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www.supplychaindigital.com

June 2018

SHELL LUBRICANTS

REVOLUTIONISING THE SUPPLY CHAIN THROUGH DEMANDDRIVEN PLANNING

A supply chain transformation at one of the world’s best-recognised brands

Westpac New Zealand’s CPO, Rob Halsall, on procurement transformation

The supply chain team ensuring its aircraft soar above the competition


MAIN STAGE SPEAKERS INCLUDE:

ELOQUII

Mariah Chase Chief Executive Officer

WARBY PARKER

Dave Gilboa Co-Founder & Co-CEO

HOUZZ

Alon Cohen President & Co-Founder

SETH GODIN

Author

JUNE 5-8, 2018

CHICAGO MCCORMICK PLACE WEST

Register at IRCE.com to attend the industry’s top e-commere and e-retail event. Save $200 off your pass with code SCD200.

irce.com


HELLO AND WELCOME to the June issue of Supply Chain Digital, the must-read monthly publication for executives working in the in the supply chain, procurement and logistics space. We have another packed edition for you this month, with our cover feature focusing on a very special procurement transformation story at Westpac New Zealand. As the islands’ government banker, the company is a unique position, and in an exclusive interview, the company’s CPO Rob Halsall tells us about digitisation, innovation and the indigenous economy. Continuing the theme of exclusive interviews, we also speak to Levi’s Chief Supply Chain Officer and Senior Vice President, Liz O’Neill, who gives us the details behind the company’s recent supply chain transformation announcement. Dubbed Project F.L.X, its project is to replace hours of manual labour with automation techniques

that will give the company’s jeans their famous finish. You can begin reading the interview on page 32. As you’ve come to expect, there are also a number of eye-opening digital reports that lift the lid on some of the most innovative supply chain and procurement companies and projects in the world. Amongst the companies covered this month include easyJet, Shell Lubricants and Linfox. And in this month’s Top 10, the world’s top 10 logistics brands are featured. As always, if you have any feedback please do join the conversation on Twitter, LinkedIn and Facebook and become part of the world’s fastest growing supply chain community.

Enjoy the issue!

www.supplychaindigital.com www.bizclikmedia.com

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F E AT U R E S

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Westpac ANZ

C P O / C P S O S T R AT E G Y

A SUPPLY CHAIN TRANSFORMATION AT ONE OF THE WORLD'S BESTRECOGNISED BRANDS

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PROCUREMENT INSIGHTS

CUT FROM THE RIGHT CLOTH how to strategically source fashion

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TECHNOLOGY

HOW TO MAKE YOUR SUPPLY CHAIN MORE

56 46

LOGISTICS & DISTRIBUTION

"YOU PLUG IN ONCE AND WE PLUG IN THE WORLD"

TOP 10

TOP 1C0S

LOGISTI BRANDS

68

EVENTS

78


C O M PA N Y PROFILES

86

Schnitzer Steel USA

110

96

State of Hawai USA

Schneider National USA


128

142

Asia

Europe

Linfox

156

easyJet

Shell Europe

172

Oracle Canada

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Westpac and the virtuous supply circle Westpac New Zealand, as the government banker, is a leading figure in the islands’ financial sector. CPO Rob Halsall talks about digitisation, innovation and the indigenous economy Written by John O’Hanlon Produced by Glen White


Westpac New Zealand

It would be a mistake to think of Westpac in the same way as one thinks of the big global corporate banks, even though it is one of the ‘big four’ in Australia. For a start it doesn’t even sound like a bank, its portmanteau name, adopted in 1982 when it merged with a number of Australian banks, signifying the western pacific region rather than the finance sector. Westpac has been in New Zealand ever since it was founded as the Bank of New South Wales in 1861, and today Westpac New Zealand is the government banker as well as serving businesses throughout the country and more than 1.3mn customers. Talking to Rob Halsall, the bank’s Chief Procurement Officer (CPO), one quickly begins to appreciate why it is different. For a start, it is very closely aligned to the values that make New Zealand an outstanding place to live. That’s illustrated by three issues it places right at the front of its agenda – promoting electrification in transport, tailoring its services for people with dementia and providing equal opportunities to women, especially in leadership roles. The first of these is a passion of Westpac NZ CEO David McLean, who drives an electric car himself, and has joined a group of large corporations in committing the bank to a 30% electric fleet by the end of next year. Halsall himself is on the board of Drive Electric. “Transitioning to EVs is more complex than just ordering the cars: you have to take the infrastructure, people’s habits and preferences as well as total cost. At the bank we’ve been working on the project for the last twelve months.”

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June 2018


AUSTRALIA

“The P2P system gives us a level of transactional data and insight that we didn’t have previously” – Rob Halsall, Chief Procurement Officer

Rob Halsall provides leadership in commercial management and sustainable supply chain solutions across IT and non-IT services within the Westpac New Zealand business. He has more than 20 years domestic and international strategic procurement experience within automotive chemicals, aerospace, telecommunications, tertiary and financial services organisations, providing leadership in business strategy, commercial project delivery and endto-end procurement services. This includes category management, strategic sourcing and integrated supply chain management.

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Electrifying New Zealand’s oldest bank This year NZ’s oldest bank will electrify its fleet with NZ’s favourite electric vehicle, the Hyundai IONIQ. We couldn’t be prouder of Westpac New Zealand who are leading the way with their ongoing commitment to sustainability.

Give New Zealand’s favourite new Electric Vehicle (EV) a try today. To enquire about electrifying your fleet, contact the fleet team at Hyundai New Zealand on 0800 HYUNDAI (0800 498 632) today.

WINNER

GREEN CAR OF THE YEAR

EV/PLUG-IN HYBRID BEST IN CLASS

hyundai.co.nz/electric The Hyundai IONIQ EV is NZ’s leading selling new electric vehicle based on New Zealand 2017 electric vehicle sales.

N E W

Z E A L A N D


Hyundai New Zealand has been partners with Westpac New Zealand for more than 10 years supplying more than 200 vehicles to its fleet. Today, Hyundai New Zealand is the preferred vehicle choice to provide the Electric Vehicles that will enable the Westpac New Zealand vision of converting 30% of its fleet to electric by 2019. As a partner to one of the oldest banks in New Zealand, Hyundai New Zealand has always strived to go above and beyond what is expected of a partner, and as champions of the Electric Vehicle industry in New Zealand, the company works closely with Westpac New Zealand on truly showcasing the viability of transforming a fleet to being Electric. With Westpac New Zealand’s transformation, Hyundai New Zealand

benefits from having a highly recognisable partner with a proven EV fleet solution that shows other customers electric fleets are a reality today here in New Zealand, not just in the future. Westpac New Zealand values the industry expertise Hyundai New Zealand provides. With Hyundai New Zealand being 100% Kiwi owned, it ensures Westpac New Zealand has the support and

information it needs as well as a New Zealand based customer support team. With the ever-evolving process of transformation, Hyundai New Zealand shares its experience from similar rollouts and provides invaluable learnings from these to support Westpac New Zealand with navigating the complex, yet highly rewarding process of having an electric vehicle fleet.

FAST FACTS >> The Hyundai IONIQ is the bestselling New Zealand new electric vehicle in the market due to its range of over 200km, practicality, styling and is backed by a 10 -year unlimited KM battery warranty. >> The Hyundai IONIQ is the only model in the world that offers three separate drive trains which provides flexibility and versatility for fleets. >> All Hyundai New Zealand EV dealerships are required to undergo a specific training programme and cerfification around Electric Vehicles. >> The Hyundai IONIQ was the 2017 winner of ‘NZ’s favourite electric vehicle’ Fairfax New Zealand, ‘Best electric vehicle’ – NZ Autocar, ‘Small Car of the Year’ Company Vehicle, ‘Motoring Green car of the year’ - NZ Herald Driven, ‘Best in class - EV/Plug-in Hybrid’ - AA Motoring, ‘Supreme Winner’ - Women’s World Car of the Year and DriveLife’s ‘Eco Warrior’s’ Car of the Year.

www.hyundai.co.nz


ACCELERATING

DIGITAL BANKING TRANSFORMATION Banks with a strategic, enterprise-wide approach to digital technology are better prepared to transform, innovate and compete amid an increasingly disruptive and rapidly changing marketplace. DXC Technology, the world’s leading independent, end-to-end IT services company, provides digital services from ideation and change through to development and ongoing evolution to accelerate large enterprise on their unique transformational journeys. To find out more, visit www.dxc.technology/au

Š 2018 DXC Technology Company. All rights reserved.


AUSTRALIA

Halsall is in his fifth year with the bank, and recently awarded Ernst & Young New Zealand Procurement Professional of the Year’ for 2018. A native of Belfast, he has over 20 years’ experience in procurement and supply chain management, 11 years of which were in manufacturing across telco, automotive and aerospace, with a further five years in tertiary before entering the financial services industry. Halsall joined the Westpac Group in Australia as Director of Commercial Services in 2014 and in 2016 he jumped at the chance to move to New Zealand when offered the role in Auckland. On his arrival in Auckland, he found a procurement culture that worked well, but needed to refocus on the basics which he thought necessary to support the bank through the next phase of its growth. “Before we could embark on full scale transformation, we had to get the basics right, and for me that meant looking at the core dimensions of our operating model and re-establish the purpose and value proposition of the function.”

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Westpac New Zealand

His strategy for changing the operating model was formulated under ‘eight Ps’:

1. People (capability maturity, learning & development roadmap, improved engagement);

2. Product (what are our core products and services and do our stakeholders understand them?);

3. Process (are the core processes effective and do business partners understand them?);

4. Platforms

5. Partners (the approach to internal business partner management and external supply partner management);

6. Planning (collaborative cycles, to cocreate on innovation, for example);

7. Pace (the rate of change and the cadence, or rhythm at which the business can regularly and consistently deliver projects that effect change);

(the right data, document and information management tools, 8. Progress source-to-manage, and simple (measuring everything so that task automation); all processes can be evaluated, Voice of Customer, Voice of Supplier, Value Creation).

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“These are the lenses I tend to use to examine our current state and where we need to be heading. When I joined the team there was room for improvement under all of these headings,” Halsall says. “Today, data is like oxygen to any business. From a Procurement specific perspective, we have moved over the last 18 months from a data poor, insight poor position to one where we are richer on the data side and have created more insights through the use of analytics.” The science of procurement is all about data and making the right choices based on the insights that the data provides, he believes. The art is the narrative around the data and the change it suggests.

“We focus heavily on both those areas. We built a repository of spend, contract and business unit data that we could interrogate and visualise using a Microsoft product that was available to us in-house.” The painstaking task of building a database and a data analytics structure has resulted in far better transparency across the supply base and the spending patterns of the bank. Not so much cost reduction, Halsall says, as cost management; enabling movement from the reactive to the proactive. “At the very least, we are now able to say that we know what we don’t know.”

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Westpac New Zealand

“Before we could embark on full scale transformation, we had to get the basics right, and for me that meant looking at the core dimensions of our operating model and re-establish the purpose and value proposition of the function” – Rob Halsall, Chief Procurement Officer

The data analytics structure is complementary to Westpac’s new networked Purchase-to-Pay (P2P) platform. The Basware system was introduced in 2017 and has made a big difference. “Until then, the bank didn’t have a P2P system. It gives us a level of transactional data and insight that we didn’t have previously and it has also allowed us to create supplier payment efficiencies, something that is of the first importance to them.” Another direct benefit of implementation was to rationalise the bank’s supplier base by 40%, with a further consolidation planned by 2020, Halsall adds. As a career procurement professional, Halsall naturally looks at ways to raise the profile of the team. “In my experience, it’s a question of overcoming any apathy that may exist towards procurement by demonstrating

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its value to stakeholders.” By rebranding the Procurement function to Commercial Services, he signalled his determination to move away from being viewed purely as a sourcing function to a trusted advisor to all the business units. “We have definitely increased our strategic role. The engagement at executive level is higher than it has ever been before. Collaboration with our key business partners on planning and identifying key projects is now embedded, where even a year ago it was minimal.” Procurement is now accepted by the executive leadership as a contributing partner in commercial decision-making. It is also seen as being more digitally enabled with improved operating disciplines. His team works very closely with the Technology team.


AUSTRALIA

PARTNERSHIPS IN FOCUS

Hyundai provides Westpac New Zealand with corporate fleet vehicles including electric vehicles (EVs). The company also provides thought leadership on the motor vehicle industry with a particular focus on EV adoption. Halsall adds: “The partnership with Hyundai has delivered great outcomes for Westpac New Zealand, they go above and beyond continually across all aspects of their service delivery and have been instrumental in Westpac being able to bring its sustainability agenda to life. “Hyundai and Westpac New Zealand have partnered as champions of electric vehicle adoption and the partnership will continue to evolve over time as Westpac New Zealand’s fleet becomes more sustainable.”

DXC provides document composition and multi-channel distribution, digital archiving, cheque processing in addition to development and maintenance services for a number of our core technology platforms and is pivotal to our ability to deliver financial transactions, account statements, and online banking services. “The partnership between Westpac New Zealand and DXC has delivered significant benefits to both Westpac New Zealand and its customers,” Halsall says. “Benefits include resource augmentation of specific skill sets (such as Java developers), alignment to and actively supporting Westpac New Zealand to embed an Agile methodology, driving transformation activities to position Westpac New Zealand as an innovator in the New Zealand banking industry and providing the flexibility enabling Westpac New Zealand to respond quickly to change. “DXC and Westpac New Zealand regularly collaborate to plan and refine the road map for continuous improvement and next generation banking, made possible due to the open and honest communication of our respective business strategies and the likely impacts on the other party.”

FCM provides customised, end-to-end travel management services to Westpac, from online/offline travel bookings through to strategic account management, providing global insights and innovation. Halsall comments: “FCM provide Westpac with a market leading service experience for corporate travel, including any bespoke event management requirements. They also service our customers as our exclusive hotpoints travel partner. FCM always go the extra mile whilst challenging the status quo and offering continuous improvement opportunities. “The partnership between both parties has grown and developed over several years. Westpac New Zealand and FCM will continue to innovate and work together to achieve mutually beneficial outcomes on both strategic and tactical initiatives and further embed our long standing partnership.”

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How will you grow today?


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Fortnightly meetings to define priorities and shared targets have been so successful that the same style of collaboration now takes place with the operations and marketing teams. “IT, analytics, artificial intelligence, simple task automation, IoT and cognitive technologies mean the workforce of the future will do things very differently,” Halsall says. “Speaking as a procurement professional, I will be very surprised if around 40% of the tasks we do today cannot be automated or completed by cognitive systems within the next five years.” The profession will look different too. Halsall anticipates that relational, social and commercial skills, and the ability to think and act strategically, will take centre stage. “For me, procurement is about being a trusted advisor to the business: a commercial advisor delivering innovation and relationships for our market but also leveraging the technology so we can do our job faster and smarter.”

It’s a deep and ongoing change management process. Weekly 30-minute sprint sessions on relevant commercial and continuous improvement topics were introduced to leverage and transfer collective knowledge and create project delivery efficiencies. In practical terms, we have been able to understand who has experience in a particular subject area and we have created a knowledge hub within our team so everybody can benefit from that material and is key to the development of the team. Halsall also engaged ArcBlue, a specialist procurement consultancy and training provider and CIPS partner, to complete a competency assessment resulting in the delivery of technical training aligned to professional development goals within the function. The team also worked on a Vendor Open Learning Tribe (VOLT), a concept designed in partnership with the internal Technology business unit leaders to accelerate innovation with supply partners.

