CMD 2019

Dec 5, 2019

And then I'm extremely happy and honored that with us today, we have Mr. Helmut Pysheng, the CEO from Vitron, who will come and present and share with you about Vitron, but also the advantages of Vitron's solutions in to Axford's platform. Truly looking forward to that, and I'm sure you also then will also have an opportunity to listen but also ask some questions to Mr. We are Stograstegg, that we are contract here at, we are on locally steering. We are contract here at Birnakhon. Ship a better Business Intelligence. Holberez, Profil, Vharin and Max Food. Neale Fastest, Neale Processor Transport, and we. The well tweaked thrust at the Fattas, some at Holbort in its atifrebigroxolong60 Kankranskraft. And Leggning. We have the sign ups. We clara at Ekavaralagovolume at 40% from Dogeneslage. We Comrond Tierra, we have 60% of U. K. A. Week. We get to see some well it's too far, the left on the well it's more a stop in the Meehan. Okay, we come in air vent. So we see here for blowing jobs for Bettingerf, so we can fly the barrel in. Plan. For Oor, how we have Jobat Mekimat set up an effective organs at home, flat leveriera, I really would like to welcome up Mr. Helmut Prischenk, CEO of Vitron, the world leading supplier in automation. We are more than happy to have you here, Mr. Pyshank. And I'm sure you will also guide the audience here in terms of Vitron, but also how this will fit into the platform that we are building. So please welcome up on stage, and I leave this one over to you. Thank you very much. And thank you for the word leading. I'll give you the $20 later. Thank you for having us here. Thank you for the invitation. We're really proud to have the opportunity to speak in front of you. And hopefully it's okay for you that we do this in English. My Swedish is much, much worse than your English. And my colleague, Jack Heippus will also join me later on when it comes to the solution itself. To give you a little bit of impression about the company, I would like to give you some pictures. I think when I press this thing 3 times then it's rolling and I guess we have tone as well. So I'll leave the picture was Mr. Winkler. And Mr. Winkler is the Founder and Owner of the company. We are 50 years old in 2 years and all what we do is logistics. So this is our main focus. And we are a foundation that's also important. That means that the mission of Mr. Winkler was always that we cannot be sold to another company. We are standing on our own feet. We own ourselves that talks a little bit about sustainability. We are a typical family company, 4,000 people. So we are a little bit smaller than Oxford, but we feel really like a family business and this is a very important thing when it comes to project success and this is when we had the first conversations with the customer where we said what are the prerequisites to make a project successful? One thing is certainly proven technology. What we are using here and this is maybe a little bit repetitive what I'm saying here because other slides mentioned the same, but we want to make sure that when we are realizing a project of this magnitude that we have a proven technology and we don't play in games, we are on solid ground and that's important. What we're doing here is comparable with 50, 60 sites we built already over the last 20 years, similar sizes as well. So the new thing is the process and the setup, but the technology is solid. That is one important fundament. The other important fundament is that we have a culture fit because this is a mountain climb. This is a project and this is a journey where we will stick together. It's like a marriage where you have those and those days, but when you have a cultural fit then that flies and that is the most important thing. And then certainly we want to make sure that we have a customer satisfaction. So we need to deliver benefits to the consumers. We will talk about this in a minute. And then we need to have a business case. That's important because we can have a great cultural fit and we have proven technology. If the business case is not working, this is reality. We all wake up in front of ROI sheets sooner or later and we want to make this happen. And this is the fantastic thing project in this arena and 95% of our business is food retail in North of Europe, in Europe and in North America. So we are doing nothing but food retail. And this is the first time where we have the situation that a market leader is not going in the way of atomize material flow, atomize in terms of a lot of little centers and a lot of streams, etcetera, but really fold business into each other and have synergies. That is the way to go. This is the way other people will find out sooner or later. And this is the brilliance of this one to have a proven technology, to have a cultural fit, to have a customer benefit and to have really a business case which works and now we're going to realize it and we want to show the world that this is really a milestone and a masterpiece in logistics. Again, I think from the company itself, it's pretty easy to understand. We are by end of this year, we are shy under €600,000,000 revenue. But the interesting thing is that we are more than €1,000,000,000 order entry this year. So we are growing very fast because of this logistics momentum what we have in the market. This is a little bit about and this I saw similar things in your so we didn't copy that. So it's really a guarantee. But when we ask ourselves what is the core, what makes us work together, in the middle is the customer, that's