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Page 1 of 25
TRANSPORTATION
MANAGEMENT
Team Report – Oroton Group Limited
For the consideration of: D. Veldstra
Date: 9:00am AEST 12 September 2016
Team 1.1: Mark Bradfield - 6174167
Daryl Tonkin - 4815351
Austin Carroll - 100655769
Leanne Bristow - 7697260
BUS30003: Transportation Management
Assessment 1: Team Report
Page 2 of 25
Executive Summary
The purpose of this report is to discuss the Textile Clothing and Footwear (TCF) industry, and
specifically analyse and evaluate how Oroton Group Limited (OGL) manages its transportation
throughout the supply chain in this industry. The specific objective is to provide detailed analysis of
the macro-environment with regard to Porter’s five forces, modes of transportation utilized and risks
associated with this transportation. The report provides information on how Oroton uses 3PL
providers, and technology to achieve effective processes, competitive advantage and reduce risk
throughout the supply chain.
Page 3 of 25
Table of Contents
Title Page ....................................................................................................................................... I
Executive Summary ...................................................................................................................... II
Table of Contents ........................................................................................................................ III
Introduction ................................................................................................................................... 4
1. TCF Industry & Supply Chains with Australia ..................................................................... 5
2. The Role and Mode of Transportation ................................................................................... 7
3. The Management of Transport.............................................................................................. 10
4. Technology and Transport ..................................................................................................... 12
5. The Risk and Challenges of Transport ................................................................................. 13
Conclusion ................................................................................................................................... 15
References .................................................................................................................................... 16
Appendix ...................................................................................................................................... 17
1 PEST Analysis ........................................................................................................................ 17
2 History of Containerization ..................................................................................................... 19
3 Typical Container Sizes & Types ........................................................................................... 20
4 Transportation Risk Register .................................................................................................. 21
5 Transportation Risk Treatment Register ................................................................................. 22
6 Risk Matrix ............................................................................................................................. 25
7 AS/NZS 4360:2004 Risk Management Model ....................................................................... 25
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Introduction
Oroton Group Limited (OGL), is an Australian publicly-listed retail company established in 1938 in
Sydney. It’s founding operations were centred around textile importation of international fashion,
before the development of its own iconic brand, specializing in luxury handbags and accessories.
Today, OGL is a leader in the distribution of premium textiles and accessory brands from the
international market throughout Australia and New Zealand. It has established its branding through
quality products and distribution excellence and now represents other international companies, with
names like Gap and Brooks Brothers. It has accomplished this with a robust sales network,
commanding over 80 stores not only in Australia and New Zealand, but also Malaysia, Singapore,
China and Hong Kong. Recently it has expanded its customer base by providing an online store,
capable of delivering products all over the world.
OGL is a market leader in the Textile, Clothing and Footwear (TCF) industry in Australia. The TCF is
a very competitive market and manufacturers in Australia have been reduced due to the
implementation of reduced tariffs, free trade and globalization. This report will analyze the macro-
environmental position of OGL’s supply chain within the TCF. It will discuss how the selection of the
correct mode of transport is important to the company and its customers. It will develop an overall
picture of how OGL manages its transportation effectively through the use of third party logistics
(3PL) providers both from suppliers (upstream) to customers (downstream). This is particularly
important to the success of the OGL transportation management model. By using quality 3PL
providers this allows OGL to focus on the areas of the business it excels in, whilst engaging the
support, economies of scale, and expertise of specialists in the transport industries. The ability of
technology to interface between the various 3PLs and Oroton and its customers is significant. The use
of Enterprise Resource Planning (ERP) and 3PL tracking systems, provides visibility, and real-time
information to manage not only the transport of products but for many other forecasting, inventory
and supply chain processes.
Fig 1: Oroton Vision and Mission statements <http://www.orotongroup.com/about-us/mission-values>
Page 5 of 25
1. TCF Industry & Supply Chains within Australia
Fig 2: Oroton Shop <http://www.smh.com.au/business/oroton-online-forays-boost-bottom-line-20111130-1o70n.html>
The TCF employees over 40,000 people throughout Australia, and is a highly diverse industry
producing multiple products for various sectors of the community. Products include made-up textiles,
clothing, footwear, carpet, and technical textiles, involving construction materials, medical (implants)
and automotive products (Dept. of Industry 2016). The TCF is a very competitive market. In recent
times the industry has faced many challenges through the dismantling of tariffs by the government.
