DB Schenker completes Aussie IT restructure

Outsources infrastructure, strikes research deal.

Schenker Australia has completed a two-year IT departmental restructure in a bid for greater stability and faster, more consistent application development.

The logistics company - which counts Apple and Dell among its customers - this month recruited the last member of its new IT middle management layer in what IT general manager John Jessen described as the “last milestone” in the restructure.

“We’ve done a lot to structure the IT department so it matches better with the business,” Jesson told iTnews at the CeBIT conference this week.

“I spent a lot of time on restructuring the team, putting in a proper management layer who are reporting to me, but who are working quite independently with the skills and experience to run their own IT set up properly.”

The restructure began in late-2009, when Schenker replaced an “outdated”, in-house data centre that housed more than 100 servers with a managed, hosted service from Optus.

Schenker’s IT is now hosted on four virtualised ESX servers in Optus’ Ultimo data centre under an agreement that expires later this year.

The move resulted in a number of infrastructure management redundancies, reducing Schenker’s IT headcount from 50 to 38.

Jessen also moved to improve the IT department’s relationship with the business, hiring a senior enterprise architect in February to establish a blueprint for its IT strategy.

“With the data centre outsourcing and the activities we’ve done to stabilise everything, I now want to look at what can we do from the IT side to work better with the business,” he said.

“[I want to] be in meetings with the business at a much earlier stage than we used to, so that any IT solution that they are considering, we are there and can evaluate that in relation to whatever blueprints we are putting down from the enterprise architecture side.”

Jessen planned to present an architectural blueprint to be accepted by the business by the end of this year.

He hoped the resulting IT strategy would standardise application development work by introducing an enterprise service bus between applications and Schenker’s databases.

“We have a legacy of a lot of developers working for us, who might have developed using their own standards, their own coding and so forth,” he explained. “I want to standardise that through enterprise architecture.

“My ambition doing that is we’ll have a more stable set up where we can more easily change according to our customers' needs and better reuse applications than today.”

In early 2010, Dell blamed a Schenker Australia IT upgrade for delaying hardware shipments to consumers, public organisations, enterprises and small to medium businesses.

Jessen said the delays stemmed from issues with bedding down a new warehouse management system during the go-live stage.

“For a client like Dell, obviously that was unacceptable,” he said. “It was a bit of a rough period, but we worked our way through it.

“We have a very good relationship with them now and a few other main clients we have in the high-tech IT sector.”

Jessen said Schenker had improved its monitoring and reporting systems during the past two years to improve its ability to meet service level agreements that were “in the high 90s”.

Researching pressure points

Jessen said IT had become a growing focus for Schenker Australia due to the country’s vast area, customer demand for information and its need to compete with other service providers.

“Working in the supply chain industry, margins are low and IT has traditionally not been that much of a focus,” he said of the company that delivers about 450,000 orders to end-customers a year.

“To me, we’re not just moving boxes from A to B anymore. We want to be able to give customers information about their shipments at any given time enroute from a manufacturer down to the end-customer.

“In the [three-and-a-half] years I’ve been with Schenker, I think we’ve seen a significant shift in our CEO and senior managers first accepting and now acknowledging that IT is a driver for what we do in the business.”

Jessen said the IT team aimed to improve its warehouse management system’s capacity to deal with spikes in demand – spikes that were a particular concern for clients like Apple.

“For Apple, when they release new products like the iPad 2 for example, it’s a massive hole in the supply chain because they don’t release new information until very late,” Jessen explained.

“If we have a big order, a big release from our clients, sometimes there is a lot of pressure on our systems and they have a hard time coping.

“We want to make sure that we can move with that going forward."

Schenker this week announced a partnership with research organisation NICTA that was expected to identify potential bottlenecks in its communication systems.

The partnership was the result of a year of discussions that began shortly after NICTA launched its Future Logistics Living Lab, which also involved supply chain company Linfox.

NICTA researchers planned to apply measuring and data crunching software on a copy of Schenker’s integrated communications system, simulating various load scenarios to determine pressure points.

Jessen said he was in discussions with Schenker’s regional chief information officer in Singapore, to apply NICTA’s findings throughout the Asia Pacific region.

Future technology investments by Schenker Australia could also include voice-picking and light-picking to replace written instructions for warehouse staff.