AUSTRALIA’S largest wool handler AWH believes a 10-15 percent saving in handling charges for its broker clients is achievable through a revolutionary suite of digital data applications and “game-changer” farm-to-market wool-handling innovations.
At its inaugural Wool Export Innovation Summit – Woolex — in Geelong last Friday, AWH’s chief executive officer Michael Jones outlined the company’s vision for industry change and re-invention of its wool handling systems; domestically and potentially into China.
“We would like to make a bigger saving internally, but I don’t know too many industries where people go and say, ‘here we are going to give you a price reduction for what we do.
“If there is a cost and margin calculation, we can reduce the cost and maintain our margin, that’s what we are trying to achieve.”
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Mr Jones said over the past 18 months AWH had been developing a new IT system – Balemaster — from the almost redundant 26-year-old AS400 Wool System, which was becoming increasingly difficult to support.
“So that the data we collect, the data we manipulate and give out to the industry is protected and is actually enhanced in the future.”
AWH currently services over 55 percent of the nation’s traded wool, handling about about 1 million bales annually, but wanted to handle more wool. Mr Jones would not disclose AWH’s internal projections on the pull-through effect of its initiatives.
“Suffice to say it is worth our while from a capital investment perspective.”
AWH aiming to also service smaller brokers
Through hubbing and spoking, transport consolidation and improving data transfer costs, AWH wants to offer a service to smaller independent brokers not currently using AWH to move or store wool.
“AWH used to handle double the wool that is does now, but over 15 years the clip has declined.”
Mr Jones said AWH had initiated five wool innovation projects aimed at handling wool more efficiently, using IT systems and apps to elicit positive industry behavioural change.
Key to this is a suite of solution-based web-enabled cloud-based unified data delivery and retrieval apps (click here) for the inputting and accessing of information for AWH internally and its customers. AWH is also developing a simpler ‘flat’ block pricing model for brokers and a block chain supply and ledger management system.
Mr Jones told Woolex delegates that although he had not started with the company in April this year as an industry “agent of change”, but “potential winds of change” had required him to look at the company’s position and direction, leading to the commissioning of five studies into its operation.
The “winds of change” that he sees are in the changing dynamic between the brokers, buyers and end-customers.
“There is quite an amount of overlap and intermeshing of that relationship and I think that that is going to drive change.”
Industry players moving “upstream” and “downstream” in the market, including Australia’s largest wool customer China, moving upstream, would change industry dynamics, he said.
AWH to roll-out its own E-speci
Mr Jones said he told a Wool Exchange Portal steering group meeting that if the industry could have an electronic exchange of data from the farm through the system “it would be a game-changer for all of us.”
The wool industry’s current paper-based speci system slows down and created problems for AWH, and it would develop its own E-speci, he said.
“We need to revolutionise the industry on the way that we do things, so the first thing that we need is an E-speci.
“We want to work on the development of an E-speci – it doesn’t have to be ours, we don’t need to own it, we just need it, we need it now.”
The customer apps include FastClasser for growers and wool classers that can automatically send the E-speci to the broker and AWH, initially as a mobile phone photograph, when phone or internet coverage is available.
“We’ll know what wool is in the system as soon as we can and that’s the massive game-changing component of this whole exercise,” Mr Jones said.
Other inter-operable apps will include Sheepdog for brokers to lot wool and review sale data; Trucker for transport co-ordination, Trader the auction/safe service app, and Shipper for freight forwarding and export.
‘Mystery wool’ is a big problem
Mr Jones said more than 60pc of the wool that comes into AWH stores annually — over 600,000 bales or more than 120 million kgs of wool – is “mystery wool”, arriving without advanced notification and with no paperwork. About 63pc of wool bales arrive with errors or discrepancies in weight or branding, and 62 pc is delivered by the grower without notice.
Mr Jones said there are about 5 E-specis in the industry, but there has never been more than two percent uptake. AWH will release the Fast Classer app with E-speci photocapture function in the next three months with a per bale incentive for early adopters, followed by a disincentive for non-compliance.
WoolTrack bale RFID
AWH will also be rolling out within the next three months an integrated RFID tag-based bale identification system called WoolTrack.
“We believe that this innovation will create the biggest single change in efficiency in the wool industry supply chain.”
Mr Jones said AWH had been working with AWEX on the system to give each bale, as it is received in-store, a unique identity via an interim RFID tag that also has a Q-code, linked to each bale’s speci, testing, sale and processing data. The tag would eventually be embedded in the wool pack.
“But we can’t wait, so we’re doing a coming ready or not, implementing within our system an RFID system, right away.
“This will enable provenance of all the wool,” he said.
