DC Automation is an important consideration for large consumer goods companies and retailers in Australia, following heavy investment in highly automated distribution centres. Recently, Woolworths has invested over $400 million on its new Dandenong DC and Coles will invest a total of $950 million over the course of six years, to fit out fulfilment locations in Sydney and Brisbane. Coles has also announced its intentions to bolster its online delivery capability by building automated facilities in Sydney and Melbourne. This has led to an increase in Crimson & Co clients questioning if similar investments are a good fit for their operations to succeed in an increasingly automated competitive landscape.
DC Automation(when executed correctly), can provide enormous benefits in productivity, safety and operational costs. However the initial investment can often run into tens to even hundreds of millions of dollars, a hurdle that can prove difficult to overcome, particularly for smaller organisations. Crimson & Co’s extensive experience has helped them to develop alternative ways to deliver significant efficiency gains. These can be accessed through innovative process optimisation that can precede or supplement automation rollouts, to provide faster access to benefits.
In late 2018, Crimson & Co worked with Fonterra to enhance the capability of an existing dry goods facility in New Zealand. Their goal for the project was to treble the current daily throughput of the facility. This was part of a global initiative to assess major asset performance and improve productivity for the world’s largest dairy exporter.
Using simulation to understand future requirements
To help them achieve this Crimson & Co built a digital replica of the operation and numerically simulated the increased volume. This enabled them to identify bottlenecks and potential pain points in the future flows of product and people. Numerical simulation is a dynamic tool that provides insight into the behaviour of complex systems by generating detailed data output, as well as a simple visual representation of the created scenario. By adjusting constraints and parameters within the simulation, Crimson & Co was able to quickly understand the size and impact of the different issues, as well as conduct sensitivity testing on the final concept design.
The end result was a capital-light solution created by combining and optimizing the DC working practices and workflow with targeted automation cells. David Garcia, Manager at Network Design and Solution, Fonterra said “The solution was customised to the problems we were trying to solve,”. The estimated cost of implementation was below $5 million with an estimated payback of less than two years.
Early trials highlight real savings
Initial trials of process solutions kicked off in January this year and are already returning productivity savings of up to 50%. The project has been considered a great success, Brendan Miller, GM Global Supply at Fonterra said, “The Crimson & Co team integrated well with the Fonterra team, their external knowledge and experience gave us great new insight into our operation and we’re already starting to see that the benefits are real, we are using this success and will try and replicate it in our entire DC network.”
The increasing level of automation within Australian supply chains is continuing to drive improved levels of service alongside higher customer expectations across CPG, and retail industries. This trend requires organisations to reassess their ways of working in order to improve efficiency and accuracy, all whilst removing operational cost. Automation is a powerful tool to help businesses achieve these goals and is fast becoming an integral component of future supply chains-but it doesn’t need to cost a fortune, and could be the key to delivering fast, powerful results.
Crimson & Co is a global management consultancy that specialises in operations transformation. We help clients achieve their strategic and operational objectives, working together to transform their businesses and generate lasting change. Our people have operational experience, are easy to work with and are trusted by clients to get the job done.
Crimson & Co and Argon Consulting are part of Argon Groupe. We have offices in Brisbane, Melbourne, Sydney, London, Paris, Atlanta, Singapore, and Mumbai.
For further information contact Lauren Alati at Crimson & Co ANZ.