TPP agreement reborn, without US

The Trans-Pacific Partnership (TPP), a major trade deal that has been almost a decade in the making, has been reborn as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Eleven of the original countries involved in the TPP negotiations are set to sign the agreement in Chile in March – Japan, Canada, Australia, Mexico, Malaysia, Singapore, Chile, Peru, Vietnam, New Zealand and Brunei.
The notable exception to the new agreement is the US, which pulled out of the agreement after Donald Trump’s election as President.
“This is a multibillion-dollar win for Australian jobs,” Prime Minister, Malcolm Turnbull and Minister for Trade, Tourism & Investment, Steven Ciobo said in a joint statement. “Australian workers, businesses, farmers and consumers will benefit.
“The Government took a leadership role and worked hard to deliver the TPP because it will generate more Australian exports and create new Australian jobs.”
“The TPP will eliminate more than 98 per cent of tariffs in a trade zone with a combined GDP of $13.7 trillion. The agreement will deliver 18 new free trade agreements between the TPP parties. For Australia, that means new trade agreements with Canada and Mexico, and greater market access to Japan, Chile, Singapore, Malaysia, Vietnam and Brunei.”
Significant wins for Australian exporters under the deal include:

  • accelerated reductions in Japan’s import tariffs on beef, where Australian exports were worth $2 billion in 2015–16 – under TPP-11, even better access;
  • elimination of a range of cheese tariffs into Japan, covering more than $100 million of trade not covered by the Japan-Australia Economic Partnership Agreement;
  • new quotas for wheat and rice to Japan, and for sugar into Japan, Canada and Mexico;
  • elimination of all tariffs on sheep meat, cotton, wool, seafood, horticulture, wine and industrial products (manufactured goods);
  • eleven separate deals – legally enforceable market access to all these countries; and
  • investment meaning strong, legally enforceable commitments on the way countries regulate foreign investment.

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.”

SMC opens new VIC distribution centre

SMC in Victoria recently held an open day to mark the official launch of their South Australia Distribution Centre. The day was attended by about to 100 customers who came to view the upgraded facilities and attend the product and industry presentations.
SMC Pneumatics established its first subsidiary outside of Japan in Australia more than 50 years ago.
Today, the company has 10 branches and employs over 200 people in the region. With a sales staff of 88, the company has a philosophy of being “close to the customer to enable to them to develop customer centric solutions.
The Victoria branch of SMC was recently upgraded and re-purposed as a Central Distribution Warehouse for the region. The 7327m2 land together with the 3049m2 building is owned by SMC and has space for expansion. The local stockholding of this branch was tripled to enable SMC to supply same-day delivery of standard parts to customers in Victoria, and overnight delivery to South Australia and Tasmania.
The facility includes a warehouse with large local stock holding, training facility with up to date training models and an engineering and design department.
“We established a Central Warehousing Centre at our VIC facility, and the positive feedback from the market gave us the indication that customers were ready for such facility,” said Rodney Ryan, State Manager – Victoria, SMC. “The quicker turnaround time on orders and the availability of critical spares were welcomed by customers. Pneumatics are a critical component of the production line, and customer need quick support and turnaround when spare parts are needed. We are happy to be able to answer this call.
“We have always had a philosophy of being customer centric. Our business and products have evolved and developed around the feedback we receive from our customers. The feedback was, quicker delivery and more stock of critical parts, and SMC is glad to deliver.”

Logistics robots to represent Australia at Amazon competition

Amazon has announced the 16 finalists in its third-annual Amazon Robotics Challenge, including two teams hailing from Australia.
At the event on 27 July in Nagoya, Japan, the teams will demonstrate their latest robotics hardware and software that can pick and stow items in storage
The Challenge combines object recognition, pose recognition, grasp planning, compliant manipulation, motion planning, task planning, task execution, and error detection and recovery. The robots will be scored by how many items are successfully picked and stowed in a fixed amount of time.
Teams from Australia, Germany, India, Israel, Japan, the Netherlands, the Republic of Singapore, Spain, Taiwan and the United States will be competing for a chance of winning up to US$250,000 ($339,000) in prizes.
“This challenge is an opportunity to strengthen the ties between the industrial and academic robotic communities and promote shared and open solutions to the technical challenges we face in unstructured automation,” said Joey Durham, Contest Chairperson and Manager of Research and Advanced Development, Amazon Robotics. “It’s also a celebration of robotic innovation – something we are deeply focused on at Amazon – and provides a platform for the academic and research community to share and promote their research in a fun and rewarding way.”
The Australian teams taking part are ‘ACRV’, from Queensland University of Technology, and Applied Robotics – Smart Robotics, from the University of Sydney.
The Robotics Challenge will be held during RoboCup, a competition for intelligent robots and one of the world’s most important technology events in research and training. The 2016 contest was held at RoboCup in Leipzig, Germany, and was won by team Delft, a collaboration between Delft Robotics and TU Delft’s Robotics Institute.
“As a result of this contest, we are attracting more interest than ever before from robot manufacturers approaching us to pursue additional research,” said Carlos Hernandez Corbato, Team Delft Captain and postdoctoral researcher. “This challenge was the most exciting project I have ever done in research and the most gratifying because of how much we learned.”