“We will always know where the bale is.”
WoolTrack would also enable AWH to limit bale handling and allow inter-stack interlotting of bales, eventually obviating the need for counter-marking.
New bale arrival coring and testing regime
AWH is also aiming to implement on-arrival coring/sampling, and single bale and/or pre-lotted sampling later this year. The company is working with AWTA and NZ testing company SGS to move to a single bale sampling/testing process within two years. These developments would enable auto lotting via the wool module Ringer app. A long-term benefit of the new system could be multi-vendor and type lotting, Mr Jones said.
“There is an ability to match broker to buyer demand requirements to get larger lot sizes to increase the return for everybody in the industry.
“In my naivete, I thought it was a really cool idea; doing it is easy, getting people to want to do it is a harder thing.”
The internal apps include the already-launched Balein for bale receival; Blacksheep for management; Balerite for discrepancy, ID and lotting; Timekeeper for labour tracking and management; Stacker for logistics management; Ringer wool module and Trucker. AWH’s cloud-based wool industry apps will include Ringer, the wool module; Balemaster and Stackit for microlistics.
Mr Jones said it was not AWH’s intention to compete with the AWEX’s E-Bale project, but it could not wait for complete its completion and would continue to work with AWEX to create an industry wide solution for bale tracking.
Use of multi-vendor lotting has barriers
Mr Jones admitted multi-vendor lotting “possibly” raised the prospect of the wool store having a role in wool trading and electronic bid and offer clearing house exchange systems already existed.
“The challenge is that the 74 different types of categories of wool and the desire of the buyers to maximise the return for their clients on their specification grid need to actually go and fiddle with the wool; that’s my term for them, the fiddlers.
“They need to actually go and look at the wool and do a physical inspection of the wool, so that’s one barrier,” he said.
“The second barrier is the change and we want to make change for efficiency, we don’t want to make change to hurt anybody’s business or to cut anybody out of the loop.
“They’re steps that if we took them we would have to have really close consultation with the industry as to what’s the aim, what are we trying to achieve out of it,” Mr Jones said.
“The mechanism is not a challenge, it’s making it in a way that is beneficial to the industry (that is).”
Elders wool selling manager welcomes AWH commitment
Elders wool selling centres manager Simon Hogan said AWH are clearly committed to improving processes where possible.
“We support any initiative to improve systems, processes and create efficiencies, and where opportunity for improvement presents itself with the aid of new technology (apps).
“The result will be improved flow of wool into store/sale and improved classer documentation.”
Mr Hogan said better systems will give growers quicker access to market.
“We encourage industry collaboration on some of the proposed projects to avoid unnecessary duplication.”
Mr Hogan said some of AWH’s projects are reasonably achievable, such as the app photo speci, the load booking app and the E-speci, while others are far more challenging, eg. getting every bale tested.
Commercially-driven AWH initiatives are exciting
AWEX CEO Mark Graves said the AWH initiatives were commercially driven which was exciting for the industry.
“Because our expectations are that the market needs this sort of commercial drive.
“They see opportunities for using technology and hopefully that translates to benefits through the pipeline, particularly for the grower.”
Mr Grave said the WEP and AWH digital initiatives were different and aimed at their respective clients, as in the WEP to better inform growers whereas AWH is working for brokers.
“I think the important part will be how they relate to each other.”
Mr Grave said data is important as intellectual property and an asset to companies.
“But there are always ways to address these things, so it is just a matter of time and working through the issues as they arise.”
Efficiencies will come from the IT discussion
WoolProducers of Australia senior vice-president and WEP steering group member Ed Storey said wool growers need to be prepared to have the “IT discussion” and get involved because that’s where efficiencies come from.
“I thought it was very exciting to see a major player in the wool industry supply chain prepared to take on serious innovation, put their money where their mouth is, put some capital into it and really look to improve the supply chain from farm shed or wool store right through to China.”
Mr Storey said the world is evolving quickly, with disturbance and disruption happening to markets in every facet of our lives every day of the week.
“Incorporating things like RFIDs in bales and digitalising wool specis are preparing ourselves for the future.
“We have to as an industry, prepare ourselves for the digital future,” he said.
“I thought today was one of the more forward-looking constructive positive days around wool industry matters that I’ve been too in a little while.”
AWH is owned by one of Australia’s largest wool brokers Landmark and DP World Australia, Australia’s largest container terminal operator, which has terminals in Brisbane, Sydney, Fremantle and the Port of Melbourne. DP World Australia is a subsidiary of the UAE-owned DP World. Landmark is owned by the Canadian-based agricultural services and product company Agrium Inc.