Supply chain event to inform omni-channel strategies

In an increasingly connected and transparent world where global economic integration and disruptive technology places tremendous stress on supply chains, it is critical for ANZ organisations to develop a smarter and more agile supply chain strategy.
With supply chains constantly evolving to meet the ever-changing expectations of ever-more sophisticated and demanding customers omni-channel customers, it is challenging to balance efficiency, performance and cost while investing in the right technology and tools required to succeed.
The Supply Chain Planning & Innovation Summit 2017 will tackle these challenges by combining best practices, and thought leadership case studies with interactive discussions for problem solving, idea exchanges and debate on the hottest topics in end-to-end supply chain planning and technology innovation.
An exciting selection of over 30 speakers has been confirmed, sharing insight from companies such as Coca-Cola Amantil, GSK, Kimberley-Clark, the Australian Logistics Council, Clarins, kikki.k and Dulux Group.
Click here to download the full programme.
The three-day event will focus on developing transformational strategies to improve demand and forecasting accuracy, the impact of disruptions and avoiding costly mistakes, how to adopt a real-time collaborative approach with vendors, partners and customers, the use of demand-sensing tools to improve demand and forecasting accuracy and supply chain trends and how businesses can prepare for future innovation.
The event will take place 29–31 August 2017, at the Pullman Melbourne, Albert Park.
Logistics and Materials Handling readers can receive a 10 per cent discount off the current early bird rates by referencing VIP code EFXLM1.
Click here to register online.
For more information or to register on, contact Akolade on 02 9247 6000 / registration@akolade.com.au

