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Supply Chain Insights

How to Prepare for the Great Resignation

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According to Aaron McEwan, a recent survey by Gartner predicts that in Q1 2022, Australia will be facing a similar event as the US now dubbed “The Great Resignation” – where one in three Australians will be looking to change roles.

The economy has shifted from an “employers market” early in the pandemic to an “employees market” today. Some 18 months ago, employees were stood down, faced a reduction in wages, had workdays cut, benefits taken, and very little received commissions or bonuses. Many employers had to for legitimate reasons, but others joined the “Managing through a Pandemic Conga Line” because it enabled them to create more profit at the top end whilst reducing costs. Besides, with so many redundancies and volatility in the market, no one was going to move jobs – at least they thought.

The supply chain sector was one of the hardest industries hit, with descriptions of the industry focused on “an unstable labor market which is negatively impacting the trucking industry and crippling the system of moving goods.”

Just under two months ago for example, 7000 drivers around Australia protested for better working conditions at one of Australia’s largest 3PLs, causing even longer delays on deliveries across the country.

Today, supply chain workers are becoming increasingly frustrated and overworked, so what can we expect to see more of in 2022?

Make it rain

There’s no denying that in the last two years Supply Chain and Technology have been two industries that have boomed, not just when it comes to demand of goods and services but expertise to deliver on that demand as well. Dealing with experts directly in these fields we have noticed a huge increase in candidate salary expectations, most wanting upwards of 30% to even consider looking at another role.

Two years ago, you could easily find WMS Specialists with a budget of $80,000 to $100,000 – now however, it’s a very difficult task to attract candidates with a budget less than $120,000. This is very similar for Warehousing and Operations Managers who you could previously find between $70,000 and $90,000. Lately however, many at this level will only consider roles above $110,000.

With the current labour market in shortage and resignation levels expected to rise, we predict employers with bigger pockets will be willing to provide unprecedented increases to secure top talent. Especially so if they are facing distressed supply chains. However, this doesn’t mean that companies won’t be able to compete with other offerings.

Watering your own yard

With a need to retain IP in a tight labour market, we expect to see more employers look at how to improve career planning and succession internally to ensure adequate support and training for workers to move up the ladder.

We are starting to see a number of leading organisations invest heavily in graduate programs, offering financial support for further tertiary education studies or providing retention bonuses to ensure continuity.

Flying unicorns

Now that the borders will re-open and travel restrictions are said to ease; overseas talent will be more accessible.

For omni-channel and eCommerce focused Supply Chain roles for example, we expect to see a surge in talent from the US, India, Asia and the UK arriving – bringing years of experience in an area that only few Australians seem to grasp well and many Australian companies still need.

Prepare for the talent crunch today

What can businesses do in preparation for the impending talent crunch?

  • Leverage your internal team with a candidate referral program
  • Initiate your internal career development plans
  • Partner HR with Marketing to create and promote your employer brand
  • Create easy to read, clear and concise job descriptions
  • Market map a talent pool or hire an external party to do this for you
  • Ensure you are set up with a good Talent Management System and process
  • Create a great experience for candidates
  • Ensure your salary bands are competitive in the current market
  • Create more compelling culture boost initiatives

HR staff will need more PR and marketing skills than ever before as it won’t be just about creating these initiatives – it will be about communicating them. Everyone says they’re flexible – but what does flexibility mean in your business? Remote working options for desk-based work, working four days a week and getting paid for five? What initiatives will set your business apart in a competitive hiring field to help attract the best talent?

It’s safe to say that those decision-makers with a longer-term view who skipped the train may be reaping the benefits very soon – for employees, the next few months will be a time of broad re-evaluation.

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Supply Chain

bp and Uber sign Global Strategic Delivery Partnership

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  • bp and Uber sign a new global strategic convenience partnership aiming to make more than 3,000 retail locations available on Uber Eats by 2025.
  • The partnership extends current local arrangements in Australia, New Zealand, Poland, South Africa and the west coast of US, adding the UK and eastern US in 2022 and with plans to launch in other European markets from 2023.

Today, bp (NYSE: BP) and Uber Technologies, Inc. (NYSE: UBER) are announcing a new global strategic convenience delivery partnership, extending their existing local arrangements to reach more consumers across the world. Together, the partners will offer a huge range of quality convenience products, including fresh and prepared ranges, from select retail locations.

bp is the first convenience retailer to team up with Uber Eats on a global level and aims to have more than 3,000 retail locations available on the delivery platform over the next three years. The partnership supports bp’s goal of growing its access to customers and expanding its delivery footprint, in response to soaring demand for food, groceries and everyday essentials brought to the door.

