Transport Cost Optimization

Solutions and Ideas

Andrzej Michalak

Logistics Manager, Delphi

Delphi Confidential

Agenda

• Delphi Overview

• Transport Cost Optimisation

Strategies for transport

mode

Volume consolidation

Multimodal solution

3PL study

• Q&A session

2

Delphi Confidential

Committed to the Kind of Innovation that Will Keep Our Planet Green and Its Occupants Safer and More Connected

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MEGATRENDSMEGATRENDS

• People Megatrends Natural Growth

People Live Longer

Generations X & Y

Increased Concern about Safety, Security and Privacy

Health Care

8/5 > 12/6 > 24/7

• World Megatrends World Turmoil

Globalization

Higher Cost of Natural Resources

Increasing Environmental Awareness/ Regulations

• Technological Megatrends Information Explosion

Wireless World

• Safe Traffic congestion in major

metro areas around the world becomes worse; more accidents; longer commute; higher stress level

• Green Fast growing economies:

more fuel for mobile platforms

Demand for electrical energy and related conventional resources far exceeds current capabilities

• Connected Global demand for broadband

access will continue to grow

Delphi Confidential

Portfolio of Enhanced Safety Solutions

• Active Safety Systems Front, Rear and Side Detection

Radar and Vision Sensing

Sensor Fusion

• Driver State Alerts Fatigue/Drowsiness

Distraction

• Safety Electronics Airbag Control Units

Pressure, Acceleration, Combination, Rollover,

and Pedestrian Sensors

• Occupant Classification Systems Full and Infant-only Suppression

Seat Belt Reminder

• Battery Disconnects

• Battery Monitoring Device

• HMI (Human Machine Interface) Diagnostics

Control Modules and Units

Haptic Devices

4

Delphi Confidential

Portfolio of Green Solutions

• Fuel Economy and Performance Technologies Cylinder Deactivation System

Two-step Valve Train with Dual Independent

Cam Phasers

Brushless Fuel Pump Modules

• Reman ECM/PCM

• Universal Reflash Tool

• Alternative Fuel Systems/Components Fuel System for Dimethyl Ether

• Evaporative Emissions Canisters

• Diesel Fuel Injection Systems and After-

treatment

• Gasoline Direct Injection

• Next Generation Energy Efficient A/C

• HVAC Compressors

• HVAC Systems for Alternative Refrigerants

• Diagnostic Systems

• Electric HVAC Systems

• Hybrid and Electric Vehicle Technologies

• Power Conversion Products

• High Voltage Battery Pack System

• Ammonia, Planar Oxygen & Battery IVT

Sensors5

• Electronics Packaging

• Halogen-free Cable

• Aluminum Cable

• Miniaturization

• Navigation

• Ultra Light Radio

Delphi Confidential

Portfolio of Connectivity Solutions

• Connected Vehicle In-vehicle Communications and

Entertainment

3G/WiMax, WiFi, DSRC

• Vehicle Infrastructure Interface (VII) and

Vehicle-to-Vehicle Interface

• Satellite Audio, Video and Data Systems

• Digital Receivers

• Advanced Reception Systems

• Navigation Systems

• Portable Device Interfaces

• Wireless Connectivity

• Security Systems

• Aftermarket Telematics

• Data Connectivity - USB Consumer Port

• HMI (Human Machine Interface) Diagnostics

Control Modules and Units

Haptic Devices

Displays

• Commercial Aviation and Electronics

• High-density, High-speed Interconnects

• Controls6

Delphi Confidential

Examples of recently launched cars featuring Delphi technologies (new models at IAA Frankfurt Motor Show 2013)

BMW i3 BMW X5BMW 4 Series coupe BMW i8 Citroën Grand C4

Picasso

Mercedes-Benz

GLA-ClassOpel Insignia

faceliftFerrari 458 SpecialeMercedes-Benz

S Class Peugeot 308

SEAT León ST Volkswagen Golf RPeugeot RCZ RŠkoda

RapidSpaceback

Delphi Confidential

Agenda

• Delphi Overview

• Transport Cost Optimisation

Strategies for transport

mode

Volume consolidation

Multimodal solution

3PL study

• Q&A session

8

Delphi Confidential

Transport Cost Optimisation

• Mode optimisation Studies – analysis of available transport solutions

for transport from point A to point B

Transport mode selection

Volume consolidation

• Transit Time analysis – longer transit time reduces cost, but increases

inventories, reduces flexibility and reaction time for customer needs

• Small parcels usage – definition of criterias to select LTL / parcel /

courier shipment for different routes

• Empties return optimisation – including Round Trip combination for

better usage of empty trucks

• Procurement strategies – quality vs. price, usage of approved carriers,

number of transport companies to work with

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Delphi Confidential10

Transport Modes

Air Freight

Road Freight

Tran

sport

s’co

stCO

ST

TO

SH

IP

Transit Time

LTL

Urgent“DHL-type”

Express

FTL

Hand

Carry

+

+

_Milk

-run

Charter

Urgent

Taxi

_

Premium

Freight

Regular Freight

Domestic

Air Freight

Road Freight

Tran

sport

s’co

stCO

ST

TO

SH

IP

Transit Time

LTL

Urgent“DHL-type”

