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WHEN IoT MEETS LOGISTICSVisibility And Interconnectivity Of Tomorrow
LIGHT IN THE CLOUD
MOVING WITH THE TIMES
INTELLIGENCE BEHIND SUCCESS
ISSN 2010-4235 MCI (P) 121/07/2013 PPS1672/01/2013 (022917)March-April 2014
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SYED SHAH Editor
ISSN 2010-4235
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RENAISSANCE OF LOGISTICS
WHEN IoT MEETS LOGISTICSVisibility And Interconnectivity Of Tomorrow
LIGHT IN THE CLOUD
MOVING WITH THE TIMES
INTELLIGENCE BEHIND SUCCESS
ISSN 2010-4235 MCI (P) 121/07/2013 PPS1672/01/2013 (022917)March-April 2014
www.LogAsiamag.com
Asia is fast growing into a cosmopolitan habitat and frankly I have lost count on the number of holiday seasons that we have here. But unlike the days of the old where you did run the risk of missing the latest gadget because you did not join the festive shopping rush soon enough, today, e-retail has saved the day. It is purchasing power at the tip of your fingers, literally; anytime, anywhere and on demand. This is the technological renaissance that is sweeping today’s retail landscape and the ramifications that it has on the growing load on the logistical systems are massive.
Make no mistake; the competition is fierce with e-retailers all around the globe offering competitive shipping deals from China’s Taobao to Amazon. My Christmas shopping in 2013 was done in a matter of minutes (though I could only open them much later – read the previous editor’s note on this) and was shipped from vendors faster than ever. Internet stores and logistics partners email me notifications about shipping and delivery throughout that time.
With a single click or push, tracking systems tell me where my every shipment is, when it arrives and leaves each location. If I wished, I could even request different destinations or delivery dates in the middle. Not only that, efficient reverse logistics systems make returns a matter of slapping on a label and dropping a package off at a post office or delivery centre. The phenomenon behind this level of connectivity and standard protocols that make these deliveries and requests possible is coined by some analysts and experts as the “Physical Internet” or PI.
The term PI is a metaphor of sorts for the total network system of moving from the procurement of raw material source through every stop on the way to the end customer. This would be done through reverse loops, and even to, possibly, recycling at the end of a product’s useful life. For this to happen, companies’ supply chain and operations systems connect with logistics partners’ scheduling and tracking systems – all within an open global system. With this, the global system then encompasses the physical conveyances that move goods from one location to the next. Then to achieve full visibility in the supply chain network, smart machines, products, and packaging units of the Internet of Things (IoT) communicate with open information systems.
Of course, to explain it all here would be too simplistic. The process goes on with processes like live tracking in the PI to measure performance to optimise the entire system. Next of course would come to the issue of the confidentiality of data amidst all this.
With the rising demands of consumers, the logistics processes involved to meet those demands increases. I know this for sure because I’m expecting my Google Glasses that I ordered off Ebay on my iPhone to arrive at my doorstep on this coming Saturday, at 3.30pm, in a box, wrapped in red, with a blue ribbon, delivered by a delivery guy that will call me half an hour prior to delivery – while having to say thank you and telling me to enjoy that hot cuppa cocoa I’m holding in my right hand.
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www.LogAsiamag.comMarch-April 2014
[ STRATEGY AND BUSINESS ] 08
SMARTER, FASTER, SIMPLER – IoT FOR LOGISTICS In the logistics business of today and for tomorrow, the market place has transformed into a highly competitive one and companies need to stay ahead of the game and innovate for growth. By DEREK MAGGS, DANIEL FAULK and JOHANN SCHACTNER.
IoT AND THE FUTURE OF 3PLS 14
KEVIN TAYLOR takes a look at what lies ahead for 3PLs and how the movement of goods and communications networks will transcend to a new level with the IoT.
[ C-LEVEL ] 16
INTELLIGENCE BEHIND SUCCESS FABIEN GIORDANO shares his thoughts on risk management, business intelligence and the importance of entrepreneurship in the road to success with Syed Shah.
[ HANDLING AND STORAGE ] 18
MOVING WITH THE TIMES Every company functions differently according to its capabilities and operational needs. Thus, there is no one size fits all concept for an order picking solution as ALVIN YAP points out.
IMPROVED FLEXIBILITY, INCREASED EFFICIENCY 22 With innovative design features, Schaefer’s Exyz offers a multitude of efficiency advantages, flexibility and more storage capacity.
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CONTENTS
Logistics Insight Asia is published six times a year by Contineo Media Pte Ltd, located at 61 Ubi Avenue 1 #05-17 UB Point Singapore 408941. All rights reserved. Please address all subscription mail to Logistics Insight Asia at the above address, or Fax (65) 6521 9788. Annual air-speeded subscriptions for non-qualified subscribers is US$125. Single copies are available for US$25. Logistics Insight Asia Volume 8, Issue 2.
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[ SOFTWARE AND SYSTEMS ] 24
LIGHT IN THE CLOUD The global logistics industry is highly competitive, with cost and efficiency being key drivers but it was only until recently that cloud has become a differentiator for logistics companies. WILLIAM LAWS explains.
[ EDITOR’S COMMENT ] 01
RENAISSANCE OF LOGISTICS
[ INDUSTRY NEWS ] 04
• Asia Manufacturers Ended 2013 Strongly
• Menlo To Open Facility In Malaysia
• Beumer To Showcase Solutions At CeMAT 2014
• Supply Chain Reforms: The Right Path To Increased Global Trade
• RFID Market Grows 17 Percent In One Year
[ LAST MILE ] 28
CAPTURING THE ADVANTAGEAsia Pacific manufacturers who utilise transportation management software are rewarded with better internal visibility and greater collaboration, says HELEN MASTERS.
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] ASIA MANUFACTURERS ENDED 2013 STRONGLY News reports have shown that Asia’s manufacturing sector ended 2013 on a “strong note”, with expansion hitting mul-ti-year highs in export-driven Japan and Taiwan, but signs of moderation in China raise concerns about the outlook for 2014.
It is also reported that both official and pri-vate measures of manufacturing activity in China fell in December, reinforcing views the world’s second-largest economy lost some steam in the final quarter of 2013.
The HSBC/Markit Purchasing Managers’ Index (PMI) for China slipped to a three-month low of 50.5 in December, consist-ent with a dip in the government’s PMI to a four-month low of 51.0. Still, according to the reports, both held above the 50 point level that separates expansion from contraction.
That could temper some of the optimism about export-dependent countries such as Japan, where the last week the Markit/JMMA Manufacturing PMI rose to a seven and a half year high in December 2013.
In addition to this, many Asian econo-mies are expecting a pick-up in exports given signs that the US economy, a major market for the region, is on the mend. However, there were mixed signals in the HSBC/Markit PMIs.
Ear;ier this year, Taiwanese manufacturers posted the sharpest expansion of output
since April 2011, and new export orders rose. But in South Korea, new export or-ders dipped even as overall activity picked up to a seven-month high. In China, both the official and private PMIs showed export orders contracted in December.
The news reports said that data on earlier this month showed South Korea’s exports to China, its biggest market, grew 8.4 per-cent from a year earlier compared with 13.2 percent for exports to the United States.
“The stronger increase in manufactur-ing output suggests that growth will be sustained over the final quarter of the year, keeping the economy on track for a grad-ual recovery,” HSBC economist Ronald Man said about South Korea.
“But given demand from China has still not shown signs of picking up meaningfully, we believe the overall upswing in economic activity will be limited.”
Other PMI surveys showed the more con-sumer-driven economies of India and Indo-nesia continued to struggle after a difficult 2013, although there were some glimmers of hope. India’s factories lost momentum as softness in new domestic orders offset a pick-up in demand from abroad.
As a result, the HSBC Manufacturing PMI fell to 50.7 in December from 51.3 in the previous month. In Indonesia, manufactur-ing activity in December improved to 50.9 from 50.3, underpinned by expansion in output and new orders.
[ Many Asian economies are expecting a pick-up in exports given signs that the U.S. economy, a major market for the region, is on the mend. ]
MENLO TO OPEN FACILITY IN MALAYSIAMenlo Logistics has announced the opening of the new Shah Alam Section 15 warehouse in Selangor, Malaysia.
The facility will have 101,231 sq ft of stor-age space and employ 60 people locally. It is configured as a multi-user warehouse, providing inventory storage and manage-ment, local and regional distribution and additional value-added services. The facil-ity has 10 loading bays and features en-hanced security systems including closed circuit monitoring, sensor alarms, card-control access, and 24-hour, on-site secu-rity guards. The addition of this new facil-ity in Malaysia supports Menlo’s expansion plans and responds to the growth of its customers in the region.
“This facility supports our objective of
providing excellent capacity and a full complement of warehousing, logistics and transportation management and supply chain services here in Malaysia and around the world,” said Desmond Chan, director, South Asia, Menlo World-wide Logistics. “Malaysia represents an excellent growth opportunity for Menlo. As our customers continue to develop their businesses here, we are investing in, and establishing, an increasing pres-ence to meet those needs for quality warehousing and distribution services management.”
Multinational engineering and electronics company, Bosch, will occupy a section of the warehouse, with the remaining space earmarked for new business. In this new facility, Menlo continues to provide services
such as inbound receipt, inspection and storage of products, inventory manage-ment and order processing, order fulfil-ment for outbound orders and value added services such as kitting, packing, returns management, etc.
The Selangor venue was chosen in part for its advantageous location. The terminal at Port Klang, often referred to as the Gateway by Sea to Malaysia, is 18 km away while the Kuala Lumpur Interna-tional Airport is 47 km from the facility and Malaysia’s Central Business District, locat-ed in Jalan Wong Ah Fook, is a mere 23 km from the warehouse. Each of these desti-nations, are easily accessible using one of four highways: the Express Highway, Kesas Highway, Federal Highway and the NKVE Highway.
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BEUMER TO SHOWCASE SOLUTIONS AT CEMAT 2014
The Beumer Group is showcasing several new solutions at CeMAT 2014.
Beumer will be showcasing solutions including a belt tray sort-er equipped with new modules and functions, a more efficient drive system with reportedly significant increased efficiency and a completely redesigned machine in its stretch hood series.
Visitors will be able to see the 40m long BS 7 BT belt tray sorter in action with Beumer equipping the machine with a variety of modules and functions to demonstrate how it can accommodate users’ individual requirements.
At its trade fair booth, Beumer will be showcasing its comprehen-sive expertise, including fully automatic sortation systems such as the double-density tilt-tray sorter and the Crisplant LS-4000 high-speed loop sorter. These are used in postal and distribution centres and enable goods to be sorted quickly and gently. The cross-belt and tilt-tray sorters provide a high level of benefit for the user.
The Beumer Group supplies filling, palletising and packaging equipment from a single source. The Beumer fillpac, for exam-ple, can be incorporated flexibly into existing packaging lines. The bagging machine is equipped with a calibratable weigher. The electronic weighing unit ensures that the fillpac always achieves accurate filling quantities. A specialised software enables the weigher to communicate continuously with the filling spouts.
According to Beumer, visitors to the trade fair will also learn about Beumer customer support, which ensures that the user’s systems have a high level of availability, and optimises existing machinery with the latest software updates.
[ The Beumer Group supplies filling, palletising and packaging equipment from a single source. ] SOME THINK
OPTIMAL LOAD STABILITYCOSTS MORE. WE THINK DIFFERENT.At BEUMER we have a reputation for making things a little diff erent. Take the BEUMER stretch hood® transport packaging system. In a sector where energy-intensive shrink hooding or stretch wrapping is the norm, the stretch hood method represents the state-of-the-art sustainable alter-native. The result: better load stability, higher throughput and environmental protection, up to 10 times less fi lm consumption and 90% energy savings. For more information, visit www.beumergroup.com
Visit us!interpack 2014, Düsseldorf, GermanyMay 8 – 14, 2014Hall 12, stand D36
Visit us!CeMAT 2014, Hanover, GermanyMay 19 – 23, 2014Hall 27, stand H32
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A report released by the World Economic Forum, in collaboration with Bain & Com-pany, indicated that urgent implementa-tion of the Bali trade accords and deeper behind-the-border reform is needed to sustainably meet world food demand, and foster industrial development, according to Enabling Trade: From Valuation to Action.
