collaboration make it happen logicon 2012

Ingo Brauckmann

Collaboration – make it happen Logicon, Amsterdam, 8 February 2012

DHL | Page Collaboration – make it happen! 2

Purpose of Today

• To show living examples of collaborations • To foster the dialogue around collaboration • To challenge your individual collaboration capabilities

DHL | Page Collaboration – make it happen! 3 3 3

Introduction to collaboration 1

Examples 2

Way Forward 3

Agenda


Collaboration – A simple definition

Collaboration is working together to achieve a goal. (Source: Wikipedia, Jan 2012)


What drives us to collaborate in Business?

• Synergies • Less CO2

Sustainability

• Synergies • Less costs

Cost efficiency

• Higher product availability • New distribution channels?

Better business

Collaboration is working together to achieve a goal. (Source: Wikipedia, Jan 2012)


Collaborative Logistics – Key Idea and Benefits

Traditional consumer supply chain Various inventory points

Collaborative consumer supply chain One single inventory point along end-to-end supply chain

Separate manufacturer warehouses

Retailer DC’s

Combined manufacturer warehouses

Cross- docking platform

Key benefits

• Lower logistics costs

• Less inventories

• Less obsolescence

• Better service

• Less CO2 emissions


Benefits of Collaboration Models have been widely communicated



Examples 2

Way Forward 3

Agenda


Collaborative Logistics – Two Major Types are of High Interest

• Collaboration is triggered by retailer (vertical collaboration)

• Typically rather large number of small manufacturers

• DHL example: 3C platforms France (initiated by Carrefour)

Main types of collaboration

Retail-driven

• Collaboration is triggered by a group of consumer goods manufacturers (horizontal collaboration)

• Typically 3-10 large manufacturers • DHL example: Tradeteam (drinks

industry platform UK)

Manufacturer-driven 1

2


Example 1


• Typically 3-10 large manufacturers • DHL example: Tradeteam (drinks

industry platform UK)





Manufacturer-driven

Retail-driven 2

1


Example 1 – Tradeteam in UK



Background: How Tradeteam was Born…

• Government ruling to divest in pub infrastructure

• Own distribution network with strong investment need

• Own supply chain set up not seen as competitive (capacity utilization, service and factor costs)

• Multi customer 3rd party supplier • Rationalized network with NDC • Employee Relations agenda • Culture of Service Excellence • An award winning business…..

Situation for Bass Brewers (today Molson Coors) around 1995

Key decisions taken by Bass Brewers in 1995


Decision to form a Joint Venture (JV) to keep control and still be able to attract

other parties to create synergies


Tradeteam is a joint venture founded in 1995: 50.1% owned by Deutsche Post DHL and 49.9% owned by Molson Coors

About Tradeteam

Tradeteam Senior Leadership Team

Joint Venture Board

DHL Supply Chain UK and Ireland



Tradeteam has Transformed

• In-house became 3rd party

• One customer

• Under utilized network

• Start of huge change programme

• Challenging Industrial Relations agenda

• Service Issues

• Multi customer 3rd party supplier

• Rationalized network with NDC

• Employee Relations agenda

• Culture of Service Excellence

• An award winning business…..

From 1995… …to today



Tradeteam’s Customer Portfolio has developed over the past years including Brewers, Wholesalers and Pubco’s

1995 2002 2007 2008 2010 2011



• One National DC (Stretton), 7 RDC’s and 19 Depots

• Turnover of GBP 155m per annum, 500 vehicles and 2,000 people

• Delivers direct to more than 25,000 pubs

• Delivers 1600 loads into retailers each week

• Picks more than 45 million items every year with a 99.88% accuracy

• Delivers over 4 million wines and spirits cases every year from over 3,500 SKUs

Tradeteam Overview 2012

Stretton

Enfield

Tinsley

Knowsley

Hams Hall

Gloucester

Glasgow

Culcavy

Aberdeen

Dundee

Penrith

Hebburn

Tadcaster

Grimsby

Wolverhampton Norwich

St Ives

Salfords Totton

Aberystwyth Ebbw Vale

Exeter

Newquay

Swansea

Narbeth

Crayford Reading

Depot

RDC

NDC



Tradeteam has Diversified its Service Offer beyond Core Primary and Secondary Distribution

• DHL Gori • Supplier

Management • Consolidation • Duty

Management

• EDI • Telesales • Order Capture • Promotional

Activity

• Retail and Wholesale DC loads

• Bulk liquid and grain movements

• NDC management

• Repacking

• Network WMS • Order picking • Stock rotation • Time window

delivery • Cellar

management

• Query resolution • First contact

service • Delivery updates • Customer

operation link • Proactive

customer surveying

• Empties management

• Container sortation

• Stock and trade ullage management

• Brewery repatriation

• Destruction

• Service levels • Customer

surveying • Query resolution

performance • Mood reporting • Outlet reporting

Order Capture Primary Distribution

Customer Service

Information & Reporting

Reverse Logistics Import Secondary

Distribution

Serv

ices

En

able

rs SYSTEMS & SUPPORT: Forecasting / Order Management / WMS / TMS / Customer Service

