Student union of Logistics (SuLo) Study trip to. Panama City, Panama

Transcription

1 Student union of Logistics (SuLo) Study trip to Panama City, Panama Cand. merc. Logistics & Supply Chain Management Aarhus University, Business and Social Sciences 10 th 23 rd of April 2017

2 Introduction: This year s study trip led SuLo students to Panama City in Panama. As logistics students we were very keen to travel to country which is one of the biggest logistics hubs in the world. Panama as a country is developing quite fast, majorly thanks to the Panama Canal. Location of the canal makes the country unique and brings international investors as there are many business opportunities other Latin American countries are lacking. Panama Canal attracts many companies that use the passage as a fast, tough expensive route to ship their goods. Moreover, due to its specific position many companies use Panamanian central location to repackage some of their shipping containers and relocate them to go to different destinations. This leads to shorter passage and lead times for many of the goods. We learned many of those things by visiting different companies and talking to experts in their fields. Furthermore many students got a new, interesting perspective on Central American countries and their work culture and environment. We heard about the challenges many companies face, opportunities and decisions they must make in order to succeed in their field. Very exciting experience for everybody was visit to Miraflores Visitor Center that we had during this trip. We had a unique opportunity to observe the cargo ships passing through the canal and learned about the technology and engineering behind it.

3 Philips Personal Health company visit April 11 th 2017 Philips is found in 1891 by Frederik and Gerard Philips (father and son) in Eindhoven, the Netherlands as a company producing lamps and other electrical products. Within few year after its foundation, the company became leading producer of light bulbs. With time, they continued their way towards Innovation and in 21 st century their main focus is on health and well-being. With this brief introduction, Laura van Humbeeck, Supply Chain Director LATAM Personal Health, started her presentation. She has been with the company since 2014 starting as a Supply Chain Manager South Latam Personal Health in Argentina and in November 2016 she got promoted to her current position and relocated to Panama City. Philip s main focus is on enabling better healthcare and better care at lower cost. We leverage advanced technology and deep clinical and consumer insights, delivering integrated solutions to improve people s health and enable better outcomes across the health continuum, said Laura. They want to support end consumers throughout their lifetime and prevent hospital visits, by improving their quality of life. Especially in the LATAM region this is a huge issue that calls for action. In her presentation, Laura introduced the products included in their different divisions related to Personal Health: Health Systems - Diagnostic imaging, IGT, Ultrasounds, HISS, ets. Personal Health - Health and Wellness, Personal Care, Domestic Appliances, Coffee, Sleep and Respiratory Care. The diverse markets within the region make it challenging to forecast demands for different products and therefore there is need for individual Supply Chain structures. The company has leading positions in the Personal Health market in Panama, Argentina, and Chile. Unfortunately, big markets like Mexico, Brazil and Uruguay need more attention and better growing strategies. Furthermore, Laura introduced Philip s Demand planning process as well as their Supply Chain core processes and introduced their Inventory Management policy. We learned about DFS (days of future sales) that Philips uses to help them look through past historical transactions and construct better forecast for the future. We found out that Philips is currently very concerned about setting goals and what their market share ambition should be within different branches of products. They do not use SKU for tracking sales of single items as that bears too much micromanagement but use branches for groups of items. After the great presentation and even better Q&A session, we had the chance to have a look around the office. Philips Panama is announced the most innovative Philips hub in the world for 2016 and it has been one of the first places where WIP (work place innovation) has been implemented successfully. The hub does not have offices but common areas with no personal desks - everyone can sit in a different place every day and interact with different people. There is a big flexibility in the working hours as long as the work is done within time and with good quality.

4 Panama Ports Company (PPC) 12 th of April As a port operator at one of the most important canals located in the heart of the Americas, the Panama Ports Company (PPC) is a very interesting company from a logistics point of view. PPC was founded in 1997 and has its headquarters in Panama City. As a subsidiary of Hutchison Port Holdings Limited it operates the ports of Balboa on the the Pacific site next to Panama City and the port of Cristobal, which is located on the Atlantic side of the Panama Canal. The facilities on both sides serve as one-stop shops for trans-shipments and logistics service both for inbound and outbound trade. They operate 24 hours per day, 365 days per year and have currently approximately 4000 employees, almost all of them Panamanians. There are several reasons why Panama was the number one choice of the company to settle their business. It has a strategic geographic location, in the heart of the Americas next to the Canal, it is the leader in transshipments in Latin America with logistics parks present and has an efficient ground connectivity to railroad and truck transport. Also, all the main shipping lines are present in Panama City. The ports of PPC are equipped to manage containers, general cargo, loose cargo/piece goods, RORO, and passenger ships. Balboa Port is the number one transshipment terminal in Latin America with an annual capacity of 4 million TEU. The geographical location of Balboa Port has been a key factor in rendering it the number one transshipping terminal in Latin America today. Balboa operates from the Pacific, attending multiple vessel lines for their shipping, unshipping, and transshipment activities. As the side of the Panama Canal at which the ships unload depends on whether its cargo is distributed on the Atlantic or the Pacific coast, there is no competition between the two sides. Thus, PPC's only competitor on the Pacific side of the Canal is PSA which we also visited. Some facts and figures of Balboa Port: 47 hectares of storage areas 1,710 m. of Dock for Containers 5 berth positions for Panamax and Post Panamax vessels 25 quay cranes, of which 7 are Super Post Panamax with a reach of 22 rows of containers, 10 Post Panamax with a reach of 19 rows of containers, and 8 Panamax with a reach of 13 rows of containers. 83 RTGs (electric and hybrid) 15.7m. (Dock 16/17/18) maximum draft Annual capacity of 4-5 millions TEUs Logistics connectivity with the Atlantic by train and truck, allowing for connection to the Atlantic from ship to ship in 4hrs.

