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INTRA-ASIA TRUCKINGGet ready for increased cross-border road freight
ISSN 2010-4235 MCI (P) 196/06/2014 PPS1672/01/2013 (022917)September-October 2014www.LogAsiamag.com
WAREHOUSE TECHNOLOGIES
THAILAND’S NEXT TRANSFORMATION
WHY LOGISTICS PEOPLE NEED TO ‘SOCIALISE’
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DRIVER SHORTAGE
INTRA-ASIA TRUCKINGGet ready for increased cross-border road freight
ISSN 2010-4235 MCI (P) 196/06/2014 PPS1672/01/2013 (022917)September-October 2014www.LogAsiamag.com
WAREHOUSE TECHNOLOGIES
THAILAND’S NEXT TRANSFORMATION
WHY LOGISTICS PEOPLE NEED TO ‘SOCIALISE’It’s rare that a story about truck drivers reaches the general public –
except, of course, when there’s a horrible accident or a sensational protest on the news. So I was surprised when I found out from my conversation with Valery Muyard, GM of Volvo Trucks Singapore (read the interview on page 8), about the shortage of truck drivers in Southeast Asia. I won’t be surprised that it is already happening in Singapore, but Thailand and Malaysia? No way!
To satisfy my curiosity, I scoured the Internet to find legit statistics on unfulfilled trucking jobs in this region. I found out from a Wall Street Journal report that land-logistics organisations in Southeast Asia are looking for 140,000 drivers, representing 15 per cent to 20 per cent of some 900,000 trucks registered to transport goods. As a matter of fact, last year Thailand’s transport industry has enlisted government help to recruit young soldiers as they leave the army. I also found out that transport-related companies in Malaysia are facing a 20 to 30 per cent driver shortage, forcing some to downsize their operations (source: Pan-Malaysia Lorry Owners Association).
How did this happen? Well for one, not enough younger drivers are being recruited to replace the older ones who retire. Another reason is the booming intra-regional trade. According to Morten Damgaard, CEO of Agility Malaysia and Southeast Asia (read his article on page 7), as Asia has transformed from a source of cheap production into a strong economic trading bloc, and with continuous investments in road infrastructure, both in physical terms and also through improved customs procedures to reduce waiting times at borders, the take-up of international trucking services has spiked over recent years.
The situation will only get worse once economic integration between the 10 ASEAN countries begins next year, as that will increase the amount of freight flowing overland from China through to other countries. Can you imagine the ripple effects this will have on the trucking industry? In the future carriers will be forced to offer trucking jobs to those with no experience or risk leaving their fleets parked; and governments will lose their competitive edge and business opportunities if they don’t do anything!
This got me thinking about what it is going to take to attract and retain drivers. Driver pay must go up, of course, but quality of life is equally important to many drivers. Those carriers that can offer their drivers a better standard of living, including shorter routes, more regular schedules and more time at home, will likely be the winners. Management can also provide a driver break room with clean facilities and coffee machines. Providing driver training programmes and a continued emphasis on safety are important as well.
Truck drivers deserve respect for their skill, commitment, and hard work. Even if you lack the resources and bandwidth for some of the items above, train your staff to communicate, work with, and show drivers the respect their profession deserves. Remember that happy drivers get the job done as efficiently as possible.
Cover photo courtesy of Volvo Trucks
www.LogAsiamag.comSeptember-October 2014
[ EDITOR’S COMMENT ]
Driver Shortage 01
[ INDUSTRY NEWS ] 03
[ PORTFOLIO ]
Warehouse Technologies 06
[ HANDLING AND STORAGE ]
Intra-Asia Trucking 07
Workhorses on the Road 08
Schweppes Voice-enables its Warehouse 10
[ SOFTWARE AND SYSTEMS ]
How a Smart Warehouse Saves Money 12
Making Sense of Big Data in Logistics 16
[ STRATEGY AND BUSINESS ]
Supply Chain Approach to Halal 20
Why Logistics People Need to ‘Socialise’ 22
Thailand’s Next Transformation 23
[ CEO SERIES ]
Building and Sustaining an Enterprise Supply Chain Model 24
[ SPECIAL REPORT ]
Asian Manufacting Awards 2014 27
Logistics Insight Asia is published six times a year by Contineo Media Pte Ltd, located at 61 Ubi Avenue 1 #05-17 UB Point Singapore 408941. All rights reserved. Please address all subscription mail to Logistics Insight Asia at the above address, or Fax (65) 6521 9788. Annual air-speeded subscriptions for non-qualified subscribers is S$210. Single copies are available for S$35. Logistics Insight Asia Volume 8, Issue 5.
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[ CHINA ] Swire builds cold storage facility in Shanghai
Swire Cold Chain Logistics has built a new cold storage facility at Fengxian in Shanghai, China. Driven by the increasing affluence of the middle classes, who have a growing appetite for quality frozen packaged foodstuffs, China is seeing a burgeoning demand for cold chain services, with fixed asset investment in cold storage reaching more than RMB 100 billion (US$16.28 billion) in 2013 - representing a YoY increase of 24.2 per cent.
In addition to the Shanghai facility, Swire Pacific Cold Storage’s new facility at Langfang in Hebei Province has also commenced operations. Two more cold storage facilities are under construc-tion at Nanjing in Jiangsu Province and Ningbo in Zhejiang Prov-ince and one facility is under planning in Chengdu in Sichuan Province. These facilities are scheduled to commence operations from 2015 to 2016. More cold stores are in the pipeline for major regional clusters, and will ultimately serve up to two-thirds of China’s population.
arvato opens HK warehouse for IT, high-tech customers
arvato has opened a 14,000-square metre warehouse and dis-tribution site in Hong Kong for its global customers in the IT and high-tech industry. The site, located in Tuen Mun industrial district, has infrastructure links and offers space for additional customers. More than 40 arvato employees now work at the four-story site with eight loading docks, picking and localising almost 340,000 items a month for Sennheiser and a leading US-based smartphone and computer manufacturer, and shipping them to all countries in Asia.
U-Freight expands HK warehouse
The U-Freight Group is expanding the operations of its logistics subsidiary in Hong Kong and has brought the operations of its airfreight import and export departments into one location in the Special Administrative Region (SAR).
At the U-Freight facility in Tsing Yi, the freight forwarding compa-ny is adding a further 39,000 sq ft of warehousing to its existing 39,000 sq ft Hong Kong warehouse, targeted at retail logistics, as well as pick and pack operations for the electronics industry.
It will also occupy the complete facility where it has a presence in Chuan Kei and plans to equip the 21,000 sq ft warehousing with full air conditioning to serve the needs of the electronics industry, mainly.
Comments the company’s CEO, Simon Wong: “The outsourcing of logistics functions to specialist companies continues apace. The additional warehousing adds further value to U-Freight Logistics’ full range of services, and is an important development for ship-pers moving cargoes that are dependent on the regulation and maintenance of ambient temperature and control of atmospheric conditions.
[ INDIA ] BDP merges with UGL to boost India business
US-based transport and logistics firm BDP International has merged with its long-time local partner Unique Global Logistics. As a result of the integration, BDP’s customers will be support-ed by a team of more than 200 logistics professionals in India.
The integration with UGL will mean dedicated inbound and out-bound logistics and customs clearance in every major interna-tional gateway, seaport and airport in India. Customers will also benefit from access to BDP’s technology such as the web-based BDPSmart Suite of shipping transaction/tracking management tools.
[ MALAYSIA ]DHL is building Malaysia’slargest warehouse
DHL Supply Chain is constructing a mega warehouse in Shah Alam, Malaysia worth RM100 million (US$31.28 million). The warehouse, to be called Malaysia Integrated Logistics Centre (ILC), has a footprint of more than one million square feet, mak-ing it the largest warehouse in Malaysia, and will increase DHL Supply Chain’s warehouse footprint in the country by over 100 per cent.
Prakash Rochlani, managing director, DHL Supply Chain Malay-sia said, “The contract logistics market in Malaysia has shown impressive growth in recent years and this trend is forecast to continue. We’ve therefore identified the country as key to our growth strategy and made the important investment.”
Featuring the use of double-ramp system, the facility will pro-vide modern warehousing and supply chain solutions to cater to the growing demands of their local and global customers in the FMCG, technology, and retail markets.
The ILC will also be used to grow DHL’s automotive, engineering and manufacturing, and life science and healthcare portfolios. The two-story warehouse will have 111 loading docks of varying levels to cater for different vehicle types, and will have the abil-ity to provide bonded and environment controlled storage, the company said.
Once completed, the facility will become the third new facility opened in Malaysia by DHL Supply Chain this year, following the new purpose-built facilities in Penang and Johor. Across the
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] next two years, DHL Supply Chain aims to grow its presence in Malaysia by opening six branch networks, expanding the cur-rent transport fleet by 50 trucks, constructing six additional multi-purpose facilities, as well as hiring close to 500 more sup-ply chain experts. DHL plans to expand its warehousing foot-print by 200 per cent by 2020 in anticipation of the region’s increasing logistics requirements.
UPS appoints TH Lim to lead UPS Malaysia
UPS has appointed Tze Hsien (TH) Lim as general manager of UPS Malaysia. Lim, a UPS veteran of over 20 years, assumes re-sponsibility for all express delivery and logistics activities for UPS Malaysia.
Lim joined UPS in 1990, and has since held various regional and country roles, including vice president of Industrial en-gineering for UPS Asia Pacific and general manager for UPS Southern China. From 2010 to 2013, Lim was also the regional vice president of strategic planning and development based in Singapore, and during his tenure, spearheaded several pro-jects including the relocation of the UPS Asia Pacific Hub from Clark, Philippines, to Shenzhen, China; as well as the expan-sion of fully-controlled operation locations in China from 23 cities to 33.
He holds a Bachelor’s degree in Industrial Engineering and Man-agement from Oklahoma State University in the US. He is con-versant in English, Bahasa Malaysia, Mandarin and Cantonese.
[ SINGAPORE ] Pan Asia opens warehouse in Tuas
Pan Asia Logistics (PAL) has opened a new warehouse at Tuas Bay Drive, Singapore. The 40,000 -square metre warehouse fea-tures an automated storage and retrieval system (ASRS) which is expected to boost productivity by 70 per cent, the company said. It can store up to 700,000 different spare part types and will result in space savings of about 30 per cent.
The fully automated system can run continuously with only the need for occasional supervision. Previously, manual handling gave rise to human error and was labour-intensive. The skill sets re-quired for operating the ASRS, combined with a new career de-velopment framework, will see a shift of 40 per cent of lower-skilled jobs to higher-skilled roles, with a corresponding increase in wages.
Suttons acquires ISLG
Suttons Group has acquired IS Logistics Group (ISLG) in Singa-pore. Operating from three locations in Singapore, ISLG provides supply chain and logistics services to the chemical manufacturing industry.
John Sutton, Suttons Group CEO said: “Our latest acquisition is a significant step as we continue to build our business in logistics hubs and petrochemical manufacturing zones across the world. Infrastructure on the ground will enable us to grow the successful
business we already have in Singapore and provide our customers with an even wider range of logistics and supply chain products and services.”
This is the second acquisition Suttons has made in the last 12 months. In October 2013, the company completed the purchase of Chinese transport company Hanchi Logistics.
All set for LogiSYM2015
LogiSYM2015, a dedicated supply chain symposium and summit in Southeast Asia will be held from 4-5 March 2015 at the National University of Singapore. The symposium will bring together mid- to senior-level logisticians to share real solutions, network, and learn new skills that they can apply in their profession. It is aimed at bridging concepts, practice and technology in supply chain management to real world implementation.
CEO SeriesA number of conferences, named “LogiSYM CEO Series”, will also be held leading up to LogiSYM2015. The first session of the Lo-giSYM CEO Series will be held at Hard Rock Cafe Singapore on 18 October. Set in a relaxed atmosphere to encourage informality and an exchange of thoughts and ideas, the session was led by Joe Lombardo, advisory board member of the Logistics & Supply Chain Management Society. His presentation was followed by a lively debate that continued even after the event had officially ended.
[ THAILAND ]UPS opens contract logistics facility for Seagate
UPS has opened a contract logistics facility in Amphur Sung-noen, Nakhonratchasima, Thailand that is dedicated Seagate Technology. Situated next to Seagate’s Korat plant, the warehouse will provide small package delivery, freight and contract logistics services, and technology solutions to the data storage company. The warehouse will operate around the clock and double Seagate’s existing storage capacity.
Piangruetai Sivaratana, vice president of Korat Operations, Seagate Technology (Thailand) Ltd. said, “Flexibility is a key of hard disk drive business and the demand is changing rapidly. This facility will support our business activities by simplifying global trade movements and optimising supply chain efficiency to meet the needs of our global customers.”