PEOPLE: Management development / H&S training / Employee engagement / People Awards

CUSTOMER FOCUS: Dedicated account management / Service Excellence / Customer Surveys

CHANGE MANAGEMENT: DePICT Project Process / Experienced Project Managers

• Inbound logistics management

• Demand forecasting

• Stock optimization

• Supplier consolidation

Forecasting & Replenishment



Key Benefits

• High service level with reduced stock (no multiple SKU)

• Competitive transport costs due to high synergies in network

• Supports the green agenda

• Platform has capacity to further expand

Key benefits to the Tradeteam partners



Example 2


• Typically 3-10 large manufacturers • DHL example: Tradeteam (wine and

spirits platform UK)





Manufacturer-driven

Retail-driven

1

2


Retail-driven 2

Example 2 – Retail Consolidation Platform in France

Image © Carrefour


Retail-driven Collaboration – Carrefour in France

Consolidation of small and medium size suppliers

in Collaborative Consolidation Centres

(“3C”)

Clear retail target to:

• Increase service level (product availability)

• Decrease stocks (working capital)

• Decrease complexity at loading ramps

• Further optimize logistics costs

• Deliver green benefits

The starting point The solution approach

Retail-driven 2

Image © Carrefour

START HERE


Industry Regional DC’s Retail Outlets Consolidation &

Collaboration Center

Full trucks

Full trucks

Full trucks

Load Optimization

Full trucks

Business Case Carrefour 3C: Physical Flows

Retail-driven 2


Retail-driven Collaboration – Example 3C Platform in Lomme (France)

Who does what?

• Deliver to Lomme at own cost from factories

• Hold stock at own charge in Lomme

• Issue invoice after products leave Lomme

• Secure product availability in Lomme

• Exchange via EDI or manually data for order preparation, inbound and outbound with DHL

Manufacturers

• Signs contract with manufacturers (equal terms and conditions)

• Secures all logistics operations from reception, put to stock, order preparation through transport and co-packing

• Provides set of KPIs to manufacturer to monitor operational efficiency

DHL

• Places orders with manufacturer

• Takes merchandise ownership when leaving Lomme

• Synchronizes manufacturers' orders to optimize inbound transport

• Takes charge of the transport from Lomme to the Carrefour platforms

Carrefour

Retail-driven 2


Benefits

Before

After

Manufacturers

Retail-driven 2

Key benefits • Transport costs: Up

to 40% less cost per pallet

• Stock holding costs: Up to 20% saving potential

• Transport distances: 25% less km

• CO2: At least 25% less CO2 emissions

• Transport lead times: Up to 40% improvement



Examples 2

Way Forward 3

Agenda


Manufacturer-driven Collaboration – General Value Proposition for 3 PL

• Neutral and trusted third party/convener facilitating relations between multiple – possibly competing – manufacturers (avoiding antitrust issues)

• Helping manufacturers pre-empt greater pressure from retailers to enter vertical collaboration

• Offering scale, pooling, and standardization benefits to manufacturers (especially those who usually cannot fill trucks by themselves)

• Offering efficiency gains through deep expertise in warehouse management and value-added services


Retail-driven Collaboration – General Value Proposition for 3 PL

• Neutral third party facilitating customer/supplier relation

• Single point of contact for the retailer – more easy to hold DSC accountable than managing multiple small suppliers

• Offering scale, pooling and standardization benefits to small suppliers

• Offering efficiency gains through deep expertise in warehouse management


Collaborative Logistics – Cornerstones of Potential 3 PL Offering

• Basic services: full operation of platforms (transport, warehousing) including quality assurance

• Optional elements

– Value-adding services – e.g., customer service, OTC management, VMI – Equity company to facilitate gain sharing between collaboration partners

• Potential specialization – Focus on certain product categories – Focus on manufacturers with seasonal complementary demand patterns – Focus on fast movers – Focus on promotion items – Focus on multichannel deliveries

Services


Collaborative Logistics – Who to Focus on?

Participants

• Focus on existing customer base (both for Consumer and Retail) • Potential participants on consumer side: all consumer goods firms, with

potential focus on: – Those suffering from high storage costs in own DC’s

(e.g., high-volume products like detergents) – Those who have difficulties of distribution with full truck loads

(e.g., high-value-density products like chewing gum) – Timelines of tendering processes need to be roughly in line


Conclusion

• The need is there! • The know-how is there! • It’s up to us to make it happen!


Thank You!

To discuss this further please contact: Ingo Brauckmann Head of Business Development Consumer EMEA DHL Supply Chain Mobile: +49 40 7345 9401 [email protected]

©2012 DHL Supply Chain All rights reserved throughout the world. Trademarks or registered trademarks are property of their respective owners. While every precaution has been taken to ensure accuracy and completeness in this literature, DHL Supply Chain assumes no responsibility, and disclaims all liability for damages resulting from use of this information or for any errors or omissions.

collaboration make it happen logicon 2012

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