Policy makers predicted the local TCF industry would develop new and more efficient methods of
creating sales. (Purnell 2011). Manufacturers in Australia have moved to specialised goods as
opposed to traditional clothing as value-added products allow innovation and differentiation in design,
allowing local companies to remain viable (Dept. of Industry 2016).
OGL uses various modes of transport, with the ability to supply to over 80 retail stores and provide
direct deliveries to online customers. Within Oroton’s online shipping policy, a wide range of delivery
systems are available to the customer, 3-hour delivery time for metro areas in Sydney and Melbourne,
free shipping for purchasers over $400, and the ability to track your shipment (Oroton 2016). Until
recently, OGL was responsible for the operation of its own Distribution Centre (DC) facility in
Australia. Due to strong growth and demand overseas for Oroton products, the business opened a
second DC facility in 2007, located in Hong Kong, relieving the Australian facility. The addition of
the Hong Kong DC allowed Oroton to manage deliveries within an allocated period to its international
customers. In 2009, Oroton closed its Australian DC facility and outsourced all distribution to a 3PL
specialist. The integration of the new DC facility and the knowledge of the experienced 3PL provider
allows Oroton to manage the supply chain operations throughout Australia and overseas (Oroton
2016).
The use of a macro-environment analysis on political, economic, social/cultural and technological
aspects (PEST) provide a structured analysis, outlining the effect of growth in the industry, and the
likely impact (see Appendix 1 - PEST Analysis). The analysis highlighted uncertainty in the TCF
locally in Australia due to the lifting of tariffs, the implementation of Free-trade and globalization. As
Page 6 of 25
a result, challenges have increased for the local industry to compete with the international
manufacturing capabilities, resulting from reduced cost of materials, labour and advancement in
international transport. When the use of Porter’s Five Forces (see fig 3) on the PEST is used, we find
that the ability of competitors and substitute products to flood the market, due to the low entry barriers
and look-alike products at cheaper prices, reduces local manufacturers competitiveness.
Oroton’s major competitive advantage is the ability to maintain brand awareness. This awareness is
created by high quality products, innovation and investment in making Oroton a luxury and affordable
products (Oroton 2016). The use of 3PL providers for all transport and distribution, utilizes specialists
in this field, providing the ability to support retail and internet customers, and allow OGL to focus on
other areas within its expertise. These are strategic investment within the Oroton Group related to new
store concepts, limited edition products, and new categories being positively responded to by
customers, with a 11% growth in like for like products under the Oroton Group brand in 2015 (Oroton
2016).
Porter’s Five Forces Analysis
Fig 3: Porter’s 5 Forces on Australian TCF Industry
Page 7 of 25
2. The Role and Mode of Transportation
For every organization within the retail industry, transportation plays a large role in the overall
performance of the organization. Transportation and distribution costs can amount to significant
percentage of the overall cost of a product, sometimes greater than 10% (Rodrigue & Notteboom
1998). OGL’s business depends on the role of transportation within the supply chain. OGL relies
heavily upon its 3PL provider’s knowledge of transportation modes to provide suitable end-to-end
solutions from suppliers to customers. This is initiated from manufacturers and suppliers, to the DC,
to stores, (or direct from internet shopping) and finally to the customer. There are various modes of
transportation, each with their own distinct advantages. For example, airfreight, provides fast long
distance transportation, however it is quite expensive when compared to sea-freight. Sea-freight also
allows products to travel long distances at a cheaper price per volume however, it is a slower service
(Rodrigue et al. 1998). Examples of modes of transport are as follows:
Air Sea/Ocean
Road Rail
Inland Water Way Pipeline
Fig 4: Various Modes of Transport
The main transport options that are used by Oroton are the top four (limited rail). See advantages and
disadvantages of the various modes in the below figure:
Page 8 of 25
Fig 5: Advantages and Disadvantages of the Modes <http://dlca.logcluster.org/display/LOG/Transport>
Within the modes, there are also various service types, examples of these are:
Sea/Ocean
FCL – Full container loads
LCL – Less than container loads
Breakbulk
Air
Freighter Cargo
International Courier
Selection of the modes and services of transportation is determined by a number of criteria, the five
main ones are as follows:
1. Time Sensitivity
2. Cost
Page 9 of 25
3. Characteristic of Goods
4. Distance or Geographical Locations
5. Frequency of Service
Incorrect use of transport modes (for example sea-freight) can extend lead times and result in loss of
revenues. An inefficient transportation service may require companies to hold greater physical
inventories to protect revenues. Inventories are directly related to additional costs to the bottom line of
a company, and are usually tried to be minimized. Alternately incorrect modes, such as airfreight, can
also result in expensive transportation costs, which can be avoided by the use of another mode
(Rodrigue et al. 1998).
