National supply chain survey launched

The NHVR has launched a national supply chain survey ahead of an education campaign about chain of responsibility requirements.

NHVR CEO Sal Petroccitto told the Australian Logistics Council’s Annual Conference that the online survey will run from September until early October and will take approximately 15 minutes to complete.

“The survey is aimed at both the heavy vehicle industry and the supply chain throughout Australia,” Mr Petroccitto said.

“We need all of industry to be involved, so the right information and tools can be developed and delivered to support business education across the national freight task.”

The results of the survey will be analysed and form the basis of the NHVR’s Chain of Responsibility education program. The information and guidance material will be used to assist all supply chain businesses to better understand their heavy vehicle safety obligations and to adopt safe management practices.

Mr Petroccitto said the survey forms part of a larger Chain of Responsibility project.

“We are committed to a heavy vehicle industry that delivers the information and tools necessary for managing the ongoing safety and compliance requirements under Chain of Responsibility legislation,” he said.

“The survey will be available through links on our website and social media channels as well as through the national bodies and individual emails.”

Managing Director of the Australian Logistics Council, Michael Kilgariff said the survey will be an excellent tool to raise a greater understanding of the supply chain and the vital role it plays for our growing freight industry.

“We congratulate the NHVR for this education initiative and look forward to seeing more industry resources in the future,” he said.

Blockchains could help restore trust in the food we choose to eat

Companies around the world are exploring blockchain, the technology underpinning digital currency bitcoin. In this Blockchain unleashed series, we investigate the many possible use cases for the blockchain, from the novel to the transformative.


If the food industry is not in crisis, it certainly contains an increasing level of complexity and associated risks. A recent analysis suggested 50% of US food production is wasted, with global estimates above 30%.

Retailers want perfect produce, leading to wastage occurring throughout the food supply chain. They also seek low prices, leading to industrialisation of processes.

Food scares such as mad cow disease (BSE) and cross contamination mean many consumers have less trust in their food, increasingly seeking information on authenticity and production practices.

Over 80% of antibiotics used in the US are used in food production. Farming practices lead to environmental issues and may exacerbate to climate change. Alternate “real world” models are being developed to address some of these issues. For instance, farmers’ markets can reduce food miles, and demonstrate localism. Gleaning, where people collect leftover crops from farmers’ fields after they have been commercially harvested, is becoming popular. There is ever increasing legislation and standards, though these tend to be national or regional, and often onerous to implement.

Recent developments in the digital economy could help. Among these are a growing use of sensors providing information to allow more intelligent practices to reduce costs and improve flexibility. Real time temperature monitoring and smart fridges in homes can help reduce waste. But a relatively new innovation, the blockchain, is seen by many as offering significant opportunities within agricultural supply chains.

Blockchains are the technology that underpin cryptocurrencies like bitcoin, but they have uses other than currencies. They record information in a distributed ledger in a way that is both secure and immutable; by being distributed among many users these ledgers are resilient with no single point of failure, and they can be (depending on design), transparent to all users.

Blockchains and trust

Described by the Economist as “the trust machine”, blockchains provide supply chain transparency and data integrity, allowing a visible assurance of authenticity.

A number of startups are exploring the potential for blockchains in agriculture. Most notable is Provenance.org, a small UK B2B software startup using the blockchain to establish the authenticity of high value goods, including food. They are experimenting with proving the supply chain of tuna caught in Indonesia being delivered to Japanese restaurants. They will use information on sensors or RFID tags and local certification, recorded in the blockchain, to track the fish along its journey from “hook to fork”; creating in the words of one of their founders, a “reputation system”.

Other software firms are developing similar off the shelf solutions for global tracking. Innovators are researching ways in which DNA can be recorded and tagged to an animal, and recorded in the blockchain. This information can easily be made available to end users and customers using mobile phones and apps.

BlockCrushr Labs is a Canadian startup addressing issues of local food poverty and is using the currency and transparency aspects of blockchain technology to increase donations to homeless people, and also to ensure these donations are responsibly spent.

Farmshare is using blockchain to evolve community-supported agriculture, where a local “currency” can be used to purchase locally produced food within a natural community.

Farmers continue to look for ways to certify their crops.
U.S. Department of Agriculture/Flickr, CC BY

A wireless sensor firm, Filament, is developing sensors to monitor crop health and recording results in a blockchain. Others are embedding sensors in the harvested crop to record temperature and humidity. These make it easier to trace damaged crops. Linking these sensor records to other connected equipment in the internet of things, such as transport and storage coolers ensures end to end monitoring and safe handling.

Skuchain is developing improved barcodes and RFID tags, and blockchain technology with the aim of protecting end to end global supply chains against counterfeiting.

Firms such as sandwich chain Subway have pledged to remove antibiotics and preservatives from their ingredients. If the wish to deliver these promises, a transparent blockchain where product origin and contents are visible to all would seem to be a suitable approach.

We may typify these proofs of concept and ideas as using the blockchain to provide a permanent audit trail, where visibility leads to accountability and trust, without the need to establish local reputation. This philosophy is obviously not restricted to agriculture.

However blockchain solutions have their own limitations. Principal among these are the need to ensure a tight coupling between the product and its digital representation, and the ongoing need for some form of reputable local certification system in the first mile to, for example, establish the fact of ethical practices.

The inevitable mixing of products and supply chains is another factor complicating easy adoption and implementation. For these reasons current proofs of concept tend to be high value and low volume, and often stimulated by strong social motivations of their founders. Blockchains can only be part of a wider solution, and may remain limited to niche markets where establishing provenance can command higher returns.

The Conversation

Phil Godsiff, Senior Research Fellow, University of Surrey

This article was originally published on The Conversation. Read the original article.

 

Top  image sourced from shutterstock.com

ALC calls for government focus on national supply chain efficiency

The Australian Logistics Council has pushed for a renewed wave of national productivity that can help Australia’s supply chain industry deliver economic and social benefits to the community.