“This facility is fully operated by UPS and is a testament to our long-term commitment to supporting growth in the region,” said Edmund Lo, managing director of UPS Thailand. “Having estab-lished operations in Thailand over 25 years ago, UPS remains com-mitted to supporting all our customers with solutions that can help their businesses trade more effectively.”
Menlo sets up new warehouse in Ladkrabang
Menlo Logistics, a US$1.5 billion global logistics subsidiary of Con-way Inc., has opened a multi-client warehouse facility in Lad-krabang, Thailand.
Menlo officials state that the new 9,747-square metre facility in-creases the company’s total operating space in Thailand to 32,528 square metres. The facility will employ more than 25 employees and was chosen in part for its proximity to the points of distribu-tion for international export and domestic distribution.
“The decision to open this new facility was driven by increased consumer goods customer demand in the region,” said Desmond Chan, managing director, Menlo Logistics South Asia. “Our abil-ity to provide outstanding logistics services specific to consumer goods manufacturers, including special storage and distribution, after-market parts distribution and inbound parts management, positions our company to successfully meet that demand.”
Currently, 65 per cent of the new facility’s space is committed for use by manufacturers of consumer goods products in the consum-er goods industry, leaving approximately 3,251 square metres of space available. Citing the attractiveness of the location, Menlo officials feel certain the space will soon be filled through existing customer growth.
[ VIETNAM ] CEVA opens Hanoi office
CEVA Logistics opened a branch office in Hanoi, located at Cau Giay District. The new office will handle a full range of supply chain and logistics services, including airfreight and ocean freight, contract logistics, warehousing and distribution, local transporta-tion and other domestic value added services.
Nelson Chow, MD for Vietnam said: “We are excited to tap the op-portunities for growth in North Vietnam. The Hanoi branch office is jointly set up with CEVA’s local partner, ITL Group, a market leader in transportation logistics and aviation services in Vietnam and Indochina.”
[ WORLD ] Digital logistics market to reach US$12.96B by 2019
The digital logistics market is expected to grow from US$8.78 billion in 2014 to US$12.96 billion by 2019, at an estimated CAGR of 8.09 per cent from 2014 to 2019, according to Marketsand-Markets’ “Digital Logistics Market by System by Application & by Service-Global Market Forecast & Analysis (2014-2019)”. The key growth factor driving this impressive increase is the need to move information along the supply chain faster from manufacturer to customer.
Digital logistics is expected to become a major component of enterprise operations for both achieving and measuring ROI and ROA. Two other trends affecting the overall growth of digital lo-gistics is increased adoption of RFID systems for tracking and traceability and the increased focus on data transfer along the supply chain.
Standardising labelling and adopting higher-quality standards that are both industry specific and internationally accepted will help companies boost supply chain viability through global markets while expediting service locally at the same time. Between cost savings and increased profitability, firms will see major advantag-es in these efforts.
Running an effi cient warehouse center makes a big diff erence to profi tability and customer satisfaction. That’s why many leading brands put sortation systems from BEUMER and Crisplant at the heart of their supply chain. Through operational insight and analysis, BEUMER Group is able to deliver complete automated material handling systems that fi t seamlessly into your process. Off ering exceptional speed, capacity and accuracy, our technology makes a diff erence to your customers, your brand and your bottom line.For more information, visit www.beumergroup.com
SOME THINKDELIVERYERRORS AREINEVITABLE.WE THINK DIFFERENT.
Visit us!inter airport china 2014, Beijing, ChinaOctober 15 – 17, 2014German Pavillon
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WAREHOUSE TECHNOLOGIESGenerally, storage costs consist of 40% logistic costs and 7% product costs. Thus, monitoring overhead costs of is a critical part of warehouse management. A pallet flow installation maximises the use of available warehouse space by re-quiring only two aisles for the purpose of loading the system and order picking. The system is therefore more compact than conventional racking and can save, on average, up to 50% of floor space.
Providing increased efficiency and faster throughput of stock, Interroll’s Pal-let Roller Flow storage systems can be installed in many storage applications and distribution centres, including ambi-ent, chilled and cold store environments down to -28°C. The system’s key benefits include space savings; faster throughput of stock with minimum handling; accu-rate stock rotation using FIFO principles, thus reducing waste of fresh and date-sensitive products; shorter travel times; separate loading and order picking aisles to ensure safe flow of vehicles and per-sonnel; and reduced energy consump-tion.
The system features a robust pallet sepa-rator with a built-in “time plus” function and redesigned rollers. On lifting the first pallet to remove from the order picking face, there is a 20-second delay before
Flexicon’s bulk conveyor with tilt-down portable base can fit through tight spaces and provide easy access for removal of the flexible screw. It fea-tures a reduced footprint which allows the castor-mounted frame to manoeu-vre through narrow aisles and around corners. Each unit is custom configured according to the discharge height, tilt-down height, discharge overhand and overall size parametres of the individual applications. The hopper, which has a hinged lid, feeds a flexible screw con-veyor that transports bulk ingredients ranging from sub-micron powders to large pellets. The enclosed conveyor tube prevents product and plant con-tamination, while the gentle rolling ac-tion of material being conveyed pre-vents the separation of blends. The rugged inner screw is the only mov-ing part contacting material, resulting
the separation device releases the next pallet in line. This gives the forklift truck driver all the necessary time to unload the pallet safely before the second pallet is released. As a result of the pedal-less system, there is no longer a pallet lift up height restriction for the driver, which is useful when working at high levels with restricted visibility.
The pressure of the accumulated pal-lets on the separator stop device is not transferred to the pedal device. There is no risk that the pedal at the unload-ing side lifts up. This ensures safety in operation even with light pallets on the pedal system and generally ensures the separating device functions reliably and requires minimum maintenance. Due to the separator stop device, the accumu-lated pallets cannot be released until the leading pallet is removed.
in reduced maintenance and increased reliability. A range of specialised screws is also available to handle free and non-free-flowing bulk materials including: products that pack; cake; smear; seize; plug; or flu-
SPACE-SAVING STORAGE SYSTEM
TILT-DOWN BULK CONVEYOR
idise. The mobile conveyor frame is con-structed of carbon steel with industrial coatings and is stainless steel finished to industrial or sanitary standards.
Rack Armour from Multistor Storage Solution Providers is a pallet racking safety product designed to increase warehouse safety and minimise rack-ing damage. Its conspicuous colour and shape provide a clear indictor to mechanical handling equipment oper-ators for their safe operating bounda-ries. To install, simply clip the guard to existing or new racking without the need for further fixings. With the guard’s rounded shape, a high-densi-ty polyethylene outer deflector, and a tough foam inner diffuser, impacts to the pallet rack are deflected and forc-es are diffused throughout its length. The guard measures 100mm wide to fit standard racking, and features ab-solute minimum bay and aisle intru-sion so as not to reduce safe operat-ing clearances. It can operate down to -40°C.
PALLET RACKING GUARD
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Demand for land transportation is growing in the region as economic cor-ridors develop along the major road net-works due to trade expansion between countries in Southeast Asia.
Given that some of the emerging markets in Asia are facing issues with infrastruc-ture, including port congestion, lack of air freight capacity, and poor develop-ment of rail infrastructure, trucking has become a viable alternative.
Cross-border road freight is proving increasingly attractive to customers because of improved shipper transparency and security, and the ability to offer trucking as part of a multimodal solution or as a time-definite door-to-door service. This mode also offers more flexibility compared to air freight on cut-off times and a speed advantage compared to ocean freight.
In ASEAN, trucking is increasingly seen as an alternative option to air freight and ocean freight. Some local markets are capacity constrained at certain times of the year, and trucking gives providers a viable option to offer road/air or road/ocean service options.
FREE TRADE AREAManufacturing clusters are being set up along the highways to take advantage of the improved road access to the growing number of consumers in the region. For example, electronic components are being transported from Vietnam to Shenzhen, China by road.
Manufacturing clusters have now been established in Vietnam, and more recently in Cambodia as a result of improved road access to the Thailand and China borders. As the shipment is transported door-to-door, the cost is lower than airfreight and transit time is quicker.
Every region has its cross-border trucking challenges, but the lack of a contiguous
INTRA-ASIA TRUCKING The intra-Asia trade corridor is a fast growing area. Huge investments in road infrastructure, both in physical terms and through improved customs procedures, are needed to accelerate take-up of international trucking services. MORTEN DAMGAARD shares his insights on cross-border trucking in the region.
highway network in ASEAN particularly adds time and cost to most shipments. The situation is improving but given the number of countries with infrastructure challenges, it will take time before intra-Asia trucking volumes show the same strong growth as ocean and air lanes.
In Asia, there is clearly a need for improved customs procedures in order to reduce waiting times at borders, and support the rise in shippers that use international trucking services. If there are improvements to the highway network connecting Southeast Asia and into China, and border services improve, the time differential between trucking and airfreight between major cities would become negligible and the cost of trucking would significantly lower.
Morten Damgaard is CEO of Agility Malaysia and South East Asia. Global logistics services provider Agility offers cross-border trucking services in China and Southeast Asia. It also has a representative office in Myanmar to tap on the opportunities as the country opens up.
The major problems that exist are both bureaucratic and infrastructural, which are common in frontier and emerging markets.
The ASEAN Free Trade Area (FTA) is hopefully the way forward to removing the trade barriers that inhibit cross border growth, so everyone is optimistic there will be incremental improvements year on year.
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WORKHORSES ON THE ROAD Ground freight is steadily gaining momentum in Asia. One factor to ensure that this growth can continue is on-time delivery, which can be achieved by picking a reliable truck and a “good” driver. Denice cAbel reports.
In recent years, cross-border trade be-tween countries in Asia – noably China and the ASEAN countries of Singapore, Malaysia, Thailand, Myanmar, Cambodia, Vietnam and Laos – has registered tremen-dous growth. Because of this trend, ground transport of goods as an alternative for air-freight and sea freight forwarding is also gaining momentum.
One important factor to ensure that this growth can continue is on-time delivery, which can be achieved by picking a reliable truck and a skilled driver. Obviously, man and machine are subjected to a lot of stress when it comes to delivering on time.
Keeping this in mind, Volvo Trucks has launched a new range of trucks in Asia this year. The completely renewed prod-uct portfolio, comprising the Volvo FH, the Volvo FM and the Volvo FMX, is the most modern Volvo line-up as of yet, featuring innovations in all crucial areas: from fuel efficiency, safety to maximising uptime.
Volvo said it invested more than US$3 bil-lion and 14 million engineering hours in product development alone.
Volvo’s proprietary Dynafleet system al-lows following up on fuel consumption over time, and – together with Volvo Trucks Driver Training – coach drivers into further improving their fuel saving skills.
The new range also introduces features such as the Volvo Dynamic Steering (VDS), which delivers “exceptional” handling – pretty much like a car’s. At low speeds, even a heavily loaded truck is easily ma-noeuvrable that it can be steered with little effort.
Telematics also enables the workshop to monitor key components, such as fuel usage, wear and tear conditions, driver’s momentum, etc., thus making it possible to reduce maintenance needs and avoid unplanned stops, letting the customer fully focus on running their core business.
DESIGNED FOR LOGISTICSAmong the three new product ranges, Volvo FH and Volvo FM are most ideal for logistics services. The Volvo FH, for in-stance, features an all-new cab optimised for long haul challenges. It is built with the driver in focus, and it is wired to make op-erations more efficient, more productive, safer and more comfortable for long dis-tance transport.
The flexible all-round player Volvo FM is designed for the urban environment and regional long-haul, and thereby meeting Asia’s fast-paced urbanisation. It is a ver-satile truck that can be tailored for each specific need of the customer’s business.
The expectations for the new truck range are high, that’s why Volvo Trucks said it is stepping up overall customer service. Volvo Trucks is currently present in over 20 markets in Asia with more than 200 dealerships and workshops.
DRIVER-FRIENDLY BRANDlogistics insight Asia sat down with VAlery MuyArD, General Manager, Volvo Trucks Singapore, to discuss how businesses can leverage in-truck technologies to optimise their transport operations.How long have you been working in Volvo?I have been in my current role in Singa-pore for nearly a year, but I’ve been in the Volvo Group for more than 13 years. Previously I was based in Thailand, and also in Volvo’s other offices such as Sweden, China, UK, and Germany.
Can you share some of the challenges you have faced in the past year work-ing in Singapore? The market here is interesting. Custom-ers here demand very efficient transport. Singapore is one of the countries where you can enter and come out of the air-port in 10 minutes, so efficiency is very
high. Customers are looking for trucks that are efficient and reliable so I would really say that this is good for us as we are able to provide these requirements.
