Toll Group is turning the e-commerce revolution to their advantage, opening up a next-generation e-commerce distribution centre in western Sydney to support the growth of online shopping in Australia
The rise in the use of online shopping has led to Toll Group joining forces with apparel retailer Specialty Fashion Group (SFG), launching a $160 million retail and e-commerce fulfilment centre in Prestons.
The 32,000 square metre facility was designed in collaboration with SFG, their fixed tenant at the site.
The hub is a multi-user facility and is large enough to house more customers.
Especially designed to meet the competitive retail market, the facility has 15,600 square metres of automation equipment and is capable of picking, processing and packing 375,000 items per day.
It shortens delivery times from days to hours, allowing retailers to deliver their e-commerce orders faster and in a more economical way.
The facility will be one of the country’s most advanced e-commerce fulfilment centres, transforming the way orders are picked, processed, sorted and delivered to customers, Toll Global Logistics President Chris Pearce says.
“Retailers will benefit from the ability to deliver goods to their stores and direct to customers faster and more efficiently,” Pearce says.
“And shoppers will enjoy flexible order times and faster processing so they can receive their purchases within hours, not days.
“This advanced automation technology will increase our productivity fivefold – capable of picking, processing and packing 70 million items per year.”
Toll and SFG have worked closely to design the facility with scalability and future growth in mind.
Launched in February, more than 50 potential customers attended the event, Pearce adds.
“We are speaking to lots of various interested customers right now, we certainly have seen a huge level of interest in this facility,” he says.
“SFG being the anchor customer, we can bring other customers into the site to fill up capacity but SFG will have the ability to take up more capacity over time as they continue to grow.
“Part of our thinking is that SFG will be a key customer for the site.”
SFG, which is the largest specialty retailer of women’s fashion in Australasia, has signed a 10-year contract with Toll Group.
SFG sells a garment every second in Australia, New Zealand and South Africa through a portfolio of 1,000 stores and seven online businesses.
SFG logistics general manager Alex Linton says the group is constantly looking to improve the experience for its customers, which includes offering faster and more convenient delivery options for online ‘click and collect’ orders.
“We have a highly specialised supply chain so we needed a customised solution that would meet our ongoing needs as a retailer,” Linton says.
“We’ve worked with Toll to develop the site – from the initial design and development through to build operation and delivery, and we’re excited to see the state-of-the-art capability in action.”
The two groups have been in partnership since 2014 and have designed several of warehouses together, he adds.
“The evolution of our supply chain supported by Toll and the capability to get where we are today – it’s been a very successful transition,” Linton says.
They commenced the Prestons project over two and a half years ago, with the construction kicking off in April, 2016.
The facility went live last December and became fully operated in February.
Equipped with $50 million of advanced automation technology, it is efficient due to its size, being five times smaller than a typical facility, Pearce says.
“When it comes to designing the leading edge automated warehouses, we have a lot of experience in doing that,” he says.
“We’ve built various types of technology – we probably have 20 different examples of that throughout our network.
“We’re very good at project managing and designing, and we have a design team within Toll of 120 people.
“It’s the sort of thing that we love to do, we have far too many engineers and we get quite passionate about our sheds. We came up with the design that we’ve got today and we’re very proud of it.”
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The facility has 15,600 square metres of automation equipment
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Operations
There are eight automated forklifts within the site.
The centre cuts the need for more manual handling with a 70 per cent reduction rate. It has a four-star NABERS rating, is fully LED lit, uses rain water harvesting and has a carton recycling machine.
Ideally positioned on the corner of the M5 and M7 freeways, it enables convenient transport links.
The centre’s technology allows for better accuracy and flexibility, Linton explains.
“It allows for a better pick accuracy which you simply cannot achieve in a manual environment,” he says.
“That’s particularly important – when you order online you want to receive exactly the product that you ordered and you don’t want an email from us saying we haven’t got the product you ordered.
“The ability to deliver in whatever medium the customer should decide, whether that is direct to them or whether that is in a click and collect offer, we can do.
“A lot of our customers are ladies who will shop in Coles or Woolworths so many of our stores are located in centres where there are Coles and Woolworths so while they’re doing a shop they can pop into a store and pick up their purchase and try in on there and then.
“We can cater for different customer requirements, have different carriers and offer different locations so the system has got the technology that enables us to prioritise different locations – if we need to dispatch a product earlier to support a different location we can do that.
“It’s all about the speed-to-market, the flexibility and the improved customer service.”
Emerging trend
The emergence of online retailers such Amazon and The Iconic – a dominant player in Australia’s e-commerce fashion market, which generates around 50,000 orders per day, is a sign of ecommerce demand in Australia, Linton says.
Having come from SFG’s UK division, Linton tasked to establish an e-commerce fulfilment centre in Australia.
“Coming from the UK, e-commerce is a little bit more advanced; the market was growing faster there. Australia was behind because it wasn’t a mature market, there wasn’t a presence of the overseas retailer that there is today,” Linton says.
“You only have to look at The Iconic, Catch of the Day and Amazon – Amazon is not going to come to Australia unless they’ve recognised there is a significant demand for e-commerce and that’s why it’s here.
“I think Amazon will change the landscape as far as what the consumers will demand – that will shift a lot of what happens around us. There will be a greater need for further speed to market for the customer and what you’ll see is more localised centres that will support the geography there is,” he adds.
“Australia is very different to Europe and even the US in that the geography that we have to cover is significantly more challenging; that means that you don’t have to have greater fulfilment opportunities on a local basis and deal with that to be able to support customer demand.
“The carrier space will develop quite quickly – there will be a lot more demand on the final mile and service offerings when they operate and a facility, such as here in Preston, provides a platform for that.”
The centre has around 200 operations workers, technicians and engineers.