Super Retail Group systematises its supply chain
Super Retail Group (SRG) has rolled out Körber’s warehouse management system and several other solutions to streamline and systematise its omni retail supply chain processes.
The ASX-listed company said a mix of inflation, pandemic-related lockdowns and skills shortages had driven it to standardise its transport, warehouse and delivery processes.
To deal with the dual threat of inefficient, ad-hoc processes and the skills shortage, the Boating Camping Fishing (BCF), Macpac, Rebel and Supercheap Auto owner is “becoming reliant on the machine and the process as opposed to individuals,” general manager of supply chain planning and strategy Patrick Fountain told the Körber Elevate conference in Melbourne last week.
“For us, going into a single platform was an opportunity to standardise and de-risk,” he said.
SRG has deployed K.Motion Warehouse Advantage to “95 percent of its DCs [distribution centres]”: its six Australian DCs but not its New Zealand one — getting rid of both functional silos and inconsistent operating practices in its supply chain teams.
Training middle management to be less reluctant to use new technologies, enforcing stricter processes and ensuring visible operations across the businesses had future-proofed SRG’s delivery and storage network against the talent squeeze, Fountain said.
Fountain said SRG is becoming less reliant “on the tenure and experience of people to keep our sheds running because of the technology.”
Running its delivery and storage processes more efficiently would also make the company more resilient against future supply chain shocks, he said.
The new capabilities had reduced operating expenditure; two distribution centres picked up from SRG’s 2018 Macpac acquisition had been let go of, for instance.
However, despite these achievements, Fountain said the upgrades just built the framework SRG needed for “surviving” the recent challenges and were not a transformation.
“Transformation is probably a bit too ambitious of a word; the first couple of years really was establishing the supply chain for Super Retail Group,” he said.
“We’re in the stabilising and building the foundations stage, and not yet in the space to kind of talk about the cutting edge and future.”
Omicron exposes inefficiencies
SRG was already moving to “trim fat” off its product distribution network when the 2021-22 supply chain crisis forced it to act more quickly.
“The expectation a few years back on supply chain was really quite modest,” Fountain said.
He added that SRG’s volumes have seasonal adjustments to contend with.
“We have quite a seasonal business,” he said.
“You can imagine with BCF, it was Summer, [but] on the biggest day of the biggest month, we still have surplus storage and surplus capacity.”
Before the upgrade, SRG’s supply chain team “were very retrospective. We would present our results at the end of the month. And we had pages of excuses to justify those results, and no focus on how we could correct them.”
At the beginning of the pandemic, the costs of inefficient delivery and storage were less dire due to increased sales. Orders moved online, but they actually grew; making operating expenditure seem like less of an issue.
“Across those three years of Covid, we grew about 30 percent revenue… the equivalent of acquiring another Super Cheap Auto brand,” Fountain said.
Then Omicron hit; border closures, lockdowns and workplace outbreaks continued. Fountain’s team were left without enough high-reach forklift drivers to fill warehouses.
Although customers were purchasing more fishing rods, puffer jackets, sports bras and tyre inflators from home, “labour shortages were playing out in DCs and transport; there were pallet shortages, which we never thought would happen.”
“We had 40 percent more containers running at 750 percent more cost,” Fountain said.
“Our production lead times flew out by about 300 percent. The rate of our ocean freight delivery being on time dropped to about 15 percent, which might as well be zero.”
SRG’s supply chain team was suddently it’s most challenged division – and investing in the division’s capabilities to help it deliver more with less became imperative.
“The supply chain was almost like an aggregation point for highlighting how multiple brands could work together and achieve a better net result,” Fountain said.
K.Motion Warehouse Advantage
The platform assigns, tracks and guides workers while completing tasks.
“It ultimately took away some of that creative license that exists in DCs where individuals will think that they’re doing things the right way, but maybe doing things inefficiently or breaking process,” Fountain said.
Using technology to ensure adherence to protocols meant fewer mistakes, he added.
“We’re seeing a massive drop-off in the number of reclaimed tasks.”
The warehouse management system includes functionality like slotting, warehouse transfers, picking and packing, cross-docking and operations like advanced shipping management and staging, order and wave management, and load and route optimisation.
SRG worked with Körber via Teams during lockdown to tailor K.Motion Warehouse Advantage to its distribution centres.
Stabilised and ready to transform
Reflecting on the future of SRG’s technology strategy, Fountain said that “we’ve stabilised, we’ve survived Covid, [and] the next five years are about us investing and shaping the direction that we’re going.”
“We’re looking at automation,” he said. “I’d argue that if you’re not looking at it, you might be getting left behind.
Before standardising its supply chain processes, SRG suffered if it did not have enough industry veterans managing processes. Similarly, its recruitment campaigns now valued “time spent in the industry” and “qualifications” less.
Fountain said the company wanted to bring in people with the “intelligence and aptitude” to lead transformations.
“We’re using those people to further simplify the business. And that’s network design; that’s automation; that’s data intelligence; that’s how we think about demand and supply planning,” he said.
“We’re using these people for stripping the guts out of everything we want automated, standardised and simplified, and we want to do systems and algorithms wherever we possibly can.”