Meet Harsh Zala, a systems solutions engineer at ifm. Harsh works across ifm’s range of products and is responsible for complete technical delivery of products on time and on budget. Hear Harsh talk about IoT (the Internet of Things), the importance of offering tailored solutions and more.
Delivery delays and stock availability are common difficulties for logistics businesses operating in Australia. George Pappas at Linde Materials Handling presents a solution to dramatically improve this issue.
Local material handling equipment users have for years found themselves in a unique situation when it comes to sourcing the appropriate machines for their needs.
On one hand the Australian market is serviced by all the major global suppliers, providing excellent choice. On the other hand, the relatively small size of the market and its distance from equipment manufacturing centres frequently leads to lengthy delivery delays.
This situation is exacerbated by the requirement for bespoke material handling equipment solutions in many instances and the temptation to settle for “what’s available now” has caused major grief in businesses of all sizes.
Delivery delays of anything from 12 to 30 weeks have become part of new equipment and fleet turnover planning by necessity, regardless of the chosen supplier.
Now Linde Material Handling Australia has made dramatically-improved stock availability the focus of a major multi-million-dollar investment project to permanently address this issue.
The investment is part of Linde’s ongoing commitment to anticipate customer requirements and to address market-wide delivery delay issues. It sits alongside similarly important developments which will see Linde broadly extend Lithium-ion battery availability and roll out Linde Robotics technology.
“We have made a multi-million-dollar decision to invest in equipment which we know is in high demand in the material handling equipment market place, and have it available ex-stock,” George Pappas, Senior Director, Service and Sales at Linde says.
He pointed to the major benefit for rental and purchase customers as the equipment covered by the plan will not incur the normal production and shipping-related delivery delays experienced for equipment currently ordered from all the big industry players.
George stresses the decision is a permanent one, rather than a short-term measure. “We have made this business-transforming investment decision to forward-order high demand stock which we know is suitable for both the corporate and retail market, for the purpose of short term rental, long term rental and outright purchase,” he says.
“The hundreds of pieces of equipment covered by this undertaking range from counterbalance electric forklift trucks, to high productivity counterbalance IC forklift trucks in our Performance Plus 2.5 tonne capacity range.
“We have also ordered a significant number of reach trucks and pallet trucks including the MT12 – a unique medium duty lithium ion battery-powered 1.2 tonne capacity, high manoeuvrability truck for use in back-of-truck and as a replacement for hand pallet trucks and manual pallet trucks.”
Linde’s aim is to ensure it remains close to the market in terms of supply through its short-term rental fleet and for all types of new equipment from the smallest application to large enterprise requirements. In doing so it has taken on the risks associated with peaks and troughs in the market.
“The days of ordering from the factory only on receipt of customer orders are behind us now as Linde moves up to the next level of customer responsiveness and support,” George says.
The widely used Linde 115 reach truck, is part of Linde’s plans for ex-stock availability, highlighting the company’s contention it is not simply stocking up on equipment which is just fodder for the capital equipment market.”
Linde is also demonstrating its new approach on the pricing front. “These are high specification machines being put to the market at some of the most aggressive prices even seen from Linde in both the short term and the long-term rental market,” George says.
“Our goal is to ultimately have application specific machines which are customer rental available with the shortest possible lead time.
“Within this program we are doing our best to be genuinely responsive to demand without the long list of terms and conditions which frequently surround rental machine availability. We are doing our best to make sure we have the right machines with the shortest possible delay.”
Linde claims its actions will address frustrations in the market around the availability of stock and allow it to respond to large segments of the market with immediate hire.
“I stress that this is a genuine, on-going approach, backed by tens of millions of dollars of investment and not just a limited- time promotion,” George says.
“We continue to have a clear focus on highly customised solutions for markets and applications which require them, but we are also better able to meet the demands of the general short-term rental market with this increased stock commitment.”
Sydney start-up Yojee has been developing technology solutions for specialised logistics organisations both at home and abroad. LMH speaks with Ed Clarke, co-founder and CEO.
The Australian start-up scene is lively and booming. Investment in start-ups is growing faster in Australia than in Europe or the US, growing 65 per cent between 2016 and 2017.
35 per cent of the nation’s start-ups begin their life in Sydney, bringing innovative ideas to the Australian economy and Yojee is one of them. Yojee’s aim is to bring logistics companies into the digital era by utilising blockchain technology, artificial intelligence and machine learning for fleet management.
Yojee recently announced it will collaborate on projects with logistics giants UPS and DB Schenker Logistics & Materials Handling caught up with Ed Clark, Co-Founder and Chief Executive Officer, to understand the company’s offering and what he thinks artificial intelligence solutions can do for the logistics industry.
Ed Clarke is a technology entrepreneur and ex-Sydney Swans rookie player. He has extensive experience in taking innovative platforms to market in areas such as real-time communication, big data marketing and e-commerce. He was Vice-President of Sales at Temasys, a communications technology provider, and was part of a team that IBM recognised as one of the “Top-5 global start-ups to watch in 2014.”