Found in translation – Exporting the Australian logistics mindset

This article first appeared in the February/March 2017 issue of Logistics & Materials Handling.
Three Australian logistics veterans have been tasked with rethinking Japan’s supply chain strategy, mixing the traditional and the modern to achieve unprecedented growth.
Even when you’re the biggest name in your market, that’s no reason to rest on your laurels. While Coca-Cola is the market leader for beverages in Japan, there are five other major players vying for a share of the action. Market pricing has been declining steadily over the past 16 years, putting a squeeze on margins and forcing beverage suppliers to stay vigilant to remain relevant. According to Bruce Herbert, Chief Supply Chain Officer at Coca-Cola East Japan (CCEJ), consolidation and diversification have been key strategies for many in the industry. “Coke in Japan is not just carbonated drinks, over half our volume is sugar-free teas, coffee and water,” he says. “A very strong innovation and new product pipeline has to be filled every year from our own plants and a network of contract packers.”
Covering over half of Japan and serving a population of 60 million, Coca-Cola distributor CCEJ is in a constant state of metamorphosis, always looking for ways to increase efficiency and cut costs. The US$6 billion ($8.2 billion) bottler was originally formed in 2013 through the merging of four smaller bottlers and has since absorbed a fifth one. It will soon merge with Japan’s next biggest beverage distributor – Coca-Cola West – and cover some 90 per cent of the market. Set to take place in 2017, the merger will increase the company’s value to US$10 billion ($13.7 billion) and increase its assets from eight factories to 17, 250 sales warehouses from 150, and 800,000 vending machines from 400,000 and 3,500 daily semi-trailer loads shifted per day from 2,000.
CCEJ recruited supply chain experts from around the world, including Bruce, to come to Japan and lend their expertise and, as a result, has been hugely successful in cutting costs and increasing profit. Bruce is joined by two other Australian supply chain experts, cherry-picked for their knowledge of the beverage and retail industries with decades of experience working with supply chains in Australia, Asia and Africa – Edward Walters, now Senior Executive Officer, Planning, Logistics & Distribution at CCEJ; and Distribution Transformation Manager, David Sim.
The Japanese market has presented a challenge, thanks to the country’s complex traditional business etiquette, though Bruce found its workforce’s strong work ethic and customer service to be worthy of admiration. “In Australia we take for granted that change and improvement are part of working life,” he says. “Especially at [Coca-Cola’s Australian-based bottler, ed.] Amatil, where supply chain transformation has been progressing since the mid-90s and many world-leading initiatives were started. Coming to a business which was effectively five small Japanese businesses just three years ago, I have realised just how far ahead some of those things we were doing in Australia were.
“In one way we have a big advantage of having lived in what will be ‘the future state’ for the supply chain here. Of course, there are many things to be learnt from the Japan model as well, but knowing that changes needed here have worked elsewhere gives us a big head start.
“I respect the Japanese working style. My Japanese colleagues are extremely hardworking and focused on detail, in a way that most Australians would find very challenging. Workers regularly work very late in the office, never hesitate to stay back or work over weekends and don’t give up on a problem. So much so that Government and companies are focused on encouraging people to relax more and take more time off, take more holidays etc. – this is definitely not a problem in Australia.”
The Japanese approach to life in general, including even how seemingly ‘logical’ issues are approached is quite different to the West, according to Bruce. “Not better or worse, but different,” he adds. “Whilst basic human reactions and motivations are the same, the way they express themselves is different. Relationships are much more important and sensitive here, as is loyalty to the business or community. All of these things translate into business culture and relationships.”
In some aspects, Australia’s logistics sector could benefit from observing the Japanese workplace, says Bruce. In particular, he believes that the value placed on quality and customer service in Japan would do wonders for Australian business. “Japan is surely the most quality-focused country on earth, and customer service is seen as an extension of quality,” he says. “Near enough is not good enough, perfection is sought after and worked towards at every level. It is deeply ingrained into everyday life – I don’t think we would ever have to ‘train’ for customer service as it is intrinsically understood. This often leads to failures by multi-national companies who don’t understand what Japanese consumers and customers expect. Likewise: quality. Australian businesses may be more ‘lean’ but often do so at the cost of customer service and quality.”
CCEJ looked at successful logistics strategies in use around the developed world when searching for ideas to rejuvenate their own approach and, according to Bruce, flexibility and a laid-back Australian style have been instrumental in ‘cracking the code’ for the company’s logistics strategy. “I think openness to different ideas has been key,” he shares.
“I experienced some changes put in place here earlier by some of our colleagues from the US, but many of them did not work as they were simply ‘cut and pasted’ ideas from the US. Aussies may be proud of their country, but they usually don’t expect that they have all the answers.”
Edward likens the challenge of solving CCEJ’s issues to the task of unravelling a badly tangled set of Christmas lights – difficult to unravel without breaking a light and stopping the business. “We discovered that, over many years on the quest to providing high service and quality, network efficiency at CCEJ had been eroded severely,” Bruce adds. “This had happened steadily and high transport, warehouse and other costs had been accepted as ‘normal’. As there was little benchmarking of supply chain costs outside Japan, and since the costs were not easily ‘visible’, they had not been tackled by investment or progressive change either and a gap grew between global practice and Japan Coca-Cola practice.”
In order to ‘crack the code’, Bruce shares that two major changes needed to be introduced. “First was a painful implementation of a new SAP ERP system which replaced multiple legacy systems and gave central visibility to live data,” he says. “Second was more instinctive – we cut inventory by about 20 per cent – a very brave move in Japan – and thereby decongested the network, eliminating double handling, waiting times, extra transport and product write-off.”
A third big change, which is currently in progress, involves moving inventory upstream, closing small sales centres and cross-docking others, together with possible investment in new warehouses at plants and picking automation. CCEJ is already seeing positive results from the change, with over 25 billion JPY ($290 million) supply chain savings both from manufacturing and logistics/distribution improvement since its inception in 2013.“This year, heavy transport cost is down 20 per cent and write-offs are down 50 per cent,” Bruce shares. “So we are already almost halfway to the long-term cost reduction goal after just one year.” The 2017 merger of Coca-Cola East Japan and Coca-Cola West is expected to create opportunities for further savings.
Bruce attributes his team’s success to a combination of factors, from slow and cautious implementation of changes to constant re-evaluation of direction. “We didn’t approach this as a ‘project’,” he says. “We tackled this as a management challenge – to implement changes, monitor them closely and adjust as we went along. In that way the original ‘plans’ were gradually changed – with successes amplified and failures dropped quickly. Good real-time data access and manipulation was crucial here.
“Thanks to methodical and detailed execution of strategies by our team here, the changes we made to inventory levels, planning processes, truck routing, pallet configurations etc. were executed without impacting customers or quality. This meant that the costs we saved were not lost in upset customers or lost sales, but could flow directly to the bottom line.
“We discovered a clear and costly link between inventory levels and transport costs, which had never been uncovered before. I’d like to say we found this by a big analytical study, but actually it only became clear by trial and error – which is why an army of experts and analysts had failed to find it before.”
CCEJ now encourages its employees to make suggestions for improvement of processes, and implements over 100,000 small innovation ideas per year on ways to improve quality, safety, service and cost.
The notoriously rigid traditional Japanese business culture presented a particular challenge for the CCEJ supply chain team, Bruce explains, though they were still able to achieve “massive change and results” thanks to their measured approach. “Resistance to change remains a constant both within the business and with customers and some suppliers,” he says.
“This is largely due to the extremely high standards set by customers and consumers and fear of making big mistakes. We were able to overcome this by making many small progressive changes, and avoiding – for the most part – big bang or sudden, unplanned change.”
Bruce believes that if applied in Australia, his team’s strategy could result in similarly positive outcomes. “The approach we have taken here has been based on numerics and data combined with good management routines, not just ‘hardware’,” he shares. “It can therefore be applied anywhere, to any problems.”
The CCEJ supply chain team have developed their own version of the revered – though oft-misunderstood – ‘Kaizen’ (kai: change, zen: good) business philosophy whereby big changes can be achieved through small, continuous improvements in all aspects of business. They are confident this method could be applied with success in any business environment. Bruce adds, “All I know is that after 35 years in this game there has never been a change as big and fast as what this team has achieved here in Japan this year.”