The new partnership covers retail sites in Australia, New Zealand, Poland, South Africa and the west coast of US. Sites in the UK and eastern US will be added to the app for the first time this year, with plans to launch in other European markets from 2023.

“We’re thrilled to team up with Uber Eats globally giving us the opportunity to reach many more consumers online in addition to those who currently visit our retail sites. We’ve seen how the pandemic has accelerated customer demand for delivered convenience and this partnership will allow us to scale up quickly on the Uber platform. And for the first time, we will be able to offer delivery options to existing customers on our own BPme app by the end of 2023,” said Emma Delaney, executive vice president customers & products, bp.

With 20,500 bp retail sites across the world and 550 million customers living within 20 minutes of a bp retail site, the partners see enormous opportunities for growth. bp sites offer a range of products tailored to local markets which may include hot and cold drinks, food-for-now options as well as staple groceries, fresh produce and ready meals, plus wine, beer and flowers.

  • In the UK, customers will be able to access a range of Wild Bean Café, and other branded food and products via Uber Eats – with the first 120 sites due live on the platform by the end of June.
  • In the US, the offer will be made available to bp’s network of independently owned retail locations to support the growth of their businesses. The goal is to make it easy for these partners to sign up to the Uber Eats platform and access benefits based on bp’s scale.

bp will benefit from Uber’s global brand and operations footprint, best-in-class technology for dispatching orders, and more than 4.4 million drivers and couriers on the platform worldwide.

As part of the agreement, Uber Eats and bp will work to introduce delivery options onto bp’s own app, BPme – initially planned to be available in the UK, US and Australia by the end of 2023 – powered by Uber Direct. This new offer will allow bp to directly connect its customers to delivery riders, making Uber Eats the trusted partner in fulfilling these orders. Since 2019, bp has seen a three-fold increase in users of the BPme app, with 16 million active loyalty users worldwide.

“With more than 20,500 locations around the world, bp’s reach is enormous—making them critical partners as we pursue our ambitions of helping consumers across the world get what they need delivered to their doorsteps,” said Pierre Dimitri Gore-Coty, Uber’s SVP of Global Delivery. “We are proud to support this next phase of the company’s convenience growth through this delivery partnership and look forward to deeper collaboration in the future.”

bp and Uber already work together in mobility with bp providing electric vehicle charging for Uber’s ride-hail drivers. The companies will explore other areas for future cooperation in convenience, including opportunities to utilize low carbon delivery methods to fulfill orders from bp sites.

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Supply Chain Insights

Officeworks to own and control Distribution Network.

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Officeworks invests in supply chain capabilities, will own and run it’s distribution centre.

Officeworks has changed its supply chain strategy in the wake of COVID-19 issues, with a view to owning and controlling a network of distribution centres across the country.

“When I joined we had a different strategy around our supply chain,” Officeworks managing director Sarah Hunter told The Australian, referring to the company’s previous outsourcing strategy.

“So we’ve worked really hard now to build our supply chain capability. We were in the process of outsourcing it, we are now in the process of building that capability.

Officeworks recently opened Australia’s first solar-powered robotic distribution centre in Derrimut, Victoria.

“We started in Victoria, and we have had approval to build, now board approval to invest, and we are building a new, similar (distribution centre) operation in Western Australia. That’s exciting,” she said.

“Looking at our capital expenditure three, four, or five years ago it’s a material step up in our investment in our supply chain.

“Most importantly for us as a business is that every team member who worked at the old facility has been completely retrained,” she said. “We have 120 team members who are now fully trained in how to work in an automated state-of-the-art environment.”

The need to control its own distribution became clear during the pandemic.

By December, Officeworks saw 46 per cent of its business come from online, including click and collect. Now it needs to move to retain this growth at a cost effective scale.

“We have created a facility that’s not only more productive, it’s going to enable our online business to grow in Victoria and into NSW at the rate that we expect our online business will grow.

“So now we have the capacity, the cost per pick is materially lower because it’s much more productive. It’s a win-win scenario for us. We’ve kept everyone employed with really great job security. We’ve scaled them up to work in the supply chain of the future.

