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IMPLEMENTING EUROPEAN LOGISTICS-PRACTICAL COLLABORATION TO IMPROVE PERFORMANCE

LOGICON 2003. IMPLEMENTING EUROPEAN LOGISTICS-PRACTICAL COLLABORATION TO IMPROVE PERFORMANCE. Alan Waller - Vice President Solving International - Visiting Professor Cranfield School of Management - Project Director -European Councils on Supply Chain

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IMPLEMENTING EUROPEAN LOGISTICS-PRACTICAL COLLABORATION TO IMPROVE PERFORMANCE

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  1. LOGICON 2003 IMPLEMENTING EUROPEAN LOGISTICS-PRACTICAL COLLABORATION TO IMPROVE PERFORMANCE Alan Waller - Vice President Solving International - Visiting Professor Cranfield School of Management - Project Director -European Councils on Supply Chain and Customer Strategy - Chairman Institute of Logistics and Transport - Chairman European Logistics User/Provider/Enabler Group Amsterdam 12 February 2003

  2. Agenda The Past • Expectations of the single European market • Opportunities for shippers • What the providers promised • What the providers deliver • Vision versus reality The Present • Case study The Future • Breaking the vicious circle • The role of the providers – and others • Changing requirements for outsourcing • The impact of e-business • The real constraints to progress The Survey The European Logistics User , Provider and Enabler Group

  3. The Past

  4. “Our focus is on markets and products, but without an effective supply chain we cannot even begin to compete” Chairman Unilever

  5. A changing EuropeThe vision In 1992 • The likely impacts of the major changes can be summarised as: Major EC ’92 changes Likely market impacts • Increased carrier competition • Lower transport costs • Greater opportunity for scale economies through centralisation of manufacturing • Consolidation of manufacturer and pan European transport company relationships Liberalisation of transport and frontier controls Removal of quotas and licensing arrangements • Free(r) competition in transport • More efficient distribution • Simplified route scheduling

  6. A changing Europe The vision In 1992 – cont. • The likely impacts of the major changes can be summarised as: Major EC ’92 changes Likely market impacts Harmonisation of standards • Technical harmonisation • Lower vehicle costs • Ability to export to whole of Europe from one site Harmonisation of company law • Leasing becomes more attractive • Increased opportunity for acquisitions, joint ventures and subsidiaries The political developments of the last 2 years will extend these changes to all Europe. This will be a further stimulus to international trade

  7. Single European marketThe expectations in 1992 Transport across Europe would be… • Cheaper • Faster • More efficient • More reliable • Seamless • Visible • Secure • Easier Providers would make all of this availableas a one-stop-shop

  8. Opportunities for manufacturers in 1992 • These potential benefits provide the stimulus for major changes in European logistics strategies Cost reduction Strategic responses • Logistics infrastructure • Manufacturing restructuring • Rationalisation of distribution networks • European not national distribution • European logistics systems • Pan-European management of service • Innovative operations • IT – an integral part of strategy Direct effects • Reduction in unit transport costs • More predictable transit times and extended service radii Cost & Service Service improvements

  9. Single European marketWhat happened? • Providers raced towards ‘european coverage’“” • Providers ‘morphed’ into logistics businesses • Providers promoted ‘value-added services’ BUT • Where is the one-stop-shop? • Where are the European solutions? • What happened to shared European networks? • Where are the logistics e-solutions? • Where is the leadership?

  10. Bridging the Implementation Gap Pan-regional supply chain integration across Europe % of Companies 100% Opportunity Awareness Strategy Planning 75% Active Implementation 50% 25% Effective Implementation 0% Source: Surveys 1992, 1994 , 1996 and 2002 ‘86 ‘90 ‘88 ‘92 ‘94 ‘02 ‘96 ‘98 ‘00 There are major challenges in translating vision into reality

  11. The Present – A Case StudyShow me the network! John DoranLogistics Director Sony Europe – EMCS(Engineering, Manufacture & Customer Service)

  12. Current network locations 5 Hub Warehouse 18 Country Stockholding Location Helsinki 5 Plants Copenhagen Dublin Hamms Hall Pencoed Thatcham Tilburg Cologne Prague Eragny Ribeauville Trnava Zurich Vienna Godollo Milan Lisbon Barcelona Athens

  13. Network locations 2003/2004 5 Hub Warehouse 3 Country Stockholding Location Helsinki Plant Copenhagen Closed Whs. Pencoed Thatcham Tilburg Prague Ribeauville Trnava Zurich Godollo Milan Barcelona Athens

  14. Sony Europe EMCS logistics Current situation • Warehousing mostly internal some outside • Transport • Very fragmented • 125 companies • 25 relationships with Deutsche Post • 200+ accounts with DHL • Project to rationalise

  15. In summary – Sony requirements • European One Stop Shop • Channel • Geography • Relationship management • Uniform standards • Service • KPI’s • Tariffs • Partnership • Share risk & benefits • Build long term • Flexibility • Allow our business to change • Manage resource up & down • Share risk • Innovate • What value to do you add? • Why should I choose TNT above Versteijnen Transport?

