1. business and industrial
2. business operations
3. management
4. supply chain management

GRA 4303 Maritime Logistics
Strategy
Session 1 & 2
1
GRA 4303 Maritime Logistics Strategy Session
1&2
• Course introduction:
–
–
–
–
Relation to GRA 4301 and 4302
Lecturers
Cases
Definitions
• Globalization of Markets
• Introduction to
– Logistics Management
– Strategi
– Vision and Goals
2
Definitions (1)
• Logistics: Logistics is that part of the supply chain process that plans,
implements, and controls the efficient, effective flow and storage of
goods, services, and related information from the point of origin to the
point of consumption in order to meet customers' requirements
• Logistics management: The process of managing logistics to achieve
the established logistics goals of the company
• Supply chain: The supply chain involves all processes that a company
uses to conceive, design, produce and deliver products or services
successfully to customers, including receipt of payment. It is a vastly
broader term than logistics
• Logistics outsourcing: The management of 2 or more interrelated
logistics activities to an external provider, enabling the shipper to focus
on core competencies and to receive enhanced cost and/or service value
3
Definitions (2)
• International freight forwarder: Usually an asset light entity, it acts as
the agent of both the shipper and the carrier (ocean or air cargo).
Common activities are cargo rate referral and booking, arranging for
cargo delivery to port or terminal, preparing and delivering private and
government documentation, e.g. letters of credit, insurance, shippers
export declaration, and for assuring regulatory compliance.
Compensation is customarily a combination of fees paid by the shipper
for specific services rendered and commissions paid by the selected
carrier. Many forwarders have established a customs brokerage
capability. Some have created or purchased NVOCCs, which permit
them to issue their own bills of lading (with limited liability).
Compensation for this service is the spread between what’s billed to the
customer and paid to the carrier. Traditionally each shipment represents a
stand along transaction, where payment results when one or more of the
service is provided.
4
Definitions (3)
• 3rd party provider: Acts on behalf of shippers, may possess some
assets, especially distribution or transport equipment. Normally
payment is directly from shippers, with few or no commissions paid by
carriers. 3PLs stand apart from traditional providers as carriers and
freight forwarders because of their ability to manage broad cross
functional processes, e.g. order fulfillment. Many 3PLs provide an
analytical and consulting capability as part of their service. The term
logistics outsourcing became identified with 3PLs because 3PLs often
took over selected activities within logistics departments and became
responsible for managing process improvement. Generally
compensation is in the form of management fees and performance
incentives, e.g. increased order fill rates, reduced order cycle times,
increased productivity, lower total costs, etc. Short and long term
contracts between provider and user are sometimes employed
5
Definitions (4)
• 4th party provider: The 4PL term was first introduced and trade
marked by Anderson Consulting in the mid 1990s. With the increasing
popularity of using 3PLs to outsource broad transport and distribution
management functions, Anderson concluded that a non-asset (few or no
transport, equipment or distribution facilities) based entity would be
needed to oversee and manage a wide variety of 3PLs and traditional
providers engaged by large global shippers. 4PLs are expected to
possess a comprehensive overview of logistics and its separate functions,
understand the supply chain and and specific industry sectors, have
process reengineering and consulting capabilities, and regularly employ
state of the art technology and systems tools. Compensation is likely to
be a combination of management fees, performance incentives and profit
sharing with the shipper. Arguably no 4th party company exists today
that can manage in the comprehensive manner and on a global scale
described here. However, an amalgam of different types of alliances
between consulting companies, E-logistics firms, asset providers and 3rd
parties may result in the emergence of a bone-fide 4th party over the
next several years.
6
Provider Spectrum
Provider
Freight forwarder
3rd party
4th party
Small,
traditional
Integrated
forwarding
Increasing:
•Process
integration
•Management
integration
•Performance
metrics
•Risk/reward
agreements
Emerging
global
alliances
Domestic,
transport
warehouse
Technology
driven, multimodal,
globally capable
Responsible
managing 3rd
party & other
providers
Fully integrated
strategic supply
chain issues
Customer
7
Group Work
• Select a company who can be classified
according to each of the definitions and
explain why it fits to the definition
–
–
–
–
–
–
International Freight Forwarder
Logistics Management
Supply Chain Management
3PL
4PL
Logistics Outsourcing
8
Globalization of Markets
9
Trends: Consolidation and Globalisation
Mergers and Aquisitions:
Reduction in number of
automotive manufacturers:
Source: E-Business and the Automotive Supply Chain, London, 2000
10
Trends: Reduced Lead Times in Distribution
Reduction in lead time in European
distribution:
Reduction in time from order to delivery
in automotive industry:
30
-33%
25
20
-33%
15
-25%
Days
10
5
0
87'
93'
98'
03' Plan
Source: European Logistics Association/A.T. Kearney
Source: E-Business and the Automotive Supply Chain, London, 2000
11
Trends: Focus on Core Business - Outsourcing
Investigation of 277 large US shippers:
Current degree of outsourcing and future intent
Outsourced service
Outbound transport
Warehousing
Freight bill auditing
Inbound transport
Freight consolidation/distr.
Selected manufacturer act.
Product marking/labelling
Cross docking
Traffic mgt./fleet operation
Product returns and repairs
Information technology
Product assembly/install.
Order fulfilment
Inventory management
Customer service
Order entry/processing
Current
9%
16%
17%
15%
20%
9%
10%
12%
16%
13%
11%
4%
7%
5%
7%
4%
Future
63%
63%
53%
49%
38%
32%
31%
23%
23%
19%
13%
12%
10%
9%
8%
7%
”Logistics”
12
Source: Ernst & Young/University of Tennessee, 2000
Globalization of Markets

