Food services company boosts its real estate

PFD Food Services (PFD) has committed to building a substantial food distribution and production facility in Chullora on land the size of the Melbourne Cricket Ground.
The Chullora facility, being developed by Frasers Property Australia, is 22,208m2 of specialised warehouse and office and on 60,305m2 of land. The new facility will be built under the direction of consultancy firm TM Insight, which specialises in supply chain optimisation, property advisory and project consultancy. Together with PFD Foods, TM Insight is designing and will project manage the delivery of the new purpose-built cold logistics and food production facility to cater for PFD Food Services growing food services business. Construction is forecast to commence shortly, with completion expected by Q2 2018.
This comes after the commitment of another large food production facility for PFD Foods in Melbourne of 23,864m2, which is due for completion in November 2017.
CEO of PFD Kerry Smith said: “Our new state-of-the-art facilities in Melbourne and Sydney will allow us to continue to service our existing network of customers efficiently and will enable further growth into the future.”
The new buildings will enable the consolidation of multiple older sites to create a modern facility with significant increases in capacity.
PFD’s new premises follows lean principles to ensure cold chain compliance is adhered to. “Both the Melbourne and Sydney facilities have been designed and purpose-built to maximise operational and energy efficiency, which will be certain to improve supply chain operations and reduce operating costs,” said Travis Erridge, director of TM Insight. “This facility reinforces a clear shift in the Australian industrial property sector, with total supply chain requirements now driving property outcomes.”
 

Amazon has a long road ahead in Australia, says Harvey Norman chief

Gerry Harvey, one half of the founding duo behind household goods retailer Harvey Norman, has again aired his thoughts on Amazon’s arrival publicly.
Harvey told Fairfax Media that he doubts claims that the e-retailer will be up and running down under by 2018, citing his own experiences of obtaining permits to develop purchased land.
“Amazon to my knowledge haven’t even bought a block of land in Australia,” he said. “Let’s assume I buy a block of land tomorrow – I’ve got to buy it, pay for it, put in a development application.
“If that happens within three years, that’s very quick – and I read that Amazon is going to be fully operational in late 2018. For their model to work they would need 50 warehouses in Australia. Start with two – one in Sydney and one in Melbourne – and then it’s, how do you deliver? That’s the best-case scenario.”
Harvey added that Harvey Norman acquired land in Macgregor, Queensland, approximately 11 months ago and is still awaiting permission to build upon it.
“I know how long it takes,” he said. “I settled six months ago and I’m still trying to get council approval, [I] am hoping for approval within 12 months.”
The Sydney Morning Herald noted that Amazon has chosen commercial real estate company CBRE to help with its search for land, and is also expected to secure at least four large warehouses and a few smaller warehouses in Australia.
 
 

Silk Logistics expands into VIC logistics facility

Silk Contract Logistics has secured a six-year lease on a 20,337m2 warehouse and office facility at Frasers Property Australia’s West Park Industrial Estate in Derrimut, Victoria.
The warehouse features LED lighting, pallet racking, drive-around B-double access, eight recessed docks and four loading bays, The Australian Financial Review (AFR) reports.
The logistics company will service two new food manufacturing customers at the site, and its neighbours will include Australia Post, CEVA Logistics and Austrans.
“The Melbourne industrial leasing market for quality assets is robust, particularly for enquiries from logistics and manufacturing companies,” said Chamoun Malki, General Manager – Investment Property, Frasers.

