A Port Container Supply Chain Project

Mark DeaconMstr SCM

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Presentation Aim & Disclaimer

People often ask me as a supply chain practitioner,

“How, when working in a government corporation, can I apply contemporary supply

chain principles in order to improve the overall port supply chain, particularly when

the organisation itself is not directly responsible for the direct management of ships

or container movements?”

The answer is relatively simple,

The organisation needs to measure, identify with, and then understand how the

various stakeholders interact in order to identify constraint points. Once the

constraint points are known, various operational, marketing, financial revenue and

capital investment strategies can be developed in order to construct what I call

“The Balanced Port”.

The data I’ll present in this PowerPoint is of a fictitious nature false and no linkage

should be inferred between presented graphs or tables to any actual Port location or

stakeholder performance. However they do serve the purpose of illustrating the

benefits that constructing a Port S&OP model can be in order to garner discussions

with various stakeholders and the various disciplines within Port related businesses.

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Project Aim

1. Improve commodity forecast accuracy for imports and exports

2. Identify key commodity routes to and from a Port

3. Construct a “Port Planning Model” that takes existing but disjointed data and

aligns that data to provide a fully integrated tool that identifies;

i. Shipping requirements as a function of average TEU exchange

ii. Quay Crane minimum performance versus capacity

iii. Rail minimum performance versus capacity

iv. Road minimum performance versus capacity

v. Impact on Empty Container Park operations

vi. Potential revenue

4. Provide management with forward knowledge about potential future supply

chain issues.

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Understanding the Container Supply Chain

“Measurement is the first step that leads to control and eventually to

improvement.

If you can’t measure something, you can’t understand it.

If you can’t understand it, you can’t control it.

If you can’t control it, you can’t improve it.”

... H. James Harrington (1991)

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7 Stages

The cornerstone of the project I instigated and now managing is based on addressing the following

seven (7) key aspect;

1. Mapping out key strategic port supply chain stakeholders and their interactions,

2. Utilisation of CAD or GIS software mapping to illustrate primary Import and Export hot spots,

3. Generation of rolling Month & Yearly commodity forecasts based on past published data and

market intelligence,

4. Development of a strategic and tactical fully integrated supply chain constraint model,

5. Integration of the constraint model with a rolling financial forecast process,

6. Participation in Port Benchmarking exercises targeting supply chain initiatives as opposed to

discrete performance measures, and

7. Internal publication of a monthly Supply Chain Management “Dashboard” report to give a high

level view of the overall health of the complete port supply chain.

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Stage 1- Key Stakeholders

Understanding Stakeholders capabilities;

• Where are they located,

• What do they do,

• What goods do they produce,

• What stage in the product life cycle is being serviced,

• What key resources do they employ,

• What are the resources capabilities,

• Identify their capacity limits both physical & calendar, and

• Recognise potential capital investment areas

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Stage 2 - CAD or GIS mapping

Illustrating where the commodity is imported

to or exported from by region helps to ;

1. Provide data in an easy comprehendible

format

2. Assist in the development of supply

strategies that may influence modal

choice for moving product to and from

the port

3. Identify contestable markets by mode

4. Estimate transportation costs and

delivery times.

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Stage 3 - Rolling Commodity Forecasts

Forecasting at the highest level results in a

loss in detail, particularly seasonality impacts

which impacts on port manning and

equipment resourcing requirements

1 2 3 4 5 6

Commodity 1 15000 12000 9000 6000 3000 0

Commodity 2 16000 20000 24000 28000 32000 36000

Commodity 3 19000 19000 19000 19000 19000 19000

Total TEU's 50000 51000 52000 53000 54000 55000

0

10,000

20,000

30,000

40,000

50,000

60,000

TE

U's

Why inappropriate forecasting can hide the true story

•What if Commodity 1 had previously been moved by rail and what

impact does it have on a ports strategy of attaining a consistent

increase in rail modal share?

•What would be the effect on port road congestion if Commodity 2

was previously being transported in 40 foot containers via a single

truck movement and is now being transported in two 20 foot

containers via two individual truck movements?

Import

Full

2009/Jul 2011/Jan M+1 M+2 M+3

1 19 20 21 22

0411 0411 Wheat 27 104 54 56 57

0412 0412 Rice 492 324 378 376 374

0414 0414 Barley 0 0 - - -

Source Market Intelligence

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Stage 4 - Port Constraint Model Reports

Knowing actual performance by Stevedores versus

their individual constraint points at the quay-side

and landside provides a valuable insight into;

• Individual Stevedore performance,

• Forecasting trend issues by mode,

• Potential key constraints point or identification

of future constraints dates, and

• Empty Container Park requirements,

to name just a few.

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Stage 5 – Financial Impact

The aim is to link revenue data associated with overall TEU monthly

forecasts.

By rolling up example charges such;

• Navigation services

• Pilotage

• Container size

you can apply at a high level, an indicative financial revenue factor

Past

Future

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Stage 6 & 7 – Benchmarking and Reports

Stage 6 – Develop Port Benchmarking exercises targeting supply chain initiatives with other ports;

• Are S&OP processes in place

• Do regular meetings occur with key commodity stakeholders

• Are vessel size impacts taken up in future strategies

• Is a landside improvement strategy in place

• What frequency do you meet with key logistics organisations

Stage 7 -Publication of a monthly “Dashboard” Supply Chain Management report.

Purpose is to develop a simple but meaningful “traffic light” report that provides a high level

indicative “health measure” of the overall Port supply chain;

For example:

• Commodity forecast accuracy by %

• % of Commodity modal routes mapped

• Modal splits by % versus target

• Operational levels versus capacity for quay side, rail & road

• Other

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Desired Outcome

Supply savvy organisations understand the “value-add” an efficient supply chain will

bring to an organisation.

As outlined in this presentation there are significant benefits to government port

organisations applying contemporary supply principles that provide significantly

improved task visibility towards understanding stakeholder interactions and port modal

capacities.

Thank you