Toll trucks

Ex Toll boss Paul Little comments on Japan Post write-down

Paul Little, former boss at Toll Holdings, has spoken out on the news that the logistics firm has been given a $4.8 billion write-down by owner Japan Post.
Japan Post recently reported a ¥40 billion (A$480 million) loss for its first full financial year as a listed company, arising from a ¥400.3 billion ($4.8 billion) write-down on the Toll, which it bought in 2015.
Speaking with The Weekend Australian, Little commented that Toll’s legacy had been “trashed” and the company would need a major culture overhaul in order to remain relevant, adding that he was upset by the job cuts announced recently in the company’s new growth strategy.
“I left Toll the best part of five-and-a-half years ago and had no involvement in the acquisition by Japan Post,’’ said Little. “Since that has happened, a number of my quite close friends at senior management levels have lost their jobs. That has been right in my face. They were loyal and extremely well respected from an industry point of view.
The way they were removed from the company, it has happened so fast and without a lot of compassion. I find that personally quite upsetting.’’
The Australian reported that, under Little’s leadership, Toll’s market value reached a high of $8 billion and it had 50,000 employees. He also introduced an employee share scheme to allow staff to directly participate in the company’s growth.
In 2011, Little stepped down after an ambitious expansion in Asia resulted in write-offs and asset sales, he was then replaced by Brian Kruger who held the position until late 2016.
Little told the newspaper that the “can-do” culture he had known at Toll had morphed into one of “cost cutting and disposal of assets and shrinking the business.”
“Toll’s legacy has been trashed,” Little said. “It has gone from being a strong, proud and aggressive group to one that is being forced to undergo major surgery with retrenchments and a major restructure.
“And I believe that is the result of its culture. The company needs to look closely at changing its culture because the only way it will survive after this restructure is with a strong growth program.
“Toll is not a yield play, Toll is a growth play. Logistics now is a global playground and you need to have global cross-border capability to survive.’’
Little reported that he approached Japan Post, offering to be involved with the company under Japanese management, but his offer was refused.
Through selling his approximately five-per-cent stake in the company following the Japan post takeover, Little benefitted to the tune of $340 million.
“There is not much I can do about the fact that Japan Post overpaid for the company and I had a reasonable shareholding,” he said, adding: “The Japanese need to empower the Australian management if they are going to turn Toll around into a successful corporation.’’

Nichiyu Forklifts gets a new home in Australia

ISS ProRack has launched the new Australian home of Nichiyu Electric Forklifts, both in the Melbourne suburb of Dandenong South, and online.
Nichiyu developed the first electric forklift in Japan in 1937 and Mitsubishi Nichiyu Forklift Co Ltd now owns 65% of UniCarriers which, according to Bloomberg, positions the company as the third-biggest lift truck manufacturer, behind Toyota and KION Group.
The newly appointed National Manager for Nichiyu Electric Forklifts – Australia, Gary Hodge, welcomed the partnership.
“Mitsubishi Nichiyu Forklift Co Ltd is committed to growth of the Australian market not just though the best technology but also excellence in customer service. As a recognised electric forklift innovator, we are thrilled to be represented by an Australian business like ISS ProRack. We look forward to continuing to supply products that will support ISS ProRack and their customers on the path to local and export success,” said Hodge.

Japan government targets logistics efficiency

A range of new incentives announced by the Japanese Government aim to minimise the economic impact of driver shortage on the logistics sector.
Nikkei Asian Review (NAR) reports that through revised logistics legislation, the Government has approved 15 plans as eligible for tax breaks and subsidies and up to 2 million yen ($23,400) will be allocated to 15 projects aimed at formulating efficiency plans. It is hoped that the Government’s support of the private sector’s projects will improve labour productivity by 20 per cent.
Many projects centre on moving cargo transport to rail. NAR shared that Senko will switch from road to rail for shipping apparel, saving 1,500 driver hours annually, while Sagawa Express and others will switch to rail from air for transporting fresh produce, taking advantage of new containers that can maintain freshness longer.

