OMSAN LOJİSTİK Top Management Program in Logistics & Supply Chain Management (TMPLSM) Supply Chain...
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Transcript of OMSAN LOJİSTİK Top Management Program in Logistics & Supply Chain Management (TMPLSM) Supply Chain...
OMSAN LOJİSTİK
Top Management Program in Logistics & Supply Chain Management (TMPLSM)
Supply Chain & Logistics Outsourcing Projects
2. 3PL Industry Highlights
4
3PL Industry Trends
• The European 3PL market is currently going through a fundamental redefinition. The new focus is on integrated logistics as “one-stop” solutions. There is also a significant migration from asset-based logistics to value-added and integrated contract logistics solutions.
• The emergence of the concept of a lead logistics provider (LLP) has brought about higher degree of specialization within the 3PL market. Also the gradual transformation of 3PL players into a 4PL service provider is just about taking shape and promises to be an exciting phase in the logistics services market in Europe.
• The current estimation of the exact size of the European logistics market as per various sources varies considerably. However the current total logistics spends in Europe is roughly put in the region of $140-$160 billion, of which $35-40 billion (25%) is directly contracted out to 3PL companies.
5
Global Logistics and contracts logistics
service providers, 2003
6
Trend in Outsourcing around the World …
7
European Logistics Market 2003
• Germany and France are the highest potential markets in Europe. However, UK market is very mature in comparison to the other ones and the most part of top European contract Logistics players are UK based.
8
Logistics contract duration
• Most part of European LSP contracts are 3 to 5 years long. It shows LSP adopt and strategy of long term partnerships with their clients.
Source: Transport Intelligence 2003
9
32%
27%
18%
10%
5%
8%
FMCG Retail & Food Technology
Automotive Health & Medical Other
Logistics outsourcing by sector
Sales of Top 11 European LSP actors by sector (2002)
Source : NVC Research, 2004
Automotive is a business developed by actors focused on this sector (therefore not representative among top European LSP actors)
FMCG and Retail sectors are the main clients of Top LSP actors
Top 11 players represent 30% of total logistics market in Europe
10
Competitive Positioning
General Services
Special Services
Ge
og
rap
hic
al S
pe
cia
liza
tio
nG
lob
al Ge
og
raph
ic Co
ve
rage
DSV
Dachser
Panalpina
DeutschePost
TNT
Bolloré
Ryder
CNF
Stinnes UPS
Exel
ABX
Tibbett
NDHays
Salvesen
Geodis
K&N
11
Top 20 European Logistics leaders 2003
Source: Eye for Transport, 2003
12
European Logistics leaders 2003
Source: Transport Intelligence, 2003
Revenue with contract Logistics
ProfitMargin
13
European Logistics leaders 2003
• Market progressed to reach a balance in terms of contract logistics profit margin of around 3%. This can be explained by the consolidation in the sector and the fact that LSPs are creating now multiple sector offers.
14
What are you looking for?
15
Why Would you want to do it?
16
Some Accomplishments …
17
Measures of Success …
18
Average Customer Results from Use of 3PL Supplier
• Logistics Cost Reduced by 14.6%
• Logistics Assets Reduced by 25.8%
• Order Cycle Length from 11.9 to 7.5 Days
• Information Systems Integration from 35% to 65%
• Customer Satisfaction Index from 65.2 to 67.9
Source: 1997 University of Tennessee/Exel Logistics Study
19
Outsourcing - Industry Trends
20
3PL Contract Logistics Market
Private Fleet15%
Value Added Whse/Dist
37%
International24%
Software6%
Transportation18%
21
Annual Logistics AnnualRegion GDP Growth Spend % Market Growth
North America $11,100 5.6% $1,110 20% $222 15%Europe $9,900 3.9% $990 28% $227 10%Asia $8,050 4.5% $805 10% $81 20%Africa $550 7.8% $20 n/a n/a n/aAustralia/NZ $500 4.6% $50 15% $8 8%South America $1,250 2.3% $65 10% $7 20%
Total $31,350 $3,040 $545
Global Logistics Market(in $billions)
Outsourcing
Outsourcing is approximately $545 billion annually and growing at 15% per year.