The reports say that government leaders need to step out of traditional ministerial silos to lead value-chain reforms and reap the benefits in domestic investment and global trade.
The report also finds that supply chain inefficiency contributes significantly to the 1.3 billion tons of food lost each year. At-tacking these barriers would help improve the livelihoods of billions of the world’s poorest people, and cut emissions, energy and water use. Lost or wasted food costs over $750 billion per year. Yet, agriculture and consumer policy remains focused on production and retail improvements, with insufficient action on supply chain and trade connections.
Major manufacturing investments could be unlocked by accelerating cross-border connectivity. Overcoming deep competitive differences, automotive executives align around the trade priority of faster and sim-pler border crossing. According to the re-port, roughly $6 billion is spent each year by the automotive industry on inventory-carrying costs at borders. If redirected into product development, this could pay for up to six new car launches every year.
“The report highlights an important new opportunity for trade liberalization and economic growth, combining border and behind-the-border reforms to strengthen the competitiveness and job-creating potential of key economic sectors,” said Richard Samans, a Managing Director of the World Economic Forum. “Such a strategy has the potential to help countries and regions translate the recent WTO agreement on trade facilitation into tangible economic gains.”
The report’s call for implementing supply chain reform builds upon earlier Enabling Trade findings, that reducing supply chain barriers could increase global GDP six times more than eliminating all tariffs.
The report highlights bright spots of po-litical will, including the Pacific Alliance
in Latin America, where deeper economic integration and supply chain facilitation are being prioritised at the presidential level. Improved border management, a primary focus of negotiations at the last World Trade Organisation’s Ministerial Confer-ence in Bali, is emphasised in the report’s call for accelerated co-development of e-logistics and smart customs systems.
“The WTO agreement announced in Decem-ber in Bali was a tremendous step toward trade liberalization and efficiency,” said Mark Gottfredson, a Partner at Bain & Company and co-author of the report. “Now is the time for governments and businesses to take ac-tion on the detailed and difficult work ahead.”
The Enabling Trade: From Valuation to Ac-tion report is based on pilot agricultural programmes in India, Kenya and Nigeria, an automotive CEO dialogue requested by the WTO, and supply chain surveys and case studies conducted with business and customs administrations. It illustrates: • In poorer regions, 94 percent of food
loss and waste stems from supply chain inefficiencies. Yet only five percent of agricultural funding goes to postharvest improvements.
• Supply chain improvements increase flexibility and early-stage value for food – and cut loss.
• Overly strict product standards, poor transportation infrastructure, border delays, and poor business climates are the main supply chain barriers for agri-culture.
• Border crossing processes are priorities for automotive trade reform. For exam-ple, pallets shipped wet from Western Europe need reweighing when dry at the Russian border.
• Simplifying parts re-export is another automotive trade priority, notably for pooled equipment.
• Consistent safety and environmental standards in the EU/US would save bil-lions – an important goal for the TTIP negotiations.
• The Pacific Alliance, representing Chile, Mexico, Colombia and Peru, promises to create a 200 million people, $2 trillion market, if supply chain reforms continue.
• Better border management – “smart bor-ders” – can dramatically improve supply chain efficiency. In Thailand and Kenya, process improvements have more than halved export times.
SUPPLY CHAIN REFORMS: THE RIGHT PATH TO INCREASED GLOBAL TRADE
[ Supply chain improvements increase flexibility and early-stage value for food – and cut loss. ]
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LogiSYM 2014LogiSYM is the region’s first Supply Chain Symposium and Summit, focused on bridg-ing concepts, practice and technology in Supply Chain management, to real world im-plementation and benefits that result in in-creased Supply Chain pipeline velocity, prof-itability and performance. The symposium was held last in Singapore on March 26 and 27 at the National University of Singapore.
Coupling supply chain practice with input from specialist academics from the region, the event was a resounding success with more than 250 attendees from Singapore and the region. It has established itself as a platform for mid to senior level Logisticians from all areas of our very dynamic profes-sion to share real solutions, network, devel-op and learn new skills that they can apply.
Supported by major supply chain compa-nies like Toll and DHL, participants of the event have asked the organisers to keep the momentum going by arranging a num-ber of smaller activities throughout the year until the next symposium.
For more pictures and information LogiSYM, visit www.logisym.com
Supply Chain Dictionary, iPHONE and Android AppsThe SCM Dictionary that can be accessed from the Society’s home page at www.lscms.org is now an iPhone and Android app. The
RFID MARKET GROWS 17 PERCENT IN ONE YEARNew research conducted by IDTechEx finds that the RFID market – including tags, readers, software and services, for passive and active RFID – will grow from $7.88 bil-lion in 2013 to $9.2 billion in 2014. Most growth is due to active RFID/RTLS systems, interrogators, and then tags, in terms of total money spent.
Passive UHF tags see rapid growth, from a total of just over 3 billion tags in 2013 to 3.9 billion tags in 2014. IDTechEx find that 2.48 billion passive HF tags will be sold in 2014, although at a much higher average sales price than passive UHF tags, so the money spent on HF tags will be almost ten times more. The highest volume sector for passive UHF systems is retail apparel, which still has
some way to go with RFID penetrating only about seven percent of the total addressable market for apparel in 2014.
After extensive interviews with suppliers, IDTechEx find that there are now emerging or established leaders in most positions of the value chain across the different tech-nologies – yet still very few companies have sales of more than $100 million.
IDTechEx expect that the RFID market will reach $30.2 billion in 2024. This re-search was conducted for the report RFID forecasts, players and opportunities 2014-2024 which provides the key data and analysis in all the main applications, giv-ing an unprecedented level of insight into
the total RFID industry and what is really happening. With over 90 tables, the report provides granular insight into the sector.
RFID and the Internet of Things will also be addressed at the IDTechEx event, Inter-net of Things & WSN Europe 2014, taking place on the first to second of April in Ber-lin, Germany. The problems, opportunities and technical developments are covered in presentations from companies such as Arup, Volvo, ABB, Bosch, Disney, IBM, Intel, ARM, Cisco and many others. Attendees will also learn how wearable technology and printed electronics are part of the big picture enabling the IoT – but of course al-ways from the angle of what is needed by end-users.
[ A few members of the organising committee of LogiSYM. ]
application is available free from January 2014 and can be downloaded from the iPhone and Google Play stores.
For more information on this and other developments at the Society, please feel free to visit our website and subscribe to our fortnightly newsletter.
STEi launches 6 + 6 programmeLSCMS Corporate partner STEi Institute has launched what is an industry first in Singapore for overseas students studying Logistics and Supply Chain Management in one of the world’s leading logistics hubs.
Students who enrol in the full-time pro-gramme with the school will be issued with a 6 month training work permit
that allows them to work as part of their course. This is a boon for foreign stu-dents as this is the only non-hospitality related programme in Singapore that allows students to work. Supply Chain Management is a profession that requires hand-on experience and students will now be able to get this.
For the employers of these students, it means that they will be able to hire train-ees throughout the year without having to have gaps in between. This allows for tasks and projects to be planned without starts and stops.
Companies interested in coming forward to hire these students as trainees can con-tact the Secretariat at [email protected]
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Imagine running a logistics busi-ness with consolidated real-time datasets based on live data feeds from operations. Imagine being able to analyse these mountains of data with ease and speed to drive better business outcomes. What if it was possible to predict and act rather just react? What if it was possible to do fleet optimi-sation and supply-chain tracking and tracing in a holistic real-time fashion? What if it was possible to pro-actively influence driver be-haviour to enhace safety or reduce fuel usage? What if it was possi-ble to operate a logistics busi-ness network or hub where each collaborating participant helps to increase the throughput and foster busi-ness and societal opportunities while infra-structure, space and investment means are more and more limited? Maybe it is time to stop imagining and start doing.
The new enterprise reality is real-time man-agement. Logistics companies need to stay ahead of change and innovate for growth. The need is to operate smarter, faster and simpler. Let us illustrate this notion through a non-logistics example. Many of us travel frequently by air (maybe too often). Let us assume a disruptive technology comes along that reduces trans Pacific flights to one hour. What will happen to airline business models? Will they still offer business class with full meal service? What size aircraft will be op-erated? What will the service frequency be? Suddenly the staff duty cycle problem disap-pears. How do they retain passanger atten-tion to maximise additional sales opportuni-ties? This example is an extreme one. But it illustrates the impact of “real-time” and it is
SMARTER, FASTER, SIMPLER - IoT FOR LOGISTICS In the logistics business of today and for tomorrow, the market place has transformed into a highly competitive one and companies need to stay ahead of the game and innovate for growth. By DEREK MAGGS, DANIEL FAULK and JOHANN SCHACHTNER.
happening to business information in your industry. Let us take a closer look. Transportation and logistics companies are operating in the middle of a once-in-a-generation shift characterised by profound and rapid changes. A number of changes are converging.
An emerging middle class is placing enor-mous strain on natural resources, social ser-vices and infrastructure. Consequently every aspect of your business strategy and execu-tion such as supply chains and employees will get stretched and overloaded. Business-es will need to find a way to manage existing and shared resources better.
The way information is created and is con-sumed has changed. There are now more mobile phones than people. Business will need to run in “real-time” to facilitate person-alised engagement with their end-customers and employees.
Forecasts by analysts indicate anything from 12 billion to 50 billion devices will be capable of connecting to the internet by 2020 (Internet of Things) generating massive amounts of data. Unlocking the secrets inside this data will present break-through opportunities for logistics busi-nesses. Businesses will need to find a way to manage “big-data” and find ways to use it to their advantage.
The technology industry in the middle of a fundamental digital transition. Intelli-gence is being embedded everywhere. The IT stack is being disrupted with software innovation becoming a pervasive priority. The result of these trends is the unprec-edented empowerment of people – as consumers, as employees, as citizens, and as societies. This thereby fundamen-tally changes how people work and com-municate. Logistics businesses are, or will soon be, at an inflection point. Businesses
[ With “Smart Logistics”, you can transform how you plan your routes, maintain your vehicles and schedule your people to improve service offerings while driving down cost. ]
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[ Industry estimates have put the value at stake for IoT at over $14 trillion. ]
[ A well-designed end-to-end IoT solution needs a single “Application Enablement” and “Device Management Platform” to monitor, analyse and automate your business in real-time. ]
can either be swept away by these changes, or view this as an opportunity to rethink the future.
SMARTER AND FASTERLet’s look at some of the transformative use cases of Internet of Things (IoT), many of them applicable to the lo-gistics industry.
With “Smart Logistics”, you have real-time information from your vehicles and cargo. With this information, you can transform how you plan your routes, maintain your vehi-cles and schedule your people to improve service offerings while driving down cost.
Protecting “Critical Infrastruc-ture” is vital for logistics op-erations. Few corporate chal-lenges have more urgency than the complex threats that include physical and cyber security, which are hard to detect with conven-tional technology. Security breaches, whether large or small, endanger the public, damage reputation, reduce profitability, destroy investor trust and undermine the abil-ity to compete. Uninterrupted availability of information technology and operational systems is dependent on real-time secu-rity controls that correlate events, alerts and incidents across all physical and cyber domains, including video surveil-lance and industrial control systems.
With “Connected Asset Management”, get visibility and manage assets on the edge including those that are not easily ac-cessed. Detect, isolate and recover from system malfunctions using real-time fault management without having to send a technician.
With “Remote Service Management”, you can improve responsiveness, minimise service and support delivery costs, and increase service revenue. How? Predict faults, quickly respond to maintenance conditions, and take proactive action be-fore failures require expensive repairs. Dispatch techs based on up-to-date and detailed information for performance-based service.
All these transformative use cases need M2M connectivity, event stream process-ing, big data, analytics, cloud, and mobile technologies to implement.
Industry estimates have put the value at stake for IoT at over $14 trillion. Transpor-tation and retail: both are industries where efficient and effective logistics are critical for business success and are amongst the top five industries investing in IoT efforts. Industries are on the move, and your com-petitors are on the move.
Logistics companies should consider the following:
Margins Being SqueezedPeople costs in business processes are high and require efficient management. People are slow and/or error is inevita-ble. People should be used where there is highest need/value. People can be routed, scheduled and optimised for greatest efficiency according to insight from machine data.