The five main criteria are described as follows:
(a) Time Sensitivity:
If a product needs to be delivered in a certain timeframe, airfreight or express couriers could be
utilized. Similarly, sea-freight can be used if time is not sensitive through full container loads, less
than container loads or even breakbulk cargo (Rodrigue et al. 1998).
(b) Cost:
The cost is generally related to the lead time of the service. Normally the faster the service the higher
the cost.
(c) Characteristic of the Goods:
The is dependent on the physical characteristic of the product. Some products are not permitted to fly,
for example dangerous goods. Also the product may be physically too large to fit in an airfraft, and
must be transported on an alternate mode (Rodrigue et al. 1998).
(d) Distance or Geographical Locations
Australia is an island country, that is not land locked, transporting products from overseas requires
transportation by either air or sea (Rodrigue et al. 1998).
(e) Frequency of Service:
This relates to the number of services that are offered by various carriers. For example, some shipping
lines may only run a monthly service. Some air carriers may provide only a weekly service (Rodrigue
et al. 1998).
The modes of transport utilized by OGL to transport their products from suppliers, to the DC and to
customer/department stores vary according to the above criteria. Local trucks at overseas companies
pick up products from suppliers and the shipments transported via sea-freight. The 3PL DC in
Melbourne primarily receives containerized sea-freight cargo from overseas. The containers are
unpacked, and products are then either stored or transported via local delivery trucks for delivery to
the Melbourne retail stores, and via line haul semi-trailers for interstate deliveries (Oroton Group
Limited 2010). Online customers receive their products from either the Hong Kong or Melbourne DC.
Depending on the requirements the modes that are used are airfreight and local delivery trucks.
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3. The Management of Transport
Managing transportation for any organisation, regardless of the industry, can be a monumental task to
undertake. As previously discussed, the costs involved with transport from suppliers (upstream) to the
final delivery to customers (downstream) can account for a large percentage of the overall costs of
that product. Managing, not only the different types and modes of transport can demand considerable
resources (discussed above), but also controlling and directing where certain products need to be at
certain times can determine whether a company is competitive or not. The costs involved can be direct
tangible costs for example, freight and handling costs, and intangible, such as the result from poor
delivery times resulting in unhappy customers (Rodrigue & Notteboom 1998).
OGL like many other companies choose to outsource their logistics and transportation operations to
various 3PL providers. As transportation is not a core competency of OGL, this allows OGL to focus
on its strengths and utilizes 3PL provider expertise. While 3PL providers supply specialized advice
and execution, they are also in a better position to understand market trends, and can draw on
strengths with consolidation, sourcing cheaper rates from carriers through economies of scale.
Reasons for and against 3PL are shown below.
Fig 6: Reason For and Against 3PL Use
A 3PL is essentially an external supplier or provider that performs some of or all of the logistics
functions that a company requires. A company must consider and evaluate different partners that are
capable of delivering the services that the company desires and adds value to the supply chain. Should
a company select a 3PL provider without extensive evaluation or consideration, they run the risk of
establishing an ineffective and/or counterproductive relationship (Coyle et al 2011 p. 394).
Page 11 of 25
OGL uses three main 3PL providers for their logistics and transport of products, from suppliers to
their warehouses, stores and direct to their customers. These 3PLs are DAMCO, Toll and DHL
(Oroton 2016).
Fig 7, 8 & 9 Damco Toll and DHL Brands
As a result of the cost advantages in production, OGL’s suppliers are located overseas. This requires
overseas transport (air and sea), and locally, customs clearance services. Damco (Part of Maersk
Group) is a freight forwarder/customs brokerage company specializing in ocean and air shipments
through its extensive hub network (Damco 2016). For supply to Australian stores, Damco primarily
provides a containerized sea-freight service (See Appendix XX: History of Containerization) to take
advantage of its buying power in the containerized market. These containers are shipped through the
Melbourne port and delivered to the Damco DC in Melbourne. From the DC, Oroton products are
then distributed to the various stores through the inland carrier Toll (Oroton 2010).
