ACCESS Family Business - July 2019

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With David Pring

Welcome o KPMG Family Business ea ure ar icles.

I you would like o discuss hese ar icles or how KPMG can help wi h your business please eel ree o con ac me on 9455 9996 or davidpring@kpmg.com.au

Te power o perpe ual inven ory n ANDY BUCKLE n CARLY RICHARDS HY op imal inven ory managemen is cri ical o mee cus omer demands and reduce cos s. echnological advances are crea ing unpreceden ed oppor uni ies or re ailers o connec wi h heir cus omers over a varie y o mediums. O ering an ‘omni-channel’ shopping experience is now he expec ed norm in oday’s compe i ive and as -paced environmen .

However, success ul omni-channel re ailing needs o be suppor ed by a modern approach o inven ory managemen . I ’s vi al or re ailers o know wha s ock hey have, where i is, and o make sure ha in orma ion is accessible hroughou he business, and as necessary, o cus omers.

Despi e his need, inven ory managemen is one o he mos underinves ed areas

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in re ail. Many re ailers rely on legacy sys ems ha do no provide in real ime or an accura e way o knowing wha s ock hey have on heir shelves, in he back rooms, in ransi and a he warehouse – ha is, perpe ual inven ory – resul ing in misdis ribu ion o s ock.

Only a ew o he op 20 re ailers in Aus ralia have ‘perpe ual inven ory’ – a near real- ime and ubiqui ous approach o invenory managemen .

Challenges of poor inventory management A lack o accura e and up- o-da e invenory managemen has ripple e ec s hrough all aspec s o a business. Some businesses have de ailed plans or a new omni-channel opera ing model, bu canno enac he plan due o poor inven ory sys ems. Here are some o her challenges o poor inven ory managemen : • Visibili y issues – For many re ailers, manual s ock akes are he only

ime when hey know wha s ock hey have and where i is in heir ne work. Wi hou he capabili y o ins an ly see and upda e inven ories, re ailers miscalcula e heir online inven ory wi h s ock ha isn’ ac ually available. Tis can lead o he cus omer ordering i ems ha are no available and he consequen ial acions o having o in orm cus omers ha hey are unable o ulfl heir orders and po en ially issue re unds.

• Hidden cos s – Online sales o en involve hidden cos s he re ailer was no aware o . For example, as goods move hrough he value chain, heir cos can be in a ed due o du y, reigh or handling charges. Wi hou accura e inven ory managemen , hese cos s are no ully managed and he rue i em prof abili y is unknown.

Impact to consumer trust Consumer rus is paramoun o he ongoing success o any re ailer. Cus omers expec ha when an order has been placed, i will be available, in he correc size/s yle e c., and ready or collec ion or i will be delivered a a convenien ime and loca ion. Every ime a cus omer’s order is un ulflled, i dilu es rus in he brand. Tis is why perpe ual inven ory sys ems are so vi al.

Visi kpmg.com.au o download he brochure o fnd ou how KPMG can help you hrough he process o evolving your inven ory managemen , and se you up o deliver an e ec ive omni-channel experience or your cus omers. Al erna ively, con ac David Pring on 9455 9996 or davidpring@ kpmg.com.au.

Article first published by Andy Buckle, Director, KPMG Australia & Carly Richards, Director, KPMG Australia on KPMG Newsroom.

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WESTERN SYDNEY BUSINESS ACCESS JULY 2019

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he Fu ure is in I n PIERRE WAKIM HE E'S a per ec s orm brewing in he cons ruc ion indus ry and i ’s going o sweep everyone up in i s pa h. Tose who embrace he oppor uni ies ha I , digi al and AI have o o er will see heir businesses really ake o . And hose who don’ will be le grounded.

I’ve worked wi h and advised cons rucion clien s or mos o my li e and i seems o me ha he indus ry is curren ly rying o play ca ch-up when i comes o new echnology. In a major global survey o he cons rucion indus ry by KPMG, Make I or Break I (2017), only 5 per cen o responden s said hey el heir organisa ions had ully aken advan age o new echnology, al hough 95 per cen acknowledged i was a cri ical ac or o u ure success.

Why is his? His orically, he cons ruc ion indus ry goes hrough cyclical “boom and slowdown” phases. During periods o rapid grow h, wi h an emphasis on prof abili y and geting jobs done quickly, real es a e, proper y developmen and cons ruc ion companies may be oo busy o plan or I in egra ion in o heir businesses, or consider he raining and up-skilling needs o heir s a . Wi h he rising price o raw ma erials and workers who may lack in-dep h raining, i is only by os ering innova ive prac ices and behaviours ha cons ruc ion companies will be able o ge smar er and ob ain a real compe i ive edge in he marke place.

Le ’s look a some o he oppor uni ies ha can easily be accessed wi h echnology and s ar wi h adminis ra ive asks. ake Blockchain: in essence, his is an open ledger ha can be accessed by all eam members, edi ed and adjus ed in real ime and ins an ly available o all, crea ing immediacy and ransparency. I can be used or smar conrac s and record keeping, leveraging Blockchain’s dis ribu ed ledger sys em o crea e a permanen , digi al record o every ransac ion.

Tis includes he ordering o ma erials and how hey are used and crea ing a process map ha ou lines he s a us o every ask comple ed in a unifed environmen . Te advan ages o his clear racking are obvious. Tis In erms o Io (‘In erne o Tings’), here is also an increasing applica ion and elemen o connec ivi y o cons ruc ion which hasn’ previously exis ed.

Io is basically he in erconnec ion o compu ing devices embedded in everyday objec s hrough he In erne , enabling hem o send and receive da a. Embedded sensors employ da a-driven echnology on a connec ed worksi e o collec and manage in orma ion rela ing o sa e y, cons ruc ion delivery and building per ormance.

