June 11, 2018
Leading fulfilment company eStore Logistics is ramping up its distribution network after securing a new warehouse in New South Wales.
A new $25 million facility at Marsden Park, NSW, is set to complement eStore Logistics’ Australian footprint and increase customer base, and will be operational in November.
The high-tech facility is being built by Logos Property and will add to eStore’s current Australian total of more than 50,000 square metres. The expansion highlights eStore’s rapid growth and aims to enable online retailers to deliver orders to their customers faster at a lower cost. The company has partnered with property and supply chain consultancy firm TM Insight to optimise facility’s operational layout and maximise storage density.
Founder and managing director Leigh Williams says the partnership began a year ago, with the Marsden Park facility being the second site he has worked with TM Insight for.
The first 13,000sqm warehouse in Derrimut, Victoria, was secured last September in just six weeks.
More Than A Service
On the hunt for a solution with more depth and detail, Williams reached out to TM Insight due to that firm’s “detailed property-sourcing process”.
“We needed a solution that was more than just a traditional real estate agent service, which consists of just opening doors and showing us potential facilities without understanding our business and requirements in detail,” Williams says.
“We approached TM Insight for our additional Sydney DC as we viewed them as a trusted partner we could collaborate with to get the best possible property outcome.
“Their property-sourcing process is detailed and would ensure that our decision-making process was supported by the best possible property-sourcing process and information.
“TM Insight’s property-sourcing approach is like none other I had experienced before as they spent time understanding our business and requirements through design sessions, used the information they had learned to design a facility which would meet our operational and commercial goals and managed a request for interest process with 50-plus property owners and developers that met our requirements.”
“Our warehouse management system is pre-configured with suitable packaging types for each client”
TM Insight also developed a detailed design brief that was distributed to more than 20 interested parties before narrowing down a shortlist.
“This property-sourcing process is key and is why we chose to partner with TM Insight for our additional Sydney DC,” Williams says.
Featuring complex algorithms with a view to minimising manual handling and human decision making whilst maximising accuracy, the Marsden Park facility will consist of world-leading logistics systems to support robust e-commerce fulfilment processes.
A number of design sessions took place between eStore and TM Insight to discuss requirements and commercial goals, including facility shape, racking layouts, stock flow, traffic management, safety of site and location of facility.
“TM Insight have many years of experience with DC design so it was helpful to bounce ideas off one another,” Williams says.
“TM Insight delivered over 20 differed designs of the building as we went through a number of design iterations with their team and they were very patient with us.”
With clients such as Kogan.com, Temple & Webster, and Patagonia, eStore fulfils up to 45,000 orders a day. The Hollingworth Road site has a maximised storage density of 1.5 pallets per square metre of floor area, and will hold 17,000 pallets.
More than 70 vehicles are expected to access the eStore Logistics facility between 7am and 6pm, with Australia Post, Toll IPEC and Allied Express being the main carriers.
The company utilises the Manhattan Associates tier-one warehouse management system (WMS), Scale, which, according to Williams, is highly configurable to cater for specific client requirements.
“Our warehouse management system is pre-configured with suitable packaging types such as cartons and satchels for each client with multiple sizes and options of packaging available,” he says.
“Packaging types are agreed with clients when they join eStore Logistics.”When we receive an order for a
client, individual item weights and dimensions are considered and our WMS automatically carbonises each order, ensuring every single item is allocated to the most appropriate packaging size. This takes packaging selection decision making out of staff hands and effectively eliminates packaging selection errors, provides a more efficient and standardised process for packing orders, and eliminates the requirement for manual entry of carton weights and dimensions.”
All inbound and outbound stock movements are system directed to ensure accuracy; eStore’s proprietary freight optimisation software calculates the most suitable and cheapest carrier to send client orders from inventory stored across multiple warehouse locations. Each freight carrier has different pricing structures for different zones around Australia and the rest of the world.
“Our system uses consignment chargeable weight and destination postcode to calculate the cheapest carrier from each warehouse where stock is located,” Williams says. “This ensures that the most cost-effective and fastest shipping carrier is always used.