Source: PwC and US Department of Commerce.
22
Services Provided By 3PL’s
Transportation Mgt22%
Private Fleets11%
Intermodal5%
Warehousing19%
Value Added16%
International10%
Integrated11%
Other2%
Lead Logistics4%
23
Where should you go? What’s the scope of outsourced
logistics services?
24
What’s stopping companies around the world from
outsourcing today?
25
Where should 3PLs get better at?
26
What customers think of their
3PLs regarding applied
technology …How are we doing at our company in
terms of logistics IT support?
27
Message? Without technology a full service 3PL
can’t survive in today’s market place!
28
… and in the future, don’t expect things getting easier. There’s a new breed of solely IT-based
logistics services.
30
… and this is the way we could see the logistics (3PL) function and its processes …
Sourcing Point(Supplier, Factory, Store, User)
Fulfilling your service promise, while optimizing system’s resources
Fulfilling your service promise, while optimizing system’s resources
Logistics (bridge)
Logistics
Consumption Point(Factory, Store, User, Consumer)
31
Axis of the Logistics Evolution
COSTSCOSTS
SERVICESSERVICES
PHYSICAL FLOWPHYSICAL FLOW
INFORMATION FLOWINFORMATION FLOW EXTERNAL EXTERNAL THIRD PARTY THIRD PARTY LOGISTICSLOGISTICS
INTERNALINTERNAL
32
Steps of the Methodology
Business planningThought Lea
dersh
ip
Performance excellence
VisionStrategyPriorities
Best P
ract
ices
Indust
ry L
eader
s Baseline
Footprint
Current
Situation
33
A business oriented framework for assessmentand strategic vision
1)Vision, Strategy, Priorities Short term tangible results Long term strategic alignment
• Baseline Footprint
Current Orientation Gap between Vision, best practices and currents state addressed by a business
planning Financial Justification
1)Industry Leaders
Selection of Applicable best practices Roadmap to achieving performance excellence Impact Vision and Strive to be Industry Leader
34
Phase 1: Vision, Strategy, Priorities
Strategicvision
Organizationpeopleskills
Monitoringand logical process
InformationSystemssolutions
Logisticsoperations
The 6 Logistics/SCMcomponents
Key PerformanceIndicators
Information systems
Service targets
Cost
of th
e Lo
gis
tic
solu
tion
Logistics
Org
anizatio
n
Physical fl
ows
Logic
al pro
cess
Components of the Logistics Business Model
35
Performance
Organization
StrategyMonitoringInformationSystemsOperations
Logistics/SCM Maturity Levels
• Each component of logistics is characterized by one of the 4 possible maturity levels.
Sequence of operations
Level 1
Physical logistics
Level 2
Supply Chain Management
Level 4
Integrated logistics
Level 3
36
Logistics/SCM Maturity Levels
Performance
Organization
Strategy
Monitoring
Information systems
Operations
Current maturity
Level 1
Low level of logistics maturity
Level 4 High level of cooperation with external actors
Level 2 Logistics focused on physical operations
Level 3
- High level of internal cooperation with other functions
current aimed Aimed maturity
37
The Maturity Matrix
• Each component of Logistics:– Strategic vision– Organization people skills– Monitoring and logical process– Information Systems solutions– Logistics operations – Key Performance Indicators
consists of several attributes, the consolidation of which helps to define the maturity level of the component
38
Clients values and performance targets Physical Structure
Process and organization Information system
• Sequential approach of physical operations
• Logistics is under the responsibility of warehouse manager and transportation is under commercial management
• Field if limited to internal environment
• Pushed flow logic• Constant claim management
• Dominant productivity objective• Logistics = Cost centre• Saturation of transportation assets
• Local logistics, local and regional warehousing network
• Operations without added value, focused on transport
• Assets ownership, racks, bins and warehouses
• Increasing number of third party actors
• Direct negotiation with carriers
• Specific solutions• Outdated information system• Low transport planning and tracking• Low EDI with business partners
Level 1 : Low level of logistics maturity
39
• Management of enterprise’s internal flows
• Assuming push/pull flow interface: postponement and late differentiation
• Specialization of shipping areas/sites• Development of national platforms• Assets ownership • Transport groups creation and
evolution aiming at value creation
• MRP, DRP • EDI wide-spreading• Transactional information system
(stock management)• Low information from logistics
service providers