  16. The Future

  17. Single European marketThe future Providers are locked in a vicious circle • Low margins • High competition • Commodity services • Cost focus Who will helpthem break out? • No investment • No risk-taking • No innovation • No proactivity

  18. Supply chain outsourcing- what is the future business model? Managers of virtual supply chains ExistingProviderMarket e-enabled Managers of supply chain assets Every provider must focus on their own core competence and decide where they will compete

  19. Supply chain outsourcing- who will be the key players? • The traditional logistics service providers do not have all the essential ingredients for success • The key players will emerge from combinations of • Forward thinking logistics service providers • Management consultancies • Technology providers • Investors • Working in partnerships with shippers

  20. Business pressures in the new millennium The top 5 • Globalisation • Hypercompetition • Focus on core competence • Speed of change • Stakeholder pressure Source: European Supply Chain Directors Discussion Forum, 2000- 2002 Doing nothing is not an option

  21. Supply chain outsourcing requirements in the new millenniumThe top 5 • Help with developing strategic supply chain vision • Help with implementing supply chain vision • Access to economies of scale/asset sharing • Access to skills and competence • Access to technology and innovation Source: European Supply Chain Directors Discussion Forum, 2000- 2002 Outsourcing needs to add real value

  22. “By end 2003, over 50% of SCM functionality will be provided from outside the enterprise ” Gartner Group

  23. E-business will have a significant impact on the search for European Solutions? • E-logistics capability will provide access to effective e-fulfilment solutions? • E-freight exchanges will generate lower cost European transport? • E-technology will provide the basis for virtual European supply chain management? • Collaboration will generate seamless supply chain integration and synchronisation? • E-marketplaces will generate industry-wide European logistics solutions? BUT WHEN ???

  24. Collaboration - putting technology into perspective “A business can have all the technology in the world, but if I don’t trust my trading partners then it becomes very difficult.” “This is not about beating a supplier into submission -it’s actually about sharing information, some of it competitive.” Gartner Group

  25. Single European Market -THE 2001/2002 SURVEY Questionnaire completed by 61 Major European Businesses • 47 Users • 7 Providers • 7 Influencers / Observers Workshops took place at the Logistics Forums on the Oriana to develop the questionnaire and discuss results Conducted by Alan Waller with the support of Richmond Events EUROPEAN LOGISTICS

  26. Impact of Single European MarketExpectations versus Reality % – User View (n = 47) Attribute Expectation Reality Realisation (%) (%) Factor (%) Cheaper 72 53 74 Faster 79.6 57.8 73 More Efficient 77.8 55.4 71 More Reliable 68.6 50 73 Seamless 69.8 49.6 71 Visible 63.4 48.2 76 Secure 54.8 45.6 83 Easier 82 56 68

  27. Impact of Single European MarketExpected versus Reality – Provider View (n = 7) Attribute Expectation Reality Realisation Factor (%) Cheaper 62.8 53.4 85 Faster 65.8 51.4 78 More Efficient 65.8 45.8 70 More Reliable 65.8 42.8 65 Seamless 80 42.8 54 Visible 77.2 42.8 55 Secure 45.8 42.8 93 Easier 65.8 42.8 65

  28. Impact of Single European Market Current Satisfaction Levels with European Transport (%) Feature Users Providers Influencers Geographical Coverage 52 43 43 Cost 47 51 53 Journey Times 57 57 57 Efficiency 56 49 47 Reliability 55 51 53 Security 55 51 60 Simplicity 50 40 50

  29. Impact of Single European Market Strategy for Europe – Vision versus Reality Users (%) Providers (%) Vision for Europe? 79 66 Strategy Formulated? 68 54 Implementation Started? 65 60 Strategy in Place? 41 42

  30. Impact of Single European Market Implementing a European Vision – Barriers to Change Issue Ranking Cross-business processes 1 Organisation structure 2 Company culture 3 Appropriate transport solutions 4 Intercompany relationships 5 Supply chain information 6 Power Play 7 Shortage of management skills 8 Fear of Change 9 Performance measures 10 Shortage of Workforce Skills 11 Appropriate IT Solutions 12 Environmental Issues 13 Single Currency 14

  31. Impact of Single European Market Improving European Transport/Logistics – Catalysts for Change Initiative Ranking Collaboration 1 Shippers 2= LSPs 2= E-Freight Exchanges 4 E-Marketplaces 5 Technology Providers 6 Capital Providers 7 Consultants 8

  32. EUROPEAN LOGISTICS USER , PROVIDER AND ENABLER GROUP

  33. EUROPEAN LOGISTICS USER, PROVIDER AND ENABLER GROUP • Formed at the invitation of delegates on board Oriana Logistics Forum 2001 run by Richmond Events • Members engage in collaborative action-based projects to improve European Logistics • Open to all users, providers and influencers of European Logistics Services-but members must engage in the projects, which are intended to be self-funding • Representation must be at appropriate and senior level • Membership is currently over 100 major businesses • Run by members for members, with independent chairman plus steering group of user/provider/influencer leaders and secretariat • User driven but democratic • Three meetings during 2002 • Non-profit-making with modest meeting/joining fee for 2003 to cover costs

  34. EUROPEAN LOGISTICS USER , PROVIDER AND ENABLER GROUP COLLABORATIVE PROJECTS - 1 • Current projects initiated during 2002 -Group Vision/Promotion Pack/Website -ITT Blueprint/Code of conduct/Contract life cycle -Directory of services-User Specified -The Italian Job-collaborative high street distribution -Collaborative asset-sharing action groups -CPG -Hi-tech -Automotive/Spares/Reverse logistics

  35. EUROPEAN LOGISTICS USER , PROVIDER AND ENABLER GROUP COLLABORATIVE PROJECTS - 2 • Projects initiated during 2003 -Collaborative asset-sharing groups -Chemical -LSPs • Future projects will include -Standards-Information/KPI/processes -Systems/IT -Transport/warehousing physicals -Culture/people/training/skill exchange -Benchmarking

  36. For further information contact • Professor Alan Waller • Solving International • email: alanw@solvinginternational.com • Home Business: +44(0)1933 403712 • Mobile:+44(0)7802 170507

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