New Business Models And Revenue OpportunitiesIt is not just about margins. Existing com-panies and business models are under threat. There are new business opportu-nities from smart use of IoT. An exam-ple would be logistics companies with a
traditional B2B focus only that can now move towards B2B2C.
Multiple Vendors Competing For BusinessOperational technology device manu-facturers now provide software and ad-ditional services that was previously the domain of IT companies. Telcos and net-work providers also look to provide ex-tended services for new revenue streams. Ultimately logistics companies have to deal with multiple vendors for an end-to-end solution.
DO THINGS GET SIMPLER?Logistics companies have to deal with multiple vendors for an end-to-end IoT solution. It is very unlikely that devices, network carrier services and device con-nectivity can be provided by a single ven-dor that will cover all business needs. But there is one key area of an end-to-end IoT solution where organisations do have to ability to reduce complexity significantly. A well-designed end-to-end IoT solution needs a single “Application Enablement” and “Device Management Platform” to monitor, analyse and automate your
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business in real-time. It needs to bring together not only smart device informa-tion but also data generated by opera-tional and business support systems. It all starts with an IT platform strategy that improves and integrates your processes and data, enables real-time analytics and visibility, and minimises IT costs.
Breakthrough solutions such as a real-time in-memory computing platforms are available. Such a platform can help by un-locking your data and the enabling deep, real-time insight needed to run a logistics business. Such solutions can also be de-livered as a cloud-based solution to drive down costs.
INNOVATIONMany organisations who have gone through a protracted period of defensive cost cutting over the past few years have emerged with a new imperative to start strategising again and looking at the big picture relative to growth. In doing so, it is clear that they want to determine how they can grow, be healthy and profitable with-out having to build back many of the costs they have already eliminated. Deployed IT systems frequently contribute to inefficien-cies and impede the visibility needed to improve operations.
During the course of our work we have the privilege to engage with a number of lo-gistics organisations in the contract logis-tics, ports and fleet management industry segments. Listening to and seeing the
[ The objective of the “smartPORT logistics” project is to optimise both traffic and logistics operations in order to allow larger quantities of goods to be trans-shipped in the port area. ]
challenges faced by senior business man-agers and how they innovate to solve these issues are very insightful.
CONTRACT LOGISTICS AND FLEET MANAGEMENTOrganisations need to process large amounts of data (generated by telemat-ics, shipment tracking, etc.) in real or near real-time to improve operations visibility. Real-time in-memory database and technol-ogy solutions help these organisations to monitor high volumes of highly variable in-ternal and external data. Application areas are many and varied, and typically best il-lustrated by looking at customer examples.
First, let’s look at a leading contract logis-tics provider in Australia. This customer delivers sophisticated supply chain solu-tions to customers in 10 countries in the Asia Pacific region with 19,200 jobs, 5,000 vehicles and four million sqm of warehous-ing. They embarked on a big data-crunch-ing proof-of-concept exercise with the aim to enable its operational control centres to act in real and near-real time on the ever growing volume of operational data be-coming available.
The core technology deployed is a comput-ing layer on top of an in-memory database solution to optimise complex sensor data processing. The computing layer consists of REST services as well as stored procedures which facilitate storing, querying, analysing, and visualising telematics data feeds gener-ated from on-board devices in vehicles.
Proof-of-concept use cases focused on three key business areas, namely safety, environment and operating efficiency. Pro-ductive deployment should drive benefits in the areas of:
Fuel Optimisation Fuel is a significant expense. Monitoring capabilities of telemetric information will allow the company to save fuel by advis-ing drivers on the best refuelling strategy considering service delivery requirements and fuelling agreements with suppliers. Monitoring of idling time will drive actions to reduce unnecessary idling.
Advanced Supply Chain and Fleet Analytics Supply chain execution and fleet resources are at the heart of operations. Data vol-umes are expected to grow substantially as a result of growing deployment of track and trace, event management and telem-etry. High performance analytics capabili-ties are required to analyse data and react in real-time to provide better customer ser-vice and improve operations.
Congestion/Toll Analysis Congestion is increasingly a problem. The ability to scrutinise congestion trends and take action (for example renegoti-ate delivery windows with customers) will improve vehicle utilisation and customer service. Logistics companies operating in cities use a lot of toll roads and as a result pay significant tolls. An ability to analyse vehicle flows on toll roads can show where and when paying to use toll roads is not
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negotiate better toll conditions with road operators.
Asset Utilisation Increased asset utilisation is a key con-tributor towards profitable growth. Having a core operations data platform (combin-ing transportation management and asset management data) will enable companies to operate a single fleet optimisation tool that will enable fleet sharing across busi-ness units. Predictive analytics will help to reduce out of service truck days.
Driver Behaviour Monitoring Monitoring events (historical or real-time) such as long stops/long drives, hard brakes, high speed driving and vehicle unresponsiveness are important safety indicators. Identifying clusters of safety concerns over time periods and thereby re-gions of hazard can contribute an organi-sation’s safety efforts. Such a capability might enable companies to negotiate bet-ter insurance premiums. A second customer example is ARI. The vehicles that many companies use every day represent a vital business asset and a major investment that must be managed effectively. That’s something ARI – a glob-al fleet management company – knows all about. This family-owned business man-ages more than 952,000 vehicles in the United States, Puerto Rico, Canada, Mexi-co, and the United Kingdom, and together with its global partners, more than two million vehicles worldwide. ARI’s custom-ers include delivery companies, govern-ment agencies, power utilities, even large railroads. Certified technicians in ARI’s customer contact centres, for example, can diagnose a vehicle breakdown and quickly determine the best way to han-dle the problem. Other solutions range from complete maintenance services to helping companies gain better fuel econ-omy. In part, the company maintains its reputation for superior service and value by making the most of its vast data re-sources. ARI can tap more than 14,000 data points associated with vehicle main-tenance alone to help companies answer the question: should I repair this truck or replace it? The challenge was how to lev-erage that data to differentiate them and increase the quantifiable value delivered to customers.
With multiple transactional systems, clients located around the world, and data volumes doubling every 14 months, it was clear to ARI leadership that the company needed a comprehensive data manage-ment strategy. Further, ARI wanted high performance analytics capabilities in order to better serve the company’s still
growing customer base. ARI decided to adopt an in-memory data platform with real-time analytics and visibility solution capability.
ARI’s customer contact centres handle up to four million calls a year – and do so with industry-leading service metrics. Today, these centres use real-time information to help ensure that customers receive road-side assistance even faster. ARI can also perform cost analysis and benchmarking in a matter of seconds – enabling custom-ers to reduce their costs and gain greater fleet efficiencies. ARI is operating its call centres with greater staff productivity, a higher first-call resolution rate, and a low-er cost per transaction. Company officials estimate a five percent reduction in total overhead costs.
Other benefits include a 360-degree cus-tomer view and the ability to make faster and smarter business decisions. For ex-ample, a year-end activities report used for business planning that once took more than 24 hours to run now can be complet-ed in just three or four seconds.
SMART LOGISTICSLogistic hubs, whether in the city, at the airport, or harbour, always aim to increase the flow of traffic and goods. “smartPORT logistics”, a research initiative by SAP, Deutsche Telekom, and Hamburg Port Authority addresses this topic. With 121 million tons of goods being moved within the Hamburg port’s ecosystem per year and 33,000 trucks running there on an average day, optimising the port’s opera-tions can contribute to further increasing the volume of transported goods, even while space and infrastructure are limited.
The “smartPORT logistics” pilot project has resulted in a comprehensive IT plat-form that incorporates mobile apps and makes it possible for traffic information and port-related services to be accessed from mobile devices such as tablets and smartphones.
The objective of the project is to optimise both traffic and logistics operations in or-der to allow larger quantities of goods to be trans-shipped in the port area. Road capac-ity within the port of Hamburg is restricted and the options for modifying the roads to take more vehicles are limited. Therefore Europe’s second-largest container port urgently requires an efficient traffic man-agement system to continue growing.
During the first test phase, 30 trucks were fitted with tablets and linked up to the “smartPORT logistics” system. The system supplied the truck drivers with real-time traffic information from HPA’s Port Road
Management System and details of avail-able parking space in the form of current, personalised messages about the traffic situation in and around the port area. The participating freight-forwarding compa-nies were also able to track their transport orders in real time. The provided informa-tion coming from different sources was ag-gregated in a private cloud (e.g. concrete traffic information, status information re-garding port and traffic infrastructure (e.g. blocked bridges or terminals), parking in-formation and a messaging and broadcast-ing system). Consequently loT was a sub-stantial aspect of this Smart Logistics field trial. As the system works with ‘Geofence’ notification method, only relevant mes-sages are transmitted to driver and the dis-patcher of the freight carrier. This concept prevents the usual information overflow and multi-channel data. With respect to the latter, the second test phase was ex-panded to include on-board unit system in-tegration. Hereby, the user group emerged to more than 100 truck drivers and trucks from around four carriers, around 50 park-ing spaces and dispatching personnel from truck stations.
The services and technical equipment sup-plied for mobile use during the field test proved to be very practical and were used intensively by the test participants. The fact that the freight planners and truck drivers were able to communicate more ef-fectively meant that there was a significant reduction in the time required to respond to traffic disruptions such as diversions due to bridge closures or to instructions to proceed to an alternative truck-holding area elsewhere on the port site. If more drivers use the system in the future, the waiting times for trucks will be reduced and there will be fewer jams within the port area and on the approach roads.
This successful cooperation with the Port of Hamburg is an excellent example of how IT can improve the efficiency and competi-tiveness of logistics hubs such as ports.
Innovative logistics organisations are in-creasingly using advanced technologies such as real time in-memory data platform capabilities to make sense of Internet of Things data in order to create a competi-tive edge. These technologies are increas-ingly becoming a ticket to play the big question is: “Where is your organisation in this game?”
Derek Maggs is the VP Services Industries, SAP APJ, Daniel Faulk is the Senior Product Manager, SAP AG and Johann Schachtner, the Travel and Transportation Industry Principal, SAP APJ.
Organised by the Manufacturing Group of publications at Contineo Media, the annual
Awards provides timely and valuable recognition for those companies providing
industrial technology solutions and value-added services that are enabling regional manufacturers to
reach and sustain the required levels of world-class performance.
Participating companies will have to send in their nominations – adhering to the criteria given. The
winners will then be selected by an international panel of expert judges who will analyse and rank
the nominations received. The judging process is audited by an external party to ensure fairness and
transparency.
Recognizing product and service excellence in the manufacturing industry!
For more information, please visit http://awards.manufacturingasia.co28
TH AUGUST
2014,
SINGAPORE
In Conjunction With Asian Manufacturing Conference
ASIAN MANUFACTURING CONFERENCE 2014Delivering Productivity, Quality, Safety & Sustainability Through Innovation
Register today at http://conference.manufacturingasia.co/registration.asp
Organiser
Covering control, instrumentation, and automation systems
Offi cial Media
Your Professional Guide To Ingredients and Processing
AWARD CATEGORIESAutomation & Control
Best Automation Systems Integrator
Best Control Valves Provider
Best Embedded Systems Provider
Best Fieldbus Infrastructure Provider
Best Industrial Cyber Security Provider
Best Industrial Network Provider
Best Industrial Wireless Provider
Best Internet of Things Provider
Best Machine Safety Systems Provider
Best Machine Vision Provider
Best Process Control Systems Provider
Best Process Instrumentation Provider
Best Process Safety Systems Provider
Best Programmable Control Systems Provider
Best Robotics Provider
Best Servo Drive/Motor Provider
Best Variable Speed Drive Provider
Industrial SoftwareBest CAD Systems Provider
Best CAM Systems Provider
Best ERP Systems Provider
Best Plant Design Software Provider
Best PLM Systems Provider
Logistics & Supply ChainBest Bar Code Technology ProviderBest Express Logistics ProviderBest Lift Truck ProviderBest RFID Technology ProviderBest Storage Systems ProviderBest Supply Chain Software ProviderBest Third Party Logistics (3PL) ProviderBest Warehouse Automation ProviderBest Warehouse Magement Systems Provider
Food & Beverage IndustryBest Food/Beverage Ingredients ProviderBest Food/Beverage Logistics ProviderBest Food/Beverage Packaging Equipment ProviderBest Food/Beverage Processing Equipment ProviderBest Food/Beverage Testing Technology ProviderBest in Food/Beverage Packaging Design
Pharmaceutical IndustryBest Pharma Automation ProviderBest Pharma Logistics ProviderBest Pharma Packaging Solutions ProviderBest Pharma Production Technology ProviderBest Pharma Testing Technology Provider
Corporate Social ResponsibilityBest Energy Management TechnologyBest Solution for Sustainability
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The only way to be a master of logistics is to be a master of networks. The need to expedite, answer, and react to the unex-pected is a key characteristic of the logis-tics industry and every 3PL leader knows that goods move smoothly only when there is a seamless flow of information.
