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transcript
ECR Asia Pacific Conference | 16 October 2008
Supply Chain & Customer CollaborationPaul H. Graham
PageECR Asia Pacific Conference | 16 October 2008
What is Collaboration?
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col·lab·o·rate (kə-lāb'ə-rāt')1. To work together, especially in a joint intellectual effort to achieve a common goal
The American Heritage® Dictionary of the English Language, Fourth EditionCopyright © 2006 by Houghton Mifflin Company
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Agenda
Supply Chain & Customer Collaboration
Sustainability
Technology
Cost Pressure
End-Consumer Satisfaction
Partnership Approach
Market Overview – we are in a new economic paradigm
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Market Overview: Asia Pacific
During the last decade, the economies in Asia Pacific expanded by an average of 6%* per year. One result of this economic growth is an increase in private consumption, which grew from $1 trillion to $2.5 trillion during the same period.
Asia Pacific is the largest growing region and the largest consumer market in the world:
• 54% of the world’s population lives in Asia Pacific; this population is projected to rise by 16% over the next 2 decades
• 68% of the top 20 countries (relative to the number of households) are in Asia • 24% of the world’s countries exceeding 7% GDP growth are in Asia• Over a third of the top 20 manufacturing output countries are in Asia• 14 Asian countries are above the global average consumer confidence index
*In inflation-adjusted terms
Source: AC Neilson
PageECR Asia Pacific Conference | 16 October 2008
However, we are facing new economic times!
• The current economic crisis has greatly impacted consumer confidence worldwide, falling to the lowest level in several years
• Asia may escape the worst of this crisis but it is still early days; China is the key player to determine regional confidence and growth
• In this century we are witnessing the rise of the East and a shift of power (especially economic) to the developing world; not since the Industrial Revolution has such evocative change taken place
• These economic challenges emphasize a greater need for collaboration
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Source: Nielsen Global Consumer Confidence Index, 1st Half, 2008
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Agenda
Supply Chain & Customer Collaboration
Sustainability
Cost Pressure
Partnership Approach
Market Overview – we are in a new economic paradigm!
Technology
End-Consumer Satisfaction
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Supply Chain & Customer Collaboration
Cost pressure
Customers continue to come under cost
pressure due to thevolatile price of fuel
and generalcommodities
Sustainability
An increasinginternational andregional focus onsustainability andvehicle utilisation
Technology
Technology is andwill continue to
grow as the key driverfor efficiency,
collaboration andcustomer
satisfaction
CollaborationLogistics companies are acting as the centre of collaborative efforts to reduce costs, increase sustainable
supply chain footprints and aggregate efficiency, with the aim to increase customer satisfaction
End-ConsumerSatisfaction
Growth of moderntrade in Asia willdrive need for
better supply chain performance; on
shelf availability willdrive customer satisfaction andthus increasedbrand loyalty
Partnership approachIncreased complexity of global supply chains create a greater need for strong partnerships and
joint investment in people, systems and solutions
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Cost Pressure
• Companies and end-consumers are struggling with the same global issues: – volatile global energy and property prices – rising commodity prices which impact grocery prices– volatile interest rates and cost of capital – increasing inflation or risk of deflation
Source: AC Neilson; Global Logistics Outsourcing trends: Challenges in managing 3PL relationship
• Many successful companies continue to address cost pressures by outsourcing supply chain activities / processes to third-party logistics companies, allowing them to:
– reach markets faster– leverage economies of scale– add flexibility to supply chains– increase global capabilities – focus on core competencies
• Cost savings can be realized through network re-configuration, further collaborative initiatives in consolidation, fronthaul, backhaul and inventory optimization and utilization of more efficient vehicles
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Sustainability: Some Facts
• Water is big business1 – annual turnover of US$400-500 billion for sales of water-related equipment and services
• Millions of Asians could face poverty, disease and hunger caused by rising temperatures and increased rainfall2
• 125 million people in South Asia could be displaced by climate change3 • Higher energy prices are promoting energy efficiency but also causing concern • Globally, sulfur dioxide (SO2) has decreased but its concentrations remain above the WHO
threshold in many cities in developing countries • If global emissions continue on a ‘business as usual’ path for the rest of the century, Earth will
warm by 14˚C by 21004
Source: 1. 2008 Sustainability Yearbook; 2. World Health Organization; 2008; 3. CSR Asia Weekly 2008; 4. Washington Post, March 2008
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Sustainable Solutions: Customer Demand
• Companies such as DHL have the economic power and global reach to act decisively and contribute to the world’s social and economic future
• DPWN, parent company of DHL, is spearheading the sustainable supply chain approach, having made a commitment to reduce its carbon footprint by 10% by 2012, and by 30% by 2020