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Westpac New Zealand

Over three days, business units within the bank were invited to pitch challenges to key suppliers, who then came back with solutions. “VOLT was actively co-creating innovation, and it is amazing how quickly that can happen if you establish the correct forum,” Halsall comments. “We learned a lot from this experience and have plans to build on this in the future”.

Work in progress for his team is to continue to deliver commercial outcomes for the business, and deepen collaborative working with internal partners and external supply partners. Halsall intends to continue working on analytics using Microsoft Dynamics and Power BI data visualisation, exploring machine learning options and leveraging the LinkedIn ‘XRM’ functionality to improve the bank’s approach to supplier relationship Supply chain transformation management. Then, finally, there’s means having a greater sustainability. This is definitely a partnership with fewer suppliers supply chain matter, says Halsall, and doing it in a more collaborative from realising the NZ Chief way. Internally, implementing a Executive’s vision to convert 30% new intranet and the P2P system, of the fleet to electric by 2019, rebranding the function and kickto Westpac’s global responsible starting innovation in just one year, sourcing initiative, which aims to is something Halsall says would ensure that all suppliers meet have taken three in any other required ethical standards. “The organisation he has experienced. sustainability agenda is huge. “We have introduced rapid We’ve been leading the way in transformation into the team, sustainability leadership and and that was necessary because we remain a leading sustainable we had to build agility and bank globally. Our aim is to build effectiveness into our operating on what we’ve achieved and to model. We measure employee continue meeting our sustainability engagement using a global targets.” benchmark, and over the last year this has risen by 23% and is now above the global benchmark we use within the group.” 22

June 2018


AUSTRALIA

“We believe that by working with other public and private partners in New Zealand, we have the opportunity to create a body that will help supplier diversity, including Maori suppliers in New Zealand” – Rob Halsall, Chief Procurement Officer

For Westpac NZ, a progressive procurement and sustainability objective, and passion of Halsall’s, is creating more opportunity to recognise and build on our supplier inclusion and diversity including Maori, as the country’s indigenous population. “We are working with partners to establish how we can develop a supplier database that would include Maori suppliers, categorised in a way that will allow all procurement practitioners within NZ to understand their services. New Zealand doesn’t have an equivalent to Australia’s Reconciliation Action Plan targets, or Supply Nation. However, we believe that by working with other public and private partners in New Zealand, we have the opportunity to create a body that will help supplier diversity, including Maori suppliers in New Zealand.

“We held a social procurement symposium in July 2017, with 200 local community leaders, procurement leaders and suppliers. We invited CPOs from telecommunications, banks, insurance, government and other community partners including Auckland Tourism (ATEED), Air New Zealand, Auckland Council, and also the chief executive of Supply Nation, to help share interest and knowledge in this area. The entire catering and product placement was provided by diverse local Maori and Pasifika suppliers.”

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LEVI STRAU S S & CO. A SUPPLY CHAIN TRANSFORMATION AT ONE OF THE WORLD'S BEST-RECOGNISED BRANDS


C P O / C S C O S T R AT E G Y

LEVI STRAU SS & CO. HA S REVEALED PLANS TO TR ANSFORM IT S SUPPLY CHAIN. THE COMPANY’S SENIOR VICE PRESI DENT AND C HIEF SUPPL CHAIN OFFI Y CER, LIZ O’N EILL, SPEAK EXCLUSIVEL S Y TO SUPPL Y CHAIN D I G I TA L A B O UT THE INIT IATIVE

Writ ten by JAM ES HEN DER SON


C P O / C S C O S T R AT E G Y

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IN FEBRUARY, LEVI Strauss & Co. (LS&Co.) announced a new “transformative new operating model” that will create “a more sustainable supply chain and a cleaner jean”. Called Project F.L.X. (future-led execution), this new model replaces manual techniques and automates the jean’s finishing process, allowing the company to reduce the number of chemical formulations used in finishing from thousands to a few dozen. Traditionally, denim finishing – which creates worn, faded design elements on jeans – has been a highly manual, labour-intensive and chemical-reliant process, but the new model will automate much of the process, making it far more efficient and time-effective. The company said the commitment is a major step to achieving zero discharge of hazardous chemicals by 2020 and accelerates the elimination of many chemical formulations that the company’s Screened Chemistry programme identified as “phase outs”. Among the chemicals that will be eliminated is potassium permanganate, an oxidizer that is used industrywide to

replicate authentic vintage finishes. Beyond eliminating many chemicals, Project F.L.X. is expected to reduce textile waste by more accurately making what the market needs and may also provide the opportunity to save water in the future. Just weeks after the announcement, Supply Chain Digital spoke exclusively to LS&Co’s Senior Vice President and Chief Supply Chain Officer, Liz O’Neill, to get more detail on the plans that will revolutionise the company’s supply chain.

HOW SIGNIFICANT A STEP-CHANGE DO THE FEBRUARY ANNOUNCEMENTS REPRESENT FOR LEVI’S GLOBAL SUPPLY CHAIN? Project F.L.X. is a radical breakthrough that will shape the future of how jeans are designed, made and sold. We believe it is possible to make iconic apparel with authenticity, agility and sustainability at the forefront – all while protecting the quality craftsmanship consumers know and love us for. Project F.L.X. is our biggest example of those values in action to date. This is the future of jeans manufacturing, and LS&Co. is well-positioned to lead the way. 27


C P O / C S C O S T R AT E G Y HOW WERE THESE INITIATIVES/ IDEAS ORIGINALITY CONCEIVED AND HOW MUCH WORK HAS GONE INTO MAKING THEM A REALITY?

to lasers to solve this problem, we achieved transformational benefits beyond sustainability.

The best innovations come when you’re constrained. And our constraints were many: product authenticity, agility and sustainability. In the case of Project F.L.X., our initial mission was to find an alternative to potassium permanganate; a chemical used to finish jeans today. In turning

DO YOU HAVE AN IDEA ABOUT HOW LONG IT WILL TAKE TO SCALE-UP THIS TECHNOLOGY ACROSS YOUR SUPPLY CHAIN? We have already begun piloting this new model with some of our strategic vendors and we’ve also begun to brief key retail partners. Our plan is to take a phased approach

VIDEO: INTRODUCING LEVI STRAUSS & CO. PROJECT F.L.X.

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to rollout starting this year, with the goal of being fully scaled by 2020.

AUTOMATION IS A BIG PART OF THE NEW SUPPLY CHAIN PROCESS. COULD YOU GIVE AN OVERVIEW OF HOW IT WILL MAKE THE SUPPLY CHAIN MORE SUSTAINABLE? In addition to reducing chemical formulations used in the finishing process from thousands to dozens, the Project F.L.X. is expected to help us reduce

O’NEILL LIZO’Neill Liz As Senior Vice President and Chief Supply Chain Officer for Levi Strauss & Co. (LS&Co.), O’Neill is responsible for the global development, sourcing and delivery of LS&Co. products shipped to over 100 countries. Through her work with global partners, O’Neil has built strategic partnerships to improve supply chain agility while supporting investment in environmental sustainability initiatives and LS&Co.’s Worker Well-being programme. In this role, she is also responsible for the company’s worldwide Terms of Engagement and Environment, Health and Safety. O’Neill reports to the president and CEO, Chip Bergh, and is member of LS&Co.’s worldwide leadership team, which helps set the strategic direction for the company. Prior to LS&Co, O’Neill spent 13 years at Gap, Inc., overseeing sourcing and production management for Gap’s global brands, and has also worked for The Disney Store in Los Angeles and Abercrombie & Fitch in Ohio in sourcing and product management. She holds a Bachelor of Arts degree in English at Tulane University. 29


“WE ARE TRANSFORMING OUR OWN SUPPLY CHAIN AS WE TRANSITION TO THIS NEW WAY OF DOING BUSINESS AND WE ARE EXCITED TO SHAPE THE FUTURE OF APPAREL MANUFACTURING.” LIZ O’NEILL, SENIOR VICE PRESIDENT AND

CHIEF SUPPLY CHAIN OFFICER, LEVI STRAUSS & CO

textile waste by more accurately making what the market needs.

COULD YOU TELL US A BIT ABOUT PROJECT F.L.X. AND HOW IT WILL BE IMPLEMENTED? By using laser technology in new ways – and rearranging steps in our operating model – Project F.L.X. allows us to finish our jeans later in the process and dramatically reduce time to market, without compromising quality or authenticity and significantly decreasing our environmental impact. We can now design denim finishes with a revolutionary imaging tool that we developed, and then use digital 30

June 2018

Project F.L.X. allows denim finishes to be designed digitally

files to quickly translate those designs to bulk manufacturing with automation — eliminating lengthy, labourintensive processes and reducing our chemical finishing formulations from thousands to dozens. We’re all in on this new digital platform, and we’re committed to scaling it across our five-pocket jeans business, including the Levi’s, Denizen and Signature by Levi Strauss & Co. brands, by 2020.

TO WHAT EXTENT ARE THE INITIATIVES ARE BEING DRIVEN BY LEVI’S DESIRE TO REDUCE WASTE? Our innovation process is informed


C P O / C S C O S T R AT E G Y

by two key considerations, namely: how to deliver quality, high quality, durable denim styles to consumers when and where they want them, while making the manufacturing process more sustainable products. And so, at every turn, we ask ourselves: how can we make our supply chain more agile and competitive, while decreasing our environmental impact? Reducing raw materials waste is part of those overall objectives and considerations. For example, the Project F.L.X. is expected to help us reduce textile waste by more accurately making what the market needs.

WE HEAR A LOT IN THE INDUSTRY ABOUT ‘SUPPLY CHAIN TRANSFORMATION’, HOW MUCH DO YOU SEE THESE NEW INITIATIVES AS LEVI’S OWN SUPPLY CHAIN TRANSFORMATION? We often say that where we lead, others follow. That begins with getting things right internally at Levi Strauss & Co., to help ensure that our operating model sets us up to deliver great product, wherever our consumers like to shop. But we’re keen to see the industry take notice and adopt more sustainable manufacturing practices, to help make a greater impact together. We are transforming our own 31


C P O / C S C O S T R AT E G Y supply chain as we transition to this new way of doing business and we are excited to shape the future of apparel manufacturing.

WHAT DO YOU CONSIDER TO BE THE MAIN SUPPLY CHAIN CHALLENGES FACING LEVI’S AND THE APPAREL SECTOR AS A WHOLE? Supply chain agility and sustainable manufacturing continue to be two main concerns for most companies operating a global supply chain today. These are the innovation priorities for us and it was with these two pressing concerns in mind that we tackled the leading idea that brought us to pursue the Project F.L.X. breakthrough.

WHEN YOU ARE DEALING WITH HUNDREDS OF SUPPLIERS ACROSS THE GLOBE, HOW DIFFICULT IS IT TO ENSURE YOUR SUPPLY CHAIN SUSTAINABILITY STANDARDS ARE BEING ADHERED TO ACROSS THE BOARD? The most effective way to help ensure that our standards are applied is to work with vendors to demonstrate that better working conditions means improved productivity – and a positive impact on the bottom line. More than 25 years ago, Levi Strauss & Co. pioneered manufacturing standards for our industry by introducing a comprehensive code 32

June 2018


of conduct. The Levi Strauss & Co. Terms of Engagement set out to protect the basic needs and rights of workers as well as the environment. Since its implementation, similar codes have become the standard and are employed by most apparel companies. In 2011, Levi Strauss & Co. began piloting the next phase of its commitment to creating a more sustainable supply chain called the Worker Well-being initiative. Through this new approach, the company partners with its suppliers and local organisations to implement programmes focused on financial empowerment, health and family well-being, and equality and acceptance. The initiative has created proven, sustainable business and social benefits at all levels of the supply chain, including a demonstrated four to one return on investment for some programmes.

HOW IMPORTANT IS THE EUREKA LAB TO DRIVING SUPPLY CHAIN INNOVATION AT LEVI’S? It’s key. Our Eureka Innovation Lab is the nerve centre that brings together our developers, designers, vendors and sustainability experts to collaborate and tackle key supply chain challenges 33


C P O / C S C O S T R AT E G Y

“OUR EUREKA INNOVATION LAB IS THE NERVE CENTRE THAT BRINGS TOGETHER OUR DEVELOPERS, DESIGNERS, VENDORS AND SUSTAINABILITY EXPERTS TO COLLABORATE AND TACKLE KEY SUPPLY CHAIN CHALLENGES” LIZ O’NEILL, SENIOR VICE PRESIDENT AND CHIEF SUPPLY CHAIN OFFICER, LEVI STRAUSS & CO

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in a multidisciplinary way, to arrive at breakthrough solutions rather than incremental step-change. Established in San Francisco in 2013, Eureka is dedicated to design, research and creative development, and to creating advanced product prototypes. From exciting new products that tap into consumer insights through to cleaner manufacturing processes, this is the place where we embrace the opportunity to define the future of the apparel industry.

ON A PERSONAL LEVEL, DO YOU HAVE ANY TARGETS/GOALS THAT YOU’D LIKE TO ACHIEVE DURING YOUR TIME AT LEVI’S?

Bart Sights at the Eureka Innovation Lab

I hope to lead a global supply chain team that operates as a major competitive advantage for LS&Co. – one that is pushing the boundaries of sustainable innovation, that is able to help us stay ahead of a changing retail landscape and meet the needs of our consumers, wherever they want to shop. And I’d like to be able to one day say that our global supply chain team was an essential part of helping to make LS&Co. the best apparel company in the world – and a leading global company, across industries.

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PROCUREMENT INSIGHTS

CUT FROM THE RIGHT CLOTH How to strategically source fashion


Hemant Gupta, CFO at Blackberrys, on how the Indian menswear brand has implemented a digital procurement solution through its partnership with Ivalua Wr i t ten by DA N B R I G H TMO R E


PROCUREMENT INSIGHTS BLACKBERRYS (NOT TO be confused with the mobile phone manufacturer) is among the top three domestic menswear brands in India (and the first to introduce off-the-peg suits) dealing with all departments of retail across pan-Indian multibrand outlets, ecommerce and large format branded stores carrying its three ranges of menswear – Mainline, Urban and Casual. Blackberrys apparel was founded in 1991 in the bylanes of Chandni Chowk, New Delhi. Starting out in wholesale, before moving to retail, under the leadership of the Mohan brothers, Blackberrys offers a one stop shop for every man’s wardrobe needs with 217 exclusive stores across 115 cities. Hemant Gupta

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Blackberrys CFO Hemant Gupta explains to Supply Chain Digital that the company was eager to avoid resting on its laurels while exploring new ways of improving its procurement strategy. “We were keen to build on our offline activity, where we still value interpersonal skills, and develop our ability to do procurement negotiations online. We had a new structure and procurement team in place but we needed help with planning so we decided to get support from Ivalua,” he recalls. “By taking this process online we were able to achieve the centralisation of data, further develop our supplier database and receive reports from the system to help us properly monitor spend. For procurement it offers a fair and transparent process when selecting a particular vendor because everything is now online with e-sourcing. Before that, our offline model didn’t give a 360-degree view when we were awarding contracts because costing is not the only factor – we are also looking at service agreements and quality control, as retail is a tricky business.”