This is because supply chains depend on a close integration between the data network that track and automates the movement of goods and the communications networks that link the people on that supply chain. Connectivity thus needs to be king when it comes to mastering the networks in the industry.
DISRUPTION BY TECHNOLOGY: MOVING INTO THE INTERNET OF THINGSThe movement and supply chain of goods have always been impacted by major tech-nological advancements. This is most evident during the last hundreds of years which saw exponential progress in the logistics boosted by technological devel-opments in transport.
For as long as people could remember, goods were transported via waterways. Nature-made waterways such as rivers were used and manmade canals came soon after. In the 18th century these ca-nal systems were redeveloped to cater to the increasing levels of production due to the Industrial Revolution and the need for increased capacity.
The next big development was the rail-way, which was developed to carry goods to places where canals could not reach. At the end of the 19th century steam power was introduced in factories, which meant yet another boost in productivity.
A new industrial revolution is currently emerging, greatly increasing industrial output and productivity: The Industrial Internet of Things.
The next wave of business growth, ef-ficiency and productivity advancement will come from “things” talking to other
IoT AND THE FUTURE OF 3PLS KEVIN TAYLOR takes a look at what lies ahead for 3PLs and how the movement of goods and communications networks will transcend to a new level with the IoT.
[ Connectivity thus needs to be king when it comes to mastering the networks in the industry. ]
“things”, or automatic, machine-to-ma-chine (M2M) communication via the aptly named “Internet of Things” (loT).
The potential of M2M communication is huge. Back in 2000, 200 million devices were connected to the internet. Today this has increased to more than 12 billion, and by 2020 it will be 50 billion according to Cisco. We are moving towards a world where all things are connected.
HARNESSING THE POWER FOR 3PLSWe are at a turning point in history, in which it is critical for 3PLs to figure out how to harness the power of the IoT. The IoT holds the potential for truly in-tegrated supply chain operations with undreamt of levels of coordination and efficiency. Truly integrated operations, which are not possible without M2M con-nections, will have much higher opera-tional efficiencies.
All About Connections – A key enabler of future growth is the networking capabil-ity to link all stakeholders involved in the supply chain seamlessly. M2M is not only
about just connecting things, it is also about connecting people in the most rel-evant ways. The interconnectivity will need to involve not only things but people, pro-cesses and data.
M2M will help establish connections be-tween the distribution centres and trans-port assets; between the manufacturing supplier and retail clients as well as be-tween countries, systems and partners. It will take open networks and big-data analysis to realise the full potential. Some 3PLs are already starting on their journey. TNT has been trialling networked sensing services such as BT Trace, and have seen a 16 percent improvement on delivery times on their contract with Ericsson.
Managing And Mitigating Risks – When more machines are connected, there is less of a need for people on the floor, re-ducing risk by increasing both safety as well as security. With real time informa-tion on all machines in a production area, it is possible to discover and resolve is-sues and do maintenance if necessary before they go down and turn into chal-lenges or dangers.
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Data Supply Chain – Increased M2M adop-tion will create huge amounts of data, which can then be transformed into useful information for decision making, enabling a more proactive approach. For example, football or basketball players can be fit-ted out with measuring devices sewn into shirts, which convey data to spectators such as miles run, speed, or heartbeat.
Processes need to be aligned to such developments and made much more ef-ficient, by focusing on getting the right information to the right person or machine at the right time. The loT will result in the formation of new companies, who will spe-cialise in analysing the huge data streams that all your connected devices will gener-ate, selling it back to you as information, or companies may decide to turn their own data into information and sell it, creating new business opportunities.
One only has to regard the capabilities of the average smart phone to comprehend the scale of benefits M2M communication can bring to the 3PL industries. A smart-phone has GPS, camera and easy access to internet, features that can enable route planning, vehicle/shipment tracking and confirming documentation. It is thus not hard to imagine how much more a sup-ply chain fully integrated with M2M tech-nologies can achieve for 3PL providers in terms of ensuring efficiencies in opera-tions and timely updates of information and data.
AVOIDING POTENTIAL PITFALLS As with all technological innovations, there are a couple of downsides to be wary of when adopting M2M for the supply chain.
Building A Stable Foundation – Establish-ing a sound and dependable underlying infrastructure is going to be the key to achieving tangible gains with M2M com-munication. Secure and open-standards IP networks, whether mobile or fixed, local or global, will be the pre-requisite for greater integration across the entire supply chain. This is because proprietary closed loop networks will prove to be a great hindrance to the implementation of M2M in the logis-tics industry.
We also need networks that are capable of coping with the huge amounts of data which will be going around. Most net-works are not ready yet due to bandwidth restraints, they are highly unreliable, do not have sufficient ability to scale and have limited resources and lack open standards.
Malware Alert – Another challenge fac-ing companies is the accompanying secu-rity risks that are bound to arrive as more
machines and devices get connected to each other. This is because as M2M adoption grows, so will the mal-ware associated with the flow of data from device to device.
Industry players need to leverage security offerings to ensure that they are ahead of the threat curve even as they venture boldly into the era of loT. The key to this is in selecting a partner that has unimpeach-able security credentials with the capabili-ties to integrate communications networks with supply chain automation networks.
GROWTH OF EMERGING MARKETSWhere will this M2M revolution in logistics take place? Every indicator points towards the emerging markets in Asia Pacific.
Multi-national corporations believe that almost half of their global revenues will come from Asia Pacific. There are two bil-lion people classed as middle class in the Asia Pacific and the region will become the largest consumer population in the world by 2020.
China is the market that is primed for greater growth. The 3PL market for Greater China (including Hong Kong and Taiwan) is a whopping $136 billion market, ac-counting for 52 percent of the Asia Pacific 3PL market. The expected growth between now and 2015 is eight percent for Greater China, 4.8 percent for the other Asian countries such as Singapore, Thailand and Australia, and 1.5 percent for Japan according to Evan Armstrong of Arm-strong & Associates. Indonesia, while growing fast, is considered by 3PLs to be the fourth most difficult country to do business due to the poor state of infra-structure.
Besides emerging markets, the US contin-ues to be a strong contender and should not be overlooked as it is also doing well with an expected growth of 4.2 percent due to contributing factors such as re-shoring, as well as increased activity in the oil and gas and plastics production fuelled by shale gas developments. South America in contrast is only growing at 3.6 percent.
Beyond Asia and South America, Eastern Europe and Russia are growth regions as well, but growth rates in Asia are much
steeper. These economies have not taken off as well as expected because they have been dependent on more established mar-kets that were suffering.
While growth in emerging markets is huge and labour is cheap, the actual cost of do-ing business there is very high and infra-structure is very expensive. The cost of bandwidth for example is ten times higher than in developed markets. Technologi-cal advancements such as the Internet of Things is regarded the largest enabler in paving the way to do successfully run in-tegrated supply chains in these emerging markets.
THE INTERNET OF THINGSWhat do we need to reach absolute connectedness? We need to enable loT. The statistics are telling – over 62 percent of companies in Asia Pacific will adopt M2M in the next few years to capitalise on the opportunities that it will bring, with half of all businesses worldwide having embraced M2M technology in the same period according to the M2M Adoption Ba-rometer 2013 by Vodafone. This growth will be driven by advances in technology and the falling costs of M2M hardware. Leaders in the logistics industry will do well to recognise the benefits of M2M communication in enabling them to be a master of networks.
We are all operating in a world with huge challenges but also huge opportunities. At BT, we see a speeding up of trade, of in-formation and of customers’ expectations. We are confident that that the 3PL sector is more than able to rise up to meet these demands and drive constant innovation in order to keep moving forward.
Kevin Taylor is the President Asia, Middle East and Africa & President Global Logistics, BT Global Services
[ M2M will help establish connections between the distribution centres and transport assets; between the manufacturing supplier and retail clients as well as between countries, systems and partners. ]
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INTELLIGENCE BEHIND SUCCESS FABIEN GIORDANO shares his thoughts on risk management, business intelligence and the importance of entrepreneurship in the road to success with Syed Shah.
Fabien Giordano is the Managing Direc-tor for SDV’s operations in Singapore. He has over 15 years of experience in the logistics industry and has been with SDV for nearly 2 years. He first joined SDV in 2012 and has been based in Singapore since then.
Q: What was your background like before joining SDV?I’ve been in Asia since 1998. I studied at INSEAD and later on, I embarked on security and global studies at an American Military University focusing on risk assess-ment, fraud and actionable intelligence. Early 90s I studied Chinese in France and Beijing; something which people thought was peculiar in the 90s. At this time when people thought of doing business in Asia, they thought of Japanese. Somehow my choice in learning Chinese paid off because as you know it, Mandarin is the language of business in Asia now with China being the second largest economy in the world.
In the case of intelligence studies, I feel the same way as about Chinese in a sense that I think that it would be useful when it comes down to analysis of a company’s operations. You could say that it helps in my management especially in risk man-agement in supply chain and logistics. I am convinced that intelligence studies is something that is critical in the general management of the processes that I deal with on a daily basis. In my 15 years in the business in Asia, I faced a lot of cases that could have done better with better risk management so I think that this is a good investment on my part. Besides utility, I think that it is also very interesting to keep on learning new things.
Q: How important is assessing risk in the supply chain from your perspective?There are many sorts of risks like political, physical, counterfeiting and many others. So you would need to have quality infor-mation first and foremost if you are going to sift out the elements of risk. It is quite a complicated process but if I were to put it simplistically, you first need to know
in which region you are operating in; for instance in which continent you are doing business in. There needs to be very strong information at hand that you need to cross with your own capacity and the customer that you are dealing with. Then perhaps, you can assess the risk element and provide mitigation scenarios for the customers to make a decision on. This can range from cargo movements to storage locations. I think that this is definitely criti-cal in value adding to existing services by logistics providers.
While it is important to understand risk and integrate that understanding into the operations portion of the business, you must not get too caught up in it other-wise the other portions get neglected and the resulting impact might be adverse. In all, there needs to be a balance in under-standing the system and factor in several channels of information to come up with a feasible solution or flow of operations.
Q: Could you describe the operations of SDV in Southeast Asia?We have about 3500 employees in Asia and have offices everywhere including in Myanmar. The regional head office is in Singapore because the country’s good geographical position and economic status makes it the ideal starting point for operations within the Southeast Asian region. Our business has got both freight forwarding for sea and air as well as logis-tics services. One of the strong places in logistics is in HK, Shanghai and Singapore. Business wise in Asia, I would say that we are becoming more and more “intra-Asian”. This is because in the past, a dec-ade ago business tended to move back and forth from Europe to Asia but now the ser-vices we provide move amongst the Asian countries. We have chosen to be focused on the different verticals. For instance, we have different logistical units handling luxury goods, aerospace and healthcare among others.
In Singapore, we have more than 120,000 sqm for logistics space and it is a regional distribution centre for goods from Europe,
China and even North America. We provide a large variety of value added services on top of the current offerings like labelling, kitting, re-dressing, and quality control. We work mainly on luxury goods, oil & gas, healthcare and aerospace. We are leading the luxury cosmetics industry in Singapore and strongly believe in green awareness. For that we have built our own warehouse of 42,000 sqm called the green warehouse which has both BCA and LEED certifica-tion that has recycled water, power saving lighting. Currently, a top luxury brand has their operations within our facility where they have their own logistics person-nel while we work together with them to provide add-on services.
In Asia, we are breaking into the logistics for fashion scene in trying to get more Asian luxury brands on board because we strongly believe that Asia’s fashion scene is the next big thing. This is why we participated in the Fashion Week last year held in Singapore to demonstrate to poten-tial customers that we possess the logisti-cal capabilities in the fashion vertical and I believe that branding exercise was a great success for the company in that sense. It was also a chance to demonstrate our capabilities in RFID in the ability to track and trace products.