Toll provide many transport and logistical services both in Australia and overseas. In Australia Toll
hold a large market share of the road transportation services (Date-Shappard 2014). OGL utilize this
advantage to deliver their products locally in Melbourne through smaller sized delivery trucks.
Additionally, they provide long distance road transport (referred to as line haul) to the stores
interstate.
Fig 10 & 11: Toll Trucks <http://www.trailermag.com.au/news/article/toll-supports-youth-employment-initiative>
Recently, with advancement in technology, OGL has implemented a web based shopfront. This
allows customers to make purchases through the internet and have them delivered where ever they are
required in the world. This requires a different type of logistical service. The purchases are lower in
value and the volumes for transportation are much smaller. From a cost point of view, the services
provided by Damco and Toll are not suitable for these types of shipments. OGL have outsourced to
DHL Express in order to provide the transport services.
DHL Express are a part of the Deutsche Post Group (German Post Office) and operate the world’s
most comprehensive global network, specializing in small parcel courier services. With offices in over
220 countries and territories and workforce exceeding 340,000 employees throughout the world, they
offer an extremely competitive service. Courier services like DHL utilize multiple modes (air, sea and
road) depending on the urgency of the shipment. Customers have the ability to purchase items and
have them delivered to their door, through this service (DHL 2016).
Page 12 of 25
4. Technology and Transport
In today’s market, technology is required more and more in any industry. Technology in business
now is involved in all areas of operations, from forecasting, warehousing, distribution, accounts, sales,
payroll and HR services. It is essential for a company to have visibility and communication between
all of its departments. In 2007 Oroton Group’s IT manager Larry Neimann requested a review into
Enterprise Resource Planning (ERP). The business evaluated and introduced SAP R/3 4.6C in 2004
and further upgraded in October 2008 (Purnell, 2011). Early in 2008 OGL reduced IT costs by
outsourcing its functions to a consulting firm called CIBER. CIBER have created a help-desk for all
day-to-day issues, this system works through a ticketing process, and this provides visibility for the
business (SAP AG 2013).
The upgrade of Oroton Group’s SAP software was a strategic move, as it allowed the business to
integrate their system with a 3PL’s system. The closing of the its own DC and the appointment of a
3PL shortly followed in 2009. The choice of SAP, was also a strategic choice, as it is popular with
many transport companies. As SAP is used by many 3PLs, this allows it to tender to a vast array of
providers and partner with major global 3PLs. SAP has resulted in connection between Oroton Group
and their 3PL providers with minor configurations, enabling integration with transport tracking and
warehouse operations. This interconnection between the SAP and the 3PL Warehouse Management
System (WMS) allows the communication of live information between departments within OGL (SAP
AG 2013). Live information on manufacturing, sales and distribution helps streamline processes,
establish lead times, create accurate forecasts, reducing waste and improve supply.
DHL provides OGL’s online customers the technology to control and monitor delivery of their
purchases from the suppliers or DCs to their door. DHL’s technology provides the customer a
tracking number when bookings are made, the tracking number can be entered into the DHL website
to monitor the location of the package or shipment. At the point of booking the suitable shipping
method, the technology allows the customer to provide a telephone number. Once this number is
inserted, it can be used to SMS delivery notifications, change delivery address, provide day of
delivery and reschedule missed deliveries (Oroton 2016).
Effective ERP technology systems provide a business with the information to make accurate
decisions. This is due to the company as a whole having the same access to up to date, usable data and
information (Baltzan et al. 2010, pg. 451). This information provides the foundation in which the
Oroton Group can use to develop strategies making it more competitive in the TCF industry.
Additionally, through DHL’s technologies this allows online customers to choose the service they
require and provide visibility throughout the supply chain to their door. The use of these technologies
which interface with OGL’s allows it to grow and succeed in the modern TCF market.
Fig 12: DHL Tracking
<http://www.dhl.com.au/en/express/tracki
ng/monitor_shipments.html#get_started>
Page 13 of 25
5. The Risk and Challenges of Transport
The object of any risk management strategy is to reduce the risk to a level that is acceptable by the
company. The risks involved in transportation are vast, examples of these risks and the possible
management strategies are as follows:
Types of Risks
Natural Disasters - disruption
Geopolitical Risk – disruption
Epidemics – disruption
Terrorist Attacks – disruption
Fuel Price Volatility - risk
Currency Fluctuations - risk
Port Delays - disruption
Market Changes – risk/disruption
Management Strategies
Speculative Strategies
Hedge Strategies
Flexible Strategies
Product Shifting
Information Sharing
Global Coordination
Political Leverage
Fig 13: Sourced from Managing Supply Chain Risk (ebook)
The risks that have been identified that provide the most significant chances for loss within the
industry and directly related to the transportation methods used across Oroton’s supply chain, are
consistent with the primary challenges identified by Coyle et al. (2011 p. 299). These are described as
disruptions and risks; the transportation disruptions are related to the flow within supply including
Page 14 of 25
delays, stoppage caused by natural disaster and or security reasons and the transportation risks are the
future movement of freight which have the potential to impact the company through affecting supply,
reputation and monetary aspects (Coyle et al 2011, p .299).