According to ALC Managing Director Michael Kilgariff, the Coalition must improve the efficiency and safety of the the nation’s supply chains by resourcing the development of a National Freight and Supply Chain Strategy.

“The development of a National Freight and Supply Chain Strategy, which would incorporate the various, interlinked components of our national and international supply chains, was one of the high-level recommendations contained in Infrastructure Australia’s 15-Year Plan released earlier this year.

“The development of the National Freight and Supply Chain Strategy should be viewed as the next step of the economic reform agenda and in the same context as the white papers that have transformed many of Australia’s economically critical industries.

“The need for such a long-term, visionary approach to national supply chains is underscored by an ALC Report which found the industry represented 8.6% of the national economy and that a 1% increase in supply chain efficiency can deliver a $2 billion benefit to Australia’s economy.

“The efficiency of Australia’s supply chains is critical to Australia’s future economic prospects, whether it be getting our exports to our ports, consumer goods to our supermarkets or delivering products to our doors.

“The volume of freight going through our ports and airports will grow inexorably over the next 30 years, with Infrastructure Australia predicting a 165% increase in containerised trade from 2011 to 2031.

“It is therefore critical that we have a long-term plan to deal with this growth and to maximise the logistics sector’s benefits to the Australian economy,” he said.

“ALC encourages the Government to respond to the Infrastructure Australia 15-Year Plan within its first 30 days of Government, and to provide the necessary resources to develop the proposed National Freight and Supply Chain Strategy,” he said.

“We would like to see the proposed Strategy developed like a Productivity Commission White Paper and for industry to be closely involved in its development.

“The Strategy would map nationally significant supply chains and their access to supporting infrastructure, and recommend a series of reforms and investments to enable the more efficient movement of freight.

“Such an approach would cover issues such as improved corridor protection, rail freight, improving heavy vehicle safety through a focus on technology and progressing reforms to heavy vehicle pricing and investment.

“We cannot expect to achieve the economic and social dividend unless we have a comprehensive national plan that sets out a long-term framework for future investments and reforms,” he said.

Vic Govt puts cold chain industry at risk, claims RWTA

The Refrigerated Warehouse & Transport Association of Australia (RWTA) has called on the Victorian Government to explain why it encouraged a business with a history of serial insolvency in Europe to enter the local market.

An investigation by the international Forensic and Risk Services company PKF has revealed NewCold’s European Directors have a history of insolvency associated with failed companies in the same industry.

RWTA Chairman David O’Brien called on the Victorian Government to disclose any subsidies or financial assistance offered to NewCold’s establishment in Victoria, and to explain what due diligence has taken place.

“Our own investigation found both of NewCold’s foreign Directors have been directors of companies that have gone into liquidation in the UK. How have they proved financial viability when there is a history of serial insolvency in Europe?” Mr O’Brien asked.

“This should have raised the alarm for any Australian business or Government considering entering a commercial relationship with this firm,” he said.

Mr O’Brien said he was extremely concerned that if NewCold decided to buy market share by price gouging, this would lead to job losses by destroying local players.

“The Premier needs to explain what data he relied upon to support his promise of the creation of 127 jobs in a business which is highly automated.”

The Australian cold storage industry is estimated to be worth about $6 billion, and is forecast to continue growing at around 2.5 per cent per annum.

SAI Global appoints new food safety expert

SAI Global has announced the appointment of Dawn Welham as Global Technical Director and Thought Leader, continuing to expand its expertise in Retail, Food and Agribusiness industries.

With a wealth of experience across food product safety, public health, consumer protection and occupational health and safety, Dawn will use her expertise across 100 countries, with a focus in Asia-Pacific, the Americas and Europe, and continue growing the company's capabilities in product safety.

Businesses are focusing more on embedding product safety processes and culture as food provenance, safety and integrity become more important to consumers.

According to Dawn, SAI Global is taking a leading role in providing risk management solutions to Retail, Food and Agribusiness industries, to ensure product integrity and safety.

"True technical leadership is about putting systems in place to make sure customers get what they pay for. They pay for quality, legality and safety, and my new role will be focused on all aspects of this compliance for many large businesses around the world," Welham said

"An effective technical system is one which takes the complexity out of compliance, but also creates a competitive advantage for the business. This is paramount to the way SAI Global works and is the part that makes my new role very rewarding and exciting."

Galipo Foods increases throughput with voice-enabled warehouse

Galipo Foods, one of the largest food distribution companies in South Australia, teamed up with VoiceID and Honeywell Sensing and Productivity Solutions to upgrade its warehouse technology and increase productivity by 80 per cent. 

As part of the upgrade project, Galipo Foods updated its existing voice technology system with the latest advancements in Honeywell’s voice solutions, including the Vocollect A730 device with an integrated hands-free scanner, Vocollect SRX2 wireless Headset and VoiceLink software to connect with Galipo’s system in real time. 

“The priority for Galipo Foods was upgrading its picking process without having to undergo a complete system replacement, as this meant a lower initial investment and therefore a quicker return on investment,” said Rizan Mawzoon, director of sales for VoiceID.  

“Galipo had already made an initial investment in Honeywell’s Vocollect voice solutions. By introducing the VoiceID connector solution and Honeywell A730 devices, we were able to complete a straightforward upgrade of the voice technology they were using, with great results in terms of productivity increases.”

“We are very excited that our upgrade to the latest Honeywell voice technology has delivered such dramatic results, with our throughput increasing from 50 million to 65 million units processed each year. With more areas to be brought in under this technology, we will be able to move 90 million units by January 2016,” said Nathan Narayanan, general manager at Galipo Foods. “And the best part is that our productivity growth has been achieved without adding additional workers, which has saved us money.”

Voted as best distributor of the year in Australia in 2014 and South Australian distributor of the year in 2014 and 2015, Galipo Foods offers its customers biscuits, soups and gravies, sauces and dressings, condiments, oil, pasta, dairy, jams, meat, cereals, bread, seafood, pastries, herbs and spices, grains, drinks, eggs, syrups and more. Operating in the competitive food service space, it is vital that Galipo Foods’ warehouse operates at an optimum level in order to deliver the right product, at the right time and in the right condition. 

