LEAD LOGISTICS PARTNERSHIP STRATEGIES FOR NOW AND IN THE FUTURE Paul Parry, Vice President, Global LLP, DHL

Dennis Drinan, Vice President, LLP Americas, DHL

2

Dennis Drinan Head of LLP Americas

DHL Supply Chain

Phone: +1 313 452-0916

E-mail: Dennis.Drinan@dhl.com

DHL Supply Chain

www.dhl.com

Paul Parry Vice President, Global LLP

DHL Supply Chain

Phone: +34 696 435801

E-mail: paul.parry@dhl.com

DHL Supply Chain

www.dhl.com

Global Energy Conference | Houston | 6 October 2016

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The Energy sector is operating in a new normal…

Global Energy Conference | Houston | 6 October 2016

Oil Price Drop

… creating

Supply Chain

complexity as a

rebalancing of supply

and demand occurs

OIL OIL

OIL

OIL

A Leaner, Stronger Industry

… driving powerful

innovation in the way oil

is being developed and

produced

Renewable Energy Focus

… resulting in

technological

advancements and price

parity between

unsubsidized renewables

and convectional energy

Company Diversification

… leads to need for

quick supply chain

integration & flexible,

adaptable structures

Carbon Emission Cuts

… translates into need for

Oil and Gas companies to

improve brand image in

order to attract investors,

talent and customers Game-changing mega trends

… are driving need for

continuous

improvement and

ongoing ability to

transform

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And our strategic customers are…

...increasingly looking at alternative methods for reducing supply chain costs and SC

rationalization beyond the typical procurement approach Cost

...developing a growing need for supply chain visibility, control, compliance, and

flexibility

Visibility, Control

& Compliance

…increasingly shifting from a segmented geographical approach, to a more integrated

regional/global end-to-end approach SC Integration

…experiencing an increasing need to invest in technology that will drive compliance and

efficiencies across the enterprise Technology

...experiencing increasing need to access best practices and accelerate time-to-value

while also delivering cost variability in line with sales Best Practice

…seeking SC flexibility that supports business changes in increasingly volatile market

while also delivering variability of cost Flexibility

…seeking a Business Partner as a catalyst and enabler of change Partner

Global Energy Conference | Houston | 6 October 2016

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Market Research : Supply chain challenges and priorities.

Global Energy Conference | Houston | 6 October 2016

What is the greatest challenge shippers face?

Source: Inbound Logistics “Market Research: 3PL Perspectives 2015”

What strategies are shippers and 3PLs using to manage

current challenges?

What is LLP?

7

Development of Lead Logistics Partnership (LLP)

Global Energy Conference | Houston | 6 October 2016

Planning

Co-ordi

nation

Execution Freight Transport

Ware-housing

Strategy

Customer

Traditional

Business

Strategy

Customer

Value added service

Freight Transport

Ware-housing

Typical

3PL 3PL 3PL

Core competence

of customer

Core

Log

istics C

om

pe

ten

ce

Value added service

Freight Transport

Ware-housing

Leading

LLP / 4PL

Customer

Timeline

8

Supply Chain

Management

Capability

Lead Logistics Partner Service Details

LLP service supports you in all the key areas of logistics management

Design Services

Management

Services

Planning

Co-ordi

nation

Execution

SC Strategy

Business

Strategy

Customer

competencies

Co

re

Lo

gis

tics C

om

pe

ten

ce

Transformation

Your Business Strategy

Transport

Services

Logistics Facilities Value Added

Services

Lead Logistics Partner

approach

Supply

Chain

Technology

Continuous

Improvement

Services

Operate

Services

Global Energy Conference | Houston | 6 October 2016

Strategies in LLP

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LLP Strategies - Keys to releasing Value

Supply chain design capability

comprehensive

supply chain design

capability “on

demand”

Certain factors play a key role in delivering a successful LLP

People and long term

partnership

“Building a stable

relationship that acts as a

foundation for continuous

improvement

Technology

Leverage data to provide

real “actionable insight ”

Global Energy Conference | Houston | 6 October 2016

BEYOND TRANSACTIONS:

TAKING PARTNERING TO THE

NEXT LEVEL

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Business Collective 1.0 – Partnering reborn

The Business Collective is a new partnering model. Multiple organizations meld

together, facing the market as one commercial entity with the customer as the focal

point

It’s about aligning on a shared mission and competitive strategy, working together to make the most of strengths and

overcome weaknesses. It’s about winning together, moving from the old way of doing things to the new…

OLD BREAK DOWN BARRIERS NEW

Companies conduct

business by looking inside

out

Internal focus

Transactional

relationships

Use data analytics to

understand customers

Design and configure the

value-chain network

Companies conduct

business by looking

outside in

Customer focus

Create value for all

partners

Global Energy Conference | Houston | 6 October 2016

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What’s required for a successful business collective?

1. Focus on the customer – Learn about their needs and priorities

2. Build the foundation – Create a shared vision, roadmap and executive commitment

3. Tap suppliers for innovation – Leverage and capitalize on supplier strengths

4. Open up and share – Open up the information supply chain to accelerate innovation

5. Start small and run fast – Pilot the changes first, rather than use ‘big bang’ approach

6. Think long-term – Building a business collective is not a short-term project

Global Energy Conference | Houston | 6 October 2016

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What benefits will the Business Collective deliver?

The Business Collective is based on the proposition that organisms are more

powerful acting collectively than acting alone

• Reduced waste

• Improved efficiency

• Lower costs

• …But above all, a real difference in a

company’s performance and position

in the market

From cost cutting to breakthroughs…

The POWER of Business Collective 1.0 –

EVERYONE wins.

1+1=3

Global Energy Conference | Houston | 6 October 2016

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Successful of Partnership brings real results

LLP capability with partnership has unlocked savings for customers across all sectors

Best Practice

Growth

Sustainability

Reduce Cost

Performance

…delivering real value

Leading Consumer Company

Design and Management of the Global inbound

and outbound supply chain into Turkey, Saudi

Arabia, Nigeria, South Africa and Kenya

Leading Marine company

Supply chain design, project planning &

implementation, logistics planning

Leading Auto company

Design, Management and Procurement Support of

the European Inbound supply chain.

15-20% cost

reduction in 4 years

20+ % reduction of

freight spend in year 1

20-25% cost reduction

in 10 years (15-20% in

first 5 years)

15-20% cost reduction

in 4 years

LLP Promise

Leading Engineering company

Design, Management, Procurement and

Operation of the Global inbound Supply Chain

Global Energy Conference | Houston | 6 October 2016

Conclusion

17 Global Energy Conference | Houston | 6 October 2016

Finally - Beware the Low-Cost provider

• LLP is not a price driven commodity

purchase but a complex value driven service

– Pricing is driven by a statement of work that is often

high level and leaves a lot to the “experience based”

assumptions made by each provider

– Under pressure, providers may over-commit on

savings (working “in theory”) and be over

aggressive on resource requirements

So..

• Considering that “LLP is like a marriage!”

…..choose carefully

THANK YOU

Q&A