Chal­lenges big and small

SMC Pneu­mat­ics han­dles the task of di­verse stock as it rides waves of eco­nomic change

Australian Transport News - - Contents - WORDS RICKY FRENCH

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.


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.”


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.”


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.


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

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