Argon & Co’s James Lee, David Ring, and Jeff Triantafilo discuss the supply chain consultancy’s focus on strategic investments, its LEAN, Academy and NEOS programs, and other ways they are helping their clients reduce operational costs and increase productivity.
Optimising warehouse and logistics operations in a competitive business environment filled with inflationary cost drivers is crucial for companies looking to improve productivity and maximise existing assets.
This is where a company like Argon & Co employs proven strategies to achieve these objectives with confidence that your business can achieve real change.
Enhancing productivity through strategic investments
Australia faces challenges in productivity compared to global leaders.
“In the current climate, our focus is on optimising the logistics networks and supply chains for our clients with a view of delivering sustainable cost out,” explains David Ring, Partner, Argon & Co. “We believe our independent approach enables us to deliver the right solution for our clients and deliver the best outcomes.”
“Disappointingly, when it comes to productivity, Australia sits middle of the pack versus other developed nations,” says James Lee, Partner at Argon & Co.
“Our GDP per hour worked lags behind leading nations like France, Germany and Ireland by 30 to 40 per cent. This gap underscores the need for both our government and major corporates to continue with smart investments in infrastructure, research and development, along with accelerated skills development across our working population.”
While major infrastructure programs are vital for building future productivity, the efficiency of spending remains a concern.
“I’m not sure paying $206k to a site traffic controller is the smartest deployment of our national funds,” says James.
Currently, Australia’s R&D spend is estimated at 1.8 per cent of annual GDP compared with the OECD average of 2.4 per cent and is currently ranked 20th globally for digital technology adoption.
“The key addressing our digital savviness, will be step changing our current education and training rates for adults to rival those of Sweden and Denmark, who currently track at 60 per cent,” explains James.
Building capabilities through continuous learning and development is a core passion at Argon & Co, which has expanded its ‘Academy’ program to offer support to clients in driving operational improvement through enhanced team capabilities.
Rapid realisation and continuous improvement
In the current economic climate, businesses are evaluating investment decisions more carefully, particularly those concerning large-scale capital investments.
“We are seeing C-suite executives challenging their teams to fully realise the potential of existing assets. The old adage ‘sweat your existing assets’ is now a core focus for our clients and the logistics industry at large,” says James.
“Consequently, we are fielding more and more requests from our clients to conduct detailed operational analysis, with the intent of not only identifying quick win productivity opportunities, but also provide insights into enhancements required to their current state operating models, including people, process, systems and infrastructure.”
Continuous improvement capabilities are also becoming fundamental competency of logistics operations, not only to identify latent productivity opportunities, but also to ensure these losses are permanently eliminated from operations.
“Argon & Co’s LEAN-based training programs are increasingly in high demand, especially across logistics and retail operations,” adds James.
“The current trend towards ‘cost out consulting’ is undoubtedly playing into one of our core strengths. Here at Argon & Co, we are acutely aware of having to balance a client’s need for rapid realisation of productivity, with the need to build out robust operational capabilities that will enable them to sustain these improvements and ultimately deliver real change.”
Property as a strategic lever
Property costs are becoming a driver for organisations to think differently about their operations. Some companies are experiencing cost increases through managing their own facilities or increased rates passed on from third-party operators.
“A number of businesses coming off three-to-four-year agreements are likely to experience a significant increase in rates,” says David.
David references one client in Sydney where a $120 per sqm increase was presented at the time of lease renewal. Although with incentives, this may come back to closer to $80 per sqm increase, it’s still a high-cost increase that will have to be absorbed.
In response, Argon & Co advises businesses to be curious about their current property deals, including rental rates, incentives, and associated fees.
If there is a longer term view to maintain the current location, then renegotiate sooner rather than later to see if you can take the incentive options to improve cashflow.
“Optimising operations is another lever that a business can use to their advantage,” says David. “Streamlining operations through inventory flow both upstream and downstream – exploring consolidation of imported stock at origin, or forward deploying inventory – with a main objective of reducing overall warehouse footprint.”
