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Logistics Performance in Baltic Sea Area Managing Director Mikko Melasniemi Finnish Association of Purchasing and Logistics LOGY. Topics. Trends in global logistics Logistics Performance Indicator State of logistics in Finland Regional projects between Finland and Russia

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  1. Logistics Performance in Baltic Sea Area Managing Director Mikko MelasniemiFinnish Association of Purchasing and Logistics LOGY

  2. Topics • Trends in global logistics • Logistics Performance Indicator • State of logistics in Finland • Regional projects between Finland and Russia • Northern Dimension in Naples • Potential beyond the near future • Mutual competition over cross cultural supply chain Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi

  3. "Excellence in Logistics"European Logistics Association (ELA), 2004 Biggest challenge is the explosion of supply chain complexity • Larger share of purchases and sales outside Western Europe • less failure tolerant supply chains • Ever increasing customer requirements • service levels, lead times, delivery reliability • Increasing amount of value added services • Shifting activities from manufacturing to distribution centres • Higher product complexity • Shorter product life cycles, arising number of stock keeping units (SKU) Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi

  4. "Excellence in Logistics"European Logistics Association (ELA), 2004 Leading capabilities to manage complexity • Collaboration • Sharing and utilizing information along the entire supply chain, which leads to higher supply chain quality and lower costs • Value chain management • Holistic view of all the end-to-end issues • Integrating supply chain partners • Outsourcing in a sophisticated way • Differentiation of supply chains • Meet specific requirements of customers, sales channels, type of product, regional specifications • The time of “one size fits all” is over! Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi

  5. What is the LPI? Logistics Performance Index (World Bank 2007) A set of indicators that measure the performance of the logistics environment of countries Data for the LPI Professor LauriOjala Turku School of Economics, Finland lauri.ojala@tse.fi Logistics professionals in international freight forwarding Turku School of Economics, Finland International Federation for Freight Forwarders Associations Global Facilitation Partnership for Transportation and Trade Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi Ojala & Solakivi CSCMP Sept.22, 2009 5

  6. International comparison of the Logistics Performance Index (World Bank 2007) 1. Efficiency and and effectiveness of Customs and other border procedures 2. Quality of Transport and IT infrastructure for logistics 3. Ease and affordability of arranging shipments 4. Competence in the local logistics industry (e.g. transport operators, customs brokers) 5. Ability to track and trace shipments 6. Domestic logistics costs (e.g. local transportation, terminal handling, storage) 7. Timeliness of shipments in reaching destination Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi

  7. Logistics Performance Indicatior Globally Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi

  8. The level of Logistics Performancevaries a lot in Europe 15 16 4 47 99 42 58 11 74 9 3 40 7 18 22 115 26 139 Source: World Bank, Logistics Performance Index Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi

  9. ”Logisticsgap” amongcountries in BSR Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi

  10. What does low LPI mean in practice? ”…lower costs for logistics reduces the cost of delivered products – and thereby encourages sales, increases trade, opens new markets, breaks down local monopolies, increases competition and generally encourages business.” (Waters 2003)  prosperity, competitiveness Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi

  11. Similar trend despite research method: logistics costs decrease till end-90s, and rise after that % of sales % of GDP Costs indexed; 2008 = 100 14 % 14 % 12 % 12 % 10 % 10 % 8 % 8 % 6 % 6 % 4 % 4 % 2 % 2 % 0 % 0 % 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Finland state of logistics ELA/A.T .Kearney CLM/CSCMP VINNOVA Ojala & Solakivi CSCMP Sept.22, 2009 11 Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi

  12. Customized logistics service packages Standardised logistics service packages Pure warehousing services Pure transportation services Distribution of turnover for different types of logistics services – 2006 and 2010 Slide as originally presented by Professor Wolfgang Kersten The demand for more individualised products is expected to increase in the future Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi

  13. MoA of Northern Dimension PartnershipSigned in Naples in October 2009 • Memorandum of Understanding setting out the modalities of establishing the Northern Dimension Partnership on Transport and Logistics • Mutual understanding by European Commission, Ministries responsible for transport, infrastructure and logistics • Norway, Russian, Denmark, Estonia, Finland, Germany, Latvia, Lithuania, Poland, Sweden, Republic of Belarus • Was agreed about • Goal of partnership to improve major transport connections and logistics in the Northern Dimension region • Other matters: Action plan, Exchange of information, Cooperation framework, Cooperation with regional bodies, Participation of private sector and social partners • Next step in December, when officers from ministries meet • Resources and guidelines over the projects • Important because • Baltic states have mutual forum for Northern Dimension • Formal way to go ahead with projects • Helps to take logistics into practise • Goal: to have a momentum in EU budget for Northern Dimension Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi

  14. Conclusions • Focus on value in supply chains, not only transportation • Two-way supply chains instead of one way transit traffic • Supply chain from supplier to final customer can bee complicated but competitive • Logistics performance is a case of competitiveness • Logistics costs are rising, time is money • Efficiency and visibility • Northern Dimension needs a line in EU budget • Act regionally, think collaborative Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi

  15. Thank you for your attention! Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi

  16. LOGY Mission and Values Development LOGY • offers its members an innovative forum for continuous development of their competence and • aims at improving the competitiveness of members business • aims at improving the valuation of logistics and purchasing. Members Competence Cooperation Finnish Association of Purchasing and Logistics LOGY/ Mikko Melasniemi

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