title subtitle toll global logistics - cemat 2020...4 e-comm landscape retail vs on-line –...
TRANSCRIPT
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Title Subtitle
Arthur Dardoumbas
General Manager – Business Development & Solutions
July 2018
Toll Global Logistics “Automation of your Distribution Centre…....and all done via your 3PL”
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The Changing Landscape of our Supply Chain
When to leverage 3PL investment vs investing
in-house and achieving an RoI
Future proofing operations and overcoming
roadblocks when implementing new
technologies
Key Points
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Changing Landscape
Todays world is changing………….probably more than ever before
• Omni channel requirements and challenges
• B2B – Wholesale
• B2B – Retail
• B2C – e-comm direct to customer or click & collect
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e-Comm Landscape Retail vs On-line – Industry Profile
Industry Profile
• In APAC, e-Comm now accounts for an average of 12-15% of all retail sales
• This is projected to rise to 25% by 2022
• Australia is in the region of the highest on-line shoppers in the world – Asia…………….Ti
• We talk about Amazon and the potential impacts, however Alibaba and JD.com are chasing aggressive growth in the APAC region
E-commerce cracks $25 billion mark April 5, 2018
Australian consumers spent around $25 billion online in the 12
months to February 2018; more than 15% boost over the same
period last year……according to the monthly Online Retail
Sales Index compiled by NAB.
A global sports company (a Toll Customer) realised a 57%
increase in e-commerce sales in 2017 in Australia, while total
revenues increased by 16 per cent to more than $38 billion
globally.
The business hoping to double its e-commerce sales by 2020
to more than $7.3 billion……..Inside Retail Australia 2018
Asia Pacific, 39.8%
North America, 30.6%
Eurpoe, 25.7%
South America, 2.5%
Middle East, 1.3%
Africa, 0.1%
Asia Pacific, 48.3%
North America, 26.4%
Eurpoe, 20.6%
South America, 2.5%
Middle East, 2.0% Africa, 0.2%
China, 69.1%
Japan, 13.7%
Sth Korea, 6.7%
Australia, 2.9%
India, 1.5%Indonesia, 0.6% Other, 5.5%
China, 74.9%
Japan, 9.2%
Sth Korea, 4.5%
Australia, 2.0%
India, 2.2%
Indonesia, 0.8% Other, 6.4%
Global e-comm logistics market (2016) APAC e-comm logistics market (2016)
Global e-comm logistics market (2022) APAC e-comm logistics market (2022)
Source Ti
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e-Comm Landscape Retail vs On-line – Example of a UK Retailer (John Lewis) who started their e-comm journey in 2001
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Changing Landscape
Todays world is changing………….probably more than ever before
• Omni channel requirements
• B2B – Wholesale
• B2B – Retail
• B2C – e-comm direct to customer or click & collect
• Speed to Market
• Ability to pick, pack and despatch same day
• Service levels to cater for customer placing an order at 2pm and
despatching same day
• delivering same day if same city – this will add a different
dimension to your overall supply chain.
• Statistics show that 70% of on-line orders are done b/w 6pm and
9pm – how can you pick your customers orders overnight and
have it ready for shipment in the morning……….for next day
delivery.
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Exceeding your customer’s expectations
The product they want….”
How they want it….”
When they want it….”
“Get the customer ….
Customer Experience
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Changing Landscape
What does this mean for your Supply Chain and standard Distribution
Centres
• Competition
• How do you stay competitive with overseas companies who can
offer the same service from across the world
• Labour rates
• Australia has some of the highest labour rates for warehousing
and logistics in the world
• For a standard DC approx 60% of your operating P&L is in labour
• High levels of inventory (customer demanding options & selectivity)
• Shifting order profiles (nothing new – just forever getting smaller)
• Peak seasonal volumes
• Large spikes & demand on your DC (black Friday, campaigns etc)
• What is your DC threshold per shift
• Ability to access labour during these peaks
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Changing Landscape
• How much is our landscape really changing today
• A quote from the book Shoe Dog, by Phil Knight, creator and
founder of Nike
“supply and demand is always the root problem in business. Its
hard enough to invent, manufacture and market a product, but then
the logistics and the mechanics of getting it to the people who want
it, when they want it…….this is how companies die” (chapter 1973,
pp 233-234)
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TOLL – Leveraging
your 3PL Partner
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Engagement & Solution Development Toll’s Internal Supply Chain Consultancy
• Evaluating your operational requirements;
• Detailed data analysis;
• Defining and clarifying key assumptions;
• Network, property and building design and evaluation;
• IT, WMS, automation and capital evaluation and ROI;
• Evaluating various warehouse models and associated
technology including:
Toll’s supply chain and solution design team’s dedicated approach ensures we deliver a solution that provides our customers
operational excellence, efficiency and flexibility in their business. Our dedicated approach will assist in:
Manual warehouse – with high manning levels and additional labour year
on year to meet increased volumes.
Semi automated warehouse – with sufficient technology to meet volumes,
reduced manning and allowing for operational flexibility and improved
safety
Fully automated warehouse – with a high level of technology, a large
outlay of capital, extended contract terms and extensive use of technology
to replace labour functions and significant reduction in footprint
Semi Automated Fully Automated
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$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10
Warehouse Solution - Commercial ComparisonTotal Annual Operating Costs
Current Manual Operation New Manual DC New Automated DC
• Example of high level Commercials (all inclusive
operating P&L).
• Current operation will not be viable or capable at year 3.
• Major savings for an Automated solution, though major
level of capital investment.
• Customers needing to invest in the supply chain and
DC’s don’t have the ability to outlay the capital required.
• Kay financials are evaluated to determine ROI, IRR’s etc
– as the high capital outlay might not meet the required
internal hurdles.
• Various scenarios and sensitivities are evaluated prior to
making any decisions to outlay funds for major capital
investment.
Investing in Technology Via your 3PL or In-House Investment
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Example – Project Enterprise
• The customer in Homebush and the Manual Site in Prestons
• required 33,000 sq.m;
• operated with up to 180 people for FY18
• A manual site was required due to timing of exit from current property
in Homebush
• The same customer in Enterprise
• only requires 50% of the facility 16,000 sq.m;
• operates with 45 staff for FY18;
• however requires a large outlay in capital
• requires the right team of people, with the right knowledge to;
• set the supply chain strategy,
• develop the appropriate solution, and
• execute the complex implementation and operate the new facility.
Toll’s Advanced Retail & eCommerce Fulfilment Centre
Enterprise
Manual Site
Removed Video – Use Vimeo Link
https://vimeo.com/263447972
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Solution Development & Execution Toll’s Internal Supply Chain Consultancy
• Various types of solutions can achieve the required
outcome
• Understanding the baseline, operational requirements,
profiles, data and future state are important
• How to evaluate the various technologies, automation
and ensure you select the appropriate solution
• The required know how to focus on the right solution
and equipment
• The required know how to implement the solution,
technology and automation
• They are all enablers for the know how to execute the
overall operation (not just the automation)
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A Successful Outcome
PARTNERSHIP & COLLABORATION
PLANNING
JOINT EVALUATIONS & SIGN – OFF
REGULAR UPDATES
KEY LEARNINGS
DISCIPLINE IN DECISIONS
TRAINING / CHANGE MANAGEMENT
RESOURCE / PEOPLE
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Our customers’ success creates
our success………..thanks for
attending and listening.