Cu$ng costs out of the supply chain: what works and what doesn't?

Transcription

1 Cu$ng costs out of the supply chain: what works and what doesn't? Charlie Wellins Senior Vice President, Supply Chain Solu7ons, CEVA Logis7cs October Trans- Pacific Mari7me Asia Conference Shenzhen, China

2 Driving out cost: What we see in the market in 2012 Customers focusing on driving more value and cost savings through 3&4PL Partnerships, rather than only looking at transac7onal freight forwarding costs More interest in End to End Visibility - having access to end to end informa7on/kpis and incen7vizing con7nuous cost improvement Outsourcing decision of op7mal transport mode based on required IN- DC date - planning effec7vely to enable balancing of service vs cost A shiw to Increasing rahos of oceanfreight from clients with a historic reliance on airfreight (e.g. tech) Cost down origin solu7ons : Milkruns, FCA conversion, ConsolidaHons OpHmizing Packaging to reduce cost/waste and support green ini7a7ves ShiW toward Global DC s in Asia 2 Cutting costs out of the supply chain: what works and what doesn't?

3 ShiPing to a Global DC in Asia Building DCs and MCC hubs in Asia to bypass more expensive des7na7on DCs while also being able to serve growing local markets Before High transporta7on costs Longer lead 7mes Distribu7on network under- servicing major markets, i.e. West Coast USA APer More flexible supply chain Improved service levels Ability to also serve local markets 3 Cutting costs out of the supply chain: what works and what doesn't?

4 The Values of End to End Supply Chain Management Understand what is valued as a customer. Improve Customer Service Managing on 7me release by supplier Electronic integra7on with service providers Timely and accurate status updates Visibility to order, part and shipment statuses Visibility to in- transit inventory SMART End to End Reliability Predictability Visibility Lower Total Cost Supply chain management through shared service infrastructure Accurate shipment rou7ng via op7mal cost mode Consolida7on of mul7ple shipments to same origin / des7na7on Reliability and predictability of supply chain performance Ability to plan against in transit inventory Reduce Working Capital Lower supply chain inventory levels Inventory carrying cost reduc7on Reliability of supply chain performance 4 Cutting costs out of the supply chain what works and what doesn't?

5 Best PracHces and Value Drivers Service Element Best PracHce Improve Customer Service Lower Total Cost Reduce Working Capital Manage Suppliers Direct InterconHnental Supply Chain Flows Provide Visibility Deploy Technology Order receipt, valida7on & op7miza7on ü ü Open order repor7ng to supplier & proac7ve follow- up ü ü ü Supplier compliance to process and excep7on resolu7on ü ü Op7mizing transport mode, rou7ng & carrier procurement ü ü Load planning & container cube op7miza7on ü ü Document valida7on & origin ISF processing ü ü Monitor excep7ons and proac7vely manage disrup7ons ü ü ü Validate supplier ASN to commercial documents ü ü Status collec7on from carriers & milestone follow- up ü ü ü Automated distribu7on of repor7ng views ü ü Connec7vity with customer enterprise applica7ons ü ü ü Automated ISF processing and interface with Broker/USCPB ü ü ü Provide connec7vity with supply chain trading partners ü ü 5 Cutting costs out of the supply chain - what works and what doesn't?

6 6 Cutting costs out of the supply chain: what works and what doesn't?

