4flow newsletter 2 2016...distribution centers and fulfillment centers along with their processes...

Newsletter

Dear Readers,

The digital transformation of supply chain is often discussed as being

the result of changed manufacturing processes (in the Industrial Internet

sense). In my opinion, however, there is much more to it.

The digital supply chain consists of two core elements, the first of which

involves digital business processes, with the most obvious potential

being visible in online retail. The second is the physical supply chain,

which will still be around in the future but with even greater efficiency

owing to new information technology. The combination of these ele-

ments can bring forth new business models in any industry. This would

be e-commerce in the broadest sense.

In this newsletter, you can find out how our experts at 4flow develop

and implement agile digital supply chains. There is quite a lot that manu-

facturing can learn from retail: While conventional retail was first threat-

ened by disruptive business models, omni-channel concepts are now

becoming the new standard for all. By the way, this was also the exact

theme of our recent 4flow challenge – a new case study competition for

soon-to-be supply chain professionals.

Enjoy this latest newsletter issue and find out more about growth, acco-

lades and new opportunities.

Issue 2/2016

Editorial

Page 2–7 Building an optimized

digital supply chain for e-commerce in 5 steps

Page 8–10

Manufacturers in China take action to adapt to the

new normal

Page 11 Lear honors 4flow as Supplier of the Year

Page 12

4flow continues record growth

Page 13

Shanghai office gains 30 years of logistics expertise

Page 14

Case study competition winners announced – 4flow

challenge

Page 15 4flow news

Page 16

In the spotlight

4flow newsletter, 2/ 2016 issue, page 2/16

Building an optimized digital supply chain for e-commerce in 5 steps A checklist for choosing the right logistics strategy

Digital transformation is not only changing consumer behavior, it is

changing expectations on products and services along with it. In order

to meet these expectations, businesses often need to augment conven-

tional business models with web-based sales channels such as direct de-

livery to consumers or click-and-collect where purchases are made

online and later picked up in-store. Taking this step can be an oppor-

tunity to improve on how you reach target groups; however, this is ac-

companied by a variety of challenges. On the one hand, companies that

want to enter the e-commerce market have to compete with so-called

pure play e-retailers (companies that depend on the internet as their

sole sales channel). On the other hand, many well-informed consumers

seek out the seller with the prices and distribution service that suits

them. As a result of new services like same-day delivery in two hours or

pick-up points, consumers’ expectations are becoming more and more

sophisticated. E-commerce is a highly competitive market where the

next competitor is just a click away. Conventional market mechanisms

and competitor situations are constantly being redefined by large

e-commerce businesses, largely regarded by traditional businesses as a

threat that must be reacted to quickly.

For companies seeking to enter this dynamic market and expand their

business model, it is essential to know the supply chain requirements of

this new distribution channel. Companies that decide to engage in

e-commerce need an integrated digital supply chain strategy to effi-

ciently meet expectations across channels. One particular challenge for

logistics is setting up an efficient and flexible omni-channel strategy that

uses the logistics synergy of conventional brick-and-mortar channels

with online channels, while at the same time ensuring that consumer

expectations are met.


4flow has worked closely with numerous clients to develop and apply

these five steps to implement flexible distribution strategies for

e-commerce.

1. Analysis of market requirements in a competitive

environment

In order to develop a sustainable distribution strategy for e-commerce,

4flow consulting identifies future market requirements in e-commerce

and answers the following questions:

What customer segments and market segments can you gain

online?

How do customers behave and what do they expect now and in the

future?

Do shoppers have access to a partial assortment online, the entire

assortment or an even larger assortment online than in brick-and-

mortar stores?

How much potential for growth does e-commerce or an omni-

channel mix have?

A key aspect of surveying the market environment is analyzing possible

competitor strategies based on scenario modeling and viewing how

those strategies could impact your own organization and the position of

your own online business model.

After internal and external analysis, future scenarios are set including

service, shopping carts and baskets, product assortment and sales

volume for each market segment, customer segments and regions.