Let’s have a mature, calm conversation about driverless trucks and drone deliveries

If we are to believe the headlines, then driverless trucks and drones are about to revolutionise delivery transport. But how close are these developments, really?
These developments will likely be academic for years to come. There is more value in looking at what we can do now to improve efficiency with technology and processes which are already available.
Don’t get me wrong – technology will eventually have a huge impact and bring improvements. But we need to bring a healthy scepticism to the big claims currently being made.
Consider an extraordinary recent claim from a Stanford economist predicting petrol vehicles will vanish within eight years – what are we to make of such bold predictions, aside from its click-bait headline? The oil industry is a global behemoth, and internal combustion vehicles currently have a massive edge on power, distance, reliability and price point. Something incredible will need to happen to see all internal combustion engines replaced by electric vehicles with competitive prices and performance in a mere eight years.
Other headlines suggest we soon won’t need drivers at all. I think there needs to be an honest, mature conversation about self-driving vehicles.
The supposed economic gains raise as many questions as answers. We don’t know what the price point for purchasing a self-driving vehicle will be. We don’t know how the regulators will deal with them, don’t know the running costs (though there are claims they will cut down on fuel costs), and don’t know how insurers will view them.
The human factor is the big question. The driver is an expensive part of delivery transport, alongside fuel. If these vehicles require ‘babysitters’ who may be called upon to take control, then they need to be qualified drivers, with the appropriate licences and the appropriate pay levels. If a human is required to be present in a driverless vehicle, how deep will the cost savings be?
The most obvious use for self-driving vehicles is long-haul freight. There have been some fascinating moves, including a self-driving truck delivering Budweiser in the USA. Uber Technologies Inc. and Anheuser-Busch InBev NV collaborated to have an 18-wheeler travel 180 miles with a driver present in the sleeper cab, to make the first commercial delivery using the technology. Volvo also demonstrated a self-driving truck last year, on a short journey in a Swedish underground mine.
Before we get too excited about the self-driving capabilities, Gartner offers an interesting statistic – the IT research house predicts less than one per cent of long-haul freight will be carried by driverless trucks by 2021. This is a long-term game.
While we must monitor these developments, will there be any benefit in being an early adopter? There are many examples in business where it has paid to be conservative, let the early adopters make the early mistakes, and wait until prices come down. These vehicles may require a huge investment and still require somebody on board. We don’t even know what the regulators will do with this technology, though it’s bound to become political.
Safety concerns and potential widespread job losses will fuel much debate and we can expect heavy regulatory involvement.
Transport is statistically one of the most dangerous industries in Australia and worldwide – so we all have to work harder on safety. Self-driving vehicles could potentially make big in-roads into safety, but this seems most plausible on long haul, interstate routes, which are more predictable.
Self-driving vehicles in built-up, metro areas is another thing. Will people, and therefore governments, ever accept driverless semi-trailers or B-doubles in built-up areas?
Early research suggests widespread distrust of self-driving vehicles. A US survey of over 2,000 people found over 75 per cent thought they would never own a self-driving car. Everybody knows how technology can ‘crash’, how it can be hacked and corrupted. Those promoting self-driving vehicles need to persuade the public and the politicians they are safe.
Consider it this way: would you put your child in a self-driving car, on their own, without any other human supervision, for them to be driven to school?
Any incident involving a self-driving vehicle anywhere in the world will be headline news. The potential for PR disaster is huge. Yet we’ve lived with human error for a long time. We may not like it, but we understand it. Will people ever be so understanding of computer error?
Drones are another fascinating development, with Amazon investing in the technology. Drones have huge potential for parcel delivery, but don’t do away with your delivery fleets just yet.
The commercial application of drones faces considerable hurdles around airspace and public safety. Some of these drones weigh 25kg – add payload, and that’s a considerable weight to fly over built-up areas. If drones can achieve air clearance and cover off all safety problems, some serious number crunching will need to ascertain whether several drones controlled by people are more cost-efficient than a driver who may carry dozens of parcels in a van.
In my 30+ years in transport I’ve seen many innovations, which should have made bigger impact on efficiency: mobile communications, telematics, vehicle and parcel monitoring, and insourcing. Yet transport remains a top-five cost of doing business, and a continual source of angst in the supply chain.
Many companies could revolutionise their transport right now. Without any massive investment in technology or personnel, most transport divisions could cut their running costs by 10–15 per cent – just by being smarter in how they use their technology and personnel.
There needs to be more focus on what we’ve got. Properly utilising existing technology would be a huge step forward for many organisations.
Doing so would not just deliver immediate benefits, it provides clear thinking on these breakthrough technologies when they finally do become available – any organisation which clearly understands its costs and efficiencies is bound to make the best decisions on future investments.
Walter Scremin is General Manager of Ontime Delivery Solutions.

