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Apr 06, 2024

Getting procurement right

Effective intralogistics implementation requires an effective procurement strategy. Argon & Co’s Christian Garcia and Kevin Mannion talk to MHD about how they get procurement right for their clients.

Effective intralogistics implementation requires an effective procurement strategy. Argon & Co’s Christian Garcia and Kevin Mannion talk to MHD about how they get procurement right for their clients.

Argon & Co prides itself on its meticulous approach to warehouse design, as well as its equally meticulous approach to procurement in getting the right intralogistics equipment and the software systems behind them.

As of last month, the ‘Warehouse Wizards’ at Fuzzy LogX are now operating under the Argon & Co banner. But their trademark approach to consulting remains as distinctive as ever. In other words, the Fuzzy LogX secret sauce now comes in Argon & Co bottles.

Christian Garcia, Facility Design Manager at Argon & Co, says the procurement process begins with a careful analysis of the client’s current operation. “We start with an analysis of the client’s current operation – either to improve it or design a new distribution centre from scratch,” Christian says. “We need to ascertain what our clients need, their price range, and vendors’ capacity to deliver on schedule.”

Deep experience in and knowledge of the market is essential. “Depending on the project, we might approach anywhere up to a dozen vendors, to help us gauge market trends.”

“It’s essential for us to understand the business fully before we can start procurement,” adds Kevin Mannion, Senior Consultant at Argon & Co. “We need to understand their current daily activities, their pain points, their future plans and activities.”

COMMUNICATE CLEARLY, OR PAY

The ability to effectively communicate and execute meticulously in procurement activities is often what separates a successful project from one fraught with issues. For Christian and Kevin, it’s not only about choosing the right piece of equipment or software but understanding its application in the specific context of their client’s operation. If the requirements aren’t effectively articulated and communicated from the outset, there can be trouble.

“On the software front, different WMS systems are suitable for different operations and ways of performing the processes required for that operation,” Kevin says. “Choosing the wrong solution could be a pain point for the next decade.”

“For instance, you may need a feature as simple as a required check before you put something away. If that doesn’t exist in the system, then you may encounter that problem multiple times a day for as long as you use that software.”

The same goes for choosing the incorrect physical equipment. “If your forklift, for example, doesn’t properly access the racking or cannot efficiently turn in a given space, it will not be effective.”

Christian echoes this, highlighting the necessity for precise execution in equipment procurement. “If the machine is too wide or too tall, or if the mast just barely matches the arch of the door, that is problematic.

“Communication is key because we need to understand what the customer wants and what is best for them. Even the slightest miscommunication can cause major problems later.”

With respect to WMS implementations, Kevin adds that “in my experience, many new WMS implementations are instigated because the old one wasn’t fit for purpose from the beginning, or future requirements were not taken into consideration at time of selection.”

NURTURING RELATIONSHIPS

One of the standout features of Argon & Co’s approach to procurement lies in its nurturing of relationships with suppliers. Regardless of whether they’re currently working with a specific WMS or MHE vendor, they maintain a broad network of contacts in the industry.

This means that Argon & Co can prep the ground for the client.

“When we engage with the customer, we’re already informing them on what to expect when they start speaking with vendors and looking at different software or equipment,” Kevin says. He adds that the consultancy’s role involves preparing the client for current market trends, especially when they haven’t interacted with the procurement process in a while.

“We discuss what new offerings they should expect and what outdated things they should forget.”

Such knowledge is especially important when it comes to complex warehousing solutions, says Christian. With the established manual warehousing culture in Australia, the introduction of new systems and mechanisation can appear daunting to many clients. “It’s about building confidence that vendors are capable because they have years of experience and numerous case studies,” Christian explains.

He adds that this trust-building process also involves rigorous vendor evaluation. “We need to make sure they have the right tools and materials for the specific project,” he says.