“We are very pleased to see that Galipo Foods’ voice technology upgrade is already helping them increase productivity and the accuracy of their order fulfilment,” said Paul Phillips, ANZ regional manager, Honeywell Sensing and Productivity Solutions. 

“With increased productivity and accuracy, Galipo Foods can now be confident they are offering the highest level of customer service at all times.”

Pepsi claims victory at the 2015 Australian Supply Chain & Logistics Awards

Pepsi has been awarded both the 2015 Supply Chain Management Award and the 2015 Storage & Materials Handling Award by the Supply Chain & Logistics Association of Australia in Sydney.

Over 55 years, the ASCL recognises an individual or a company for outstanding achievements and contribution working within the Transport, Supply Chain and Logistics Industry.

The 2015 Supply Chain Management Award is given out to encourage and acknowledge the outstanding achievement of an organisation that has demonstrated significant achievements in managing the integration of Supply Chains. This could be functional integration within an organisational Supply Chain or more widely across Supply Chains involving several organisations that have formed trading partnerships or alliances.

PepsiCo were recognised for their Supply Chain Optimisation project, which included automated palletising, AGV pallet transport and put-away/retrieval from ASRs.

Pepsi were also awarded the 2015 Storage & Materials Handling Award, which recognises the significant achievements in the techniques and technology of materials storage and handling at any stage of the supply chain.

Technology covers equipment and design techniques, including the facilitation of design and associated information and control systems.

Other awards given out at the Sydney show included the 2015 Industry Excellence Award, the Future Leaders Award, the 2015 Training, Education & Development Award and the 2015 Information Management Award.

Asia’s newest service centre open to global food supply

CHEP has reaffirmed its commitment to developing better supply chains to food and logistics industries through an opening of an advanced pallet service in Malaysia.

With an opening ceremony officiated by the Chief Executive Officer of Brambles Limited, Tom Gorman, the event featured supply chain leaders from local and international companies.

“This service centre sets a new benchmark for modern pallet repair facilities in Asia and positions CHEP to better meet the growth demands of our customers in the region, many of whom are household names such as Nestlé, F&N, Coca-Cola, Mondelez and Unilever,” Gorman said.

CHEP supports more than 500,000 customer touch-points for global brands such as Kellogg’s and Nestlé as part of Reusable Plastic Containers (PRCs), which operates a fresh food supply chain globally to the automotive, aerospace, oil and gas sectors.

Consumer goods (such as dry food and groceries) are served in the fast-paced industry that services fresh produce, beverage and manufacturing groups.

A new site has been designed to support an additional 30 per cent increase in future pallet repair volumes and also incorporates CHEP Malaysia’s head office and support functions such as customer service.

Gorman said CHEP’s role in providing supply-chain solutions to help customers transport goods can assist in driving trade and business worldwide, with the quality and efficiency impacting on consumer experience.

Coles refunds over $12 million to suppliers following ACCC action

Independent arbiter, Jeff Kennett has instructed Coles to refund over $12 million to suppliers and has also allowed suppliers to exit the ARC program without penalty or have their ARC contribution rebates reviewed.

The $12 million is in addition to the penalty ordered by the court of $10 million fine in December last year.

“The arbitration process conducted by Mr Kennett has proven both extremely timely and effective with significant benefits to suppliers,” ACCC Chairman Rod Sims said.

“The process will also deliver flow on effects for suppliers more broadly as a result of changes Mr Kennett says Coles has begun to implement that affect the way it deals with its suppliers.”

The refunds process arose out of the resolution of two proceedings commenced by the ACCC against Coles in 2014: the ‘ARC proceedings’, and the ‘claims proceedings’.  In December, the Federal Court made declarations in both proceedings by consent that Coles had engaged in unconscionable conduct in 2011 in its dealings with certain suppliers.

As part of the resolution, Coles also provided a court enforceable undertaking to the ACCC to establish a formal process to provide options for redress for over 200 suppliers. In December 2014, Mr Kennett was appointed to administer the process and to assess the eligibility of:

  • over 200 smaller suppliers listed in the ARC proceedings, categorised by Coles as ‘Tier 3’ Suppliers, to obtain refunds of any prior ARC rebate payments and seek adjustments of future rebates (taking into account the circumstances of their entry into the ARC program and any benefit received from their access to ARC over and above any arrangements they had with Coles prior to the implementation of the ARC program); and
  • suppliers referred to in the claims proceedings (in respect of which Coles made admissions in relation to profit gap claims, waste claims, and delivery fines) to obtain possible payments.

“The high level feedback from suppliers is that they are largely satisfied with access to redress from Coles and the timely, efficient and low cost approach. Ultimately, it was a matter for each supplier to decide whether or not to proceed with the resolution proposed, and as Mr Kennett’s report demonstrates, a very large number accepted the relief offered by Coles,” Sims said.

“The arbitration process was intended to provide an efficient alternative to otherwise lengthy and costly processes in determining the loss and damage of affected suppliers.  Mr Kennett has now finalised his deliberations and has instructed Coles to refund over $12 million to a number of ‘Tier 3’ suppliers and a further $324,000 to suppliers listed in the claims proceedings. This is in addition to the penalty ordered by the court of $10 million,” Sims said.

Under the arbitration process, it was also open to suppliers to simply exit the ARC program. A number of suppliers took this option. Suppliers who sought a review of their eligibility for refunds also had the option to exit the ARC program.

“Mr Kennett has reported that his arbitration process has resulted in substantial ongoing savings for suppliers. Exit from the program chosen by some suppliers and reduced rates for others will save suppliers significant additional costs into the future,” Sims said.

Kennett’s determinations, as the independent arbiter, are binding on Coles and Coles has already moved to implement steps necessary to comply with those determinations. Kennett also made a number of non-binding recommendations to Coles on the basis of his discussions with some suppliers.

