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Title Subtitle

Arthur Dardoumbas

General Manager – Business Development & Solutions

July 2018

Toll Global Logistics “Automation of your Distribution Centre…....and all done via your 3PL”

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The Changing Landscape of our Supply Chain

When to leverage 3PL investment vs investing

in-house and achieving an RoI

Future proofing operations and overcoming

roadblocks when implementing new

technologies

Key Points

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Changing Landscape

Todays world is changing………….probably more than ever before

• Omni channel requirements and challenges

• B2B – Wholesale

• B2B – Retail

• B2C – e-comm direct to customer or click & collect

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e-Comm Landscape Retail vs On-line – Industry Profile

Industry Profile

• In APAC, e-Comm now accounts for an average of 12-15% of all retail sales

• This is projected to rise to 25% by 2022

• Australia is in the region of the highest on-line shoppers in the world – Asia…………….Ti

• We talk about Amazon and the potential impacts, however Alibaba and JD.com are chasing aggressive growth in the APAC region

E-commerce cracks $25 billion mark April 5, 2018

Australian consumers spent around $25 billion online in the 12

months to February 2018; more than 15% boost over the same

period last year……according to the monthly Online Retail

Sales Index compiled by NAB.

A global sports company (a Toll Customer) realised a 57%

increase in e-commerce sales in 2017 in Australia, while total

revenues increased by 16 per cent to more than $38 billion

globally.

The business hoping to double its e-commerce sales by 2020

to more than $7.3 billion……..Inside Retail Australia 2018

Asia Pacific, 39.8%

North America, 30.6%

Eurpoe, 25.7%

South America, 2.5%

Middle East, 1.3%

Africa, 0.1%

Asia Pacific, 48.3%

North America, 26.4%

Eurpoe, 20.6%

South America, 2.5%

Middle East, 2.0% Africa, 0.2%

China, 69.1%

Japan, 13.7%

Sth Korea, 6.7%

Australia, 2.9%

India, 1.5%Indonesia, 0.6% Other, 5.5%

China, 74.9%

Japan, 9.2%

Sth Korea, 4.5%

Australia, 2.0%

India, 2.2%

Indonesia, 0.8% Other, 6.4%

Global e-comm logistics market (2016) APAC e-comm logistics market (2016)

Global e-comm logistics market (2022) APAC e-comm logistics market (2022)

Source Ti

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e-Comm Landscape Retail vs On-line – Example of a UK Retailer (John Lewis) who started their e-comm journey in 2001

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Changing Landscape

Todays world is changing………….probably more than ever before

• Omni channel requirements

• B2B – Wholesale

• B2B – Retail

• B2C – e-comm direct to customer or click & collect

• Speed to Market

• Ability to pick, pack and despatch same day

• Service levels to cater for customer placing an order at 2pm and

despatching same day

• delivering same day if same city – this will add a different

dimension to your overall supply chain.

• Statistics show that 70% of on-line orders are done b/w 6pm and

9pm – how can you pick your customers orders overnight and

have it ready for shipment in the morning……….for next day

delivery.

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Exceeding your customer’s expectations

The product they want….”

How they want it….”

When they want it….”

“Get the customer ….

Customer Experience

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Changing Landscape

What does this mean for your Supply Chain and standard Distribution

Centres

• Competition

• How do you stay competitive with overseas companies who can

offer the same service from across the world

• Labour rates

• Australia has some of the highest labour rates for warehousing

and logistics in the world

• For a standard DC approx 60% of your operating P&L is in labour

• High levels of inventory (customer demanding options & selectivity)

• Shifting order profiles (nothing new – just forever getting smaller)

• Peak seasonal volumes

• Large spikes & demand on your DC (black Friday, campaigns etc)

• What is your DC threshold per shift

• Ability to access labour during these peaks

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Changing Landscape

• How much is our landscape really changing today

• A quote from the book Shoe Dog, by Phil Knight, creator and

founder of Nike

“supply and demand is always the root problem in business. Its

hard enough to invent, manufacture and market a product, but then

the logistics and the mechanics of getting it to the people who want

it, when they want it…….this is how companies die” (chapter 1973,

pp 233-234)

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TOLL – Leveraging

your 3PL Partner

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Engagement & Solution Development Toll’s Internal Supply Chain Consultancy

• Evaluating your operational requirements;

• Detailed data analysis;

• Defining and clarifying key assumptions;

• Network, property and building design and evaluation;

• IT, WMS, automation and capital evaluation and ROI;

• Evaluating various warehouse models and associated

technology including:

Toll’s supply chain and solution design team’s dedicated approach ensures we deliver a solution that provides our customers

operational excellence, efficiency and flexibility in their business. Our dedicated approach will assist in:

Manual warehouse – with high manning levels and additional labour year

on year to meet increased volumes.

Semi automated warehouse – with sufficient technology to meet volumes,

reduced manning and allowing for operational flexibility and improved

safety

Fully automated warehouse – with a high level of technology, a large

outlay of capital, extended contract terms and extensive use of technology

to replace labour functions and significant reduction in footprint

Semi Automated Fully Automated

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$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10

Warehouse Solution - Commercial ComparisonTotal Annual Operating Costs

Current Manual Operation New Manual DC New Automated DC

• Example of high level Commercials (all inclusive

operating P&L).

• Current operation will not be viable or capable at year 3.

• Major savings for an Automated solution, though major

level of capital investment.

• Customers needing to invest in the supply chain and

DC’s don’t have the ability to outlay the capital required.

• Kay financials are evaluated to determine ROI, IRR’s etc

– as the high capital outlay might not meet the required

internal hurdles.

• Various scenarios and sensitivities are evaluated prior to

making any decisions to outlay funds for major capital

investment.

Investing in Technology Via your 3PL or In-House Investment

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Example – Project Enterprise

• The customer in Homebush and the Manual Site in Prestons

• required 33,000 sq.m;

• operated with up to 180 people for FY18

• A manual site was required due to timing of exit from current property

in Homebush

• The same customer in Enterprise

• only requires 50% of the facility 16,000 sq.m;

• operates with 45 staff for FY18;

• however requires a large outlay in capital

• requires the right team of people, with the right knowledge to;

• set the supply chain strategy,

• develop the appropriate solution, and

• execute the complex implementation and operate the new facility.

Toll’s Advanced Retail & eCommerce Fulfilment Centre

Enterprise

Manual Site

Removed Video – Use Vimeo Link

https://vimeo.com/263447972

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Solution Development & Execution Toll’s Internal Supply Chain Consultancy

• Various types of solutions can achieve the required

outcome

• Understanding the baseline, operational requirements,

profiles, data and future state are important

• How to evaluate the various technologies, automation

and ensure you select the appropriate solution

• The required know how to focus on the right solution

and equipment

• The required know how to implement the solution,

technology and automation

• They are all enablers for the know how to execute the

overall operation (not just the automation)

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A Successful Outcome

PARTNERSHIP & COLLABORATION

PLANNING

JOINT EVALUATIONS & SIGN – OFF

REGULAR UPDATES

KEY LEARNINGS

DISCIPLINE IN DECISIONS

TRAINING / CHANGE MANAGEMENT

RESOURCE / PEOPLE

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Our customers’ success creates

our success………..thanks for

attending and listening.