5 PSA Company Visit April 12 th 2017 During our visit at PSA Panama we visited their head quarter at the Pacific end of the Panama Canal. The visited started out with a 30-minute presentation from one of the employees working with international relations. The whole presentation started with a video showing the history of PSA. She explained the operations in PSA Panama and that their harbor covered an area of 40 hectares. PSA Panama has operated since 2008, and they are a subsidiary of the PSA International, one of the worldwide leading port group. PSA International is a company with employees, 2100 cranes and during 2016 they moved 68 million TEUs (Twenty-foot equivalent units). In the video a lot of attention were set on the harbor in Shanghai (since this is their biggest operation) and she spend a lot of time comparing the two harbors. At the location, they had three berths, a dock length of 340 meters, 3 gantry cranes and a capacity of 0.5 million TEU s. As a supplement to their currently operations, she told about the new expansion, which they started in This was started as a result of the recent expansion of the Panama Canal and the increased need for berth and services capacity. The expansion contributes with additional dock length of 800 meters, 8 gantry cranes and a capacity of 1.5 million TEU s. The expansion was scheduled to be finish later this year and is estimated to generate 400 additional jobs for the operation of the expanded terminal. After the presentation, we were invited to the harbor to see how it all worked.

6 Unfortunately, the harbor was rather empty and we only saw a few quay cranes and rubber tier cranes operating. We spend approximately 30 minutes at the dock where we saw different locations. We were transported in a little bus where we went to see the rubber tier cranes and saw some of them operating. Company visit at Elyzian April 18 th, 2017 The first company visit we had on Tuesday 23rd of April, was at Elyzian which is a consultancy company, that currently consist of 4 employees. The company was founded by Herman Hansen and Sérgio Oliveira in January We were welcomed by Herman Hanssen and one of his co-workers. Herman Hanssen was the main speaker at the presentation and he introduced the company and himself. Before Herman Hanssen cofounded the company, he had earned business experience in many executive positions, e.g. CFO in Phillips Latin America. During his work at Philips, he has built high performance teams and implemented LEAN cultures in different areas of Phillips. For a period of time he worked for Phillips in Brazil, where he met Sérgio Oliveira. Together they recognized that there where many possibilities to improve companies in Latin America and therefore they established Elyzian together. The idea of the Elyzian, is to help companies elevate business performance. This is done by operational excellence and having best-in-class customer experience. Together with their clients Elyzian create a deep understanding of the company s value stream and learn the customers how to handle the issues that may occur. This way they create a daily habits of improvements and the customer get grip of their business. The main idea of Elyzian, is to learn their clients to solve problems by them self rather than solving the problems for them. This way the clients will be able to solve problems on their own and win more often. Herman Hanssen mentioned going gemba as an example for identifying and solving problems. For each consultancy Elyzian makes, they start with gemba walk to see what is going on in the operational processes. Moreover, they encourage the leaders in the company to go gemba more often. By combining the initiatives mentioned above it can help make the company able to elevate the business performance.

7 The reason why Elyzian started in Panama, is because it is an emerging market and moreover it is surrounded by such markets. Even though the emerging markets have some cons like, corruption, lacking infrastructure and great risk, Herman Hansen explained that these markets are a great opportunity for a company like Elyzian. This is because the growth in these markets are high and therefore many companies face new challenges, that they do not know how to handle. Furthermore, the waste and operational ineffectiveness is high in these markets. The company visit gave us an insight in the challenges and possibilities companies are facing in markets like Panama. Herman Hanssen was very inspirational and explained his thought by giving many specific examples of how he and Elyzian has done improvements in businesses.