How can businesses leverage in-truck technologies to cut costs?There are two things that are “biting” the trucking industries: particles & NOx emis-sion and fuel consumption (CO2). Achiev-ing low particles & NOx emissions was a challenge but we have progressed so much [on this]. We have achieved tremendous progress in lowering emissions, which is helping the environment as well as peo-ple’s health. The other challenge is fuel consumption – but I would say that our
trucks are using less and less fuel each year. It’s a trend which is quite impor-tant, because fuel efficiency translates to lower carbon emissions as well as lower operating costs.
During truck selection, what features do companies usually look for? Is it purchase cost, fuel savings, or cus-
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tomer service?I think the first thing that the customers are looking for is the total cost of own-ership – including the costs of owning and running each truck and the resale value after some years. Volvo is seen as a premium brand in the world, and we have presence in all countries. Clearly we are not the cheapest one, but we know that customers find us beneficial because they will achieve lower fuel con-sumption and better uptime when com-pared to our competitors. They know that our trucks will run for a long time so the resale value will be good. So cost of ownership includes purchase cost, fuel consumption, repair cost, uptime and resale value.
Secondary to that, customers want to know what the trucks can do for them in terms of transport capabilities. For ex-ample, our trucks are equipped with load sensors to tell how heavy the load is in your truck. This is important especially in Singapore where there are road limita-tions. We also have the Dynafleet hard-ware which comes installed from factory and allows following up on the truck’s fuel consumption, and allows for send-ing messages between the office and the driver. You can get a full picture of the fleet in real-time with this technology.
Finally, customers are looking for trucks that their drivers want. Our trucks are easy to drive and this is important in at-tracting good drivers. We really have a shortage of drivers and having a truck that has many advanced features to help the drivers, helps customers retain their employees.
It seems that technology plays a major part in truck’s overall performance.Well the driver also plays a big part of the operations. The truck will do 70 per cent of the operations, but 30 per cent remains
the driver. We at Volvo are working actively with the drivers in different ways. One is we have the Fuelwatch, a competition for drivers to achieve the highest fuel savings through optimised driving techniques. We started this com-petition in Asia in 2007, but in Europe it has been running for many years. It is part of our efforts to educate drivers, fleet managers, customers and other stakeholders about the importance of good driving practices to improve fuel efficiency, reduce cost and increase profitability. Through this programme, we are also helping the bottom line of companies.
We also regularly provide refresh-ment courses for drivers and teach them safety, etc. We try to have at least [one workshop] per month. We also help the drivers by developing safe trucks equipped with reliable emergency braking systems and other technologies to make their life easier behind the steering wheel. We are try-ing to cover the full scope: the driver, truck, and whole usage. You have to realise that if you save 1 per cent of fuel – even just 1 per cent – it will make a major impact on profitability. Sometimes you can see a difference of 30 per cent fuel efficiency between a good driver and a bad driver. And gen-erally a good driver is a safe driver. It goes together because a driver who cares about his fuel also cares about his truck and tends to me more care-ful on the road.
Volvo’s core values are quality, envi-ronment, and safety. Volvo built its reputation on selling safer cars. We invented the three-point seat belt; we are the first to install front underrun bumper on trucks, first to introduce side airbags, etc.
Where do you design, manufacture, and assemble your trucks?We manufacture in Sweden. We have two main plants in the world, one is in Sweden and the other is in Belgium, so all our trucks come from those places. We have an assembly plant in Austral-ia, but all our trucks mainly come from Sweden.
Why should companies choose Volvo trucks over other brands?When they buy Volvo trucks, they buy a complete package. They buy a truck and a service that will take care of them all the way. We have premium trucks and we are a premium brand, so we give customers premium service.
[ Volvo FH and FH16 ]
[ Volvo FM ]
[ Volvo FM cabin ]
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SCHWEPPES VOICE-ENABLES ITS WAREHOUSE Iconic brand Schweppes has been delivering premium quality non-alcoholic beverages for over 150 years. It boasts of 11 manufacturing sites and 12 distribution centres across Australia. How does Schweppes successfully manage its supply chain? Letʼs fi nd out.
First pioneered in Geneva in 1783 by Jacob Schweppes, the remarkable process of capturing and bottling bubbles was brought to Australia in 1850. The first Schweppes factory was built in Sydney in 1877.
Today, Schweppes Australia is a beverage powerhouse, boasting 1,800 employees, 11 manufacturing sites and 12 distribution centres across the country. It manufac-tures popular drinks including Schweppes, SOLO, Cottee’s, Spring Valley, Pepsi and Gatorade.
Schweppes Australia distributes and deliv-ers beverage products to more than 30,000
customers nationally. One of its largest distribution centres, the Archerfield site in Queensland, services a large majority of the state’s market. Over 40 employees pick up to 16,000 cases daily, which are then delivered to more than 5,000 customers.
Until recently, the Schweppes Archerfield DC operated using a paper-based picking system and the process of planning each load could take a worker up to 15 min-utes. As many of the product descriptions are similar, workers could easily misread information resulting in delivery errors. Stock tracking also was made difficult due to multiple stock keeping units (SKUs) and pallets being stocked at each picking loca-tion.
In order to combat the inaccuracies and in-efficiencies caused by an outdated, paper-based picking system, Schweppes Australia decided to implement a fully-integrated voice-directed solution.
Logistics Insight Asia spoke to Danny Mur-phy, Schweppes Australia’s national logis-tics execution manager, on what they have done to upgrade their Archerfield distribu-tion centre.
DITCH THE PAPERAccording to Murphy, they did so much more than just replace paper. The com-pany’s goal was to build a fully-integrated system that would eliminate the double handling of pallets and non-value add re-petitive tasks, as well as provide their man-agers and supervisors with visibility in the workplace, which creates a safer place to work for pickers.
“We installed Vocollect voice solution by Honeywell to optimise our supply chain performance due to the ease with which it could be implemented and trained across the entire workforce,” said Murphy. “The in-tegration of the voice project occurred very quickly”, said Murphy, “hence providing a significant return-on-investment within a short timeframe.”
Due to the automated nature of the voice solution, Schweppes’ workers can be trained in a much shorter timeframe. They can now set up voice templates for new operators in 10 minutes, and a worker can be trained on the product range within 20 minutes. This contrasts to the old system where it would take up to two weeks before an operator could be fully confident to pick unsupervised.
PICK BY VOICEWith the Vocollect voice solution, a worker is provided with a pallet label and then gives and receives verbal prompts which direct them to the correct picking location. The location is confirmed by the use of a check digit upon arrival – removing any confusion about location. The voice system then prompts the worker as to how many cartons to pick, and the worker repeats the quantity back to the system. Accord-ing to Mike Heide, Schweppes Australia’s Queensland distribution manager, within the first week of using the voice system, their carton picking errors were reduced by as much as 90 per cent.
Implementing the voice solution established an automated system that resolved the issue of product identification, previously
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a major challenge for the Archerfield ware-house. Under the paper-based system, workers had to identify 400 different prod-ucts in the warehouse – some of which have markedly similar packaging, such as Pepsi and Pepsi Max.
Heide expects productivity benefits for the workers too, particularly when it comes to product replenishment, which has already achieved a pick rate increase of around 20 per cent.
A voice solution also provides real-time visibility into each worker’s shift. The avail-ability of accuracy and productivity figures under the new system means manage-ment can clearly identify what each worker is picking, their pick rate, and how much work they have completed. Where manag-ers used to manually review each worker’s paperwork daily, they now simply press a button to access a comprehensive produc-tivity report for each worker at any point during the work day.
Archerfield’s distribution centre manag-er, Nathan Lucinsky, has also witnessed higher accuracy in order completions.
“We can gauge the workload at the begin-ning of the day and flex our casual labour force based on this information, rather than
waiting for the end of the day to deter-mine how much work is still required. The system has allowed us greater accuracy for our customer deliveries,” said Lucinsky.
Murphy considers the biggest benefit of the voice solution to be the seamless in-tegration with all the warehouse systems.
“As a result of implementing voice, we were able to activate a real-time replenish-ment system, which is more efficient and accurate. We have stronger batch control at our pickface and we are providing a saf-er work environment for our employees,” added Murphy.
Voice is well-suited to operations such as Schweppes because it allows workers’
hands to be free for picking, rather than occupied with paper, scanners or labels. Drivers no longer need to refer to their pick sheet whilst driving; they now receive all instructions via a wireless headset, so as not to be distracted.
DRIVER SAFETYUnder the old system, forklift operators would drive around the warehouse with their heads down looking at their pick sheet. Under the new system, there is no paper so their heads are up and they are visually checking to make sure everything is safe as they drive around.
Schweppes Archerfield’s distribution cen-tre is not the only winner following the implementation of the voice solution. The improvements in efficiency, productivity, visibility and safety have enhanced the site’s supply chain performance – a ben-efit that is ultimately passed on to the cus-tomer, who benefits with quicker and more accurate deliveries.
The workers at the Archerfield centre are also incredibly pleased with the solution, valuing the investment made by their man-agers to ensure that they have access to the latest technologies that will make their jobs easier and safer.
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EVOLVING SUPPLY CHAINS
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HOW A SMART WAREHOUSE SAVES MONEY Left frustrated by inaccurate stock levels or unhappy with the time it takes to deliver customer orders? Looks like a job for a smart WMS. By FRANS KOK.
The market for warehouse management system (WMS) is predicted to expand at a compound annual growth rate of 8.2 per cent across the Americas, Asia-Pacific, Eu-rope, the Middle East and Africa over the next three years, as per a recent research by a leading technology research and advisory company. The key market drivers for WMS include an economic pace that continues to pick up and push companies to spend more on advanced technology, the ongoing need for more streamlining and visibility in the distribution centre, as well as the fact that many existing solutions are ageing and need to be upgraded or replaced.
Other factors include the rapidly chang-ing clients, who demand better service and more information. Thanks to the speed of the Internet available today, clients have be-come used to getting everything instantly. One cannot ignore that the demand from small- and medium-sized businesses that are adopting WMS solutions to help them improve efficiency and stay competitive in the market is playing an instrumental role.
According to the Logistics Management 2013 Technology Usage Study, 50 per cent of logistics operations are currently using WMS — the highest percentage of any supply chain software solution. The survey also revealed how 43 per cent of companies admitted that their use of sup-ply chain software has changed in the past two years. Only 5 per cent said their us-age has decreased, while a fairly healthy 23 per cent said that they are currently using more software packages than they were two years ago.
REDUCE LABOUREven though the concept of a warehouse is simple theoretically, the task in reality is complex and enormous, requiring the right mix – whether the people, systems
or the solutions – to run efficiently. To be-gin with, it cannot be ignored that a major factor affecting the industry as a whole is the ageing market for warehouse labour, which creates the issue of worker scarcity and consequently increases cost. In labour-intensive industries such as warehousing, staffing is typically the largest single vari-able cost. Warehousing jobs are physically demanding, thus they are being shunned by young workers.
On top of it, there is always the issue of up-dating and maintaining data across all sites to ensure not only consistency and accura-cy, but also smooth accessibility at all times. In addition, the volume of goods to handle also tends to double. Twice as many outlets may mean wider range of product choices for customers, but it also means longer browsing periods for the staff. The longer the time, the fewer orders they can process.
[ There is a growing requirement for bigger space, but the high cost halts companies from expanding their warehouse. ]
The challenge with using manual-based stock is that the staff can only search by one particular means, such as the product name or type, which halts productivity and stalls efficiency even longer. Without appropriate systems in place, it becomes almost impos-sible to track goods effectively. As stock vol-ume starts to go up, manual or paper-based systems simply cannot keep up with the constantly changing status of goods that have been used, sold or returned.
OPTIMISE SPACEIn today’s business environment, ware-houses are expensive to operate – the cost of the land, machinery, building, and labour can amount to a significant sum of money, adding to the list of burden cur-rently shadowing companies. There is a growing requirement for bigger space, but the high cost halts companies from ex-panding as they wish.
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The role of warehouse managers is also becoming more intricate and demanding. They must avoid excess space but on the other hand ensure that the needed space is always available at the time of the arrival of the goods. A shortage of warehouse space at the same time when goods arrive can result in huge financial losses for compa-nies. As an example, among the many in-dustries that rely on automated solutions, retailers are leading the growing trend to embrace automation to transform their warehouse operations and step ahead of the competition.