Think differently

This interview first appeared in the February/March 2017 issue of Logistics & Materials Handling.
Global megatrends such as globalisation, urbanisation and digitisation are forcing Australian logistics businesses to commit to a new, much more comprehensive mindset.
In a move to renew the company’s focus on innovation and future growth, Linfox founded a stand-alone Development, Strategy and Innovation (DSI) business unit in late 2015. A year on, Logistics & Materials Handling spoke to Chris Hemstrom, head of the ambitious project, about the essence of innovation and the role of creativity in modern business.
Q: It’s been a little more than year now since you became head of Linfox’s new DSI unit. In a time where the term innovation is seemingly losing traction – the Prime Minister’s 2016 Innovation Initiative was deemed too elitist to be successful, for instance – how do you ensure people understand what you’re trying to achieve?
A: That’s an interesting question. To move away from that innovation buzzword, I’d like to think of DSI as an organisational development tool. Our goal is surprisingly simple: to make sure we are delivering value to our client base. Our strategy is therefore much more focused on understanding our customers, their requirements, and how we can best help them than on innovation per se or simply acquiring more business. In fact, you may be surprised to learn that Linfox has shrunk the number of customers we have by almost two-thirds since the GFC (Global Financial Crisis, ed.), while the business has grown quite substantially in terms of its scale. In focusing on fewer customers, we’ve been able to create more value for and grow with our existing ones.
Q: Surely that doesn’t mean you’re not open for new business?
A: No. All we do within the DSI team is look differently at the concept of business development. Part of the reason why DSI was formed was to help scan the market, help identify work with potential new customers and understand what it is they’re after, of course. But we don’t approach it in a transactional way where we create a new service and then try to sell it as much as possible. Rather, we try and understand where there might be a gap in the market, where there might be a problem that someone else hasn’t been able to solve but that we might be able to handle. We look at that both from the perspective of deploying our existing capabilities and services as well as building new capabilities.
Q: Can you give us a more concrete example of that process?
A: One area that we’ve done a lot of work in, for example, is developing and deploying efficient warehouse management systems. We have a long-standing relationship with SAP here, which has a very sophisticated core technology that has been developed over a long period of time. At Linfox, we’ve got special expertise in how to run warehouses and how to deploy their systems, so together with some external suppliers, we have created some very efficient routines, if you like, to make modern warehouses more efficient. In fact, in a first for Linfox, we’ve recently secured two contracts to provide SAP warehouse management system maintenance, support and rollout services to two customer sites – I think many 3PLs are not quite as engaged in the R&D side of things as we are.
Q: So it’s more about the way you approach a problem – a mindset issue, if you will?
A: Precisely. We’re using the design thinking process developed by the Hasso Plattner Institute (HPI) at the University of Potsdam, Germany, and Stanford University, or at least the methodology behind it. It was originally intended as an innovation method for products and services, but has advanced to a completely new way of seeing people in relation to work, of imagining the concept of work and of posing questions about how we want to live, learn and work in the 21st century. To translate it back to what we do, we’re basically saying ‘we want to understand how we can work at the leading edge of technology and bring new efficiencies into our businesses instead of just taking what we’re offered.
Q: That’s quite an academic approach for a privately owned logistics business. Do you sometimes think you are doing everyone else’s work?
A: No. We’re an early mover who is actively bringing promising technology companies into the transport space – that’s all. Without us bringing some of them into the market, they probably wouldn’t have arrived yet. I suppose when you’re a leading player, you need to go down that path to keep moving. If you lead and keep leading while everyone else is trying to get to where you were two years ago, you always have an edge. At the same time you help bring up the standards of the industry at large. I’m hoping we are, anyway.
Q: In that context, does the push of disruptors like Amazon or Uber in the logistics space worry you?
A: We do recognise that the world is changing very quickly. Every day now you’re reading about Amazon and how it’s going to take over the world, and you’re reading about Uber and how it’s going to take over part of the transport chain. What we’re saying is that that may be true, but we’re still in the game. We think we’ve got some different ideas that could add value. To get that across, we have quite an extensive program of talking to our customers and to prospective new customers – not in a sales-y sort of way, just to learn about their problems – which we call our discovery process. Again, it’s not a sales program. It’s a program of understanding how industry is changing. Quite often it’s us that instigate change by just asking the question. That’s probably why I am not all too worried about Uber at the moment.
Q: You are not standing still either, though. Linfox has recently launched a multi-million dollar partnership with Monash University to advance the transport industry’s innovation agenda and provide more education opportunities for the Linfox team. A result of the work DSI has done?
A: It’s been a team result of course, supported by DSI. The Monash University partnership is a critical part of a longer-term strategy for the business to make sure that there is a structured education program for everyone that works in the business, because we believe it will bring value to the customer at the end.
Q: So it’s not just a leadership program, to pick up on the elitist debate once again?
A: Absolutely not, no. Linfox College, our current internal education program, already touches everyone in the business, and our ambition is to expand on that. In fact, Linfox College allows family members to be educated as well as part of the program. There’s quite a substantial array of different courses for them. What we’re trying to do with Monash simply adds more pillars to the program, so we can enable people to go up from doing employment-based courses or single unit courses to Bachelor’s or Master’s degrees, or even PhDs where that’s relevant. But, at the same time, we also get access to the expertise within the university system, and Monash is, as you’re well aware, one of the top universities, not only in the country, but globally. Being able to get access to its research team and its ways of looking at the world will also help us in our innovation and R&D agenda.

