Developed North Queensland freight model and joint presentation at Smart Conference
Restructured inventory management, revised ERP specs for Supply Chain
Provided supply chain technical support on a major assignment
Cellnet is an Australian publicly listed company specialising in the import and distribution of accessories in the telecommunications and PC Peripherals market, with a sales target of $100M. Distributed brands include 3SIXT, Lifeproof, Otter, Incipio, Zagg, and others.
In early 2014, Cellnet was suffering from a number of challenges in a crowded and competitive market place. They were receiving feedback about poor customer service, and supply chain costs were skyrocketing. Inventory was also too high, and obsolete stock was becoming a major issue.
Alan Sparks was recruited to address these and other issues and to turn the company around. One of his first tasks was to address the Supply Chain challenges. He engaged Paul de Guingand of The Supply Chain Network to embed within the business and lead the journey in Cellnet’s
Supply Chain transformation.
The first challenge was to bring down the import Supply Chain costs. These numbers were so high because most orders were airfreighted into the country – that is over 50% by volume, and most remaining stock was being shipped in LCL quantities (Less than Container Load). This included most of the orders from their top 10 suppliers, with very little shipped in FCL (Full Container Loads).
Buying and Product managers were concerned about product lead times to meet critical dates. When it became clear that multiple LCL orders from different vendors were taking too long to arrive, they felt compelled to request airfreight to meet urgent customer orders in an attempt to maintain service levels. Orders were rarely planned within lead-times, and there was little control over the shipping processes.
The ordering patterns out of Hong Kong and Southern China (90%+ of supply) looked something like the below:
After reviewing and analysing these supply patterns, an alternative pattern of supply was established. This was to consolidate all orders into a Container Freight Station (CFS) in Hong Kong. These would then be shipped every week in Full Containers directly to the Brisbane Distribution Centre – even if the container was not full. By providing a reliable and regular service, the buyers regained confidence in supply, which eliminated the need for frequent airfreight.
This required a tender of all freight and the selection of an International Logistics Services Provider who was able to consolidate orders in Hong Kong and Shenzhen, and to provide full Supply Chain Visibility through their systems to facilitate better planning.
After the transition to a n ew Service Provider, the model was re-engineered into the below model:
If you are interested in discussing this or other Supply Chain ideas, please click here for more information about what The Supply Chain Network can do for you.