Blackberrys’ SS18 collection

Gupta notes that once you are doing trade purchases it’s mostly based on the quality parameters. He explains it’s compulsory for Blackberrys internal stakeholders to select at least three vendors on the same quality parameters then they are good to go with cost negotiations. This means that when a good price has been agreed, the deal won’t be rejected due to quality issues that ultimately could affect the end consumer and damage the brand’s reputation. The partnership with Ivalua grew from Blackberrys’ collaboration with Consus, which were using the Ivalua platform to outsource the management of procurement functions. “Consus work in our office providing us with resources to manage our negotiations online, improve visibility, share various reports and manage the centralisation of data,” reveals Gupta. “Over the past three years our discounting has increased by almost 25% which has helped drive a reduction in margins. As CFO I need to improve the bottom line of the company so we needed new partnerships like this to 39


“With a total annual historical spend of $9.8mn in 2016 and $19.5mn in 2017, after the introduction of Ivalua’s solution, we achieved year on year savings of 14.3% in 2016 and 10.8% in 2017. Now all our internal stakeholders can see the results” HEMANT GUPTA, CFO, Blackberrys

work on procurement of both trade purchases and non-trade purchases.” Blackberrys has had to focus on meeting the challenge of changing its operational mind set, moving away from some manual elements and keeping all stakeholders on the same page. “Cost-cutting is no longer the solution for sustainable profitability; the key to success is finding creative ways to optimise it,” says Gupta. “Nontrade purchases, such as marketing 40

June 2018

spend to drive footfall into stores with the launch of each new season range, are traditionally handled offline. We’ve decided to challenge ourselves to reduce rates we pay for procurement because there’s a historical trend to quality parameters and rates being set with certain suppliers for trade purchases. Previously there has been a complete monopoly of the vendor but because of the AI that the online system creates, suppliers


PROCUREMENT INSIGHTS

realise there is competition which encourages more competitive pricing.� The company introduced Ivalua in 2016. Prior to this it was using only traditional manual sourcing methods with no visibility on spend or central database for maintaining contracts beyond their expiry. Allowing it to manage a dual structure of internal stakeholders and external vendors, Blackberrys has embraced automated processing, lowering

risk and increasing efficiency while utilising hassle-free tracking (when issuing the PO to realise savings in the post sourcing process) and renewal of contracts for improved control and transparency. With annual spend of $100mn, Blackberrys introduced Ivalua in 2016 across six of its spend categories: New Store Projects, Packaging, Gifting & Events, Visual Merchandise, Contract Labour & IT Infra and 41


PROCUREMENT INSIGHTS

“We were keen to build on our offline activity, where we still value interpersonal skills, and develop our ability to do procurement negotiations online” HEMANT GUPTA, CFO, Blackberrys

Blackberrys’ SS18 collection 42

June 2018


Trade Purchases. “With a total annual historical spend of $9.8mn in 2016 and $19.5mn in 2017, after the introduction of Ivalua’s solution, we achieved year on year savings of 14.3% in 2016 and 10.8% in 2017,” confirms Gupta. “Now all our internal stakeholders can see the results, we are further driving collaboration to continue cost reductions and get better services from our procurement function, productivity and efficiency.” Gupta maintains the most important achievement in the process has been to bring the purchase of raw materials for apparel manufacture – fabric, interlining and buttons – and the quality parameters expected from historical vendors, into the online space: “With certain kinds of base articles, we need to ensure these are NOS (never out of stock) as we work towards our two seasons – autumn/ winter and spring/summer. Whenever a customer visits a store, certain products, around 20-25% of our merchandise which features in the Mainline range, are always available in store. We have been able to identify certain vendors to deliver those base fabrics and trims to us so we can reduce down procurement costs

from their historical higher levels.” Gupta believes solutions like Ivalua are at the forefront of a key industry trend, bridging the gap between procurement and sales functions. “If I have to keep stock at my warehouse for a future store delivery my procurement function needs to be aligned in such a way that ensures I won’t have to hold it there for more than 10-15 days,” he explains. “Longer than that means it is the increased consumption of working capital in the stock parameter which is going to give me the sale. That’s the challenge Ivalua can help us tackle, to reduce costs by bringing procurement closer to sale.” Blackberrys operate on a production cycle of 120 days, so whatever it is planning for each season requires three to four months to build up that stock. “We work in different channels – wholesale, retail, ecommerce – so 43


the customer demand also varies,” says Gupta. “We need up to 60% of the merchandise in one go to launch a new season range and feature stock across all our stores – to manage that supply chain efficiently is key to avoid blocking our working capital and mitigate against increasing administration costs in warehouse management.” What advice would Gupta offer businesses contemplating a solution like Ivalua’s? “Ivalua is moving fast but takes time according to the client’s needs and legacy systems that may be in place. Their support and ability to change the dynamics within the software allows them to create positive change in your company very quickly. Before implementation, it’s important to know if you’re ERP system can communicate with any new approaches. It’s a problem Ivalua is able to solve to allow for smooth tracking. Technology like this can improve set processes so you’re not dependent on the individual who may leave your business and take their expertise with them.” The next step for Blackberrys with Ivalua is to expand its adoption of 44

June 2018

Blackberrys’ SS18 collection


PROCUREMENT INSIGHTS their solutions. “Currently we’re using their tools for online negotiations. We have been tracking performance and this year are planning to introduce procurement to purchase order with Ivalua so we are able to achieve end to end tracking of what services have been awarded to our suppliers,” reveals Gupta. “When I look at my theoretical savings versus practical savings there is a gap of almost 30% – Ivalua can help with that when we make the transition from manual to system-based tracking of contracts which are awarded following online auctions with suppliers.” He concludes: “The dynamics of the supply chain requirements for retail are changing on a daily basis so we’re open to further enhancing our digital capability for strategic sourcing.”

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TECHNOLOGY

HOW TO MAKE YOUR SUPPLY CHAIN MORE


EC Electronics MD Phil Simmonds on how the manufacturing services provider is reacting to industry trends to add value to the supply chain, and how the latest hardware innovations with flexible integrated circuits (FlexICs) are set to ramp efficiencies Writ ten by DA N BR IG HTMOR E


TECHNOLOGY EC ELECTRONICS PROVIDES manufacturing support for OEMs and product innovators to help them take a product from concept to market with key services, including PCB assembly, cable assembly, overmoulding, electronics box-build and product realisation. With over 30 years of experience in the field it combines expertise in manufacturing with supply chain solutions to meet the needs of customers across industries. Group MD Phil Simmonds identifies a key manufacturing trend in the supply chain industry where partnerships are key. “We find customers are looking for long term supply partners who can provide a higher level of integration and a diverse range of services. We’re starting to see clients moving away from a couple of niche experts, to companies that can provide a range of complementary services. “For example, we provide PCB assembly, cable assembly and testing before final integration into electronics box-build – from start to finish, the customer can achieve everything within one company. It shows the importance of developing relationships and trust 48

June 2018

– clients want to know their projects are in capable hands and won’t need to jump around between different suppliers. This trend goes beyond the simple logistics of working with just one supplier – clients also want to know they’re getting value for money while getting everything they need from as few suppliers as possible. At EC Electronics, we offer the option to source electronics sub-assemblies from the most competitive global location. With factories in Romania, we can offer the best value for money, before bringing the project back to the UK for final integration and testing.” The internet of things (IoT) has become one of the fastest growth markets bringing hardware technologies into the supply chain. While the vast majority of IoT designs are for software apps, it’s the hardware that enables the apps, the intelligence and connection to the cloud. Simmonds believes the heroes of IoT are the processors, sensors and communications chips that make it all happen. This is the technology that makes things smart, which is why he maintains it’s an exciting time to be manufacturing hardware and technology products for a range of


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TECHNOLOGY “THESE FLEXIBLE INTEGRATED CIRCUITS COULD REVOLUTIONISE SUPPLY CHAIN AND STOCK CONTROL, ALLOWING COMPANIES TO IDENTIFY AND TRACK PRODUCTS FROM MANUFACTURE THROUGHOUT THEIR LIFE CYCLES, EVEN UNTIL A PRODUCT ENDS UP IN THE REFUSE OR RECYCLING” PHIL SIMMONDS, MD, EC ELECTRONICS

sectors from industrial to medical. Electronics devices and circuits have become increasingly miniscule, allowing all kinds of goods and products to become connective – powering the internet of things and offering opportunities for logistics companies to improve their services. Simmonds highlights they’re also set to become more flexible, literally, with the first flexible integrated circuits (FlexICs) being brought to market by PragmatIC with its printed, 50

June 2018

plastic equivalent of the silicon chip already being deployed by Unilever and Hasbro, amongst others. “PragmatIC CEO Scott White sees an application for his company’s FlexICs in the supply chain, to be assembled into inlays and tags, at a price point up to 80% lower than conventional silicon-based solutions,” explains Simmonds. “These flexible integrated circuits could revolutionise supply chain and stock control, allowing companies


to identify and track products from manufacture throughout their life cycles, even until a product ends up in the refuse or recycling.” Along the way there could be numerous opportunities to drive further efficiencies and cost savings, as well as improve the customer experience when they interact and buy products. “Low costs, usability and the scalability of RFID and NFC flexible integrated circuits makes stock management

solutions accessible to many businesses. Current RFID and NFC stock management technology is expensive and therefore only feasible for high value products,” adds Simmonds, who notes instead of just tagging high value products, they can also be tagged with a FlexIC, so its manufacturer knows exactly where it is at any given time. As an electronics contract manufacturer, EC Electronics works with companies and entrepreneurs 51


TECHNOLOGY to get their products to market, so actively seeks out innovative technologies like this to help achieve its goals. New developments like flexible integrated circuits have many applications and could be used in a variety of ways to increase efficiency, believes Simmonds. “The supply chain benefits with enhanced tracking throughout manufacture and delivery, resulting in fewer products being lost, while the ability to improve stock management means its less likely that products will go out of stock. Ultimately, it’s the end user who benefits most as FlexICs offer the potential to provide customers with information on their smartphone, such as reviews, promotions, recipes and

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recommendations prior to purchase and beyond. Meanwhile, data collected from products enabled with FlexICs could provide insights to give stores marketing opportunities before customers even purchase them. For example, data that shows a customer picked up the product, tried it on in the changing room etc. Eventually, consumer loyalty could be enhanced by utilising packaging with a flexible integrated circuit to potentially provide data when it’s in the customer’s home. This could include sending a notification to the customer’s smartphone when a product is about to pass it’s use by date, or a reminder to purchase a replacement when a customer disposes of it.”


“FLEXIBLE INTEGRATED CIRCUITS OPEN UP A NEW MASSMARKET WHERE NON-ELECTRONIC PRODUCTS CAN ALSO BECOME PART OF IOT WITH TECHNOLOGY THAT IS IMPERCEPTIBLE IN ITS PACKAGING” PHIL SIMMONDS, MD, EC ELECTRONICS

To date, IoT has typically referred to the electronic products we have in our homes and offices, and how these interact with our devices. Flexible integrated circuits open up a new mass-market where nonelectronic products can also become part of IoT with technology that is imperceptible in its packaging. PragmatIC’s FlexICs are 10 microns thick – a typical human hair is 50-100 microns. “They are so thin, you almost can’t feel them,” says Simmonds. “Yet they adhere very easily to flexible substrates, making them perfect for incorporating into a label or packaging.”

Simmonds believes that when a supplier of hardware technology demonstrates an appetite for a partnership utilising the latest innovations such as FlexICs – rather than just quoting on a requirement and entering into a transactional relationship – it shows they want to work collaboratively to optimise its part in the supply chain, for your business objectives and success. He concludes: “Partnerships are good for business, when your interests and their interests are aligned everyone is focused on getting a competitive edge and succeeding in the marketplace.” 53


20th Annual EMEA

Supply Chain & Logistics Summit & Expo Maximise efficiency and minimise costs through supply chain strategies of the future

Key Speakers In a world where digital supply chain disruption is in full swing – how can you prepare to successfully navigate these digital complexities? 70% of executives say they have started digital supply chain transformation, but they may lack a clear understanding of what this transformation entails. So join us at the 20th edition of the Supply Chain and Logistics Summit & Expo, that will take place at the Okura Hotel in Amsterdam on the 4-6 June, to understand how other industry leaders have created their roadmap towards digital implementation.

Rohit Sodha Amazon

Onofrio Caradonna Procter & Gamble

Mirko Senatore Pfizer

Ivanka Janssen Pepsico

Michael Tomuscheit BMW


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LOGISTICS & DISTRIBUTION

"YOU PLUG IN ONCE AND WE PLUG IN THE WORLD"


Centiro's Global Business Director Bobby Shome on how its cloud-based global logistics platform is empowering companies to enhance their last mile delivery services Writ ten by DAN BRIGHTMORE


IN 2017 THE market for last-mile delivery solutions was worth $181bn, growing in double digits year on year. Founded in Sweden in 1998, Centiro is focused on delivering last mile delivery solutions – increasingly vital in our ecommerce world – by helping consumers interact better with retailers and brands around the management of their orders. As consumers move away from physical stores and interaction, being able to provide a good customer experience now requires all elements from the retailer through to the supply chain to work together, including last mile delivery. Centiro’s Global Business Director Bobby Shome tells us: “When you order an item you get updates from the carrier about the progress of your delivery, but if there’s a problem who do you speak to? Who’s taking responsibility for that order? From a physical standpoint it’s the carrier, but from the ownership perspective it has to be the retailer.” Shome believes there’s a disconnect between the consumer knowing what’s happening and then being 58

June 2018

proactively informed. “In a big nutshell, our solution brings retailers and consumers closer to deliver an improved end-to-end experience.” To improve the visibility of its solutions, Centiro is using predictive analysis developed through machine learning. “We’re looking to implement this to compute potential failures


LOGISTICS & DISTRIBUTION

before they happen, initially based on historical data and existing algorithms, but going forward we’re utilising this solution around advancements in AI to analyse future events to help us plan the right delivery solution for a given order,” explains Shome, highlighting Centiro’s longstanding partnerships with JDA and IBM. “Our technology

is a pure cloud-based solution so integrating it is straightforward – we’re agnostic in that sense,” he adds. Centiro are cognisent of the fact that some customers may previously have had bad experiences, so are happy to help them through changes via a bespoke process. When things go wrong in the supply chain, as 59


LOGISTICS & DISTRIBUTION

seen with the nightmare experienced by KFC in the UK earlier this year, it damages consumer confidence and the expectation of a brand’s products always being available to its customers. Hence the need to implement any transformations carefully – Shome notes this is the biggest challenge for customers Centiro deal with, the fear of change. “They often have on-premise, highly customised legacy solutions and worry about how the 60

June 2018

business will survive if orders are compromised. To combat this fear, we can run a co-existence model and encourage a baby step approach to implementing our solutions so we de-risk as we integrate. “We have visibility tools that can take information from existing systems, not just the current carrier management solutions, and then we can start providing our solutions. That gives companies more predictability and better order


"WE HAVE VISIBILITY TOOLS THAT CAN TAKE INFORMATION FROM EXISTING SYSTEMS, NOT JUST THE CURRENT CARRIER MANAGEMENT SOLUTIONS, AND THEN WE CAN START PROVIDING OUR SOLUTIONS" BOBBY SHOME,

Global Business Director, Centiro

visibility across ecommerce, supply chain and customer services – which we find often exist in silos. “With that picture in place, the customer can understand better where they are succeeding and where they can improve. We leave it to them to decide if they want to continue with our co-existence model or utilise more features and functions and migrate fully towards our solution going forward. We want to prove what we do can be done well and on time.