2. Determine service requirements in logistics for e-commerce

During this step the logistics service requirements for the digital supply

chain are determined. The product assortment plays a key role here

because it determines the quality requirements for each category

cluster along with seasonal peaks and product life cycles.


It is also important to define the supply chain capacities required for

response times with respect to delivery time and order cut-off times.

They can be inferred by looking at the availability level and service times

desired, in combination with sales scenarios. Extra services such as gift

wrapping, personalized greeting cards or country-specific labels also

need to be taken into account since such requirements can otherwise

lead to bottlenecks in the supply chain.

3. Developing and evaluating strategy options for the digital

supply chain

Existing logistics networks usually don’t fulfill consumers’ e-commerce

expectations cost-efficiently. In order to find the right distribution

strategy, a variety of factors are analyzed such as weaknesses and

potential infrastructural bottlenecks, as well as creating greenfield

scenarios that are combined to develop brownfield scenarios.

Selecting strategy options – 4flow consulting project cases

The strategy options are then evaluated on a holistic, end-to-end level

so that questions like the right degree of centralization or automation


(CFC or centralized hub fulfillment) or the degree of integration be-

tween offline and online sales channels can be looked at transparently.

With sensitivity analysis and what-if scenarios, 4flow consulting ensures

that only sustainable strategy options are examined in detail during the

next step. These tools test a distribution strategy’s robustness according

to the selected service and market scenarios and potential competition

scenarios.

4. Designing digital supply chains to be flexible and robust

What then follows is taking a deep dive into the selected strategy

options in respect to network structure and warehouse location.

Combined warehousing and picking for different distribution channels

calls for cross-functional and dynamic approaches to standardize

distribution centers and fulfillment centers along with their processes

and to ensure their design is service-oriented, flexible and lean. When

developing DC processes, both established and innovative automation

technologies need to be considered to fulfill scalable e-commerce

picking volumes in a cost-efficient way. In addition, automation

technologies factor in the increasingly sophisticated requirements

inherent to demographic change. Choosing the right degree of

automation requires a holistic and individualized approach that takes the

systems and economic conditions into account.

Selecting the strategy takes place on a dynamic basis according to the tipping point cost model among other things


In addition to fine-tuning logistics structures, the processes and IT

systems connected to logistics also need to be precisely detailed. The

necessary IT infrastructure and the right organizational structure are

determined. Detailing the distribution processes in this phase is crucial

due to the fact that distribution costs make up a substantial share of total

costs in e-commerce. As opposed to brick and mortar retail, shipments

in e-commerce are split up as a result of direct delivery to consumers.

The number of delivery runs and stops increases, resulting in higher

costs. At the same time, offering preferred delivery time slots to

consumers is a key competitive factor.

In addition to quantitative and qualitative analysis, the risks that

accompany implementation also need to be taken into account in order

to select the optimal future supply chain configuration. 4flow consulting

makes its recommendations for the supply chain based on end-to-end

business cases.

5. Road map for agile implementation of digital supply chain in

e-commerce

When implementing a digital supply chain strategy, the necessary steps

in the areas of network structure, locations, processes, IT systems, and

organization are defined and scheduled for implementation.

Because of the long-term perspective, financial gates are introduced

over time that allow consumer, assortment and sales trends to be

examined, while their impact on the next implementation phase can be

determined. Depending on the results of the review meeting,

investments are made or replanned. This way the company always has

the assurance that the strategic direction can be adjusted over time.

The right logistics strategy for an e-commerce business model can only

be identified and implemented by taking an end-to-end approach that

accounts for diverse factors and risks. This enables companies to

integrate new distribution channels into existing network structures

quickly and with minimal risks.


Digital supply chain road map

Thanks to a long-term feasibility comparison, companies profit from

well-informed decisions when choosing the right logistics strategy.

Strategically setting up and expanding network structures to implement

new distribution channels has resulted in a clear competitive advantage.

