how supply chain makes the world a better place.
Helen Masters is the vice president and managing director of Infor South Asia, ANZ & ASEAN. For more information www.infor.com.
 

New slavery regulation coming to Australia: are you prepared?

The Chartered Institute of Procurement & Supply (CIPS) has announced the findings of its first Australian Modern Slavery Survey, which reveals most procurement managers are ill-prepared for the new Government requirements.

  • 45 per cent of procurement managers describe the requirement as a timely and necessary piece of legislation, but a quarter of all respondents are concerned it will ultimately have little impact.
  • 1 per cent of procurement managers don’t think their organisation would be able to release a statement based on current monitoring, policies and supply chain management practices. More than a quarter (28.8 per cent) don’t know if they could.
  • To date, 20 per cent of organisations haven’t taken any measures to ensure a slavery free supply chain.
  • Nearly 20 per cent (19.9 per cent) of those surveyed do not know who in their organisation is ultimately responsible for ensuring their supply chain is free of modern slavery and human trafficking.
  • 80 per cent of respondents identified reputational risk as the most concerning factor in finding modern slavery in their organisation’s supply chain.

The online survey, carried out over a four-week period in April to May 2018, coincided with the Government’s 2018 budget announcement last week, aimed at strengthening Australia’s response to modern slavery. The new reporting requirement will oblige more than 3,000 large corporations and other entities to publish annual public statements on their actions to address modern slavery in their supply chains and operations.
CIPS general manager for Australasia Mark Lamb said that despite concerns about local readiness to comply, there is overwhelming support within the procurement and supply chain community for the legislation. Mr Lamb said: “According to our survey, 80 per cent of procurement managers in Australia consider the introduction of requirements as a step in the right direction in stamping out modern slavery.
“More than 40 per cent of those surveyed have put clear procurement policies in place. However, one in five of Australian procurement leaders haven’t taken any measure at all to secure their supply chains.”
Mr Lamb believes the reason for this is a lack of awareness and training. He said: “Our research shows that more than half (54.9 per cent) of managers lack confidence that their supply chain managers have sufficient skills and expertise to minimise the occurrence of modern slavery in their supply chains.
“CIPS firmly believes that accountability for inadequate or exposed supply chains sits firmly with procurement professionals. CIPS is leading the way on raising awareness of modern slavery in supply chain, as well as equipping procurement and supply management professionals with the necessary tools and guidance to address this issue in their own organisations.”
About the survey
The survey was conducted online via SurveyGizmo and managed by CIPS Australasia, over a four-week period between 11 April 2018 and 13 May 2018. 195 respondents completed the survey. 72.3 per cent of respondents have an annual turnover of $100million.
 