Exploring higher density storage options is another lever. Options like double-deep, drive-in, and shuttle racking can optimise space within existing facilities.
Automated concepts like vertical lift systems or mini–Automated Storage and Retrieval Systems (ASRS) with goods-to-person stations can further enhance space utilisation.
If a new site is deemed necessary, Argon & Co recommends starting with a holistic network view to determine the facility’s requirements and role.
This approach ensures the selection of a site that is fit-for-purpose and future-proof, opening possibilities like multi-storey warehousing.
“We take that operations-first approach,” says David. “In everything we do, we are focused on getting the best outcome for our clients and optimising their operating model – the team, the processes, and their systems.”
Ensuring success through system integration
Argon & Co’s NEOS system integration practice plays a vital role in ensuring project success.
“We are a management consultancy made up of specialists, but we can only lead horses to water,” says Jeff Triantafilo, Partner at Argon & Co.
“That’s where NEOS comes in, taking our clients the whole way through delivery by managing software delivery and increasing the likelihood of success.”
NEOS focuses on deploying software applications, particularly in warehousing, including Warehouse Management Systems (WMS) and Transportation Management Systems (TMS).
“We already increase the likelihood of success of our projects, through a high level of detail around engineering and design data science to create best practice operations, whether they be greenfield or brownfield. This leads to a high level of confidence in design,” says Jeff.
This added capability allows Argon & Co to maintain stewardship over the delivery phase ensuring minimal failures during transitions. NEOS is a response to the increasing demand for new or upgraded enterprise application systems, positioning Argon & Co as a preferred partner in this area.
“You cannot have a cookie cutter approach, but rather a system integrator that must understand your business case to deploy the change, and that’s consulting,” says Jeff.
Addressing challenges in a tight economic environment
Argon & Co’s operations-first consultancy approach is designed to address the unique challenges faced by businesses today.
By focusing on optimising people, processes, and systems, Argon & Co helps clients achieve vertical startup, a concept from manufacturing that aims to realise benefits as soon as possible.
“Vertical startup is a concept that is very well used in manufacturing, and it’s about realising benefits as soon as possible. We’re just applying it to warehousing and logistics projects,” explains Jeff.
This involves meticulous planning and training to ensure that operations can meet the changes and deliver the expected results.
Securing capital for projects is challenging, particularly in a tight economic environment. Argon & Co’s approach involves a strong baseline understanding of operations, coupled with funding strategies and operational excellence.
This methodology ensures that clients not only secure the necessary funding but also achieve operational readiness to meet the changes effectively.
“We are able to cherry pick the best of practices that have been born out of other service offerings and integrate them into our own services,” explains James.
Argon & Co’s independence is also a significant advantage.
“We are quite proud of our independence,” adds David.
“We are not linked to a property transaction, a system vendor, or have a history of working with big third-party logistics providers. For us, it’s about finding the right solution for our clients and leveraging our network and capabilities to deliver the best outcomes.”
Argon & Co’s strategies for optimising warehouse operations are rooted in an understanding of the challenges and opportunities in today’s business environment.
By focusing on strategic investments, rapid realisation, continuous improvement, and property optimisation, it offers comprehensive solutions tailored to clients’ unique needs.
“At the front end, we talk about cost out projects, helping you to fund a client’s transformation,” says Jeff.
“At the back end, we can use our operational excellence and our knowledge across the supply chain to provide assurance to the delivery too. It’s not just about funding your project and using existing savings.
“But also, once you’ve gotten the approval to go and spend, sometimes hundreds of millions of dollars to get that assurance, we can also deploy the capability that we have in manufacturing, around operational excellence to get your operation ready to meet the change.
“Often, people focus on the design and business case, but it’s the people in the operations who need to change. That’s where we focus.”
As Australia strives to improve its productivity and competitiveness, Argon & Co stands ready to support businesses in achieving their operational goals and unlocking future potential.
To find out more about Argon and Co, click here.