As one of the first companies outside of the banking sector to provide a blockchain network, Yojee is seeking to enable the logistics industry to keep up with the boom in e-commerce.
“A number of years ago, as e-commerce started to develop, there were significant problems for the supply chain and logistics industry. Businesses were finding it difficult to move goods from the digital to the physical,” Ed says.
Yojee has been quickly developing a delivery network across the Asia-Pacific region. The concept behind the business is to bring to market a platform that manages deliveries on a mass scale. “We aim to transform the global logistics industry by providing state-of-the-art blockchain and artificial intelligence backed technology empowering shippers and carriers to work together across the entire supply chain,” Ed says. Traceability and visibility
The company is primarily based in the Asia Pacific region and has been working with Lion Parcel, a delivery service in Indonesia to digitise its network. “In Vietnam, Asia, Indonesia there is a lot of sub-partners and multimodal networks, parcels are passed on jobs through partners but they often loose visibility,” Ed says.
Logistics providers often have four or five subcontractors and once a parcel reaches a new supplier the original provider losses visibility. According to Ed, the logistics industry in its current form is very fragmented.
“Even the big guys like DB Schenker and UPS still have the same problems, it’s all about traceability and visibility. Once you add different layers and suppliers with their own networks this gets increasingly hard,” he says. Adaptable model
Ed recognised that in order to improve traceability and visibility any technology offering should be accessible to all businesses regardless of their size. “We have established a deliver-based pricing model so that the bigger companies can work with the smaller ones,” he says.
Ed believes that with this model, nobody is priced out. He thinks this is important in a multimodal industry that often engages a number of different suppliers to make a single delivery.
“The consumer wants to know delivery windows – in this day and age they aren’t willing to be left waiting for a couple of hours. There is a lot more responsibility on the carrier to provide real-time information so data is very powerful.” Last-mile delivery and labour costs When comparing the Asian market to Australia Ed believes it’s important to keep in mind the differences in labour costs, and the vehicles used in the logistics operation. “You have to consider the cost of labour when making a decision about how you will manage your operation and how the technology can help you. In Australia, the labour cost is very high, so it changes the type of vehicle you want to work with. If a driver is costing a lot per hour, then you want to make sure that there is enough deliveries in the vehicle. However, in Indonesia, for example, labour cost is lower and there is a huge traffic problem. As a result motorbikes are often used which make fewer deliveries per vehicle.”
Yojee is able to look at existing data and work with each individual business, regardless of their size or preferred transport mode. “We run the company’s existing historical data and then work on a simulated model to increase efficiency,” Ed says.
Most logistics companies, regardless of the mode of transport used, are looking to reduce wait time, he says. “It’s about maximising itinerary and minimising wait time. Time-slots are very important, waiting time is wasting time and this is particularly inefficient when labour costs are high.” Tech in logistics
Ed says the logistics industry is an old industry and in many ways it is struggling to make sense of the technology that could help. “The market is so big. Everyone is struggling – people are looking for solutions and opportunities.
“Take blockchain, everyone knows it’s the future, everyone is trying to work out their own way of doing digital transformation. But, for a lot of people this is a struggle – and that’s where we can help,” he says.
For Ed, if the larger companies can use smaller subcontractors but they all use the same technology platform then all parties can benefit from transparency and visibility. “The bigger companies that are implementing these digital strategies still need to work with smaller contractors, but if they all share the same system then the data can be used effectively. We found that the companies using our software have asked their subcontractors to use the software because they rely on it.”
This is where Ed believes the Yojee offering will help transform logistics. “The Yojee platform incorporates state-of-the-art technology and APIs so powerful that small to medium businesses have the ability to pull parcel capacity off the Yojee grid to enable greater revenue and increased efficiencies. Even if you only have four trucks, the system is affordable.”
Premier Daniel Andrews met with the logistics and transport industry to discuss the future of freight in Victoria. Logistics & Materials Handling was on-hand to report.
Over the past few years there has been an unprecedented road and rail infrastructure investment across the state of Victoria. This sentiment has been backed up by the recent establishment of a dedicated freight division of Transport for Victoria and the publication of the Victorian Freight Plan.
The Victorian Freight Plan recognises that moving goods to, from and around Victoria is vital to the economy and enhances the standard of living for all. With Victoria’s rapid population growth in mind, there is an increased need for goods and services.
Victoria is only three per cent of Australia’s total land mass, but accounts for almost a quarter of Australia’s total food and fibre exports, with goods exported each year valued at $26 billion, according to the plan.
The plan identifies future challenges and opportunities that freight and logistics businesses, their employees, and local government have raised and the initiatives needed to address these.
The overall aim of the plan is to reduce the cost of doing business, improve the efficiency of moving freight while minimising adverse impacts, to better connect Victorian business to their local, interstate and export markets and to provide sufficient future capacity.
The report highlights five key priorities that the government will tackle over the next five years to ensure that Victoria has an efficient, safe and sustainable freight and logistics network. These are to manage existing and proposed freight corridors in conjunction with urban form changes, to reduce the impact of congestion, to better use rail freight assets, to plan for Victoria’s future port capacity and to stay ahead of the technology curve
Key elements of the plan include working closely with industry and the freight community to establish the roles to play in how the freight and logistics system develops and to work towards a common freight ambition.