Nissan, Mitsubishi building major automotive logistics facility

Nissan Motor Co. Australia and Mitsubishi Motors Australia have announced that they will establish a shared parts and accessories operation in Truganina, Victoria.
The announcement follows Nissan’s recently established global alliance with Mitsubishi Motors, which was formalised in October last year.
The new Australia-based initiative will see both automotive companies share warehousing space and logistics support for the national distribution of each brand’s parts and accessories from an all-new Truganina warehouse facility.
“This is a milestone development in Nissan’s new alliance with Mitsubishi,” said Richard Emery, Managing Director and CEO, Nissan Australia. “This collaboration has opened the door to many important synergies, including the sharing of parts storage, distribution and logistics here in Australia. This is an important investment with many benefits for our respective customers and dealers.”
Mutsuhiro Oshikiri, CEO, Mitsubishi Motors Australia, said this is one of the first alliance-based projects globally. “We are pleased it will assist us to achieve greater efficiency through cooperation with our local alliance partner, Nissan Australia, to deliver a better service to our respective customers,” said Oshikiri.
The new 36,000m2 National Parts Distribution Centre will be one of Australia’s largest automotive logistics facilities and is targeted for build completion by December 2017.
The Truganina facility will become the new master warehouse for Nissan and Mitsubishi’s national distribution network and will also service the Renault and Infiniti brands, both of which fall under the global Renault-Nissan Alliance.
This new warehouse has been designed to meet the requirements for a six-star Green Star rating, the Green Building Council’s highest level of certification for sustainable building design and among Australia’s first six-star energy rated parts distribution centres.

Industrial property in high demand across logistics industry

Industrial property continues to be in high demand in the transport and logistics industry.
According to Fairfax, various multi-million projects are currently underway in both Sydney and Melbourne, with a $169.3 million sale to Frasers Logistics & Industrial Trust the most recent example.
The sale, which Frasers referred to as a ‘restocking’, covers a diversified portfolio of seven major industrial assets, spread across the eastern seaboard.
According to Fairfax, it comprises four completed properties and three properties under development, has a weighted average lease expiry of 9.6 years and all properties are fully leased or pre-committed.
“Twenty per cent of the assets are in Sydney, 60 per cent in Melbourne and the remainder in Brisbane,” Fairfax reported.
Meanwhile, Stockland started work on a $80 million office and warehouse estate in Warwick Farm, close to the Hume Highway, M5 and M7 motorways and near the Southern Sydney Freight Line and future Badgerys Creek Airport.
The company had only recently redeveloped two warehouse facilities in Melbourne to turn them into a ‘logistics offering’.
Fairfax quoted Michael Fenton, the Australian head of JLL, an American professional services and investment management company specializing in real estate, as saying that the markets continues to set new records every year.
2016 volumes reportedly reached $6.89 billion, surpassing last year’s all-time high. Portfolio transaction volumes have grown 155 per cent per annum since 2013, Fairfax noted.
“Sydney and Melbourne will still be considered as high-growth markets, however pricing will be accordingly sharp,” Fenton told Fairfax.
“In these markets, secondary yield compression hasn’t occurred to the same intensity as that in the prime over the past few years. As such, some assets will have a greater margin to absorb further rises in bond rates. JLL believes yield spreads in Sydney and Melbourne will narrow in the near term.”