• The objective is reduction of order management costs, stock costs, with improvement of service level
• Heading for excellence• Performance measurement
through representative numbers
• Logistics function is normally fragmented: Warehouses, ADV, Delivery planning
• Creation of Distribution logistics function
• Development of interfacing functions : forecast and demand management
• Paperless organization
Clients values and performance targets Physical Structure
Process and organization Information system
Level 2 : Logistics focused on physical operations
40
• Management of enterprise internal flows
• Continental transport platform planning
• Network planning• Globalization of flows• Post-manufacturing development• Punctual logistics outsourcing
• Introduction of Supply Chain statements :forecast adequacy, constraint management, visibility, alert management
• Reverse Logistics development• Category management introduction• Business Process Re-engineering
• Service level agreement formalization
• Trade-off analysis between logistics service and logistics cost
• Shared performance indicators
• ERP• Fist APS• Integration between ERP and APS,
extended visibility and anticipation• Tracking & tracing• Constant optimization and flexibility
Clients values and performance targets Physical Structure
Process and organization Information system
Level 3 : High level of internal cooperation with other functions
41
• Client and supplier collaboration• Assuming multiple functional fields :
logistics, customs, quality, proprietary transfer
• Gaps elimination throughout the Supply Chain : reduction of buffer stocks
• BTO• e-logistics• Outsourcing of administrative assets
(telephone, office)• Sector concentration• 4 PL introduction (4th part logistics)• 3PL (logistics service provider)
specialization • Multi-modality
• E-business• Faster link with client and suppliers• Collaborative planning solutions• Supplier transparence• Capital Clients management• Extranets• CPFR• EAI
• Chain capacity (against single actor capacity)
• Reduction of frozen period• Segmentation• Agility and Lean• Continuous improvement• Strategic gains: Market share, Time
To Market, enter barriers • Innovation and continuous
adaptation
Clients values and performance targets Physical Structure
Process and organization Information system
Level 4 : High level of cooperation with external actors
42
Where are we? Where do we want to be in 2010? How do we get there?
Today
Somewhere around here, tomorrow!
43
Strategic profiles for a best-in-class 3PL
Logistics Engineering
Internal Organization
Asset Resources
Human Resources
Information systems
Special Logistic Operations
Current maturity
Level 1
Partial Logistics Services
Level 4 Integrated SCM Services
Level 2 Separated Execution between Transport and Logistics
Level 3
Integrated Execution of Operations
current aimed Aimed maturity
Capability for Partnerships
44
Topic « strategic vision » (1/2)
Level 1 Level 2 Level 3 Level 4
Understanding level of Logistics objectives
Vague Formalized and not communicated
Formalized and communicated to the logistics organization
Formalized and shared
Formalization level of the logistics strategy
Not clearly defined Defined but not formalized (no documents, no communication)
Formalized but not fully and clearly communicated
Formalized and fully communicated
Communication of the logistics strategy
Limited to logistics Limited to operations « B » + other functions (marketing, finance, R&D, …)
In house and external (key accounts, partners, …)
Links between the logistics strategy and the business strategy
Independent Input for the business strategy Strategic co-design Pulled by the business strategy
Logistics strategy horizon Less than one year (reactive to events)
Annual budget Less than five years More than five years (partnership)
Logistics strategy focus Costs reduction Improvement of the service level Trade-off service – cost Supply chain used as a competitive leverage
Relations type with the suppliers and the customers
Reactionary management and the dysfunctions
Conflict relations focused on the costs or the service
Relations based on costs and service
Partnership relations and shared improvement
Covered operation fields Transport and storage
Physical logistics chain and customer service
« B » + Sourcing and forecasting (monitoring)
« C » + customers and Third Party logistics operations
45
Topic « strategy vision » (2/2)
Level 1 Level 2 Level 3 Level 4
Service Strategy provided by logistics
Not defined or not defined enough
No customized service strategy
Services sometimes customized (customer, distribution channel,…)
Services fully customized