ANDREAS KICK executive vice president

at 4flow. [email protected]


Manufacturers in China take action to adapt to the new normal Top businesses in China gather to discuss solutions to current logistics challenges

The need to seek opportunities for improvement is common in times of

slower growth for economies in all stages of development. China is now

in the situation where it no longer has the breathtakingly rapid double-

digit growth of recent decades. The manufacturing powerhouse is en-

tering a new dimension of growth – one that calls for a new focus. Chi-

na’s current economic situation, referred to as the new normal, repre-

sents a situation where organizational change is essential and presents

at the same time, an excellent opportunity for manufacturers to achieve

new levels of efficiency and productivity. But what is the “new normal”?

And how will it affect manufacturers in the future? These questions

were discussed at 4flow Logistics Day “Lean solutions for manufacturers

in China” recently held in Shanghai. Delegates from a variety of busi-

nesses and universities in China attended the event, including OEMs,

suppliers, and logistics service providers. Challenges, opportunities,

and solutions brought forth by the new normal were presented and dis-

cussed.

How businesses in China are responding to the new normal

Soeren Hagen, managing director at 4flow in Shanghai, presented “The

New Normal – The Impact of the Current Economic Situation in China

on the Logistics Industry”. He described the challenges under way

commenting, “China’s role as the factory of the world is slowly chang-

ing. 2013 was the first year in which services made up more than 50

percent of the economy. Stimulation of domestic consumption and the

service industry by the Chinese government is increasing.”


Is the logistics industry in China prepared for the new

challenges?

According to Soeren Hagen, the logistics industry needs to invest a lot

to successfully overcome the new challenges. 4flow senior consultant,

Kenny Zhang also presented on how 4flow worked with one of the larg-

est manufacturers of home appliances in Europe and China to develop

an inbound strategy for its new appliance park. “We collaborated with

our client to implement seamless inbound logistics from end to end,

preparing them for future domestic growth, reflecting the shifting Chi-

nese market.”

Included among the guests were Wolfgang Strauss, Director V-

Class/Vito China at Fujian Benz Automotive and Joern Krueger, Head of

V-Class/Vito Project Management Office. Wolfgang Strauss presented

a major two-year project for the launch of the V-Class and Vito at Daim-

ler’s manufacturing plant in Fuzhou, China. As part of the Fujian Benz

product launch of the new V-Class, a multinational team collaborated to

achieve leading logistics processes. Logistics proved to be essential in

bringing multiple functions together, not only in China, but at Daimler

locations in Europe as well.


“We received help from 4flow to optimize reporting structures, to create

processes, among other things. It was a hugely successful project and

we are still using those templates and those processes today,” Joern

Krueger of Fujian Benz explained.

Moderating the panel discussion was 4flow COO Kai Althoff who em-

phasized how essential it is for organizations in China to prepare for the

future of logistics and manufacturing. “Logistics brings all of the func-

tions together to set up an overarching concept to control costs and en-

sure high levels of efficiency,” he said.

Manufacturers in China are tasked with adapting to this new normal in

order to stay competitive not only in China, but on a global scale as well.

The next 4flow Logistics Day in Shanghai will take place this year on

November 17, 2016. If you are interested in participating, please con-

tact us at [email protected].

For more information about overcoming supply chain challenges in Chi-

na, please contact Soeren Hagen at [email protected] or Kenny

Zhang at [email protected].


Lear names 4flow a Supplier of the Year Automotive supplier Lear honors 4flow for outstanding service

Lear Corporation, a leading supplier of premium automotive

seating and electrical distribution systems, has named 4flow a 2015

Supplier of the Year. Lear and 4flow have collaborated since 2005 to

design and successfully implement centralized integrated transportation

management at all of Lear’s plants in all of its divisions in Europe and Af-

rica.

"The award-winning suppliers performed at superior levels and have

outstanding track records in working together with us," said Matt Si-

moncini, Lear's President and Chief Executive Officer. "Our global sup-

plier partners are critical to our success in providing the best possible

cost, quality and value to our customers," he added. “We are proud to

have received this award from Lear – a valued customer with whom

we’ve had a long-standing and close partnership,” Andreas Kick, execu-

tive vice president at 4flow, stated, to which Julian Schulcz, also execu-

tive vice president at 4flow added, “This award shows how important

our ideas, performance, and software solutions for integrated transpor-

tation management are in helping our customers prepare for the future

and remain competitive in a globalized market environment.”