At the moment, I would say that we at SDV are focusing on our strengths. We work closely with the EDB (Economic Development Board) and thus we know what is required of us by the country and we align our strategies according to that. One of this would be processes aligned with productivity. We have enhanced LEAN operations in our logistics and freight op-erations in Singapore.
Q: What are your thoughts about training and education in logistics?I think that we have to face the reality that logistics as a career is not always the first choice on everybody’s mind anywhere. The prospects, in my opinion, are prob-ably as good as most other professions so in order to attract the best talents; there is a need to upscale the method in which
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the industry is portrayed. After all, we are competing with other popular sectors like banking and finance, so it is impor-tant that the message behind the equally good prospects that the logistics sector can give needs to be packaged well. This means that the processes within the indus-try have to improve greatly to attract this talent. Therein lies the challenge because in order to achieve this improvement, there needs to be upgrades to the working environment so some of the plans that we have here at SDV is that we are working on having a more digitalised environment that will have much more high tech savvy feel.
Another thing is that I have envisioned for the working environment here in the Singapore office is to develop a working mentality that suits the younger genera-tion of today in terms of progressiveness which I think is great because this encour-ages the more senior personnel to gener-ate new ideas that will in turn only serve to benefit not just the company but their own personal growth.
Q: What do you think of the logistics scene in Southeast Asia in recent times?The peculiar thing was that back in 1998 – 2000 when I first came to this region was that nobody quite saw Singapore becoming the hub that it is today, as we all taught that China will leave no space for Singapore as an Asian gateway. But more than ten years on right now, the mind-sets have changed, as Singapore successful adapted, and there is tremen-dous opportunity in the region with Singa-pore being placed as a regional distribution hub for our operations in Southeast Asia, even Cambodia. This is because it make sense for any logistics provider to use Singapore as a logistics distribution hub with its facilities, infrastructure and posi-tioning. In my opinion I believe that Singa-pore is in a very good position to capture the growth from the emerging markets in the region. While the rest of the markets in the region are growing at an exponential rate, I still do not see anyone else taking Singapore’s place as the regional hub – not for awhile at least.
Q: What makes SDV different from the rest of the competition?Culturally, SDV encourages its workers to have a strong sense of ownership and creativity. We have come some ways from having staff strength of 80 staff about 15 years ago to having 950 staff today in Singapore. The main idea of our work is to be customer centric in our approach to the business. There is a strong solutions team which is comprised of engineers, IT personnel and business savvy individuals that come together to make our offerings the best possible product for our customers.
What makes us different is that we ex-cel in the industries we focused on and give the best offerings compared to our competitors. Entrepreneurship is a very strong variable from top to bottom of our organisation, flexibility and tailor made solutions should also be added into our successful equation.
Q: What is the biggest challenge of doing business here in Asia?It is very difficult to give a direct answer to this because of the diversity of business cultures in Asia. The challenge in other words is a unique one. For example, a mature market like Japan, there is already an existing business culture that you can-not change but adapt to if you want to succeed. But in China in the last ten years, where the economy was boo ing, busi-nesses were much more ready to accept the changes that were brought to them.
Still saying this, it is a complex affair to work in China especially these days be-cause the market there has become very sophisticated, with increasing wages, and more complex tax systems implemented as it nears maturity. I think that even-tually, the market there will cool upon maturity but that will mean that the current economic cycle has ended; after which, a new cycle will develop and there will be resurgence. Comparatively, if you look at the downturn that is going on in multiple countries in Europe, I feel that it will not last forever as well. My point is that when-ever a new economic cycle begins, any business will have to adapt and anticipate in order to get the most out of that cycle.
Q: Describe your style of leadershipI have grown from different positions in my career right up to my current one. In terms of being in touch with the ground operations, I am always there but what I really try is to work by tasking operations
within the hierarchy in what I call a task force system where at any time I can go down to any level, pick a few people and work on a certain project which I think will improve operations. Secondly, I’m not leading by dictatorship, and try to maintain an excellent working atmos-phere but I do make tough decisions at certain points. I firmly believe that the creation of stress disrupts the capacity of the people in the organisation. The reason for this is because it creates a sense of distrust and people might not be willing to share information that might be critical to the overall operations. I am always open to discussions to executive decisions that I have to make with my heads of depart-ments and make those decisions usually after a consensus has been reached.
At the end of the day, it is important that the employees feel that they are stake-holders within the company and they understand their importance within the hierarchy of things. Managing success-ful career path is the key, and for me, strength comes from respect and respect has to be earned. So hence if I am open and clear in my directions and everybody feels that they have contributed to the success of the company, then that trust and respect is earned.
Q: Some final thoughts on SDV’s direction five years down the road?SDV will continue to grow and be a very important player in the worldwide and intra-Asian business. Currently we have ex-perienced personnel, with strong commit-ment, in all parts of Asia who are adept in their respective roles in the different coun-tries. Thus, if we continue to immerse our-selves in the economic growth cycle within this region and grow as we are doing now, we will see ourselves at the forefront of the business we are in and will continue to prosper to greater heights.
[ SDV looks to focus on the logistics for fashion in Asia by getting more luxury fashion brands on board. ]
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MOVING WITH THE TIMES Every company functions diff erently according to its capabilities and operational needs. Thus, there is no one size fi ts all concept for an order picking solution as ALVIN YAP points out.
These days, purchasing and consump-tion occur at rapid-fire rates with consum-ers’ seemingly insatiable appetite for prod-ucts of all categories. In response, many companies find themselves swamped with fast-increasing order volumes and sizes that can lead to problems in manufactur-ing and order fulfilment if both are not well taken care of.
Realising that getting orders right in terms of both quantity and timing is an important contributing factor to final customer satis-faction, successful manufacturing compa-nies have been wise to locate and invest in a value-adding area of their business – logistics warehouse processes.
Logistics warehousing processes encom-pass many different sub-sections that work together harmoniously to deliver the end result to customers. With numerous orders received on a daily basis, manufacturers need a clever system installed in order to sort out orders correctly and efficiently. This process is significant because it can directly affect the degree of customer sat-isfaction.
Order-picking is this essential system in logistics warehousing. It involves the identi-fication, selection and collation of required items for various customer requests. There are many variants of order-picking tech-nologies and although set-ups may vary across the board, the desired end-result is to always deliver the appropriate order to the customer in an efficient manner.
Although order-picking technology is an integral warehousing process, there is a lack of general awareness on the poten-tial benefits that it can bring if properly utilised. Often branded as time consuming, the procedure is unfortunately severely un-dermined and overshadowed by other pro-cesses with greater perceived importance such as output and delivery. However, the true value of order-picking in fact lies in its ability to increase work productivity and raise investment returns.
Order-picking can be broadly categorised
[ Order-picking involves the identification, selection and collation of required items for various customer requests. ]
as: man-to-goods and goods-to-man, both fulfilling the same purpose. Between the two, the goods-to-man or automated ap-proach presents companies with greater advantages in optimising operations.
Order-Picking: The Two CategoriesAs the name suggests, a man-to-goods process entails an operator referring to printed instructions and walking to various shelving locations to identify and collate orders. This is suitable for smaller compa-nies engaging in fewer and straightforward orders, as it is an inexpensive method ca-pable of fulfilling orders.
Conversely, by integrating automation in the order-picking process, as with the goods-to-man approach, reliance on manual labour is limited to a greater extent. The goods-to-man process enhances convenience and is usually controlled by a centralised ware-house management system.
Although smaller companies typically cope well with existing order-picking methods, it may be beneficial for them to adopt some degree of automation to gain competitive advantages because orders are getting
increasingly complicated as companies transcend into international boundaries. The Need For Order-PickingWhere international business trading is concerned, orders are met and delivered daily between countries, intimately inte-grating global business interactions. This assumption stereotypes that all manu-facturing businesses, regardless of size, have an order-picking technology in place to manage orders. The truth is, many businesses are yet unaware of the benefits of having a systematic order-picking pro-cess in place, and most have little to no idea of what an order-picking system is!
Depending on business needs, order-pick-ing technologies can provide different ben-efits. Although the man-to-goods technique employed by small companies is functional in fulfilling current operational needs, in-tegrating automation in order-picking technologies will promote higher levels of productivity. In addition, an order-picking implementation will assist management in capturing areas where processes are inefficient, allowing solutions to be accu-rately administered.
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where the desired quantity to be picked is indicated. After retrieving each item, the operator acknowledges the action by switching off the lighted signal and there-after deposits the order on a conveyor belt or other form of transportation system.
This method eliminates paper instructions and excludes paper cost. It also reduces human error and helps to increase pro-ductivity and accuracy levels, while setting good operational standards for smooth order picking processes. The pick-to-light form of order-picking is also cost effective as it reduces the time required to search and to deposit orders, as operators will first receive a display reflecting the vari-ous lighted signals, and are able to then plot the shortest picking path. Return on investment can also be quickly measured in the short run as productivity increases are almost immediate and the simplicity of the technology encourages a shorter learning curve for staff.
Voice technology in order-picking in-volves speech recognition that is compat-ible with speech synthesizers, enabling two-way communication between the operator and the warehouse management system (WMS), via radio frequency or local area network. An operator dons a wire-less headset where data instructions are transmitted from the WMS and relayed via the headset, and verbal acknowledge-ment can then be communicated in reply. Usually when an item is identified, the operator will be required to read the last few digits of the barcode to eliminate picking mistakes. This helps to speed up the identification process. This user friendly method encourages both hand- and eye-free operation, which greatly enhances productivity as it not only eliminates the hassle of manually cancel-ling out picked items, but items are also deposited after immediate confirmation, resulting in fewer trips overall. Voice tech-nology order-picking enables real time
[ It is common for companies to only begin recognising that order-picking automation will instantly lower operating costs, when the business expands and operations begin to get more complicated. ]
The implementation of order-picking tech-nologies will inevitably incur additional costs for companies. However, it is com-mon for companies to only begin recog-nising that order-picking automation will instantly lower operating costs, when the business expands and operations begin to get more complicated. This typically occurs as order volume increases, and when activity in the warehouse conse-quently starts to pick up.
For example, an operator may be tasked with an order that requires several trips around the warehouse to pick out a vari-ety of items. After those items have been selected, that order then needs to be sorted amongst other completed orders before the entire batch is consolidated and inspected for accuracy. Ignoring secondary processes such as organising orders for delivery trucks and arranging for pick-up time slots, the above-condensed process may be the best option for companies with lower overall output. But for companies with a larger daily output volume, or for a business with a high variety of goods in its warehouse, the complication of picking orders manually can really incur inefficien-cies and even unnecessary labour costs. In relation to labour costs, companies who do not recognise the need to automate order-picking in time to match their grow-ing output and to fully reap all benefits, may end up paying the price in terms of increased manpower expenses. In a man-ual order-picking setting that is faced with the pressures of fast-increasing demand, typical human resources issues are likely to arise. Operators may need to take on overtime shifts that can easily lead to lower productivity levels, higher costs (for overtime pay), and poor health. Forward-looking leaders who on the other hand are able to recognise and react with long-term sustainable solutions will understand and appreciate the benefits of having an appro-priate automated picking system in place.
A number of different order-picking tech-nologies are available in the market to suit different business operational needs, and three of the most prevalent picking technologies active in the market are out-lined below.
Market Watch: Three Popular Variations Of Order-Picking TechnologyThere are many variants and hybrids of order-picking technologies available, but the most popular technologies currently engaged in the Asian market are pick-to-light and voice-directed technology.
In pick-to-light technology, an operator locates items from an order by identify-ing light signals located on storage slots
updates in inventory request and control, and reduces picking errors due to precise instructions given. Accuracy, productiv-ity, and safety levels are increased, as op-erators are not distracted with hand held instructions, lowering the risk of accidents.
The two technologies highlighted above are capable of improving warehouse operations, however in a complex environ-ment such as a supermarket warehouse with extensive daily output, for example, neither the pick-to-light nor the voice directed technology would be sufficient to achieve desirable results. With bulk orders made and delivered every day, a more effi-cient order-picking technology is required for optimum productivity.