Logistics innovation and design capability
Low capacity and curative approach
Weak capacity (logistics/business integration) embedded in an improvement process
Strong expertise and anticipation focused on in house benchmarking (resource management)
Strong expertise and anticipation (pro-active approach) focused on external benchmarking
Alternative scenarios assessed for logistics
No alternative scenario Only volume alternative scenarios
Volume alternative scenarios and services
Co-designed scenarios with customers, logistics providers,…
Strategy of IS No guidelines Local and limited guidelines Global guidelines Global guidelines + business intelligence (partners, suppliers,…)
46
Topic « organization – people - skills » (1/2)
Level 1 Level 2 Level 3 Level 4
Formalization level of the logistics organization
No logistics skills Identified logistics skills Organized logistics function Supply chain function with functional interfaces
Objectives definition No objectives Limited objectives Objectives on the logistics performance
Objectives on the evolution of Supply chain function
Logistics management profile
Independent organizations
Shared information with other departments
« B » + shared objectives Formalized collaborative processes
Interface with suppliers and retailers
Little or no automated interface
Interfaces limited to largest volumes of exchange
Widespread interfaces of data exchange
Widespread interfaces + collaborative tools
Relations between logistics and the other functions
Conflict relations Limited relations Shared objectives Shared objectives and initiatives
Improvement approach “Fireman” ex post Approach limited to the costs reduction
Continuous improvement with quantitative objectives
Global approach cost / service value
Sponsor for the change (responsible for evolution expenses)
No sponsor Functional or operational managers
Logistics VP Top corporate management
Changes booster Operational managers “A” + Logistics teams “B” + Logistics management “C” + Supply chain and business management
47
Topic « organization - people - skills » (2/2)
Level 1 Level 2 Level 3 Level 4
Main constraints for an improvement approach
No measure and no control of the trade-off cost / service
Lack of quantitative objectives cost / service
Very local approaches Shared and communicated improvement approach
Teams development and skills management
No development plan Development limited to recruitment
« B » + Development by the expertise training
« C » + Training to management and leadership
48
Topic « monitoring and logical process »
Level 1 Level 2 Level 3 Level 4
Horizon Daily Consistent with the budget on a monthly bucket
Rolling yearly horizon Flexible horizon according to the events
Business indicators measure
No knowledge of the basic indicators
Global logistics budget and productivity indicators
“B” +costs analysis and budget control
« C » + action plans under manager control
Service objectives Little or no formalized Objectives not differentiated and internally fixed
Objectives differentiated on an axis (customer, product, …)
Objectives differentiated on several axes
Decision-making tools
Not or not much support Office tools Tools dedicated to functional areas
Tools enabling overall integration
Key Performance Indicators (KPI)
No KPI KPI limited to logistics costs and logistics productivity
KPI limited to the costs and to service quality and productivity
« C » + in house & external benchmarking + action plans
Capability to monitor a relation with a logistics service provider
Lack of in house monitoring and few experience of logistics subcontracting
In house monitoring and few experience of logistics subcontracting
In house monitoring and capability to share the monitoring process with a service provider
Specific and pro-active monitoring with a service provider (plans of shared improvement)
49
Topic « Information Systems solutions »
Level 1 Level 2 Level 3 Level 4
In house integration logistics IS and operational IS
No automated interface (operational monitoring and execution and level)
Limited and not very open-ended interfaces (limited to execution level)
Interfaces on the way to internal generalization
Internal and external generalized interfaces
Integration of internal IS and external IS (customers, service providers)
No automated interface (customer relation)
Limited and not very open-ended interfaces (transport)
Interfaces on the way to internal generalization (logistics service providers)
Generalized interfaces
Global coherence of logistics IS compared to logistics
No coherence with logistics Local IS partially integrated (area, functions)
