The Future of Logistical Collaboration in Europe

Professor Alan McKinnon

Kühne Logistics University

Hamburg

28th May 2014

CO3 General Assembly

P&G Offices

Brussels

KÜHNE LOGISTICS UNIVERSITY HAMBURG

A private, independent, state- recognized university – founded in 2010

A university with expertise in logistics and management

2 MSc, a Bachelors, an executive MBA and a PhD program – 180 students

17 resident faculty plus contributions from a large group of external professors

3

Major Challenges Facing Supply Chain Managers

collaborate with multiple partners

IBM supply chain maturity model (2005)

Source: Accenture (2004)

Logistical Collaboration: long history of rhetoric and disappointment

Key role in models

of supply chain

development

Prominent place in

supply chain

surveys

Source: IBM, 2005

Dimensions of Supply Chain Collaboration

Collaboration

with and between LSPs Horizontal collaboration

Vertical collaboration

Core

individual

company

capability

Between companies at the same level in the supply chain:

within same sector in different sectors

Between companies at different

levels in the supply chain

Between business units –

use of control towers

Source: McKinnon, 2003

partnerships

alliances

consortia

1980s

1990s

2000s

2010s

2020s

CPFR = collaborative planning forecasting and replenishment CTM = collaborative transportation management

Evolution of Logistical Collaboration

vertical collaboration

ECR CPFR

Shippers

horizontal collaboration

opportunistic

systematic

network based

CTM

Carriers

Starfish CO3

6

Rationalisation by Collaboration

geography

Source: Cap Gemini (2008)

Horizontal Collaboration:

5- dimensional diffusion

7

5 Ms of Horizontal Collaboration

Mindset: - new age of collaborative enlightenment

- acceptance of the ‘sharing economy ‘

Motives: - internal, company-level efficiency gains exhausted

- external commercial and environmental pressures mounting

Models: - evolution and refinement of collaborative business models

- mathematical models and software tools to optimise gain-sharing

Market: - establishing mutually-supportive roles for logistics providers

- aligning HC with other market trends to maximise synergies

Ministries - legal acceptance of HC as yielding wider societal benefit

- promotion of HC through logistics best practice schemes

‘Physical encapulation’ of goods in a new

generation of modularised containers’

applying the networking of principles of the internet to the physical movement of freight

‘Rise of a Collaborative Commons as the dominant model for organising

economic life’

‘The Internet of Things (IoT) is the technological ‘soul mate’ of the

emerging Collaborative Commons’

‘ The IoT is made of a Communications Internet, an Energy Internet and

a Logistics Internet that work together in a single operating system,

continuously finding ways to increase thermodynamic efficiencies and

productivity in the marshalling of resources, the production and

distribution of goods and services and the recycling of waste.’

longer term vision of ‘network-based’ horizontal collaboration ?

Impending Paradigm Shift

Physical Internet

Source: Montreuil, 2012

Collaborative bundling of freight to meet modal shift targets

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2009 actual without target with target

Road

Rail

IWW

% o

f to

nn

e-k

ms

Target: EC White Paper target for 30% of freight tonnes moving over

300km to move by rail or inland waterway

Without target: Business-as-Usual projection of modal split

Based on analysis by Tavasszy and van Meijeren (2011)

Will these targets ever

be achievable without

extensive horizontal

collaboration?

10

Collaborative bundling of freight to maximise the load

consolidation benefits from high capacity trucks

Source: Steer Davies Gleave, 2013

4.5%

% of EU tonne-km moved by HCV

The Scale of the Climate Change Challenge

11

Source: Clark, 2013

Bn to

nnes o

f C

O2 p

er

annum

Kg CO2

/ tonne

1. Separate delivery 43.8

2. Groupage 27.3

3. Collaborative synchronisation 20.3

Source: Jacobs et al 2014

Nestle-Pepsico Benelux collaboration

12

DHL Logistics Trend Radar

Need to integrate logistics service providers more effectively into HC schemes

Source: DHL, 2014

Extending the Scope and Objectives of Horizontal Collaboration

improving the utilisation of existing assets and services

joint planning of new facilities, systems and services

catalysing and leveraging future logistics innovations

Joint programmes for adaptation to regulations,

climate change etc.

Challenges

Orchestrating more complex, broadly-based collaborative networks

Complying with evolving competition law

Kühne Logistics University – the KLU Wissenschaftliche Hochschule für Logistik und Unternehmensführung Grosser Grasbrook 20457 Hamburg tel.: +49 40 328707-271 fax: +49 40 328707-109 e-mail: Alan.McKinnon@the-klu.org website: www.the-klu.org

Professor Alan McKinnon