“The ACCC recognises and acknowledges Coles’ co-operation in acting upon the binding determinations made by Mr Kennett and in making some of the non-binding changes recommended by Mr Kennett. It moved quickly and without challenge to accept the decisions and implement changes,” Sims said.

 

Food & Beverage Supply Chain training centre receives funding

The Australian Research Council (ARC) Food & Beverage Supply Chain Optimisation Industrial Transformation Training Centre (ITTC), hosted by the University of Newcastle, will train the next generation of multi-disciplinary researchers capable of designing and managing safe, sustainable, and cost-effective food supply chains.

The training centre received $2.1 million in ARC funding through the Industrial Transformation Research Program, which will employ three postdoctoral researchers and support 10 PhD students.

Based at the University of Newcastle’s Central Coast campus, the centre will bring together a diverse set of research organisations and industrial partners to ensure the research carried out, and training provided, are both at the cutting-edge and industrially relevant.

The food industry is important to the Australian economy with 15 percent of the national workforce involved in food production and food exports equating to $30.5 billion each year.

The National Food Plan White Paper states the vision for Australia’s food system is a sustainable, globally competitive, resilient food supply, supporting access to nutritious and affordable food.  Key to achieving this vision are safe, sustainable, and cost-effective, food supply chains.

The ARC Training Centre for Food & Beverage Supply Chain Optimisation will support the development of new and innovative postharvest treatments to improve horticultural market access and reduce waste in the horticulture supply chain.
Centre Director Professor Rick Middleton said the ARC Industrial Transformation Training Centre scheme had a focus on postgraduate research that was directly linked to industry needs.
"The ARC Training Centre for Food and Beverage Supply Chain Optimisation brings together researchers both in operations research (optimising logistics) and in food science."

The University’s School of Mathematical and Physical Sciences, the School of Electrical Engineering and Computer Science and the School of Environmental and Life Sciences form part of the training centre.

Researchers at the centre will collaborate with the University of Sydney, The Georgia Institute of Technology, Commonwealth Scientific and Industrial Research Organisation, NSW Department of Primary Industries and Ghent University Global Campus, as well as industry organisations Coca Cola Amatil (Australia), Sunrice, Batlow Fruit, and the Sanitarium Health & Wellbeing Company.

 

Grocery code “not necessarily the answer”: former Kelloggs boss

Former Kellogg chief executive Jean-Yves Heude has warned suppliers not to rely on the grocery industry code of conduct.

The code of conduct, which was declared legally enforceable on 3 March, aims to deliver more contractual certainty in trading relations between suppliers and supermarkets and encourage the better sharing of risk and reduce inappropriate use of market power across the value chain.

It sets out clear obligations to ensure key elements of Grocery Supply Agreements are discussed and agreed up front.

The Australian Food and Grocery Council (AFGC) said the tabling in Parliament is a step towards levelling the playing field for food and grocery suppliers in their transactions with the major supermarkets.

“Signing onto the Code will be a mark of the retailers commitment to fair dealing and to improving the operation of one of the most dynamic and competitive sectors of the economy – the fast moving consumer goods sector,” said AFGC CEO Gary Dawson.

However, Jean-Yves Heude, who ran Kellogg's Australian and New Zealand operations for five years, says the code of conduct is "not necessarily the answer" for suppliers under pressure from Coles and Woolworths to cut prices, fund deeper and more frequent promotions, fill profit gaps and fund supply chain changes, The Australian Financial Review reports.

“They shouldn't rely on this to help them,” said Heude, who now advises food and grocery suppliers. “Coles and Woolworths will use whatever levers they can to deliver their financial targets.”

Mr Heude, a 25-year veteran of the European grocery market, says suppliers need to adapt to a shift in the market from a "win win" model to a European style "balance of power" model, where the major chains exploit their market power to secure better deals from suppliers.

The only way suppliers can level the playing field, he says, is by ensuring their products are unique and relevant to consumers and to adapt their trading strategy to this model.

"If your product is unique and relevant then the retailer needs you as much as you need them," he said. "The minute your product becomes a commodity you're in trouble, price is the only differentiator and on price they will crush you."

"Uniqueness drives loyalty and if consumers are loyal to your brand the retailer can't touch you – loyal consumers will go to another store if they cannot find their preferred product, then the retailer runs the risk of losing the entire basket," Heude said.

"If you are small with very loyal consumers then you have the balance of power."

The Australian Competition and Consumer Commission has promised to use its new powers under the code to enforce its provisions and take legal action for breaches of the code by retailers who sign up.

However, Heude believes that retailers still have scope to demand lower prices and extra discounts and payments from suppliers without crossing the line of unconscionable conduct or breaching the code, as long as they have the right to buy the products they want at the price they want – "which is obviously the case in a liberal economy like Australia."

"Suppliers need to understand what they are facing," he added. "Don't wait for the code to save you, but adapt your business to the balance of power model now."

 

Premier Foods accused of demanding “investment payments” from suppliers

Premier Foods, one of the UK's biggest manufacturers, has been accused of demanding payments from its suppliers to continue doing business with them.

BBC’s Newsnight reports that Premier Foods said it was confident the scheme did not break any rules under competition law, but the UK government said it was "concerned by recent reports".

The company, which owns brands like Mr Kipling, Ambrosia, Bisto and Oxo, demanded the payments from suppliers across the UK.

Newsnight has seen a letter sent by chief executive Gavin Darby, dated 18 November.

He wrote: “We are aiming to work with a smaller number of strategic suppliers in the future that can better support and invest in our growth ideas.”

“We will now require you to make an investment payment to support our growth.

“I understand that this approach may lead to some questions.

“However, it is important that we take the right steps now to support our future growth.”

But when a supplier raised questions in an email about the annual payments, another member of Premier's staff replied.

“We are looking to obtain an investment payment from our entire supply base and unfortunately those who do not participate will be nominated for de-list.”

Liesl Smith, from the Federation of Small Businesses, said: "This is the first time that we have ever seen anything so blatant… in this very direct way before.

