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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

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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.

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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>

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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

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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

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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:

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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

Mail

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

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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).

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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).

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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>

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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

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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.

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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.

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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>

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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.

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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.

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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

Page 20 of 25

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

Page 22 of 25

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