Transport risk registers, treatment registers and risk matrix with the key risks identified from the type
of transport methods used in Oroton’s supply chain are provided in the Appendix (See Appendix 4, 5
& 6). The major challenges identified are the possible disruptions to the supply chain caused by the
associated risks of global import. Oroton utilise and rely largely on outsourcing, 3PL providers and
freight forwarding companies to support their entire operation, this in itself poses many risks to the
business through the potential lack of control from using these methods. However, this also means
Oroton can focus on other aspects of the business and use experts in the field of logistics to control
this area proficiently. Oroton currently have in place several business risk policies which assist to
mitigate and reduce the levels of risks this type of logistics brings (Oroton 2015).
Risk management has an established Australian standard, this is AS/NZs 4360:20004. The risk model
is an essential way to manage risk in the supply chain (see Appendix 7). Through the use of the
model, the main methods identified to mitigate these risks and reduce the overall impact on the
company are through clear, concise contractual agreements set out by Oroton and any outsource
provider. This is also demonstrated through their policies towards ethical sourcing. As stated by
Oroton Group (2015) the concerns with outsourcing manufacturing in regards to ethics and
sustainability is bound by an Ethical Sourcing Code, it states that their suppliers are reputable
companies of whom comply with international labour and environmental laws. This was established
after the “Rana Plaza Tragedy” in Bangladesh in 2013, where a poorly constructed garment factory
building collapsed, killing over 1100 and injuring 2300 people (Ayres 2014). The code provides a
level of mitigation in production risk by partnering with reputable companies, which assists with
regards to quality products, reputation, reductions in pilfering and damage to products.
Oroton’s advancement into technology has also allowed greater visibility when transferring freight
from origin to destination and has also included the value into online purchases for clients to observe
their own purchases. This increase in visibility allows Oroton to track orders and observe any delays
to freight providing extra management when and if this occurs. Through the use of a global forwarder,
they also have access to a variety of transportation means such as sea and air freight which would
allow for greater forecasting and planning for stock levels and in areas reducing cost by using both of
these means. Overall Oroton have many know challenges in the field and industry they operate but
have successfully reduced and in areas mitigates know risk with this type of operation.
Page 15 of 25
Conclusion
Transportation is an essential part of the success of the Oroton Group. As the macro-environment
changed, due to the reduction of tariffs and globalization, OGL strategically invested in technology to
enable partnership with 3PLs. Technology has indeed allowed greater sales through online stores, and
the specialized international courier service used provides the transportation. This transportation is an
essential element of the whole experience that online customers receive when they purchase Oroton
products. The success of DHL in the transportation market is directly related to the seamless service
that Oroton’s online customers receive.
The use of leading 3PL providers at OGL provides a method to add value within Oroton’s supply
chain. OGL’s strengths are in brand awareness, new store concepts, limited edition products, and new
product categories with the textile, clothing and footwear industry, not in transportation. In order to
compete in the very competitive TCF retail market, it needs to provide value in all aspects of its
business. 3PL providers are specialists in their field, and leverage economies of scale, technology,
efficient modes of transport and experience in the transport industries. OGL utilize these aspects to
enhance their business.
The use of technology like ERP and 3PL tracking systems, provides visibility, and real-time
information to manage not only the transport of products but for many other forecasting, inventory
and supply chain processes. The overall result of the use of technology and quality 3PLs reduces risk
within the supply chain and makes Oroton arguably Australia best textile, clothing and footwear
retailer.