“We think it is unjust, it is not competitive and it is not helping the supply chain.

“It's not just going to affect the business owners, it will affect staff as well.”

Premier Foods told Newsnight: “We launched our 'invest for growth' programme in July last year as part of a broader initiative to reduce complexity in support of plans to help turnaround the business.

“This included a commitment to halve the number of our suppliers and develop more strategic partnerships focused on mutual growth.

“The programme requires our suppliers to make an annual investment to help fund our growth plans.

“In return, our suppliers benefit from opportunities to secure a larger slice of our current business.

“They also stand to gain as our business grows in the future.”

It added: “In the current challenging environment, the support of all of our suppliers is crucial.

“We have had a positive response from many who are actively engaging in building a new partnership with us, including many small companies.”

Newsnight understands many suppliers have paid a total in the low millions so far.

Competition law states that in some cases, pay to stay can be against the law.

Premier Foods is confident its scheme is within the rules.

 

SMBs should challenge suppliers to achieve growth, Forum Group

According to a new report from managed-service company, Forum Group, two in five SMEs have either decreased the number of sites they operate across or let staff go to manage supplier cost fluctuation.

The Forum Group surveyed 453 businesses to examine and quantify how the operational expenditure of SMEs, and mid-market companies impacts on business growth and productivity.

The report found that 66 percent of respondents have seen employee head count restricted, or profit margins decrease due to the impact of increased operating expenditure.

“It is worrying that such a large number of organisations feel they need to resort to redundancies to get a handle on hard costs,” said Forum CEO, Bill Papas. “We know cost of doing business is increasing, and the strain this is putting on business, particularly SMEs, means companies need to look for new ways to make the most of their operating expenditure to better manage inefficiencies.”

The report states that over the past 12 months, only 20 percent of operators have actively looked at ways to reduce their largest operating expenditure, which is only down slightly from 22 percent three years ago.

In addition, 30 percent of respondents said they have increased the number of suppliers servicing their organisation over the last year, and that more than half (60 percent) of businesses claim they can’t change suppliers due to existing contracts and penalty fees, or personal relationships.

Papas said rising costs and operational issues can often distract business owners and managers from their core business.

“The costs associated with managing multiple supplier arrangements is often overlooked and most business owners and managers don’t have the time or knowledge to identify the best services or suppliers, or how to better manage the increasing cost of doing business. They may search online for a quick fix, or perhaps look to their own network and suddenly find themselves in a situation where they have too many suppliers to handle,” he said.

“SMBs should challenge their suppliers to improve and streamline their services so they can prioritise business productivity and growth.”

Other findings from the research include:

  • 14 percent of SMBs have up to 10 suppliers
  • 56 percent of SMBs review their supplier contracts annually
  • 5 percent of SMBs are not clear on why their supplier costs have changed over the last three years

 

GS1’s Global Registry reaches 15 million product items

Global supply chain standards organisation, GS1 has announced that its GS1 Global Registry has now reached 15 million product items.

The Global Registry, which is a directory operated by GS1, allows companies to synchronise standardised product data with trading partners worldwide. The registry is also an essential tool within the GS1 GDSN, which provides secure and continuous synchronisation of accurate data between businesses.

“The 15 million item milestone indicates the ever growing success of GDSN as well as demonstrating Data Quality standards going from strength to strength globally. In the last two years many organisations have recognised the benefits of scale that adoption of GDSN brings to their business processes, which showcases the advantages of the uptake of GS1 standards” said Maria Palazzolo, GS1 Australia’s CEO.

In addition to the success of GDSN, GS1 Australia entered into a multi-year contract with certified data pool provider 1WorldSync in March this year. This provides the Australian and New Zealand markets with a new ‘next generation’ platform for the enhanced delivery of the GS1net Australasia GDSN certified data pool.

GS1net is currently the third largest data pool with over 800,000 Global Trade Item Numbers from 1750 GS1net user organisations across the Grocery, Foodservice, Liquor, Healthcare, Hardware and Office Products and General Merchandise sectors.

GS1 expects to see an overall increase of the usage of GDSN in several different industries, such as healthcare, retail, food service due to a growing demand for data around how a product is delivered to market, including handling instructions, traceability attributes, nutrition information, regulatory compliance and classification.

 

Food supply management centre to be established

The University of Sydney will partner with brands including Coca-Cola Amatil and SunRice to establish a research centre focusing on maintaining a sustainable food supply to our domestic and export markets.

The Training Centre for Food and Beverage Supply Chain Optimisation will operate in cooperation with the University of Newcastle, the CSIRO, the Georgia Institute of Technology and the NSW Department of Primary Industry, and industry partners will include Coca-Cola Amatil, SunRice, the Batlow Fruit Co-operative and Sanitarium Health and Wellbeing.

The University of Sydney Business School’s Institute of Transport and Logistics Studies is establishing the centre, and its chief investigator, Associate Professor Behnam Fahimnia, said a cost effective supply chain is essential if the food industry is to become more sustainable and competitive on the world stage.

“The key to survival is logistics excellence with a focus on the delivery of products to the right customer at the right time,” Fahimnia said. “One of the big challenges is size. Coca Cola Amatil, for example, has 35 production lines, 14 primary distribution centres and over 125,000 delivery points.”

“The rice industry generates a large volume of waste products in the form of rice hulls which are either buried or burnt,” he said. “This waste could be converted into energy in the form of electricity.”

Fahimnia is now looking for three PhD students to join the centre and work on supply chain design and management projects in close collaboration Coco-Cola Amatil and SunRice.

The Training Centre for Food and Beverage Supply Chain Optimisation is being funded with a substantial grant from the Australian Research Council.

 

Coles categorically denies unconscionable conduct claims

Supermarket giant Coles has categorically denied claims it’s engaged in unconscionable conduct by forcing suppliers to pay additional rebates for a new supply chain program.