BAC to build new 11,000m² facility at Airport Industrial Park

Brisbane Airport Corporation (BAC) will deliver a new 11,260m² facility at its Airport Industrial Park precinct for wholesale food distributor Quality Food Services.
BAC’s property division, BNE Property, will deliver the purpose-built office, warehouse, cold storage and distribution facility, scheduled for completion in March 2018.
John Tormey General Manager of Commercial Businesses, BAC, said the deal is a great win for the growing Airport Industrial Park.
“For Airport Industrial Park to attract a new tenant of this calibre in a competitive market demonstrates its strength as an industrial location,” Tormey said.
“Quality Food Services will join more than 400 other non-aviation commercial and industrial businesses that benefit from the airport’s accessibility, size and amenity.”
“Our vacancy rate across both industrial and commercial space remains amongst the lowest in Australia.
“This new development is not only a reflection of Airport Industrial Park’s location and amenity, but also our ability to deliver flexible solutions to meet our clients’ needs.
“We are very pleased to have Quality Food Services on-board at Airport Industrial Park and look forward to working with them on their new facility.”
Frank De Pasquale, Director, Quality Food Services, said Brisbane Airport was an ideal location for the company’s new headquarters.
“The airport precinct has excellent connectivity to road networks and tunnels in all directions which was important to Quality Food Services,” De Pasquale said.
“Combined with the land availability, development flexibility, future expansion options and nearby amenities, this location offered everything we were looking for.”

Rohlig opens Sydney warehouse facility

International freight forwarding firm Rohlig Logistics has opened a new 6,000m2 warehouse in Sydney.
The new warehouse is equipped with the latest in warehousing and logistics technology, including a sunken dock with a seven-metre in-ground hoist capable of handling 14 tonnes of airfreight. Additionally, the facility will be able to handle up to 4,000 pallet spaces, covering from warehousing and freight, to contract logistics.
“Our research and development team are always looking at new processes and technologies that can streamline our operations, deliver cost savings and efficiency, while also adding value for customers,” said Hany Amer, Managing Director, Rohlig Australia. “The sunken dock, for example, means we are able to cope with much bigger loads and offer more services than any of our competitors.”
This new addition to the organisation’s operations is the latest in a line of improvements to facilities in Brisbane, Melbourne, Freemantle and Adelaide, following the launch of a small parcel service last year and a new customs consulting service.

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.”

Qube raising $350 million equity for Moorebank

Qube has announced a $350 million equity raising to fund new warehousing and strategic growth initiatives for Moorebank Logistics Park, Australia’s largest intermodal precinct.
Earlier in May, Qube officially commenced development at Moorebank and it is now in discussions with potential tenants for the development.
Qube has announced that it expects to fund the construction of at least $80 million of new warehousing for Moorebank, including the warehouse for the soon-to-be-announced first tenant as well as an initial warehouse facility for Qube Logistics, and construction is expected to commence in early 2018.
“Qube is pleased to have achieved a further important milestone, with the development of the first new warehousing at Moorebank bringing us a step closer to realising the substantial benefits that the Moorebank project will deliver for customers, suppliers, and the entire East Coast freight and logistics chain,” said Maurice James, Managing Director, Qube.
“We are delighted with the initial reaction of potential tenants to the transformational proposition that is provided by the Moorebank facility” he added.
New warehousing at Moorebank is to be built on demand and with pre-commitments from tenants.
Qube has invested around $140 million in the 2017 financial year to date to acquire the remaining 33 per cent of Moorebank it did not already own and on initial development capital expenditure, Qube expects to invest $400 million of capital expenditure in the development of Moorebank – excluding warehousing and rail shuttle capital expenditure ­– over the first 5 years.

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