Today the number of open slots a retailer can go live with is reducing, so we offer a way of showing we’re able to deliver on those strict time lines. Through collaboration we can then provide for more volume, additional lanes and further functionality.” The philosophy behind Centiro’s mantra – you plug in once and we plug in the world – comes from working with a host of global brands across different geographies that need the ability to use various carriers in a host 61


LOGISTICS & DISTRIBUTION

VIDEO: THE FULL-CIRCLE BRAND EXPERIENCE 62

June 2018


of countries. They need to be able to deal in large volumes, while utilising a customisable solution always available to them without having to bend the product so much they miss out on functions and features that are in the pipeline. “Ours is a true cloud solution,” confirms Shome. “Some say they have a SaaS product, but to me that’s just a way of licensing the price, it doesn’t mean you have a public cloud solution available. This is what we can provide and because of our set up each customer has their own version of our latest solution customised to their needs and compatible with our global product and any future upgrades. At some point legacy solutions become unsustainable for the vendor and hinder the progress of the customer.” Shome is proud that Centiro is financially stable and aims to makes sure its projects are profitable for everyone involved. “We want to work with customers that have growth agendas and understand the value we bring,” he says. “Hence they come to us via the network we’ve built over many years.” It’s one of the reasons

why Centiro was named Best Technology Partner at last year’s JDA Connect in London, recognising the alignment of Centiro’s Last Mile solutions to JDA Intelligent Fulfilment solutions allied to creating joint value for customers. Creating that value starts with being ahead of the game by recognising, and reacting to, industry-wide trends. “We’re seeing more legislation around cleaner fuels and the congestion relating to pollution,” notes Shome. “The UK is highly advanced in last mile delivery with home deliveries increasing exponentially since the advent of online. We need collaboration to combat this environmental impact so the challenge is still to service customers in a way that’s as green as possible. The Mayor of London’s Transport Strategy is an encouraging first step towards securing a sustainable and more environmentally friendly future for deliveries. If London is to have any chance of meeting these goals the Mayor has set out, organisations from all parts of the industry – from

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LOGISTICS & DISTRIBUTION retailers to delivery partners – must start working together in a more collaborative way. This approach could be extremely effective when it comes to deliveries, with more businesses working together, where appropriate, over the last mile to reduce the existing levels of delivery traffic, particularly during the morning peak.” Meanwhile in the US, deliveries have much larger distances to cover to even be in a position to deliver last mile services. “We need more visibility here, but not just on primary distribution (port to delivery centre),” notes Shome. “Our specialism is secondary outbound distribution (last mile), in some cases in the US last mile is the tertiary outbound distribution because deliveries go from a factory or port to a regional DC (delivery centre), and then a local DC before going out for delivery. What I’m seeing is the visibility of that big order being broken down into a smaller order from a consumer perspective. Where in the past we’ve had processes that made sense to the retailer or brand, now we need to have that visibility also available to the consumer. It’s why the US market is slightly behind - the main issue is that primary/ 64

June 2018

secondary function before local heroes complete the local last mile delivery where there’s no visibility or ownership of the process. This is where Centiro can really help to be a systemic enabler to get that customer expectation to be a part of the solution.” Shome expects to see an acceleration of last mile capabilities thanks to the ‘Amazon effect’ driving customer expectations. Shome’s goal for Centiro is to continue working quietly in the background with more brands – whether wholesalers, retailer or manufacturers – that want to address b2c and b2b2c, and with logistics providers who are starting to offer a total ecommerce solution, managing inventory and taking payment on behalf of brands, rather than just fulfilment. He concludes: “In the past supply chain was about removing costs, but today the businesses that are forging ahead see supply chain as a growth driver and enabler. So, getting their supply chain to add value requires investment and they are the ones that will do well in the future and take advantage of the speed of change we’re seeing in our industry around last mile.”


"IN THE PAST SUPPLY CHAIN WAS ABOUT REMOVING COSTS, BUT TODAY THE BUSINESSES THAT ARE FORGING AHEAD SEE SUPPLY CHAIN AS A GROWTH DRIVER AND ENABLER" BOBBY SHOME,

Global Business Director, Centiro

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‘IoT ne blockc that o config crede perfor action

Could Blockchain Transform Manufacturing? How will blockchain impact the manufacturing sector? Kate O’Flaherty compares the reality with the hype. It is the distributed ledger system that enables cryptocurrencies, but blockchain technology offers new use cases across multiple vertical industries. Within the Internet of Things (IoT), blockchain’s applications go beyond security and authentication to asset tracking and the exchange of smart contracts, which give devices a way of handshaking and exchanging information according to mutually agreed rules. Indeed, the claimed potential of the technology to boost efficiency in supply chains, for example, has resulted in a number of projects and pilot programmes that focus on the IoT. The Trusted IoT Alliance – a consortium of companies that includes Bosch, Cisco, Gemalto, and Skuchain – was formed in September 2017 to focus on how blockchain and the IoT can intersect for business advantage. Recentl AI and blockchain technologies Recently, have been combined by Fetch.AI to create autonomous ledgers that can act as smart agents on behalf of a person, organisation, or technology. iom-uk.internetofbusiness.com

Yet more than most new technologies, blockchain is surrounded by hype on the one hand and criticism on the other. For every claim that blockchain forms the basis of a new data commons, there is another saying that it is slow and inappropriate for 90 percent of the tasks that it is being proposed fo And for every claim that it forms a new, for. more secure bedrock for tracking goods and services, there are voices suggesting that it is a flawed technology. Is the hype real? Innovative ventures certainly abound – using blockchain to track and authenticate contracts, for example, and both physical and digital assets – while even some blockchain experts express reservations about the technology and suggest that it urgently needs to evolve. So, taking all of this into account, what will the real impacts be on the manufacturing sector? The There are multiple uses for blockchain in manufacturing. According to Shaan Mulchandani, global security strategy and blockchain leader at Aricent, blockchain-based processes and smart contracts can facilitate automated security and compliance checks as part of the p manufacturing/building process.


etworks can leverage chain solutions to ensure only devices with valid gurations – or trusted entials – are accepted and rm a limited set of ns.’

He says: “IoT networks can leverage blockchain solutions to ensure that only devices with valid configurations – or trusted credentials – are accepted and perform a limited set of actions.” futu manufacturing will increasingly In the future, see the IoT and blockchain intersect, powering robots that are able to teach themselves, says Van Ostaeyen. He cites the example of Sewbot, a robot that makes clothes without human intervention, which could take advantage of blockchain in the futu to become fully integrated into the future supply chain.

In addition, Van Ostaeyen claims that manufacturing will “become 100 percent transparent through blockchain”. In the future, he predicts: “There will be no tampering, and no fakes or counterfeit goods.” Th claim seems unlikely. However, it is clear That that manufacturing is itself slowly transforming from a slow, monolithic process into a smarter, more automated, more localised one, in which smaller facilities that cater to local needs replace offshore outsourcing, which is based on the lowest labour cost. Read full article.

Radisson Park Inn London, UK 5-6 June 2018 Taking place in London from 5-6 June; the Internet of Manufacturing UK conference and expo is your opportunity to network with and learn from those driving IoT adoption for Manufacturers as well as your peers already benefiting from this innovation.

The summit will examine in detail how Manufacturers can enhance their IoT strategy focusing on ROI, blockchain, additive manufacturing, connectivity, AI/analytics and security. All attendees will leave with tailored roadmaps to the adoption of these next generation technologies to reduce costs, imp improve efficiency and increase ROI.

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T O P 10


0 1 P TO

S C I T S I LOG S D N A BR d's l r o w e h t f o n w A countdo aluable logistics 10 most v s based on brand businesse reported in the value, as ance Logistics Brand Fin 2018 report... 25 W r it t e n b y

MARK SPENCE


PICTURE: TRAVELER1116/ GETTYIMAGES

T O P 10

10. CSX

CSX is a leading supplier of rail-based freight transportation based out of Jacksonville, Florida. As a railroad, the company operates around 21,000 route miles of track. The company was formed in 1981 by combining the railroads of the former Chessie System, Seaboard Coast Line Industries then the Seaboard System Railroad in 1986. The brand is currently valued at $4bn.

www.csx.com

9. Deutsche Post

Deutsche Post is part of the Deutsche Post DHL Group and is Europe’s leading postal service provider. Deutsche Post delivers mail and parcels in Germany and across the world and provides dialogue marketing and press distribution services as well as corporate communications solutions. Deutsche Post DHL Group employs approximately 510,000 employees in over 220 countries and territories worldwide. The brand value, according to Brand Finance, is $4.2bn.

www.deutschepost.de/en/home.html 70

June 2018


8. CN

With a brand value of $4.4bn, CN is a Canadianbased transportation company that offers integrated services covering rail, intermodal, trucking, freight forwarding, warehousing and distribution. CN has approximately 24,000 railroaders and transports more than $250bn worth of goods annually for an array of business sectors, ranging from resource products to manufactured products to consumer goods, across a rail network of approximately 20,000 route-miles spanning Canada and midAmerica.

www.cn.ca

7. Poste Italiane

Poste Italiane is an Italian postal service provider. Outside of its standard postal services it also offers various integrated products such as postal savings, communication, logistics and financial services throughout Italy. In 2011, the business acquired UniCredit MedioCredito Centrale for â‚Ź136mn ($166mn) and in 2016 the Italian government approved the sale of stakes of up to 40% in the company. Its CEO and MD is Matteo Del Fante and its brand value stands at $4.8bn.

https://www.poste.it/ 71


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6. McLane Company

The McLane Company is of the largest supply chain service leaders providing grocery and foodservice supply chain solutions for convenience stores, drug stores and more in the US. It has one of the largest private fleets in America and delivers around 50,000 products to 110,000 locations and employs around 20,000 employees. The President and CEO of McLane since 1995 is W. Grady Rosier and its brand value is currently $4.8bn.

PICTURE: MIXMOTIVE/ GETTYIMAGES

www.mclaneco.com

5. Union Pacific

Union Pacific is a freight hauling railroad that operates 8,500 locomotives consisting of 43 different models, operating over 32,100 route miles. Its system is the second biggest in the US. The company started in back in 1862 when it was called the Union Pacific Rail Road and its current CEO is Lance M. Fritz. The brand value of the company is thought to be $7.8bn.

www.up.com

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PICTURE: KRASNEVSKY/GETTYIMAGES

4. DHL

DHL is one of the most recognisable logistics brands across the globe, specialising in international shipping, courier services, road and rail transportation, air and ocean freight, international parcel and express mail services and contract logistics. Founded in the US in 1969, the company had gone global by the late 70s and its current value is thought to be in the region of $10.7bn.

www.dhl.co.uk

3. Japan Railways Group

The Japan Railways Group is more commonly known as the JR Group and consists of seven for-profit companies that took over most of the assets and operations of the governmentowned Japanese National Railways in 1987. The JR Group has a total route length of about 12,500 miles, of which about half is electrified. Current brand value is thought to be $11.1bn.

http://english.jr-central.co.jp 73


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2. FedEx

FedEx Corporation is a US multinational courier delivery services s company with its headquar ters in Memphis, Tennessee. FedEx offer a complete suite of online services for shipment preparation, package l tracking, shipment rates and tools for international shippers and smal e businesses. The name FedEx is actually an abbreviation of the nam , of the company’s original air division, Federal Express. Brand value h. according to Brand Finance, is $18.1bn. The CEO is Frederick W. Smit

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PICTURE: GK-6MT/GETTYIMAGES

www.fedex.com


PICTURE: RAYONEMEDIA/GETTYIMAGES

1. UPS

United Parcel Service is an American multinational package delivery company and a provider of supply chain management solutions. Services also include a cargo airline, a freight-based trucking operation and retail-based packing and shipping centres. UPS employs approximately 444,000 staff with approximately 240,000 drivers with international package operations delivering to more than 220 countries. Its CEO is David P. Abney and the brand value of the company is $22bn.

www.ups.com/us/en/Home.page 75


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Mining and Engineering (M&E) Indonesia 2018 is a B2B exhibition, which delivers signiďŹ cant opportunities for local and international suppliers to enhance your business proďŹ le, launch your latest products, technologies and services and network with mining professionals from Indonesia and the surrounding region. For visitors, the event is a dedicated platform to network, source, and gain insights.

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E V E N T S & A S S O C I AT I O N S

Events The biggest and best events and conferences from around the world‌ Writ te n by AN D R E W WOO DS


E V E N T S & A S S O C I AT I O N S INTERNET OF MANUFACTURING RADISSON INN, HEATHROW, LONDON, UK | 5-6 JUNE

Are you a manufacturer planning an Industrial Digital Strategy? Are you interested in connectivity? Concerned with Security? Intrigued by IoT? The Internet of Manufacturing UK conference from 5-6 June in London is a must attend event. Designed to accelerate the industry’s readiness for change through practical case studies with a granular approach; the agenda will cover the adoption of IDT, implementing AI, AR and VR, data and GDPR, the implications of Brexit for IIoT on the UK market and more. This is your chance to hear how the biggest Manufacturers in the UK and across Europe have gone about implementing innovation. You can get insight from the likes of:  •  Gareth Alford, Lead Engineer, GSK  •  Dr Graham Herries – Director of Digital Technologies, Laing O’Rourke •  Malte Manke, CIO, Krauss Maffei  •  Jim Davison, Regional Director South of England, EEF •  Georgios Karakousis, Senior Manager, Digital Strategy, Stanley Black & Decker

https://iom-uk.internetofbusiness.com/

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GS1 CONNECT 2018 JW MARRIOT PHOENIX DESERT RIDGE, PHOENIX, AZ | 5-7 JUNE

GS1 Connect 2018 will help you shift into the fast lane, providing an engaging blend of live educational programs, industryspecific and cross-sector conference sessions, and the Standardsville Exhibit Area. Across all formats, the content is designed to put you in the lead by showcasing the benefits of applying GS1 Standards for full supply chain visibility.   Save three days in June to gear up for success:   Discuss industry best practices Collaborate to improve business processes Strengthen your professional networks to drive innovation and growth

www.gs1connect.org

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E V E N T S & A S S O C I AT I O N S 9TH ANNUAL NORTH AMERICAN SUPPLY CHAIN SUMMIT THE WESTIN PEACHTREE PLAZA, ATLANTA, USA | 5-7 JUNE

The event features 50-plus keynote speakers from companies such as Coca-Cola, Nike, IBM and Schneider talking about the new wave of disruptive digital technologies is transforming processes for businesses and their customers. Discover how leading companies are capitalising on digital trends to update their business strategy, create sentient supply chains and empower the workforce of the future. Organisers have also created dedicated tracks and sessions that address how organisations are driving the responsible business agenda, bringing together experts from sustainability, communications, procurement and innovation departments as well as investors, NGOs, governmental bodies and academics.

events.eft.com/scsc

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SUPPLY CHAIN CONTROLLING AND PERFORMANCE MANAGEMENT BERLIN, GERMANY | 11-13 JUNE

This Marcus Evans conference is a unique opportunity for Supply Chain finance leaders to discuss how to deliver significant cost savings and improve performance of your Supply Chain as well as to implement the latest trends in technology to get a better control and more visibility. With rapidly changing customer and market requirements, it is also a good opportunity to discuss how to become flexible and agile and encourage business interaction from the S&OP perspective and how to align Supply Chain with customer value proposition.

https://goo.gl/6pXjCZ

EUROPEAN PROCUREMENT EXCELLENCE DRESDEN, GERMANY | 26 JUNE

The 13th European Procurement Excellence Summit will continue to offer a high-level platform for intense exchange and highquality networking to procurement executives from Europe’s leading companies, bringing together thought leaders, highly regarded mentors and influencers whose experiences benefit their organisations and inspire the business ecosystem they operate in. ‘Through inspirational keynotes and small, interactive working groups we aim to contribute to enable Europe’s procurement executives to meet every challenge ahead’

https://www.bme.de/en/all-events/epe-european-procurement-excellence

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PROCURECON DIRECT 2018 RANCHO BERNARDO INN, SAN DIEGO, CA | 21-22 AUGUST