Local integrated IS ex post Supply Chain Management guidelines
Transactional functionalities (orders management, tracking, …)
Few Limited to the basic functions
Developed but limited functional span (partial tracking, …)
Wide functional span (full tracking, collaborative management of problems, …)
Decision-making functionalities (planning and optimization tools)
Few, simple local tools Modules of local optimization
Developed but limited functional span (partial optimizations, …)
Large functional span (full optimization)
Data coherence (data management, dictionaries)
No coherence (no common dictionary, …)
Partial coherences Full coherences Data management organized within a planned process
50
Topic « Logistics operations »
Level 1 Level 2 Level 3 Level 4
Logistics (warehousing service, transport) - Purchasing
Spot purchasing Purchases based on yearly contracts
Purchases based on 3 year-contracts with yearly savings
Purchases based on open book : win / win
Performance measure cost - quality
No performance measure Performance focused on the costs and productivity levels
Multi-criteria analysis of the performance level
Performance measure according to customer’s specifications
Technical innovations (warehouse, transport)
No or few innovations Spot innovations pushed by logistics services
Spot innovations co-developed by logistics and business line
Innovations embedded in the Mid Term Plan of Supply Chain
Customer service information (tracking, …)
No tracking Limited tracking ex post not integrated in the transactional IS
Tracking limited to the customer’s request and integrated in the transactional IS
Full tracking (on Supply Chain) available on line for the customer
Shared experience in operations
No sharing Standardized operations but not rolled out
Standardized operations and rolled out
Operations in line with the local needs and exchanges on the in house best practices
Operations optimization
On a spot basis ex post Local and anticipated Shared, global but spot Global and planned
51
Topic « Key Performance Indicators »
Level 1 Level 2 Level 3 Level 4
Integration level of the concept of performance
No references to the performance
KPI limited to operational activities
Widespread KPI KPI embedded in formalized reporting process
Quantitative indicators for measuring the logistics performance
Analytical costs of the service provider on operations and resources
Internal and external analytical costs
Comparison of standard costs with actual costs
Balance between costs and service value KPI
Benchmarking Not or few benchmarking Partial and specific benchmarking not fully formalized
Regular quantitative benchmarking
« C » + regular qualitative benchmarking
Trade-off analyses No trade-off approach Trade-off inventory cost versus transport
Trade-off costs versus service Trade-off costs versus service versus investment
Scope of logistics distribution network re-engineering
Few re-engineering of logistics networks
Re-engineering limited to the interfaces : Plant > DC – subsidiary > Customer
Collaborative re-engineering with logistics service providers
Collaborative re-engineering with suppliers and customers
Assessment No link between the logistics performance and assessment
Link between the operational performance and assessment
Link between the logistics performance and assessment of logistics staff
Integration of the Supply Chain performance within other functions
52
Potential Services Offered by a 3PL
• Shipment Consolidation
• Logistics Information Systems
• Product Returns
• Warehouse Management/Operations
• Inventory Management
• Carrier Selection
• Order Fulfillment
• Rate Negotiations• Order Processing• Fleet Management
/Operations• Product Assembly• Customer Spare Parts• Vendor Selection• Purchasing
53
Classification of Services by 3PL
Physical Contract Physical Contract Logistics ServicesLogistics Services
• Dedicated Contract Carrier• Dedicated Warehousing
Integrated Integrated Contract Contract LogisticsLogistics
• Integrated Warehousing and Transportation
• Integrated Carrier Management and Transportation
Basic ServicesBasic Services
• Common Carriage• Public Warehousing
Management Management Contract Contract
Logistics Logistics Services Services
• Traffic Management• Warehouse Management• Import/Export management
PhysicalPhysicalServicesServices
ManagementManagementServicesServices
Complexity and Customization
Co
mp
lexi
ty a
nd
Cu
sto
miz
atio
n
Low High
High
Source: J.M. Africk and C.S. Calkins (Transportation and Distribution, 1994)
54
Value Creation Capacity of proposing additional value (logistics value) to client´s products/offers.