As customers become increasingly de-manding and supply chains increasingly global, the profitability of today’s man-ufacturers and distributors is at risk. They cannot address rising customer ex-pectations and seize new market oppor-tunities with inadequate warehouse op-erations. These challenges have forced companies to come up with a new solu-tion that can help them save costs while also maintaining, if not improving, their quality level.
One of the ways is through warehouse au-tomation, which provides tools for keeping track of all the actions occurring inside the warehouse. While the traditional func-tions of a warehouse are common and well known, the more advanced warehouse is an integration of highly evolved automa-tion technologies, making it a core part of the supply chain.
DON’T ISOLATE YOUR WAREHOUSEDespite the circumstances, even today, many companies still do not use ware-house management solutions to their full potential. The crucial business area of the warehouses or distribution centres – also
referred to as the “heart of the supply chain” – is also often isolated from the rest of the supply chain and not fully integrated with operations and systems from other areas such as procurement, dispatch, customs, transport and service providers. Such isolation inevitably results in a loss of transparency and consequently, missed optimisation potentials.
And optimised utilisation of resources, proper inventory management, automa-tion of billing and accurate stocking are just the first steps in reducing costs and improving efficiency within the warehouse. Unfortunately, for many companies, the ef-fort stops there.
With the warehouse as the central hub of the supply chain process, it is important that companies use their warehouse man-agement system along with other agents in the supply chain ecosystem, in order to get the best return on investment.
Today’s WMS must offer multi-level, multi-site and multi-client inventory manage-ment, facilitate different picking strategies and material handling systems, support reliable demand forecasting, and cater for the distribution of store deliveries and on-line orders alike – to name just a few.
The potential benefits of a WMS system are remarkable. Once an order comes in, the system should be able to prepare the legal guidelines for the export and generates all the barcodes, picking the necessary tickets and transportation documents. Further-more, the system should be able to calcu-late the time required for packing orders and assign manpower to oversee the work, based on a master manpower schedule. As a result, companies can adjust their staff requirements accordingly, re-assigning staff to different jobs and departments, and thus resulting in more effective and efficient usage of both cost and resources.
COMPLETE VISIBILITYThe most powerful part of a WMS is hav-ing complete visibility of inventory levels in the warehouse. By tracing what goes in and what goes out on a daily basis, com-panies will be able to reduce inventory lev-els, keeping only the minimum amount re-quired in order to respond to emergencies.
A good WMS is able to send immediate no-tifications to suppliers and carriers when in-ventory levels are close to falling below the minimum requirement, resulting in a prop-er continuous flow of goods and fewer bot-tlenecks. It is vital to have these basic best practices in place before looking at how the business intelligence can be applied to other areas of the supply chain. Aside from offering a better customer experience, an accurate stock knowledge means manage-ment can make better business decisions too, as they will be able to identify which representative is selling the most.
[ Without appropraite sytems in place, it becomes almost impossible to track goods effectively ]
[ The most powerful part of a WMS is having complete visibility of inventory levels in the warehouse ]
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Beyond better mechanical solutions, to-day’s automated warehousing solutions are all about the software. In order to take advantage of the capabilities of the advanced equipment, it is important that the companies first learn new levels of the software itself.
The right software should provide com-plete visibility of inventory levels in the warehouse and of goods in transit. Full transparency of incoming and outgoing or-ders enables companies to consolidate and time their transports and reduce inventory levels, keeping only the minimum amount required to respond to emergencies. A good WMS promptly notifies suppliers and carriers when inventory levels are close to falling below the minimum requirement, facilitating a continuous flow of goods and saving money.
Warehouse operators should also look for end-to-end traceability of order items and returns management capabilities as es-sential functionalities. This is particularly important in case of product recalls, which can quickly lead to warehouse bottlenecks and turn into PR disasters. Powerful WMS solutions offer drill-down options for or-der tracking and KPI monitoring, e.g. from container level to stock keeping unit level, and collect all applicable progress reports and status messages on one centrally ac-cessible platform.
Returns management adds another compli-cated process that each warehouse opera-tor must manage next to their core ware-housing and distribution operations, often within the same facilities and at a great ex-pense. Not every WMS is able to handle the various returns strategies, keep a full audit trail throughout, and link each item with its original order to trigger related financial ac-tions in the master ERP system.
Another crucial requirement to run a seamless warehouse operation is system integration capability: A WMS should in-tegrate smoothly into a company’s ex-isting IT environment and communicate with both internal operations and systems (e.g., procurement, customs, shipping and sales) and external parties (e.g., suppli-ers, service providers and carriers), lead-ing to transparency and efficient work flows – ideally in real-time. The software should have a modular architecture that provides the functionalities required at the time, with scalability, i.e. the option of expanding as a company’s requirements grow. This includes integration of trans-port as well as global trade management systems, facilitating comprehensive lo-gistics execution, as well as regulatory compliance with customs and global trade procedures.
The ultimate choice of WMS depends on a company’s individual requirements and short-term, mid-term and long-term goals – there is no ‘one-size-fits-all’ solution. That is why it is crucial that the solution provider offers the right portfolio, experi-ence, and consultative approach to guide through the decision making process. Ideally they should become a proactive partner, offering an outside view and ask-ing the right questions to assist in-house teams to design improved work flows, cut waste and increase efficiency.
In practice, automated warehousing helps a company‘s entire operation to function much more efficiently with less costly space and effective productivity rates. And because automated warehousing solutions make the most effective use of space, building costs can be kept to a minimum. Significant cost savings are made possi-ble through the need for less land and a smaller building. Automated storage and retrieval machines also physically weigh a lot less than aisle trucks, further reducing construction requirements.
OPERATE FASTERReducing reliance on labour and cost sav-ing has always been the traditional justifi-cation for automation in the manufacturing space. Today, there is also an emphasis on making things operate faster. Productivity remains one of the top reasons why more and more companies are now choosing to automate their warehouses, particularly since customers are placing their orders later and later.
Nowadays orders are still accepted be-yond the normal working hours, and e-commerce is only enhancing this trend. The later the cut-off times on order, the shorter the lead time on the warehouse
floor. Order picking may account to more than half of warehouse cost, and process-ing customer orders quickly and precisely also has a direct impact on customer satis-faction and loyalty.
In its benefit to increase productivity, not only does automated warehousing work faster than forklifts and narrow aisle trucks, they can also operate 24 hours a day, sev-en days a week, keeping products on the move. With automated storage and retrieval machines, the days of delayed process as-sociated with putting away or retrieving pal-lets from high locations will be long gone.
Seeking not only financial but also produc-tivity returns on any WMS or warehouse automation investment is understandably high on the priority list for any growing company. In an industry where time and space are both sought-after commodities, the pressure to maintain a seamless ware-house operation has stepped to a whole new level, changing the game of the manu-facturing industry in general.
Warehouse management systems have a staggering impact on improving supply chain dynamics and performance, and ulti-mately on realising savings. Today’s com-panies are challenged to possess the ability to anticipate what customers are seeking for, and then bring the product to market before the competition. Investing in the right technology and utilising them are vital in achieving this success. The right WMS can help companies impress poten-tial clients and provide the best possible service and support to the current ones.
[ Automated storage and retrieval machines weigh a lot less than aisle trucks ]
Based in Singapore, Frans Kok is the general manager of AEB (Asia Pacific) Pte Ltd.
It has been a good decade since e-commerce took the world by storm and we are just beginning to see a levelling of the online versus brick-and-mortar playing fields. The catalyst for this trend is omni-channel retail-ing, an evolved and sensible way for physical retailers to utilise e-commerce to give busy customers more shopping options, without cannibalising their traditional businesses.
Omni-channel frees the consumer to shop online, in-store, or do both – wherever and whenever their moods take them. They can choose to have their online purchases delivered to their doorsteps, or pop by a physical shop to pick up their stuff to their convenience. And if they’re already there at the store, they will hopefully do a spot more shopping.
To the retailer and the consumer, this is a win-win solution that benefits both, so why only now is the trend on an upswing? The catch is order fulfilment.
As much as distribution centres (DC) would prefer e-commerce orders be hidden in a corner of the warehouse – online shopping is not something that will go away. With the integration of multiple customer order channels, more brick-and-mortar business-es are wising up to the benefit of having both physical and virtual presences – as a way to successfully contest their pure e-commerce counterparts.
For warehouse operators, survival in this new world requires flexibility and a holis-tic approach, as processing online orders for an individual is vastly different from processing for retail. The main challenge lies in the changing product mix – from a mixed pallet and case world, to an increas-ingly ‘each’ world.
Consumer online shopping is undoubtedly the biggest trend to impact the retail supply chain landscape in recent times and it is showing no signs of slowing
THE OMNI-CHANNEL DISTRIBUTION CENTRES
VOICE FOR AN OMNI-CHANNEL OPERATIONDCs progressing to an omni-channel fu-ture should be mindful of two important factors – accuracy and flexibility. While these are already the cornerstones of any warehouse operation, they have to be significantly drummed up to ensure high levels of productivity are maintained throughout.
In this respect, a voice solution perfectly meets the demands of e-commerce by in-creasing efficiency on all fronts, leading to shorter turnaround from ordering to de-livery. Honeywell’s Vocollect voice solu-tion, for example, is purposely designed for industrial environments and to help organisations:• streamline their omni-channel order ful-
filment needs• realise improved warehouse efficiency • raise accuracy for a lower operating
cost.
It increases efficiency by eliminating the time workers spend shuffling papers, labels, and scanners, allowing them to perform their assigned tasks much more quickly via a hands-free, eyes-free work-flow. DCs enabled with voice are thus, able to streamline traditional work patterns and often see a 20 per cent lift in produc-tivity whilst ensuring accuracy rates of 99.9 per cent.
These benefits are ideal not just for man-ually-intensive tasks such as order pro-cessing, but other operational processes like cycle-counting, receiving, loading, put-away, replenishment and put-to-store as well, enabling warehouses to meet in-creasing operational demands like next-day and late-night fulfilment for example.
Through the simplicity of voice direction and instruction, they now have the tools to be used wherever they are needed, across multiple workflows. And because train-ing times for new tasks are dramatically reduced, workers can manage receiving tasks in the morning, order pick for much of the day and finish up replenishing or loading – all supported by the same intui-tive voice-directed link to the host system.
Shift managers will further benefit from a real-time view of progress, allowing them to plan and allocate resources more effi-ciently – especially in light of continuous growth of SKUs and smaller order sizes, which can add serious inefficiencies in the warehouse.
Future DCs will be pressed to increase overall use of batch picking processes to enable more ‘each orders’ to be picked, an area that is best handled by voice. Voice-directed batch picking greatly reduces the extraordinary amount of wasted travel time, resulting in greater workforce pro-ductivity.
GOING MAINSTREAMAs omni-channel order fulfilment activity scales up, DCs will begin to increase their investments in their facilities and dedi-cate greater real estate to support various channels. They may start out by setting aside ‘mini-warehouse zones’ within their existing physical structure. But in time, there will be no more ‘hidden’ corners for e-commerce processing; these ‘mini-warehouses’ will become mainstream and a common operating practice.
A truly mobile voice solution equipped with adaptive recognition will become a necessity, as the technology continuous-ly and proactively responds to changing voice and environmental conditions – pro-viding better performance over time.
With retail brick and mortar businesses becoming more effective at leveraging their retail store infrastructure and local inventory presence, the warehouse of the future is one that handles omni-channel distribution as a matter of fact, rather than a matter of inconvenience.
Vocollect and Vocollect Voice are trade-marks or registered trademarks of Honeywell International Inc. in the US and/or other countries.
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The global logistics industry is facing a growing number of challenges. Caught be-tween rising labour costs and ever-rising fuel prices, the industry is subject to in-creasing environmental pressures such as emissions legislation and accurate carbon footprint reporting. Competition is fiercer than ever before as customers demand advanced services that involve just-in-time supplies, same-day delivery, and dynamic shipment routing.
Asia is home to multiple global logistics hubs, including Singapore which in 2012 was ranked no. 1 out of 155 countries glob-ally in the Logistics Performance Index by the World Bank. Urbanisation, Asia’s rapid economic development, and the rise of its middle classes are expected to propel the industry to greater heights, supported by burgeoning intra-ASEAN trade, which is projected to grow exponentially under the ASEAN Economic Community 2015 plan. This growth is putting added pressure on the region’s strained maritime, aviation and land transport capabilities.
One of the solutions to many of the challenges faced by the industry can be found within the vast amounts of data
MAKING SENSE OF BIG DATA IN LOGISTICS Find out how fi ve distinct characteristics of Big Data analytics can deliver added value and effi ciency to the logistics domain. By SANTOSH TAKOOR.
generated by the sector. Big Data analytics can significantly enhance existing business models, or even transform the logistics by creating entirely new ones.