Erich Schwarz, Global Vice President Purchasing at Lear Corporation, Andreas Kick and Julian Schulcz, both Executive Vice Presidents at 4flow, and Todd Glance, Vice President Global Supply Chain at Lear Corporation (from left)


4flow continues record growth

Supply chain service provider sustains excellent market momentum

4flow had a profitable growth of 17 percent for 2015. After establishing

a US subsidiary in Metro Detroit in 2014, 4flow opened offices in Brazil

and Hungary, created about 70 new jobs, and increased its team to

more than 350 employees globally. Since its founding in 2000, 4flow

has enjoyed steady organic growth year after year. In each of three

business areas – 4flow consulting, 4flow management and 4flow soft-

ware – double-digit percentage growth was achieved. “With more and

more organizations realizing the need for digital supply chain transfor-

mation, demand for our products and services is growing tremendous-

ly,” 4flow CEO Dr. Stefan Wolff said.

In 2015, 4flow grew once again in every market around the world. Di-

verse global teams at 12 different 4flow locations on 4 continents assist

customers to optimize their supply chains around the world. These

proven services are now also provided at the new offices in Budapest,

Hungary and Campinas, Brazil. “As a reliable partner for our global cus-

tomers, we continuously support them in making sustainable improve-

ments to their supply chains wherever needed,” Wolff said about

4flow’s strategic international growth. One example of 4flow’s world-

wide growth in 2015 was in Shanghai, China where the company grew

at an above-average rate.

Another key aspect of 4flow’s record result is its focus on long-term col-

laboration with large clients and long-lasting strategic partnerships.

First-time projects with new customers also made up a substantial share

of the growth. In addition to adding new automotive suppliers to its cli-

ent base, 4flow acquired new business from the consumer packaged

goods, grocery, retail, and rail industries.


Shanghai office gains 30 years of logistics expertise

Supply chain experts George Zhao and Kelvin Zhu join 4flow in China

George Zhao has joined the 4flow team in Shanghai as vice president.

Prior to joining 4flow, George held a leadership role at Accenture in

China where he was responsible for optimizing entire supply chains,

transportation, networks, costs and inventory. He possesses more than

20 years of experience in logistics and more than 15 years of experience

as a consultant along with extensive intercultural competence. During

his career working for international consulting firms such as Kurt Salo-

mon and Schneider Enterprise Consultancy, he has worked with global

clients from industries including logistics, retail, manufacturing and con-

sumer goods. He has been with 4flow consulting in Shanghai since June

2016 as vice president. “We are really fortunate to have George Zhao to

enhance our team in China on this level. Our growing client base in

China will profit from his expertise,” 4flow COO Kai Althoff said.

Another new addition to the 4flow team in Shanghai is Kelvin Zhu who

has joined the company’s 4PL business as senior logistics manager.

With more than 10 years of experience in logistics, automotive manu-

facturing and sales, Kelvin Zhu will make a significant contribution to

setting up 4flow management in Shanghai. “We have been growing by

more than 50 percent on average in China for years. It is crucial for us to

have George Zhao and Kelvin Zhu, two accomplished and experienced

supply chain management experts driving our success and growth in

the Chinese market,” Soeren Hagen, Managing Director at 4flow in

Shanghai said.

Rising demand and growth in the Chinese market created the need for

the new positions at 4flow. Since establishing the office in China in

2011, 4flow has expanded its customer base enabling continuous ex-

pansion at the Shanghai office.


Case study competition winners announced

Supply chain students present strategic e-commerce concepts at 4flow challenge

Twenty students from six universities traveled to Berlin, Germany for

the 4flow challenge case study competition and spent 48 hours in the

role of supply chain consultants. Earlier this year, 4flow had invited mas-

ter’s students to develop a strategic e-commerce supply chain concept

for a mock retail company seeking to enter the e-commerce market.

