Building a Global Ocean Program Chassis Brakes International Overseas Project
Who we are
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Challenge: Very quick turnover increase in China & Mexico (Supplier base and investment management) 5
Independent privately owned business registered in London, UK and delivering worldwide. Built on international supply chain consulting offering. Consistenly excelled working for premium brands and medium-sized companies with complex international logistics needs. Hands-on and results driven supply chain consulting using Tokema consultants operational expertise. Specialist experience: automotive, aftermarket, retail, FMCG, aerospace and energy. 6
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Our strategy
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Our Vision for Supply Chain Global support Lead relationships within CBI, with customers, suppliers and logistics partners through the Global Purchasing & Supply Chain organization. Customer satisfaction To become the preferred supply chain partner of our customers through performance and innovation. Financial performance Thriving for supply chain financial performance through TCO + TWC optimization. To become a global support to our business with focus on customer satisfaction and supply chain financial performance
Situation in 2015 Limited work methods standardization worldwide OES business not well adressed Limited TCO + Cash mindset Limited alignment with Purchasing Unconsistent level of Supply Chain maturity between regions 27.3 days 2015 DIO worldwide Lack of suppliers logistics performance Disruption risks due to lack of suppliers assesment 4.8% 2015 logistics cost worldwide Capacity management not well adressed We need to speed-up our Supply Chain maturity to boost efficiency 11
Our Vision in Numbers for Supply Chain in 2020 To become a global support to our business with focus on customer satisfaction and supply chain financial performance By 2020, we will be the preferred supply chain partner of our customers at the right cost CSL 100% 0 Customer incident 19 days (20 m ) DIO worldwide 0 supply chain crisis Suppliers OTD 100% 4% (6.8 m ) logistics cost worldwide Suppliers issues -20% per year 12
OUR PATH TO SUCCESS OUR SUPPLY CHAIN STRATEGY IS IN LINE WITH THE RISE 2020 FOUR STRATEGIC PILARS OUR OBJECTIVES RISE 2020 Global Supply Chain Perform at 100% CSL with 0 customer incident Achieve 19 days DIO average worldwide (20 m ) Achieve 4% logistics cost worldwide (6.8 m ) Perform at 100% supplier OTD and reduce suppliers issues by -20% per year Achieve 0 supply chain crisis N 1 WE WILL BE THE PREFERRED SUPPLY CHAIN PARTNER OF OUR CUSTOMERS AT THE RIGHT COST OUR VISION: WE WANT TO BECOME A GLOBAL SUPPORT TO OUR BUSINESS WITH FOCUS ON CUSTOMER SATISFACTION AND SUPPLY CHAIN FINANCIAL PERFORMANCE. CUSTOMERS PRODUCTS BUSINESS OPERATIONS OPERATIONAL EXCELLENCE Customer satisfaction Collaborative approach on planning Customer packaging fleet management Packaging design Global Supply Chain financial performance Overseas transportation costs Logistics flows optimisation Pull flow strategy with suppliers OES components strategic supply Chassis Brakes new global projects SAP expertise development SAP data integrity Organization change implementation Our Supply Chain network development Working methods with Purchasing Working methods with other departments Transactional activities Market intelligence S&OP methodology Logistics protocols Inbound logistics methods Suppliers capacity management Suppliers logistics audits Suppliers scorecards Supply Chain crisis management KPIs Global data-base KPIs OTD KPIs Suppliers logistics claims OUR VALUES: TRUST CREATIVITY ACCOUNTABILITY AGILITY EXCELLENCE
Our overseas transportation project
Why this project? (AS IS situation) No global organisation for Supply Chain No Supply Chain Director (only coordination) No Global Category Manager for transportation No global management worldwide (each CBI plant is responsible to define and manage freight forwarder) No standard defined No or local contract No SOP No standard reporting (track & trace, ) No bundeling effect to improve performance (Silo effect) Target: Define a freight forwarder to manage our overseas business as these activities are not part of our CORE BUSINESS 15
Project scope and objectives Project scope Implement a global category strategy for transportation and logistics. Select a global partner to handle all overseas shipments (sea, air). This global partner must be a freight forwarder (volumes still mainly LCL). Understand and assess the global shipping market on a regular basis. Objectives Involve all plants in a global transport project (standardisation). Achieve suppliers reduction strategy. Secure reliable transit times to increase forecast and component supply reliability. Optimise end to end lead times impact on working capital and inventory levels (DIO). Enhance quality of service. Reduce logistic costs. Implement a global KPI dashboard and visibility tool incl. transit time and landed cost analysis. 16
Project methodology Preparation Internal communication on the project. Data collection from plants (volumes, rates, trade lanes, suppliers, incoterms, transit times, operational practices). RFQ document writing and internal validation by plants. Limited list of freight forwarders issued (currently working with Chassis Brakes International and new ones). Initial briefing on project scope to freight forwarders invited to tender. 17
Project methodology Preparation Selection process 2 initial rounds of proposal submission (transit times and rates). Workshops with all freight forwarders invited to tender to discuss details of each proposal. Short list issued at the end of the workshop process. Global visibility tools demos. Final discussion with the last 2 freight forwardes. Business case (lead times and budget). Final award. 18
Project methodology Preparation Selection process Implementation Project team (CBI+FF) implemented. Standard SOP document designed. Ops workshops in each country with freight forwarder to finalise SOP (especially for import brokerage). Standard global contract implemented. Operations start scheduled by plant (no «big bang»). Weekly implementation calls. 19
Main issues and challenges
MAIN ISSUES - INTERNAL Change Management in our CBI plants Why changing a situation not so bad? Investment to restart with new freight forwarder!! (local contact, ) Why taking the lead globally on this project? How to get the best price in each regions AND with the best worldwide? Project globally, issues locally!! We probably underestimate the change management in this project, even if taken into account in the project phase 21
MAIN ISSUES - EXTERNAL Q4 2016 : Total shift of shipping services New alliances New services, new transit times Cancelled calls Unreliable transit times Major supply chain disruption (material supply) From April 2017 Q4-2016 22
MAIN ISSUES - EXTERNAL Q4 2016 : Issues to access capacity Reduced or frozen capacity Equipment shortage Bookings were refused Shipments were delayed Another major supply chain disruption (material supply) as manufacturing plannings were totally jeopardised. 23
MAIN ISSUES - EXTERNAL Q4 2016 : Freight rates have soared Shipping lines GRI & PSS Freight forwarder s service contract uneffective Increased CBI logistics cost budget Logistics costs x 2,5 Potential penalties to CBI customers as a result of manufacturing disruptions Partnership with freight forwarder under pressure. Working capital under pressure. Strategy: where is the added value of using a single global freight forwarder? 24
Lessons learned
LESSONS LEARNED - INTERNAL Increase change management in the project content: Communication, planning, team involvement and engagement. 26
LESSONS LEARNED - EXTERNAL Revised strategy Focus on several freight forwarders by major regions (no single forwarder). Agility - flexible approach to the market to anticipate any fluctuation on capacity and pricing and adjust accordingly vs. 3 years contract steadiness. Use standard SOP to offer operations consistency worldwide. 27
LESSONS LEARNED - EXTERNAL Looking for consensus and mutual commitment How make manufacturers/importers understanding ocean carriers constraints without creating supply chain disruptions? How can manufacturers challenges and objectives be taken into account positively by ocean carriers and freight forwarders? 28
Contact us Pierre Liguori Tokema Ltd Phone +44 75 721 44 303 Email pliguori@tokema-international.com Thank you!