At a recent event, the Victorian Transport Association (VTA) invited Victorian Premier Daniel Andrews to meet with members, sponsors, associates and other stakeholders from the freight and logistics sector to discuss the future plans for Victoria, skills shortages and how better to promote the logistics industry as a career of choice.
The event was held the Members Dining Room at Parliament House in Melbourne in August and provided a unique opportunity for industry to meet with Government to discuss Victoria’s freight future. Action is the new normal
Introducing Daniel Andrews, Peter Anderson, Chief Executive Officer at VTA applauded the Victorian Government for defending the long-needed infrastructure developments in Victoria. He thanked the Premier for delivering on election promises and was thankful that he has the role of representing the logistics and transport industry at government level.
The Premier spoke of the successful projects the Government has delivered on, including the privatisation of the Port of Melbourne, which he described as “the biggest transport program of investment the state has ever seen”.
For the Premier, the latest developments and the speed of improvements should now shape the standard for years to come. “We have invested in the local roads you drive on every day, we have invested in public transport to address pressure points on our roads. This sense of action should be the new normal, what we’ve done over the past four years should set the tone for the future,” he said. Representing an industry
The Premier spoke of the great job that the VTA do of representing the industry’s needs and concerns.
“Our people are our most important asset, so professional and industry associations are so important. We can never know your sector like you do,” he told those in attendance.
The Premier has some first-hand experience in the logistics industry. “I have actually driven a truck myself, while I was at university. Though, I’m not the greatest example of the craft,” Daniel said. The Premier revealed that his father ran a food processing business and that he would help out from time to time.
As a strong advocate for the industry, the Premier spoke of the respect he has for the logistics industry. “To get that freight task where it needs to be so that Victoria can capitalise on its natural advantages and pave the way for innovation and critical thinking is not underestimated here,” he said.
Recognising the great contribution that freight and logistics provides to the economy and society at large, the Premier spoke of the importance of making the industry a safe and efficient one and the part that improving infrastructure can play in that role. Right people in the right job Addressing the growing skills shortage in the logistics, transport and freight sector, the Premier spoke of the importance of addressing the current skills shortage in the industry. “It’s not the communities want or desire that is a limiting factor in this development. It’s the skills and some natural resources that will hold us back,” he said.
He also recognised that there is an issue in that the general perception of what a career looks like in the logistics industry can be negative.
“We need to change the way the community views the roles in the transport industry. In this sector, if you have the right qualifications and you do a good job you will have a job for a long time and earn a good wage,” the Premier said.
To address this, the Premier declared that should the Labor government be re-elected at the November state election, it will invest $4 million dollars to deliver 800 new heavy vehicle drivers in partnership with the VTA and others.
The Premier also discussed his government’s investment in TAFE programs to help equip the next generation of workers with skills needed by the state’s growing economy. He also stated that partnering with groups like the VTA was essential to overcome the specific challenges faced by industry sectors.
An important factor for the Premier is not to miss the opportunities of developing this industry and for it to provide good jobs for the people of Victoria.
Peter Anderson thanked the Premier for his signature of intent in making the logistics industry an industry of choice and for overseeing what he claimed is biggest infrastructure agenda the nation has ever seen.
“Our industry is about people, freight and the economy that drives the standard of living we all enjoy. While over the years at times, as an industry, we have felt left behind, there is now a real focus on our industry and we are encouraged by new infrastructure, a new industry specific department in Freight Victoria and an economy that is going from strength to strength,” Peter said.
Blockchain has the potential to offer a whole range of benefits across the supply chain. Here LMH demystifies the concept by talking with logistics and blockchain specialists at one of Australia’s leading banks.
Blockchain technology has the potential to revolutionise any market it touches. In the world of logistics, where real-time data and transparency are vital factors in an efficient and successful supply chain, the opportunities blockchain promises could be significant.
A few months ago, Commonwealth Bank of Australia (CBA) built a blockchain to ship 17 tonnes of almonds from rural Victoria to Hamburg. In a collaborative project involving a series of logistics providers, trucking companies, rail freight providers and major shipping firms – the experiment was a major success and the results are now being used to shape the future of blockchain in the logistics sector. Logistics & Materials Handling met with CBA’s Sophie Gilder, Head of Blockchain, and Chris Scougall, Managing Director of Industrials and Logistics to find out the details of the project and how the technology will go on to change the processes used to ship goods. From origin to destination
The almond shipment was tracked end-to-end from the packer in Sunraysia, Victoria to Hamburg, Germany and involved five key Australian and international supply chain leaders. CBA facilitated the experiment and the platform was underpinned by ledger technology, smart contracts and the internet of things (IoT).
“Naturally, we looked to work with someone who was a primary producer, in this case that was Olam Orchards Australia. We then looked at someone on the rail side, that was Patrick Terminals, then on the stevedore side we had Port of Melbourne and worked with Orient Overseas Container Line (OOCL) as the international container line,” Chris says.