The only dedicated direct procurement conference in North America... ProcureCon Direct is the only seniorlevel conference solely dedicated to the unique challenges facing direct sourcing and procurement. Building upon the successful 17-year history of ProcureCon conferences, ProcureCon Direct is customised for those handling commodities, components and raw materials.

https://bit.ly/2Hf9geb

GARTNER SUPPLY CHAIN EXECUTIVE CONFERENCE LONDON | 23–25 SEPTEMBER

Gartner Supply Chain Executive Conference is the world’s most important gathering of supply chain leaders, discussing how disruptions large and small confront today’s supply chains on a daily basis and how ‘organisational survival depends on the ability to anticipate, adapt, and transform supply chains to deliver reliability and performance’.

www.gartner.com/events

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CSCMP EDGE 2018 NASHVILLE, USA | 30 SEPT–3 OCT

Discover over 100 forward-thinking sessions covering real world strategies implemented to maximise and transform supply chains and learn from some of the brightest academics and practitioners in supply chain today. ‘The Council of Supply Chain Management Professionals (CSCMP) hosts the must-attend supply chain event of the year — CSCMP’s Annual Global Conference, EDGE. From leading-edge content to cutting-edge supply chain solutions, EDGE reflects the unparalleled resources CSCMP offers today and symbolises our unwavering commitment to supply chain in the future.’

cscmp.org

CIPS SM AWARDS QUEEN ELIZABETH II CONFERENCE CENTRE, BARBICAN, LONDON | 31 OCTOBER

Chris Bell FCIPS, Commercial Director – City of London Corporation, one of this year’s judges, and winner of the ‘Procurement and Supply Management professional of the year 2016', will chair the day while presenters from the various winning organisations will deliver case studies.

www.cips.org/en-gb/event

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Inside Schnitzer Steel’s sustainable

supplier programme


Senior Director of Procurement Marcus Folino discusses how procurement plays an increasingly strategic function at Schnitzer Steel Written by Catherine Sturman Produced by Denitra Price


SCHNITZER STEEL

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hroughout the last five years, supply, including appliances, the mining and metals industry manufacturing scrap and other local has faced a number of sources of construction-related macroeconomic challenges and has recycling, for example. There’s a lot been focused on implementing new of growth coming from many areas.” technologies to provide significant By honing in on industry trends, cost control, cost management Schnitzer Steel has gained essential and enhanced optimisation. foresight in the re-evaluation of its One of the oldest companies operational platforms to deliver in the business, Schnitzer consistent positive outcomes. By Steel Industries, Inc., is investing in its procurement continuing to lead the capabilities, it has way, establishing sought to transform its an impressive procurement function Established in footprint, with from one which is approximately 100 somewhat tactical, Portland, Oregon in locations spanning into one which is the US, Canada more strategic. and Puerto Rico. With past senior roles “We purchased roughly across manufacturing, 400,000 end-of-life vehicles last logistics and strategic year, from which we harvest parts and sourcing operations, Folino’s role recycle through our platform. There’s as Director of Strategic Sourcing a lot of opportunity that is tied to our at logistics and transportation purchases of automobiles, the overall company Con-way (now part of XPO economy and the replacement rate of Logistics), fully opened his eyes automobiles,” explains Senior Director to the potential that procurement of Procurement Marcus Folino. can bring to organisations. “We also have a variety of other “At Con-way, I found myself programs and sources of metal rebuilding the strategic sourcing

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function that had already been created. Originally the focus was domestic, North American sourcing and later on, I worked with the international business and took the strategic sourcing function globally. It was a great opportunity and a good challenge, which led me to this role,” he says. Procurement transformation In order to transform the non-scrap procurement function into one which is increasingly strategic, Schnitzer Steel has placed significant emphasis on three main areas: its tools, its people and its processes to support the company’s ongoing strategy. Folino is nothing but complimentary about the team’s capabilities upon joining the organisation, but outlines where Schnitzer Steel had opportunities to enhance its existing approach “We had a solid and committed group of purchasing professionals at the business unit level. They possessed significant domain expertise in the mining and metals industry and substantial tenure within the Schnitzer business divisions.

“There’s a lot of growth coming from many areas” – MarcusFolino, Senior Director of Procurement

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They already were a group of people that had a strong work ethic, which is really representative of our company’s culture,” he says. Schnitzer’s people have remained a key pillar in the company’s procurement transformation, and throughout the past three years, the firm has introduced essential change management, incorporating lean concepts and process improvement, as well as standardised existing processes and invested in multiskilling its exceptional workforce. “We invested in further training for the purchasing group, and I brought in additional talent with specific strategic sourcing, project management and contract management expertise. From a timing perspective, we decided to recruit the sourcing expertise from the market alongside investing to develop it internally,” adds Folino. “One of the existing benefits to our organisational structure is that we maintained our purchasing staff co-located with the business. Consequently, there are many day-to-day working

relationships which we continue to maintain and further develop.” Supplier management Working closely with its supply base, Schnitzer Steel has leveraged its spend to effectively manage potential risks, as well as invest in new digital tools across its complex procurement processes. “We went through a very aggressive selection process with the focus on finding a platform supplier of procurement tools. From here, we implemented a contract management system and another module of this application to manage supplier data. While we were evaluating the supply base, we were running request for proposals (RFPs) and signing contracts,” Folino explains. “We went from an environment where the spend under contract was managed with limited procurement tools or systems, to one where we had a formalised policy, a procurement platform and a focus on contract management. Today, we have around half of our total spend under contract.” By implementing a supplier

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SCHNITZER STEEL

“We went through a very aggressive selection process with the focus on finding a platform supplier of procurement tools” – Marcus Folino, Senior Director of Procurement

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Schnitzer Steel has placed significant emphasis on three main areas: its tools, its people and its processes

management program within the first few months of its procurement transformation, Schnitzer Steel has also harnessed the capabilities of strategic suppliers to drive the consolidation of its supply base, reducing the number of suppliers by about half. “We segmented our supply base and those suppliers that we could develop by applying specific evaluation criteria. We also identified the suppliers that we could target

for consolidation. Through a rigorous process, we determined what our current supply base in each of our core areas of spend would be,” explains Folino. “We learned more about our suppliers, enhanced communication, and then managed their ability to execute,” he continues. “This whole process has been invaluable. Once we established the basic mechanics, we continued to integrate key internal stakeholders to help guide the direction of the

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Schnitzer Steel has approximately

100 locations services and goods that suppliers are providing.”

spanning the US, Canada and Puerto Rico

Expansion plans Aligned with its objective to grow the volume of materials processed through its platforms going forward, Schnitzer Steel is leveraging new technologies to deliver faster, more efficient, effective support across its procurement operations. “This year we have been seeing the benefits of the past few years of our purchasing and procurement transformation,” says Folino. “One area we are now looking into is supplier diversity programs. This has been rolled into part of our ‘Know

Our Supplier’ efforts. As we’ve implemented new technologies, we’re starting to capture better information on our supply base, which is now moving towards a supplier self-service model.” One of Schnitzer Steel’s goals is to drive increased volumes through its current footprint, whilst looking at ways to further its ambition to deliver sustainable working practices which benefit customers, suppliers, our people and the communities which we serve.

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How an Aloha culture steers procurement in the State of Hawaii


The State of Hawaii exists in a geographical and political situation unlike that of any other state of the USA. To be a leader there demands qualities of respect, vision and spiritual empathy with its people Written by John Oâ&#x20AC;&#x2122;Hanlon Produced by Denitra Price


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ike most people in Hawaii, when we spoke to Sarah Allen in the middle of May she was preoccupied with the rumblings of Kilauea. There are hundreds of islands in the Hawaii Archipelago but the ‘Big Island’, home to Kilauea, is the largest in area and the active volcano has created a lava lake that threatens to spill over – if it hits water enormous steam explosions that could send 10-ton molten rocks a kilometer from its crater. So it’s little wonder that Sarah Allen, the State’s Procurement Administrator and Chief Procurement Officer, in common with other government leaders, is concerned. Disaster management is very much within her remit. The remoteness of the islands means that food security is very important. If a hurricane were to close the harbors, food, already more expensive than on the mainland, would have to be flown in. In the longer term, the global food shortages that are predicted could impact Hawaii harder and sooner. “We have no food security here in these islands,” Allen says. “Disaster preparedness

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Sarah Allen Hawaii State Procurement Administrator/Chief Procurement Officer

Sarah Allen is the Administrator of the State of Hawaii Procurement Office and the Chief Procurement Officer for the Executive Branch. Allen’s expertise is in contracting, acquisition and financial management. From 2007 to 2013, she was a Senior Manager for ASI Government Inc., during which she acted as Executive Advisor to the National Geospatial Intelligence Agency. Prior to that, she was a Senior Acquisition Analyst from 2006 to 2007 for CACI at the Pentagon, and served in the U.S. Air Force as a Commissioned Contracting Officer from 2004 to 2006 and a NonCommissioned Officer at Hickam Air Force Base from 2000 to 2004. Allen earned a Global Executive Master of Business Administration from George Mason University, a Master of Acquisition Management from the American Graduate University, and a Bachelor of Commerce in Accounting and Auditing from the University of South Africa


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“Hawaiian culture is a simple sense of living life and taking care of each other and of the land” – Sarah Allen, Hawaii State Procurement Administrator/Chief Procurement Officer

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and improving our systems for procurement are two major areas that I have taken responsibility for on top of my other work.â&#x20AC;? And overseeing contracting and acquisition for an entire state is no small task. Allen is CPO of the executive branch and her State Procurement Office (SPO) serves as the central authority on procurement statutes and rules

Hawaii Stakeholders in Disaster Preparedness 2015

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for all government bodies of the State and all 21 CPO jurisdictions. Allen was appointed to this job in 2013 by then Governor Neil Abercrombie and after a rigorous reselection process was confirmed in 2017 for another four-year term by the current incumbent David Ige, and ratified by the State Senate.


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A leader’s journey How Allen’s early realisation that she had a talent for leadership brought her to Hawaii is a story worth telling. Born and educated in South Africa, she spent her first 10 years collecting, as she puts it, accounting, auditing and tax experience there. “As early as the age of nine I somehow had a

fascination with leadership.” Another early fascination, for space and aviation, brought her to the USA in 2000, where within five months of arriving she persuaded the Air Force to sign her up. “The Air Force put me into contracts, where I was able to do very well probably because of my background in finance and

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“Aloha is learning to hold every relationship tenderly. It is allowing courage to be defined while still maintaining grace. It is leading as a servant and operating in ways that unite” – Sarah Allen, Hawaii State Procurement Administrator/Chief Procurement Officer

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accounting,” she says. Through serving for six years as an enlisted person and a commissioned officer, she built up experience of working in contracts, and transferred as a contractor to the Pentagon working on classified army contracts. By 2007 Allen had transferred to the National Geospatial Agency (NGA) – “I like to refer to that as Google Earth for spies,” she quips. Not a bad description, considering that she was at the Agency at a time of some critical operations including the tracking and targeting of Osama bin Laden. “It was even more exciting for contracts and acquisitions which is what the federal folks call procurement,” she continues. Working under another woman leader there, at a time when the organisation was striving to justify its continued existence, she participated in the creating of cross functional teams across the 16,000-strong agency, and procurement was tasked to introduce ‘agile acquisition’. “I was lucky enough to be the executive advisor to the top procurement official and so I was integral with that program, managing all the

multiple cross functional teams and hundreds of subtasks within them.” In 2012 Allen left her job with the NGA and took herself to Hawaii. Why here? “Because I missed it, and it was a place I really felt at home,” she answers. We should explain that as new recruit, after basic training her first posting was to Hickam Air Force Base near the famous Pearl Harbor. On arrival, late at night, she was greeted by a senior airman who placed a lei (the traditional flower garland) round her neck. “I was disconcerted from the stress of basic training and not sleeping, just trying to survive and with no idea what I was in for. But as soon as I put my feet on the ground, with all the air smelling of flowers from the lei, I fell in love with the islands.” That love never left her. As she explains, people coming from the mainland either get it or they don’t. “It is a place where east meets west. Added to that we have this underlying beautiful Hawaiian culture that is a simple sense of living life and taking care of each other and of the land.” The contrast with the Washington environment was stark. Over there,

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Andrew Lum_Business Management Analyst

Carey Ann Sasaki_ Purchasing Specialist

Lori Cervantes

John Vedder

“From day one when I told the story I told them it’s really important that we have fun in this job” – Sarah Allen, Hawaii State Procurement Administrator/Chief Procurement Officer

Ruth Baker


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Hilo Training_Owen Kano and Mara Smith

the only thing that drives people is getting the job done. But in Hawaii the relationship always comes first. “I was looking for a place where I could find an elevated spiritual culture and I certainly find that here,” Allen says. This is not to suggest that Allen didn’t enjoy her work before. She blesses the Air Force for helping her overcome culture shock, teaching her what she calls ‘the heartbeat of America and American culture’, and giving her a sense of pride in belonging to a great nation that was very different from the ambivalence of a troubled South Africa.

Nevertheless, Hawaii clearly captured her heart. Its culture of ‘Aloha’ fits her management style. “Aloha is learning to hold every relationship tenderly. It is allowing courage to be defined while still maintaining grace. It is leading as a servant and operating in ways that unite.” Talking story When it comes to procurement systems, Hawaii is very young compared with the East Coast. When Allen arrived, the teams were working with antiquated systems and mindsets. Procurement meant no more than doing deals and buying things. “My experience on the federal

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side includes the entire acquisition life cycle so that was definitely a new idea that I was able to bring in.” Her instinct, budgets aside, was not to pursue a crash technology transformation program. The relationship came first. She felt she had to make her people realise their true worth. “In Hawaii relationships are started when you ‘talk story’. At my first meeting with the staff I shared a story about the ‘tree of procurement’, its roots representing the statutes and the rules, the trunk the Governor’s policies, the branches the departments and agencies and the leaves, all the transactions.” The people themselves were represented by the Pueo owl, unique to Hawaii and inhabiting the tree. The owl now appears on everything from T-shirts to PowerPoint presentations. “They really connected with that idea,” enthuses Allen. It

conveyed they were not just clerks but professionals. “We need to elevate procurement specialists in their own minds, and their communities and their leaders too.” So, there was indeed a transformation over her first four-year term. It has involved training, and Allen has been working hard to improve compensation levels: “They are now aware that their role is customer service, which is not how they used to see it. And right from day one when I told the story I told them it’s really important that we have fun in this job.” For example, sharing food plays a big part in the daily life of the department. Another thing Allen introduced was a certification program to recognise achievement. Twice a year Pueo certificates are awarded, and the annual procurement conference SPOCON that she created two

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years ago brings together procurement specialists from across the islands with contractors and other stakeholders. At the same time she introduced a procurement award that all the counties, state agencies and CPO agencies can compete for. “I haven’t got a big budget but I can give them training and I can give them an emotional lift up, support them mentally and assist them to elevate themselves.” The to-do list Allen has set herself a raft of goals.