Here are five distinct characteristics of Big Data analytics – supported by real life exam-ples – which can deliver added value and ef-ficiency to the logistics domain:
1) OPTIMISATION TO THE COREThe strong dependency of logistics opera-tions on timely and accurate information is a key opportunity that Big Data can address. Optimising properties such as delivery time, resource utilisation, and geographical cover-age is an inherent challenge of large-scale logistics operation. Information on payload, quantity, size, location and destination are required to control efficiency and service quality in a transport network. The logistics industry, already intrinsically dependent on information, therefore stands to benefit from advanced predictive techniques and real-time forecasting of events to provide a new quality in capacity forecast and resource control.
A recent example of Big Data at work in the logistics industry can be seen at the Ham-
burg Port Authority in Germany. Ham-burg’s docks are limited to an area of 7,200 hectares, yet like many port hubs, expansion plans are underway. In Ham-burg’s case, by 2025 the number of containers passing through each year is expected to treble from the current 9.1 million containers per year. Hamburg uses a cloud-based traffic management system from T-Systems to help stream-line the flow of goods and keep up to 40,000 vehicles a day in check.
Until very recently, logistics companies were forced to rely on radio networks to maintain contact with truck drivers. Ad-vances in technology now allow for touch-screen tablet devices that offer text-based communication and mobile network con-nectivity. With GPS technology, HQ agents now possess round-the-clock, real-time insight into the location of vehicles and their cargo. The knowledge gained from this data enables HQ to communicate the right information at the right time to stakeholders.
For example, police notifications can be processed and leveraged immediately. The challenges associated with deploy-ing such a solution usually come down to concerns about the bandwidth capacity to deal with the constant stream of large volumes of data, as well as the informa-tion capture and analytics tools. Using a solution that offers a cloud platform and data processing and analytics on a scal-able, ‘pay-as-you go’ model, logistics companies can maximise the benefits of Big Data analytics without the need for up-front investment in expensive ICT in-frastructures or hardware.
2) TANGIBLE GOODS, TANGIBLE CUSTOMERSWhereas in other sectors such as travel or banking, where direct customer inter-action has been replaced by automated ICT processes, logistics players typically rely on direct customer communication at both pick-up and delivery. With Big
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Data technology, the logistics industry can derive value from the millions of di-rect customer interactions daily by creat-ing a link for market intelligence, product feedback, or even demographics. Big Data concepts provide the means for logistics companies to generate valuable business insight in consumer sentiment and prod-uct quality that is more difficult to obtain in verticals that have abandoned the per-sonal customer touch point.
As Asia opens up its markets to the world, the logistics marketplace becomes in-creasingly competitive. In a crowded mar-ket, customer satisfaction and retention is more important than ever before. Data from distribution network carries a signifi-cant value for the analysis and manage-ment of customer relations and loyalty. Ad-ditionally, enriched by Internet and social media mining, Big Data techniques can be applied to minimise attrition on the sender side and understand demand on the re-ceiver side.
Logistics customer touch points can also include responses to sales and market-ing activities, customer service enquiries, and complaint management. This digi-tal customer trail can be correlated with distribution network data on statistical service levels, and with customer’s publi-cally available Internet data from news agencies, annual reports, and even social media, for analysis. Semantic text analysis, natural language processing, and pattern recognition have the potential to gener-ate and initiate proactive customer service countermeasures based on automatically generated triggers.
3) IN-SYNC WITH CUSTOMER BUSINESSThe global expansion of global markets and supply chains is further increasing – and with it increases the relevance of lo-gistics services as a critical factor in any company’s operational procedures. Mod-ern logistics solutions tailored to custom-er-specific requirements are able to seam-lessly integrate into a host of industries, in many cases enabling the logistics provider to ‘feel’ the very heartbeat of the individual businesses serviced.
The data opportunity here comes when the logistics providers recognise their unique position to become valuable advisors for their enterprise customers, and apply ana-lytic methodologies to reveal insights. For example, contract logistics suppliers al-ready have access to client’s supply chain data, and Big Data analytics technology un-locks the value that many industries might be seeking, such as supply chain risks and possible remedial action in case of disrup-tion or crisis.
Robust supply chains that can cope with unforeseen events are a vital business ca-pability in today’s rapidly changing busi-ness world. Logistics firms must not un-derestimate the value that their insight in maintaining a resilient and flexible supply chain can bring as it is foresighted risk de-tection that ensures business continuity when disaster strikes.
Logistics providers are well-positioned to secure customer operations by perform-ing predictive analytics on global affairs. T-Systems is a trusted partner of Apache Hadoop, an open-source software frame-work for storage and processing extremely high and unstructured data volumes. Ap-plications can distribute complex comput-ing tasks and process petabytes of data that have every potential to enable logis-tics providers to make recommendations for countermeasures for sustained opera-tions to clients, and report on upcoming risks for client’s supply chain.
4) A NETWORK OF INFORMATIONWhilst maintaining transport and delivery networks is no easy task, this highly-op-timised infrastructure that constantly for-wards goods around the globe doubles as a high-resolution data source and is, there-fore, a distinct business asset. Such infor-mation not only serves to further optimise the network itself, but can also provide valuable insight to external parties.
On an aggregated, macroscopic level, lo-gistics data has already been used in an economic indicator in the past. Today, applying the power and diversity of Big Data analytics moves the level of observa-tion down to a micro-economic viewpoint. A detailed analysis and segmentation of the global flow of goods is a powerful tool for every business to detect developing trends and changing conditions in any given market.
Platform-based Big Data solutions (e.g. T-System’s Efficient Fleet Management) are designed to cut costs and monitor environ-mental footprint to ensure compliance on behalf of the logistics provider. They opti-mise shipments and routes, therefore sav-ing fuel and operating costs. They can also offer complete transparency of driving be-haviour and fuel consumption for vehicles, thus maximising fuel efficiency by improv-ing driving behaviour.
5) GLOBAL COVERAGE, LOCAL PRESENCEFinally, another characteristic that sepa-rates logistics from many other indus-tries is that decentralised operations are a necessity. A local presence is crucial to serving customers at both the start- and end-points of increasingly far-flung supply chains. As a result, many logistics provid-ers engage a fleet of vehicles that move across continents with blanket coverage in order to pick-up, forward, and deliver various types of shipments. Automated collection and analysis of local information along the transport routes can create a valuable zoom display for a demographic, environmental, and traffic statistics.
Take Google’s successful ‘street view’, for example. The Internet giant has proved that it is possible to provide local footage as a business model, but significant invest-ment was required to capture this informa-tion – customised cars were sent to every single location. For global logistics provid-ers, the ability to collect and monetise local data virtually comes for free. M2M (machine to machine) devices are already heralding the way for this; location information trans-mitters are expected to be built into all trucks in the not-too-distant future.
Again, data processing and storage takes place within the Big Data cloud, enabling both the capture of data and information
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from sensors (ambient temperatures, rain sensors, fog, etc.). Not only can this in-formation enable predictive assessments of driving conditions and possible route changes, there is also the potential to maximise the value of this data externally. Should the demand arise, sensor devices can be built into all kinds of vehicles, ships, and trains to monitor factors of interest – such as local pollution levels and their spread.
Big Data is a disruptive technology that gives logistics companies the power to process vast data volumes at an affordable price point. It can help address a number
TALKING BIG DATAQ&A with SANTOSH TAKOOR, vice president of sales for T-Systems Americas and APAC, Systems IntegrationsLIA: Could you give us an overview of what T-Systems is doing?ST: Let me give you a quick once-over of T-Systems. We started from Deutsche Post, the German post office. From there, Deutsche Post was then merged and became Deutsche Telecom, a cor-porate telecoms company. Finally, out of Deutsche Telecom, T-Systems was formed. So, T-Systems being the IT arm of Deutsche Telecom, we went to big German corporations such as the likes of Volkswagen, which has massive IT de-partments, and we provided them with cheaper, better and faster IT solutions. We have maintained very good relation-ships with them for the past 10 to 20 years and have been renewing services contracts and increasing our business with them since. We are now doing a lot more than we started off with, and we are now an organisation worth more than 10 billion euros [US$12.85 billion], doing anything related to pure ICT, such as telephone systems, computers, and networks, amongst other IT solutions and systems. We are strong in Germany, and for the last 15-20 years, we have been investing in expanding our global footprint.
LIA: What are your responsibilities as VP of sales in APAC?ST: I joined T-Systems after working at SAP for almost 14 years. I actually joined as a consultant and really wanted to learn about this trade. My former boss invited to join the company, to bring fresh analytics IT idea to the business, and I became the solutions integration sales in APAC. This was two and a half years ago. I am responsible for 16 coun-tries, managing huge turnover and a lot
of other things for a couple of years. At the start of this year, I was asked to come back to APAC, and similarly it was to bring in the portfolio, the analytics ideas, solutions and sales ideas.
LIA: Is T-Systems a competitor of SAP, Oracle, etc.?ST: We are key partners, and this is again one of the best-kept German secrets: that we are one of the largest partners of SAP. We work closely to develop a lot of func-tions. I came from SAP and I spent 40 years there. Another key board member of T-Sys-tems also came from SAP and brought in this relationship from SAP for us to keep working with them to develop key appli-cations. We are one of the largest provid-ers of outsource application optimisation services for SAP. So we take care of your entire ICT infrastructure for you, instead of you having to host your own data serv-ers and have people running around doing IT and managing services. We do it all for free, and even better, we do a full scalable IT system. For example, during Christmas where there is larger expected volume, you can pay for us to scale up in order to meet this demand; and when volume goes down, we can then rescale it accordingly. In that way, you don’t need a huge invest-ment in your IT system as we can manage and update your system on your behalf.
LIA: How has Big Data analytics evolved over the years? Where are we now exactly?ST: From the very early days, we had the pirates and the loggers of data and the pragmatic approach. And even be-fore that, we go back to ancient Greece where we had the earliest form of data collation. We take this information and
try to make sense of it and use it, not reactively, but proactively. What has changed is that there is now the speed, volume and variety for you to choose from. There’s a lot of data technol-ogy out there, so for example we have someone on stage presenting about Big Data, and how he could send data back to Nike or Apple recording what his heart rate or calories burn are. That kind of volume and variety of data has changed how businesses work nowa-days. So although you can ask a team people to physically do data spread-sheets, by the time you’re done with that, the data expires as it is already days or weeks old. When volumes of data go into not just a few megabytes but a few giga- or terabytes of data, you can no longer handle it physically.
That is where Big Data analytics comes in. The ability is to take information in its shape however quickly it comes in, and to make sense of it. Take the 1970s and 1980s when people sat in the office to discuss last month’s fig-ures and wait for next month’s figures to come in, and compare that to today, when you get quicker reports of your financials and supply chains in almost real-time. Nowadays, last month’s fig-ures are no longer relevant; we now need faster analysis of business fig-ures. Customer experience is really driving that. It is also different in that now you can instantly search for over-seas goods online from E-bay, Amazon, etc. for goods from China or America. You want your purchases to arrive quickly, and for stock to be available and information to be as timely as pos-sible in order to make good decisions.
of prevalent industry challenges and will take operational efficiency and customer experience to the next level.
Together, the five properties highlighted here give a road map for logistics provid-ers to better understand their own data assets and unlock the value contained within them. In turn, this provides en-terprises with opportunities to identify specific cases where the adoption of Big Data analytics processes can be used to exploit value and contribute to operation-al efficiency and improved customer ex-perience, or possibly development of new business models.
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LIA: How do your solutions optimise business operations, particularly in the logistics sector?ST: We look at Big Data and Internet of Things (IoT). There is a lot of information going around, and everything is talking to everybody. It boils down to how you take the noise out the Big Data and make sense of it. So we needed to know the recipe and put things together and make value out of it. If it doesn’t work, take that thing out. This way, we add value to the organization by maybe optimis-ing what you’re looking for. You see, logistics has been around since the dark ages, it isn’t rocket science. All we’re do-ing is making it quicker and cheaper.
What we’re talking about here is the fundamental paradigm of how logistics works and how we supply and deliver, right from store fronts, warehouse, in-ventory and delivery with two months lead time to delivering just in time. You want to see the stock available online, you purchase it and it arrives right at your door step within days. That is a completely different paradigm shift now. What if we could use the vast wealth of data structure that exists now, which we are creating at a phenomenal rate, and not just optimise, but change how you do business? Now this is what we’re talking about. The first step is making sure what you’re doing is prag-matic and efficient, and meets custom-ers demand and expectations. Then you want to ensure you have a better user experience and make use of the vast data available out there to do sentiment analysis.