Kevin underscores the significance of Argon & Co’s role in smoothing the way for vendors, too. “In fact, before the vendors even speak to the customer, we’ve already paved the way for them,” Kevin states. He goes on to suggest that Argon & Co’s engagement with vendors often makes the procurement process more straightforward for all parties involved: “They find the job smoother when working with a consultancy service provider like us. It removes any doubt before all parties begin to interact.”

CONTINUOUS EVALUATION, CONTINUOUS IMPROVEMENT

“The world of warehouse management and material handling equipment is constantly evolving,” Christian says. “We need to ensure that the solutions we recommend to our clients are not just adequate for their current needs, but also adaptable for future changes.”

A significant part of this process involves active monitoring and evaluation of their relationships with suppliers. “We keep an eye on their product updates, the projects they’re working on, and how they handle customer service and support.”

This continuous appraisal isn’t a one-sided affair, though. “We provide feedback to the suppliers based on our experiences and the experiences of our clients,” Christian points out. This mutual feedback loop enhances Argon & Co’s knowledge base, ultimately benefiting their clients.

Kevin stresses the importance of continually validating suppliers’ abilities to deliver on their promises. “It’s quite straightforward to tick boxes at the beginning of an RFP process, with suppliers saying, ‘Yes, I can do this or that’,” he says. “But there is further evaluation that follows. We ask questions such as, ‘How can you do this? How is it going to look in 10 years if you proceed this way?’”

The consultancy also seeks to engage their clients in the evaluation process. “Clients can observe the process we’re going through,” Kevin notes. “As we complete our discovery, design, and the eventual embedding of the solution, they have ample opportunities to provide their own input as well.”

Even as they maintain relationships with trusted vendors, the Argon & Co team is not afraid to explore new horizons. They invite many parties, providing a comprehensive overview of the market. “It’s always good to learn what new suppliers can offer and potentially include them in future projects,” Kevin says.

Many vendors are happy to visit the Argon & Co office in North Strathfield, to present or demonstrate their products and services on a regular basis to the Argon & Co team. This way, the trends in the market are continually being updated in the consultancy’s knowledge bank – which ultimately benefits both customer and suppliers alike.

Argon & Co is dedicated to finding the best and right solution for their clients – remaining agnostic between solutions providers. Their clients and their needs are the most important factors in every procurement project.

Recognising that each customer’s needs are unique, Argon & Co also takes into consideration any existing client-supplier relationships.

“One of the first questions I always ask is, ‘Do you have a preferred supplier for this particular equipment?’ because they may already have agreements that provide competitive pricing from the start – saving them and us time and effort,” Christian says. “However, if they prefer for us to conduct a full evaluation, we are always ready to help.”

PROCUREMENT AS STRATEGY

Kevin and Christian also highlight the importance of approaching procurement as a strategic function rather than merely an operational task. Christian expands on this distinction: “We align our client’s transformation project with the latest available technologies that will serve them in the short and long term without the need for major updates. We are also on the outlook for innovative solutions with environmentally conscious approaches that line up to our client’s long-term goals – in sustainability and carbon neutral policies, for example”.

According to him, this strategic approach to procurement plays a vital role in the success of large organisations, whether they are breaking ground on new ventures or maintaining ongoing operations. And it’s the approach Argon & Co takes in all its projects and engagements. “From a project perspective, we don’t sign any agreements with anyone to supply specific equipment; we’re technology agnostic and will choose the right individual supplier on a case-by-case basis, assist our customer with contract negotiations and then support them all the way from implementation to commissioning and handover.” Christian adds.

Kevin says that from the outset Argon & Co’s procurement strategy is accompanied by data collation and spend analysis through a Process Excellence Review (PER) of the operation, then through the design phase by identifying the suitable suppliers for all the project needs.

Argon & Co delivers comprehensive support and advice through contracting and negotiation with suppliers, before moving onto the implementation and final optimisation realisation, he adds.

No stone is left unturned.

For more information on Argon & Co, click here.

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