One of them is to move towards an e-procurement system. Without access to the analytics and metrics she’s used to it is difficult to get vision of her spend and to prepare reports for the legislature. Many states, she observes, prefer agile e-procurement solutions, built on a self-funding catalog based model, over large-scale ERP systems. This is the approach to digitisation that she favors. “It would give us incredible power to transform, bring efficiencies and add transparency.” Still, she is very satisfied with the tools her team has created on a very

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SPO Awards


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small budget. Now that they have a life-cycle view of procurement and customer service, Allen is looking to introduce them to pricing analysis and contract law. “The multi-billion contracts and programs we work on are a fantastic opportunity for us to get involved with the economic sustainability of Hawaii,” she adds. As we saw, contingency management and food security are key areas of concern. Leveraging state food programs in collaboration with the departments of agriculture and defense would reduce the islands’ dependence on food from the mainland and stimulate local supply chains, and she remarks on the juxtaposition between the shortterm political view, and the long-term need. She’s also partnered with the Counties for Kauai and Big Island, as part of the Governor’s Executive Task Force on managing the floods and the lava, along with the Federal Emergency Management Agency (FEMA), to conduct compliant

procurements for federal aid. Hawaii’s main source of revenue is tourism, another area Allen sees scope for reform. The island’s 10 commercial airports have long wanted to group themselves under an airports authority and Allen is very committed to helping them to do that. “We need a focus on points of entry and exit. I want them to be really successful and to work seamlessly with the Department of Transportation, the governor’s office and the airport authorities.” It’s a shame, she adds, that the legislation to create a central authority has stalled over recent years. Despite Hawaii’s laid-back image, islanders are really hard-working. Their processes may not be familiar to outsiders but they are effective. For Allen, the Aloha spirit is about awareness of self-worth, but with humility. “I am still learning every day. Aloha has really helped shape me as a leader: it has taught me that while the mission is important, it’s subservient to the spirit of people and place.”

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REDEFINING

TRANSPORTATION

AND LOGISTICS

THROUGH DATA


For more than 80 years, Schneider has delivered unrivalled transportation and logistics services. Now the company is continuing to redefine the industry through data and cognitive intelligence Written by Dale Benton Produced by Andy Turner


SCHNEIDER

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chneider, one of the leading providers of truckload, intermodal and logistics services in North America lives by a promise to deliver for their customers. That promise is increasingly important in a world moving faster than ever, with continually rising expectations on service and partnership. It is essentially a promise to deliver tomorrow’s world today, and Schneider’s approach to innovation, technology and data science position it well to do just that. The company plays an integral part in the supply chain of many of the leading names in omnichannel retail, consumer goods, manufacturing and other industries. In order to continuously add value to this ecosystem, Schneider requires a level of technological expertise not often thought of in the transportation industry. Luckily for Schneider, it has a deep history of innovation and a solid foundation of “pragmatic

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innovation” driving its success. That’s what Shaleen Devgun, EVP & CIO of Schneider, feels differentiates the company and enables service like no other. “Our success as one of the largest truckload, intermodal and logistics services providers in North America lies in our ability to connect and get data from our digital assets,” he says. “But it doesn’t stop there – it then becomes a question of garnering intelligence from that data by asking what it is telling us and making informed decisions – all in near-real time.” Schneider has a long history of developing and implementing technology that helped transform the industry. It was one of the first companies to utilise a platform that could track movements of every tractor or trailer back in 1979, implemented satellite technology in the late 80’s, and introduced a selfservice track and trace capability in 1997. Furthermore, Schneider


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“TECHNOLOGY IS IN OUR DNA” – Shaleen Devgun, EVP & CIO of Schneider

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evolved from a mainframe to a more modern technical architecture that has helped drive much of the organisation’s growth. Devgun goes as far as saying that Schneider is in fact a technology company masquerading as a trucking company. “Technology is in our DNA,” says Devgun. “And where we are today, with over 10,000 tractors and over 50,000 trailers and containers – that we see as effectively digital assets – our future depends on leveraging

our platform to collect this data, and build on it through analytics, to create insight that we’ve never had before.” This approach to technology and innovation, with a sharp focus on capturing and utilising data, is part of a transformational journey that Schneider has been on since 2007. The company worked with Oracle to create a horizontally integrated platform, designed to connect and digitise not only Schneider’s value chain, but also its customer’s. It’s called the Quest platform,

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SCHNEIDER

“WHERE TECHNOLOGY MAY HAVE HISTORICALLY BEEN VIEWED AS A SOLUTION TO A PROBLEM, TECHNOLOGY IS NOW CREATING NEW BUSINESS MODELS AND OPPORTUNITIES” – Mark Rourke, Schneider’s Chief Operating Officer

and Schneider uses it to digest all of the information that is coming from its digital assets in the field and create operational insights. “With Quest we’ve created digitisation across our value chain. It connects to every aspect of our business and to our customers, and, more importantly, it connects our customers’ customers to them,” says Devgun. “Through the Quest platform, we are able to deploy advanced analytics and decision sciences to create and share insights across the most important aspects of our business, which are

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safety and business performance.” Technology adoption in transportation has accelerated and Schneider represents a company that disrupts and redefines the art of the possible. “Where technology may have historically been viewed as a solution to a problem, technology is now creating new business models and opportunities,” says Schneider’s Chief Operating Officer Mark Rourke. “It really reinforces our belief that technology has evolved to a ‘nerve centre’ component of our company versus a traditional cost centre.”


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Mark Rourke Schneiderâ&#x20AC;&#x2122;s Chief Operating Officer

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Devgun couldn’t agree more. “We are witnessing this in full force when it comes to the adoption of social, mobile and contextual technologies,” he says. “Innovation is driving changes and evolutions in the industry that enable nonindustry disrupters to come in and challenge the existing models.” So how does Schneider approach

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this changing landscape? With the same pragmatic approach that it has had for over 80 years, only in today’s world its very much centred around disrupting traditional models and ways of thinking. “We will always look at what’s changing and think of how we apply our pragmatic approach to it in a way that produces results for our


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customers, our drivers and associates, and our business” Devgun says. “We are constantly striving to drive value for our shareholders, our customers and our driver associates. So, we ask ourselves, ‘how do we create value for each of the actors in our ecosystem through the use of technology?’” “That’s what drives our

strategy. That’s what drives our thinking with technology.” A key component in any organisation is often one that is lost throughout the technology conversation – the people. Technology and solutions are only tools, but it takes the right people with the right skillset to drive efficiencies and deliver on a promise.

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DATA HAS NEVER BEEN MORE IMPORTANT FOR COMPANIES. AND IT’S NEVER BEEN HARDER TO MANAGE.

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DE L P HI X .CO M


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Devgun cannot stress enough how important a role driver associates play in the Schneider ecosystem. “To me, technology is going to help everybody in the organisation rise higher in the value chain,” he says. “It’s going to take away the transactional, and the commoditised pieces of their job, and make them more valuable.” This is a sentiment shared by Brian Stuelpner, VP of Strategy, Planning & Architecture. “When we talk about automation and cognitive intelligence, it’s about augmenting the individual,”

he says. “What we are trying to do is help our people be more effective, so that they can focus on the right things and drive value.” “This will be key to our success now, and in the future.” As a company that places its customers and drivers at the very centre of what it does, particularly in an ever-evolving space, the importance of understanding how their needs are evolving cannot be understated. With increasing power in the palm of their hands, the customer of 2018,

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in any industry, is one that demands instant gratification and is one that is much more in tune with what’s happening behind the scenes. This effect is what Devgun sees influencing buying behavior and an unparalleled understanding by customers of the nuts and bolts of the supply chain. “As they demand more information and greater access to that information, what impact does that have on the supply chain?” says Devgun. “Their

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expectations surrounding visibility have dramatically changed, and we are seeing this more and more in the e-commerce space. Our push into e-commerce with dual first-tofinal mile acquisitions in 2016 help highlight our belief that the growth of the e-commerce channel, and the platforms that enable it, are becoming extremely important and must be a focus area for us going forward.” E-commerce is only one of several examples of how technology is


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“OUR SUCCESS IS DEPENDENT ON OUR ABILITY TO DELIVER VALUE QUICKLY AND USE OUR AGILITY TO STAY AHEAD OF THE MARKET” – Brian Stuelpner, VP of Strategy, Planning & Architecture

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changing and transforming the supply chain industry. Blockchain, automation and cognitive intelligence are all key technology terms that are dominating the innovation conversation, and Devgun recognises that as more companies embrace technology, they must continue to understand what works, what doesn’t, and more importantly, what will best serve their customers. “Technology should never be adopted for technology’s sake,” he says. “We can talk about our pragmatic approach to innovation, but the real significance lies in showing how we can create real, tangible value for the actors in our ecosystem.” Technology has also redefined the idea of competition and how companies can differentiate from one another. For Stuelpner, in order to continue to succeed in this industry, a company like Schneider must be agile and be willing to take some risks. “The rate and pace of change is requiring a nimbleness not seen

before,” says Stuelpner. “Our success is dependent on our ability to deliver value quickly and use our agility to stay ahead of the market.” This has seen Schneider push its own capabilities as an organisation through innovative hackathons, design thinking and an adoption of agile – all focused on helping create a culture that learns, adapts and improves much quicker than ever before. “We’re developing our organisation and our associates, pulling in outside thinking, and challenging the status quo in order to drive us forward,” Stuelpner says. “As we look to the future – our future – we see one defined by automation, cognitive intelligence and aggregation. A marketplace is being created that requires us to think differently and invest differently to enable success. The disruption is all around us, but we see ourselves as having the ability to ‘disrupt the disruptors’ based on our technical know-how, our industry expertise and approach to driving positive change with our customers.”

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While it is impossible to predict the future of the transportation and logistics industry, Devgun and Stuelpner believe that whatever that future will be, it will be one defined by technology. As it embraces the future, Schneider can call upon more than 80 years of innovation and technology investment to help light the path forward and then completely redefine it. “We want to skate to where the puck is going to be tomorrow, not where it is today,” says Devgun. “Our belief is that through the use of our data analytics and technology, we can get there before anyone else. “At Schneider, I’d say we have a clear strategy and vision for the future, and as an organisation, we are investing and aligning our people to achieve that vision.”

“WE ASK OURSELVES, HOW DO WE CREATE VALUE FOR EACH OF THE ACTORS IN OUR ECOSYSTEM THROUGH THE USE OF TECHNOLOGY?” – Shaleen Devgun, EVP & CIO of Schneider National

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WHERE STRONG LEADERSHIP IS KEY TO LOGISTICS SUCCESS Linfox may have become a global leader in logistics, but it hasnâ&#x20AC;&#x2122;t forgotten its roots as a family business Written by Laura Mullan Produced by Charlotte Clarke


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n 1956 Lindsay Fox founded Linfox with just one truck in Melbourne, Australia. Fast forward to today and the company is regarded as a logistics giant, standing as the largest privately-owned logistics company in the Asia Pacific. Still owned by the iconic Australian family, Linfox’s footprint now stretches across the Asia-Pacific, with more than half of its growing team situated in Asia. Even with this acclaim, however, Linfox hasn’t forgotten its roots and remains now, more than ever, a company built on family values and compelling leadership. Andrew Johnstone, Operations Director at Linfox Thailand, says that, even as the company’s presence expands, Linfox’s foundation is one that will remain focused on those same meaningful family values that were instilled in the company from the beginning. “Whilst working at both Linfox Australia and Linfox Thailand, I’ve really seen the depth and breadth of how Linfox does business,” observes Johnstone. “The value that we have

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in our people and our leadership has allowed us to channel our vision from Australia through to Asia. “There are cultural differences, absolutely, but the fundamentals of doing business from a leadership perspective are very much the same,” he continues. “It’s about investing in great leaders, investing in partnerships, and bringing our vision to life to connect with our customers. “Fundamentally, I think one of our key differentiators is that we are a large business that operates with family values. We care about our people and customers like they’re our own family. Lindsay’s original vision of taking care of our people, our customers and building relationships, from back in 1956, still carries on in the business today and it’s stronger now than ever before. For me, that’s the key to the company’s success.” First joining Linfox in 2008, Johnstone understands the importance of strong leadership firsthand. Responsible for managing large-scale operations, warehouse management, supplier relations and more, he says that Linfox


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“Lindsay’s original vision of taking care of our people, our customers and building relationships, from back in 1956, still carries on in the business today and it’s stronger now than ever before” Andrew Johnstone Operations Director at Linfox Thailand

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2,500 Number of staff on Andrew Johnstone’s team at LINFOX

recognised early on that it needs great leaders to connect and inspire its large, diverse workforce. “As a non-Thai speaking leader in this country, I utilise all my skills and past knowledge to navigate cultural differences,” he explains. “When it comes to leadership it comes back to the fundamentals of focusing on the company’s vision and managing change through effective communication. “Pace of change is much quicker here in Asia and Thailand particularly,” he adds. “Although there may be differences, there are also lots of similarities – I think it’s important to understand that wherever you go people are universal and the way we need to lead comes back to people first.” For great leaders to succeed they also need a clear strategic plan to follow and it seems that Linfox has


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developed a sure-fire vision for growth. Clear to grow its footprint, the firm has continued to make significant capital investments throughout Australia and the Asia-Pacific region. In doing so, it seems the logistics giant has a meticulous plan for expansion and sustainable growth. “This investment demonstrates to both the country (Thailand) and our customers that we’re serious about doing business here, not just in the next two or three years, but long into the future,” Johnstone explains. “Part of our long-term strategy for growth also involves

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attracting new business and investing across the Asia Pacific region.” With compelling leadership at the helm of the company, this is not only transforming the firm internally, but also having a tangible impact on the customer experience. “From my perspective, when I talk about the family values, it’s about people, it’s about relationships,” notes Johnstone. “People are our number one asset. If we can invest in our team and give them the opportunity to grow and develop, we believe that they’ll be thoroughly engaged and care for our customers’


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“It’s about investing in great leaders, investing in partnerships, and bringing our vision to life to connect with our customers” Andrew Johnstone Operations Director at Linfox Thailand

needs on an authentic and genuine level. “The way you engage employees is by having great leaders,” he continues. “Every time we talk to an employee – a driver, a cleaner, a shift manager – it’s an opportunity to engage with them in a genuine, authentic way.” Personally responsible for a team of around 2,500 people, Johnstone says that the firm consistently invests in the upskilling and training of the team to create a workforce that is adaptable, agile and skilled. “Today, we’re investing in developing our leaders’ cross-functional capabilities so that they have transferable skills and can move from one role to another,” he explains. “This is because we don’t want to employ someone to just fill a vacant position, we are always thinking two or three positions ahead so that the employee has the opportunity to grow and develop. We want to build capability within our brand and become an employer of choice. “I believe we should hire for attitude and train for skill because bringing in the right people with the right attitude, the right mindset, and the right behaviour is key to success. My approach involves taking managers and developing them into leaders.” By creating a highly-skilled, driven workforce, this is also influencing the way that Linfox approaches key challenges such as health and safety. Safety is a top priority at Linfox and, as such, the logistics firm has created a dedicated Vision ZERO safety programme whereby it aims to achieve zero

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24,000 Linfox is Asia Pacificâ&#x20AC;&#x2122;s largest privately-owned logistics company with operations employing more than 24,000 people spanning 12 countries

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fatalities, injuries, motor vehicle incidents, net environmental emissions and also pledges zero tolerance of unsafe behaviour and practices. Since launching the programme, Linfox has reduced its Lost Time Injury Frequency Rate (LTIFR) by more than 90%. In Thailand, Johnstone says that whilst instilling a culture of safety and compliance has been a challenge at times, it was an important task because when it comes to safety, one injury is one too many. “Thailand frequently tops the rankings as the country with the

highest amounts of traffic incident rate in the world. Therefore, for us to see a year-on-year reduction in the number of incidents has been something that I’m extremely proud of,” Johnstone says. “My hope is that all of our people will do the right thing when no one’s watching,” he adds. “I want to ingrain the values and the principles of the organisation in our team so they truly understand the responsibility that they have to act safely, not only for Linfox but for themselves and their families. “In Asia, we have programmes

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to consistently improve the culture of safety and compliance as we don’t want our team to make decisions at any cost or put themselves in harm’s way to get a job done, so we’re educating our people – we have an extremely robust fatigue management policy, and we monitor our vehicles and driver hours. On top of this, we’re also partnering with our customers and the local authorities to ensure that we’ve got the best safety practices in place.” As well as promoting the highest safety practices, Linfox is also tapping into some of the industry’s most cutting-edge technologies to protect its people and support its customer relationships. By using state-of-the-art innovations such as driver monitoring, facial recognition, and fleet care, Linfox is making sure that its team operate in a safe and responsible manner. “We monitor our vehicles to ensure safety and we proudly partner with Michelin in Thailand. The fleet care programmes they offer are fully digitized and their monthly tyre inspections ensure our team are safe and our vehicles efficient at all times. “We also have a 24/7 monitoring capability which checks our drivers’ safety, performance, and efficiency,” explains Johnstone. “With this, we’ve been able to reduce incidents involving distractions and fatigue which are some of the biggest causes of road incidents in Asia. This investment has been made because we genuinely care about our people. For me, if we save one life it’s been successful.”

