Logistics giant Brambles is pinning its hopes on an ongoing digital transformation to try and deal with an ongoing pandemic-driven shortage of the timber it needs to make pallets.
Brambles
In spite of its challenges, the company has announced [pdf] full-year 2022 revenue growth of eight percent to US$5.6 billion (nearly A$8 billion), and operating profit up 10 percent to US$930 million (A$1.3 billion).
However, inflation in lumber hit the company with US$470 million (A$670 million) in extra costs, as the price of new pallets rose by about 40 percent.
“Current challenges across global supply chains continue to highlight the importance of transforming our customer experience and the efficiency of our operations," CEO Graham Chipcase said.
The company announced a four-year transformation program in September 2021, and its focus this year has been on “setting the foundations for transformation and accelerating commercial and asset productivity initiatives”, Chipcase said.
In the 2022 financial year, the company invested US$48.4 million (A$69 million), with a further US$25 million (A$36 million) budgeted for 2022-2023.
In the first year, Brambles rolled out asset productivity analytics in 20 countries, with another 10 markets due for deployment in the next financial year.
“Our transformation programme will deliver new capabilities for customers and further optimise our business with a broad range of initiatives, including asset efficiency and network productivity," Chipcase said.
“We made tangible progress in the first year of the transformation program. We have built the capability and technological foundations that will support transformation initiatives across the organisation.”
He told the company’s earnings call Brambles’ cloud migration is now complete, offering the chance to enhance its project management and digital capabilities of the business.
Partial automation of pallet repair has been rolled out in some centres, he added.
However, extending the repair capability has been delayed by the supply crisis in the semiconductor supply chain.
A key part of the transformation program is “smart assets” – pallets with autonomous tracking devices – with over 250,000 deployed in the year.
Of these, 200,000 were deployed in the UK and Canada.
Such initiatives are designed to keep as many pallets in the supply chain as possible, in spite of what the company said were “higher customer and retailer inventory holdings to de-risk supply chains and an increase in the unauthorised reuse of pallets, in response to pallet shortages and higher market value of pallets.”
As a result, Brambles said, it recovered and salvaged four million pallets in the year, and the company hopes to cut the number of palettes it scraps by 15 percent by the end of 2025.
To support the transformation, the company says it has trained 300 “leaders in digital and analytics skills and onboarding specialist expertise across data science and engineering”.
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