• Our investment in sustainable supply chain consulting expertise provides programs and guidance to customers to help them understand how to measure carbon footprints and collaborate and work together with DHL to reduce them
Increasing pressure from customers for sustainability-based logistics solutions
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Distribution Centre
Regional Distribution
CentreRetail
Manufacturing/
Production
Home
Distribution Centres• Pollution risk from product and fuel spills• Noise, vibration and light• Waste • Packaging use
• CO2 emissions• Other emissions• Energy use• Water consumption
Environmental Impact of Supply Chain Logistics
Transport (all routes)• Fuel use• CO2 emissions & other emissions• Pollution risk from product and fuel spills• Noise and vibration• Congestion
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Sustainable Supply Chain Logistics
• Network design and route planning• Employee training, monitoring• Water recycling (i.e. grey water)• Rail and intermodal transport• Urban logistics centers
(consolidation)• High loading factors, KPI’s• Fleet optimization• Better management of energy use
• New vehicles with diesel particle filters• Vehicles with alternative clean fuels /
technologies (CNG, Hybrid, Biofuels, etc.)• Solar panel installation on building rooftops • Temperature controlled warehouse facilities w/
energy conservation features
Sustainable initiatives include:
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Technology: RFID
• Increasing customer demand for local and limited deployment / roll-out– RFID deployment will be demand driven; retailers will drive RFID adoption
– Extending inventory visibility beyond the warehouse will be a differentiator for 3PLs
– Considerable industry roll-outs with METRO, Sony and fashion customers in France• RFID will improve processes in the Supply Chain
– Tracking promotional displays, reducing out-of-stocks and improving shipping and receiving accuracy– Fast and accurate handling in unit-tracking; speeding up lead time in the supply chain
– Secure data and shipment quality providing increased transparency
– Continual tests in various pilots leading to stability of sub-processes
• DHL has ample experience to implement RFID technology in our supply chain operations– A variety of RFID projects have been implemented successfully
– Standardized RFID solutions for specific sectors have been developed (i.e. fashion)
– Strong DHL internal knowledge about RFID
RFID opportunities in logistics replenishment, distribution and inventory management will enable a closed-loop supply chain to monitor and measure business benefits of unit-level
visibility with item-level tagging
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DHL SmartSensor Solution Inventory Management & Replenishment
Temperature monitoring service along the entire supply chain• Temperature measurement unit with RFID interface
• Designed for temperature sensitive products (i.e. drugs, food, flowers)
• Unique wireless reading at inspection points of temperature / history data
Benefits• Full control of product quality along entire supply chain
• Real time status information at inspection points
• Convenient web portal to monitor status information
• Ease of product handling due to comprehensive DHL services
• Notification to customer / DHL in case of critical conditions allows proactive reaction
• Product integrity from wireless reading without opening the package
• Solution excellence due to synergy of partnerships
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DHL Smart Shelf SolutionTemperature Tracking, Clinical Trials, Cool Chain Solutions
Manual Stock Replenishment Process
Healthcare Hub
Inbound
Stock
HospitalsOrder Fulfillment, DHL
Legend
Information Flow
ReturnUS Suppliers
EU Suppliers
Return
Outbound
Vietnam
Brunei
Indonesia
Singapore
Med Device
Med Device
Med Device
Med Device
Med Device
Med Device
Med Device
Pharma
Present day solution: consignment of pharmaceutical products
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DHL Smart Shelf SolutionTemperature Tracking, Clinical Trials, Cool Chain Solutions
RFID Smart Shelf Solution: consignment of pharmaceutical products
Healthcare Hub
Inbound
Hospitals
ReturnUS Suppliers
EU Suppliers
Return
Outbound Singapore
Local Delivery
Med Device
Med Device
Med Device
Stock
Med Device
Med Device
Med Device
Med Device
Stock
Med Device
Computer
Computer
Smart Shelf
Smart Shelf
Medical Devices Tag with RFID Tags
Pharma
Order Fulfillment, DHL
Legend
Information Flow
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RFID Project – DHL & METRO Group, France
• METRO‘s RFID strategy is to support all relevant processes with RFID in the next 10 years – a multidimensional task!
• Project marks stepping stone for large-scale use of RFID in the logistics industry
• METRO Group is a new partner of the DHL Innovation Initiative, this partnership will jointly advance technology projects and turn them into business successes
• Full pallet RFID tracking for METRO Group in France– All DHL shipments to METRO Cash & Carry France will use RFID
– 1.3 million pallets per year will be fitted with the RFID tags
Collaboration between DHL, METRO and technology partners to create solutions that will ultimately benefit the end-consumer
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End-Consumer Satisfaction
• There have only been minimal improvements in on-shelf availability between 2004 – 2008 as over time product availability has become more challenging with more fresh products offering greater supply chain challenges, particularly for organic and Fairtrade products
Customer demand for better quality logistics solutions to meet end-consumer demand
Shift toward more efficient value-add logistics services
Source: ECR UK
OOS SEL
OOS No SEL
Available
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Pallet ThaiBringing goods more quickly & efficiently to the end-consumer!