A third variation of goods-to-man order-picking is sortation systems. Sortation systems, also known as sorters, can add tremendous value to larger warehouse op-erations, as numerous orders can be com-pleted in a stipulated period of time. This clever system allows many orders to be ful-filled simultaneously, and completes orders with highest accuracy levels. But if the sor-tation system is so capable, why are most companies still using other technologies?
As the sortation system engages in bulk or-der-picking processing, companies with low demand output will find it difficult to reap benefits that high demand output compa-nies enjoy. Coupled with significantly high capital investments, this technology may be priced out of reach for many businesses. Companies receiving extensive orders will be able to achieve economies of scale and high returns on investments as the sorters can greatly contribute to productivity, but for companies who operate on a smaller scale, the heavy investments are unjustified when other more affordable technologies are sufficient for completing orders.
Justifying The Investment In Order-Picking AutomationWhile it is easy to establish that order-
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picking technologies provide assistance in delivering accurate orders to customers, the challenge lies in convincing man-to-goods advocates that automated order-picking benefits are worth the investment and can be converted into competitive advan-tages. Capital investments aside, a simple integration of automation into the order-picking process will greatly enhance accu-racy and productivity levels, enabling com-panies to accept more orders, recouping investment costs. 20-30 percent of time savings are captured, as operators will be less likely to commit careless mistakes with automation assistance, eliminating the need for correcting wrong orders.
Many factors such as omitted items in an order, poor quality inventory update, and operator error in picking the wrong items or in the wrong quantity can be eliminat-ed with the induction of an order-picking system. With such a system in place, companies can expect a much lower rate of human error instances.
In addition, a systematic order-picking pro-cess is also likely to reduce labour costs. With less complicated manpower require-ments for order fulfilment in an automated warehouse, operators are generally not required to possess specific qualifications or skills, and training on automation pro-cesses is easy to grasp. Workplace safety is also greatly enhanced as there is inevitably less human movement – and therefore less likelihood of injury and accident – within an automated warehouse environment.
The benefits of order-picking technologies are plentiful, and it would offer compa-nies advantages over others who have yet to adopt such systems. Although invest-ment costs for these systems are a step up from simplistic methods, companies who employ order-picking technologies may stand to witness stark improvements in their warehouse processes and general business output.
Order-Picking Customisation & Factors For ConsiderationAs described earlier, order-picking tech-nologies are available in a wide variety of options to suit different business needs, and most companies are able to find a technology suitable for their operations. However, as logistics can be a company specific process, some companies may find difficult to implement standard order-picking technologies. Most often, a compa-ny needs to ascertain its operational needs before it can make an objective, calculat-ed, and beneficial order-picking selection. Different order-picking technologies can provide different competitive advantages, and cost may not always correlate to the true value of what a system can provide.
With each company operating differ-ently, the one-size-fits-all concept may not encompass all the required needs of the company. Just as warehouses can be customised, order-picking technologies can also be tailored to individual business operations, providing a variety of options to enable businesses to fully optimise and leverage on their unique strengths.
But before running out to get the latest order-picking technology off the market, companies should consider the volume of picking, picking support requirement, capital investment budget, and space allowance.
Companies should consider systems that will aid in speeding up the picking pro-cess while assembling accurate orders. For companies where output is high, the order-picking technology should include different functional aspects from low order demand companies.
The type of picking support between high and low order demand companies will differ, and by identifying the support required, an accurate selection of or-der picking technology that will enhance warehouse operations can be determined. Investment budgeting is also important as it can reflect a suitable range of order-picking technologies that will align capital output to strategic goals.
Companies must also consider their ware-house space allowance before integrating automation with their existing infrastruc-tures. If space allowance is tight, a fully automated technology with large conveyor belts and trays may not be conducive, and can potentially create a hazardous working environment.
A Warehouse Mainstay In the manufacturing environment, a defi-nite paradigm shift gravitating towards the implementation of order-picking technolo-gies can be observed, and it is not difficult to understand why. As businesses gradu-ally move out of domestic markets and into international markets, they often start to compete on a larger scale with new and more sophisticated competitors. Engaged in a more intense playing field, any advan-tage obtained by a business can prove to be a unique capability in differentiating itself against its competitors and further strengthen its international standing.
It is increasingly important for businesses to take into account the benefits that or-der-picking can provide, not just as a pro-cess in itself, but also as a key component of the entire manufacturing environment. Astute businesses that are able to compre-hend and appreciate the intricacies of the order-picking process will realise the influ-ence it has over not just the orders, but that it may also trigger a “domino effect”, even to the degree of end user satisfaction.
Having understood the attractive advan-tages and long-term benefits that order-picking technologies can provide, compa-nies employing such processes continue to find themselves in profitable positions, trumping the competition. As the interna-tional market only continues to grow in im-portance in both importing and exporting activities, having an order-picking system is fast establishing itself as a vital ware-house entity.
Alvin Yap is the Deputy General Manager, Business Development & Marketing, Efacec Asia-Pacific.
[ Capital investments aside, a simple integration of automation into the order-picking process will greatly enhance accuracy and productivity levels. ]
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IMPROVED FLEXIBILITY, INCREASED EFFICIENCY
The interface difficulty and respective standardisations are determining factors in machine and plant engineering. The coordination of system does repeatedly interface requiring considerable effort for the plant and system suppliers. This is especially so at intra-logistics projects, where from racking via conveyor system and storage and retrieval machines up to the control systems and host computers, numerous heterogeneous plant compo-nents, manufacturers and components have to be coordinated with standardisa-tions offering numerous advantages.
Through comprehensive categorisation plants with standardised connections can be arranged and extended as a connector system at defined interfaces or – due to technology change – modernised in sec-tions without problems. A multitude of actual products and components offered by the manufacturers for different appli-cations are already modularly designed standard systems which can be tailored to the individual requirements of the user in the so-called customising.
The manufacturers in turn benefit at the production of standard components struc-tured in modules from a slight, efficient process chain. The systems and compo-nents are mass-produced, but can be com-bined flexibly among each other so that in-dividually tailored devices and plants from approved single components are available for the user.
SSI Schaefer’s “Exyz” a new generation of storage and retrieval machines is designed as a modular system, the devices can be exactly tailored in shortest time to the in-dividual requirements of the user, accord-ing to Schaefer. With the market launch of their new generation of storage and retrieval machines (SRMs) named “Exyz” they started a new path: Off from the production of single, individually tailored
machines to individual combination of standardised machine components. Differ-ent, serial-produced basic elements – from single or double-mast devices with one or two load handling devices for a single, double or multi-deep storage and retrieval or an Orbiter-version – create an compre-hensive pool for customer-specific mount-ed end devices.
The name “Exyz” is actually the exact name of all that with which this storage and re-trieval machine works on. According to Schaefer, “E” refers to efficiency in energy consumption and performance. The “E,Y and Z” refers to the three dimensional axes “X”, “Y” and “Z” on which storage and re-trieval machines work: travel, hoist as well as storage and retrieval movements.
One example is the design of hoist truck and mast. On the one hand the guiding rails are integrated in the mast construc-tion of the Exyz. The hoist element has been mounted U-shaped around the mast and approaches to the mast. “By this means we reduce the approach values by around 15 centimetres,” explains Markus Sellen, product manager for SRM at Schaefer and he clarifies how that can be summed up to several cubic metres at a high bay ware-house of 30 metres height and how this can significantly reduce operating and con-struction costs.
There is island position attribute achieved with the mast design. On-board counter-weights for the hoist truck can be mounted inside the mast, which balances up to two thirds of the dead weight of the hoist truck and increases the capacity while the nec-essary energy input decreases. “Innovative engineering activity including most-mod-ern knowledge and technologies,” explains Sellen. “Compared to conventional devices customers achieve only at lifting an energy saving of up to 25 percent and signifi-cant reductions of operating costs. Thus
the amortisation time is less than twelve months.”
Areal efficiency was taken into considera-tion in the design in Y-direction. In this case, the hoist truck guidance at the Exyz ranges from the driving rail to the top guiding rail. Furthermore the lift truck encompasses the traveling unit traverse. The traveling unit arms are lowered be-hind the wheel housing. “A compact, in-tegrated design which ranges as design principle over the entire device,” says Sellen. “Thus the whole length of the mast can be used from bottom to top. The inte-gration of the traveling unit furthermore opens up eight to ten centimetres more effective space in the rack which also has a positive effect on operating and con-struction costs.”
For the compact structure in X direction, with two strong drive motors Exyz has an all-wheel drive – one before the load and one behind the mast. The all-wheel drive offers optimal traction attributes and en-ergy efficiency. This again has a positive effect on the braking characteristics and also on the effective total length of the traveling unit: the wheelbase has been shortened, the brakes at both drives of-fer increased security – with significant effects on the plant engineering because the DIN EN 528 standard prescribes the use of so-called aisle end buffers for emergencies which are designed for 70 percent of the kinetic energy.
If the devices, however, offer further safe-ty measures, so stated in the standard, the layout measures of the aisle end buff-er can be reduced down to 30 percent.
“By splitting the drive motors we were able to use this option at the Exyz,” says the product manager. “With two drive motors, the device also offers two full-fledged emergency brake systems which reduce
With innovative design features, Schaeferʼs Exyz off ers a multitude of effi ciency advantages, fl exibility and more storage capacity.
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[ The Exyz works in a three dimensional pattern: travelling, hoisting and storage/retrieval. ]
the aisle end buffer.” The approach values have been decreased by up to two metres compared to conventional SRM-solutions. For additional safety also at high speed, there are integrated approved software modules from the Schaefer Miniload Cranes (SMC). They are sophisticated anti-pendular-system which activates the trav-el drives for an equalisation of potential vibration via the control is now also used for the pallet-SRMs.
Assembly wise, in the Exyz, all functional units are pre-installed in basic modules – and they are installed in a way that enables them to be conveniently loaded in a stand-ard maritime container. “This construction principle considers not only the possibility to ship and supply the SRMs worldwide to any requested location,” says Sellen. “The pre-mounted basic modules also enable an entirely new type of assembly on site.” Unlike conventional SRMs, the long masts no longer have to be lifted via cranes through the roof into the rack system.
The masts are rather designed so that they can be erected in-house. Transport protec-tion devices have been constructed intel-ligently so that they can be used as assem-bling aids at the same time: the bottom ends of the Exyz-mast-segments are fitted with a reusable element which enables as a kind of tilting device the erection of the mast via its foot. “This saves one complete crane,” explains Sellen.
However, the development of the new de-sign concept for the SRM-generation Exyz is not altruistic. The compilation of stand-ardised modules and components does not only enable an individual design of the SRM for the user, an improved maintenance at malfunctions or future retrofit-projects along with a fast exchange of necessary compo-nents. The manufacturer also benefits from it – by the serial production of approved single components with defined interfaces. This in turn enables a more even utilisation ratio of the production and an immediate availability of the requested modules.
Whilst the order intake exceeded budget by close to 10 percent in 2013 thanks to a very large automation con-tract secured in Australia, a fully auto-mated case picking warehouse for a ma-jor retailer, invoice sales lagged behind budget due a number of new build sites being delayed. It is a critical fact that we at Schaefer are seeing more and more projects being delayed due to a very tight labour market not only in Singapore but in most of the Southeast Asian and Mid-dle East countries. Governments have tightened controls on the use of low cost labour, which in a lot of countries are in fact illegal immigrants. This has led to severe shortages in the construction industry delaying new builds. SSI Schaefer has also been directly affected as our sub contractors also use labour from the construction pool (but not illegals’), and due to the labour crunch, rates have risen in some countries to as high as 50 percent, which has met resistance level with our clients.
We see labour as being one of the key challenges for the next one to two years as the industry adapts to the new rules being introduced, whilst SSI Schaefer pro-vides automatic storage systems which reduce labour in the warehouse increasing productivity, we do need labour to install these systems!
Nevertheless sales of automation projects are rising as warehouse operators appre-ciate that the introduction of a little intel-ligence into the warehouse operation will quickly repay the investment by increas-ing productivity and reducing returns. SSI Schaefer is negotiating two very large au-tomation contracts which should be signed within the next month, one of which is in China with a major retailer for a very large e-commerce warehouse that includes a comprehensive range of our automated systems to handle the wide range of prod-ucts which they will be stocking.
