Problems and new solutions in logistics:Central Loco Workshop

NIKODÉMUS Antaldeputy head of department

Ministry of Economy and Transport

2007. February 22.Stefania Palace

E.g. lower barriers to FDI:

•New players•Increased comoetition•Market seeking FDI

E.g. increased market based

resource allocation:•Efficiency seeking FDI•Specialisation by foreign affiliates

E.g. transport innvation:

•Asset seeking FDI•New players•New FDI location opportunities

E.g. ICT innovations:•Cross-border technology alliences•International off-shoring•Facilitates FDI by SMEs

Drivers

Policyfactors

Technolgyfactors

DimensionsWidth Depth

•Greenfield investment•International M&A

•Inter-firm trading transactions•Strategic alliences•Partnership•Non-equity joint venture

Organisational modes for cross-border production and investment

Modes

Cross.border

insourcing

Cross-borderoutsourcing

FDI

Arms-length

trading

Focuses of development as the basis of Hungarian Focuses of development as the basis of Hungarian competitivenesscompetitiveness

Exploit „Hungaricums”

Hungary specific factors:

• Natural resources

• Geographic location

• Strong talent base

• Services

• Logistics

• R&D etc.

Successful industries attracting FDI

Focal points of development

• Education, ‘life long learning’

• Utilisation of knowledge in economy

• Business incubation

• Biotech

Combine general CEE advantage with country specifics

IT- and information needs of 4 PL providers (II)

Infrastructure

ERP/SCM/SCEM

Integration layer

eBusiness Solution

Logistics Services

2PLs

Client‘sIn-house logistics

3PLs

LLPs

Financial Services

Bank

Trade Account

Insurance

Credit

ProcurementChannels

Partners

2nd tier Suppliers

1st tier Suppliers

3rd tier Suppliers

SalesChannels

Reseller/Retailer

Vendor Managed Inventory (VMI)

Distributor

Customer Service

Operations/ FulfillmentChannels

Inventory

(light) Assembly Consolidation/

Configuration

Returns

Product Support

4PLPlatform

Terminals and freight villages

Integrative 4PL services (Component 2.3)

Multi-layered collaborative business model is necessary to meet the new challenges of the transport and logistics industry, as well as to

ensure a durable competitiveness of Central Europe

After sales

Integrated Supply Chain management (SC design and integration of goods, information and finance)

Integrated IT management (Integration of market softwares, scalability and flexibility, web-based, open standards)

Integrated solutions and services

Consolidation Intermodalterminals

Manufacturers& raw materials

Export/Importactivities

Global freightmanagement

Warehousing and Distribution

Primary movements

Distributioncenters

Secondary movements

Transport solutions

Distribution solutions

Value addedServices (packaging…)

Productionmanagement

Fulfilment & procurement

eProcurement

1. Macro-regional network effects

- Pan-European corridors (Increasing importance of IV, V corridor)

- V. corridor : Far-East >> Russia, Ucraine >> South Europe - VII. corridor : Danube river- Importance of the Ports of Adria and Easter Europe (Coper,

Constanta)

Global Trade flows tendencies / restructuring of continental transport

The shifting ‘blue banana’ – EDCs

Source: Cushman & Wakefield, Healey & Baker – EDCs (2004)

The shifting ‘blue banana’ – Automotive production

Core Automotive axis and periphery

Concentration of automotive suppliers

Core domain of automotive production in Europe

Main producers (OEM)

Strong growth of periphery

High density of supplier industry

LeipzigDresden

Budapest

Bratislava

Györ

Wien

Wolfsburg

Hamburg

Nord-Italien

BeneluxRuhr-Gebiet

Rhein-Main

Main-Neckar

Sochaux

Lyon

Graz

Eisenach Chemnitz

LiverpoolManchester

Birmingham

South England

Wales

North England

Catalonia

Valencia

CastilleMadrid

Basque country

Région parisienne

Tours - Orléans

Ouest

South PolandŽilinaBohemia

BerlinPoznan Warzawa

WroclawGlivice

Esztergom

Nürnberg-

MünchenOÖ-

Cluster

0 200 km

Map: Dr. Olivier Podevins

European Distribution Centers shifting eastwards

4

333

21

Concentration of EDCs‘

Existing EDCs‘

Main locations of EDCs in Europe

1. East and South Netherlands (Limburg, Brabant)

2. East and South Belgium (Antwerp, Limburg, Wallonie)

3. North and East France (Nord-Pas-de Calais, Lorraine, Lyon)

4. Oresund (for Scandinavia)5. Helsinki (for Russia and Baltics)

5

Main locations of EDCs in the future

1. Netherlands2. Belgium 3. Germany4. Central EuropeMap: Dr. Olivier Podevins

Country Consolidation Center

Nordics

Solectron is a leading global provider of

electronics manufacturing and integrated

supply chain services for customers, such as

DELL; IBM, Sun, Microsoft, Motorola…)

Supply Chain Solution:

Manufacturing in low cost locations

(Asia, Romania)

Pick up at customer or retailer

(potential split of destinations)

Country consolidation

European consolidation for transport to

repair facility

Repair

De-consolidation to regional warehouse

Management of swap stocks in regional

warehouses

Delivery at customer or retailer

(potential delivery of multiple sources)

Solectron‘s supply chain solution for EMEA

Optional Country Consolidation Center

Regional Warehouse/Country consolidation center

Repair facility

European Consolidation Center/Regional warehouse

Retailers

Defective units flow

Repairedunits flow

UK

Western Europe

Map: Dr. Olivier Podevins

Main structure of European logistics on longer term

BSR: Baltic Sea Region

New „blue banana“

Intermodal connections „North-South“

BLSR: Black Sea Region

„New Central Europe“

Continental inter-connections

Euro-Asian inter-connections

Map: Dr. Olivier Podevins

Gazdasági és Közlekedési Minisztérium

Dr. Nikodémus Antal főosztályvezető-helyettesInnovációs Főosztály

H-1055 Budapest, Honvéd utca 13-15.Tel: (36 1) 374-2906 Fax: (36 1) 374-2878

E-mail: nikodemus@gkm.gov.hu Internet: www.gkm.hu

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