According to SMH, Coles issued a 34 page document to the Federal Court in Melbourne on Monday (30 June) rejecting claims made by the Australian Competition and Consumer Commission (ACCC) that it used unfair tactics to force suppliers to pay ongoing rebates to participate in the Active Retail Collaboration (ARC) program.

The ACR program was developed by Coles in 2011 to improve earnings by obtaining better trading terms from its suppliers. The ACCC alleges that in relation to 200 of its smaller suppliers, Coles required agreement by the supplier to the rebate, which ranged from about 0.7 percent to more than one percent of sales, within a matter of days. If these suppliers declined to agree to pay the rebate, Coles personnel were allegedly instructed to escalate the matter to more senior staff, and to threaten commercial consequences if the supplier did not agree. The ACCC alleges that, in a number of cases, threats were made when suppliers declined to agree to pay the rebate.

The ACCC alleges Coles engaged in a number of acts of unconscionable conduct including:

  • Providing misleading information to suppliers about the savings and value to them from the changes Coles had made;
  • Using undue influence and unfair tactics against suppliers to obtain payments of the rebate;
  • Taking advantage of its superior bargaining position by, amongst other things, seeking payments when it had no legitimate basis for seeking them.

Coles denies the claims, arguing participation in the program was voluntary and that it maintained trading relationships with suppliers regardless of their involvement.

 

Supermarket wars – a tale of the Australian duopoly

Consumers do not automatically consider the Australian grocery duopoly as an industry at all. Its stores play a part in most Australians’ everyday lives, whether it’s dropping into the local supermarket on the way home from work, or being exposed to blasts of push media in the form of fresh promises or revised jingles on TV, radio and billboards.

Australia is the most concentrated grocery market in the developed world: our top two retailers hold 78 percent of total grocery market share collectively, according to the Australian Food and Grocery Council (AFGC). This compares to 48 percent in the UK, 44 percent in France and only 24 percent combined market share of the top two grocery retailers in the USA. As an industry, the Australian grocery scene reads like a twisted schoolyard rivalry. It’s a high school scene with a fierce tension between ‘cool groups’. There’s never room for two. Let me explain.

Regarding industry leadership, the helm of Australian grocery was largely uncontested until 2007 when Wesfarmers bought Coles for $20 billion. This acquisition saw a brand new managerial board from the “Tesco school of grocery leadership” reshape the frumpy bridesmaid of grocery retail into a real threat for Woolworths. They initiated a flurry of revised consumer marketing, celebrity chef endorsements, Tesco-inspired business strategy, fierce price discounting and an emergent pride and equity associated with private label products.

The complacent Woolworths had been around forever, with a strong heritage (‘Safeway’ street cred) and a relative trend setting reputation on their side. They were the first to ‘liven up’ the consumer experience by draping their staff in green shirts and installing self-service checkouts.

To the tune of promotional renditions of Status Quo’s greatest hits played on big-red-hand guitars, Coles continued to challenge for leadership. The red they’d always worn was brighter (and damn, that’s a food colour), their jingles catchier and their pricing promotions more memorable. The mothership from the UK had been flying under the radar whilst gathering information about the local turf. Before 2008, 70-80 percent of Coles’ staff were employed on a casual basis. They instantly transferred as many employees as they could onto permanent part-time basis’ to gather camaraderie and champion the shopper’s in-store experience in their quest for a supermarket shake up.

Despite all of this action, the Australian Food and Grocery Council reported a 2.2 percent Compound Annual Growth Rate (CAGR) food and grocery industry decline in 2009-2011. Of course other school yard factions made moves, but none have made any real threat to the throne. Metcash, whose primary grocery channel is IGA, is trying to cling to its second tier status while playing a strong ‘locals’ card and capitalising on its ability to customise stores as needed. A recent Roy Morgan report identified Metcash had officially been knocked off its third place perch by German retailer Aldi, which now accounts for over 10 percent grocery sales. 

As the country’s largest manufacturing sector, Australian food and beverage manufacturing employs a quarter of a million people. Grant Thornton’s survey of industry CEOs revealed that manufacturers are feeling the impact of private label competition and anticipate further negative impact on profits.

From primary producers to suppliers, everyone is now fighting for their share of scarce profits and competitive advantage. The implications of this rivalry reach far and wide into the Australian economy. Supermarket shelves are the culmination of Australia’s  $110 billion food and grocery manufacturing industry’s supply chain.

Manufacturers face constraints on shelf space and therefore opportunities to reach their consumers. Their products are often sacrificed to make way for competitive copy-cat private label offers, trade margins and the ‘cost of doing business’, as well as retailer demands for deep promotional pricing (either fully or partly funded by the manufacturer). This is additional to the external, non-grocery factors impacting Australian food manufacturing’s business such as the high Australian dollar, ever changing regulatory compliance initiatives, commodity pricing and increasing costs of energy and labour.

In order to increase competition, the Australian government should appoint a supermarket ombudsman responsible for assessing the trade margin implications of both Coles and Woolworths on the greater supply chain. The ombudsman should also hold responsibility for monitoring private label market share across all categories. As per the AFGC’s 2011 recommendation, such an ombudsman should ensure that branded products continue to have access to supermarket shelf space on a fair and equitable basis. Without such an authority, the anti-competitiveness of the industry will continue to rise, and both the industry and consumers will suffer.

Alexandra Wall is a student at RMIT University and was a Global Voices Delegate to the OECD Forum in May this year.
 

As India and China transform, Australian manufacturers must follow

As Australia laments the decline of its manufacturing sector, China is actively taking steps to accelerate its move up the value chain.

Historically a low-cost operating environment, China was once an attractive option for multinational companies seeking to minimise production costs. However with a burgeoning middle class aspiring for a better place in the global ecosystem, the cost advantages are rapidly eroding.

A Bloomberg Businessweek article examined how tech manufacturer Knowles has grappled with these changing conditions, and their experiences aren’t unique.

The rapid increase in wages, increased cost of doing business – physical infrastructure and raw material – and a higher Yuan are all contributing to manufacturing cost pressures. These challenges, and the pace at which they are taking place, are forcing multinational companies in China to rethink their local strategy to remain competitive.

