European Supply Chain Challenges and Solutions

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1 The Supply Chain Leadership Forum 2011: Walt Disney World Resort, Lake Buena Vista, FL European Supply Chain Challenges and Solutions Susan Evans, Managing Director, Tompkins Associates & Jim Tompkins, CEO & President, Tompkins Associates

Session Scope This Session Will Focus On: Similarities between European and North American supply chains Common European supply chain challenges New and evolving issues Retail supply chain in Europe

2 Session Scope This Session Will Focus On: Similarities between European and North American supply chains Common European supply chain challenges New and evolving issues Retail supply chain in Europe Regional and global practices Online retailing Distribution requirements and service levels Summary Copyright 2011 Tompkins Supply Chain Consortium. All rights reserved. 2

3 Similarities European and North American Supply Chains Large free trade zone NAFTA (3 countries) and EU (27 countries) Reduction of country focused DCs to regional Acquisitions of smaller companies DHL, Carrefour and Wal-Mart, Anheuser-Busch InBev Increasing off-shore production Imports by sea containers to large gateway ports Multi-modal transportation Companies focusing on cost reduction Copyright 2011 Tompkins Supply Chain Consortium. All rights reserved. 3

4 Common Challenges European Supply Chain Benefits of the European Union 27 member states EU policies aim to ensure the free movement of people, goods, services, and capital A monetary union, the eurozone, was established in 1999 and is currently composed of 17 member states. Delays due to cross border transportation non-eu countries Complexity with multi-currency VAT Customs and duties Language barriers of drivers and local authorities and warehouse workers multi-lingual Different mindsets and attitudes due to multicultural population Copyright 2011 Tompkins Supply Chain Consortium. All rights reserved. 4

5 New and Evolving Issues Each country has it s own equivalent of the FDA for food and drug regulation In some countries, products must be sold to end customer within country More outsourcing to logistics partners Greater number of outsourcing partners Larger LSPs grow by acquisition, but culture, system and, SOPs are not quickly and easily integrated Economies vary greatly by country Stronger are Germany, Switzerland and Scandinavia Weaker are Greece, Italy, Portugal and Spain Available credit Copyright 2011 Tompkins Supply Chain Consortium. All rights reserved. 5

6 Retail Supply Chain in Europe Market Information High-street shops and boutiques are losing ground to mass retailers and Internet selling. Online retailing is biggest in the UK over all of Europe: Due to the influence of North America Due to the congestion on the road infrastructure Some retailers that sell online in some countries only make the catalog available for looking at products and store information in other countries. Websites need to be in the country s local language and currency. Some retailers online growth is in double digits. Home delivery in Europe is managed mostly with local partners by country. 80% of online purchases are in the UK, Germany and France. Copyright 2011 Tompkins Supply Chain Consortium. All rights reserved. 6

7 The Supply Chain Leadership Forum 2011: Walt Disney World Resort, Lake Buena Vista, FL Examples

Copyright 2011 Tompkins Supply Chain Consortium.

Illustrative Example: IKEA Copyright 2011 Tompkins Supply Chain

15 Retail Supply Chain in Europe Regional and Global Practices Wal-Mart / Toys R Us, others to fail going into Europe Large global retailers include Metro AG, Tesco, IKEA having successful mega stores and online direct When and how to sell direct versus via distributor network Other influencers on how people shop Generation Product, necessity or nice to have Electronics versus automobile Copyright 2011 Tompkins Supply Chain Consortium. All rights reserved. 15

16 Retail Supply Chain in Europe Key Decision Points Market Focus Start-up or Acquisition? Distribution Options Managed in-house, operate DC, own trucks, etc. Outsource: 100% Logistics Service Provider Service Levels 1 week Next day Customer service Returns White glove / 2 hand Copyright 2011 Tompkins Supply Chain Consortium. All rights reserved. 16

17 Summary Similarities exist between North America and European supply chains. Free trade zones, off-shore production and economies Complexity of European supply chains is greater with 27 EU member states and others outside of EU. Language, currency, tax and regulation add to this. Acquisitions, integration and consolidations across cultures create new challenges. European retail supply chains require different distribution strategies depending on country and culture. Copyright 2011 Tompkins Supply Chain Consortium. All rights reserved. 17

18 The Supply Chain Leadership Forum 2011: Walt Disney World Resort, Lake Buena Vista, FL Discussion