From MHD magazine: Systems of record

Sam Wardill

Do you ever think about the evolution of Enterprise Resource Planning systems into Systems of Record? Wonder what implications this has for supply chain professionals?
In the beginning there was Y2K
Those of us who were involved with Enterprise Resource Planning (ERP) and Advanced Planning & Scheduling (APS) systems in the late 90s will no doubt remember the scramble to implement new ERP to guard against the Y2K risk. I was involved in the transition at a major FMCG organisation from our mainframe Cincom Manufacturing Resource Planning (MRPII) system to SAP R/3 (with Manugistics).
We were all told how SAP was going to unlock our data and automate planning processes, and so justifying the multi-million dollar (or in fact British Pound and Irish Punt) investment.
Those of us tasked with delivering this transformation took a more pragmatic attitude. We recognised the need to establish a robust system of record to manage the business and we just needed to work to make sure that we could plan our supply chain as effectively with SAP as we had previously with Cincom.
In the noughties we faced the reality
Throughout the noughties through various organisations the myth persisted that we should expect to deliver the savings that had justified the significant investments that had been made in our ERP systems. By then we realised that the myth of unlocking our data was, in fact, true in the reverse. We tried to educate our stakeholders to understand that true Enterprise Resource Planning required process capability enabled by technology.
Most of us SAP users migrated from R/3 to ECC6 without really noticing. We spent our energies trying to make SAP work for us rather than us for it. We tried to help our colleagues who had given up and reverted to planning in spreadsheets. Those of us at the coalface recognised that SAP’s biggest competitor was Microsoft (Office Excel, not Dynamics).
We wrote enhancement requests for SAP Business Warehouse (BW) reports to ‘unlock our data’, and they sat in a queue for delivery some time well into our more mature years. We watched as our C-suite lamented the resources we had engaged to manage data – and slashed them mercilessly.
Approaching our twenties we matured…
Rolling into the late teenies, things are starting to look up. SAP has finally developed a significantly improved database that truly does ‘unlock our data’. SAP has stopped trying to compete, and now integrates better, with Excel and, in general, is a more user-friendly beast. For example, SAP has developed customisable Graphical User Interfaces that do not require hard coding and therefore should not inhibit in-life patches and upgrades.
SAP has also announced a product roadmap that forces our organisations to stop and think about their IT strategy, rather than just going with the flow. There is now a recognition that spending on an ERP System of Record, like spending on an audit or accommodation for employees, is a necessary business expense that is unlikely to deliver competitive advantage and should not need to be justified in itself (rather, a business case should examine the various options for performing this necessary function). Even what was previously described as an Advanced Planning System is now regarded by Gartner as a ‘Planning System of Record’.
The old artificial boundaries between ‘business’ and ‘IT’ supply chain professionals are blurring. We now have a pragmatic understanding of how to bridge the difference between what the software salesperson promises and what is actually delivered, and all ERP presentations start with that important disclaimer making it clear that we should not believe everything we see in the brochure.
Finally, everybody is talking about Industry 4.0 and analytics, so our C-suite are now asking us how we are going to invest in big data to drive competitive advantage. So how should we capitalise on this opportunity?
How to deal with our ERP midlife crisis…
Leading FMCG organisations now have ERP/APS under control and working for them to deliver competitive advantage in their supply chains. This has been a journey in which they have invested significantly. They have been able to attract and retain the most capable supply chain and ERP/APS professionals who have worked tirelessly on this challenge.
For smaller FMCG organisations, and other industries where supply chain has not historically been such a differentiator, the challenge still remains. Supply chain managers are left wondering how to start to make more progress on catching up. Unlike the top global FMCG leaders, these other organisations are not going to be able to attract, retain and develop the lion’s share of the most capable global supply chain and ERP/APS talent, especially in more remote global outposts. They do, however, need to have a strategy to nurture supply chain ERP/APS capability. This is likely to include a mixture of organisational design, recruitment, training, incentives and coaching.
Some businesses also need to have a strategy to make things simpler as an alternative to investing in capability. They also need to recognise that many ERP-supported supply chain processes may not have been well-defined or understood in the resource constrained ERP/APS deployment, or the process definition may have not evolved since the initial deployment and therefore bears no relation to what anybody actually does any more.
Certain ERP capabilities that are not at all used by the supply chain FMCG leaders (notably Project System) or certain industry solutions (e.g. Oil & Gas or Defence) have not been subject to the same breadth of deployment scope or rigorous challenge from a capable user base as the core business modules (like Finance, HR, Material Management, Production, Sales & Distribution). In these areas there is still an important role for pioneering clients or user groups to push back on the ERP developers asking them to develop their functionality to properly support the industry specific requirements.
SAP Hana as an Inflection Point