US and Chinese delivery giants form partnership

UPS and SF Holding, the parent company of SF Express, have announced plans to establish a joint venture through which the pair will develop and provide international delivery services, initially from China to the US with plans to add other destinations later.
“UPS is excited to form a joint venture with SF,” said Ross McCullough, President of UPS Asia Pacific. “This joint venture will support products that provide competitive benefits to our Chinese customers who trade or seek to trade internationally.
Alan Wong, Group Vice President, SF, added, “China is leading the world in terms of e-commerce market size, growth, penetration and mobile business usage. Coupled with a rapidly growing and internet-savvy consumer base, it’s imperative that SF and UPS collaborate to revolutionize the logistics sector.  Together, we aim to bring greater competitive advantages to our customers in China, to succeed globally.”
The joint venture is subject to regulatory approval.
 

AusPost partners with Qantas on supersized air-freight

Australia Post and Qantas have welcomed the largest aircraft to join the dedicated domestic air network used exclusively by Australia Post and StarTrack customers.
Bob Black, Chief Operations Officer, Australia Post Group and CEO, StarTrack, said the addition of the B737-400 was great news for Australian consumers and retailers, and further strengthened Australia Post’s delivery network.
“We’re delighted to be able to offer local businesses access to the best value delivery service in the market; a fully integrated eCommerce and logistics network in the sky and on the ground,” said Black.
“This new aircraft is the largest type of freighter aircraft operating scheduled services in Australia and gives us greater capacity and flexibility.
“We know that online shopping continues to grow because of the price, range and convenience of products available on domestic and international marketplaces.
“The main aim for us is to help Australian businesses, including those in rural and regional areas, stay strong in a competitive and global market, and this new plane sets us apart from our competitors.”
The B737-400 freighter is capable of carrying 16,500kg of cargo and is part of a dedicated network of six aircraft – all branded in StarTrack livery.
The air-freighter’s arrival is part of a five-year contract worth more than $500 million for the transport of Australia Post and StarTrack’s range of premium and express products and services until mid-2020. The agreement includes priority access to cargo space in Qantas Group’s passenger fleet.