We see e-commerce and one of the fast-est growing markets, with China as one of the leading the exponents, we signed one large contract for a new distribution centre just outside Shanghai early in 2013 and have now just started installation. With rising labour and land cost, introduction of Automation in Asia is a natural progres-sion.
Outside of automation standard industrial sales continue to rise, with Southeast Asia once again as in 2012 the star performers, we have now fully utilised the €5 million
budget provided for future expansion, and now have an extra 5,000 sqm of special steel production halls, with an-other Germany rolling line which will increase our steel production rolling capacity in Malaysia to over 50,000 met-ric tonnes per annum. SSI Schaefer Asia is now recognised as the competence centre for the design and fabrication of AS/RS and Rack Clad Buildings by the group, this new investment will allow us to fabricate the new profiles and special steel work required for these structures. Whilst allowing us the increased capac-ity to meet the growing pallet racking and its derivatives market.
We expected consolidated order intake to be close to €400 million in 2014 which will be another 35 percent growth over 2013, but it has to be said that 50 per-cent of this will come from automation which includes some mega projects.
To handle this growth we are increas-ing the establishments in our automa-tion hubs, in Singapore, Shanghai and Sydney, and are at the constant look out for well qualified nationals.
In 2013, SSI Schaefer undertook some major structural organisational changes within the company, harmonising our four key divisions into a single entity with sales teams supporting the activities of our regional hubs. This will strengthen the company’s footprint in the develop-ing markets of Asia.
MEETING THE LABOUR CHALLENGES
Brian Miles, Managing Director,Schaefer Systems International
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Given the critical importance of accu-rate data it is not surprising that the sec-tor was one of the first to adopt the use of computers to manage warehousing and track shipments. Over time of course every element of the business became computer-ised, from the finance and human resource departments to customer relations and procurement.
Computerisation self-evidently made en-terprise processes vastly more efficient than their paper-based predecessors, but there have always been drawbacks to tradi-tional software implementations.
Every on-premise installation had to be configured by the software vendor or systems integrator and customised to meet the specific needs of the enterprise. This process was inevitably both costly and time-consuming. Each implementa-tion required configuration, testing and maintenance as well as training of staff. An additional challenge was ensuring there was a compatible interface with the systems used by the company’s cus-tomers and suppliers. Such customised on-premise solutions represented a ma-jor undertaking with significant budget implications. Given the high profile of such projects, IT departments would seek to include every imaginable scenario with the result that systems were often over-engineered, inflexible and carried a risk of rapid obsolescence – particularly given the typical upgrade cycle of one to two years.
In effect, according to Derek Maggs, Vice President for Services Industries at SAP Asia, such a deployment would end up giving the enterprise exactly what they wanted – but only what they wanted, with substantial structural difficulties in intro-ducing changes or addressing unantici-pated needs.
Visionaries in the IT industry began hy-pothesising cloud solutions as long ago as the 1960s, but the lack of significant in-ternet bandwidth meant cloud computing for a mass business audience did not begin
LIGHT IN THE CLOUD The global logistics industry is highly competitive, with cost and effi ciency as keydrivers but it was only until recently that cloud has become a major diff erentiator for logistics companies. WILLIAM LAWS explains.
to take off until the 1990s, with the arrival of Salesforce.com, followed shortly after by Amazon Web Services. These firms led the way for software vendors to deliver enter-prise applications over the internet as well as provide storage and computation.
As with the early wave of computerisation, the logistics sector became an early adop-ter of cloud-based services and solutions. Michael Kiss, Senior Solutions Consultant, Asia Pacific, Verizon Enterprise Solutions, believes that the profile of logistics com-panies benefits from deploying technology solutions, so there is faster adoption than in other sectors. He does, however, see slower take up in the Asia Pacific region, compared to North America and India.
“Cloud computing is a differentiator for logistics companies – they are global op-erators, so they have always had an interna-tional outlook, operating in complex mar-kets,” he says. “Thus they are very ready to embrace the cloud because of the benefits it brings – cost, agility, flexibility. Improv-ing the efficiency of their own supply chain helps control details of how their assets are being used. Enterprise information and data analytics are key for the logistics sector, and the cloud makes these functions simpler and more accessible.”
According to SAP’s Derek Maggs, the appeal to logistics firms of cloud-based solutions lies in its intuitive standardisation and flexibility. So many options are available with-in the cloud that an enter-prise can effectively pluck its desired solutions off the shelf and implement rapidly, with minimal if any customisation and at a highly attractive cost.
“Our customers in the logistics sector are in-vesting in specific cloud-based applications –
finance and procurement, transport management, warehouse management and analytics, with an underlying da-tabase,” says Maggs. Early adopters within the enterprise have been HR departments, sales and marketing and then procurement processes. “Our end-user finance departments have been using cloud together with HANA (High-Performance Analytic Appliance), our in-memory relational database manage-ment system, for more than a year,” according to Maggs. “The more differ-entiated and complex transport manage-ment function typically had nothing in the cloud, but is now moving rapidly to cloud-based solutions.”
Cas Brentjens, Director of Business Con-sulting, Asia Pacific and Japan for Infor (Southeast Asia), concurs. “Our Cloud Suite comprises solutions for all ap-plications,” he says. “Infor’s customers see the value of cloud for such func-tions as asset management, HR man-agement and service delivery. A specific example of a critical business process within the logistics sector is Electronic Data Interchange. There are multi-ple EDI (Electronic Data Interchange) standards in use today, including ANSI (American National Standards Institute),
[ Computerisation self-evidently made enterprise processes vastly more efficient than their paper-based predecessors. ]
Logistics &
Manufacturing WORLD 2014
10th annual
23 – 25 June 2014
Suntec International Convention & Exhibition Centre, Singaporewww.terrapinn.com/scmlogistics
SCM Logistics & Manufacturing World convenes the largest gathering of supply chain, manufacturing leaders from Asia’s most dynamic markets of retail, high-tech & electronics, FMCG, automotive, healthcare & pharmaceuticals, chemicals, oil & gas industries. It’s a focused knowledge & networking platform for leaders from Asia Pacific to access the very best ideas and to stay ahead of the competition amidst a rapidly changing global marketplace of products, ideas & services.
Leading speakers include:
Bjorn Vang JensenVP, Global Logistics
Electrolux, Singapore
Michael LeeVP, Operations
DRX Pharmaceuticals, Taiwan
Rajeev WasanSenior VP, Manufacturing
Honda Cars, India
Arjen HeeresCOO
Quintiq, The Netherlands
Michel BoivinVP, Manufacturing
Schneider Electric, Singapore
Joy RiceRegional Supply Chain Director,
Asia PacificDiageo, Singapore
Jen TanVP, Global Planning & Customer
Logistics CentreREC Solar, Singapore
Dominic ChanVP, Order Fulfillment & Planning
PCI, Singapore
Ryan YojaHead, Supply Chain & Logistics
OperationsKimberly-Clark, Philippines
Olivier RedonSupply Chain Planning VP,
East Asia Japan PacificSchneider Electric, Singapore
For more information, contact Daniel Radz at +65 6322 2321 or [email protected]
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Event highlights
Pre-conference seminar led by Quintiq
Premium conference with keynote presentations, strategic panel sessions & roundtable discussions
Standard conference focused on supply chain management & logistics, material handling & equipment, manufacturing & industrial automation FREE!
Exhibition convening over 40 exhibitors showcasing their world class supply chain, logistics & manufacturing products & solutions FREE!
Speed networking & 1-to-1 partnering sessions where you can meet and network with over 1000 industry leaders at the event
SCM Logistics & Manufacturing Excellence Awards bringing influential leaders face-to-face over an evening cocktail and gala dinner
SCM14 200x273.indd 1 26/3/14 5:50 pm
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EDIFACT (Electronic Data Interchange For Administration, Commerce and Trans-port), TRADACOMS (an early standard for EDI) and XML (Extensible Markup Lan-guage). Infor translates OEM EDI formats into a generic cloud-based offering, speed-ing the process and eliminating errors.
“Our customers now are keen to explore the potential of cloud in more functions, and a key growth area is CRM (Customer Relation-ship Management). The low cost of cloud has made analytics more accessible, and the ability to aggregate and rapidly analyse data from multiple sources is a game-changer.”
SAP’s customers also recognise the value of analytics. Hitherto, analytics had been done from the customer’s point of view and the only data available for analy-sis was what the enterprise could gather internally. Now, the cloud provides a holistic picture, and is able to capture data from multiple sources. Cloud-based CRM solutions can integrate all available and relevant information and provide not only a picture of what happened in the past, but point towards what may happen in the fu-ture. Data analytics is helping change the paradigm among sales staff, according to Maggs. Traditionally, sales specialists have not been very interested in capturing and interpreting data, but the scale and speed of today’s cloud-based analytics is under-pinning a significant improvement in the productivity of this function.
The broad benefits of cloud computing – flexibility, scalability, standardisation and lower cost – appeal to all sectors of the logis-tics industry. The adoption of cloud by func-tions and specialisations like shipping, rail transport, trucking, warehousing, forward-ing, 3PL and end-to-end helps them all con-tribute to a vital metric – faster time to value.
In terms of end-user verticals, cloud solu-tions providers are finding eager custom-ers among categories such as hi-tech, con-sumer packaged goods, automotive, retail, fashion and food. Whatever the sector, customers are demanding less complex-ity, more speed, and lower cost. At the same time, software vendors are not only responding to customer demands but also pro-actively developing solutions that are easy to deploy and simple to patch.
Brentjens points out that in the 3PL space, cloud has become a commodity market, where price is key and customers look for the lowest total cost of ownership. In developing markets such as Vietnam and Cambodia, there are limited IT resources on the ground, so cloud’s capability of of-fering centralised management and flex-ibility is a major advantage – enterprises have no need for expert headcount.
Along with the shift from customised on-premise solutions, vendors and end-users are coming to terms with new business models. All vendors offer multiple ways to use cloud, giving customers complete flexibility. The customer can choose what suits his purposes best from multiple go-to-market offerings – internally hosted, on-premise cloud, fully licensed or SaaS-based, public or private cloud, or hosted managed services. Some users want to keep certain functions, such as payroll or HR, on-premise while turning to cloud so-lutions for other applications – this hybrid model is not uncommon. Then in a pure cloud deployment, users can purchase the application they need (and only that application) priced per number of seats, with a recurring fee payment and regular upgrades – quarterly rather than the tradi-tional annual or two-yearly.
Training methodology is another aspect of cloud-based solutions that offers a significant benefit. The standardisation of specific applications means training is less demanding, can be carried out on-line and on demand rather than pre-sched-uled in the classroom, and consumes far less time. This learning management approach is more straightforward and user-friendly, while still delivering the necessary certifications. Together with the ease of deploying a standardised solution, the result is that applications can deployed, functioning and earning a return in as little as four weeks. The automotive sector in particular is an enthusiastic adopter of this methodology.
Is the logistics industry’s adoption of cloud computing solutions as easy and positive as it seems? Not necessarily – there are inevitable drawbacks, the most significant of which is security.
The maintenance of data privacy and IT security has progressively improved over recent years, but it is still an issue of le-gitimate concern to end-users in the logis-tics sector, and events like the collapse of Nirvanix in November 2013 keep end-user IT chiefs awake at night. In addition to the risks associated with the Storage-as-a-Ser-vice model, the industry has also learned from Edward Snowden’s revelations that virtually no data is safe from prying eyes.
The maintenance of data is subject to reg-ulatory constraints that differ country to country, and many end-users in Asia Pacif-ic are sensitive to having their data stored in the United States. (It’s worth noting, perhaps, that at Amazon allegedly only six people know where the data is). Indeed, a leading question among customers in Australia and New Zealand is – where’s the data? In other markets, India for example,
[ The broad benefits of cloud computing – flexibility, scalability, standardisation and lower cost – appeal to all sectors of the logistics industry. ]
it is the cost of data storage in the US that is potentially an issue. Indian end-users typically prefer to host their data in-house, or at least in-country. The response of so-lutions vendors such as Infor is to offer their customers local storage. SAP too, together with partners, is putting up data centres in China and Macau. The company offers Managed-Cloud-as-a-Service which partners can leverage and which is more robust than the storage-only Nirvanix model.
Vendors may play down the security risks of moving operations to the cloud, but end-users are typically more cautious.