For those of us who use SAP, Hana is a significant technological advance that dramatically increases the power of the ERP core database engine. It’s like the difference in start-up time between an iPad and a PC with a hard drive. Data that is needed quickly is held in a microchip rather than a spinning magnetic disk so it can be read much faster.
Hana is already starting to have a huge impact with SAP’s Business Intelligence (BI). The reporting capability is significantly enhanced. No longer does the BI reporting database need to be significantly limited in scope for performance reasons. Pretty much the entire global SAP database can now be made available with standard database extractors set up as memory resident queries.
The increased native scope of the BI database, coupled with advances in web-based graphical user interfaces, means that business super users can be given significant freedom to enhance or build their own reports. This significantly reduces the complexity, lead-time and development overhead for BI solutions but requires a new type of skills in business users and IT support. The more powerful BI database also helps outbound interfaces, as they can now use a BI based architecture that removes constraints on the core ERP database performance.
SAP is migrating its core ERP from the current version (ECC6) to the Hana-based S/4 Hana. Like previous transitions, users will be forced to migrate away from ECC6/APO, but it will not be such a simple choice as the previous R/3 to ECC6 transition.
The capability of Hana means that some APS functionality will migrate to ERP. Although Integrated Business Planning (IBP – SAP’s APS successor to APO) will now use the same database engine as the ERP, it looks like it will only be offered as a cloud-based solution that might not suit everyone.
APO is now languishing in the uncherished bottom left corner of Gartner’s magic quadrant for Planning Systems of Record and, whilst already plugging some long-term gaps in support for management level dashboards / sales & operations planning functionality, not enough is known about IBP’s full end-state functionality to even make a place in the Gartner magic quadrant.
Indeed, Gartner’s magic quadrant for Planning Systems of Record certainly only tells a small part of the story these days. Leading FMCG supply chain organisations are supplementing their APS with best-of-breed planning applications for specific functions, such as demand sensing or inventory optimisation. This is much easier to do now than it ever was before. Modern technology, advances in interfaces and the simplicity of implementing cloud-based SaaS systems help all companies partner to develop supply chains that can start to compete with the industry leaders. The organisations developing these Planning Systems of Differentiation often do not have sufficient revenue or breadth of scope to make it anywhere near Gartner’s magic quadrant.
Some of the Planning Systems of Differentiation are not even systems. A number of the supply chain leaders, and some of the less mature organisations that just want a simpler approach to managing their supply chains, are adopting Thoughtware instead of Software, and using DD-MRP as a radically different supply chain planning approach to the traditional APS/MRPII model.
Big Data… Big Deal?
Exploiting the opportunities presented by big data may seem like a pipe dream to the supply chain manager struggling to get to grips with process compliance and poor data quality in their own ERP or APS. Indeed, I must confess coming from a similarly sceptical position when pitching an innovative analytic solution for inventory planning to a software vendor who specialised in master data management.
The software vendor’s CEO was very interested but ultimately declined to support the pitch, believing that Industry 4.0 and an increased focus in master data would keep them more than busy enough in their core market. With the benefit of the passing of only nine months since that incident, I now accept that the CEO probably made a well-informed and wise decision.
The lesson learnt from this is that getting the basics right with master and transactional data is also going to start being a lot more sexy than it used to be. Organisations are going to need to start crawling with data before they can walk or run, and will need to start taking action soon. The good news is that the companies that are really leveraging data now (like Google or Amazon) do not compete in all our industries. Most of our industry peers are facing the same issues that we face – we have not yet been left behind.
The risk, however, is that, unless we start to get our data in order soon, either our competitors, or a more nimble start-up, will be better placed than us to exploit the new opportunities. Master Data Management, Governance and Data Metrics are terms previously bandied around by data architecture geeks who were the sort of people that we avoided at work Christmas parties. We now need to understand what they do and establish strategies to address the issues that they espouse.
Finally…
With almost two decades of experience, now we are more realistic in our expectations and regard our enterprise backbone as a System of Record rather than an Enterprise Resource Planning System.
With this in mind, and taking into account wider trends in industry and society, we need to refocus our attentions to ensure our System of Record better supports our supply chain.
Sam Wardill is a senior manager at GRA Supply Chain Consultants. Over the last two decades Sam has worked at both strategic and operational levels across FMCG, Pharmaceutical, Utility & Energy sectors to manage and deliver supply chain value. Sam has deep experience in supply chain inventory planning and performance management, supported by effective use of ERP, APS and BI systems (particularly SAP). He is a Chartered member of the UK Institute of Logistics & Transport and holds Masters degrees in both engineering and business administration. For more information visit www.gra.net.au.
 