Sendle takes on eBay exec as Head of Growth

Days after IP Australia found in its favour in a long-running Australia Post trademark dispute, parcel delivery service Sendle has reported that it has made a major new addition to support its future direction.
Apurva Chiranewala, eBay’s former Head of Shipping, will join the company as Head of Growth, as reported by Business Insider.
Chiranewala said, “This is a pivotal period of growth for both Sendle and the eCommerce industry as a whole.”
According to Sendle CEO and Co-founder James Chin Moody, Chiranewala’s knowledge and support will be instrumental in the continued expansion of Sendle’s presence in the digital economy.

Sendle wins AusPost trademark dispute

Following a lengthy trademark dispute, in which Australia Post asserted sole right to use the terms ‘post’ and ‘office’, IP Australia has found in favour of delivery service Sendle, as first reported by News.com.au.
The agency noted that it was not satisfied that Sendle’s ‘post without the office’ slogan was “deceptively similar” to Australia Post’s own trademark.
In the course of the trademark battle, the national postal service likened the connection between ‘post office’ and Australia Post to several corporate brand identities.
“Consider ‘Coca without the Cola’, ‘Hungry without the Jack’s’ or ‘Louis without the Vuitton’,” Australia Post wrote in its submission. In delivering its decision, IP Australia described the hypothetical examples as nonsensical.
“I do not find that the Australia Post’s hypothetical treatment of other well-known trade marks is analogous,” said Debrett Lyons, IP Australia delegate. “In the hypotheticals, ‘Hungry without the Jack’s’ and ‘Louis without the Vuitton’, the interposition of the words ‘without the’ results in an expression which has no hint of a meaning. The added words merely intersect with the known trademark with no new meaning.
“The hypothetical, ‘Coca without the Cola’, is simply mystifying since the introduced words result in an expression which might cause consumers, if they thought of the beverage giant, to wonder what the product might be.”
In its submission, Australia Post argued that rather than claim a monopoly over the word ‘post’, it wanted its “strong reputation” over the word through its “statutory monopoly” of services including ‘Parcel Post’, ‘MyPost Digital Milbox’, ‘Pay it @ Post’ and Bank @ Post recognised.
“This strikes me as a distinction without a difference,” Lyons said.
Sendle CEO James Chin Moody told News.com.au that, after having spent more than $30,000 in legal fees and wasting hours fighting the case, the decision was a “win for competition and a win for common sense.”
“You never want to get an email from a top law firm, but at the end of the day I’m glad we didn’t kowtow to them,” Moody said. “Since they opposed us we are at least 20 times bigger, but in the early days it’s more than we should have.”
Australia Post spokeswoman Michelle Skehan said, “We believe that use of the phrase is confusing, or likely to confuse customers. We are currently considering the decision and our next steps.”

Long-distance drone delivery record set in US

A fixed-wing Unmanned Aerial Vehicle (UAV) has flown over 150 kilometres in Texas to deliver a package, setting a record for long-distance drone delivery.
Nevada UAS Consortium – Team Roadrunner – arranged the flight on 5 May 2017. Launched from a central Texas urban location, the UAV followed a pre-planned route autonomously, though it was supported by visual observers located across the flight route equipped with enhanced radios and cell phone communications, enabling the UAV to be flown using a cellular communications link until it successfully landed and delivered its package in Austin, Texas.
Team Roadrunner consisted of the Nevada UAS Test Site (Nevada Institute for Autonomous Systems), Volans-i UAS, Latitude UAS, AUV Flight Services, and the ground and mobile visual observer support from Embry-Riddle Aeronautical University (ERAU) Worldwide campuses.
“This was the most challenging, logistically-intensive, and longest package delivery demonstration recorded to date using cellular technology in the NAS, and allowed us the opportunity to demonstrate innovative capability – a demonstration necessity for the UAS industry,” said Dr Chris Walach, Director of the Nevada UAS Test Site and Adjunct Assistant Professor, College of Aeronautics at Embry-Riddle Aeronautical University Worldwide.
“Drone package delivery in an urban and remote environment is the wave of the future, and Nevada is leading and helping to grow this major commercial endeavour,” he added. “These package delivery milestones prove that new UAS technology enables the safe integration of UAS into the NAS for long-distance and urban package deliveries.”