The program took a long time to develop and Sophie’s team were working intensively for months before the shipment actually took place. This isn’t the first time that CBA has been involved with a blockchain project, and the bank sees blockchain as a significant opportunity.
“We started exploring the concept in 2015, and we joined a global consortium called R3. In 2016 I joined the innovation lab at CBA and we established a centre of excellence for blockchain. We think this technology will have a far-reaching impact for our customers, for the structure of various industries, for the way that we do business and also for financial services,” Sophie says. How does it work?
Blockchain is commonly talked about with regards to logistics and the supply chain, but how does it really work in practical terms?
“If we break it down into component parts it’s easier to understand,” Sophie says. The component that the users see is essentially a dashboard, it gives them a window that shows the underlying information of the shipment. In addition to that, we have a blockchain, which is a distributed ledger sitting behind the user interface, she says. This database is unique in that it can record information from a variety of sources, including the IoT devices inside the shipment. It is synchronised across a network so that every user has an up to date clone of the database, regardless of their location.
“This is revolutionary in that instead of the data being recorded in one single location, the data is shared. Users can see in real-time how far through the operational process is,” Sophie explains.
The IoT devices placed in the shipment provided a bridge between the digital and physical realm for the team. “By the time the nuts arrived in Hamburg, you had an entire chronology from origin through to destination of the hands through which the product has passed, the times and dates that they happened and also the condition of the goods at any time as the IoT devices were not just capturing location but temperature and moisture,” Sophie says.
For Chris, this has significant benefits for all parties involved. “For Olam, the producer, they are able to make sure the product was delivered in prime condition. For the buyer, they know that the product had been stored properly throughout the entire trip from Australia,” he says.
The IoT devices placed in the shipment were developed by LX, an IoT product development specialist. The devices measure about the same size as a human hand and have a built-in battery.
“These devices can do two things which are essential for logistics in Australia and the world at large. It can capture information and save that information to send when connected. This has significant benefits for countries like Australia where there are many areas that do not have connectivity – you can still capture it and as soon as the device reaches a signal the data is communicated,” Sophie says. Transparency and efficiency
There are many overarching benefits to be realised from using blockchain technology. “The comments we have from all participants involved two words; transparency and efficiency,” Chris says. Each operator or supplier was able to see that the product was in prime condition.
“Whether it was Olam or any other transport operator, they could be absolutely transparent about where the product is at any one time and also the condition it’s in,” Chris says.
According to Sophie, transparency is something that participants along the supply chain don’t have today. “The way we cope now and come to terms with different aspects of communicating with each other is that we make phone calls, we send emails, faxes, collect receipts – we have a vast array of different forms of information. A lot of these forms are physical and need to be transported, sent or couriered between the different parties and you just hope that nothing gets lost or that any errors are made,” she says.
Where blockchain gives a significant advantage is all of this information is captured with a date and time stamp and a digital signature about who undertook which action. “You have a complete set of information about who has done what, you don’t waste time looking through filing cabinets or desperately trying to find that receipt that you need,” Sophie says.
Trust and security are major advantages and Sophie explains that a high priority for any logistics business is authenticity. “At the moment, we rely on paper and wet signatures, which is pretty much what we were doing in medieval times.”
Paper is not fraud proof, and Sophie says that when using blockchain documents you are given a unique digital footprint called a hash. This hash works like a fingerprint in that you know that it is genuine due to its makeup. For Sophie, this is very powerful and enhances the level of trust between different parties in trade. Early adopters
Although blockchain is very much in its early form, experiments like this one are paving the way for how the technology can be used across a variety of sectors. Sophie’s department at CBA are working on a series of projects and trial, exploring the possibilities.
“We want a good understanding of blockchain so we have undertaken a series of proof of concepts – over 20 of them. They are not just in the financial services realm, they are in many different industries. We want to understand our clients problems and how we might be able to deploy emerging tech to address them,” Sophie says.
The types of devices and processes used in the almond shipment are not common in regular shipping processes, but Sophie believes they are at a tipping point in terms of affordability and battery life. “Until now there has been issues with them not being cheap enough to deploy across entire fleets and logistics assets. Another issue is that they are not sufficiently rugged. They need to be tougher so that they can be dropped or if someone is packing a container they are not at risk of being damaged. All of these need to be considered in the next step in development” she said.
Sophie expects that these devices and this technology will be used more in the future as it offers unique benefits over any other technology currently available. “It’s hard to do these type of things with any other method. While we are still working through the practicalities, the benefits of different parties being able to share information for logistics will be huge.” Collaboration key to success
Both Chris and Sophie attribute much of the success of this particular project to the collaboration between all parties involved.
“It’s not technology that is the gating requirement, it’s most likely to be governance structures and how you get different entities to agree with each other,” Sophie says.
She says it will take longer to achieve consensus between legal entities and people than it does to build the technology and the key to the success of this project was the consensus and shared vision of all involved.
“All parties wanted to learn, they had the understanding that this could change the way they operate their business and interact with their customers. Everybody approached the project with an open mind and always offered honest feedback. This enabled us to create something that had benefits for all involved,” Chris says.