Growth in numbers and size of global
companies

Standardization of products and services on a
global basis

Reduction of the number of players in each
phase of the Supply Chain
13
Globalization of Markets

Reduction in the number of competitors and
increased market shares of the remaining

Global division of tasks and skills

Transportation and logistics share of the value
chain will increase significantly
14
Globalization of Markets

The survivors in the future global markets
– Customer Loyalty
– Production cost has to be equal or lower than
competitors
– Control over supply and distribution
– Products and services must be differentiated from the
competitors
– Customer awareness
– Supply Chain Integration
Process Management
IT integration along the supply chain
15
Formation of Strong Supply
Chain Networks
16
The Supply Chain Model
S
U
P
P
L
I
E
R
S
“Plan”
Planning and
Forecasting
“Buy”
“Make”
Procurement
Manufacturing
“Move” “Sell”
Distribution
and
Logistics
C
U
S
T
O
M
E
R
S
. . . Organizations Buy, Make, Move, and/or Sell Goods . . .
17
SCM Implication
– Companies will in the future compete between
supply chains and not within them
C
o
r
e
C
o
m
p
e
t
e
n
c
i
e
s
Supply Chain “A”
The Market
Supply Chain “B”
The Customer:
Share,
Loyalty,
Retention
Supply Chain “C”
Customer Value
18
The Integrated Supply Chain
Global ecommerce
Integrators
Product
Flow
Cash Flow
Supplier
s
$
Spend
Manufacturing
$
Spend
Distribution
Spend and
Collect
$
End
Custom
ers
$
Collect
Organizational
Flow
19
The Supply Chain creates pockets of inventory
The challenge:
to reduce inventory investment while still maintaining
capacity utilization and achieving customer satisfaction.
Stores
Warehouse
Supplier


