Challenges big and small
SMC Pneumatics handles the task of diverse stock as it rides waves of economic change
SMC Pneumatics handles the task of diverse stock as is rides waves of economic change
At first glance, SMC Pneumatics’ Melbourne distribution centre doesn’t look especially big. But looks can be deceiving. The stock numbers are actually remarkably large, it’s just that the stock itself is small. To help illustrate one of the challenges of distributing large quantities of small pneumatics parts, you’re going to need some bench space.
SMC’s Nicole van Riel lays out 15 thick books of catalogues and indexes.
“Our product range is enormous,” van Riel says. “You have so many variations of each part, so many increments.
“So we have guides to pre- ordering. End users can get overwhelmed with how much product we have, so we simplify the catalogues into core products.”
Simplifying the ordering, picking, packing and shipping process has become the focus for SMC, which has recently opened a new southern Australian distribution centre in Melbourne, repurposing the warehouse and tripling stock holdings to make it a central distribution warehouse for the region. The 3049-square-metre building has room for further expansion.
The aim is to provide faster, more efficient delivery to customers Australia-wide, with the promise being same day delivery of standard parts to customers in Victoria, and overnight delivery to South Australia and Tasmania – something that was previously very difficult.
There was also the need to keep pace with their competitors, several of whom have their head offices in Melbourne.
The Japanese- owned company has more than 80 offices globally, and established its fi rst subsidiary outside of Japan in Australia over 50 years ago.
The largest branch in Australasia is in Sydney, which has also traditionally had most of the stock holdings. This has meant supplying parts to the entire country quickly has been a challenge. But adapting to challenges is one thing SMC doesn’t back down from.
MOVING BEYOND CARS
Director of sales and marketing James McKew says SMC had to quickly adjust its core business after the shutdown of the Australian car manufacturing industry.
“Traditionally, SMC’s dominance has been fuelled by the automotive industry,” McKew says. “Post the mining boom and auto closure we had to fi nd new markets that were more sustainable.”
Today, SMC’s end users include food production and packaging, conveyor belts, doors, automation, mail sorting, general manufacturing and phones. Big players are still involved, though.
Woolworths’ new distribution centre in Melbourne’s south-east is all pneumatically run. But pneumatics also pop up in places you wouldn’t expect, such as farms with pneumatic gates, control cabinets and panels for operating fi ltration. It’s about identifying new markets and looking to the future.
“We grew 11.5 per cent last year and it’s the same this year so far,” McKew says. “We’ve got our focus and got our momentum.”
THE CENTRAL HUB
Most customers expect overnight or same-day delivery, but SMC wouldn’t be able to guarantee overnight delivery to regional Victoria or Adelaide from their Sydney warehouse alone without massive air freight costs.
“We repurposed this [Melbourne] space and put inventory down here to support robotics customers,” McKew says. “Victoria and Adelaide always had a strong manufacturing base and that seems to be shift ing into robotics and automation post-auto.
“So, by having inventory here, we can keep our DIFOD above 95 per cent.”
The centre is not just a warehouse, either.
It also contains a training facility and an engineering and design department. But the core business out back in the warehouse is to move freight quickly and efficiently. SMC uses StarTrack and Toll as its primary couriers.
“They’re very integrated into us. They can pull out proof of delivery on every single delivery,” McKew says. “We have challenges delivering into Perth, but we get a very good deal on air freight.”
The Melbourne centre was designed by SMC’s Sydney logistics manager, with the aim of keeping soft ware systems consistent across both centres. It’s been set up for high-volume stock movement. Part of the sales job is to help navigate customers through the sometimes bewildering options when it comes to ordering the right parts.
“The number of pick and packs is incredible,” McKew says. “We still believe that people buy from people, so most of our orders are still manually entered.
“Our customers don’t have an interface into our system. If customers are ordering something we don’t have in stock, the guys can look at our stock profi le and see that we might have something else that will do the same function.
“We can see the stock levels of every SMC warehouse in Asia/Pacific, including the HQ in Japan, so even if we don’t have stock we can locate it quickly and have it put in an airbag in a day.”
SMALL PARTS, BIG BUSINESS
Back at the central distribution centre, van Riel fl icks through one of the catalogues.
The challenge SMC faces is in deciding which products to stock and making sure it has enough of the fast-movers and critical spares that customers will need.
“We’ve got over 12,000 base products and over 700,000 variations. The idea is that each branch keeps basic stock, then extras that can be used to modify that,” van Riel says.
To illustrate, she holds up a cylinder: “You might put a rod clevis on here, or you might have a mounting on the back. So basically we keep all these base products on site, plus the mods. Our store manager will then do the simple assembly and ship to the customer.”
The index catalogue has a guide to ordering. SMC also has sales engineers who will visit customers and recommend parts. The idea is that the product required will be in stock in Melbourne, but if it’s not it will be shipped from either Sydney or Japan.
Next to the computer and workbench in the distribution centre is an Australian-made Kardex VCA 500. Items can be located by punching the part number into the system.
The carousel will then rotate and bring the part to the front to be picked.
For storage, part numbers are linked to shelf location, for easy retrieval.
Freight arrives from Sydney in air bags or boxes and is booked into the system and then shelf-located.
Delivery from Japan is 15-20 days. The incoming freight averages about two pallets a week, and 10 air bags a day. The distribution centre also has a tech assembly area and a cabinet building section.
“Our system is called MP5,” van Riel says of the Masterpack 5 enterprise resource planning system. “We replaced the boxes, increased our stock levels and focused on our core products to understand what our customers were using and making sure we kept good stock levels of those.”
The system automatically replenishes orders once they drop below 100.
REPURPOSING FOR A PURPOSE
Rodney Ryan, state manager – Victoria, South Australia and Tasmania, says maintaining normal dispatching was a challenge during the renovation of the central distribution centre.
“We moved stock and assembly areas around the renovation and at times called upon Sydney to ease the bottlenecks,” Ryan says. “The ultimate goal however was that customer deliveries were not disrupted, and we managed to achieve this.”
Ryan admits the logistics of transporting high volumes of small items will always have its headaches.
“Getting reliable transport is difficult,” he says. “Most companies will do a good job of delivering, but when things go wrong they go horribly wrong. It has become increasingly difficult to accurately track all products that have been transported.
“Finding a missing parcel is one of the biggest headaches for us and something which has become increasingly so as our output has increased.”
But with an attitude geared towards looking to the future – rather than mourning the past – SMC Pneumatics is taking positive steps towards growth and fulfi lling customer expectations.
“By having inventory here, we can keep our DIFOD above 95 per cent”
Above: SMC Melbourne office and distribution centre Opposite: SMC director of sales and marketing James McKew standing in front of racks of pneumatic parts in the SMC Melbourne distribution centre
Below: SMC’s Nicole van Riel in the Melbourne distribution centre
Top: SMC Melbourne distribution centre
Above: The Kardex VCA 500 carousel in the Melbourne distribution centre Opposite, clockwise from top: The Sydney warehouse; SMC Victoria state manager Rodney Ryan; The formidable SMC product catalogues