“The more you do and the more you share the learnings from projects like this the more you can progress with the adoption. We see these practical experiments as a way of sharing the learnings and educating people on the possibilities of blockchain.”
SEW-EURODRIVE uses a unique process to increase efficiencies and productivity. You’ve heard of SAP system, let SEW introduce you to SLAP systems.
At SEW-EURODRIVE, precision, efficiency and productivity are key. Working with the head office in Germany, Fred Pizzicara, National Procurement Manager at SEW-EURODRIVE Australia, has implemented a new logistics process that aims to boost operational efficiency.
The system is called SLAP, which stands for standardisation of logistics and assembly processes. “The benefits we are getting here in Australia since the implementation of SLAP has been astonishing,” Fred says.
SLAP is an information technology systems applications product (SAP) integrated system and is used across various processes within the SEW facilities.
The system was developed in Europe in 2008 and a project team was developed to roll the product out across the entire business. By 2012, the system was implemented into 13 European countries. In 2014, the system began to roll out internationally and Fred spent a significant time in Europe getting ready to bring the system across to Australia.
By 2014, the system was fully functioning in the Melbourne office and Fred says efficiencies were quickly realised across the entire SEW operation. “Parts used to come in and we had to manually handle them into the system. Now products arrive into SEW stores and are scanned which it automatically informs us of where the product should be placed. This enables us to gain a lot of increased productivity with the waiting and dispatching,” Fred says.
This has resulted in impressive efficiency gains and improvements. “As an example, putting away a whole container used to take one to two weeks, now it can be done in one to two days,” Fred says. The process of loading the goods from one container into the system is no longer a manual process. With the load of the container already detailed on the barcode, there is not a need to manually record each item.
“Before SLAP we had a warehousing team consisting of seven members. After implementing SLAP we found that we could alter this number and we re-deployed two team members of the warehousing team into other areas of the organisation,” Fred says.
“In the packing area, we also discovered that we could gain similar efficiencies by moving some team members into other areas of the business and the packing department could still operate with having one or two team members in a packing line to organise most of our products,” Fred says.
With SLAP, the process becomes more automated as it uses barcode scanners throughout the journey of the product. SEW now uses mobile scanners for booking of goods receipts on every box. Another advantage is that there is an automatised printout of goods receipt slip. If applicable, an identification tag is attached to each box with local storage locations, which speeds up the process for storing parts, Fred says. In a factory with over 15,000 different parts and products, this automated process can deliver significant efficiency gains.
The automated system also leads to increased transparency. “We can now see stock levels in some SEW across the world, this is really helpful with our efficiency processes as we’re so far away from Germany,” Fred says. The Melbourne SEW office supplies many other SEW sites in the region, not just domestically but also overseas. Having accurate and detailed stock reports helps SEW Melbourne to supply parts to these other facilities.
For Fred, the process has improved efficiencies within all departments. “The system is so clear and easy to use that it stops the team from having to query quantities, they can just get on with the work now.”
By using a standard system across the whole business anyone can log in and see where the stock is located as well as access accurate quantities. This ultimately enables SEW to provide a faster service for the customer. If a customer needs a part that isn’t stocked in Melbourne, SEW employees can quickly look on the system to see where the closest available part is located as well as request the part all with one system.
The information is also always accessible instead of at certain processing times across the supply chain. This leads to a continuous workflow. Fred says there is a significant reduction in administration tasks and manually inputting information, also leading to less error and faster process times.
“Even for special parts that we don’t usually stock we have transparency as soon as they come in, again increasing efficiency”, he says.
As the system is rolled out across SEW sites it allows the entire business to share and understand processes and information, there is no need to contact each location as all information can be seen in one central piece of software for all involved.
The system ultimately allows SEW-EURODRIVE to more effectively manage and control its stock and allows for better planning across regions. Having increased touch points across the supply and process chain leads to increased efficiency and transparency, allowing SEW to better service its customer’s needs.
Year after year organisations invest large sums in an attempt to improve their leadership capability as a means to create organisational cultures that deliver for customers and shareholders. Whether the organisation operates within upstream or downstream, manufacturing, resources, operations, logistics or the wider supply chain, in the majority of cases, many of these leadership development interventions deliver none of the intended promised changes in performance.
In recent years, leadership development strategy and programs have begun to find traction in the resources sector and throughout the Australian supply chain industry, however, poorly designed, deployed and executed, the failure of leadership development programs can actually result in increased organisational cynicism and a further decline in employee engagement, as employees perceive management wasting money they have been asked to cut or save.
Leadership development begins to be perceived as a waste of time, where leaders are seen to indulge themselves in management ‘love-ins’ and ‘off-sites’ in stylish hotels. The leaders who attend leadership development programs that fail to deliver can also be left feeling helpless, as despite completion of such programs they are still unable to cope with the demands their leadership roles expect of them.
When the promised changes do not eventuate, and when employees do not experience the change in leadership behaviours promised, cynicism and resent are natural and predictable responses. If you want to understand how leadership development is viewed in your organisation, ask someone who is not privy to it. If the results of such programs are not visible here, it is likely they are not creating the change you seek.