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â&#x20AC;&#x153;Fundamentally, I think one of our key differentiators is that we are a large business that operates with family valuesâ&#x20AC;? Andrew Johnstone Operations Director at Linfox Thailand

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1956 The year that LINFOX was founded

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Keen to tackle the pressing issue of sustainability and CO2 emissions, Linfox has also explored the use of electric vehicles, partnering with automotive behemoth Volvo. “We’re fortunate to have long standing partners in Michelin and Volvo who are aligned with our values and place the same level of importance on safety, efficiency and innovation.” Although challenges such as congested areas and unpredictable geography remain, the firm says it is striving to become more environmentally-aware. “We’re constantly researching and working on alternate fuel source vehicles and automation,” notes Johnstone. “In Asia, the region is increasingly looking for alternative fuel vehicle solutions particularly due to environmental issues such as air quality and pollution. At Linfox, we’ve partnered closely with Volvo, who are on the cutting edge for safety and innovation in electric heavy vehicle production. Anything we can do to reduce our emissions is absolutely being evaluated.” Whilst Linfox may have invested in state-ofthe-art technologies and implemented the very latest safety practices, the fundamentals of Lindsay’s original vision still ring true today. Looking to the future, Johnstone says that he is optimistic about the road ahead. “I would say that in the next five or 10 years, our relationship with our customers is going to be closer


S U P P LY C H A I N

and more developed than ever and we will also attract new business because of our strong ethos, family values, and commitment to innovation,” he says. “Our safety record speaks for itself and our leaders are doing a phenomenal job in driving change and leading our people in the right direction. “I get really passionate when I talk about leadership and our team because I genuinely believe that that’s what the business about,” he adds. “We can have all the technology in the

world but it doesn’t mean a lot unless we have passionate leaders who share and integrate our vision to ensure that technology is used correctly. Today, if you want to send products and goods you need to rely on transport systems and logistics, and these systems still, and will likely always, rely on people. I believe if we get the people right, we’re on the road to success.”

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PICTURE: OKOROKOVANATALYA


Keeping easyJet flying high

Written by Catherine Sturman Produced by Glen White

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Recently recognised as the best low-budget carrier in the United Kingdom, easyJetâ&#x20AC;&#x2122;s supply chain team seeks to ensure its aircraft continue to soar above the competition

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ecently recognised as the

best value airline in the United Kingdom, European travel giant easyJet has witnessed exponential growth. With tourism figures continuing to rise on a global scale, the low-cost airline has announced its aim to expand its holiday business and implement a sought-after loyalty scheme, bringing increased returns to shareholders and retaining its position as an airline of choice. However, whilst the business has flourished, it remains under increased pressure. Travellers remain driven by deals which are cost-effective and can guarantee exceptional service besides. The maintenance of its aircraft is area often overlooked, yet is the most vital element of all. Responsible for supplying the material needed for easyJetâ&#x20AC;&#x2122;s fleet, Elentinus Margeirsson, Head

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EASYJET

of Supply Chain Engineering & Technical Contracts, explains how the division works to ensure safety, drive quality results and align with core business values. “Our material classification can be broken down into three categories, Consumable Expendable (C&E), Consumable Repairable (CR) or Rotables. The first category is pretty self-explanatory. The second class is material that we try to re-use dependent if a repair is possible and

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economical. And the last category is our assets. Those we repair/ overhaul and use until either it is not possible or economical to repair. “If the material is high usage and/or critical to our operation, we will keep it on site and the list of materials we keep on site will depend on the volume of aircrafts going through there and the type of maintenance performed,” he says. Witnessing rapid growth year on year, easyJet’s supply chain


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team has grown considerably. Noting that the division previously outsourced a number of supply chain activities, it has invested in bringing in the right talent to harness the required knowledge to deliver exceptional service.

Fleet maintenance Situated at over 30 line stations, aircraft maintenance is routinely completed overnight. However, to ensure all work is completed in a timely

manner, the team works to supply all required material to the correct station or utilise stock already on site. As the airline is set to open a number of new stations this summer, a defined list of materials will also support the need to ship items to a particular station. However, this list will continue to grow with the number of aircraft, as well as the number of departures per station. The companyâ&#x20AC;&#x2122;s recent acquisition of Air Berlin, for example, led

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to a number of challenges. “We had to set up an operation of 25 aircraft within six months, so time was of the essence. We took the ex-Air Berlin aircraft over, and we required maintenance to be done to ensure that they were in line with our current aircraft specification and make them fit into our maintenance programme,” observes Margeirsson. “They were at different standards than our own aircrafts. We required some modifications to be done and the material and components needed for that modification were supported by the supply chain team. “Each year, there's the challenge that you will add on x amount of aircrafts which then will result in more maintenance events per year. This means more consumption of your inventory. Also, as aircrafts age, the inspections required to maintain those aircrafts increases which results in more consumption of material.”

Optimisation Utilising KPIs at service level, the airline’s supply chain performance

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is measured each month, which evaluates the turnaround time of components from repair back to serviceable state, to stock level at certain stations and how many times material shortage is involved in operational disruption. The airline uses AMOS to support its maintenance operations. “Our KPI’s are critical for us in order to see if we are improving on our delivery to the airlines operation. AMOS keeps track of all the work completed and work to be completed on the aircraft as per our maintenance program, which is approved by the authorities. “This industry is one of the more heavily regulated industries,” acknowledges Margeirsson. “We have strict guidelines on how we maintain our aircrafts and we are regularly audited by the Civil Aviation Authorities to ensure that we are in constantly in compliance with the regulation. We have to have traceability of all items bought and used. If there is a recall we need to know exactly on which aircraft the item was used.


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“Each year, there’s the challenge that you will add on x amount of aircrafts which then will require

more maintenance. This means more consumption of your inventory”

Elentinus Margeirisson, Head of Supply Chain Engineering & Technical Contracts

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â&#x20AC;&#x153;We had to set up an operation of

25 aircraft within six months.

We took the ex-Air Berlin aircraft over on lease, and we required maintenance to be done to make them fit into our

maintenance programmeâ&#x20AC;?

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“In the last five months, we have been exploring the option of acquiring an inventory optimisation software to help us with making better adjustments on what we need to support our operations. This is currently a request for proposal (RFP), but is something that we are hoping to achieve this year.” With the largest hubs at Gatwick, Malpensa, Berlin and Luton, the airline also looks at the consumption of each station, the type of aircraft operating out of a particular station, the number and frequency of aircrafts, and how many flights depart at each station. “This is combined with the maintenance work planned, which depends on the capability of the MRO contracted. We will come up with a list of items that we want to keep there to support the maintenance event and the aircraft operation. The challenges are always when you have these ad hoc findings which you don't have any historical consumption information can always be a pain,” Margeirsson says. Despite its challenges, its

maintenance operations continue to expand across Europe; from Ljubljana, Malpensa and Malta. Long-term, whilst its main inventory hub remains in the UK, the company will face a number of risks, which it seeks to address through a number of partnerships. “We are working with Cranfield University, for example, to look at our system setup to see if there is an opportunity to add another inventory hub within central Europe which could help us improve our service level, decrease the shipping time and shipping costs. The work is also meant to explore the implications that Brexit could have on our supply chain.”

Strength in numbers Throughout its expansion, easyJet’s recent long-term agreement with independent specialist AJW Group will also seek to enhance the efficiency of its existing fleet by providing the airline’s component maintenance, as well as the provision, storage and distribution of spare parts and material.

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“Our contract is structured in such a way that it anticipates that we will add aircrafts to the fleet. Once they are in operation the contract kicks in,” says Margeirsson. “Our contract with AJW covers purchasing, repair management and logistics. They handle our purchasing activities for material required for the aircraft we currently have in operation. Also they do the repair management of our rotables, which means once the component comes off the aircraft it is sent to AJW who then prepare the required documents and route the component for repair. “Within our contract we have items that are included in our rates with AJW,” he continues. “There are occasions where we don't have that included so we will cover those costs, on a time and material basis. The same goes in terms of logistics.” Whilst it is clear that easyJet demands a lot from its suppliers, it continues to place pressure on itself to drive results. Partnering with Lufthansa to support its maintenance and logistics services further,

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the German company supports easyJet’s inventory in Berlin. “With the addition of Air Berlin operation we are foreseeing that Berlin will be one of our biggest hub, therefore we have been working with Lufthansa Technik Logistics Services to have the require material on site in Berlin. We send our own inventory out there, they will receive it into the


PICTURE: BRASILNUT1

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system, keep track of it, and provide us with information on consumptions and movement,â&#x20AC;? Margeirsson adds. Additionally, easyJet partners with numerous other suppliers for its material and maintenance activities. Remaining lean and efficient across its operations, the company is predicting a 30% rise in profits across 2018 and has witnessed an

increase in shares over the last six months. EasyJet will continue to lead the way in the airline industry, drive high-quality services from the top, down, increasingly attract corporate and leisure travellers and remain ahead of the competition.

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REVOLUTIONISING THE SUPPLY CHAIN THROUGH DEMAND-DRIVEN PLANNING Written by C AT H ER I N E S T U R M A N Produced by R I C H A R D D U R R A N T


Shell Lubricants has ripped up the rulebook in supply chain management, fully disrupting the industry

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lobal supply chains are facing increased customer and portfolio complexity. Heightening consumer demands are leading companies to look at ways to transform existing processes to drive efficiencies, lower costs, provide quality customer service, all whilst lowering working capital and inventory. No business is more invested than Shell Lubricants. The global leader (in terms of market share and branded product) in finished lubricants for the last 11 years, continues to house most of its downstream business on a single instance of SAP, enabling the company to standardise its work practices on a global scale. However, growing complexities and ambitious business plans have led to amplified pressures across its supply chain operations. â&#x20AC;&#x153;I think the challenge for supply

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chains, especially global supply chains that are heavily networked, is really what to do with this complexity,” explains Global Planning Excellence Manager, Nick Lynch. “In 2013/4 Terra Technology, who are now part of E2open, published an annual cross-industry survey which showed that whilst the number of products sold increases, the total amount sold remains pretty flat in most industries. Therefore, as the volume sold per product goes down we can expect SKU level forecasting to get harder the more spread out a portfolio is. This is a trend we certainly recognise. The future is not likely to be simpler than our business of today. “In practical terms this means that with our traditional forecast driven MRP planning tools, we purchase raw materials, manufacture products and put inventory into the warehouses based on our forecast that predicts that we’ll sell it. In reality, the forecast is sometimes correct; often it is not even with best-in-class forecast performance,” he says. “Products that don’t sell to forecast tie up precious working capital and may

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become excess or obsolete inventory. Lubricants fills over 2mn bottles a day, With more than 10,000 saleable SKU’s and undertakes 30mn deliveries a year it is easy to understand the pressure to direct customers and distributors. that this may put on operations. Those Lynch’s role to drive Shell Lubricants’ products will have consumed capacity long-term strategy and subsequent and materials that could otherwise roadmap for its global supply have been used for other products that chain planning, spanning business we do need at that moment. These processes, systems and organisation may be products design, is therefore that weren’t in one that cannot be the forecast underestimated. which become “We’re also a firefight and supporting the marine expediting chase. business, as well as This bullwhip or 10,000 ocean-going customers are served every noise isn’t limited vessels that carry day at 43,000 Shell-branded just to our internal Shell lubricants at fuel retail stations supply chain. It any time. So, just is clearly visible in terms of scaling in our extended that, they’re just supply through to our suppliers. huge numbers,” he adds. “A strategy based around simply being “better” at forecasting was simply DEMAND-DRIVEN PLANNING not going to be viable in the long term. In 2015, Lynch sought to look at Working harder with our traditional the advantages of demand-driven MRP processes and tools would not planning, which would seek to be enough. We had taken almost sidestep such pressures routinely all the low hanging fruits already.” seen within traditional forecast With 40 lube oil blending, base oil and driven methods and enhance Shell grease manufacturing plants, Shell Lubricants’ supply chain capabilities.

30mn

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“WE USE INVENTORY BUFFERS TO BREAK THE BULLWHIP EFFECT IN THE SUPPLY CHAIN, AND SPECIFICALLY IN DEMANDDRIVEN PLANNING, WE DO NOT USE THE FORECAST TO DRIVE OUR TRANSACTIONS” – Nick Lynch, Global Planning Excellence Manager

By implementing strategic inventory buffers, typically in areas where inventory is already held, demand-driven planning works to decouple the supply chain, breaking down traditional MRP processes which create a bullwhip effect. “You see this happening where you have a slight change in demand on one end of the supply chain, and by the time that has been filtered through all of the different replenishment calculations that go all the way along the supply chain, the variation that people at the end of the supply chain

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feel is significant,” explains Lynch. “We use inventory buffers to therefore break this effect in the supply chain, and specifically in demand-driven planning, we do not use the forecast to drive our transactions. Instead, we set up a buffer, where we wait until we have actual demand, and then make a decision based on this demand.” Deciding to take a very different approach to that of Shell’s implementation of SAP in the mid2000s, Lynch adds that he wanted to see how the business would benefit in the face of ongoing cost pressures


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SHELL regularly seen in the oil and gas industry. However, in today’s supply chain climate, big changes programmes like this require very solid and credible business cases. Lynch required leadership and financial backing, and strenuously looked at ways to harness available data and support the required results. “We had to be absolutely clear on the business case and ran simulations around how demand-driven planning would work in a lubricant supply chain. There are very few industries doing this. Nobody’s tackled it globally yet, so I think Shell Lubricants is the first global supply chain to adopt this methodology in its entirety,” he says. “We’re talking about 30-plus key manufacturing plants around the world and several hundred stocking points, distribution centres, regional distribution centres, warehouses etc. These supply both local and networked markets, so accurate data was absolutely crucial. It’s a multi-year project of significant change management scale, which required significant commitment to drive this transformation.”