For example, if you’re a shoe manufac-turer, you would want to be able to do a scroll across the Internet, social me-dia and the web, and find out what the next fashionable item is out there. If Angelina Jolie was seen in Afghanistan for a peace-keeping mission, what she is wearing is discussed on social media. It may be completely irrelevant to you, but to 18- to 25-year-olds, the target mar-ket, they are interested and are tweeting within the next 15-25 minutes about the latest clothes or shoes she is wearing. And what if, by the evening, you could meet this demand, manufacture and make these desired products out there for consumers to buy? Bingo! There is already a market here.
Let’s go even further: what if when you’re doing research on social media, and you realise that what she is wearing is going viral on Twitter? What if you’re able to create a function to reach out to these
people, and as whether they would like to choose and place an order for a similar piece of clothing at a discounted price, and get the outfit by post or collect it a physical store the next day? Wouldn’t that be a guar-anteed market and demand as well?
Now to do that kind of data mining re-quires a huge amount of computing power. Just imagine. We’re talking about databases, structures, feeds, emails and images, amongst other things. What if we could create a demand for products just based on data mining, and then feed it to the target market? That is changing how you manufacture, how you manage your supply chain and do B2C (business to con-sumer) sales. In fact, it becomes C2C (con-sumer to consumer) almost straight away, and that is really something that could happen. Are we there yet? No, but the good thing is, it is definitely possible.
LIA: Southeast Asia has more SMEs than MNCs, and many of the small logistics firms here are looking for the latest IT technologies available to optimise their operations. However, many of them say that the better IT systems out there are expensive to implement. Do you agree?ST: Yes, it’s very true. But going back to the example of SAP, there are actually tiers of IT systems and core applications that they offer. We are able to standardise and offer better deals based on what these individual businesses really need. That is where the idea of scalability comes in; we are able to upscale, downscale or provide different packages and functionalities in order to make the services cheaper. For example, we are able to make the systems fully online and self-service. The platform we used for hosting – for Shell, for exam-ple – is not that much different or complex as compared to those we use for smaller organisations. In terms of technology, ac-cessibility, platform, models, etc., there’s not much difference. So if your sales mod-el is able to cope with delivering to such SMEs, they can still afford the channels, some of the solutions and a full self-ser-vice model for their IT systems.
LIA: How would you convince SMEs to implement your data analytics system in their businesses despite cost concerns? ST: For SMEs, its normally house-made or tailored-made systems. Again, back to ba-sic business fundamentals, the only thing to convince them is that although it may seem like loss-making at first, the real question is, what is the rest of the market doing? What are similar businesses doing? Do we have the necessary competitive ad-vantage? Are we leading or are we at the tail-end?
I was explaining to an audience in Fin-land about the need to implement data analytics and solutions. I was originally working in Rio, and my son called me and asked me where his football boots were. There is an important distinction here. According to his rationale, he was reaching out to me for information on the whereabouts of his football boots that he needed for his school match. He reached out to me for information using technology (his mobile phone) in order to make things faster and easier, regardless of where I was physically, and then goes back to his normal pro-cesses. Similarly, in business, you need to reach out for information easily and readily before going back to your pro-cesses with this intelligence. You can’t say you’re unable to do it.
Returning to your question on how to make it justifiable to implement these systems, it almost becomes a question of where you are in the industry. Are you leading the change like Facebook, Google and Amazon are in their own sector? You want to be ahead of indus-try change. Another example would be a group of US-based banks are invest-ing money in laying fibre optic cables. Why would they do that when all they needed was quicker information about the stock markets in order to know five seconds quicker than other finan-cial institutions? Is it really worthwhile? And true enough, they spent billions on the cables but gradually made back the sum and more in fact, within a few years, just by using the intelligence they had to strategically sell and buy certain shares. Essentially, you need a commercially-viable model that they can subscribe to, be it the hardware or whatsoever, and that is where T-Sys-tems comes in to create solutions and platforms that can be customised to the requirements and budgets of these SMEs. You can start by doing bits and pieces and not large scale implementa-tions straight away. Instead, gradually adapt, grow and make value out of it. When you have seen the value propo-sitions, you can then move forward to larger scale implementations. Step by step, you can balance costs and ben-efits and know what works for your business and makes processes better, easier and faster through technology. The need for using the vast pool of available information out there to make better decisions is critical, and tools that are sophisticated enough are avail-able. That is where technology sits in supply chain and logistics, “computer vs. excel.”
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For Muslims, halal is essential as it is part of their religious obligations. Today, halal food, cosmetics and even pharma-ceutical products have become available worldwide. Halal is influential in opinion forming, provides a high level quality mark, and is more critical to be addressed throughout the supply chain.
Various halal scandals and contamination issues over the past years have led to reputation damage for big brands and are demanding a better protection of the Halal integrity for both the Muslim consumer and brand owner, similar to that of food safety. Halal assurance has become a significant component of the brand image and promise to the (Muslim) consumer. As the halal industry is starting to extend halal towards supply chain management (SCM), there is an evident need for supply chain partners to meet these emerging halal requirements. The logistics service provider can play a central role in the facilitation of these halal supply chains.
Halal is moving from a product approach, where the product is halal certified at the slaughter house or factory by an independent halal certification body (confirming that the ingredients and production process are conforming to a halal standard), toward a supply chain approach, where the halal integrity needs to be protected all the way up to the point of consumer purchase (retail or restaurant).
Extending halal assurance downstream the supply is complex, as goods flows become fragmented and thinner along the way and are consolidated with other goods in storage and transportation. Traditionally in the consolidation of goods flows, the halal status has not been a criterion, leading to mixing of halal and non-halal goods in transport, storage and even on the load carrier itself.
Although this might not directly lead to
SUPPLY CHAIN APPROACH TO HALAL Halal certifi cation is moving from a product approach towards a supply chain approach, where halal integrity needs to be protected all the way up to the point of consumer purchase. MARCO TIEMAN reports.
cross-contamination, it would definitely increase the risk as well as putting the brand image in jeopardy when these halal branded products are mixed in the supply chain with haram products such as alcoholic beverages and pork (based) products, leading to doubt of the halal integrity of a particular brand by the Muslim consumer. This makes a brand vulnerable.
Halal assurance requires a new paradigm and needs the involvement of all supply chain partners that handle these goods, such as logistics service providers, seaports, airports, wholesalers, distributers, retail, HORECA (hotel, restaurant and café), etc.
INCLUDE DOWNSTREAMConventional halal standards are focused on slaughtering and manufacturing (food, pharmaceutical and cosmetics), providing guidelines on the ingredients used and the method of production. These halal production standards do not specify the processes downstream the supply chain, covering possible transportation, warehousing, trading, HORECA and retail. However, some countries (like Malaysia) have developed specific halal standards for logistics, HORECA and retail. Therefore, some parts of the supply chain can be halal certified. The result is a supply chain where pockets are halal certified or compliant, but not the entire supply chain from source to point of consumer purchase!
This is different from food safety, which has been traditionally extended throughout the entire supply chain. The result is a halal supply chain (see Figure 1) where there is a ‘product approach’ to halal (only the source is halal certified) and a ‘supply chain approach’ to food/product safety (addressed throughout the supply chain).
Research conducted over the past years supports the concept of putting halal
and food/product safety at equal footing. Although halal certification is not always possible downstream the supply chain (or just in a few pockets), it is important for brand owners to address halal compliance in their supply chain through developing standard operating procedures which can be stated in contracts with supply chain partners and enforced through audits. This would create a more robust halal supply chain, which is more resistant to contamination and halal issues.
The question for many halal producers is whether and how to start with halal SCM. Halal production standards are not static, and through revisions are slowly including requirements for first-tier suppliers and customers in terms of transportation and storage. Halal standards and certification bodies are also creating new halal standards for logistics, food services, retail, and others; allow industries to make the supply chain halal compliant through the adoption of local, regional (e.g., the Arab Gulf Cooperation Councils’s halal standard) and/or international halal standards (such as IHI Alliance and SMIIC).
Halal regulations are also being further strengthened by Muslim markets in the Middle East and Asia for imports, prescribing more products that require a halal certificate as well as the recognition by the importing country of selected certification bodies in the world that can issue these certificates.
Once the components of the supply chain can be halal certified, it is just a matter of time that the halal production certification in particular Muslim countries will require also the compliance or even the certification of the entire supply chain. As halal scandals have shown to have big impact on the reputation of brands, big brand owners and local players do benefit by being proactive in halal compliance
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along the supply chain to better protect their brand and use halal SCM as a competitive advantage.
GAP ANALYSISA first step in halal SCM is to conduct a gap analysis to better understand the vulnerabilities and possible compliance issues in your current supply chain. From here you could develop a prioritised list to address the most urgent gaps in your current supply chain.
Halal compliance can be achieved by either (1) halal certification of supply chain partners or (2) assuring halal compliance through a contract. In both cases it is recommended that halal compliance is checked through regular audits. In here a distinction can be made in frequency depending on the importance of a supply chain partner (high/low volume handled), halal sensitivity of the product (animal origin yes/no), and location of the supply chain partner (Muslim or non-Muslim country).
A second and more integral approach to halal SCM is to embed halal assurance in your supply chain by design. For this, review your halal supply chain design, covering areas such as halal policy, logistics objectives, logistics control, supply chain structure, supply chain resources, supply chain processes and performance indicators.
Research shows that halal supply chains benefit by simple and short supply chains. It is pivotal to review your supply chain structure, covering sourcing and distribution. Consequential in the supply chain processes is to prevent mixing of halal and non-halal products throughout the supply chain. Therefore halal supply chains are systematically segregated from non-halal products, through a process of (1) physical segregation and (2) clear identification of the halal status on freight documents, labels and via information systems.
For a better optimisation of halal supply chains, collaboration, both vertically with supply chain partners and horizontally among companies in the same industry, could be beneficial for brand owners to avoid higher costs in logistics. Effective vertical collaboration of halal supply chains can be achieved through halal industrial parks and so-called halal supply chain orchestrators. Halal parks are spatial clustering of halal production chains (halal food, cosmetics or pharmaceutical manufacturing) in an industrial park or economic zone, whereby a significant part of the supply chain is geographically positioned this halal park, providing
Marco Tieman is the CEO of LBB International, a logistics consulting & research firm focusing on agri-food supply chains, industrial logistics and third party logistics. He is also adjunct professor with Universiti Tun Abdul Razak (Malaysia), in charge of research on halal supply chain management.
evident logistical advantages (by shorter transportation times); optimal use of by-products, including waste and energy; and increase capacity of halal park participants and innovation growth.
Today there are dedicated halal parks in Brunei, China, Malaysia and the United Kingdom. A halal supply chain orchestrator assists in managing global halal supply chains according to the specification of the destination market and ensures that the integrity is maintained throughout the halal network. This orchestrator makes use of common halal distribution centres in key gateways and consolidation of transportation. This role can be fulfilled by a logistics service provider.
Collaboration between companies in the same industry, also known as horizontal collaboration, can take different forms in achieving synergy advantages in halal supply chains. Horizontal collaboration can be beneficial for manufacturers, retailers and restaurant chains. Collaboration can be facilitated through either direct collaboration between different companies or through an intermediary, such as a logistics service provider or trader. In the implementation of a new halal supply chain it is important to do this phase by phase, possibly on a tier-by-tier basis. For example, we first start first with our logistics service providers, then the distributors, then HORECA, and finally retail.
CERTIFIED LSPThe logistics service provider is key supply chain partner in the management of global sourcing and distribution flows for the brand owner and in realising synergy advantages in halal supply chains. As the logistics service provider outsources much of the actual transport and warehousing to other logistics players, its (lack of) control of halal assurance with those logistics partners determine the actual level of halal assurance that can be realised for the brand owner.
There is an urgent need for professional logistics service providers that can orchestrate those complex sourcing and distribution networks. Fortunately, there is a growing number of logistics service providers in various parts of the world that are getting certified under local (e.g., MS 2400:2010 in Malaysia) and international (IHIAS 0100:2010) halal logistics standards.
It is clear that today’s supply chains are complex. Further downstream the supply chain towards retail, where the cargo flows are smaller (less-than-container or less-than-truck load), halal and non-halal products are easily mixed. This results in supply chains that are vulnerable in terms of cross contamination, risk of contamination, and a possible mismatch with the expectations of the Muslim consumer.
A supply chain approach to halal is needed for a higher level of halal assurance for the Muslim consumer and better protection of brands. A gap analysis can provide a first insight into vulnerabilities and compliance issues in your current supply chain. This can be a good start in quickly improving evident gaps in your halal supply chain. However, a more robust design of halal supply chains provides better halal assurance for the brand owner and in generating actual synergy advantages in halal supply chains. The logistics service provider is a key partner for brand owners in orchestrating these complex sourcing and distribution networks.