 

Speed up! – to find out how, read this MHD article

Dr John Gattorna

In 1998, Charles Fine published his ground-breaking book, Clockspeed. He based much of his research on the observation of fruit flies, which he called a ‘fast-clockspeed species’, evolving from eggs, through adulthood to death, all in under two weeks! Much of his research was concentrated on the industrial equivalents of these fast-evolving fruit flies.
One of the companies that he focused on was Intel, which in turn had fast-evolving customers such as Compaq and Dell, whose products inevitably had short life cycles in the marketplace. Clearly, then as now, the real pressure was coming from the customer end of the chain, and that pressure has increased significantly in the two decades since Fine wrote his book.
Fine studied whole industries, noting the different rates at which they evolved; he called these rates industry clockspeed, which he defined as resulting from a combination of product, process, and organisation clockspeeds, respectively.
Fine drew the conclusion that any differences in clockspeed between businesses is manifested in the size/length of the decision-making window, and I agree with that. When it comes down to basics, enterprises under pressure from their customer base and/or competitors must by definition find ways to make faster decisions if they are to survive. Indeed, given that competitive advantage is now regarded as only ‘temporary’, the enterprise must continually re-invent itself to stay ahead. The old concept of locking in a ‘sustainable advantage’ is not possible in fast-moving industries and markets.
Fine defines a company as “its chain of continually evolving capabilities”, and by that he includes its own capabilities and those along the entire supply chain. In our terminology, he is referring to the extended supply chain. Of course, the old maxim of the weakest link applies.
Clock-speed: fast
Fine cites Dell as a great example of a fast clockspeed company, mainly due to its early supply chain design that placed it in direct contact with consumers and users. This advantage receded in subsequent years as Dell was forced to engage in different distribution channels involving intermediaries.
Interestingly, with the coming of the e-commerce era, and the direct access that this affords suppliers to their consumers/end users, coupled with digitisation and the disintermediation effect of Blockchain, we are likely to see many more disruptions across industries that are dragging their feet on clockspeed.
Fine comments on the dynamics of extended enterprises, and in particular nominates two laws that he sees as pivotal: volatility amplification (or bullwhip effect by another name), which moves upstream in the chain; and clockspeed amplification, which moves downstream towards the final customer.
Fine introduces his notion of clockspeed analysis, which begins by mapping existing supply chain capabilities in order to identify potential weak links as well as potential opportunities.
So, in Fine’s thinking, clockspeed is defined as the summation of capabilities along the extended supply chain, to which I would add the time taken for each element, across the full breadth of the total lead time, from supplier(s) through to end user/consumer.
Further, he postulates that in order to improve the clockspeed in an enterprise or indeed an industry, products, processes, and capabilities have to be designed concurrently; he coined the phase for this as 3DCE, or 3D Concurrent Engineering.
Finally, Fine makes an initial attempt at measuring clockspeed, with the qualification that it is very complex, not dissimilar to costing in that there are many areas where judgement is required.
Today
Time has moved on and we now understand the dynamics of supply chains a lot better than in the 1990s. For instance, the idea of ‘one-size-fits-all’ has been banished forever, and we have a clear guiding principle that supply chains must by definition be designed from the ‘outside-in’. This is consistent with Design Thinking, and consistent with Fine’s stated view that ‘clockspeed amplification’ emanates from the customer end of the chain.
We also know that supply chains are not inanimate beasts, but are living ecosystems, propelled by people situated all along the chain, making decisions, for better or worse. Hence the need to incorporate the study of ‘culture’ and leadership style in our analysis of supply chain performance.
So when we talk about clockspeed, we are not suggesting that the enterprise has to suddenly accelerate to meet volatile conditions. Instead, we are convinced that the entire organisation has to lift its tempo and operate at that new higher level, ALL THE TIME. Once this is achieved, the internally generated clockspeed will hopefully match and indeed nullify the effect of volatile demand emanating from the customer end.
Because we are now talking about achieving faster split times in each element of the overall lead-time, the time buckets are shorter, and this has the effect of reducing the risk of forecasting errors. As in the case of Zara, they are never more than three weeks away from the next cycle of product launches to stores, so markdowns become much less of a problem, and stock-outs become something of a virtue. How the world has changed!
And if we couple this phenomenon with our proprietary Dynamic Alignment model, involving an array of up to five (5) supply chain types, each aligned with a particular customer buying behaviour segment, over- and under-servicing are virtually eliminated, as are the corresponding complexity and associated costs, both actual and opportunity-based.

