There have been several projects that fit the business transformation category within Mainfreight globally, says Kevin Drinkwater, CIO of the logistics company, with headquarters in Auckland.
But the project that stands out for him is the one that revolves around the customer and Mainfreight’s ability to create a new revenue stream through giving them full visibility into their supply chain.
This is the project Mainchain Ultra, which is part of the company’s Intelligent Assets strategy to digitise the supply chain.
“Mainchain Ultra was a concept that materialised as a result of finding a customer with a need,” says Drinkwater.
“The 72-hour prototype that captured our biggest customer could be considered a global hackathon, where we had a team in The Netherlands building the concepts, a team in New Zealand doing the development and another team populating data and testing. This happened in a continuous cycle over this period.”
“The resulting product is unique in that Mainfreight, as a logistics provider, is giving visibility to freight controlled by our competitors.”
This customer was the first to implement Ultra, he says. The systems give this company visibility into their very complex supply chain of orders arriving in Europe from multiple factories around the globe and then being distributed and delivered to all European countries, North Africa and the Middle East.
He explains the complex systems that Mainchain Ultra distills for the group.
“There are over a 150,000 orders per year (with a value in the billions of dollars) that we monitor, with every order having to be tracked down to product line and serial number level from manufacture to delivery,” says Drinkwater.
“There are over 6000 unique supply chains, that an order can follow to get to its final destination. At any one time there are approximately 30,000 orders in play.
“There are over 70 different carriers in the supply chain and the majority of orders require several different carriers. Sometimes there are up to 10 different parties involved in the delivery of one order.”
Mainfreight carries less than 5 per cent of all orders, all the other carriers are competitors.
“Our technology had to be built to aggregate the data from all carriers and present it in a way that their customer could digest it on a transactional day to day basis,” he states.
Minding the gap
He says Mainfreight’s strategy is to provide customers with an intelligence portal into their business by filling a gap in their information systems and knowledge base. This is particularly true for customers with complex supply chains who use many different carriers.
The strategy was to build a system that would understand every individual component of the customers supply chain, receive and aggregate data from our competitors and display that simply to our customer.
There are two major aspects provided to the customer, he says. One is the transactional view (‘microscope’) for day-to-day operations and the other is the data analytics view (‘telescope’) to enable them to improve their supply chains.
Drinkwater says Mainfreight was able to provide a full working prototype to their biggest customer within 72 hours of the first discussion.
The project was a collaboration between this global company, and their European and New Zealand teams, together with two local development houses, Sandfield Associates (who built the database and the rules engines) and Designertech (who built the front end portal).
Apart from the tight timeframe of three months to deliver, they had to hurdle other challenges, like their competitors’ extreme reluctance to provide the milestone data to them.
They overcame these by setting up very small teams representing each of the above parties, very tight project management and utilising rapid develop and test processes. As well as “never stopping”, he adds.
“A key cultural issue was having our business understand that we could create a profitable business model by providing insight and intelligence as well as the actual transportation of the freight.
“This is quite a change for us as we have always believed we only provide technology where we control the freight,” says Drinkwater
But the status of this company as a significant global customer and the importance they placed on our ability to provide this system allowed us to overcome this issue, he says.
Drinkwater says Mainchain Ultra is just one of several projects at Mainfreight that they developed under the mantra of continual innovation throughout the business.
Another project, the Claims system, was a result of the business deciding we needed to service our customers better when we lost or damaged their goods, he says. A series of workshops was held to determine what the key objectives were from which storyboards were created.
“We have turned the claims process into a much simpler, more more efficient and more pleasant experience for the customer – especially as it has reduced the average time to pay a claim from 27.6 to 14.8 days,” he says. “Additionally our internal process efficiency has improved by 40.18per cent which is an equivalent of 512.6 hours per week saved.”
Another project, Order Management System (OMS), was a result of recognising that we could help our import customers around the world by giving them visibility to the orders much earlier in the process i.e. from the moment the order is placed on the supplier and therefore having updates at all stages of manufacture, he says.
“This will give the customer a significant improvement in the way they manage their suppliers and the supply chain.”
“Being innovative is part of Mainfreight’s DNA,” explains Drinkwater. “Our culture continually encourages the team to come up with improvements and to try them. The base structure to this is our PAT (Positive Action Team) meetings where the sole purpose is to find better ways of operating.
General managers of business units and country managers assess the initiatives to determine a priority list.
Connect, the intranet, allows anyone in the business to make suggestions for improvements. Each suggestion when posted is emailed to a list of key executives, including the CEO.
Drinkwater likewise has the advantage of having team members that are familiar with other aspects of the business, beyond IT. “Almost all of our business analyst and software support team members have worked in other parts of the the business before,” he says.
While they work in IT, they also continue to work with operational teams to assess pain points and consider innovation.
“Mainfreight’s culture supports this approach in all aspects of the business, not just IT.”
Piloting and deploying systems that use disruptive or emerging technologies is part of the team’s remit.
“We work in our warehouses with voice picking technology that allows a team member to work completely hands free,” says Drinkwater.
We have also rolled out a driver and loader scanning technology which allows the team member “to capture much more information at the coalface”.
Our online presence has enabled TradeMe sellers to have a full NZ market for large goods as they now have the ability to price the cost of shipping large items throughout New Zealand. In some branches, the total revenue from TradeMe customers puts them in the top 10 customer list, he says.
Balancing these new projects with operational excellence is a matter of priority setting, he states. “Priorities are determined across the board whether they are operational improvements or innovation. Everything goes into the same hopper to be assessed as to the impact on the business.”
The global CIO
Drinkwater is among the handful of New Zealand CIOs who has a global remit. His multinational team works with and supports Mainfreight offices in Australia, the United States, Mexico, Canada, China, Hong Kong, Singapore, Malaysia, Thailand, Vietnam, Chile, Netherlands, France, Russia, Ukraine, Romania, Germany, Netherlands, Belgium, Poland and the UK.
Drinkwater has been with Mainfreight for over 30 years. He has been CIO since 2001, and before this held a series of roles from sales manager, CFO to GM of Logistics Division.
“I visit every country/region at least once a year and give presentations on latest innovations and progress with our technologies as well as speak on trends that might affect our industry,” he says. He also meets with the entire IT team in each region twice a year to update them and hear of any ideas or issues.
“I stay in a region for at least seven working days so I can spend time with the business and customers promoting new ideas and looking for new opportunities to innovate,” he says.
“Most importantly, every time I visit a branch, I talk to the operational team to find what their biggest pain points are,” he states.
“To me there are only two reasons for these pain points – either we need to improve the system or their training has not been adequate.”
However, “I encourage them not to wait for a visit and to call me if they have any issues or opportunities.”
“Make sure you understand the business need and culture,” he says on key pointers for working with a diverse and global team.
“If you can walk in the shoes of the team you are in a much better position to influence,” he says.
“Then it is a matter of describing the opportunity in a non-technical manner to the right people and testing the proposal with them.”
“Sometimes, however, the idea is quite radical and where it has been I have sometimes used outside experts or made a short video to promote the concept.”
“We have at least one person in every region around the world that manages that territory.
“In New Zealand, we have three senior managers that are capable of stepping into my role when I am absent, and when I retire,” he states.
“I have worked with and mentored them all for many years. Every year my role expands and they have stepped up to take over more of what I have on my plate.”