For those firms not in a position to move up the cost/quality curve, an attractive option is to shift their operations to other parts of Asia where labour costs are still a fraction of China’s, such as the Philippines or Vietnam.

Increasingly multinationals are also facing hiring competition from local private and state-owned enterprises. Temporary relocations from rural areas to larger cities for work are also common in parts of China, with employees returning to their families after a year or two.

It is no surprise then for companies to be investing in employee engagement programs. In one instance, a leading manufacturer of building products in Guangzhou has made a considerable investment in employee engagement programs to achieve a staff turnover rate of 20% (which they identify as being well below the average at comparable companies).

“Indigenous innovation”

Led by the government’s 9% growth target for the production of sophisticated goods, China has concentrated on improving its business and governance environment to create a high value-adding manufacturing industry, as opposed to its traditional low-cost, low value-added ecosystem.

In doing so, their focus has been on “indigenous innovation” – creative production nationally that is less reliant on foreign capabilities.

Analysis conducted by the Royal Bank of Scotland and Bloomberg indicated a shift in job types away from traditional textile and clothing, to computers and communications. Medium and high-tech goods production has increased from 40-60% over the past two decades.

While China is transforming itself into an advanced manufacturer, India is actively promoting itself as a manufacturing hub. India’s recent 11th Five Year Plan (2007-12) showed 28.5% jobs growth in the manufacturing sector. India plans to create an industrial corridor between Delhi and Mumbai, investing in vital support infrastructure such as power plants, water facilities and transport infrastructure.

Alongside this global manufacturing and trading hub, will be the creation of seven “Smart Cities”, while at the Third Global Innovation Roundtable (GIR) 2013 in Delhi, there was also discussion of incorporating industry-university clusters, as well as virtual clusters.

How can Australia compete?

All this means that Australian manufacturers need to be prepared for increasing competition in higher value manufacturing, and consider a wider range of options when looking to offshore operations.

So where should Australia place its efforts and how does it retain its competitive edge? My recent article on Asian value chains clearly establishes the economic case for Australia to deepen its engagement in Asia. But more needs to be done. UWA Professor Tim Mazzarol’s recent piece on the “big shift” in manufacturing – from controlling assets and stocks to leading global knowledge networks – makes this case too.

This accords with calls by industry minister Ian Macfarlane for Australia to expand its industry base to cover new industries and products and transform relationships between research, skills, training and industry.

This ethos of collaborative competition will serve Australia’s interests well in moving up the value chain of activity, allowing Australian companies to lead new developments.

At the micro level, Australian companies must start to foster an enabling culture that moves individuals from thinking about ‘my’ role to ‘enabling another’s' role within the company.

But a prerequisite is the creation of a high skilled, globally minded workforce, which needs to begin through schools, universities and even into organisations.

Sustained interventions at different levels of the ecosystem in education, management and industry will enable a national culture that drives future productivity, innovation and entrepreneurship. Education must be the avenue by which we not only prepare individuals for jobs, but help them to become creators of jobs.

The Conversation

Dr Christopher Vas is the recipient of the 2014 Endeavor Australia India Education Council Research Fellowship. He is also one of the Chief Investigators in the Singapore Government funded research project on benchmarking productivity and innovation in Singapore's manufacturing sector.

This article was originally published on The Conversation. Read the original article.

Track and trace – the benefits of global standards

GS1 Australia’s Andrew Steele reports on the importance of traceability standards and other emerging local and global supply chain initiatives.

Enhanced product traceability, faster recalls and improved consumer safety should be at the top of the agenda when an organisation is detailing its supply chain process.

Traceability is key to consumer safety and an important part of any organisation’s product recall management plan, particularly in the food industry. It makes recalls and withdrawals more efficient. It ensures proper information about unsafe products can be given to consumers in the case of a recall. Not having an effective traceability process is one of the leading causes of product recall incidents escalating into a crisis.

A Product Traceability Expert Group set up by the European Commission released the Research Support for an Informal Expert Group on Product Traceability Report in December 2013, recognising the adoption of GS1 Standards as a best practice for improving supply chain traceability and consumer product safety.

GS1 was selected as one of the 15 expert members of the Product Traceability Expert Group, which was established in 2011 by the European Commission’s Directorate General Health and Consumers to address traceability and product safety issues.

Adoption of traceability standards was just one of several recommendations highlighted in the report, released by the group following two years of industry-wide dialogue. These recommendations focus on benefits for not only businesses and consumers, but also for market surveillance authorities with the common goal of protecting public safety and health.

As supply chains continue to span the globe and consumers purchase more products online, the ability to track and trace products helps properly identify dangerous products and remove them from the supply chain more effectively.

The group’s report outlined the following recommendations:

  • For economic operators, the group recommends labelling consumer products with product identification codes and automating traceability systems using global standards such as ISO and GS1 Standards for product identification, data capture and exchange in order to strengthen consumer safety and improve traceability between trading partners across multiple countries.
  • For market surveillance and other authorities, the group recommends including the use of barcodes in training and conducting traceability assessments in cooperation with private sectors as well as developing best practices to collect information about dangerous products when they cross EU borders.
  • For consumers, the group suggests raising more awareness on the importance of product identification and helping consumers alert authorities about suspicious or potentially dangerous products.

How can the employment of global standards help improve traceability and adhere to new regulations around traceability?
GS1 Standards are used around the world to identify products and capture, record and share data about these products. This information is key in laying the groundwork for traceability. Reliable data cannot exist if traceability systems are not automated. These automated systems rely on a common language of standards in order to “talk” to each other when capturing and sharing data.

How do consumers benefit from improved product traceability?
In the event of a safety issue or recall, dangerous products can be properly identified and removed from the market faster. In addition, efficient, standards-based traceability systems improve the accuracy of product information and labels.

As supply chains often span the globe across different industries and involve raw materials, additives, other ingredients and packaging through to Point-of-Sale (POS), ensuring traceability throughout the whole supply chain has become more challenging.