New research from the Centre for Workplace Leadership at the University of Melbourne, funded by the Australian Federal Government, on the state of Australian leadership, was published recently. The findings point to mediocre leadership capability being a systemic issue leading to poor business performance across Australian organisations. Many of these organisations are global brands. Without too much of a stretch of the imagination, it is likely the findings might be similar for organisations in other countries as approaches to leadership development, globally, are not that diverse. Why do leadership development programs fail?
If an organisation were a garden and you were the gardener, to which plants would you give water and attention? The new shoots, the seedlings and smaller plants, or the mature trees? One of the key findings of this research points to a huge underinvestment in frontline leadership. For every $10 spent on senior leaders, only $1 is invested in developing frontline leadership. This has negative implications for creating a pipeline of future leadership and is impacting business performance.
Again, imagine you are the gardener, conditions are harsh, and you only have limited water and resources to spare. Do you pour it over the established trees? Or do you sprinkle it over your precious seedlings that have just broken through the soil? At the moment, from a leadership development perspective, we seem to be preoccupied with watering the trees, a strategy that has not delivered the required change. For organisations to flourish, it is clear we need to think differently about where investment is focused and how the development of leadership throughout the leadership lifecycle is approached.
Many businesses in Australia and NZ tend to be very hierarchical, with most investment in the highest level of executive leadership. Treating leadership development as an elitist reward for making it to the senior ranks does nothing to move the organisation forward into a high-performing space, and focusing leadership development on so-called HIPO talent neglects the leadership experienced by the majority of employees in the organisation. Employees inherit failing, unsupported leaders, because the organisation does not consider them high-performing. This is a perfect recipe for low employee engagement, something we are all too familiar with. It is also a dereliction of a duty of care to those employees. Ineffective leadership fails to serve the legitimate aims of the organisation, and it also fails to recognise the potential and of individuals and teams.
“If an organisation were a garden and you were the gardener, to which plants would you give water and attention?”
Designed to fail?
The way leadership development programs are designed and structured is a key reason why they fail to deliver the desired change in leadership capability. Many development programs focus on what is termed horizontal development, that is, the acquisition of new skills and information. The premise being that leaders lack the required skills and information, therefore to become effective leaders they need to acquire new skills and information. This approach is actually leadership training and should not be confused with leadership development, though it does have its place. Leaders need to acquire new skills and information as thinking in the leadership space evolves. It is not this acquisition, however, of new information that builds inspiring leaders.
What fuels leadership development is exposure to real-work situations where a leader’s perspective taking capacity is challenged, and where, as a result of the experience, the environment creates in a leader an ability appreciate multiple differing perspectives simultaneously. That is to say, the leader is now able to sit comfortably with situations others might describe as paradoxical. The development experience may be described as the ‘heat’ in the experience: the leader is taken out of their comfort zone, where they are stretched into unfamiliar territory, where growth happens. Exposure to being mentally stretched in real-work situations provides leaders with the capacity to grow and develop; it is this realisation that cascades ongoing future development for many leaders. The knowledge that discomfort gives way to development and growth.
Many leadership development programs are designed without first undertaking an extensive diagnostic process that identifies the key issues within a system that limit the development of leadership talent. It is unlikely that a diagnostic process undertaken internally can deliver the required insight, the premise being that you can’t see the problem if you are already part of it. Internal politics and power relationships may also bias findings that identify unpopular issues requiring attention.
This is not to say that an external diagnostic is not subject to bias. The promise of an ongoing business relationship with a leadership development provider may be sufficient to taint the messaging the provider communicates to an organisation. The organisation is given what it wants to hear, rather than what it needs to hear. Perhaps the answer resides in a collaborative approach driven by a strong desire for authentic understanding?
Many third-party providers of leadership development programs are selling products and tools, or what some term leadership systems. The sale of these products or systems forms the basis of the intervention. It is not necessarily what the organisation needs. It is unlikely that a range of leadership products will meet the unique needs of the organisation in question. It is not to say that certain leadership development tools are not useful, they can be. It is just to say that alone, they are not the solution to all leadership woes – buyer beware.
We have all heard the adage “it takes a village to raise a child”. Well, it also takes a whole range of other people to help create amazing leaders. Leadership development programs need to involve stakeholders as an integral part of the developing a leader’s growth journey. Gaining feedback from these stakeholders on areas for development, and also progress against set goals, is a wonderful way to develop leaders and also a fantastic way to engage and build trust with key stakeholders. This is where being vulnerable builds capital in relationships. Take your time
There is great pressure on leadership development practitioners throughout Australia & NZ to deliver changed leaders quickly, however, real change does not occur overnight. The industrialised world may have accelerated at light speed over the last 200 years, but human evolution moves at a much a slower pace. Human beings are slow to change, and change is hard for people to make. Leadership development programs need to be long enough to achieve the goals of development programs and embed new ways of leading. Leadership development programs that run over a few months have little chance of effecting sustained change.