Samsung sets containership record

Samsung Heavy Industries (SHI) has set a new world record for world’s biggest containership with Mitsui O.S.K. Lines’ (MOL) Triumph.
The 400m-long vessel is 58.8 metres wide, and has a depth of 32.8 metres. The Ultra Large Container Ship (ULCS) can transport 20,150 containers.
Three other 20,150 TEU containerships are due to join Triumph at MOL, Port Technology reports.
Final preparations are now being made for Triumph’s maiden voyage, set to take place after the ship’s delivery on 27 March 2017.
A naming ceremony took place for the ship in Geoje shipyard, South Korea, on March 15 2017. The event was attended by representatives from SHI and MOL, including the CEOs of both companies.
Triumph boasts eco-friendly features including energy-saving equipment such as propeller, rudder valve and stator.
SHI expects to deliver 10 more 20,000 TEU containerships in 2017.

Butler robot contract awarded for large home furnishing chain in Japan

Technology company GreyOrange and logistics technology provider GROUND Inc have been awarded the contract to supply robotics solutions to the Nitori Holdings Group, Japan’s largest furniture and home furnishing chain with over 400 stores. The robotics system will be deployed at Home Logistics which is a logistics subsidiary of Nitori Holdings, operating 34 distribution bases and an efficient logistics network for product delivery to stores and e-commerce customers across the country.
Manabu Matsuura, Corporate Officer of Nitori Holdings and CEO of Home Logistics said, “We were impressed to find that the GreyOrange Butler is an entirely new robotics concept for warehouse automation unlike automated storage and retrieval systems. Also, Butler satisfies our corporate philosophy that we always pursue ideal workplaces for everyone. For example, we have been an early adopter of technology solutions and were the first user in Japan to leverage robotic storage systems in our warehouses last year.”

Manabu Matsuura, Corporate Officer of Nitori Holdings and CEO of Home Logistics, and Nalin Advani, CEO - APAC, GreyOrange.
Manabu Matsuura, Corporate Officer of Nitori Holdings and CEO of Home Logistics, and Nalin Advani, CEO – APAC, GreyOrange.

Hiratomo Miyata, CEO of GROUND Inc., exclusive provider of GreyOrange Butler in Japan, said: “We are really happy to announce that Home Logistics has become the first user of the Butler in Japan. They have evaluated several options and are glad to use the Butler as they believe the Butler goods-to-person technology will be a driving force in their strategy to increase productivity in their warehouse operations through robotics.”
The GreyOrange Butler system will be installed at the Home Logistics Osaka distribution centre, to handle automated inventory storage and picking. The software adapts in real-time to changing inventory profiles and order fulfilment patterns, for high productivity and accuracy.
Nalin Advani, CEO – APAC, GreyOrange said, “Japan has one of the world’s most mature distribution infrastructure and it is the fourth largest e-commerce market. Over 75 per cent of consumers regularly shop online and e-commerce is forecasted to grow to US$200 billion ($260 billion) by 2020. We are honoured to work with Nitori Group, including Home Logistics, to deploy our Butlers. The Nitori Group is far-sighted in anticipating the challenges of warehouse operations and addressing it with robotics. We are also excited to be selected for the Japan market where specifications for technology are among the most demanding in the world.”

Toll Group under pressure to improve performance

Melbourne’s Toll Group, which is now owned by Japan Post, could see a major reshuffle during the second half of the Financial Year.
According to the Australian Financial Review (AFR), senior Japan Post executives were in Melbourne earlier in the month to review the company’s performance since the $6.5 billion take-over last February.
“The expectation was that Toll would prove the springboard for Japan Post’s diversify away from its traditional and unprofitable post service by acquiring a broad and profitable channel into the Pacific freight and logistics business,” the AFR’s Matthew Stevens reported. “[However,] Toll’s new owner is deeply unhappy with the performance of the business since its acquisition.”
Earnings are said to have gone back during the current Financial Year, forcing a strategic revision, the AFR found.
Toll refused to comment on speculations regarding the consequences of such a revision, but told Stevens that, “we need to be positioned to deliver better solutions for our customers and to have an organisational structure that takes into account the challenging environment in the logistics industry.”
Brian Krueger, who led the negotiations with Japan Post as Chief Executive, retired in December and was replaced by ex-Linfox Chief Executive, Michael Byrne.
Since then, ex-Asciano Executive, Saul Cannon, has reportedly come on board as the company’s Director of Strategy.

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