Page 16 of 25
References
Ayres, A 2014, A guide to the Rana Plaza tragedy, and its implications, in Bangladesh, Forbes,
viewed 3 September 2015, <http://www.forbes.com/sites/alyssaayres/2014/04/24/a-guide-to-the-rana-
plaza-tragedy-and-its-implications-in-bangladesh/>
Baltzan, P Phillips, A Lynch, K & Blakey, P 2010, Business Driven Information Systems, 1st
Australian and New Zealand Ed, McGraw-Hill Auistralia Pty Ltd, North Ryde NSW
Coyle, J Novack, R Gibson, B & Bardi, E 2011, Transportation: A supply chain perspective, 7th edn,
South-Western Cengage Learning, Mason, OH.
Damco 2016, Freight Forwarding, Maersk Group, viewed 4 September 2016
<http://www.damco.com/en/our-services/freight-forwarding>
Date-Shappard, D 2014, Toll Holdings Limited: the road freight transport market leader you should
know, The Motley Fool Australia Pty Ltd, viewed 2 September 2016
<http://www.fool.com.au/2014/02/18/toll-holdings-limited-the-road-freight-transport-market-leader-
you-should-know/>
Dept. of Industry 2016, Textiles, Clothing and Footwear (TCF), Australian Government: Department
of Innovation and Science, viewed 11 August 2016.
<http://industry.gov.au/industry/IndustrySectors/TextilesClothingandFootwear/Pages/default.aspx>
DHL 2016, Company Portrait, DHL International GmbH, viewed 4 September 2016,
<http://www.dhl.com.au/en/about_us/company_portrait.html>
Oroton 2010, Australian Packaging Covenant: Action Plan July 2010 – June 2015, Oroton Group
Limited, viewed 4 September 2016
<http://www.orotongroup.com/images/pdf/general/australian_packaging_covenant_action_plan_2010
-2015.pdf>
Oroton 2015, Oroton Ethical Sourcing Code and Supplemental Standards, Oroton Group Limited,
viewed 20 August 2016
<http://www.orotongroup.com.au/images/pdf/constitution/oroton_ethical_sourcing_code_and_supple
mental_standards.pdf>
Oroton 2016, Shipping, Oroton Group Limited, viewed 15 August 2016
<http://oroton.com.au/shipping>
Purnell, F 2011, Inside SAP: Yearbook 2012, Flapjack Media Pty Ltd, EBL Ebook Library
Rodrigue, JP & Notteboom, T 1998, Transport Costs, The Geography of Transport Systems, viewed 4
September 2016 <https://people.hofstra.edu/geotrans/eng/ch7en/conc7en/ch7c3en.html>
Rodrigue, JP Slack, B & Comtois, C 1998, Transportation Modes, Modal Competition and Modal
Shift, The Geography of Transport Systems, viewed 4 September 2016
<https://people.hofstra.edu/geotrans/eng/ch3en/conc3en/ch3c1en.html>
SAP AG, 2013, OrotonGroup: Fashioning New Trends in Business Operations with SAP ERP, SAP
AG, viewed 26 Aug 2016 <http://go.sap.com/australia/docs/download/2014/01/38c8db54-397c-0010-
82c7-eda71af511fa.pdf>
Page 17 of 25
Appendix
1. PEST Analysis
Environmental Factors
Comments Effects on industry growth
Political: Positive/negative
Tax Policy GST tax on TCF items, if the GST is increased to 11%, this will slow the demand of TCF products.
Negative effect if the taxes are high. Creates customers to think twice about what they buy.
Environment regulations
Oroton Group must follow strict guideline regarding the bleaching process of fabrics, complying to ISO 14000 standards, insuring continuous improvement (Group, 2015).
This is a positive effect on the industry. Consumers are happy to buy products knowing the business is looking after the environment.
Political stability Political stability provides confidence in the retail sector & infrastructure commitments.
Improved infrastructure benefits the transport industry and customers. Positive effect on the industry.
Tariffs & Trade restrictions
Tariffs are a tax added to imported goods. The reduction on tariffs of textiles that are imported into Australia, China is the dominant country in the textiles industry.
This will have a negative effect on the TCL industry. More competition within the textiles market.
Employment laws
Employment laws for the textiles industry are protected by Textiles, Clothing and Footwear Union of Australia (TCFUA) (Neil, 2012). Australian textile companies must ensure ethical work practises are followed when using overseas operations using the ECA guidelines. These are audited by TCFUA (McDonough, 2016).
Positive effect on industry growth. Industry workers can maintain a solid work environment.
Economic Aspects:
Economic stability
Increasing inflation rate, higher production cost.
Slows growth due to production costs, increases sales price to customer. Negative.