clear. The customer is paying our wages. Some people in Parkstein think that Mr. Winkler is paying our wages. No, it's the customer. And then it's about the people and the end to end solutions what I mentioned already. What are we bringing to the table is the design. We did the design. We have this behind us. We have an agreement. Now we are in the build circle. So we are realizing the software. We are producing the mechanics, etcetera. Sooner or later when the building is ready, we will come on-site, we will install it and then we will ramp it up together and then we will operate or maintain or service. So this is to be defined. We are in the middle of the agreement discussions right now. Then we will have a partnership for a long time. So design is maybe 1 year, 1.5 realization, 2, 3 years, you saw the timeline. But to run the show, we're talking about 25, 30 years. The expectation of a lifetime of such a facility is 25 to 30 years. This is capital protection, if you want, investment protection and this is something we are proud of that we are on the same page with Lifetime Partnership. This is something where a lot of people in the market working on. Very often people focused on the ecosystem warehouse that players have thought about what can we do in the warehouse, how can we improve ergonomics in the warehouse, how can we make the cost per colleague in the warehouse nice? At the end of the day, this is an important part and we need to do a nice job there. But at the end of the day, it's the whole ecosystem what counts. Because for a consumer, when you are ordering a package and you want to get the package in your house store or you are walking to a store, for you, it's not important what is the picker doing in the warehouse or whether it's a forklift or a comm machine or a stacker crane. You're just not interested. You are interested in the quality, in the experience that this is the right thing, in the right price, etcetera. So we have to focus on the end to end supply chain. That is the important thing. And that means that we need to do a brilliant job in the warehouse, but we need a very smart connection, for example, to a transport management system. We need a smart connection to the purchasing. We need to make sure that you're not pumping too much volume to the supply chain, etcetera. So the end to end thing is important. And that is the beauty of this project that with the end to end thing, we really were able to create a very efficient mother ship and not hundreds of little warehouses and atomize and then you have to run these atomize atomizing for next couple of decades. That is the problem in the market and this is the beauty of this setup. I think the network I talked about this already, so I don't want to go too deep in this. This is important. The intelligence, we have 2 basically dimensions. We have the horizontal dimension in the intelligence sector and the vertical. That means we need to use all the data and I'm sure you heard all about the buzzwords about artificial intelligence and machine learning and all these things. I don't want to put to sleep with this, but we have all these things in this. So that means we're using all this data for machine learning and for intelligence to make sure that I don't want to say it runs like an autopilot, but it goes in that direction. And end to end, the intelligence along the supply chain as well, we want to make sure that we are doing a wise job that when we are doing something on the purchasing end that this makes sense for the whole chain and not a suboptimum in the silo. That is extremely important. I talked about operation as well. So these are the things we are offering when it comes to a live operation, whether it's a remote, a help desk, on-site whatsoever, we will figure that out when it's the right time. Important for us is also when we are talking about such a technology, most people are so happy about the technology and about the machine and about all these things. At the end of the day, the machine will do the job. The crane will run. At the end of the day, such a project is about people and it's about commitment and it's about engagement. That is and about to run the business. So we want to make sure that we're not too much focused on technology, but really don't forget the people around starting with the consumer because this is the guy we are doing this for and the people who are running this and the people who are crafting the thing. So the people focus is very important. And what was really exciting for us in the relationship with Ax Food was that the most companies do have a business focus. A business focus in terms of we have to make the ROI, we have to make the cost per case, we have to make this and this and this. So the business focus was very often in the middle. And what we learned here in this relationship is sustainability was a headline, was very important to make sure that when we are talking about this project, do we do a nice job to our consumers, 1st of all, then to people, ergonomics in the warehouse. Then can we reduce the truckloads? We are producing less pallets with this technology. That means we have less trucks, we have less traffic, we have less CO2. Can we when we are doing a wise job in the warehouse, can we reduce the whole volume what we are pumping through the pipeline? And when we can reduce this, we don't produce that much and then we don't have so much waste in the store. So all this sustainability thing is very important because we all as company have a meaning and a social responsibility and not