The $17 billion logistics giant Brambles is expanding into “big data” by setting up a new company called BXB Digital to be based in California’s Silicon Valley as it pushes to make extra profits and become a big player in the Internet of Things.
The company expects the new entity to eventually become a profit centre in its own right as it seeks to capitalise on the next rapid advance in the digital economy, which experts label the Internet of Things, where sensors embedded into devices, machines and objects collect and exchange data in real time. The analysis of that data is particularly valuable, and companies across the world are scrambling to become first movers in the commercial applications of tracking each movement in a complex supply chain, and consumer behaviour and usage patterns of people using devices, equipment and consumer goods.
Brambles chief executive Tom Gorman said BXB Digital would have its headquarters in Silicon Valley in northern California because “in terms of big data analysis, that’s where it’s all happening”.
Tracking pallets and crates
Brambles has pumped some seed capital into it and Mr Gorman said the potential is vast.
“We should see this business stand on its own,” he said.
Brambles has hired an experienced executive from software giant SAP to run the new business. Prasad Srinivasamurthy will start in the position of president of BXB Digital in March, after leaving his role as SAP’s senior vice-president of customer innovation and Internet of Things.
Brambles uses more than 500 million pallets, containers and produce crates in its global network daily through its CHEP and IFCO brands, as goods are transported around the world for customers including Nestle, Unilever, Wal-Mart, Tesco, and Coles and Woolworths in Australia. It is set to disclose the plans for BXB Digital on Monday, when it announces its first-half results.
Mr Gorman said outside expertise would be used to find the best way to embed sensors and other devices into most of the 500 million pallets, containers and crates. Durability is a major consideration, along with the ability to find the right power source to ensure the devices keep transmitting data.
“I think we really need to get the economics right,” Mr Gorman said. He said on a full-year run rate the seed capital would equate to between $5 million and $10 million, but the business would soon be generating revenue.
Brambles has a large customer base in the grocery and food industries, healthcare and fresh produce. Mr Gorman said the speed at which goods were moved around put the company in a strong position on data analysis. “We’re talking about a business that has high asset velocity.” He emphasised it was early days and there was much work to be done to make the economics stack up, but the vast asset pool across the 60 countries which Brambles operates had hidden value in being able to deliver real-time information, such as the temperature of the goods and their distance from their destination.
“Today, our assets are essentially dumb assets,” he said.
“We could move to a space where we get real-time information,” he said.
Mr Gorman, a former president of car maker Ford’s Australian business, said BXB Digital would also be important in making the Brambles business more efficient, and reducing losses and damage to its pool of pallets, containers and re-usable produce crates. But it would seek to earn business from outside customers.