The ability for a company to successfully track and trace their products through their supply chain and retrieve them from the marketplace is a key component of a product recall event.

GS1 Recallnet is GS1 Australia’s secure web-based portal for the management of recall and withdrawal notifications. Based on global GS1 Standards and best practices, GS1 Recallnet simplifies and automates the exchange of information between suppliers, distributors and retailers as well as government agencies such as Food Standards Australia New Zealand (FSANZ) and the Australian Competition and Consumer Commission (ACCC).

By increasing the speed and accuracy of recall and withdrawal notifications, introducing global standards for traceability significantly decreases business and consumer risk, reduces costs, protects brands and ultimately helps improve food safety in Australia.

Why be standard?
Well-designed supply chain standards play a very important role in day-to-day business operations because:

  • They reduce complexity between and within organisations.
  • They make it easier to make the right decisions about purchasing hardware, software and equipment.
  • They reduce the costs of implementation, integration and maintenance.
  • They facilitate collaboration between trading partners in the supply chain, in a many-to-many relationship, making it quicker and easier to identify items, share information, order and receive parts or ingredients from suppliers, or ship goods to customers.
  • They help improve patient safety and reduce medication errors.
  • They enable global traceability and authentication.

Andrew Steele is Industry Manager – Food & Beverage at GS1 Australia.
 

ACCC signals strategic change in battle with supermarkets

The corporate regulator’s ongoing battle with the major supermarket chains took an interesting twist on Monday when it alleged that Coles had engaged in unconscionable conduct against various small suppliers.

The case relates to Coles’ efforts to improve its efficiency via a major revamp of its supply chain. This led to the Active Retail Collaboration program, which – according to Coles – delivered benefits for large and small suppliers. There’s no such thing as a free lunch though: Coles wanted its suppliers to pay rebates in return for these benefits.

The Australian Competition and Consumer Commission’s (ACCC) case relates to the manner in which Coles sought the suppliers’ agreement to pay the rebates. It is based upon the evidence of 200 small suppliers who were allegedly given “a matter of days” to examine the proposals put forward by Coles. Refusals to pay the rebate were apparently “escalated” to senior Coles staff who threatened “commercial consequences” if the supplier didn’t comply.

On the face of the ACCC’s media statement, the facts upon which the case is based could have been framed as a misuse of market power. The ACCC, however, has made a strategic decision to pursue the claim as unconscionability.

A recent broadening of the law

There are several reasons why it may have done so. First, the ACCC had a significant victory last year when the Full Court found that Lux had engaged in unconscionable conduct when selling vacuum cleaners door-to-door. The unconscionable conduct provisions have been a moving feast ever since their introduction into what is now known as the Competition and Consumer Act. When first inserted, Parliament clearly indicated that the statutory prohibition was not the same as the equitable concept of unconscionability, which is extremely hard to prove.

But many early court decisions seemed to view the statutory prohibition within the framework of the old fashioned equitable approach. In response, Parliament kept amending the legislation, leading to several iterations of the prohibition. But this itself resulted in greater uncertainty about the interpretation of the law. With the Lux case, however, we have superior court interpretation of a provision that has not been amended for more than two years (in the life of statutory unconscionability, that’s practically a record).

While that decision is very fact specific, it clearly broadened the scope of the statutory prohibition, such that the ACCC may feel greater confidence in categorising Coles’ alleged conduct as unconscionability rather than as a misuse of market power.

Time and complexity

Market power cases are notoriously difficult to prosecute: they are long-running, expensive and extremely complex. The ACCC doesn’t have the best track record in relation to such cases and even success can turn out to be a Pyrrhic victory. One of the ACCC’s best misuse of market power success stories is the 2006 Safeway case, in which Safeway (now Woolworths) was fined $8.9 million for unfair conduct towards bread suppliers. That case took nine years from the time of filing to the handing down of final penalties: any benefit for Safeway’s victims had clearly dissipated in the meantime.

Unconscionable conduct cases are much more fact specific and do not involve the complexities of expert economic evidence. Lux for example took around 18 months from filing until the Full Court’s decision.

While the current case is much more complex than Lux (the sheer volume of witnesses will make a significant difference), a first instance decision could be expected by the end of next year. The first directions hearing (on June 6) will be before Justice Michelle Gordon; she runs a fearsomely efficient court room, so an earlier result (if the case stays on her docket) is quite likely.

What would success mean for the ACCC and suppliers?

By framing Coles’ conduct as unconscionable, the ACCC will lose out a little in relation to possible penalties. Maximum fines for misuse of market power are substantially higher – $10 million or more – as opposed to $1.1 million for unconscionability.

But this factor is unlikely to have weighed heavily on the ACCC. First, any such consideration is premised on victory and, as already discussed, unconscionable conduct looks easier to prove right now. In addition, penalties can be imposed per contravention – it’s unclear, at this stage, how many contraventions the ACCC is alleging and how they might be categorised. But it’s unlikely that there would be a maximum penalty of just $1.1 million available to the judge if the ACCC is successful.

In any case, the key outcomes will be damage to Coles’ reputation (which may well result even if the ACCC doesn’t win) and the closer scrutiny of its ongoing conduct. Suppliers, in particular, are likely to be more vocal in complaining about the conduct of Coles and Woolworths if they can see that the ACCC is able to take timely and effective action on their behalf.

To this end, it seems unlikely that Coles will punish the 200 or so suppliers who are caught up in the ACCC’s action. The ACCC has made very clear that much of its evidence was obtained by the use of compulsory powers: as such, it’s hard to tell whether a supplier is a “collaborator” or an unwilling participant.

In any case, Coles would be extremely foolish if it tried to punish suppliers for co-operating with the ACCC while under such a public spotlight. That would look a whole lot like unconscionable conduct.

The Conversation

Alexandra Merrett was a senior enforcement lawyer with the ACCC until July 2012.

This article was originally published on The Conversation. Read the original article.

 

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