Peter Jones, Founder of Prological, explains how the logistics consultancy is reinterpreting the supply chain rulebook to give its customers a competitive edge.
Back in 2003, LG Electronics (LGE) had just rebranded from Lucky Goldstar and required an overhaul of its national supply chain operations. Founder of Prological, Peter Jones and his team of conusltants were tasked by Tony Harris, National Supply Chain Manager for LGE, with creating solutions to support the company’s businesses aspirations in the Australian market.
In parallel with setting up new distribution facilities around Australia was a total redesign for LGE’s freight operations. After several months of work, transport options were narrowed down to two candidates: the established McPhee Transport and a relatively new business unit within TNT, known as Speciality Services.
To help Peter’s team make this decision, LG sent its head of supply chain for APAC, Leonardo Kim to Australia. Leonardo’s name was born from his first expat role in Spain, and it was proudly displayed on all of his business cards.
“McPhee Transport, having worked with Sony, Panasonic and several other White and Brown goods brands was a known entity we could take to the bank without risk,” Peter says. “TNT Speciality Services was more of an up-and-coming business without the maturity of McPhee within this sector, but under Andrew Lysaght’s leadership was able to do things advantageous to LGE.”
After carefully examining all processes from both transport companies, Peter came to a decision.
“I said to Leonardo, ‘I know McPhee transport is a very low risk proposition,’ but he had a different approach all together,” Peter says. “Leonardo turned to me and said, ‘If we go the same way as everybody else, the best we can be is the same as everybody else and we can never be better than that.’”
TNT Specialty Services’ work for LG made up 20 per cent of its business unit volume, at the time allowing the emerging business unit to develop unique capabilities off the back of LG’s volume, according to Peter. Combined with an equally unique approach with Allied Express for national metropolitan distribution, LG Electronics Australia quickly grew to 8 per cent of LGE global sales.
“Life was Good for LGE customers as well as us consumers who bought the products by the ship load,” Peter adds.
The success of this project birthed Prological’s philosophy of “creating an unfair advantage,” that is, implementing supply chain solutions which place customers ahead of their market competitors.
SOLUTIONS TO TODAY’S PROBLEMS
Peter draws inspiration from engineer and designer of Formula One racing cars Gordon Murray when assessing solutions to modern day supply chain problems.
Working with the Brabham team, which was owned by Bernie Ecclestone at the time, Murray designed the BT46 “fan car.” The vehicle was driven by a complex series of clutches running from the engine to a large single fan at the back of the car, so the faster the engine ran, the stronger the fan would suction. The car won its debut race at the Sweden Grand Prix in 1978 but so superior was this innovation that Brabham themselves withdrew it from the rest of the season amid concerns over their “unfair advantage” ruining the competition.
“It’s an example of someone remaining within the rulebook but creating something far superior to anything else on the market,” Peter says.
Prological facilitated a process that led to the development of an extra-large, 148 cubic metre single semi-trailer for an Insulation manufacturer in collaboration with Mike Cahill M.D of Cahill’s Transport. Justin Hollis, GM of the business at the time said the benefits of the new transport solution combined with other associated and integrated business changes led to a 20 per cent increase in market share in the following 12 months.
Working with another transport provider who developed a 210 cubic metre B-double was considered. This was also a brand new unprecedented configuration at the time. Despite being extremely cost effective, the size of the vehicle had too many constraints with sites combined with limited gazetted pathways, whereas the 148 cubic metre ‘super-single’, while still a PBS vehicle had much more flexibility including the ability to do direct deliveries.
“By developing a fleet of 148 cubic metre single vehicles, we had almost as much capacity as the many B-doubles,” Peter says. “Once we understood the dimensions of the trailer, we designed it to load as much product as possible and from this created the unfair advantage for our client.
Creating an unfair advantage isn’t limited to the transport side of supply chains, Peter adds, with game-changing gains to be had in inventory control and management.
“Everyone has the same rulebook, but the key is revisiting the rulebook to identify the opportunity to maximise efficiency,” Peter adds.
Penske Australia approached Prological with the idea of upgrading their 13,000 sqm parts distribution warehouse in Brisbane. However before “pulling the trigger on a new 20,000 sqm warehouse,” the truck distributor wanted to confirm the existing facility was in fact too small.
Prological used sophisticated tools to work out the warehouse reconfiguration, “a big game of Tetris with over 35,000 stock keeping units ranging in size from small washers to whole truck cabins in over 50,000 locations,” Peter says. “The warehouse needed to be relayed within a live environment and quite a few processes modified to deal with the much higher demand than the original design and layout was intended to deal with.”
Sophisticated redesign tools enabled Prological to work out how to reclaim approximately 25 per cent of the warehouse capacity back, but that was the easy part, according to Peter. “The key to the success was having the people on the floor who knew how to execute our plans,” he says. “Identifying the problems is always the easy part, planning how to solve it is a little harder, but the execution of solutions is what separates a good consulting firm from outstanding firms.”
Mike Hickey’s (Penske’s National GM – Parts & Supply Chain) team, working with Prological’s consultants and redesign, reconfigured 80 per cent of this complex warehouse in a fully operational environment. This will give Penske at least another decade of operations without major rework or outlaying millions on a new facility.
Peter and Prological’s history is full of stories of bringing an unfair advantage to its clients. The firm is passionate about supporting Australian and New Zealand manufacturers to be successful locally and globally.
“By looking at the rule book and seeing something very different to everyone else, we create a new reality for our clients, which becomes their new unfair advantage.”
For more information on Prological, click here.