Charlie Wellins Senior Vice President, Supply Chain Solu7ons, CEVA Logis7cs
October 18 2012 Trans-‐Pacific Mari7me Asia Conference Shenzhen, China
Cu$ng costs out of the supply chain: what works and what doesn't?
Driving out cost: What we see in the market in 2012 • Customers focusing on driving more value and cost savings through 3&4PL Partnerships, rather than only looking at transac7onal freight forwarding costs
• More interest in End to End Visibility -‐ having access to end to end informa7on/KPIs and incen7vizing con7nuous cost improvement
• Outsourcing decision of op7mal transport mode based on required IN-‐DC date -‐ planning effec7vely to enable balancing of service vs cost
• A shiW to Increasing raHos of oceanfreight from clients with a historic reliance on airfreight (e.g. tech)
• Cost down origin solu7ons : Milkruns, FCA conversion, ConsolidaHons
• OpHmizing Packaging to reduce cost/waste and support green ini7a7ves
• ShiW toward Global DC’s in Asia 2 Cutting costs out of the supply chain: what works and what doesn't?
ShiPing to a Global DC in Asia
• Building DCs and MCC hubs in Asia to bypass more expensive des7na7on DCs while also being able to serve growing local markets
3
Before • High transporta7on costs
• Longer lead 7mes
• Distribu7on network under-‐ servicing major markets, i.e. West Coast USA
APer • More flexible supply chain
• Improved service levels
• Ability to also serve local markets
Cutting costs out of the supply chain: what works and what doesn't?
Improve Customer Service
• Managing on 7me release by supplier • Electronic integra7on with service providers
• Timely and accurate status updates • Visibility to order, part and shipment statuses
• Visibility to in-‐transit inventory
Lower Total Cost
• Supply chain management through shared service infrastructure
• Accurate shipment rou7ng via op7mal cost mode
• Consolida7on of mul7ple shipments to same origin / des7na7on
• Reliability and predictability of supply chain performance
• Ability to plan against in transit inventory
Reduce Working Capital
• Lower supply chain inventory levels • Inventory carrying cost reduc7on • Reliability of supply chain performance
• Reliability • Predictability
• Visibility
SMART End to End
The Values of End to End Supply Chain Management Understand what is valued as a customer ….