“We have all heard the adage “it takes a village to raise a child”. Well, it also takes a whole range of other people to help create amazing leaders.”
There is also a need for support structures to be in place, such as coaching and mentoring programs to support leaders while they make sense of new ways of seeing the world, and embed those changes in the way they lead.
Support is a key element of success in development programs. For many leaders being experienced differently by others is a painful process, support to develop new ways of leading and these new ways of sense-making of the world is key to success. The structures created by the leadership development program need to be left in place once the program has ended to ensure leader growth continues – they should not be considered temporary structures. Key elements of successful leadership development programs
Ensure a thorough collaborative diagnostic process is undertaken by an external independent party, which creates a clear understanding of the systemic challenges facing developing leaders in your organisation.
Focus the investment where it will have the greatest sustainable impact on your pipeline of leadership.
Continually adapt your approach to leadership development, understand that any leadership development program needs to continually evolve. What might deliver success today may not deliver the same success tomorrow. Successful leadership development is contextual, always be aware of the context. Programs that adapt to changing conditions remain relevant and deliver results.
Leadership development programs need to be designed around exposure to real work situations. Real work situations provide the context and real-world experience for developing leaders where development can be directly translated into their daily leadership roles.
Successful programs provide differing ways for leaders to develop, depending on their individual needs and context. Not one-size-fits-all, the approach must be multifaceted.
Involving stakeholders in the development of leaders is a key element to assist in generating insight and supporting change. It is also a great way to build relationships with stakeholders.
Build and maintain support structures such as coaching and mentoring programs to support and embed new ways of making sense of situations and to help embed new approaches to leadership.
Identify clearly the ROI the BU/organisation expects from the program(s), initiate related agreements, and hold all stakeholders accountable for the investment.
Simon Popley is senior partner, leadership and coaching, and Kim Winter is the global CEO of Logistics Executive Group. 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 the Middle East. Contact Simon Popley at email email@example.com, or Kim Winter on +61 411 883 368, email firstname.lastname@example.org.
Meet Chris Dicker who is both the Australasian Product Manager and Complex Product Manager for ifm in Australia. Chris has extensive experience working in the industry and with ifm, he has genuine passion for the products because they are such high quality and are designed to be easy-to-use and implement. Hear how Chris gets great personal satisfaction from helping customers find that perfect solution.
Meet Hao Yang, Internal Sales Manager with ifm. Hao loves working with a company that is a family business with loyal employees and also loyal long-term customers. He is proud and passionate to be part of the Australian ifm headquarters – a technical centre in the automation world and one of the few, if not only, companies that provide a 5-year warranty on their products. Hear Hao talk about the ‘Close To You’ culture of ifm and how together with customers they can help businesses to grow.
In this series, we explore how the longer-term demand plan should play a more prominent role in businesses. The first two parts will deal with the key elements in setting up the demand planning and forecasting process, and later, we will explore what are the key behavioural elements, i.e. what do we do with the process and the outcomes when we get them. Demand planning and forecasting is a critically important ‘front end’ of not only supply chain planning processes but business planning processes. Often, however, the whole organisation misses the opportunity to use the demand plan – both in the short term and the longer term – to guide the rest of the business. The longer-term part of the forecast (or more appropriately, the demand plan) is often ignored by the sales team and there is often very little marketing overlay and input into setting direction for the longer term.
Improving forecast accuracy is proven to have numerous significant business benefits, and best-practice companies are typically ‘all over’ accuracy, especially in the near term.
Why is it, though, that the integrity of the longer-term demand plan does not always have
the same focus? As one senior executive was overheard saying recently, “If you get the month right, then the longer term will take care of itself”.
Unfortunately, there is a chicken and egg aspect to this statement as we’ll see later in this paper. The real reason probably lies in the inability, or unwillingness, to communicate bad news early. It is too common for the sentiment about the emergence of a gap to strategy later in the year, that is ‘we’ll deal with that when we get there’. Anchoring
A fundamental psychological element is to have a mechanism to gain an objective view of the future. It is called ‘anchoring’ and is about making sure there are boundaries to the demand projections. The primary way to do this is to use statistical forecasting techniques and predictive analytics to ensure the sales projections are as objective as possible. Research has demonstrated that in many environments, statistical algorithms are better at predicting the future, at least in the short term, than human beings.
Hence, statistical forecasting techniques can serve as a powerful anchoring effect, so any large deviations to projections that Marketing or Sales may suggest, can be anchored back to something more objective. This tends to take the emotion out of the numbers and starts a dialogue on the differences in thinking and perspective instead.
So that’s the good news. However, using only history to predict the future is fraught with danger. The two main issues are:
Statistical algorithms rely on historic sales and the assumption is that the trend, or curve of ‘best fit’ from this past data, will continue – in other words, statistical forecasting won’t be able to predict what is going to be different about the future.
This is linked to the first issue in that trend analysis and using algorithms is the easy bit, but what is critical about longer-term projections is predicting change. So what we really need to know is:
When is the trend going to change?
b. By how much is it going to change?
c. How long will the change last?
