How to Save Money (and CO 2 ) through Horizontal Collaboration
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1 How to Save Money (and CO 2 ) through Horizontal Collaboration
2 World Economic Forum Supply Chain Study % of freight vehicles in the EU are running empty Average loading related to max. weight of the rest is 57% Overall efficiency: 43% Flow imbalance could only explain half of this loss How long can this inefficiency go on?
3 EU and CO³ Vision EU Transport Policy Vision (EC 2011): Reduce Europe's dependence on imported oil Cut carbon emissions in transport by 60% by 2050 Modal shift: 30% off road by % by 2050 Multi-modal: European corridor network (low carbon/green) CO³ Vision: Improve efficiency, effectiveness, sustainability simultaneously with horizontal collaboration and crosscompany flow bundling Consolidate and reduce freight flow Scale up for intermodal (rail/barge) Sustainability Supply Cross Chain Supply Chain Optimisation Supply Supply Chain Chain Supply Chain Effectiveness Efficiency
4 CO3 Vision Only horizontal collaboration and crosscompany flow bundling can simultaneously improve efficiency, effectiveness and sustainability Effectiveness Sustainability Supply Cross Chain Supply Chain Optimisation Supply Supply Chain Chain Supply Chain Efficiency
5 What s in a name? Traditional: vertical collaboration (SCM) Alternative: horizontal collaboration Vertical focus: Product 1 Product 2 Horizontal focus: Inventory control Just in time Push or pull ECR Customization Ordering policies Bullwhip effect Chain dominance Product design Integration Power Beer game Supplier Producer Retailer Shop Supplier Producer Retailer Shop Synergy Matchmaking Bundling Gain sharing Competitors Legal aspects Give and take Modal shift
6 Operational framework FUTURE? TODAY Source: Lambert et al. (1999) / Cruijssen CO³ INTENSITY OF COLLABORATION Making the supply chain sustainable with long-term contractual relations Increase the utilization of assets with secure volumes and contracts
7 Between September , the will actively Collaborative Concepts for Co-Modality (CO³) is a EU sponsored consortium to create a legal framework, a scientific body of knowledge, an educational package and a number of inspiring test implementations for horizontal collaboration and bundling in transport and logistics. The ultimate goal is to make the European logistics market more competitive and more sustainable.
8 CO3 Consortium 8
9 High Level Industry Board (HLIB) Philips HLIB Mission: Review and discuss CO³ milestones and results Provide valuable market feedback for development and success of CO³ project
10 More information ON OUR WEBSITE gid= &trk=hb_side_g Thank you!
11
12 A new role: Trustee The trustee is an essential new player to manage horizontal collaboration It has two roles Online: harmonious organization of daily collaboration processes Offline: Neutral external support to the collaborators Examples of online functions: Loads combination Prioritization Real-time synchronization Single contact person IT Interfaces Examples of offline functions: Matchmaking Create critical mass Stability and fairness Legal compliance Entry and exit Conflict resolution Data confidentiality 12
13 Roles and responsibilities
14 CO3 deliverables 1. Operational framework for Horizontal Collaboration 2. Legal framework for Horizontal Collaboration 3. Development of appropriate business models 4. Validation of framework with test projects 5. Mental shift!
15 Test Cases/ Call for Projects:
16 CO3 in practice As neutral matchmaker and trustee of CO3, TRI-VIZOR (supported by ITENE/Giventis) proactively identifies, prepares and operates horizontal partnerships and collaborative test communities. By bundling and synchronizing freight flows across multiple supply chains, CO3 will try to demonstrate significant gains in cost, customer service and sustainability. CO3 wants to set up test projects which are scalable and repeatable and disseminate the learnings.
17 World s First Cross Supply Chain Orchestrator Since November founders and shareholders Spin-off of the University of Antwerp Strategic Advisory Board with captains of industry
18 Track record so far 2009: 14 th Annual 3PL-study of Georgia Tech and Cap Gemini mentions TRI-VIZOR as pioneer in orchestration 2010: Winner of Air Chase Competition 2011: Winner of European Supply Chain Award for Innovation, Berlin 3 rd place 2011: The World s first orchestrated horizontal collaboration 2011: Winner of Belgian Sustainability Award 2012: 2 nd place
19 Operational example Baxter UCB orchestrated horizontal collaboration video:
20 Difference with groupage Synchronizing supply chains of multiple shippers Consolidation in geography and time Managing the consolidation from a shipper s perspective
21 Bundling vs. groupage Traditional Groupage Company Active Bundling Company 9 shipments Avg. fill rate: <57% Cost savings: <5% 5 shipments Avg. fill rate: 80%+ Cost savings: 10%+ More sustainable Service level?
22 Role of TRI-VIZOR as neutral trustee Data collection and matchmaking Adequate legal framework with multilateral contracts, anti-trust compliant Adequate toolset to set up, manage and expand communities Specialized mechanisms for impartial operation, full transparency and fair gain sharing Supporting services: LSP integration, freight payment, expansion opportunities, KPI reporting, Only 1 objective: maximize total community gains!