[ Figure 1: A typical halal supply chain ]
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It’s no secret that the Asia-Pacific region has a diverse range of resources – both human and natural – which are in high demand in the global marketplace. In a recent Logistics Insights Asia article, the group CEO of CIPS David Noble argued that in order to compete on the world stage, Asian businesses need to establish robust supply chains to provide accessibility for global trade. A solution to promote better procurement practice, according to Noble, is to build strong relationships with sup-pliers.
But how can you do so when your suppliers and/or buyers are on the other side of the world? How do you find them and then stay on their radar?
The solution lies, as do many things in the modern day, online. A growing amount of logistics, procurement and supply chain professionals are tapping into online platforms to help build these global relationships and respectively, boost their competitiveness.
Online or social networking is usually associated with social media sites like Facebook, Twitter and the corporate world’s mecca, LinkedIn. But there’s now a new wave of social media which is tailored to professionals in specific industries: the niche online business network.
Think LinkedIn, but for a specific industry. Examples include GitHub for software engineers; Doximity, Sermo and Healthtap for doctors; and Spiceworks for IT administrators. And for the logistics, procurement and supply chain profession, there’s Procurious (www.procurious.com). These niche platforms offer similar functions to a social network but also much more.
Niche online networks for businesses offer three key benefits:
1) GLOBAL NETWORKING
WHY LOGISTICS PEOPLE NEED TO ‘SOCIALISE’ Logistics, supply chain and procurement professionals should look to niche online networks to help their procurement strategies and secure a competitive boost in the global market. By TANIA SEARY.
The logistics, procurement and supply chain profession is global in nature and these niche networks provide the opportunity to network with people from all corners of the globe. There’s a staggering six million users registered on GitHub, five million on Spiceworks, and 10 million on Academia for academics from all pockets of the globe.
Procurious boasts members from 56 countries, with many coming from Australia – one of the key markets for Asia. With the UK and USA also driving membership numbers, the online space is no doubt a key channel for establishing business relationships with professionals from some of the world’s largest economies.
2) A SENSE OF COMMUNITY The difference between a niche online network and LinkedIn is that they provide a real sense of community for members. Research conducted on behalf of Procurious revealed that the profession feels disconnected and like outsiders on LinkedIn – it is just too big. But with functions such as networking capabilities, industry specific news updates and discussion forums, these platforms create focused global communities, providing opportunities for members to converse, network and share knowledge with like-minded peers.
3) TAILORED LEARNINGNiche online networks are also hubs of knowledge which can be useful to relationship building. If you want to do business with someone, it is important to understand their background, the market they play in and local industry issues. And these sites provide members with tailored knowledge and up-skilling.
For instance, they offer bite-sized training videos from the world’s best trainers, as well as industry opinion pieces or discussion groups that include experts
in the field. For logistics, procurement and supply chain professionals, skills development and the ability to learn another culture’s way of doing business before entering a new market can be invaluable.
Niche online networks are growing at incredible speeds. Several networking sites including GitHub, Doximity and Spiceworks have been able to raise venture capital between US$50 to US$100 million to support the tremendous growth they are experiencing.
In the logistics, procurement and supply chain field, a recent survey revealed that almost four out of five purchasers would use social networking sites specifically aimed at them. The reality is your competitors and peers are likely to have already joined the party.
The concept of “Guanxi” – or fostering relationships – in Asia is not a new phenomenon, and online networks has made this quicker and easier. Logistics, supply chain and procurement professionals in Asia should look to niche online networks to help support their relationships as part of their procurement strategies and secure a competitive boost in the global market.
Tania Seary is the founder of three procurement related businesses: The Faculty, a procurement management consultancy; its sister recruitment firm The Source; and Procurious, an online networking business for logistics, supply chain and procurement professionals. With more than 15 years in the procurement industry up her sleeve, Seary previously worked for the likes of Alcoa, Rowland and the Walt Disney Company across the USA, UK and Australia.
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Khun Aom used to have to get up at 6 A.M. every day to rush to the local wet mar-ket three bus stops away from her house in the quaint town of Bang Yai located in the outskirts of Bangkok. Today, shopping has become an entirely different experience for her — one that she is actually looking for-ward to, with the large variety of fresh pro-duce and grocery products sourced globally and the comfort of indoor air-conditioning in a supermarket just outside her house.
Thailand, especially big cities like Bangkok, is experiencing rapid transformation and modernisation in its retail sector. With the national population at over 65 million and average monthly household income of 25,403 baht, or US$785 (Source: Thailand
THAILAND’S NEXT TRANSFORMATION The eight-year plan to develop Thailandʼs transportation infrastructure at a cost of US$74 billion shows the governmentʼs ambition to become a regional supply chain hub. By KEVIN BURRELL.
National Statistical Office), the potential for retail is huge.
Grocery retail currently leads the market, growing at a speed of 63 per cent. Convenience stores, chained forecourt retailers and supermarkets saw the fastest development with aggressive new outlet expansion, while hypermarkets continued to enlarge their presence as well. On the other hand, traditional grocery retailers remained important for Thai consumers and recorded a market share of 54 per cent (Source: Modern Grocery Retailing in Major ASEAN Markets). On top of the highly fragmented market and diverse retail formats, the rise of e-commerce and m-commerce has added more complexity
and is set to reshape the sector.
In view of the fast technology revolution and the dynamic consumer behaviour, it is hard to predict what the next big trend in retail is going to be. However, what’s certain is that the model of one-size-fits-all is outdated and the trends are driving retailers to provide appropriate and highly flexible responses to consumer demands. To achieve this, supply chain plays a key role.
Retailers have to re-think their supply chains with an eye toward one thing: building out a portfolio of options, risk tolerances and capabilities to support cost-effective flexibility. They must create and manage a supply chain that is ‘fit for purpose’ in this environment, capable of serving multiple channels and retail formats. The supply chain must be resilient enough to withstand disruptions, agile enough to respond quickly to sudden
or unexpected change, flexible enough to customise products, and efficient enough to protect margins. DHL, for example, has invested in warehouse automation system, fleet management tools, fuel-efficient trucks, as well as driver training, in order to mitigate operation risks and achieve the best level of efficiency and quality for the retail customers.
What’s happening in the retail sector is indeed a reflection of Thailand’s overall economy today, which is also in the transformational stage as the country prepares itself for ASEAN Economic Community (AEC) by 2015 and becomes a supply chain hub riding on its strategic location and proximity to other AEC countries.
The eight-year plan announced to develop Thailand’s transportation infrastructure at a cost of 2.4 trillion baht (US$74.17 billion) shows the government’s ambition of building a regional supply chain hub and its strategy to develop the logistics system and integrate all transportation platforms across rail, air, road and water.
With the continuous government efforts put in infrastructure and legislation, combined with technology and innovation coming from the supply chain sector and private operators, Thailand, or Bangkok, is well poised to become the regional hub of critical importance to the new AEC.
Kevin Burrell is the managing director of DHL Supply Chain Thailand. In this role since November 2012, he is responsible for managing the day-to-day operations and business development, driving growth in warehousing, transportation and value added supply chain services across the country. He has more than 20 years of experience in logistics industry and having spent the last 15 years in Asia in senior leadership, operations and business development roles.
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BUILDING AND SUSTAINING AN ENTERPRISE SUPPLY CHAIN MODEL
In Part 2 of this six-part CEO Series, we discussed the value that can be derived from a well designed and implemented supply chain model that is closely linked to an organisation’s business strategy. By aligning the business resources and processes, there will be tangible improve-ments in business performance. In addi-tion, we will also see reductions in busi-ness operating expenses from such an alignment. The value and benefits from such a structured approach can be meas-ured not only in financial terms but also in commercial value and organisational growth and development.
TOP MANAGEMENT COMMITMENTThe management engagement we are ad-vocating starts with a good understanding of how supply chains work and how they must be linked and adapted to the busi-ness strategy. This is a fundamental mind-set change, which contrasts traditional management methodologies. It would be necessary for the CEO and his senior man-agement to fully embrace such an initia-tive as a formal transformational change management programme across the whole organisation.
Like with any major initiative, full engage-ment of top management is needed to pro-vide the organisation with the inspirational and operational leadership towards a new direction. A programme like this should be viewed as a medium- to long-term journey for the organisation, requiring an empow-ered project team to be created, to set the milestones, time line check points, and monitor the progress. The goals would be dependent on the business model dimen-sion, the organisation structure, and the complexity of the transformational pro-cess. Up-front preparation and planning work for the programme are crucial to the sustainability and success of efforts and investments deployed.
Management would also need to facilitate the necessary resources, like a budget for
The sustainability of a supply chain requires a structured and competent governance culture and a CEO that is attentive to disruptive changes. RAYMON KRISHNAN, STEPHANIE KRISHNAN and JOE LAMBARDO explain in Part 3 of the six-part CEO Series.
education and training, as well as giving the organisation the space to make the necessary transition, whilst maintain-ing current business activities. Progress would need to be monitored regularly to ensure adherence to the programme mandate and to allow management the opportunity to perform the appropriate tuning and adjustments as necessary. This attention to progress reviews is part of the management commitment. Man-agement at all levels must make time to
personally review the programme pro-gress – delegating such an important task does not inspire nor motivate the organi-sation to make any changes or take the programme seriously.
DEFINING THE EXECUTION MODELOnce top management commitment and buy-in by key stakeholders have been es-tablished, designing the appropriate ex-ecution model will be crucial. Setting-up a supply chain execution model does not
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business model to achieve our business and supply chain KPIs?
To address this question, we will use the supply chain model and attach the core capabilities that we consider relevant and necessary to drive the business cycle and the supply chain execution model.
To start the building of the right model, it will be sufficient to address the high level and important capabilities first. The second
and third level capabilities in the model will emerge as the model is expanded to cover all the key organisational functions.
In Figure 2, we identify some of the typi-cal core operational capabilities necessary to achieve effective execution of the busi-ness cycle. These are just a few of the key capabilities and there are many others, de-pending on the type of business, industry sector and product/services.
Using this approach, we can see a whole new dimension and organisation emerge around the core business cycle. Not as de-partments or a hierarchy of charts but as clear tangible drivers of the business.
This approach to build the right execution model will also facilitate a clearer defini-tion of the key business processes, adapt
[ Figure 3 ]
have to be an unduly complex process. It is mandatory that top management define the deliverables (outputs or achievements) from the supply chain model, expressed as KPIs and deliverables, to focus attention on the right process priorities.
It is relevant to note at this juncture that we should not confuse business KPIs with supply chain KPIs, which may appear to be similar but are not always the same. Busi-ness KPIs tend to be more financially-ori-entated, like percentages for sales growth, profit margins, market share and Inventory turns, OPEX (operating expenses), CAPEX (capital expenditure) and cashflow.
On the other hand, supply chain KPIs measure the capabilities and performance of operational processes and flows. Supply chain KPIs would generally revolve around KPIs that measure time, cost and quality of supply chain activities and processes.
Depending on the part of the supply chain being measured, some KPIs used would be: product time to market, order cycle time, customer complaints, response time to customer complaints, machine down-time, time to machine uptime, and many other such KPIs.
CEOs and senior executives should typical-ly define at least the top 5 supply chain KPIs that they want to see in their daily, weekly or monthly performance dashboard. This definition is fundamental at the design stage of the supply chain model, as it will immediately put in focus the management execution strategy. This is the first crucial step to link the business strategy with the supply chain execution model.
BUILDING THE SUPPLY CHAIN EXECUTION MODEL In Part 2 of the series, we introduced the business cycle and supply chain model. Figure 1 illustrates the three major blocks of the supply chain execution model. This is the foundation for the alignment of the business cycle and the supply chain execu-tion model.
We also highlighted that complicated or-ganisation charts, elaborate job titles and strange job positions – having evolved over time and due sometimes to legacy reasons – often confuse and distort the rel-evant supply chain functions and capabili-ties enablers.
As we move to build the supply chain exe-cution model, we will discard all traditional organisation charts, departments and job titles and go back to basics. We will instead start by taking the top 5 KPIs given to us by the CEO, and ask ourselves, what are the capabilities that we need in the company
[ Figure 2 ]
[ “We should not confuse business KPIs with supply
chain KPIs – which may appear to be similar but are
not always the same.” ]
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them to market and customer changes as needed, and enable a system to control and measure performance in a structured and responsive manner.