For example, Ynomia is an emerging Ausralian s ar -up u ilising proprie ary BLEA (Blue oo h Low Energy Awareness racking) echnology, developed in collabora ion wi h CSI O, or he purposes o high value resource racking.

Tis hardware-enabled so ware, as a service pla orm, provides real ime, au oma ed, loca ion-based insigh s on he hree key ingredien s dic a ing projec success: labour, machinery and ma erials. Tis soluion was designed and developed o address cons ruc ion’s dispara e and disconnec ed work aces.

For example, he sensor echnology can rack he movemen o ma erials such as açade panels rom o shore supplier crea ion o on-si e ins alla ion and quali y checking.

Tis represen s a major plus or con racors who seek o increase opera ional e cacy, enable s ra egic work orce planning and deliver accura e iming and budge ou comes.

In addi ion, he solu ion connec s ma erial s a us in o he commercial progress paymen work ows or all s akeholders.

Ar ifcial In elligence (AI) and Machine Learning is ano her impor an developmen .

We’re seeing he increased digi isa ion

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and in egra ion o genera ive design hrough applica ions such as Archis ar. Tis acili a es ou lining he opography o any si e or block o land and accura ely ascer ains he land planning condi ions and developmen con rol plans.

Tis in urn will allow designs or he kind o s ruc ure ha could be buil on ha si e o be crea ed ins an ly. Such so ware is curren ly in use by large proper y developers o gauge he easibili y o apar men block loca ion hrough a quick desk op analysis.

Addi ionally, hrough Vir ual Reali y (VR) programming, i ’s possible or clien s o ake Building In orma ion Modelling (BIM) o new heigh s. Po en ial buyers can now ake par in vir ual walk hroughs o

o in ui ively link he value chain o ex end across design, cons ruc ion, sales and acili ies managemen .

In recen imes, drones have been used by real es a e agen s or sales and promo ional purposes – sending a drone up o ake aerial images o a proper y can make or compelling marke ing ma erial – bu hey now possess much broader applica ions. For example, he abili y or a drone o colla e aerial si e in elligence has now become a core prac ice or several cons ruc ion s akeholders seeking accuracy.

Drone imagery and da a can allow a con rac or o unders and and rack wha is happening on si e on a day-by-day basis.

No only does his allow or racking o soil removal across projec s o be calcula ed bu

ully- urnished apar men s on screen, based on underu ilised BIM fles ins ead o emp y spaces o he plan.

Tis e ec ively enhances he cus omercen ric experience and expedi es purchase decisions.

V can also assis in he design process, allowing real ime comparison o 3D models and essen ially ac ing as he undamen al link be ween physical and digi al spaces.

Ineni eal ime, Inovora and Inspace X are examples o companies u ilising V

also enables con rac ors o crea e 3D models o a si e.

Al erna ively, surveyors can now use drone echnology o moni or changes, si ua ional sa e y and inspec he en ire si e in real- ime.

Te exible applica ion o drone echnology in hese scenarios illus ra es how ‘ echnology as a ool’ possesses a broad range o applicaions across he value chain o cons ruc ion.

We’re seeing a growing need or indus rial robo ics, which will soon become a commanding orce in he cons ruc ion indus ry.

obo ic solu ions such as bricklaying and sca olding robo s (eg: FB ) can increase opera ional e ciency bu also reduce he s rain o more radi ional and repe i ive manual labour asks, reeing workers o concen ra e on more value-added ac ivi y.

Modula ion in cons ruc ion is ano her me hod which re ers o a building sys em ha is manu ac ured o -si e in ac ory-con rolled condi ions, hen delivered o si e. I can hen be in egra ed side-by-side as single level dwellings or ‘s acked’ like gian building blocks in order o as - rack he s ruc ural componen s o a developmen .

We are seeing his process being compar men alised in o areas o f -ou /fnishes, such as pre- abrica ed ki chens and ba hrooms (e.g. Sync Ba hrooms and Hickory Building Sys ems).

Te benef s o Modula ion per ain o enhanced quali y, he abili y o repurpose and reins all a di eren loca ions and heigh ened speed o s ruc ural assembly, signifcan ly reducing opera ional and holding cos s, which end o be every developer’s nigh mare.

Tis is jus he ip o he iceberg and a brie overview o he brave new ech world ha is wi h us oday and will con inue o evolve over ime. Compared o o her par s o he world, such as he USA and some coun ries in Europe, no ably Germany, Aus ralia is lagging behind in I adop ion. Tis is sure o change, as he cons ruc ion indus ry remains highly compe i ive. In a ime when real es a e and cons ruc ion is experiencing a slowdown and some economic uncer ain y, now is he ime o drive e ciencies, inves iga e new echnological and digi al possibili ies and play ca ch-up.

Wha ’s cer ain is ha he marke has changed over he las fve years: consumers expec more and i ’s now a buyer’s marke .

Wha used o be viewed as a luxury is now a s andard ea ure. Te cons ruc ion indus ry mus be ready o mee increasing consumer demands and echnology as a ool can help make ha happen.

I ’s also wor h men ioning ha he signs are posi ive, and as KPMG’s la es global Cons ruc ion Survey, Fu ure- eady Index (2019) indica es, he cons ruc ion indus ry is already s ar ing o realise some angible benef s or early inves ors, including beter, energye cien design, igh er scheduling, improved quali y con rol, higher produc ivi y and sa er workplaces.

All i akes is a willingness o embrace he new – and a vision or he u ure. o fnd ou how we can help you naviga e echnology, please con ac David Pring davidpring@kpmg.com.au First published in the Issue Two of MBA NSW. Pierre Wakim, Partner, KPMG Enterprise Australia.

WESTERN SYDNEY BUSINESS ACCESS JULY 2019

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