Linfox Logistics CEO Michael Byrne believes his company’s winning approach to the development of customers is a key path out of economic stress.
“We have a solid mix of customers across industries, with a significant number producing or retailing staple items, daily necessities of life that are less impacted by the downturn than discretionary purchases,” he says.
“Yes, building products are affected, but vegetables and hair shampoo are not, or far more marginally.”
“We’ve won important new business in the resources industry in WA, distribution for BOC compressed gas products in Australia’s eastern states and Tesco in China. Our new National Foods contract is the largest in the company’s history.”
“Many of the economies in the Asia Pacific region have remained quite resilient until now,” he adds. “In Australia, while the future is less than certain, unemployment has not reached the levels some predicted we would experience by now.
"There are signs of growth returning and the Chinese and Indian economies are expanding and Thailand is tipped to return to growth this quarter.”
“Our customers recognise the need to invest in a premium service in order to improve value in their supply chain operations for the long term,” Byrne says.
“That is certainly the logic behind the National Foods contract; we are working closely with our customer to deliver long term benefit.”
According to Byrne, Linfox’s 2009 — 2012 business strategy was developed with some measure of economic downturn already forecast.
“So our focus for FY 2009 and 2010 is firmly on consolidating our business, identifying and implementing new efficiencies in our operations and backroom functions and leveraging our leading IT platform to streamline operations,” he says.
“While some businesses, especially during an economic downturn, may simply look for lowest price, smarter businesses are investing in the long term. We are creating our best results where our supply chain services integrate seamlessly with our customers’ processes.”
“Linfox’s new DC for Campbell Arnott’s in Brisbane is a good example. The bakery’s production line feeds straight into our DC via an airbridge and uses leading-edge technology and IT systems to receive, put away and process orders to transport.”
“This level of integration is facilitated by sophisticated data interchange and a powerful customer — 3PL partnership. It generates significant value for our customers.” Another good example is Linfox’s new contract with National Foods.
“We had worked for the Dairy Farmers part of the business for some time when National Foods was seeking a true supply chain partner to streamline its national distribution,” Byrne relates.
“National Foods has grown rapidly in the last two decades through the acquisition of a number of businesses. So designing a state-of-the art supply chain is a crucial step in consolidating the business.
“Linfox is designing, constructing and managing two major national DCs, one in Sydney and one in Melbourne. This brings together their major warehousing needs and will supply a strategic network of regional warehouses.
“Linfox will also consolidate National Foods transport operations which currently include a large number of different suppliers and create 300 new Linfox jobs into the bargain.”
“Most important, Linfox brings National Foods far greater supply chain efficiency, complete visibility of operations and an ongoing process of review and improvement.”
Asked the areas of growth he predicts for Linfox, Michael Byrne points to the potential of the resources and infrastructure industries in Australia.
“Linfox has substantial strategic contracts in these industries in South Australia and Western Australia,” he says. “This includes major supply services to BHP Billiton’s remote mining interests across these states.”
“In Asia processed foods and beverages, personal hygiene and home care products will grow as economies regain strong economic growth, modernise and their standards of living improve.
“Linfox is also well positioned to benefit from renewed growth with leading customers across all these products and retailers.
"Some of our customers in these sectors include Unilever, Procter & Gamble, SC Johnson, Guinness Anchor and Tesco.”
Byrne believes there’s no compromise when it comes to providing a premium supply chain service. “It’s important to cut costs, to optimise the use of our own assets and it’s important to maintain the highest levels of customer service,” he says.
“It’s something blue chip customers want and understand is a long term investment in their own business success.
“We have spent quite a lot of time analysing our operations, identifying where we can cut waste, where we can do things smarter and where we can leverage our IT to provide better solutions.
"It’s something we have to do, not just because the economy is tough at the moment but because we have to continue to improve and drive new value in supply chain operations.
“Before we begin collaborating with our competitors to optimise the use of our assets and infrastructure we’ll do it internally. That’s one area our review process has worked on.
“Optimising resources is an ongoing issue for supply chain companies and we are getting better at it, using smart new technology to help us,” Byrne adds.
“Linfox’s new WebViz system is all about optimising resources, our own and our customers’. The system tracks vehicle movements so that turnaround times, loading and unloading are collapsed.”
Linfox has also developed a strong SAP platform because it provides strong integration with many of the company’s customers’ IT systems.
“The ability to integrate electronically and physically with customers is a vital step in the future of our industry,” Byrne asserts. “This requires deep partnership relationships with our customers. Greater integration of IT and process technology will be the real driver of change in our industry.
“Two and three decades ago manufacturers began outsourcing their supply chain functions to specialists so that they could focus on their core business.
"Today 3PLs are moving closer than ever to their customers to provide better outcomes. The service is still outsourced but the working relationship is closer, and IT interfaces are driving that more than anything.