Jimmy Yeoh, Chief Information Officer at DHL Express, Asia Pacific & Emerging Mar-kets, says that for DHL, the focus is on the result not the means, on quality of service rather than on the technology per se. The company recognises that cloud-based computing offers numerous benefits but has proceeded cautiously with implemen-tation.
“At DHL, we take an enterprise perspec-tive. We require solutions that are globally applicable and beneficial, rather than a collection of different local solutions,” says Yeoh. “We require a cloud-based service delivery model capability across the world, not a technology for its own sake.”
DHL spent several years exploring cloud solutions in the testing and development area of DHL. Cloud-based applications were trialled via virtual desktops, with infrastructure provided to customers. They looked first at commoditised areas such as document management, and took three to four years of careful study before full implementation.
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as the country’s economic model evolves. B2C, automotive and fast food are likely to be key sectors driving logistics and hence the adoption of cloud.
SOUTHEAST ASIA WILL SEE A HIGHER ADOPTION RATE OF INFRASTRUCTURE OUTSOURCINGJapan will continue to be a global leading supplier exchange, with for example more than 3,000 parts manufacturers. The fash-ion and food sectors are also predicted to contribute to the adoption of cloud solu-tions in logistics.
Verizon’s business plan for Asia includes a focus on expanding its client offering of storage and cloud-based services in part-nership with SAP and Oracle – SaaS, M2M and telematics. The company is of course already a leading global network provider, so it was logical for it to offer its logistics customers cloud services via that network pipe. The company will continue to help its customers address budget constraints through rationalisation and improvement of internal processes, using the cloud.
In sum, cloud-based services are the next stage in a continuing evolution of logistics data management. Cloud offers the lowest total cost of ownership and a seamless tran-sition to each next step. This is a technology that customers don’t want or need to own; ownership has been consumerised. From a cost point of view, in addition to capital expenditure savings, cloud billing models allow customers to better manage their usage, responding to peaks and troughs in their demand. From the marketing and sales point of view, cloud provides the sales function with actionable data on customer behaviour. And in operations, the use of cloud solutions offers standardised pro-cesses but greater flexibility, and helps seamless integration with customers and suppliers.
As long as security issues can be confi-dently addressed, we can safely say that the future is in the cloud.
Yeoh explains that DHL is a big consumer of IT services. The organisation has its own internal IT supplier and is currently devel-oping its own private cloud. It leverages some public cloud and other products from various vendors, operating a combi-nation of direct third party vendors and public cloud. He confirms that DHL is sen-sitive to risks. The questions are always: Who owns the data? Where is it kept?
“The cloud promise is ‘cheaper, faster, bet-ter’,” says Yeoh. “Fulfilling this promise calls for other people, outside DHL, to carry out the necessary due diligence around de-liverables including security, so SLAs with such vendors must address this concern.”
DHL recognises that in contrast to owning assets, buying applications is cost-effective as it allows the sharing of infrastructure. Services are commoditised across multiple users, capital costs are much reduced, and billing is by licensing and unit charges per minute. Similarly in the area of training, vendors offer a simple, easy to use service design, because of the multiple users.
Yeoh says that DHL sees improving matu-rity and speed of the infrastructure. The company is using private cloud aggressive-ly for certain areas of its business, while still working with vendors on how to use cloud solutions most effectively, where it cuts across external and enterprise appli-cations. DHL is moving towards a service-oriented architecture that can use a hybrid model of external and internal resources.
DHL uses several suppliers of cloud-based services, since each provides elements of value. The company makes sure its suppliers have the necessary experience and relevant processes, and up to now, says Yeoh, DHL has not experienced any incidents of security breaches from its use of cloud computing.
According to Yeoh, cloud is a work in pro-gress and it is too soon to say if the use of cloud computing is giving DHL a competi-tive edge, but given the heavy investment by all parties, cloud is happening whether we like it or not.
One weakness identified by DHL is on the business side – how the question of licensing is being addressed. This aspect, believes Yeoh, is not advancing as fast as the technology itself.
WHERE DOES CLOUD COMPUTING IN THE LOGISTICS SECTOR GO FROM HERE? Cloud is a disruptive technology driv-ing major change in the industry. The benefits of cloud-based computing are highly relevant to logistics companies,
and there is no doubt the industry will continue to be an early adopter and heavy-duty user of cloud-based services that offer a superior customer experi-ence and positively impact the bottom line. But the industry must be ready for changes that are perhaps unexpected.
According to Verizon’s Kiss, moving to cloud involves decisions on optimisation, and leads to changes in day-to-day operations as well as cultural changes within the enterprise. New technologies have a creeping impact, as top-down decisions with defined out-comes emerge from HQs. At regional level, decisions will be confined to execution, addressing local concerns. Local opera-tions want an easy-to-deploy local solution which locks seamlessly into global net-works, both internal and external – cloud is really the only way to achieve this.
SAP’s Maggs agrees that the company has evolved from its traditional business model, and is doing more and more in the cloud. Its acquisitions of companies such as Success Factors in the HR space ensure SAP has ready-to-go solutions for all as-pects of a customer’s business.
We can anticipate continuing adoption of cloud-based solutions, faster and broader, as suppliers of software, stor-age and networking continue to enhance and strengthen their offerings. Price com-petitiveness will always be a major driver. Infor’s Brentjens sees the potential for even greater savings through the adoption of open source, which allows customisa-tion out of the source code on the same server, instead of buying into stacks. He says that in the private cloud, headcount ratios can be 1:2 in support for a single tenant. For multiple tenants the ratio can rise to 1:50 and with open source it can reach 1:70.
Different markets in the Asia Pacific region will show differing rates of adoption and will continue to lag more mature markets. Australia already has a good take-up rate, according to Maggs. The Queensland rail system is a big adopter with an innova-tive approach, while the Linfox Group uses cloud intensively to manage its operations across the region. SAP’s Singapore cus-tomers in the sector include NOL (Neptune Orient Lines) and Richland Logistics.
China will only get bigger in logistics as the global majors expand their operations. The domestic sector holds great promise
[ The maintenance of data privacy and IT security has progressively improved over recent years, but it is still an issue of legitimate concern to end-users in the logistics sector. ]
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Helen Masters is VP Sales, ASEAN for Infor.
The need for reliable, easily executed and cost-efficient management of global transportation systems is well recognised in Asia Pacific (APAC) and a greater num-ber of manufacturers here are citing the need to streamline processes, improve collaboration and get their products from point A to point B in a more economic man-ner as key to their success.
Moreover, as more manufacturing com-panies move away from Europe and the Americas to Asia Pacific, there is a corre-lating increase in the number of regional manufacturing plants with increased needs to route inbound raw materials and outbound finished goods. This will either lead to more manufacturers building inter-nal fleets of trucks and other multimodal transport strategies.
UNIQUE TMS NEEDS OF APAC MANUFACTURERS Transport Management Systems (TMS) is vital to APAC manufacturers as they bring all data requirements – from transactions with internal and external carriers to cus-tomer requirements, together in a sin-gle point. TMS helps manage and reduce transportation overheads by optimising transportations routes and maximising utility especially since overhead (gas pric-es, taxes and levies by government regu-lators) tend to fluctuate drastically in the current economic climate.
In the APAC, lead times are often extensive in order to remain competitive. Materials need to be purchased ideally with long lead times to allow affordable shipping and cus-tomer orders to be transported in the most efficient manner and in accurate quantities. It is noticed that as overall sales cycles con-tinue to decrease, customers expect regular but smaller deliveries with minimum impact to cost or service delivery.
The above point is especially so in China, where a large proportion of manufactur-ers are involved in retail and/or B2C busi-ness providing door to door service. As a result, the transaction volume is huge and the transportation networks are very com-plicated. Hence, it is imperative to imple-ment an effective TMS to streamline their operations and provide full visibility of the supply chain.
CAPTURING THE ADVANTAGEAsia Pacifi c manufacturers who utilise transportation management software are rewarded with better internal visibility and greatercollaboration, says HELEN MASTERS.
WHY THE ADOPTION OF TMS IS SLOW IN APACWhile there is increasing interest amongst manufacturing companies in automated rating and routing, many companies find the need to manage multiple carriers somewhat challenging, particularly sur-rounding freight reconciliation and associ-ated invoicing. This is especially the case in the APAC region where complexities af-fect TMS decision making.
Nonetheless, manufacturers in APAC are recognising the need to shift from manually managing transportation needs using fixed rate contracts with a fixed number of trans-porters, to a completely outsourced systems provider allowing them to focus on their core competencies in pure manufacturing. This is further fuelled by the fact that manufac-turers in these countries are unable to take advantage of tax breaks that are provided by the government to organisations that are full on end-to-end transport companies.
WHAT TO LOOK OUT FOR IN TMS SERVICE PROVIDERSAs the manner in which manufacturers in-teract with vendors, channels and custom-ers change, APAC manufacturers need to choose TMS solutions that have evolved to meet their needs and allow for the following:
• Effective and user-friendly transpor-tation planning
Today’s manufacturers need to have vis-ibility into both inbound and outbound shipments, have the ability to effectively consolidate and determine the most cost-efficient manner in which to move product taking into consideration deliv-ery dates and technical requirements. Manufacturers need to utilise TMS solu-tions that support aggregation, multi-stop moves and multi-leg moves through a pool point or cross-deck process.
• Greater visibility of inventory in transit Effective TMS systems need to provide
for advanced shipment visibility, which includes shipment status, alerts, and updates to estimated arrival times based on actual events, allowing shippers to respond to needs on the go and provid-ing for more reliable delivery based on greater flexibility.
• Choice of the best carriers Effective TMS systems allow for coordi-
nation between multiple fleets, which reduce cost and improves service levels by streamlining inbound and outbound transportation processes from order inception to delivery.
• Achieve freight economies through optimisation
TMS systems should enable manufac-turers to create technology that allows carriers to coordinate with one another and with their customers through capa-bilities such as optimised dock-appoint-ment scheduling.
In addition to the provision of on-demand solutions, TMS services should feed into the fleet procurement and overall network design to assist organisations with asset management and enable them to measure the opportunities outside the simple pick-up and delivery scenario.
TMS AS AN OPPORTUNITY Manufacturers across Asia recognise that effective management of transportation systems is at the core of logistics, which in turn directly impacts their bottom line. As models of competition shift to focus on speed rather than scale, enterprises are turning to dedicated TMS to deliver speed, accuracy and cost savings to provide them with stronger comparative advantage.
In a world when manufacturers are only as good as their last shipment, the key to sgetting goods to market on time and in good condition is adopting transportation management processes that link supply chain partners, provide visibility of goods in transit, and manage the shipment lifecy-cle from order inception to delivery.
Fast becoming a source of value and com-petitive edge, not just a cost on the income statement, TMS solutions are an opportu-nity to save money and work smarter, bet-ter, and faster for those seeking to achieve operational excellence and overall finan-cial performance.
Dairy Farm Group has outgrown paper-based picking. When they needed a process and technology innovation to improve the productivity and accuracy of their distribution operations in Singapore, they decided that Voice Picking was the way to go. This made them one of the first major retailers in South East Asia to do so. A combined picking operations and WMS upgrade was implemented. After 3 months, Dairy Farm has already seen 30% productivity and 35% accuracy improvements. The picking operators with diverse ethnic backgrounds and a wide range of English proficiency levels found the training to be fast and easy and are now much more effective and motivated. This has now become the blueprint for progressive implementation and standardisation across Dairy Farm’s operations in different countries and retail banners. That’s what we call a logistics result.
Creating Logistics Results
30% productivity increase35% accuracy improvementFast return on investment
Another logistics result.
Ask us.(65) 6398 3980realtimelogistics.asia
Logistics Solutions | System Design & Integration | Software & IT | Voice Picking | ASRS | Storage Solutions | Conveyors | Service & Support
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P: 65/6863 0168 · E: [email protected] · www.ssi-schaefer-asia.com
Efficient processes from goods receipt to dispatch – that’s what SSI Schaefer is all about. With manual and automated warehouse and logistics systems as well as software solutions, SSI Schaefer always provides for a customized mix of warehouse technologies.
Come register today for your free entrance ticket to CeMat 2014, Hannover, Germany, via www.ssi-schaefer-asia.com/cemat2014. We will demonstrate how efficiency can be achieved in your warehouse.
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