“And eStore Logistics holds extensive commercial accounts with Australia’s largest priority distribution companies, which allows us to deliver goods to consumers at an extremely low price.”
About 70 per cent of the racking aisles are 2.2m narrow, with stock pickers and articulated forklifts operating within. The rest of the racking aisles are 3.2m, allowing regular truck operations within. By utilising narrow aisles, eStore has been able to improve pallet density. It will service 10 clients upon opening and expects to gain another five by 2019. With storage capacity always a hot topic when designing a warehouse, Williams says he wanted the highest storage yield per square metre.
The company currently occupies a 16,000sqm DC in Melbourne that yields 1.25 pallet positions per square metre (20,000 pallet positions), with 30 per cent of floor space allocated to stock staging and rework.
“For our additional Sydney DC we worked on a smart design with TM Insight which involved altering roof heights, roof pitches, warehouse shapes and various racking designs that achieved 17,000 pallet positions for this 12,500sqm facility, which is about 1.5 pallet positions per square metre,” Williams says. “This was all done while ensuring that inward and outward stock throughput and efficiency was high and also with 30 per cent of the warehouse floor being allocated to stock staging and rework.”
Room To Grow
TM Insight director Travis Erridge says the Marsden Park site was chosen due to adjacent land that would allow for future expansion.
“There’s every chance that by the time we finish the facility it will be full, so we already have started to look at what our expansion options are,” Erridge says.
“It will be dependent on the work secured over the next 12 months.”
With storage density in mind, the building has been designed from the inside out.
“We’re worked out what the storage profile would look like from inside, and then we did a lot of work on designing to maximise the storage capability – which is unusual; normally a building gets built the other way around, where they max out the height of the building for fire regulations, but we’ve actually maxed out the storage capability,” Erridge says.
He says he’s seen more smaller operators investing in high-end facilities due to the growth in e-commerce, with many moving away from cheap and old warehouses.
“The days of walking into an old B-grade type of facility because it’s cheap are gone; people need to understand what their operations are and find the building that suits that operation,” Erridge says.
“When you think about property cost being less than 30 per cent of an operating cost and 70 per cent being freight, it makes absolutely no sense to have an operation into a facility that doesn’t reach their needs anymore.
“This has been something that’s been happening over years in the large end of town; the ASX-listed companies have always, over the last 15years, thought about this but we’re now seeing private companies really concentrating on what their operation looks like – it’s all about lean operation, speed to customer, and not so much saving a dollar or a square metre on a building that doesn’t suit.”
Much has changed since Williams founded the company in 2008 at the age of 26. Starting out with just one casual forklift driver and a client, Williams began operating from a 700sqm warehouse in Melbourne, managing every aspect of the business, including IT, finance and accounting, sales and marketing, operations, HR, administration and safety.
“My background was in IT and process improvement so I spent over three years at the beginning learning about e-commerce fulfilment and developing best-in-class IT systems for eStore Logistics to support the growing online retail sector in Australia,” he says. “Today we have up to 300 staff across four sites in Melbourne and Sydney, and over 60 clients.”
He expects to employ another 100 staff at the Marsden facility, fulfilling up to 20,000 orders per day. With e-commerce on the rise and shoppers turning online for convenience, Williams has no plans of slowing down.
“It’s going to mean more warehouses opening in more locations, which is going to result in reduced cost for our clients,” he adds.
He expects to secure an additional facility with TM Insight once the Marsden Park warehouse opens.
“By bringing in an additional warehouse in Sydney, we’re going to be able to deliver faster and also doing it at a lower cost because we’re closer to customers in NSW and in Queensland,” he says. “Before e-commerce was popular in Australia, I was buying things online from eBay from overseas 10 years ago. I could see that this was going to be the future and, at the time, there were not many specialised e-commerce fulfilment providers in the market, which is what led me to back myself and start this business.
“I certainly believe with Amazon arriving in Australia and e-commerce online retailers opening up every day, online retailers will continue to flourish and grow,” he adds. “I think department stores will find it tough.”