In my first post for 2016, it’s only natural I reflect on the wonderful past few weeks I’ve had spending time with family and friends, overindulging in too many delicious treats and beverages, and watching young and old enjoy quality time together – whether it’s battling it out in a *very serious* game of backyard cricket, or teaching our youngest to ride a bike.
But while I sat there and enjoyed the festivities, I spared a thought for the people working tirelessly around the clock to make sure I had access to everything I needed to celebrate the perfect silly season – making sure the kids’ Christmas presents were in store when I went to purchase them, to ensuring duck fat was in stock at my local supermarket shelves for the perfect roast potatoes!
One such team of secret Christmas Elves is Linfox, Australia’s largest privately owned logistics company, with over 23,000 employees across 10 countries working to deliver adaptable supply chains for some of the world’s largest retailers and consumer products companies. Managing 4.8 million square metres of warehouse and 5,000 individual trucks and equipment on road and rail across 250 seperate operations, it’s no small feat to deliver service excellence and real-time contact with operations around the clock.
Narayan Prasad, the Chief Financial Offer for Linfox Australia, recently gave insight at the Finance Forum into some of the work that goes on behind the scenes to ensure smooth operations with integrated planning across the business.
It was just a few years ago they faced a high level of dissatisfaction around planning and forecasting – providing the perfect catalyst for change. As an organisation, they faced a number of challenges:
- There was minimal linkage between strategy, long term plans and budgets.
- Planning was time consuming, with the budget process taking over six months to complete.
- There was a low level of credibility with no budget ownership and a manual-intensive process that was prone to errors.
- Plans were too detailed with a lack of focus on key drivers. For example, travel budget was derived based on the number of trips each person did, which created a vast amount of data that didn’t actually improve the quality of the budget in any way.
- The process was inflexible – even small changes such as a salary increase required major rework and lengthy delays.
As a result, plans produced a high level of conservatism and were not accepted broadly by the board.
Narayan and his team introduced IBM Cognos TM1 to re-focus their efforts across three key areas: People, Process and Systems.
They created a linkage between strategy, long terms plans and budgets. Instead of going straight to site budgets and making corporate cuts along the way, they incorporated strategic reviews prior to the start of the planning process so that long term financial goals would include value for shareholders and return on investment. This formed the framework for the following year’s budget.
They simplified the design and stability of the process, focusing on key business drivers with incremental development of features to keep the platform relatively stable. Providing a consistent look and feel to the system also cut development time and gave greater stability, and delivered increased usability and relevance to the people that use it. They also made an important design decision to link the corporate planning solution to ERP (SAP) and other systems to provide consistent profit centres and account hierarchies with automated updates – they have not tried to recreate capabilities of other systems in TM1.
They put renewed focus on the ease of use for the contributors, with the important need to be usable by site managers in particular. To make it easier for site managers, centralised planning was done for some cost elements such as depreciation of existing assets, occupancy costs, work cover costs, insurance etc., automated calculations were incorporated for salary and wage costs, depreciation of new assets, and prior period data was made readily available. Users only had to input data related to revenue, wages, and discretionary costs. Working on remote sites, they also adapted the solution to meet the requirements of the users, with templates used to input budget data that had the look and feel of Excel spreadsheets, percolated with centrally planned data. With unreliable connectivity in some remote sites across Asia, it was critical site manager’s could input data offline and publish to the enterprise plan when they were back online.
Change management was also a major challenge due to the geographical spread of sites. Over 100 training sessions were conducted over two years – some face-to-face and others using web conferencing facilities. With a large number of users in non-English speaking environments, simplicity in systems and processes was essential.
With a renewed focus on ease of use and templates, system-generated forecasts as a starting point, availability of spreading tools to edit forecasts at a high level, and easy to use reports for all levels of management, Linfox created a more flexible planning process with greater user acceptance, increased credibility and most importantly, plans that were directly linked to the strategic goals of the business.
What does this mean for me? It means I can be certain that next Christmas I’ll be able to indulge in far too many Tim Tams than necessary because they’ll make sure those bit-sized chunks of heaven make it from source to store in time for my cuppa. Unfortunately, I made the mistake of showing my daughter, Jessica, Narayan’s photo of the Giraffe they delivered to Perth Zoo – which by the way is her *favourite* animal. At least I know if she asks Santa for one next year, Linfox will be able to deliver!
Linfox have had a great motto in which they run their logistics business – but I think it can equally apply to their ability to plan and align their operations to their corporate strategy: “Every site. Every day. Linfox leads the way.“