The migration from a private to a public company in 2004 was a catalyst for Super Cheap Auto Group to both leverage its historical strengths and introduce a balanced mix of new ideas and people.
The Group also launched new scalable infrastructure and processes that would support its growth objectives until 2010 — a five year Plan.
General manager Group Logistics Graham Chad tells Logistics Magazine that testament to these strategic changes is the fact that the five underpinning success factors of early 2006 are still active today.
“Firstly, the Senior Executive Team defined and communicated the goal for 2010 — the End Game for all elements of the business, not just supply chain,” Chad says. “This meant we had a clear desired outcome to work towards.”
“In addition, our strong Management Control frameworks allowed us to balance and prioritise our strategic initiative work stream, including a monitoring process.”
“As our people are the core of our business, we make sure we have ‘the right people on the right bus in the right seats’,” Chad emphasises, “especially for operations line management within Group Logistics.”
“Just as importantly, we recognise the benefits of gaining transparency and a sense of direction with our suppliers.”
“Although our Plan can be modified when economic conditions change while maintaining transparency, the execution of the Plan still comes back to the fundamental building block of ensuring the various teams understand and agree to the goal set by the executive team and senior line managers developed.”
“Operations Teams’ ownership and accountability for Change Management is paramount.”
Super Cheap Auto Group set upon modelling its ‘Design Year 2010’, including remedies for more urgent capacity/capability needs within Group Logistics in 2006.
“A number of scenarios were modelled to lead us to the optimum DC and freight network for Australia, New Zealand and interfacing logistics back up the supply chain into China,” Chad recalls.
“The implementation of the chosen network scenario commenced in July 2006 with the introduction of the ‘Hub and Spoke’ freight network, supported and implemented with Toll Australia.”
‘Hub and Spoke’ involves the standardising of pallet sizes, aligned to mezzanine floors in BDoubles from source DCs, into retail outlets, delivering them to Hub depots where pallets are transferred to smaller single axle vehicles for final store delivery to more than 300 stores in Australia and New Zealand.
“Results achieved include significant improvements in Delivered In-Full, On-Time (DIFOT) to stores; greater utilisation of truck space; and overall fewer trucks on the road, decreasing fuel emissions while increasing volume,” Chad says.
The Group’s next strategic initiative was the redesign of supply chain support back into China.
“With the five year plan identifying growth in this area, emerging bottlenecks had to be addressed,” Chad says.
“After assessing the needs and reviewing capabilities of a number of logistics service parties in China, we chose a strategic alliance with Toll Global, supported through Cargo Services Far East Limited, a locally owned and operated logistics support partner.”
This has worked well for us given the challenges of Christmas stock flow, event management and the creep of China based suppliers inland.”
“We then started on the final DC footprint by establishing a new DC in New Zealand, closing all offsite/overflow storage facilities in all Australian states, moving to a new DC in Perth, and opening a DC at Altona in Melbourne,” Chad says.
“As a result, the Design Year 2010 footprint articulated in early 2006, was totally completed in early May 2008 — a significant achievement to renovate and rebuild the entire logistics network in just over two years.”
Super Cheap Auto Group’s DC Operating System is based on Manhattan Warehouse Management Software powered by IBM AS 400, which is currently being upgraded.
“This system utilises RF handheld technology with full scanning capability for key activities, like picking and stocktaking,” he explains.
“We’ve found the system to be robust with yearly uptime of 99.9 per cent.”
“The Manhattan solution interfaces to an SAP Enterprise System with a Business Warehouse Reporting suite, and links to a GRA GAINS Forecasting and Replenishment System, generating daily orders for stores.”
Chad maintains the Group will retain this company-wide IT footprint for the foreseeable future.
“It continues to serve us well with ongoing improvements and our user education program, particularly focussed on leveraging the fertile information within the Business Warehouse environment to better understand customer behaviour and wants,” he says.
The next stage of DC systems research and possible implementation through 2009 will be in the accelerating efficiency of Voice Picking Technology.
“This Project Team will start in early 2009 following the completion of the Manhattan Upgrade currently in progress,” Chad affirms.
“We’re also progressing the e-commerce support infrastructure to automate the transmission of orders and receive advanced shipping notices from both domestic and overseas suppliers.”
“We continue to work with Manhattan on engaging and implementing Labour Management Software and Slotting Utilisation Software.”
“At Super Cheap Auto Group, the internal infrastructure of our DCs is engineered to provide accurate and timely picking of both full case and inner case Retail Stock Units,” Chad says.
“This manifests itself in a combination of ‘Pick to Tote’ and full carton picking.”
“‘Pick to Tote’ utilises materials handling equipment where we make up a cardboard tote box at the start of the pick path and then send this tote along a conveyor network for Team Members to pick and pack within the tote.”
“Full carton picking from floor level pallets utilises RF handheld technology, a key element of our DC Operating System,” he says.
“These underpinning applications and procedures are built around our fundamental Group Logistics Operating Philosophy of ‘Safety, Accuracy and Service, which drives a large part of what we do within the Group Logistics area.”
According to Graham Chad, cross docking, flow through and ex-factory gate are necessary parts of Super Cheap Auto Group’s overall Supply Chain Toolkit.
“For our business, like many other retailers, operations can be very seasonal, with flat flow for some products and very spiky input/output for others,” he says.
“It’s not feasible for a DC network to move from a single to triple process operating style, ongoing for 52 weeks.”
“In the retail world, the customer ultimately drives how you operate. For this reason, you need to have a supply chain approach that offers choice and can accelerate or decelerate as customer behaviour demands.”
In terms of the future, Chad believes the major underpinning trend for companies either sprinting ahead, or honestly acknowledging where they need to go, is in the development of people in planning and expediting roles in both DCs and their head office.
“We reinforce this through an internal education program and formalising the cross-functional team approach in job descriptions, KPIs and Team Member incentive criteria,” he says.
“This is where the true leading edge lies in waiting for many organisations- large or small.”