Inside Linfox's vendor-first innovation strategy

Logistics firm Linfox has credited close partnerships with a handful of technology vendors for driving innovation in its supply chain, communications and mobile systems.

The Victorian company has about 18,500 staff and a fleet of 5000 vehicles across 10 Asia Pacific countries.

Its core IT team of 100 is based predominantly in Melbourne and led by chief information officer and supply chain president John Ansley, who also leads a business-facing supply chain team of 30.

Although Linfox’s desktop and data centre maintenance was outsourced to UXC in 2009, Ansley said a bulk of IT work remained with in-house warehouse management, transport management, integration and backoffice teams.

“We have one SAP implementation and add new customer sites to it,” he said, noting that Linfox typically spent eight to 16 weeks integrating its SAP platform with customer systems.

“In general, we’re rolling out a new SAP solution somewhere in Asia-Pac on a monthly basis; we’re just churning through these rollouts at an incredible rate.”

For strategic projects, however, Ansley said Linfox tended to lean on a handful of “high-value, tier one partners”, naming SAP, CDM, Motorola and Telstra as examples.

“Innovation comes from us going to our partners and explaining what we want and why, and them extending their product,” he said.

Last month, analyst firm Gartner told iTnews that organisations seeking “innovation” from their technology vendors should be prepared to invest about ten percent of their contract values on the relationship.

Ansley, a former SAP account manager, said Linfox had maintained a “very close relationship” with the German vendor since adopting an SAP financial system in 1999.

Over the past decade, Linfox has extended the SAP platform into HR, payroll and maintenance, replacing a range of disparate, legacy systems with a view to becoming a "wall-to-wall SAP house".

Ansley noted that Linfox’s transport and supply chain management systems staff often travelled internationally to work with SAP on projects.

Linfox has also participated in the SAP-NICTA Living Logistics Lab since its launch in February last year. Competing logistics firm DB Schenker struck a research deal with NICTA this May.

“A lot of people don’t invest the time in the relationship with their vendors … I treat the money that I spend with my vendors as an investment rather than view it as a cost,” he said.

“Just like if I’ve invested in shares or in property, I’m going to keep a fairly strong eye on things. If I’ve invested money in IT, I’m going to spend time with those people.

“If that means travelling to their head office, wherever that is in the world, I’m going to do that and sit down with them and make sure that I’m talking to the people who drive their strategic agenda so I understand where they’re going.”

Read on to find out about Linfox’s upcoming ruggedised tablet rollout and what it hopes to achieve with SAP’s Extended Warehouse Management product.

Linfox has been working to consolidate its various backend systems onto a common SAP platform over the past 15 months.

Ansley said the company had replaced three brands of warehouse management systems with another two to go.

It also was removing custom code from its fleet management system and a bespoke driver time, payroll and invoice system built almost 20 years ago.

Ansley expected to have replaced all legacy systems within Linfox and at customer sites within the next two years, as various customer contracts were renewed.

“We’re moving all of our customers, over time, to common technologies,” he explained. “As we’ve fully depreciated an investment that we’ve already made, then we’ll put the new technology in.”

Ansley hoped to integrate Linfox’s systems more deeply with those of its customers, allowing the company to take on more supply chain tasks such as planning, in addition to its current warehouse and transport offerings.

“I think there’s a lot of further work to be done in the industry generally in optimisation, whether that’s load optimisation, route optimisation … space utilisation in warehouses, those sorts of things,” he said.

Linfox was upgrading from SAP’s Warehouse Management product to Extended Warehouse Management, which improved its ability to direct staff and machines in a warehouse by dynamically optimising workflows and presenting instructions on a handheld device.

By 2016, the company also planned to roll out Motorola’s ET1 ruggedised Android tablets under a “device convergence project” for its 5000-strong fleet.

Ansley said Linfox had recently concluded its final trial of the technology, and would begin rolling out the seven-inch devices with a range of Android applications late this year.

The applications allowed drivers to take notes about consignments and report any adverse events affecting traffic or their deliveries.

Besides being issued to Linfox drivers, the applications could also be downloaded and used by the company’s subcontractors on their personal devices.

Ansley expected the Motorola tablets to replace up to six existing devices in Linfox vehicles, including navigation, personal audio and fleet management systems, for half the price.