“And on top of that, we now have the capacity for growth in Victoria that frankly we were struggling with through COVID.”

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Logistics

E2open Acquires Global Multi-Carrier E-Commerce Shipping Software Platform Logistyx Technologies for $185 Million

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Combination brings complementary cloud-based solution and global multi-carrier e-commerce capabilities to E2open’s networked, end-to-end supply chain operating platform

E2open Parent Holdings, Inc. (NYSE: ETWO), a leading network-based provider of a cloud-based, mission-critical, end-to-end supply chain management platform, has acquired Logistyx Technologies, a leader in global parcel and e-commerce shipping and fulfilment technology.

With the combination, E2open enhances its global footprint for multi-carrier e-commerce shipment management, offering companies a complete range of shipping capabilities needed to scale and respond to growing market needs.

“We are excited to welcome Logistyx Technologies’ team, clients, and capabilities to E2open,” said Michael Farlekas, chief executive officer at E2open. “The demand for e-commerce shipping capabilities continues to grow as companies look for more flexible and cost-effective ways to deliver products to consumers. This combination makes E2open the most comprehensive and integrated shipping solution provider, which covers all shipping modes including ocean, air, road, rail, and parcel, and is powered by a global network of carriers and logistics service providers. Logistyx is complementary to E2open’s existing platform, enabling E2open’s world-class clients to orchestrate their supply chains from demand to fulfilment, to supply.”

“We are excited to welcome Logistyx Technologies’ team, clients, and capabilities to E2open”

Michael Farlekas, chief executive officer at E2open

“The Logistyx team is thrilled to combine with E2open to enable more companies to ship smarter and benefit from the largest supply chain platform and network available,” said Geoffrey Finlay, chief executive officer at Logistyx. “We provide our customers, which include top retailers, manufacturers and logistics providers, the automation, visibility and flexibility needed to simplify global fulfillment and compete in an omnichannel world – all within a one-stop, connected platform.”

Compelling strategic benefits to accelerate growth

The Logistyx combination with E2open accelerates subscription revenue growth and unlocks strategic benefits for clients, including:

  • Increased reach as a global leader in transportation management for parcel shipping: Logistyx’s global parcel system augments E2open’s direct-to-consumer e-commerce offerings, creating a complete global footprint for multi-carrier parcel management.
  • Enhanced global parcel carrier network: The combination adds a carrier library of over 550 global carrier integrations including UPS, FedEx, DHL and USPS, to E2open’s leading network. The solution manages the carrier certification process to keep clients in compliance, while making it easier to compare and review spot rate options, which is critical in a capacity-constrained environment.
  • Expanded client base: E2open’s client base will be enhanced by Logistyx’s strong global enterprise clients, which include many of the world’s leading retailers, manufacturers, and carriers.
  • Augmented product offerings: Logistyx’s clients will benefit from a combined portfolio that will not only expand shipping modes beyond parcel, but also enhance upstream capabilities to better orchestrate manufacturing, distribution, channel and trade operations.

Transaction Details

E2open acquired Logistyx Technologies for a total purchase price of $185 million ($250 million AUD), including $90 million paid in cash at closing and the remaining balance to be paid in two additional installments at 90 days and 180 days post-closing. E2open has the option to finance the remaining payments through cash or a combination of cash and E2open stock issued to sellers, at the company’s discretion.

The transaction was unanimously approved by E2open’s Board of Directors. Additional details about the agreement will be contained in a Current Report on a Form 8-K to be filed by E2open with the U.S. Securities and Exchange Commission (the “SEC”). For other related investor relations disclosures and presentation materials, please visit the investor relations section at e2open.com

Financial Highlights

In calendar year 2021, Logistyx grew in line with E2open’s current growth rate and achieved approximately $40 million in revenue. The combined business is expected to be accretive to E2open’s current organic growth rate given the cross-selling opportunities the combination creates.

The combination reflects a purchase price of approximately 11 times adjusted EBITDA when anticipated cost synergies are fully realized, which are expected to be within 18 months of closing.  E2open will include the full impact of the acquisition on revenue and adjusted EBITDA in conjunction with fiscal 2023 guidance, which will be provided with the fourth quarter earnings release scheduled for late April.

Berenson is serving as exclusive financial advisor to E2open, and Troutman Pepper is serving as legal advisor to E2open.

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