4 Cutting costs out of the supply chain what works and what doesn't?
Best PracHces and Value Drivers
5 Cutting costs out of the supply chain - what works and what doesn't?
Service Element Best PracHce Improve Customer Service
Lower Total Cost
Reduce Working Capital
Order receipt, valida7on & op7miza7on ü ü
Open order repor7ng to supplier & proac7ve follow-‐up ü ü ü
Supplier compliance to process and excep7on resolu7on ü ü
Op7mizing transport mode, rou7ng & carrier procurement ü ü
Load planning & container cube op7miza7on ü ü
Document valida7on & origin ISF processing ü ü
Monitor excep7ons and proac7vely manage disrup7ons ü ü ü
Validate supplier ASN to commercial documents ü ü
Status collec7on from carriers & milestone follow-‐up ü ü ü
Automated distribu7on of repor7ng views ü ü
Connec7vity with customer enterprise applica7ons ü ü ü
Automated ISF processing and interface with Broker/USCPB ü ü ü
Provide connec7vity with supply chain trading partners ü ü
Manage Suppliers
Direct InterconHnental Supply Chain
Flows
Provide Visibility
Deploy Technology
6 Cutting costs out of the supply chain: what works and what doesn't?
24/10/12 p. 7 TPM Asia 2012
From Air to Ocean
TPM Asia 2012 Alfred Hofmann Go clean go Green
Containershipping : the most energy efficient way of transporting goods
24/10/12 p. 8 TPM Asia 2012
Agenda
� Key event influencing change � Cost of airfreight versus seafreight � Industries at forefront of the trend
� Challenges to the supply chain
� Solutions and Result
24/10/12 p. 9 TPM Asia 2012
From Air to Ocean Key event influencing change � Collapse of Lehman Brothers and the economic crisis � Consumer demand at lowest level � Airfreight was a “no” in most companies and only used in emergencies � Re-examing the supply chain � Re-stocking of 2010 did not change the long term fundamentals
24/10/12 p. 10 TPM Asia 2012
Growth in Global Air Travel (RPK) and Air Freight (FTK)
24/10/12 p. 11 TPM Asia 2012
70 7281
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Millions TEU World Container Traffic
4-5% Growth
24/10/12 p. 12
From Air to Ocean
TPM Asia 2012
Cost of airfreight versus seafreight • 1x40‘ with 10tons from SHA/LAX
US$ 2,600 US$ 46,000
• 1x40‘ with 10 tons from SHA/HAM US$ 2,200 US$ 33,500
24/10/12 p. 13
From Air to Ocean
TPM Asia 2012
Industries at forefront of the trend • Pharmaceutical Industry
• Extremely high value cargo • Temperature controlled products which could be converted • Natural choice – Reefer Containers
• Hi-Tech Industy • Seriously started to convert notebooks 3 years ago • Industry aim is to convert over 50% of notebook shipments to ocean • Tablets go ocean after first wave of consumer demand has been satisfied
24/10/12 p. 14
From Air to Ocean
TPM Asia 2012
Challenges to the supply chain • Notoriously bad in forcasting of volumes • Cancellation of bookings versus actually shipped challenged promise to deliver to customers on time • Inadaquate communication between planers, ODM‘s and logistics departments • Insufficient visibility to manage flow of cargo • Re-examine security issues while cargo is in transit
24/10/12 p. 15
From Air to Ocean
TPM Asia 2012
Solution and Result • Ensure collaboration of all participants in the supply chain
• Planers, ODM‘s, Logistics Management, 3PL, Truckers, Carriers, Rail and Barge Operators • Provide excellent visibility • Reduce risk of unwanted surprises • Establish clear handling and security procedures
• Move to E2E with 3PL‘s managing process(Control Tower) • Reliable transit times – Reduction in overall leadtime • Assurance in the supply chain and availability of products in time • Cost reduction through better inventory control and increased cash flow
24/10/12 p. 16
Thank you
www.sekologis7cs.com © 2012 SEKO Logis7cs
Shortening the Supply Chain
Intelligence Delivered
www.sekologis7cs.com © 2012 SEKO Logis7cs
" Ian Richardson has been a resident of Asia for 20 years. Ian has adapted to the Chinese culture, Lifestyles and ways of business, building up an extensive Asian Network during this time.
" Ian boasts over 30 years experience within the logistics industry.
" With Ian’s knowledge and professionalism he was appointed to Managing Director and Partner of SEKO Synergy Hong Kong in 2008. Recently the company started its structural expansion and changed its name to SEKO Logistics (HK) Limited.
" Ian has worked with various Fortune 500 companies such as IKEA, Costco and Wal-Mart, and more latterly with fast-growing SME brands, all eager to expand their businesses in China and Asia. Ian enjoys building the business and encouraging his team of enthusiastic young professionals to greater success.
Ian Richardson – Director/Partner of SEKO Logis7cs (HK) Limited
Intelligence Delivered
www.sekologis7cs.com © 2012 SEKO Logis7cs
" Economies slowing or stuck
" Clients need speed to market & lower costs
" Consumers spending less & want goods faster " Supply Chain under pressure to deliver smarter solu7ons
Demanding condi7ons…
“Give me choices of the same or be0er service at lower overall cost”
Intelligence Delivered
www.sekologis7cs.com © 2012 SEKO Logis7cs
" Client needs faster 7me to market than tradi7onal ocean freight
" New choice of Sea/Air via Vancouver from Shanghai
" The chance to save up to 3 days against tradi7onal Sea/Air route
Demands innova7on…
Intelligence Delivered
www.sekologis7cs.com © 2012 SEKO Logis7cs
" Logis7cs hubs in Hong Kong to speed Bri7sh fashion brands to market in Asia
" Old route of Asia to UK then back again
" Customer has dedicated distribu7on, total control and full visibility
" Customised to suit – short supply chain to store; swing tags
" Powered by robust, nimble and responsive cloud-‐based technology systems
Thinking differently…
Intelligence Delivered
www.sekologis7cs.com © 2012 SEKO Logis7cs
" Maintain or improve 7me to market
" Reduce costs " Give us choices and control
" Collaborate to overcome challenges
Responding to demands…
Think like a customer to deliver smart solu9ons across the supply chain
www.sekologis7cs.com © 2012 SEKO Logis7cs
Any ques7ons please?