just picking a pallet. Yes, we pick a palate, but this is just the end game. To do a good job here is the key. So this is a little bit the reference list and as I said, 95% food retail in Europe and in North America with all the market leaders and this is the experience what we bring also into this project and that helps certainly to bring stability. And greetings from Mr. Winkler. He is he was right behind this project as you can imagine. This is one of the biggest project we're realizing and so a lot of greetings from him and he is very much engaged that we are delivering a masterpiece here. There is no other option. We will deliver this. This will run, no question. And he will keep us awake I think every day and night to make sure that we don't forget this. So I want to give this to Jack to go a little bit more in the details of the technology. Yes. Thank you. Well, my name is Jack Ipos. I'm Vice President, Northwest Europe for Vitron. Yes, I was heavily involved in the design of the system of the solution, and I've got the honor to show you a little bit more details on it. Yes, I'm just looking where is my screen. Yes, I think the outside everybody has seen already the masterpiece as Helmut was explaining it. Of course, what it's all about is what's happening in the inside. In total, what we are looking at here is, as I think Per already mentioned, it couldn't follow the Swedish completely, a little bit more than 100,000 square meters, 25 meters high, fully, let's say, filled up with automation. You see some numbers on the right hand side. And I think the most interesting thing about this is the hybrid concept because we're covering basically in the same building both the retail and convenience business as well as the dotcom business. And it's all in one facility with all synergy effects and flexibility points that are related to that. Different temperature zones that have to be covered and both for retail and convenience, as I said before, as also for e commerce. So the building is split up in different temperature zones where we have then applied different standardized concepts. Helmut already mentioned it's all based on proven technology. In the video you just saw, you have seen, let's say, some snapshots of the different concepts that have been applied, yes? The main concept basically covering the most of the volume is the OPM concept, fully automated case picking concept. For those articles that are basically too small to be handled fully automatically, yes, we've got a semi automated IO system as we call it all in one, yes. You've seen it also in the movie. And for the what we call and we always have to be careful when we talk about this about to customers, the Uglies, let's say, sacked goods, etcetera, that are difficult to handle in an automated way. We have then a car picking system, which comes close to your, let's say, current way of working. As mentioned before, this the whole facility is basically built up around this OPM concept, yes? We've been on the market with that for 15 years. Of course, there have been, let's say, learnings that have been applied, yes? But there's been a very big experience in this. You see the numbers and you also see the reorder rate where customers coming back to us and basically ask for more facilities to be equipped with this equipment, yeah? In the end, of course, it must lead to benefits for the customer, yeah? And basically split it up into 2 different parts. One I think is more or less focusing on this hybrid concept covering retail and also e commerce in one facility. What advantages, what benefits does that bring? Yes. Of course, we can make use of the same stock to cover, let's say, both directions of the business. I think I lost okay, I lost sound, yes. We've got the same picking systems applied in all temperature zones. So also from a flexibility point of view towards, let's say, the working force, it makes let's say, it gives a lot of benefits there. The staff can be, let's say, placed in a flexible way. So where we have some more work than we place people in that area, yes? We are flexible in where to allocate the people. The other thing with regard to the concept is the decoupling, yes? We have as you can imagine, let's say, we have a highly automated machinery build there, which you want to run keep running at the same pace. Your dispatch profile though, how you deliver to the customers will be very hectic, yes? So what we did is we created a solution where we're basically decoupling these two different parts of the let's say of the solution. Since we are covering let's say 60% of your volume approximately in one side, of course, a lot of I say that a lot of focus has been paid to redundancy, yes, the availability in the system, yes. And of course also to, let's say, accuracy, faultless picking, yes? The machine won't make a mistake, yes? And there where we need the people, yes, we must make sure that the people, let's say, are guided in a way that the mistakes are as low as they can be. And we that is what we have learned in time and developed these concepts for. In the end, we're talking about very high, let's say, mechanizationautomation degree, Let's say, more than 95% of the business basically is handled in a fully automated or highly automated way, yes. And that, let's say, doesn't defer, let's say, but then also in frozen and fresh where sometimes people are thinking, hey, wait a moment, does it work also in that area? Yes, it's the same concept, yes, and it works also there. If we're looking, let's say, more inside of the warehouse, yes, then