“A crucial aspect in optimising technology is provided by Linfox’s Supply Chain Solutions team,” Byrne adds. “This is a specialised group of ‘internal consultants’ who combine expertise in a range of supply chain related disciplines to work with customers and Linfox operational teams to analyse supply chain operations and develop innovative solutions. This ensures that we use tools effectively to create value.”
Linfox has also pioneered carbon measurement software on its SAP platform which provides a sophisticated measure of carbon output for company operations.
“Accurate measurement is of course the first vital step in reducing greenhouse gas emissions,” Byrne says. “We have a strategic goal to cut the rate of greenhouse gas emissions from the business by 15 per cent by FY 2010 based on 2007 emissions.
" Preliminary results indicate that we are well on track to meet this target, a result that has been achieved because of the commitment of our people and because we have a suite of programs addressing all facets of our work.”
“We have begun using carbon mapping software,” he adds. “This allows us to measure the carbon impact of alternative supply chain options and we’ve been working quite successfully with one customer to rearrange their transport routes and in some cases even relocate depots to get a better carbon output.”
Another successful program at the company, known as 25C, involves twenty-five Linfox sites that have volunteered to trial a wide range of energy saving initiatives, measure their effectiveness and then roll them out to the business if they produce effective savings.
“One initiative involves electricity audits at three sites which have identified a wide range of potential savings such as the use of smarter lighting systems that are controlled by external natural light for instance,” Byrne says.
“The 25C project has also played an important role in encouraging our employees to take part in environmentally sensible processes.”
Michael Byrne is confident that Linfox Logistics’ is close to achieving its corporate vision of being the supply chain solutions provider of choice across the Asia Pacific region.
“We already have a unique footprint in Asia with strong positions in some of the region’s leading growth economies,” Byrne says.
“More than half of the Linfox workforce is outside Australia so we truly are an Asia Pacific business that happens to have its roots in Australia.
“Linfox began operations in China in the 1980s, but in the last 18 months we have won substantial growth with new operations for global brands like Tesco and Unilever.
"We began operations in India in 2005 and have built a strong position with leading local and global businesses there. We are well entrenched in Malaysia, Thailand and Vietnam.”
“The Asian economies are where Linfox can expect much of its future growth. Many are quickly adapting first world living standards with successful local and global suppliers demanding more sophisticated supply chain operations. We have proved that we can achieve this.”
“Our roll out of SAP systems to many of our operations in Asia is proving a great benefit. We also bring new safety and operational training standards with us and are lifting industry standards to new levels,” he says.
“While these developments take time, economic recovery in the next few years will see aggressive expansion in our industry across Asia and we are in an excellent position already to take advantage of these opportunities.”
Despite the vast array of company achievements, Michael Byrne points to driving a culture of safety across Linfox’s operations as his proudest achievement.
“We’ve slashed the lost time injury frequency rate in the business (the number of lost time injuries per one million hours worked) from around 20 in 2006 to 4.5 in the 2009 financial year,” he says.
“Looking after our people is a cornerstone of our business. We implemented our Vision Zero strategy based on a dedicated safety team initiating a range of programs designed to make safety ‘front of mind’ in everyone’s work.
"Every meeting we hold at Linfox, from the board to the frontline, begins with safety. Every site manager in the business now conducts a ‘safety walk and talk’ of their site every day.”
“We ‘Stop for Safety’ every year; every person at Linfox meets at their site with their colleagues to address site-specific safety issues,” Byrne says.
“And there is a range of programs to address various operational issues, such as safety during the peak summer season.
“While we’ve seen tremendous reductions in injuries, there is still a long way to go to actually achieve our Vision Zero,” he admits.
“There are still too many injuries, there have been fatalities because we are in a hazardous industry and everyone must share responsibility for focusing on safety 100 per cent of the time. It only takes a moment’s lapse in concentration to have an incident.”
“I’m also proud of the way our people have used their creative expertise, IT and technology to integrate more closely with our customers’ businesses,” Byrne adds.
“This provides tremendous value for our customers, speeding up the velocity of inventory through the supply chain. We have invested in the technology and in developing our people’s knowledge and skills.
"It allows us to develop solutions which optimise the inventory holdings in the supply chain and increases the freshness of food and beverage products.”
Linfox devotes more than $3Million each year to educating its employees. “Linfox College is a dedicated resource providing a wide range of learning opportunities to our people,” Byrne says.
"Its courses include a wide range of self-administered online subjects, a range of leadership skills courses for managers at all levels, through to advanced tertiary studies in management and logistics skills.
“Investing in our people’s skills and knowledge is vital for our business. We help develop our people’s skills and knowledge and we develop our own future leadership.”
“Last year we launched a leadership skills course for site supervisors and had more than 375 people take on the course. It is heartening that our people show a real thirst for knowledge and advancement and it’s great if that can happen through the workplace.”