8 Caterpillar company visit: April 19 th 2017 Since founded, Caterpillar has been helping customers build the world's infrastructure projects as well as homes, businesses and communities worldwide. Below we have made a short recap of the timeline of Caterpillar: : Benjamin Holt (Holt manufacturing company) successfully designed and testet the first steampowered track-type tractor in The Bucyrus Company supplied 77 of the 102 steam shovels purchased during the construction of the Panama Canal. 1925: Caterpillar Tractor co. was formed in 1925 through merger of the Holt Manufacturing Company and the C. L. Best tractor Co : Caterpillars equipment participated in various larger projects including: Track surfaces in a copper mine in Antofagasta, Chile The Guri DAm/Raul Leoni Dam Yacyreta dam between paraquay and Argentina now: Contractors used over 400 CAT machines on t just the first two phases of the six-phase Panama canal expansion project. Panama Demonstration and Learning center

9 Caterpillar demonstration and learning center provide their distributors the opportunity to see new products, services and solutions in action while it allows caterpillar to listen for inputs. Furthermore it s developed to deliver an educational and safe experience. the center is located in beautiful locations raising like an architectural pearl in the mountains and jungle surrounding it. The center is clearly built to impress the distributors. Visitors are welcomed in a neat lobby that presents caterpillars history, main business numbers, and small models of a selection from the product range. We were shown state of the art simulators that lets potential customers feel what it is like to operate the machines, this provides a strong tool when trying to sign orders with potential customers. The center also includes an outdoor earth pit with spectator stands as it can be seen in the picture above. This is for some of the actual machines to perform shows and operations for the visitors. the center also includes a very cozy business lounge where guests can relax and contracts be negotiated. Moreover there are simulator machines that can be used by the distributors so present what the machine can do and how to operate it in an indoor environment. All in all this part of the center provides a state of the art marketing mix of VR and showcasing of the actual machines, when we left all of us were ready to buy a caterpillar machine simply because the experience provides the visitor with a lust to try the machines themselves. Our visit was divided into two parts; first the visitor center and then the logistics and distribution hub which was also a part of the facility. Sadly we were under time pressure, the first part of the visit had taken too long. As a consequence our presentation with the SCM manager was shortened and we didn't have time to ask too many questions after his power point presentation. Nevertheless, it was very interesting that Panama was the central hub for all Americas both north and south. The Supply chain department generally seemed quite professional.

10 Inventory control was not centralized and this seemed to present a problem as the main hub did not have complete overview of the stocks at the different dealerships. In this regard it's important to mention that CAT does only deal B2B with approved dealers. This links well with the huge setup for customer care we saw in the learning center. The manager explained that reason for not centralizing inventory control was the political and cultural differences in the markets served in South America thus the local dealerships and hubs have the finger on the pulse with regard to supply/demand. The tradeoff for decentralization of SCM control is less overview and higher requirements for communication and flexibility. Since we rushed out of the presentation to get to the next we do not have the actual numbers he presented, but caterpillar is a company in growth. The expected grown was also clear just walking through the office the building was completed in the spring of 2014 and a lot of the office spaces were empty- ready to be filled. We were also told that the next project for the hubs was to integrate their IT systems. Switching from different providers to an integrated SAP system that will allow for better inventory control and therefore shorter lead times. this is absolute key in meeting the expected growth. Moreover, dealing with local political or economic uncertainties as managers will have access to unified data on which analysis can be performed. The first part of the visit was interesting but not particularly relevant from a business/scm standpoint. therefore it would have been nice to spend more time with the SC manager. It is a quite interesting business case Panama being and emerging market and this hub serving all of South America, the growth sets high requirements for the supply chain management. Especially with regard to organisation and technological development the latter being seen in the imminent implementation of an integrated IT system. To conclude we did see first-hand a state of the art customer center which provides clever marketing and sales solutions. From a student viewpoint we would have liked to spend more time with the Supply chain manager to discuss some of the future challenges.

11 Maersk Line Company Visit April 19 th 2017 We visited Maersk Line Wednesday where Stephanie Gillespie, Communication Lead for Latin America & Caribbean presented for us at the office in Panama City. In the presentation, she used an interactive approach to involve us by small quizzes, where the winner got a Maersk calendar for the year A quiz question could be: How many shoeboxes could be in a 20-foot container and how many elephants a vessel could hold without sinking. During the last 10 years, Latin America has experienced huge success within the shipping and transportation sector, where Panama is no exception. Panama benefitted from an increased growth and now has one of the highest growth rate in Latin America. Furthermore, Panama has experienced an annual average increase in gross domestic product for the past 5 years with approximately 51.7 billion in 2015, the majority of this increase stemming from the Panama Canal. The Panama Canal is the daily gateway for more than 13,000 ships, which together carry around 3% of the World s sea trade. In 2006, the Panama Canal expansion was started and it represented the biggest project at the canal and the idea with the expansion was a long-term commitment to enlarging trade by transporting larger vessels through the canal. Maersk Line s operational hub for the Caribbean is located in Panama, and they are providing businesses with regular connections to their vast ocean fleet. Maersk have a set of core values that drives the way they do business. These are: Constant care, humbleness, uprightness, their employees and their name. Further, Stephanie Gillespie explained that Maersk Line s name is one of the most important values because they think it is important that when their customer thinks of Maersk, they will associate it with reliable, flexible and eco-efficient services. Their reputation is important to be the world s largest container shipping company. Stephanie continues to explain that they focus on their environmental and economical footprint. The biggest vessel leaves the smallest footprint. The Triple-E is designed for Efficiency, Economy of scale and Environmentally improved.