7 From Air to Ocean TPM Asia 2012 Alfred Hofmann Go clean go Green Containershipping : the most energy efficient way of transporting goods TPM Asia /10/12 p. 7

8 Agenda Key event influencing change Cost of airfreight versus seafreight Industries at forefront of the trend Challenges to the supply chain Solutions and Result TPM Asia /10/12 p. 8

9 From Air to Ocean Key event influencing change Collapse of Lehman Brothers and the economic crisis Consumer demand at lowest level Airfreight was a no in most companies and only used in emergencies Re-examing the supply chain Re-stocking of 2010 did not change the long term fundamentals TPM Asia /10/12 p. 9

10 Growth in Global Air Travel (RPK) and Air Freight (FTK) TPM Asia /10/12 p. 10

11 World Container Traffic Millions TEU % Growth TPM Asia /10/12 p. 11

12 From Air to Ocean Cost of airfreight versus seafreight 1x40 with 10tons from SHA/LAX US$ 2,600 US$ 46,000 1x40 with 10 tons from SHA/HAM US$ 2,200 US$ 33,500 TPM Asia /10/12 p. 12

13 From Air to Ocean Industries at forefront of the trend Pharmaceutical Industry Extremely high value cargo Temperature controlled products which could be converted Natural choice Reefer Containers Hi-Tech Industy Seriously started to convert notebooks 3 years ago Industry aim is to convert over 50% of notebook shipments to ocean Tablets go ocean after first wave of consumer demand has been satisfied TPM Asia /10/12 p. 13

14 From Air to Ocean Challenges to the supply chain Notoriously bad in forcasting of volumes Cancellation of bookings versus actually shipped challenged promise to deliver to customers on time Inadaquate communication between planers, ODM s and logistics departments Insufficient visibility to manage flow of cargo Re-examine security issues while cargo is in transit TPM Asia /10/12 p. 14

15 From Air to Ocean Solution and Result Ensure collaboration of all participants in the supply chain Planers, ODM s, Logistics Management, 3PL, Truckers, Carriers, Rail and Barge Operators Provide excellent visibility Reduce risk of unwanted surprises Establish clear handling and security procedures Move to E2E with 3PL s managing process(control Tower) Reliable transit times Reduction in overall leadtime Assurance in the supply chain and availability of products in time Cost reduction through better inventory control and increased cash flow TPM Asia /10/12 p. 15

16 Thank you 24/10/12 p. 16

17 Shortening the Supply Chain SEKO Logis7cs

18 Intelligence Delivered Ian Richardson Director/Partner of SEKO Logis7cs (HK) Limited " Ian Richardson has been a resident of Asia for 20 years. Ian has adapted to the Chinese culture, Lifestyles and ways of business, building up an extensive Asian Network during this time. " Ian boasts over 30 years experience within the logistics industry. " With Ian s knowledge and professionalism he was appointed to Managing Director and Partner of SEKO Synergy Hong Kong in Recently the company started its structural expansion and changed its name to SEKO Logistics (HK) Limited. " Ian has worked with various Fortune 500 companies such as IKEA, Costco and Wal-Mart, and more latterly with fast-growing SME brands, all eager to expand their businesses in China and Asia. Ian enjoys building the business and encouraging his team of enthusiastic young professionals to greater success SEKO Logis7cs

19 Intelligence Delivered Demanding condi7ons " Economies slowing or stuck " Clients need speed to market & lower costs " Consumers spending less & want goods faster " Supply Chain under pressure to deliver smarter solu7ons Give me choices of the same or be0er service at lower overall cost SEKO Logis7cs

20 Intelligence Delivered Demands innova7on " Client needs faster 7me to market than tradi7onal ocean freight " New choice of Sea/Air via Vancouver from Shanghai " The chance to save up to 3 days against tradi7onal Sea/Air route SEKO Logis7cs

21 Intelligence Delivered Thinking differently " Logis7cs hubs in Hong Kong to speed Bri7sh fashion brands to market in Asia " Old route of Asia to UK then back again " Customer has dedicated distribu7on, total control and full visibility " Customised to suit short supply chain to store; swing tags " Powered by robust, nimble and responsive cloud- based technology systems SEKO Logis7cs

22 Intelligence Delivered Responding to demands " Maintain or improve 7me to market " Reduce costs " Give us choices and control " Collaborate to overcome challenges Think like a customer to deliver smart solu9ons across the supply chain SEKO Logis7cs

23 Any ques7ons please? SEKO Logis7cs