Many international teams submitted concepts with six teams making it

to the final round. Working on a challenging case and presenting their

solutions to a panel of judges, the students had to show they have what

it takes for consulting. The solution presented by the first place team

from TUHH Technical University of Hamburg in Germany convinced the

panel of judges with its consistent end-to-end planning, earning the

team 4,000 euros.

“Developing and challenging bright minds is very important to us at

4flow. It was a true delight to see these future supply chain profession-

als solve the 4flow challenge case with their new ideas and enthusiasm.”

4flow CEO Dr. Stefan Wolff said.

Students and their 4flow mentors at the 4flow challenge case study competition


4flow news 4flow Logistics Day – Reshaping supply chains in the digital age

What does digital transformation mean for supply chain and what chal-

lenges and opportunities come along with it? These and other questions

will be discussed at 4flow Logistics Day in Munich on September 29,

2016. The event with the theme “Reshaping supply chains in the digital

age” will take place at the Municon Conference Center at Munich Air-

port in Germany. Insights on best-practice cases for digital supply chains

await the attendees. In addition to Claudia Sorrentino, Head of Supply,

Production & Logistics at BOBST and Johan Rådmark, Director at Volvo

Cars, Patrick Thom, Manager Transportation Planning Inbound Europe

at BMW, and Dr. Thorben Seiler, COO of Bringmeister.de, will present

practical solutions they are implementing to overcome logistics chal-

lenges in the digital age. 4flow Logistics Day is the ideal setting for at-

tendees to network and exchange insights. For more details about the

event and how to register, please visit: www.4flow.com/logisticsday.

4flow at BVL International Supply Chain Conference

This year’s International Supply Chain Conference presented by BVL In-

ternational, will take place October 19-21, 2016 in Berlin, Germany. At-

tendees are invited to stop by our booth in Foyer Potsdam to speak with

team members from 4flow consulting, 4flow software and 4flow man-

agement about any challenges you might have in your supply chain.

Request a meeting with 4flow at the conference by sending an email to

[email protected].

On Friday, October 21 at 9:30 am, Dr. Stefan Wolff, CEO of 4flow, will

moderate the session on digital transportation management. Among the

speakers at this session will be Norbert Peto, load control center man-

ager at Mondelez Europe who will present “Smart Transport Manage-

ment and Optimization in the Fast-Moving Food Industry”.


In the spotlight Ina Goedicke: Consultant at 4flow in Frankfurt, Germany

Ina Goedicke has worked as a consultant at 4flow

in Frankfurt since January 2015. Prior to joining

4flow, she attained a doctorate in logistics and

held a position as a research associate at the Insti-

tute for Transportation Logistics at the Technical

University of Dortmund. As a team leader in Lo-

gistics Planning at TU Dortmund University, Ina

engaged in teaching and research, while working

on industry projects. She worked with several large logistics service

providers, supporting them with planning and optimizing hub systems

and processes.

At 4flow Ina has handled a wide variety of client projects including

warehouse location consolidation as well as developing and implement-

ing various network strategies. Originally from Dortmund, Germany, Ina

enjoys the uniqueness of each project and the associated challenges.

“The scope of tasks I handle is wide-ranging, which makes the work

very dynamic. My coworkers come from diverse professionals back-

grounds, making learning from one another a real pleasure as we can all

share our past experience. This is a huge component of successful pro-

ject outcomes,” Ina said. During her time at TU Dortmund University

she gained invaluable experience in international collaboration. “The ar-

ray of international projects has taught me how plans are implemented

from country to country. The experience has broadened my horizon

and helped me here to handle projects with clients on a global scale at

4flow.”

In her spare time, Ina enjoys playing cello in a local orchestra and play-

ing at private functions. She is a big fan of Scandinavian design, good

food, backpacking and traveling to different cities. She currently enjoys

cycling in Karlsruhe where she now resides.

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