Their challenge is to embrace the change and, in the process, raise themselves to new, higher levels of competitiveness.

In the end, it all comes down to developing and nurturing a defined range of capabilities, and then combining these in different recipes to underpin the engagement with customers (and suppliers) according to their preferred way of buying our product/service categories.
Time to transform
The important point here, especially for executives with a mandate to ‘transform’ the business, is that we are dealing with a ‘whole-of-enterprise’ phenomenon. In other words, in the process of transforming your enterprise supply chains, it is in fact necessary to transform the entire organisation in order to achieve the faster rhythms inherent in faster clockspeeds. What this means in fact is that defaulting to lean processes in our enterprise supply chains is no longer the correct option, because a new default has arisen in the form of speed and agility in order to cope with the faster, more volatile operating environment.
Companies operating in FMCG, Hi-tech, and Fast-Fashion markets are already experiencing this change in modus operandi, and similar conditions are heading in the direction of older, more established ‘bricks and mortar’ industrial companies – their challenge is to embrace the change and, in the process, raise themselves to new, higher levels of competitiveness.
The enterprise-wide capabilities required for success in the new faster clockspeed world are briefly described below:

  1. New organisation designs that promote speed of decision-making.
  2. Process mapping and re-engineering along all supply chain types.
  3. Adoption of appropriate KPI to measure performance, free of conflicting demands.
  4. Install IT systems that are genuine Decision Support Systems (DSS) in order to speed up decision-making.
  5. Install appropriate Sales & Operations Planning (S&OP) regimes to focus the entire organisation on agreed priorities to meet customer demand.
  6. Shape a number of different ‘subcultures’ inside the business to underpin the different supply chain types. This will involve all of the above plus additional effort in areas such as defining roles; defining incentives; methods of internal communications; recruitment of specific types of personnel; introduction of a range of T & D programs; and role modelling.
  7. The resilience to recover from a major unplannable disruption in our supply chain network.
  8. Conscious development of an IoT strategy and corresponding analytics capability, including customer/supplier sensing.
  9. A blended combination of ‘business as usual’ and search for new innovations.
  10. Managing capacity at all points in our supply chain network as all times.
  11. Channels selection.
  12. Requisite collaboration with appropriate network members.

These internal capabilities should be supplemented by supply chain specific capabilities as follows:

  • Product design: CAD; modular; supply chain friendly.
  • Manufacturing: CAM; automation/robotics; AI; 3D-printing; group technology; FMS.
  • Logistics: Postponement; insourcing/outsourcing mix; control towers; 3PL management; network optimisation modelling.

There are many moving parts in contemporary supply chains, and many external factors that can potentially impact performance. Nevertheless, if we are able to increase the clockspeed of the entire enterprise and literally get in synch with the operating environment, complexity is materially reduced and operational and financial performance correspondingly increased.
The book referred to in this article is Charles H. Fine, Clockspeed: Winning industry control in the age of temporary advantage, Basic Books, Cambridge, MA, 1998. For more information email john@gattornaalignment.com.
 
 

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