we can also point to a couple of these advantages of the concept that we have developed, yes? Starting at goods received, for example, we have an automated in feed, yeah, where we with GS1 support, we read the we know the data already upfront and basically a truck driver can unload the truck and everything else is handled automatically. We recognize what has been delivered. We've got dedicated conveyor systems for the different flows in the building, so there's no dependencies in there, yes? We have, as I mentioned before, a decoupled picking and dispatch, shipping buffers These mechanized shipping buffers basically bring the goods in the right sequence towards the docks. So it's only 3 meters from basically taking off the pedal or the roll cage from this staging lane, put it into the truck. So no searching for anything, no manual sorting or whatever is needed. The same thing basically, but of course, in a different dimension, we've also applied in the dotcom area, where we have sequence buffers that make sure that we after picking basically can retrieve the goods, the totes basically in a right sequence, yes, stack them, yes. So there's no manual sorting needed anymore as you have today in your manual operation, yes? And the last thing that I can point on specifically is basically economic working environment. It's logic nowadays. But in the end, we have to make sure that we design it, that we apply it and that it works according to the people's demands or requests. And that is basically, I think, what I could tell you in a very short way about a solution. Thank you. Thanks a lot. And really appreciate your presentations. And I actually, I think we're all happy you also will be part of the Q and A session if there will be any questions, because I know that all of us is more or less logistical experts after that walk then on flattening or then frequency of Johanskaya. We hope some early at Fellenia after all that met get to sit over. Yes, absolutely. Helmet, please join us. Thank you. I have a question. You mentioned that you have some 50, 60 facilities the first of its kind. In what way is the Bolstad Center the first of its kind? What I mentioned before, to fold in the complete two business processes in one facility, This is the first what we are doing here right now together with Ax Food. But we are doing this with the proven technology what we are using in all the other sites. Coming back to your question in other sites, there are e com parts, but not in that consequent what we are doing here. That is what I meant with here, we have really the situation that we don't atomize, but we hybrid. And in other situations, it's a little bit more in different networks. And these are more than 60 sites where we're doing this food retail business. Okay. And I'm also curious, your revenue, how much of this is directly linked to new projects and how much is linked to service? The revenue, I would say that around about 30% is service, depending what you how do you define service. From a finished project. Yes, 30%, I would say service and 70% is basically then projects or then expansions and things like that. Okay, thank you. Magnus Roman, Kepler Cheuvreux. I have a question regarding the closure of the 6 centers. Can you tell us how many employees you have there today and how many employees you expect to have in the new fulfillment center when it's fully ramped in 2023? Nikolas, why don't you join as well? So we Okay. And then I have a follow-up to Helmut. Also coming back to this question around what kind of content or kind of setup you've had in these 50 to 60 finalized projects. You mentioned that there has been atomized and now you're doing a hybrid, but did your company produce any sort of complete e commerce fulfillment centers that were atomized in the way you described it? Or did you not produce those kind of fulfillment centers? Well, first of all, we realized distribution centers for pure players. So where we have only e commerce, that means that we do have that experience. What I mean with Atomize is we do believe in very high efficient mother ships and then serve the knots out in the market, whether it's a store or a house store or a pickup point. This is where we do believe and this is where the experience from the last 15, 20 years tells us that this is the way you can in the long term make the business case. That is the point. To be quick in the market is one thing. To have to build something small and quick to be there is one topic. But to be in the long term have a business case where it pays because at the end of the day gravity will fix everybody appreciate the service what you're delivering. And it starts with the model what you're appreciate the service what you're delivering? And it starts with the model what you're running. And so yes, we did distribution centers for pure players. And for us the important thing is nobody knows exactly what is happening in 10 years. Nobody got a crystal ball. So what we need and this is what we together with Axfood, what we were able to do is to create a distribution center which is agile in that way that depending on whether this e com part is growing by 10% or 30 percent or whatever percent it is, we are agile to breathe and to make sure that in that moment where we have more store than we do we use the infrastructure and the machine for the store. And if the other topic is skyrocketing, then we use the machinery for the others. So that is the key to make sure that we have agility and flexibility in the building and we are not cornered in. And that is the