Page 18 of 25
Interest rate Increase in interest rate, less money available to spend on clothes, lower interest rate allows customers to spend (spare) money.
High rate reduces sales. Low rate, increase in sales.
Inflation rate Reduce profit margin. Increase sale price.
May result in lost sales, customer might buy cheaper option. Negative.
Economic growth
High economic growth is an advantage to the manufacture.
Result in higher sales and profit. Positive.
Exchange rate Affects the cost price of the goods for the retailer and online shopper to export and import.
Affects the profit margins. Both negative & positive.
Social/culture
Age distribution Oroton Group’s product covers a wide range of age groups.
This is positive, covers the
required market in fashion.
Population growth rate
The growth rate is an advantage for sales, more people, and more sales.
Positive result in company and shareholder profit.
Career attitudes Being a company that is worldwide and the product name is well known throughout these counties and seen as a high status product. Employees are trained to adhere to the highest standards in ethics (Group, 2015).
This is positive for the industry.
Religion & culture
All cultures and religion use hand bags and clothes.
This is a positive effect, the clothes and accessories are used by all religions and cultures.
Consumer behaviour
Fashion industry is highly sort after accessory for a majority of consumers. Appearance and the way people look.
Positive for the industry.
Technological Aspects:
Distribution & communication channels
Distribution is via 3PL logistic company, Communication of product range is through web sites and marketing programs.
This is a positive effect, using a 3PL.
Technology Improved technology allows the business Positive.
Page 19 of 25
incentives to enhance the ability to produce, supply and ship products to retailers and customers.
Automation Automation allows the DC to supply and ship orders faster, the customers receive orders on time, with the use of hi-tech rollers systems and voice activated picking. Automation also has improved the ability for manufactures to produce better products with higher quality and in faster times.
Positive.
Rate of technological changes
The rate of change in technology is growing rapidly, WMS and the use of systems such as SAP allow the industry to maintain and provide accurate information on sales, forecast and distribution. Technology changes in the manufacturing of textile products, especially in technical textiles.
This is a positive for the industry.
Barriers to entry The Barriers of entry are low with China and other Asian countries being able to flood the market with low cost items. Reduced tariffs on imports and low labour rate.
This is negative for the TCF industry.
Population level The growth of population and the ability for a majority of these people to have access to the internet. This provides higher sales.
Positive.
Outsourcing decisions
The outsource decision provides the ability for Oroton to service all retail and internet orders.
Positive
2. History of Containerization
Modern container shipping celebrated its 50th anniversary in 2006. Almost from the first voyage, use
of this method of transport for goods grew steadily and in just five decades, containerships would
carry about 60% of the value of goods shipped via sea.
The idea of using some type of shipping container was not completely novel. Boxes similar to modern
containers had been used for combined rail- and horse-drawn transport in England as early as 1792.
The US government used small standard-sized containers during the Second World War, which
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proved a means of quickly and efficiently unloading and distributing supplies. However, in 1955,
Malcom P. McLean, a trucking entrepreneur from North Carolina, USA, bought a steamship company
with the idea of transporting entire truck trailers with their cargo still inside. He realized it would be
much simpler and quicker to have one container that could be lifted from a vehicle directly on to a
ship without first having to unload its contents.
His ideas were based on the theory that efficiency could be vastly improved through a system of
"intermodalism", in which the same container, with the same cargo, can be transported with minimum
interruption via different transport modes during its journey. Containers could be moved seamlessly
between ships, trucks and trains. This would simplify the whole logistical process and, eventually,
implementing this idea led to a revolution in cargo transportation and international trade over the next
50 years.
Quoted from: http://www.worldshipping.org/about-the-industry/history-of-containerization
3. Typical Container Sizes & Types
http://adbcargo.com/general-information/container-size-chart/
Page 21 of 25
4. Transportation Risk Register
Reference ID Risk Number
Describe the risk What can happen? How can it
happen? When can it happen?
Rate the
likelihood - Very
Likely
- Likely
- Unlikely
- Very
unlikely
Rate the
consequence - Major
- Serious
- Minor
- Insignificant
= Resulting
level of risk - Low
- Medium
- High
- Major
Describe how adequate current controls are - Over adequate
- Adequate
- Inadequate
- Non-existent
Give it a
risk
priority A - Must
B - Should
C - Could
#1 Supply Chain
Interruptions
· Delivery delays to products at
both origin and destination
· Can cause shortages of
products available
· Decreases profit and
reputation to supply by
business
· Back orders on products
Could happen anytime
Likely Serious High Adequate – Evidence of seasonal shipping using
RF tech to date, store and style. Using both
methods of LCL/FCL and Air freight where
necessary. Uses Airfreight if any delays or
urgent orders are required.