HQ-40 UAS on final approach for its 97-mile delivery, via Nevada Institute for Autonomous Systems.
HQ-40 UAS on final approach for its 97-mile delivery, via Nevada Institute for Autonomous Systems.

Steve Hill, Executive Director of the Nevada Governor’s Office of Economic Development, added, “Creating a safe and thriving drone industry is an incredible challenge, especially when you couple that with drone package delivery. The record-breaking success of Team Roadrunner’s aerial package delivery mission proves that diligent testing in complex conditions will lead to drone delivery becoming reality.”

CouriersPlease appoints new COO

Parcel delivery service CouriersPlease has appointed Hoy Yen Hooper as its new Chief Operating Officer.

Mark McGinley, CEO, and Hoy Yen Hooper, Chief Operating Officer, CouriersPlease.
Mark McGinley, CEO, and Hoy Yen Hooper, Chief Operating Officer, CouriersPlease.

Hoy Yen will drive the strategy and innovation of the company’s national operations as it expands its delivery and courier network across the country and overseas, overseeing the delivery of the more-than 17 million parcels CouriersPlease delivers yearly.
 
She will be responsible for the overall management, performance and strategic direction of CouriersPlease’s operations and instilling a customer-led, product-focus approach within the organisation.
Hoy Yen has nearly two decades of general management and commercial experience in the Australian and New Zealand logistics and supply chain sectors, most recently as the Head of Commercial Operations at Sendle, and previously as Managing Director at DHL eCommerce Oceania, and Commercial and Operations Manager at Deutsche Post Global Mail (Australia).
“I am looking forward to heading up the operations at CP at an exciting time for the logistics and eCommerce market in Australia,” said Hoy Yen. “With big players such as Amazon and Alibaba coming to our shores for the first time, CouriersPlease aims to become a leader in parcel deliveries.
“To meet this aim, I will be working towards cementing CouriersPlease’s focus, as an organisation, on customers. We will work hard to ensure that we develop solutions that meet customer needs in the ever-changing eCommerce environment.
 
“CouriersPlease is already about to launch some exciting customer-centric developments, including re-delivery to a neighbour, and I am keen to work with the team to launch them in the market.”
CouriersPlease CEO Mark McGinley said, “Hoy Yen has an exceptional track record in the industry, in strategy development, improving business processes and implementing new initiatives. She is bringing with her a vast depth of knowledge and experience in logistics and supply-chain management that will help drive the CP business as it expands operations to support the growing online retail market.”

Fastway expands parcel-forwarding service

After expanding its parcel-forwarding offering for Australian e-shoppers, Fastway Couriers now provides access to global shopping destinations across 18 different countries across Europe, Africa, North America and Asia.
In a press release, the company noted that Australians pay up to 60 per cent more for clothing and up to 200 per cent more for cosmetics when they shop locally, according to research by Choice.
The Shop & Ship service is designed for situations when delivery to Australia is not an option.
“There’s nothing more frustrating than finding exactly what you want online at the price you want, and then going to check out to find that shipping to Australia is not an option,” said Richard Thame, CEO, Fastway Couriers Australia.
“In fact, our research shows that 40 per cent of Australian consumers shop online with international retailers because the prices are so much lower with 28 per cent wanting access to products that simply are not available here. Our customers tell us that, more often than not – even if the brands are available here – many of the products simply are not available.”
Fastway research found the most popular categories for online shopping to be wellbeing and beauty products, which represent 47 per cent of online purchases by women, and consumer electronics, which represent 53 per cent of online purchases by men.
“Shop & Ship offers the added benefit of charging on actual weight only, ensuring you only pay delivery on what you’ve purchased,” said Thame.
“That’s a real advantage that Shop & Ship has over other freight-forwarding options, many of whom charge on a cubic or volumetric basis, as well as the fact that we offer access to such a large number of countries.”

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