beauty of that setup, if that makes sense. One can also add that we have in our system, I mean, frozen in the Nordics versus many other countries in the world is on a higher share. And here we have a system that is also handling the frozen or temperature zones, which I think is also kind of a step in a forward looking logistical solution in the Nordics particularly. And one question for Hamed, if I may. Please correct me if I'm wrong. But from what I understand, you have a large customer in Australia, which happened to go with sort of a pure play British online competitor of yours with the online solution rather than stick to you. Could you please let us say what you think was the reason they didn't go with you the whole way? Or what was it they could provide that you perhaps couldn't in their eyes? Yes. I think and in all honesty, I want to be respectful with things where I was not part of the business case and don't know the details. What I know and what Kohl's is the customer, I think this is public information. We are focusing with Coals on the mother ships in all temperature zones. And that is a lot things where we are doing at the same time. That means what we are realizing is we are realizing a huge distribution center in Brisbane. And 1 year later, we are realizing in Sydney. And then we are talking about other temperature zones as well. And this is a lot of this is a lot of volume we are talking here. And then we have one factor. We are talking about Australia. And Australia is a very interesting setup in terms of how many people you have in which distances. And there we have a different story when it comes to how many knots you have in terms of transport, in terms of what is the share of costs for one pick in terms of when you are getting a parcel, what is transport, what is picking, what is pure material. So this is a little bit of different setup. But again, I think to talk about a business case where Enel was part of is a little bit I want to be a little bit careful. What I do know is that we are when we follow the discussions in the market, how things are going, we strongly believe that the best of breed approach is in the long term, the successful and the sustainable approach. We don't believe in a one size fit all setup for this type of business. We strongly believe that the best of breed is really the thing which brings the customer forward. And what do I mean with this is to put brilliant technology, proven technology into the game, to use your transport management system, to use your retail competence. And the most important thing, what we are 100% convinced, we want to make sure that in the whole picture, your capital is honored and the biggest capital of a food retail company is your relationship to the consumers. The consumers trust you. So this is your capital. And we don't want to step into this and we don't want to step between our customer and the consumer. So we want to make sure that we can bring the best technology and the best intelligence on the table. But to complete the picture, we believe in the best of breed to bring all the other capital to make really a brilliant solution. I hope I didn't answer your question. Might I have one last one? Just given that you're now and whoever wants to answer, please do. I'm not sure who this is for. But since you're taking down the count of warehouses to 1, I guess, the it becomes more critical that one warehouse actually works. And I guess it also would pose as a target potentially for someone who wants to do some type of attack on that in terms of cybersecurity and whatnot. What would happen if there was a power outage or if there was some type of cyber incident that made you not able to operate this fully? Should I have Stefan? Then you have 2 minutes to think about it. We did a couple of projects where we migrated more sites in one facility. For example, Boots in Nottingham, we migrated 17 distribution centers in 1 basket. And we had certainly questions from people like, are you sure what you're doing? Things like that. So what we did here is together with Axwood, we did a risk assessment, risk management to make sure that did we really think about everything what can happen. But we need to be realistic as well. Sometimes we have risk assessment centers where we think, okay, the whole world is done, but our warehouse is operating. No truck, no street, everything is burning, but the warehouse is up and running. So we need to make sure that we find a balance. And it starts exactly with things what you said. We need power. By the way, every manual warehouse needs power as well. Good luck without any power for a manual facility, but we need the power. This is clear. Then we want to make sure that we are doing a wise job with IT, with the computers in terms of the different server rooms and the rate arrays where we copy them the software, etcetera, etcetera. And then it comes down power, IT. And then we are down to individual machineries where we have then redundancy in the system. So that is the way we did the risk management. In that moment, we are talking about what happens if the hell freezes over, then I would like No, but thank you. And I will obviously, you're right that there's always a risk in everything you do. But I think if I look at it currently today as well that we are distributing from Jundbro to many other places today and to also other other warehouses as well. So if so there is a risk also in current setup. But we need to work on the risk, and risk management is a critical point and a critical part of also this project.