A – Must
#2 Product
Loss/Damage/
Contamination
· Products are manufactured
overseas
· During transport, air, sea
products could be exposed to
differing environments,
weather which could result in
stock damage
· Due to distance travelled stock
could be stolen
· Some items may be held for
customs inspections
Could happen anytime
Likely Minor Medium Adequate – Stock is appropriately stored in both
cardboard and plastic to prevent damage or
contamination to product however not 100% full
proof on weather.
A – Must
#3 Delivery Delays · Again customs held
· Didn’t make flight or boat
Unlikely Major High Adequate – Employs a Freight Forwarder and
Brokers to ensure documentation is ready at
A –Must
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from origin both ends and ensures monitoring of freight.
#4 Freight
Forwarder Delays
· Slow on collection and
processing
· Incorrect deliveries
· Not adhering to time frames
· Not following SOPs which
dictate how to break freight
down for delivery
· Not having enough room on
the truck
Likely Major High Adequate – Has SOPs in place and agreements
to ensure processing of freight is done in the
required timeframes and to the required
outcomes.
A – Must
#5 Incorrect
deliveries for
online purchases
· Using a local transport
company with a hub and spoke
model can cause some losses
and incorrect deliveries of
products to customers
· Results in unhappy customers
and delays in getting products,
could leave bad reviews
damaging company reputation
Likely Minor Low A-
M
ust
5. Transportation Risk Treatment Register
Risk in priority
order from the risk
register
Possible treatment options Available options
More research needed to
create new options?
Preferred
options
Choose
what to
do:
A =
accept
option/s
R =
reject
option/s
Who will implement
option/s
By when? Who will
monitor this
risk and its
treatment?
Further action
#1 Supply Chain 1. Ensure prior risk 1. Accept Procurement Team/ Prior to Reviews to be Audits of Manufactures
Page 23 of 25
Interruptions assessments are done
correctly on manufactures
2. Contracts are drawn to
reflect the objectives and
KPIs required by the
company
3. Correct forecasting of stock
needs for each store in-
country
4. Using the appropriate
transport method for freight
when transporting such as
FCL, LCL and Air Freight.
2.
3.
4.
all
options
Legal Teams/Logistic
Teams
selection of
any new
suppliers
carried out
continuously
to be actioned to ensure
continuity of product can
be supplied.
#2 Product
Loss/Damage/
Contamination
1. Again ensure correct
manufacturer/supplier is
selected to ensure the
quality of the products is
maintained.
2. Correct and suitable
packaging is used to ship
goods
3. Due to distance tracking
can be used such as RFID
on high value products
4. RF technology to be used
at origin and destination
where possible
1.
2.
3.
4.
Accept
all
options
Procurement Team/
Legal Teams/Logistic
Teams
Prior to
selection of
any new
suppliers
Reviews to be
carried out
continuously
Audits of Manufactures
and 3PL, Freight
Forwarder to be actioned
to ensure continuity of
product can be supplied.
#3 Delivery
Delays
1. Ensure Origin and
Destination supply /
surrender correct paperwork
to brokers/ freight
forwarders
2. Have specific cut offs for
origin deliveries to ensure it
makes the correct transport
1.
2.
3.
Accept
all
options
Logistic Manager /
Freight Forwarder
Continuous Logistic
Manager /
Freight
Forwarder
Page 24 of 25
mode
3. Ensure the management of
all products at origin is
monitored with SOPs and
KPIs also .
#4 Freight
Forwarder Delays
1. Strict contracts in place to
meet agreed targets
2. SOPs are designed for
reference on products
3. RF Technology is used to
scan items in and out of the
warehouse
1.
2.
3.
Accept
all
options
Freight
Forwarder/Logistics
Manager
Continuous Logistic
Manager
If FF is not performing
tender new FF
#5 Incorrect
Deliveries for
online purchases
1. Selecting the correct local
delivery provider
2. Ensure scan technology is
used
3. Customers sign for their
products on glass
1.
2.
3.
Accept
all
options
Logistics Manager Continuous Logistics
Manager
Page 25 of 25
6. Risk Matrix
Fig XX : Risk Matrix
7. AS/NZS 4360:2004 Risk Management Model
Recommended