Since opening the business is 1859, the Danks name has been synonymous with local expertise, innovation and customer focus.
Today, Danks is Australia’s leading distributor of hardware and garden products, comprising three thriving retail brands- Home Timber and Hardware, Thrifty-Link Hardware and Plants Plus Garden Centres- with membership of more than 600 independent hardware retailers throughout Australia.
Given the nature of Danks’ customers, comprising independently owned stores trading under the company’s retail brands and a range of individual independent hardware stores, orders can vary significantly in size, product range and urgency.
“Ninety-nine per cent of orders are processed electronically based upon pre-determined links between Danks and its end customers,” explains National Supply Chain manager Ken Pike.
“The pre-agreed lead-times and delivery schedules typically average 48 hours from initial order placement to delivery.”
“We also have the flexibility to facilitate urgent orders inside the normal lead-times and enable urgent customer order pickups from our Distribution Centres,” he says.
According to Pike, the economic downturn initially led to a reduced average quantity per line ordered by Danks customers and a general destocking by members in the first quarter this year. However this has now returned to normal order levels.
“In the past 12 months alone, we have increased operational efficiencies via the implementation of new technologies and business strategies, and seeking out quality products to provide continued value to its member retailers and grow their sales,” Pike says.
“Now we are growing sales in total. The lean margins that exist in the hardware wholesaling sector mean the supply chain is always on notice to lower the cost to serve and the pressure now is on accelerating the delivery of change.”
Pike says electronic business systems and the move towards retailers managing their own inventory levels and cost to serve has resulted in immense pressure to reduce lead-times in the supply chain.
“There is a tendency for our customers, particularly the smaller retailers, to want 100 per cent service levels and compressed lead-times on all items in the product portfolio,” he observes.
“The business reality is that service levels and lead times will vary by product contribution. Where we once classified products as A, B or C, we are now looking at A,B, C and D items with service levels varying from 99 per cent on As to 90 per cent on Cs and potential purchase to backorder on Ds.
“Our system means customers can place orders efficiently using hand held PDEs (Portable Data Entry) devices which will scan barcodes and transmit electronic orders to Danks to significantly reduce the ordering process,” Pike says.
“DanksLink, an online ordering service, is available with a 24-hour turnaround from receipt to dispatch and service levels consistently reach 95 per cent. DanksLink enables our customers to check stock availability, the status of their orders and receive invoices.”
In addition, having a supplier management program that focuses on inbound service levels and lead time reliability allows Danks to provide a ‘direct-to-store’ supply situation to reducing lead-times.
The products of over 600 different suppliers are available on a charge-back system — where stock is delivered direct to stores from suppliers and invoiced through Danks.
“This is a practice that Danks has been continuously evolving and honing for some time based upon volume, sell price and supplier reliability and flexibility,” Ken Pike says.
“Of course, some of our smaller stores cannot meet the minimum order values required for ‘direct-to-store’ deliveries from supplier. This is the value proposition for our Distribution Centres - the removal of which would mark the end of the smaller independent hardware stores.
"The retailers have access to around 25,000 products warehoused in our national distribution centres located in Melbourne, Sydney and Perth.”
“With both systems available, we ensure greater independence and flexibility for the retailers, and greater product ranges and availability for customers.”
Pike says Danks may have up to 22,500 SKUs in its range at any one time, and with items varying from the smallest screw to an outdoor garden setting, the company’s warehouse management system is developed around many variables in its allocation of storage and pick-up locations and types.
“We aim to optimise volumetric space, material handling, pick frequency and retail receiving to get a compromise between efficient picking at our end and easy put away for the retail store upon receipt,” he says.
“As mentioned previously, 99 per cent of our transactions with our retail network are electronic. All the data we need is on our Enterprise Resource Planning (ERP), Danks Advanced Retail Technology (DART) and Cognos dashboard systems.”
The DART system is an industry leading point of sale and back office software package designed to assist members in streamlining their business management practices from product ordering and price ticketing to full accounting capabilities.
Orders can be placed efficiently with hand held Portable Data Entry devices which scan barcodes and transmit electronic orders through to web-based ordering options tailored to suit all customer needs.
“These advanced technical services are just part of the continuing evolution of the business, providing an industry-leading service to our customers and suppliers,” Pike says.
In terms of performance measurement, Pike points to a balanced scorecard system called ‘Navigator’ which takes Danks’ corporate objectives and cascades them down to departmental measures.
“These are reviewed annually along with our business plan and monitored monthly at a corporate and departmental level,” he says.
“Our long standing partnerships with our customers and suppliers enable us to involve them in our business, providing them with feedback channels to ensure we continue to provide value and ensure business growth.”
Pike maintains the priority with supply chain performance measurement starts with the customer.
“Our ‘Delivered In-Full, On-Time’ (DIFOT) measure is first and foremost to get the service right, and then we manage the efficiencies,” he explains.
“By increasing operational efficiencies via the implementation of new technologies and business strategies, we can free up time in the ordering process to focus on our customers.
“The next measure is efficient use of distribution assets with fixed and variable Distribution Centre costs measured as a percentage of sales and the third level of importance is inventory carrying costs as a percentage of sales. Freight costs are managed separately and are a combination of regular market rate reviews combined with annual route management.”
Labor utilisation currently represents more than 30 per cent of supply chain costs at Danks. “We are currently embarking on a major process improvement initiative which will incorporate ‘lean thinking’ and supports our vision of ‘Hardware made easy’ for all customers internal and external,” Pike says.
“The payback will be through waste elimination, improved service and labor efficiencies. “An extensive training program combined with warehouse consolidation and materials handling automation will form the cornerstones of our efficiency gain.
"This will provide the necessary platform to absorb the expected business growth over the next two to three years without proportional cost increases.
“While we are committed to continuous improvement and evolution, there are currently more supply chain materials handling and IT technology solutions than we could ever hope to implement,” Pike quips.
“The trick is to introduce the technologies that allow you to eliminate the least value-adding steps and waste in the supply chain.
“For example, it makes sense to use narrow aisle layouts and carousels to reduce warehouse footprints as part of our consolidation strategy.”
Ken Pike is proud of Danks’ achievements. “The continued resources boom in Western Australia prompted us to open a new 10,000 square metre distribution facility in Welshpool in April 2008, the largest distribution centre in the state,” he says by way of example.
“We consolidated several old disparate warehouses to one consolidated warehouse over a six week period with zero interruptions to the sales order processing. This was completely seamless to our customers.”
“A year later, the result is 15 per cent operating efficiency gains, two percent improvement to service levels and 10 per cent drop in inventory levels.
"This is the blueprint for our eastern state consolidations moving forward over the next three years.”
“This year we are celebrating not only 150 years of trading but also the continuing evolution of the Danks Group as a leading player in the hardware industry.
"Our 150th anniversary year brings celebrations of our long standing partnerships between our customers and suppliers.
"The business’s strong relationships with more than 600 of Australia’s industry suppliers sets us apart, enabling us to provide our customers with the advantages of combined buying power, giving them access to a wide variety of products at competitive prices.”