The problem we’re trying to solve then becomes: how can we use history, and our knowledge
of the future, to create a robust longer-term demand planning environment, one that aligns with strategy and that everyone understands and trusts? What I mean by ‘understand’ is that while there is an acceptance that predictions are never going to be perfectly right, agreement needs to be gained on the bandwidth of variability and inherent uncertainties in trying to predict future outcomes. This needs to be built into the planning process. 5 keys of demand planning
It is important to keep in mind the working assumption that the demand plan is the plan that underpins all other plans in a business, e.g. supply, inventory, financial, strategic, people, and infrastructure. Without this in place, plans are just unaligned guesses, and highly likely to be different from one department or function to the next.
So, back to our topic of ‘Realising the Full Potential of Demand Planning’: there are 10 keys to making sure we have congruence between our demand plans and strategy – we will cover five in the first two articles and the remaining five in following ones.
Make sure the monthly management process horizon is at least a rolling 24 months
“We used to take three months to do the ‘latest estimate’, and then another three months to do the budget … this left only six months of the year to be actually doing anything valuable. Now budget is a significant non-event.” — A CFO’s delight
When it comes to demand planning, many companies focus their time on the next month; maybe the next quarter. Thereafter the budget (and sometimes an un-reviewed statistical forecast) is inserted to flesh out the rest of the financial year, but this encourages ‘hockey stick forecasting’ (see Figure 1.), which is particularly commonplace when sales are consistently tracking behind budget. In this situation most organisations will still be forecasting throughout the year that they will achieve budget, so there is a resultant cumulative error, commonly known as bias.
Typically, the gap between forecast and reality only becomes visible through a quarterly or half-year ‘latest-estimate’ process and then the solution is to just say something like, ‘with all the new initiatives we’ve put into plan, or that we can bring forward from next year, we’re still going to hit budget’. When the impact of these ‘recovery plans’ are time-phased into monthly buckets, the resultant graph looks Figure 1… ‘mission impossible’.
The reverse situation is also true. If companies are tracking ahead of budget, there is a tendency not to show the full potential of the plan, and worse still, as they get towards the end of the year, push sales into the following 12 months.
Imagine the chaos this causes if all other plans in the business are linked to those projections. Of course in such circumstances, people try to be clever and don’t link their plans directly to the demand plan, using their discretion to hedge against this ‘game playing’. Unfortunately, this results in multiple numbers; the value of integration is lost.
” Improving forecast accuracy is proven to have numerous significant business benefits, and best-practice companies are typically ‘all over’ accuracy.”
So, what’s the solution? Some organisations resolve this by looking out to the end of the current financial year, and while this keeps some focus beyond the current quarter, it very quickly becomes compressed into conversations about ‘how are we going to end the year?’ This is also known as a ‘compressing horizon’ or the ‘accordian horizon’ (see Figure 2.).
More sophisticated organisations take the next step and insist on a monthly process that assesses an 18-month horizon and this at least gives visibility of next financial year, six months in advance. However, in reality, it’s barely enough, since many companies start their budgeting process around six months out, so the first cut of the budget, is only at that 18-month horizon.
Anyone who has been in business for a little while knows that the first draft, or ‘roughly-right’ budget plans, become the anchor to which all subsequent deviations must be explained.
So a better approach is to make sure the monthly review cycle has at least a rolling 24-month horizon (see Figure 3.). This means there are six months to get the first draft of the budget as good as it can be, but avoids a 12-month budgeting process.
In this way, the senior leadership team gets a view of the next year’s plan in full, right at the time the financial year is starting. As the team learns more about the integrity of the underlying assumptions through the execution of ‘this year’s plans’, the underlying assumptions about next year can be iteratively refined and applied in readiness well before the point of commitment.
The result is that senior managers are so confident of ‘delivering this year’, they are freed up to focus on strategy. It may take two or three iterations before their confidence reaches the appropriate level, but the important thing is to make a start.
It also makes the whole budgeting process a significant non-event – ‘significant’ in that it is vital to have a budget, but a ‘non-event’, because the budget comes automatically from the rolling monthly projections.
These days, many companies are even projecting out to a 36-month horizon because they know how important it is to spend time anticipating future issues and opportunities, before they become today’s problems. If you think this is just hypothetical, when I left industry in 1996, our IBP process was routinely looking out 36 months, with technology that was way less sophisticated compared to what is available today.
With the tools that are available today, there really is no excuse.
A simple test of having a valid budget is that when the senior team looks at the opportunities and risks to achieving the plan, they are evenly balanced either side of the most likely outcome (see Figure 4.). Most companies, however, tend to ‘bank’ all their opportunities in their annual budgets, and then spend the rest of the year dealing with risks of not delivering the plan, which is not a very uplifting environment to be in. This article will continue in the September-October issue of MHD Supply Chain Solutions magazine. Rod Hozack is a partner at Oliver Wight. For more information email email@example.com or visit www.oliverwight.com. ” More sophisticated organisations take the next step and insist on a monthly process that assesses an 18-month horizon and this at least gives visibility of next financial year, six months in advance.”