23 CO3 Methodology: 3 simple steps to create horizontal collaboration
24 CO3 Methodology Phase I. - Non Disclosure Agreement - Identify freight flows for bundling - Build a secure freight flow database - Intelligent mapping & matchmaking - Initiate contact - Together with shippers and LSPs
25 Secure freight flow database Contains already 100 companies (and growing) Ca transport lanes Which are open-minded for collaboration!
26 CO3 data template (under NDA)
27 Network quickscan
28 Smart matchmaking platform
29
30 CO3 Methodology - Per tradelane - Calculate synergy (business case) - Cost Carbon footprint Service level Phase II. - Legal framework Fair gain sharing Entry/Exit rules Selection of transport provider In collaborative spirit with LSP
31 Antitrust aspect = OK A) Cartel prohibition (Art. 101 EU), but is not prohibiting: cooperation between non-competitors; -> OK cooperation between competing companies that cannot independently carry out the project or activity covered by the cooperation - OK B) EU Guideline (2011/C 11/01) on Art. 101 EU horizontal co-operation agreements is not prohibiting Horizontal Collaboration, if using a trusted party (eg joint purchasing organisation ) Legal role of Trustee to comply with EU law: no direct information exchange between the parties trustee do not compete with the parties on the selling market, all information necessary for the purchases is only disclosed to the joint purchasing organisation, not to the other parties example: quality specifications, quantities, delivery dates, maximum purchase prices Horizontal co-operation agreement is not violating EC Competition law! Principle: no data exchange / Use a trustee to avoid anti-trust!
32 Multilateral legal framework Shipper 1 Shipper 2 Shipper N concrete carriage contract price / volume info Trustee invoice TSP 1 TSP N invoice info This is a totally new type of contractual relationship!
33 Fair gain sharing: Shapley value is always right IT S MY MONEY!!
34 CO3 Methodology Phase III. - Test project implementation: - Collaborative process - Multilateral contract - ICT planning cockpit - Evaluate results (after 6-12 months) - Disseminate learnings
35 Test cases (4 types) 1. Road bundling between 2 or more shippers 2. Intermodal bundling between >2 shippers 3. Collaborative retail distribution (last km) 4. Value Added Logistics clusters
36 JSP Hammerwerk Collaborative Road Bundling
37 Type 1 test case: Road bundling
38 JSP and Hammerwerk have overlapping Cheb Eschenau Fridingen
39 Co-loading tests successful: Net cost reduction -10% ; carbon
40 CO3 call to action Companies in the EU interested to explore and implement horizontal collaboration, e.g.: 1) Road transport bundling 2) Multimodal bundling 3) Retail distribution bundling 4) Value Added Freight villages Are invited to participate in CO3 test cases. The CO3 Team and methodology will help you to find bundling partners and implement test projects that are profitable, scalable and repeatable. Process, legal, ICT, support will be provided -> zero cost and risk. First come, first served!
41 Thank you QUESTIONS?
42 Summary: How to participate in a test case? 1. Sign NDA with CO3 Trustee 2. Collect high level trade lane data (EMEA) 3. Individual network visualization and review 4. Upload data in secure CO3 database 5. Intelligent matchmaking 6. Review bundling opportunities 7. Partner and scope selection 8. Go/No Go 9. Operational test case (6-12 months)
43 What s in it for shippers: significant cost and CO 2 reductions 100% open and transparent reporting Gain sharing allows big shippers to capitalize on their scale advantage, without losing their competitive edge. Smaller shippers can sell their flexibility.
44 What s in it for LSPs: long term stability and commitment It s is not a zero-sum game: synchronized logistics networks allow higher margins for everybody Collaborative communities are built on stable flow volumes and long-term multilateral commitment Big, frequent volumes (incl. backflows) enable higher asset utilization and rotation + modal shift Successful communities automatically attract more volume for the LSP ( snowball effect ) LSP becomes a strategic partner of the community Collaborative communities need LSPs who are reliable, innovative and profitable! Blue ocean market for early adopters
45 CO3 offers trainings and awareness sessions Free of charge (excl. travel cost) Three types 1 hour awareness Webex 2 hour meeting 1 day in-depth workshop Aimed at supply chain managers of shippers and LSPs
46 What s in a name? Peter Drucker: Cooperation, Coordination and Communication (1993) Vertical collaboration (1980- ): Between subsequent actors in the same supply chain Between suppliers, manufacturers and customers ECR, VMI, CPFR, SCOR Driven by ICT (extended enterprise) Horizontal collaboration ( ): Between companies in the same market Alliances, partnerships, clusters, network organizations Collaborate in some markets, compete in others (Gary Hamel, 1998) Michael Porter: Clusters and the New Economics of Competition (1998) -> Welcome to the age of co-opetition!
47 It s people business! People manage, improve and expand the community Community Manager maximizes the total community gains Efficiency: Min. Total Supply Chain Cost Effectiveness: Max. Service Level Sustainability: Min. Carbon Footprint Powered by the Cross Supply Chain Cockpit Collaborative and multimodal Transport Management Periodic Community Management Meetings
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