Ocean Freight Sourcing Navigating The Current Storms
Brian Selby
23 May 2012
Elemica – China Sourcing Expertise
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• Providing Sourcing Services in China since 2002 to Top 100 Global Manufacturing Companies
• Dedicated Sourcing Teams in Shanghai, Singapore, Seoul and Tokyo…integrated with other regional teams (NA & EU)
• Executed 600+ e-Sourcing projects in China, with a total value of over US$550M
• 600+ registered suppliers in China
• Sourcing categories include DM, IM, Services, Marketing, Engineering
Global Ocean Carrier Market
“In 2011 container lines are estimated by Drewry to have
collectively lost $5.2 billion…” – Dr. Lian Ping, Chief Economist
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• Tactical or Strategic Opportunity For Shippers?
• How 70% of Shippers Approach The Situation*
– Running a Bid to get a better rate…may be Web enabled – No relationship, No lane/cargo optimization…It’s all about Price
• How “Best In Class” Companies Do It
– Strategic supplier/partner relationship focus – Easy to implement/optimize bids…e-Sourcing platform (enhanced) – Process is Fair & Transparent to suppliers
* Accenture Survey 2011
Ocean Freight is Critical To YOUR Business
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Customers Suppliers
Ocean Carriers
Parts of Ocean Freight Sourcing are primarily about collecting,
analyzing and controlling internal information and
processes
But much involves understanding the interaction
between your customers, suppliers and ocean carriers. All this interaction requires shared
information and processes
Common information and integrated processes lead to
the most efficient, cost effective, high performing
supply chain
Your Company
Logistics, Manufacturing,
Accounting
Tips & Best Practices – Novice
Tips for Novice
• Data, Data, Data
• Internal Alignment
• Small Steps
• Long Term Focus
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Tips & Best Practices – Active
Tips for Active
• Data, Data, Data
• Basic Scenario Planning
• Go Global, Think Local
• Internal Change Management
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Tips & Best Practices – Strategic
Tips for Strategic
• Data, Data, Data
• Advanced Scenario Planning
• Balance Contract vs. Spot
• Collaboration
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Best Practice - China Ocean Freight
Inbound Ocean Project (March `12):
• 7 lanes in Asia to deliver to Shanghai and Dalian ports
• Provided estimated quantity of next 6 months
• Invited 4 incumbents to participate…no “rabbits”
• Used e-action tool (ease of access) and straight forward bid structure
(1 round pre-bid and 2 rounds sealed auctions with rank)
• Carrier’s pre-bid became their starting price during the bidding.
• Due to limited lanes, Carriers need to quote all lanes…no “cherry
picking”
• Savings is 15% (Lowest vs. Average Initial)
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Best Practice – Global Ocean Freight
Global Ocean Project (April `12):
• Global project management/execution moved from NA to China
• 2,000 lanes, 20+ ocean carriers (all pre-qualified), $180MM in annual
spend
• Required real-time optimization for carrier bids with weighting for
price, transit times and other non-price factors.
• Multi-rounds of bidding took place over the span of 3 months with final
face-to-face negotiations focused only on specific lanes or carrier
issues.
• Carriers could quote as many lanes as they felt they could handle…focus
was balancing between price and service quality
• Savings is 10% (vs. `11) 9
Upgrade To A Strategic Approach
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Elemica Vision
To be the leading provider of supply chain integration and optimization services to the industries we serve; tire and rubber, chemical, energy and selected manufacturing industries.
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Established in 2000 by the Chemical and Tire & Rubber Industries
More than 40 of top 50 chemical companies and 10 of top 15 tire & rubber companies transact through Elemica
Who Uses Elemica?
Supply Chain Solutions For:
• Procurement Procure better materials faster with lower costs
• Customer Service and Sales Overcome sales costs increases, margin pressure and customer
acquisition challenges
• Logistics and Transportation Eliminate shipping disruptions and reduce costs
• Finance Capture discounts and better allocate capital
Ocean Freight Sourcing Navigating The Current Storms
Brian Selby
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