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NICK LYNCH

GLOBAL PLANNING EXCELLENCE MANAGER

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DEVELOPING EXPERTISE In order to gain further support to implement demand-driven planning, Lynch liaised with Shell Lubricants’ regional planning managers in the Americas, Europe, Africa and Asia Pacific (APAC) to discuss the business’s ongoing supply chain roadmap. “There was enough interest at that first meeting to warrant their support for doing the first of the detailed simulations, which was completed in the North American business,” he says. By partnering with consulting firm, SmartChain LLP, the business then

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worked to simulate 12 months of real business data to look at how things ran during this period of time. With this data, Shell was able to simulate what would happen with a demand-driven methodology, with exceptional results. Noting that SmartChain LLP has been vital in transforming Shell’s supply chain capabilities, the firm has also been instrumental in delivering essential expertise across its entire design, build and implementation. “I reached out to SmartChain back in 2014 to take a first look and educate myself on this topic,”


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“WE HAD TO BE ABSOLUTELY CLEAR ON THE BUSINESS CASE AND RAN SIMULATIONS AROUND HOW DEMANDDRIVEN PLANNING WOULD WORK IN A LUBRICANT SUPPLY CHAIN. THERE ARE VERY FEW INDUSTRIES DOING THIS” acknowledges Lynch. “I introduced demand-driven planning to the Shell business with SmartChain in April 2015, which is essentially when we formally started, and they have been, effectively, our consulting partner on this for the duration. “It’s a small team of very high-calibre, specialised individuals who have implemented demand driven planning before in various businesses, who could give us the benefit of a proven methodology of how to design, build and implement this. This was critical, because the size of the prize at Shell

– Nick Lynch, Global Planning Excellence Manager

could be anything between 20% to 30% reduction in working capital, garnered from what we simulated. With a lubricant business of 5bn litres, this is huge but we must also get it right. “SmartChain bring a wealth of experience and is actively supporting our global rollout. We’re live in Egypt, Spain, Italy, Turkey and our European Material Scheduling

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centre in Krakow. We’re currently working with Russia, North America, Malaysia and the Philippines.” TECHNOLOGICAL DRIVE Nonetheless, although the results from the North America simulation looked positive, Lynch explains that both the European and Asia Pacific management teams required the simulation to also be undertaken in these areas for further assurance. Tests were therefore undertaken at plants in Ghent, Belgium, as well as Shell’s Hong Kong plant and network. “They are all very different, with very different supply chains in terms of the customers they serve, the geography, the product portfolio, the networking, etc., but all simulations produced very positive results,” Lynch adds. With such positive test results, senior leaders tasked Lynch to source essential software to further transform the company’s supply chain. “There was no way we could support this with a planner’s favourite tool…MS Excel,” Lynch adds with a smile. Whilst material requirement planning (MRP) capabilities in traditional

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enterprise resource planning systems such as SAP and Oracle remain forecast-driven, Shell looked at industry software endorsed by the Demand Driven Institute, which could not only remain compliant with Shell’s IT standards, but conform to the demand-driven way of doing planning across its entire business portfolio. “The Demand Driven Institute is run by Carol Ptak and Chad Smith, who are the authors of the bible of MRP in its current form. They have introduced demand-driven MRP as a new chapter, where they have codified the structure for how demand-driven planning should be implemented,” explains Lynch. “The software had to be globally scalable, match the strict Shell IT strategy of how to buy software, and had to be cloud-based.” Narrowing its options down in late 2016, the company undertook extensive demos and tests, bringing demand-driven planning to fruition in under two years. Partnering with Orchestr8, Lynch gained leadership support and submitted the group investment proposal required to proceed


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with such revolutionary changes, in order to enable Shell IT and the software company to build the required infrastructure. “With Shell being on a single instance of SAP, it meant that with Orchestr8, Shell IT only had to build the interfaces from our host SAP system into Orchestr8 just the one time. Every country around the world is on the same system,” reflects Lynch. “We went live with our pilot in October 2017. So, March to October we completed the design, build and first implementation. That was a terrific effort by all the folks involved.” UNLEARNING OLD HABITS Introducing such a change from traditional processes; however, it remains clear that demand-driven planning will only remain successful if it is embraced by those at the helm. This is a challenge where Lynch remains confident the business will overcome. “We’ve put nearly 200 people in planning through certified demand-driven planner training and are taking them through a sensible change journey throughout

FACTS & FIGURES SHELL MAKES SELLS A WIDE VARIETY OF LUBRICANTS FOR THE AUTOMOTIVE, HEAVY-DUTY TRANSPORT, MINING, POWER GENERATION, CONSTRUCTION AND GENERAL MANUFACTURING SECTORS LEADING BRANDS INCLUDE SHELL HELIX, SHELL RIMULA, PENNZOIL, QUAKER STATE AND SHELL TELLUS SHELL LUBRICANTS FILLS OVER 2MN BOTTLES A DAY AND UNDERTAKES 30 MILLION DELIVERIES A YEAR TO DIRECT CUSTOMERS AND DISTRIBUTORS. SHELL HAS 40 LUBE OIL BLENDING PLANTS, FIVE BASE OIL MANUFACTURING PLANTS, AS WELL AS 10 GREASE MANUFACTURING PLANTS PARTNERING WITH CONSULTING FIRM, SMARTCHAIN LLP, ENABLED SHELL TO SIMULATE 12 MONTHS OF REAL DATA TO LOOK AT HOW THINGS RAN DURING THIS PERIOD, AND THEN SIMULATE WHAT WOULD HAPPEN WITH A DEMAND DRIVEN METHODOLOGY

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the implementation,” he says. “If you can take out the firefighting, and the noise within the business – the expediting, changing schedules, etc. – then the day in the life of the supply chain individual will feel quite different when this is fully implemented.” Demand-driven planning will be a distinct game changer for Shell Lubricants, and enable the business to better serve its customers, with a higher stock availability and a lower working capital commitment. “If you think about a change programme, this is changing the planning in 15 time zones around the world, as well as the different depots and planning locations. With the first implementation in October 2017, we will be finishing the bulk of the implementation in 2019 with just a couple spanning over into 2020. “Shell Lubricants is an enormous supply chain, and I think this will provide a huge competitive advantage for Shell,” concludes Lynch. “Once one major player has moved over to this, more and more companies will be forced to take a good look at their planning processes and consider whether to move away from 20+ years of forecast driven MRP and the industry that exists around that. “It’s a significant investment and a bold move, but the returns are very attractive for all.”

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The cloud-based

future of

supply

chain management

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Dan Bloch, Vice President, Diversified Industries, Financial and Supply Chain Solutions for Oracle in Canada, explains his excitement at what the likes of AI and cloud have to offer the world of SCM Written by John Oâ&#x20AC;&#x2122;Hanlon Produced by Glen White w w w. c a n a d a . b u s i n e s s c h i e f . c o m

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W

hen it comes to business computer technology, Oracle is ubiquitous. And when it comes to business applications, Oracle has a similarly strong presence with enterpriseclass products and platforms it has developed in-house, integrated with best of breed solutions it has acquired over the years. In areas such as supply chain planning, PLM, logistics, transportation, warehouse, and global trade management it has established itself as a provider of best-in-class, regardless of the backend ERP. Over the last several years the company has been on a journey to redevelop all of these capabilities for the Cloud – starting with CX, then HCM and ERP, and more recently SCM. Based in Canada, Dan Bloch is Oracle’s VP responsible for customers’ financial and supply chain needs, predominantly in Eastern Canada and the North Eastern USA, and across multiple industries. For him the cloud is not just the biggest opportunity facing Oracle, but a catalyst for change for almost every aspect of business 174

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and consumer life. “We are finding increasingly that with the accelerating speed of change, and emergence of disruptive technologies such as IoT, companies need a platform that can rapidly adopt new capabilities without having to undergo periodic, massive transformations. That platform is the cloud” In the case of IoT, the terabytes of data that now floods in from a myriad of IP enabled devices, RFID, GPS and other sources must be collected, consolidated and thoroughly analysed. Bloch adds: “This data has the potential to help a supply chain assess what it can do because we get better insight into where materials are prior to manufacturing, for example, and where my post manufacturing products are relative to reaching their endpoint.” The challenge lies in making all that data usable, he says, and many companies still have some way to go. Gaining insight from that information, and translating that into positive business outcomes is where Oracle differentiates


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“As soon as you start dealing with equipment, even if you’re not manufacturing that equipment, you create an entire supply chain situation” – Dan Bloch, Vice President, Diversified Industries,Financial and Supply Chain Solutions

itself. “We have identified the different industries and sub-verticals and are bringing out specific capabilities designed for each. This will always be a continuous journey, but the horizontal infrastructure that enables this is ready now.” For customers this is crucial. For example, a device on a forklift can detect that a piston is overheating, but without sophisticated predictive analytics that signal is meaningless.

And without the ability to translate that into action, such as creating a work order, complete with the right tools, material and besttimed dispatch, that signal by itself is just not useful. “Oracle is transforming that signal into real, actionable information and then integrating that into the right ERP and SCM processes,” Bloch says. “That’s what is unique.”

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Oracle ribbon cutting ceremony for its new Design Tech (d.Tech) High School – a public charter school that works closely with the Oracle Education Foundation, a non-profit organization funded by the company

The power of 5G, IoT and AI Communication infrastructure operators justified the capital cost of building out the 4G network on the demand for video streaming. Now they are looking to IoT: the proliferation of devices will require mobile networks that can handle an exponential growth in data. That’s what going to drive the investment in new 5G networks and their 100x speed and capacity. In Canada he sees these forces converging: “Business needs the information these devices can provide, and the ability for those devices to communicate over mobile networks, and to be able to service 176

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that information in a way that’s relevant to business goals.” Delivering these services in a cloud environment for supply chain is still relatively new. Oracle has been immensely successful with its traditional on-premise software. Major Canadian businesses are among the many that rely on Oracle supply chain solutions to produce and deliver products to their customers. The territory he looks after is geographically dispersed. Industries like mining and resources operate in remote locations, and for companies like one of the world’s largest


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gold producers, 5G connectivity will be crucial. “We have some great customers,” says Bloch. “They certainly understood where we are headed in terms of enabling IoT information into business practice. We have large commitments to one another to further that agenda.” Customer-led prioritisation The communications service providers (CSPs) themselves stand to benefit. They deal with huge amounts of diverse equipment, from their towers and signal boosting equipment to cable boxes, handsets and modems – even the devices that give cars mobile

connectivity and their data centres. “As soon as you start dealing with equipment, even if you’re not manufacturing that equipment yourself, you create an entire supply chain situation,” Bloch says. “In the old days, if there’s a failure somewhere, you would learn about it from a customer, then locate and fix it. Today the fault can be detected automatically. The next step is to not just see a problem, but to predict it, locate it, and resolve it automatically without disruption. The preventative capacity that it creates is amazing and all of

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Perspective matters The future asks more of business. A demand to look at the world from a whole new viewpoint. With a global network of over 2,000 supply chain consultants, Deloitte delivers supply chain management with new perspectives, from strategy through implementation. We serve clients around the world to help them improve their supply chain performance and increase shareholder value. A fresh view on addressing your most challenging decisions awaits at: HeartOfWhatMatters.Deloitte

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Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member Firms, and their related entities. DTTL and each of its member Firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member Firms. © 2016. For information, contact Deloitte Touche Tohmatsu Limited.


CANADA

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SCM BUSINESS DRIVERS INNOVATE

• Enable new operational thinking and support changing networks to free resources to perform more value-added activities.

CONNECT

• Link related business processes to create efficiencies and enable greater transparency.

SIMPLIFY

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• Fewer integrations, less training, and consistent upgrades will empower workers.

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this is enabled through the seamless integration of IoT, analytics and SCM.” The information might be embedded into existing work processes to enable action – or it can be made useful by applying artificial intelligence (AI) with no human intervention. Bloch says: “It’s the added insights that AI can provide in real-time that really makes the whole thing exciting, and that is why you are starting to see the lightbulb go off for leaders of supply chain. They see tremendous opportunities to take out cost, to improve service and to decrease cycle times. Budgets stay static at best, so their approaches have to be smarter and more cost effective. AI will enable many savings. I can react to a problem earlier with a less serious maintenance task and

not wait until it is more disruptive, costly or even catastrophic. I can reroute my production capacity based on a better understanding of the whereabouts of the problem, or dynamically solve my premanufacturing inventory issues.” Oracle is partnering with customers to drive innovation. “The specifics of a solution may differ but the benefits are not company or industry-specific,” Bloch continues. “These are people who see that the IoT investment and the software investment will drive value in their business. That is a vision we at Oracle share.” The majority of companies today have some sort of work order management

“Business needs the proliferation of devices in the areas where it makes sense to collect information, the ability for those devices to communicate over mobile networks, and to be able to service that information in a way that’s relevant to its goals” – Dan Bloch, Vice President, Diversified Industries,Financial and Supply Chain Solutions

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BENEFITS OF MOVING TO THE CLOUD COST REDUCTION

• Minimal upfront investment, subscription-based pricing

SCALABILITY

• Easy expansion with minimal risk

SIMPLICITY

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• The cloud vendor handles maintenance, and upgrades

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Founded in

1977

process, he says. They vary in the extent to which these processes are digitised, but whether they are running their enterprise on an Oracle backbone or another system, Oracle IoT and SCM solutions can be integrated without the need for a costly migration of their existing backbone. Of course, if that backbone were the Oracle Cloud, the capabilities would be part of the platform. Beneficial partnerships Oracle has an accreditation process for its implementation partners, with differentiation on the basis of their experience and the breadth, depth and value that they bring outside of

just IT implementation. In many cases a joint collaboration makes sense when approaching an SCM transformation in the context of broader corporate goals. Industry-specific know-how is of particular benefit. For example, it has a number of partners that are very active in Canada and North America. “One partner of ours is very experienced in implementing Oracle solutions across industries in Canada, and North America, so they can anticipate issues before they occur,” says Bloch. “For example, in the US there is a new accounting standard called ASC 606 which governs revenue

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“I am so excited about the wealth and the breadth of the capabilities we are bringing to market” – Dan Bloch, Vice President, Diversified Industries, Financial and Supply Chain Solutions

recognition and deferred obligations in customer contracts, similar to the IFRS 15 requirement. Given this particular partner’s expertise in auditing, they can anticipate the needs to collect contract level information during an ERP or supply chain implementation and make the appropriate design considerations up front to satisfy this accounting requirement.” Again, this is something that differentiates cloud from on-premise solutions, he says. “On-Premise software brings with it a greater 184

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burden, in resources and cost, of customisation and upgrading. To that extent its benefits are short term. In contrast, while the Oracle Cloud does permit extensive configuration and even the development of extensions, it does not allow the customer to customise. This is a good thing. While customers typically go through some change management to use the software the way it is designed, this ultimately that puts them in


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a highly sustainable place and at a much lower cost. It allows them to standardise whatever they can and still to differentiate in the areas they need to â&#x20AC;&#x201C; those areas that really create the identity and differentiation of their business. And most importantly, it allows then to continuously receive new capabilities and innovations without the need for complex and costly upgrades. â&#x20AC;&#x153;I am so excited about the wealth and the breadth of the capabilities we are bringing to market and the potential impact we can have on the Canadian

market. That we have Canadian data centres to provide these services will allay any concerns around data appropriation. We can service customers of every size and complexity. And we can help customers standardise and differentiate what makes their companies and products unique. I never want to suggest that we have all the answers. We are always in partnership with our customers, who are our best teachers. We love their feedback.â&#x20AC;?

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SupplyChain Magazine — June 2018  
SupplyChain Magazine — June 2018