• Door-to-door palletized collection and delivery • Guaranteed next business day and day 2 service• Scheduled line-hauls each night between Bangkok and regional hubs• No minimum nor maximum number of orders• Centralized customer service contact• Web-based track and trace with immediate proof of delivery• Quarter and a half pallet rates for smaller consignments
Pallet Thai applies the concept of Express logistics to pallet distribution. It allows SMEs the same access to wide distribution networks as large MNCs, without having to ship
large volumes.
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Pallet Thai: How does it work?
Order placed by telephone, fax or e-mail
Collection of goods byclosest hub to point of origin
- Network traffic control center- Consolidation goods at collection hub
Scheduled vehicles runningdaily between hubs
Local distribution by closest hub to point of destination
Cross-dock operations onto delivery vehicles
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Agenda
Supply Chain & Customer Collaboration
Sustainability
Cost Pressure
Partnership Approach
Market Overview – we are in a new economic paradigm!
Technology
End-Consumer Satisfaction
PageECR Asia Pacific Conference | 16 October 2008 22
Partnership Approach & Developing Relationships
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Partnership Approach
• Moving past collaboration, partnerships between 3PLs and customers will strengthen customer supply chains, with 3PLs continually providing innovative supply chain solutions with a focus on customer needs, including:
– Cost Savings
– Sustainability
Cost pressureCustomers are
continuing to comeunder cost
pressure due to theRising price of fuel
and generalcommodities
SustainabilityAn increasing
international andregional focus onsustainability andvehicle utilisation
TechnologyTechnology is and
will continue togrow as key driver
for efficiency, collaboration and
customersatisfaction
CollaborationLogistics companies are acting as the centre of collaborative efforts to reduce costs, increase sustainable
supply chain footprints and aggregate efficiency, with the aim to increase customer satisfaction
End-CustomerSatisfaction
Growth of moderntrade in Asia will
drive need forbetter supply chain performance; on
shelf availability willdrive customer satisfaction andthus increasedbrand loyalty
Partnership approachIncreased complexity of global supply chains create a greater need for a strong partnerships and
joint investment in people, systems and solutions
Cost pressureCustomers are
continuing to comeunder cost
pressure due to theRising price of fuel
and generalcommodities
SustainabilityAn increasing
international andregional focus onsustainability andvehicle utilisation
TechnologyTechnology is and
will continue togrow as key driver
for efficiency, collaboration and
customersatisfaction
CollaborationLogistics companies are acting as the centre of collaborative efforts to reduce costs, increase sustainable
supply chain footprints and aggregate efficiency, with the aim to increase customer satisfaction
CollaborationLogistics companies are acting as the centre of collaborative efforts to reduce costs, increase sustainable
supply chain footprints and aggregate efficiency, with the aim to increase customer satisfaction
End-CustomerSatisfaction
Growth of moderntrade in Asia will
drive need forbetter supply chain performance; on
shelf availability willdrive customer satisfaction andthus increasedbrand loyalty
Partnership approachIncreased complexity of global supply chains create a greater need for a strong partnerships and
joint investment in people, systems and solutions
– Technology
– End-Consumer Satisfaction
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Partnership Approach
• Joint planning and investment between 3PLs and their customers will become increasingly important in the future as competition will strengthen and greater visibility will be the key to success
• Customer access to partner 3PL’s information systems will provide them with visibility of available warehouse and trucking space, trucking destinations, etc., from point of supply to point of sale
• Rising investment costs, global standards and best practice processes will continue to drive a partnership approach
PageECR Asia Pacific Conference | 16 October 2008
Looking ahead …
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• In the current environment this could be limited to 24 hours!• We will see a growing trend of customers looking to outsource
more and more of their supply chain activities – replenishment, manufacturing, data and financial management – increasing the need for closer economic and strategic ties between 3PL’s and their customers
• Many of today’s companies will become pure ‘brand’ entities and will hand over the arms and legs of their physical operations to supply chain entities; a growing combination of strategic partnerships from sourcing to end-delivery will allow the ‘brand’ to focus purely on brand development and R&D
• Asia will, in many ways, be a leader due to its long term growth, early adoption of new business models and huge tide of new consumers who will drive supply chain execution, excellence and excitement
• DHL looks forward to being a partner on this journey!
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THANK YOU FOR YOUR ATTENTION