Kuehne + Nagel Investor Day
April 27, 2007Otto SchachtSenior Vice President, Global SeafreightKuehne + Nagel International AG
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• Market trends / challenges
• Customer and Kuehne + Nagel
• IT solutions
• Customers initiatives
Agenda
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International Procurement, Production and/or Distribution NetworksInternational Procurement, Production and/or Distribution Networks
Rationalised & changing Procurement-, Production- and Distribution Networks
Rationalised & changing Procurement-, Production- and Distribution Networks
Reduced Product LifecyclesReduced Product Lifecycles
Increased Customer Demand (Time, Quality)Increased Customer Demand (Time, Quality)
Increased Supply Chain Reliability, Speed and VisibilityIncreased Supply Chain Reliability, Speed and Visibility
Increase Shareholder ValueIncrease Shareholder Value
Capital Efficiency Cost PressureCapital Efficiency Cost Pressure
Globalisation
Understanding the Market Place and TrendsOngoing trends / challenges
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Increased Supply Chain Complexities (more parties involved, e.g. Contract Manufacturing)
Increased Supply Chain Complexities (more parties involved, e.g. Contract Manufacturing)
“Carbon Footprint” of the Supply Chain“Carbon Footprint” of the Supply ChainEnvironmental IssuesEnvironmental Issues
Globalisation
Globalisation Increasing Move from “Push” to “Pull”Increasing Move from “Push” to “Pull”
Understanding the Market Place and TrendsNew trends / challenges
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• Demand for information and process integration is growing exponentially
• Next plateau to drive improvements• Financial
• Inventory, Cash-to-Cash Cycles, Efficiencies, Infrastructure, ROI
• Service• Fill rates, lead times
Driven by• ERP, Internet, ease of EDI, XML
Understanding the Market Place and Trends
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Traditional 3PL value proposition
cost reduction
cost reduction
Customer Customer’scustomerSupplier • Transport cost reduction
• Operational efficiency
Enhanced value proposition by Kuehne + Nagel
Customer
Overall supply chain visibility and optimisation for the customer
Customer’scustomerSupplier
• Improved delivery performance
• Reduced inventory• Reduced fulfilmentcycle time
• Increased overall productivity• Lowered supply chain costs• Improved order fill rates• Improved capacity utilisation
Traditional and Enhanced Value Propositionby Kuehne + Nagel
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Expediting costsExpediting costsLate deliveryLate delivery
High High logistics costlogistics cost
Lost revenueLost revenueLost revenue
Poor customer servicePoor customer servicePoor customer service
Asset costAsset costAsset cost
ReworkReworkReworkReturnsReturnsReturnsWarrantyWarrantyWarranty
Operating costOperating costOperating costLost customer loyaltyLost customer loyaltyLost customer loyalty RiskRiskRisk
LitigationLitigationLitigation
Excess inventoryExcess inventoryExcess inventoryProduction downtimeProduction downtimeProduction downtime
Long cycle timesLong cycle timesLong cycle timesFirefightingFirefightingFirefighting
ReplanningReplanning
Major impacts due to lack of transparency
are not visible –but nevertheless
MASSIVE
Need for VisibilityImpacts of lack of transparency
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• Many points of entry (difficult management)• Detailed various ocean carriers
and/or• Various forwarders
• Different systems• Track & trace• Invoicing• Reporting
• Transfer of liability
Customer‘s Perspective
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Seafreight – Consolidated ManagementAdvantages
• Fewer points of entry fora customer
• Simplified rate structure
• Simplified invoicing
• Single reporting system
• Single track & trace system
• Clear transfer of responsibilities
• Outsourcing of administration
• More control to warehousepartners
• Manage complete supply chain
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Customer Solutions Traditional Model No common standard of
information and restrictedno. of carriers
Information / Contracts
CustomerCarrier II
Carrier III
Carrier IV
Carrier V
Carrier I
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Customer Solutions Kuehne + Nagel‘s role
ContractInformation
Detailedinformation
Vendor IVendor II
Airline IAirline IIAirline III
Kuehne + Nagel
• Planning • Optimising• Monitoring• Controlling• Reporting• Execution
Customer
• Production• Production planning• Sales forecast• Marketing• Research and
development• Public relations
Carrier ICarrier IICarrier IIICarrier IVCarrier V
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Integration with Carriers
• Schedules• Booking• Shipping instructions• Bill of Lading• Track & trace• Reports
Customers
Single access to multiple carriers reduces training,
mistakes, and time!•••••
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Reliability through People, Processes and Technology
KN Login – Enables carriers and supply chain partners to directly input information
CIEL (FA/FS) – First Generation Information directly interfaced to KN Login
CIEL (FA/FS) – Captures information from carriers and other supply chain partners to increase data quality and availability
CIEL (FA/FS) – Single Global Operational Platform to plan transportation, create documentation and post events. Driven by a standard workflow to ensure SOP conformance
KN Login – Web-based window to view and manage transportation across carriers & modes
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• Provides online visibility to order lines across vendors and source channels
• Provides online integrated visibility to order line allocations to respective shipments across carriers and modes
• Enables reliable and efficient transportation and information flow management
Visibility
Monitoring
Collaboration
Information management
Kuehne + Nagel Global Logistic Network
KN OMS
Enabling Customers to Effectively Implement and
Manage Global Procurement Strategies
Activities
KN Login Visibility and Process Management Tools
Protocols
KN LoginVisibility and process management tools