Innovation Capability
Ability to creatively design and implement customised solutions and to implement projects.
Functional Expertise
Technical skills covering all the range of logistics operations (SC management, transportation planning, demand planning, customs clearance,etc). Broader service offerings.
Financial Engineering Skills
Assumption of financial commitment to taking part in a client´s new business. Sharing financial risk with client through for instance inventory and assets ownership. Shared risk and reward
IT Skills Information Technology (SW and HW) supporting logistics operations. E.g.: T&T, APS, Flow simulators, etc.
Vertical Expertise
Technical specific abilities supporting clients´operation to a sector or market. Capacity to work in joint teams with clients. Knowledge transfer. Also capacity of combining operational and project management skills (both internal and external).
Operational Reliability
Commitment to clients´ services expectations.
Operational Flexibility
Ability to timely react to new client´s needs. High flexibility in terms of staff and operational structure facing different demand volumes. Speed of project implementation.
Geographical Coverage
Presence in all clients markets, with local management and necessary structure. Ability to manage country specific joint venture ensuring pan-regional integration.
Cost Effectiveness
Competitiveness through the ability of realising the same operation with lowest fixed costs. Ability to reduce operational costs through business consolidation and dealing with high volumes. Focused cost reduction.
Key Success factors for a 3PL
55
Four LSP Strategies appears in response to market´s Key Success Factors
Strategic Profiles
• Cost Killer• Contract LSP• Logistics Partner• Supply Chain Partner
• Where are we?• Where do we want to
be?• Where are we prepared
to be?
56
Strategic profiles: Cost killer
Cost Killer
•Basic logistic services provider (mainly physical operations)
• Important attention to economies of scale
•No high functional expertise
•Multi-sector player
Value Creation
Innovation Capability
Functional Expertise
IT Skills
Vertical Expertise
Operational Reliability
Operational Flexibility
Geographical Coverage
Cost Effectiveness
Financial Engineering Skills
57
Strategic profiles: Contract LSP
Contract LSP
•Standard logistic services provider (physical operations and some logical ones)
•Mutualized solutions (economies of scale)
•Poor functional expertise
•High geographical coverage
•Multi sector player
Value
Creation
Innovation
Capability
Functional
Expertise
IT Skills
Vertical
Expertise
Operational
Reliability
Operational
Flexibility
Geographical
Coverage
Cost
Effectiveness
Financial
Engineering Skills
58
Strategic profiles: Logistics Partner
Logistics Partner
• Long range contracts
• Sector specific economies of scale
• High specific expertise
• Geographical coverage as requested by the client
• High level of customer business process understanding
• High operational reliability
Value Creation
Innovation Capability
Functional Expertise
IT Skills
Vertical Expertise
Operational Reliability
Operational Flexibility
Geographical Coverage
Cost Effectiveness
Financial Engineering Skills
59
Strategic profiles: Supply Chain partner
Supply Chain Partner
• High added value service
• High level of customer business model understanding
• Dedicated solutions
• Innovation
• Financial commitment
• Joint ventures• Can be a non
asset company (Example : 4PL)
Value Creation
Innovation Capability
Functional Expertise
IT Skills
Vertical Expertise
Operational Reliability
Operational Flexibility
Geographical Coverage
Cost Effectiveness
Financial Engineering Skills
60
Strategic profiles : Synthesis
PhysicalService Offering
Logical
Pricing
Transaction Risk SharingFixed and Variable Value Based
ValueAdded
Low
High
Logistics Driven
Commodity
Contractual
SupplyChain Driven
Contract LSP
Cost Killer
Logistics Partner
Re
lati
on
ship
Supply Chain Partner
61
Strategic profiles evolution
Service Offering
Physical Logical
PricingTransaction Risk SharingFixed and Variable Value Based
ValueAdded
Low
High
Rel
atio
nsh
ip
Logistics Driven
Commodity
Contractual
SupplyChain Driven
Contract LSP
Cost Killer
Supply ChainPartner
Logistics Partner