Express

FTL

Hand

Carry

+

+

_Milk

-run

Charter

Urgent

Taxi

_

Premium

Freight

Regular Freight

Domestic

Delphi Confidential11

Transport Modes

Air Freight

Co

st t

o S

hip

Transportation cost

+

+

CharterPremium

Freight Sea Freight

_

Hand

Carry

Flash /

Urgent

P1

P2

Regular

Freight

P3

_

FAK

FCLLCL

Freight of All

Kind (FAK)

FAK => Multiple

customers

Dedicated

Containers

Air Freight

Co

st t

o S

hip

Transportation cost

+

+

CharterPremium

Freight Sea Freight

_

Hand

Carry

Flash /

Urgent

P1P1

P2

Regular

Freight

P3

_

FAK

FCLLCL

Freight of All

Kind (FAK)

FAK => Multiple

customers

Dedicated

Containers

Transit Time

Delphi Confidential

Volume consolidation

Strategies dependent on several factors

• Number of pick-up locations

• Distance

• Number of plants sharing same suppliers

• Volume

Potential solutions

• Milk run

• Hub & Spoke

• Consolidation Center

• Direct deliveries (FTL, PTL)

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Delphi Confidential

Origin-Based Network concept

In the Origin-Based Network concept all of the destinations for each

origin are considered together, and the routes serving them are

efficiently identified and optimized.

1

3

When implemented,

concept is driving to

maximal utilization both

on the short and long

haul part of the

shipment journey.

France

UK

Spain

PortugalItaly

Turkey

Poland

Romania

Hungary

Slovakia

Delphi Confidential

Origin Based Network (OBN)

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NA

SA

AP

Delphi Confidential

Origin Based NetworkCentral European x-dock

Spain

France

Poland

RomaniaItaly

Transit Time reduced and significant

savings generated on Freight cost

Reduction

of CO2

emissions

Delphi Confidential

Import/Exports to/from Turkey by road

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Leamington

Barcelona

Bochum

FR

ES

GB

BE

DE

AT

IT SI HR

HU

RS

RO

BG

TR

Transit time 5-8 days depending on OD pair

3500 km

3800 km

Delphi Confidential

Risks associated with long haul road transport

Border delays

Traffic congestion Accidents

Severe weather

Delphi Confidential

Risks associated with long haul road transport

Border delays

Traffic congestion Accidents

Severe weather

PREMIUM FREIGHT

Delphi Confidential

Multimodal transport process using swap bodies

- Swap body process- Pick-up at origin

- Move from wheels to ferry

- Move from ferry to train

- Move from train to wheels

- Delivery at destination

- Current volume approx. 1000 shipments per year

Delphi Confidential

Import/Exports to/from Turkey using Multimodal

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Trieste Mannheim

Istanbul-Izmir Trieste

LeamingtonMannheim Genk /

Bochum to Manheim

Toulon

Barcelona Toulon to Istanbul-Izmir

Barcelona to Toulon

Bochum

FR

ES

GB

BE

DE

AT

IT

TR

TR to BE

BE to TR

DE to TR

ES to TR

TR to DE

TR to GB

GB to TR

Delphi Confidential21

In 2012 the impact of changing from road to multimodal

for all imports/exports to/from Turkey was a reduction

in kilometres driven of 80% and a reduction in CO2

emissions of 624 metric tonnes representing 49%

Environmental benefits of Multimodal transport

Delphi Confidential

3PL / 4PL

A third-party logistics provider (abbreviated 3PL, or sometimes TPL) is a

firm that provides a one stop shop service to its customers of outsourced

(or “third party”) logistics services for part, or all of their supply chain

management functions. Source: Wikipedia

The definition of Fourth-Party Logistics (4PL) is an integrator that

assembles the resources, capabilities and technology of its own

organisation and other organisations to design, build and run

comprehensive supply chain solutions. Source: Andersen Consulting

The economic advantages of using 3PL suppliers are:• Elimination of infrastructure investments

• Access to world-class processes, products, services or technologies

• Improved ability to react quickly to changes in business environments

• Risk sharing

• Better cash-flow

• Reduction of operating costs

• Exchange of fixed costs with variable costs

• Access to resources not available in one's own organization22

Delphi Confidential

3PL / 4PL

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Delphi Confidential

3PL / 4PL

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4PL services

Delphi Confidential

3PL / 4PL

5 reasons to use 3PL services

• Supply chain support in countries without direct presence

• Seasonability support

• Inventory management

• Advantage of lower transport rates

• Quickly build logistics network

5 reasons not to use 3PL services (source: survey of ARC advisory group) :

• Bad experience from the past

• Better rates than 3PL

• Special requirements that 3PL cannot meet

• Logistics is core competency of your company

• Other

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Delphi Confidential

Agenda

• Delphi Overview

• Transport Cost Optimisation

Strategies for transport

mode

Volume consolidation

Multimodal solution

3PL study

• Q&A session

26

Thank you