We started this series with a simple over-view of the supply chain model and linked it to the three major business blocks. By then adding the core capabilities to each major business blocks, we have created the various relevant links in the supply chain. It is fundamental to note that core capabilities are realised by the drivers and enablers in the organisation. These core capabilities and the interconnections with the various business blocks will en-sure that the execution model is able to deliver the required performance of the supply chain, hence the supply chain ex-ecution model.
Such an approach to building the execu-tion model is a dynamic and scalable one. We could add, amend or eliminate vari-ous levels of enablers and capabilities as required. The model will enable manage-ment to have immediate information on the performance of their supply chain.
When we have established the clear links to each of the three major blocks and busi-ness capabilities – starting from the busi-ness strategy to the business cycles, and to the supply core capabilities – the organi-sational structure can be recompiled into the recognisable traditional blocks and linked to the business cycles.
In Figure 3, we show how the organisa-tion structure takes on a new dimension, providing a clear connection to the supply chain that eliminates the silo organisation. This robust structure shows the real con-tributors in the business cycle and in deliv-ering the supply chain execution capabili-ties that have already been defined.
Having linked the core supply chain ca-pabilities to the business cycles – and by ensuring that the functional departments are able to execute the business strategy – will deliver an overall higher level better performance.
There are many different functional departments in an organisation. It is cru-cial to ensure that every department is linked to the business cycle in the supply chain execution model. This means that each functional department must contrib-ute the relevant capabilities to actively support the business cycles in the supply chain execution model.
If a functional department or group does not play a role in the supply chain execution model, it should be challenged and its rea-son for being there should be questioned.
Note: The charts contained in this series, are designed for illustration of the point of principle and are not intended to represent the optimum supply chain model or structure for any specific company or industry.
This article is the third of a six-part series on optimising supply chain performance, written by the Logistics & Supply Chain Management Society (LSCMS). Stephanie Krishnan is an honorary fellow of, and lectures for, the University of Wollongong. Joe Lombardo is the founder of ESP Consult. Raymon Krishnan is the president of The Logistics & Supply Chain Management Society.
For more information on the articles or to contact the writers, please email [email protected].
SUSTAINING THE SUPPLY CHAIN EXECUTION MODELWe have discussed the fundamentals of how to build a supply chain execution model, linking the business strategy and key business cycles, as well as identify-ing core capabilities required to drive the supply chain. The realisation of such an organisational transformation will be challenging in the transition phases, but will bring many benefits to the business once the balance and alignment has been successfully completed.
Even before the completion of this trans-formational journey, a new challenge will emerge. The question now becomes one of how the CEO and his team will sus-tain the effectiveness of the transformed supply chain execution model they have created.
Sustaining an organisation with balanced competencies, synchronised process, and the capabilities to meet performance ex-pectations is a challenging proposition. Considering that market conditions are continuously evolving and where the hu-man resource is an important aspect of the capabilities, change management may seem to be a never ending challenge. But failure or delay to address this reality, how-ever, will result in uncontrolled variables disrupting the execution capabilities. This would undoubtedly deteriorate business performance and eventually even threaten business viability.
Managing change is a crucial dimension in the sustainability and growth of a busi-ness. But managing change is also funda-mental to keeping the ‘freshness’ of the business strategy and effective supply chain performance.
Even after a supply chain has been well de-signed, implemented and is working well, the expectation that the effectiveness and smooth operation can continue indefinitely is a fallacy. There is no supply chain that can work on remote control, unattended or impervious to the various change factors that surround the business realities. Sus-tainable performance requires a constant review and a continuous corrective mindset
to maintain the intended high performance levels.
The supply chain execution model is like the veins of a human body that carry sig-nals and resources around the body. By vir-tue of being the business ‘bloodline’, the supply chain will take on new character-istics when changes are induced into the critical operational areas. These changes will alter the capabilities and will undoubt-edly change the deliverables.
In Part 5 of this series (Jan-Feb 2015 issue), we will be looking at understanding and managing risks in the supply chain, which is also an important factor that impacts sustainability.
Whether the changes are accidental or delib-erate, they all need to be properly assessed and managed before implementation. This is essential to maintain the coherence and balance in the capabilities that enable the delivery of performance targets.
The sustainability of the supply chain ex-ecution capabilities therefore requires a structured and competent governance culture, and a CEO that is also attentive to disruptive changes. The CEO and his ex-ecutives must also continue their engage-ment in the transformational processes, which will require a subtle period tuning to ensure change is managed as part of the day-to-day business.
In Part 4 of this series, we will be looking at people and competencies (Nov-Dec issue) in the business cycle and supply chain ex-ecution model. This aspect is an important element in the organisational structure and performance.
[ “There is no supply chain that can work on remote
control, unattended or impervious to the various
change factors that surround the business
realities.” ]
Companies enabling excellence in man-ufacturing performance in Asia through the provision of industrial technology solu-tions and services were celebrated at the Asian Manufacturing Awards 2014 gala dinner and awards ceremony, organised by Contineo Media and held at Marriott Hotel, Singapore on 28 August 2014.
“The complexities facing manufactur-ers in Asia have evolved over the years. Today, amongst other challenges, the modern plant is faced with improving op-erations productivity, ensuring safety, rais-ing power efficiency, and taming supply-chain complexity. These challenges have resulted in newer and improved products and services to the manufacturing indus-try,” said Contineo Media CEO Raymond Wong in his welcome address.
Now on its third year, the Asian Manufac-turing Awards was conceived to recognise companies which deliver innovative indus-trial technology solutions and services. This year, the Awards received more than 170 nominations across the 39 award cat-egories. These nominations were assessed by a judging panel made up of 17 inter-nationally recognised experts and practi-tioners from a variety of industry sectors and disciplines. Their extensive industry knowledge and experience enabled them to adjudicate effectively and ensure de-serving winners in each category. More importantly, the votes have been audited by independent auditors, HLB Atrede LLP, to ensure impartiality and legitimacy in the process and to dispel any notion of favour-itism, or advertising-led award giving.
AWARD WINNERSThe award categories were selected to
[ Rudolf Hausladen, Swisslog ]
“We are honoured to receive the recogni-tion as the Best Storage System Provider,” said Rudolf Hausladen, head of Swisslog WDS Asia-Pacific. “I’m deeply proud of our team in Southeast Asia. This award will spur our team to continue delivering the best-in-class automation solutions for our customers to provide the right products, to the right place, at the right time.”
reflect the portfolio of publications within Contineo Media’s Manufacturing Group, namely Logistics Insight Asia, Asia Food Journal, Control Engineering Asia, and PharmaAsia. The categories are: Logistics & Supply Chain (eight awards), Pharmaceu-tical Manufacturing (four awards), Indus-trial Software (four awards), Automation & Control (17 awards), Food & Beverage Manufacturing (four awards), and Corpo-rate Social Responsibility (two awards).
Under the Logistics & Supply Chain Cat-egory, the winners are DHL Express, Hon-eywell Scanning & Mobility, ifm electronic Pte Ltd, JDA Software, Kerry Logistics, KEY-fields Pte Ltd, SWISSLOG, and Vocollect by Honeywell.
[ Kenny Tan (R), KEYfeilds Group ]
“All winners in the other award categories are mainly MNCs and large corporations. We are glad that a home grown [Singapore] company stands up to the occasion with the big boys in the industry to win this award,” said Kenny Tan, group founder and CEO of KEYfields Group. “I would like to thank my team in KEYfields for their pro-fessional service and hard work to win the trust of our business partners.”
[ Lawrence Lim and Kerry Logistics team ]
Lawrence Lim, regional commercial direc-tor, South and Southeast Asia of Kerry Logistics said, “We are proud to win the award for Best 3PL Provider in the competi-tive logistics and supply chain category for the first time. Obtaining this award reflects
LOGISTICS & SUPPLY CHAINBest Bar Code Technology ProviderHoneywell Scanning & Mobility
Best Express Logistics ProviderDHL Express
Best RFID Technology Providerifm electronic Pte Ltd
Best Storage Systems ProviderSWISSLOG
Best Supply Chain Software ProviderJDA Software
Best Third Party Logistics (3PL) Provider Kerry Logistics
Best Warehouse Automation Provider Vocollect by Honeywell
Best Warehouse Management Systems ProviderKEYfi elds Pte Ltd
PHARMACEUTICAL INDUSTRYBest Pharma Automation ProviderEmerson Process Management
Best Pharma Logistics ProviderKorean Air Cargo
Best Pharma Packaging Solutions ProviderMULTIVAC Pte Ltd
Best Pharma Production Technology ProviderPowder Systems Limited (PSL)
INDUSTRIAL SOFTWAREBest CAD Systems Provider Siemens PLM Software
Best CAM Systems ProviderDelcam
Best ERP Systems ProviderEpicor Software (Asia) Pte Ltd
Best PLM Systems ProviderSiemens PLM Software
AUTOMATION & CONTROLBest Automation Systems IntegratorExcel Macro Industrial Systems Pte Ltd
Best Control Valves Provider Emerson Process Management
Best Embedded Systems Provider National Instruments
Best Fieldbus Infrastructure ProviderBeckhoff Automation Pte Ltd
Best Industrial Cyber Security ProviderCheck Point Software Technologies
Best Industrial Network Provider Moxa Inc.
Best Industrial Wireless ProviderHoneywell Pte Ltd
Best Internet of Things ProviderRockwell Automation Southeast Asia Pte Ltd
Best Machine Vision ProviderCognex Singapore Inc.
Best Machine Safety Systems ProviderSiemens Pte Ltd
Best Process Control Systems Provider Emerson Process Management
Best Process Instrumentation ProviderEmerson Process Management
Best Process Safety Systems ProviderSiemens Pte Ltd
Best Programmable Control Systems ProviderRockwell Automation Southeast Asia Pte Ltd
Best Robotics ProviderABB Pte Ltd
Best Servo Drive/Motor ProviderMitsubushi Electric Asia Pte Ltd
Best Variable Speed Drive ProviderFuji Electric Asia Pacifi c Pte Ltd
CORPORATE SOCIAL RESPONSIBILITYBest Energy Management Technology AspenTech
Best Solutions for SustainabilityVeolia Water Solutions & Technologies
FOOD & BEVERAGE INDUSTRYBest Food/Beverage Ingredients ProviderIngredion Singapore Pte Ltd
Best Food/Beverage Packaging Equipment ProviderMULTIVAC Pte Ltd
Best Food/Beverage Processing Equipment ProviderKHS Asia Pte Ltd
Best in Food/Beverage Packaging DesignEssentra Packaging
CORPORATE SOCIAL RESPONSIBILITYBest Energy Management TechnologySchneider Electric Singapore Pte Ltd
Best Solution for SustainabilityAgility
Recognising product and service excellence
in the manufacturing industry
the manufacturing community’s recogni-tion of our dedication to providing quality integrated logistics services and custom-ised supply chain solutions to customers across the region. We would also like to thank our customers from various indus-tries, who made this win possible by nomi-nating us.”
Also prominent among the winners this year was Emerson Process Management, recipient of four of the 39 awards given out during the evening. It captured Best Control Valves Provider, Best Process Control Systems Provider, Best Process In-strumentation Provider, and Best Pharma Automation Provider. There were three straight victories for JDA Software, Best Supply Chain Software Provider; Siemens PLM Software, Best PLM Systems Provider; and Emerson Process Management, Best Process Instrumentation Provider.
Corporate Social Responsibility Awards were given to companies who promote sus-tainable manufacturing and provide cus-tomers with solutions to cut energy costs, improve efficiency, and reduce their impact on the environment. This year’s winners were Schneider Electric Singapore, for Best Energy Management Technology, and Agil-ity, for Best Solution for Sustainability.
“We at Agility feel encouraged and hon-oured to be recognised for our efforts in developing and delivering sustainable sup-ply chain solutions to manufacturers,” said Ramesh Ganeshan, Agility vice president for human resources in Asia Pacific, who accepted the award the gala dinner. “We understand the impact of supply chains on society and the environment. We remain committed to sustainable action in collab-oration with our customers and partners.”
ASIAN MANUFACTURING CONFERENCEFor the first time ever, Contineo Media launched the Asian Manufacturing Con-ference to complement the Awards. With the theme “Delivering Productivity, Qual-ity, Safety & Sustainability Through In-novation” and held on the same day and venue as the Awards, the inaugural one-day Conference featured presentation tracks aimed at educating manufacturers in achieving productivity, quality, safety and sustainability in their manufacturing processes. The event was supported by Platinum Sponsor Rockwell Automation; Strategic Partner Sponsors Belden and Epi-cor Software Corporation; and Supporting Association, Singapore Industrial Automa-tion Association (SIAA).
[ Ramesh Ganeshan (R), Agility ]
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