Components
Raw Materials

In Transit
Inventory

Raw Materials


Factory
Distribution
Network
Work-in-Process In Transit
Finished Goods Inventory

Finished Goods
Customer

In Transit
Inventory
VELOCITY
Most companies have multiple product lines and many supply
chains.
Effective inventory management becomes more difficult and
complex as products increase and service requirements
expand.
20
Trends: Supply Chain Development
1980’s
JIT
(Automotive Industry)
Supply
Production
Distribution
Consumer
Supply
Production
Distribution
Consumer
Supply
Production
Distribution
Consumer
1990’s
(Retail Industry)
2000’s
Customer Sophistication
Power of IT
21 Kearney
Source: European Logistics Association/A.T.
Future Challenges for the
Customers of Maritime Services
22
Cost of Distribution Typically Quoted as 30%
Dealer
Manufacturer
or
distributor
Product
development
Purchasing
Marketing
8-15%
Organisation
4-6%
Warranty
Logistics
1-2%
2-4%
Manufacturing
Contracting
Platform
Outsourcing
Development Commonality
Strategic sourcing
Partnerships
Dealer margin 10-18% The “black hole”
Distribution
25 - 35%
Total
cost
Expanding
Lean
manufacturing
Outsourcing
Network factory
?
Source: WW ASA 2000
23
Cost of Distribution Typically Quoted as 30%
Dealer
Manufacturer
or
distributor
Product
development
Purchasing
Marketing
8-15%
Organisation
4-6%
Warranty
Logistics
1-2%
2-4%
Manufacturing
Distribution
25 - 35%
Total
vehicle
cost
Deep Sea Transportation:
Expanding
Contracting
Platform
Outsourcing
Development Commonality
Strategic sourcing
Partnerships
Dealer margin 10-18% The “black hole”
Lean
manufacturing
Outsourcing
Network factory
?
0,3 - 1 %
24
Leading Factors in Awarding Logistics Contract
Price
Potential cost/inventory savings
Product/business expertise
Technology capability
Geographical scope
Industry reputation
Breadth of service offerings
Financial strength
Prior relationship
Other
Sales presentation
0.0
0.5
1.0
Least important
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Most important
Source: Lazard Fréres & Co. LLC
25
3 PL- Third Party Logistics Providers
Historical
Sender/
Passenger
Future
Sender/
Passenger
Air Transport
Ground Transport
Water Transport
Intermodal Transport
Organiser
Organiser
Outsourced
Logistics
Air Transport
Ground Transport
Water Transport
Intermodal Transport
Outsourced
Logistics
Organiser/
Supporter
Recipient/
Passenger
Organiser/
Supporter
Recipient/
Passenger
Future Transportation Firm
Activities
= Potentially disintermediated
Source. PwC analysis
26
New entrants are approaching the
market
+ Greater Functional Integration
+ Broader Operational Autonomy
BOA
Arrangement
1990s-2000s
Client
Shippers
4PL
Service
Providers
Outsourcing
1980s-1990s
Client
Client
3PL Providers
Internal Logistics
Operations
27
Shareholder Value Growth
35 %
30 %
25 %
S&P 500: 20%
20 %
15 %
10 %
5%
0%
Overall
Third-party Equipment
Transportation Logistics
Leasing
Industry
Services
Railroads
Air
Parcel
Trucking Truckload
Ocean
Carriers
Source: Mercer Analysis. All figures for US public companies only, except ocean carriers. Compound annual
growth rate for market capitalization, 1993 - 1997.
28
New Entrants Are Approaching the
Market
Recent alliances between transporters and IT leaders:
Logistics Companies
IT-system Leaders
Kuehne und Nagel
i2
Ryder Integrated Logistics
Schneider Logitics
New Holland
i2/
Dell Computers
Andersen Conculting
i2
Andersen Consulting
Ryder Integrated Logistics
FedEx/Caliber Logistics
Andersen Consulting
KPMG
29
Retail Car Buyers Are Going To Use E-commerce...
Use of E-commerce in
car buying process
Would buy on Internet
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
US
D
UK
Did use
J
F
0
UK
US
F
J
D
Will use
Source: FT World Motor Conference, Sept. 1999
30
31
32
The Logistics
rationale
33
The Logistics rationale (1)
4%
The key components
of logistics represent
about 10 % of world
GDP, or about US$
4.0 trillion
inventory carrying
warehousing
Transport
Order entry
Admin
Source: Cass Information Systems & ProLogis
1%
28 %
59 %
8%
34
The Logistics rationale (2)
In billions USD
1999/
2000
921
In billions USD
1999
4000
Although global logistics
outsourcing is a small % of
global logistics today, it is
still a significant number
Total logistics
Outsourcing
represents
5.7% of total
logistics
Extrapolating
U.S. data suggests
size of global
market
531)
U.S. logistics & outsourcing market
228
World logistics & outsourcing market
1) Net
Third Party U.S.
Based firms: Logistics
revenues in the range of
28-29 billion USD in
Source: Cass Information Systems & ProLogis
35
The logistics rationale (3)
Logistics:
Break-up of costs
Source: Cass Information Systems, Inc. & ProLogis
36
The logistics rationale (4)
Billion USD
The outsourcing market
According to Northeastern
University and Armstrong &
Associates, the outsourcing
market is growing nearly 20 %
annually
600
In billions US$
550
500
450
125 billion USD in
net revenue for 3PLs
400
350
300
250
The difference between gross and
net is that we take out the cost of
transportation purchased for
clients to calculate net revenue
200
2000 2001 2002 2003 2004 2005
Net revenue for 3PLs is
approximately 53-55% (in the
US), and profits before taxes are
6-8% of gross(?) revenues
according to Cass information
Systems Inc., ProLogic &
Armstrong & Associates
5 year
outsourcing
potential
37
The logistics rationale (5)
Outsourced service
Outbound transport
Warehousing
Freight bill auditing
Inbound transport
Freight consolidation/distr.
Selected manufacturer act.
Product marking/labelling
Cross docking
Traffic mgt./fleet operation
Product returns and repairs
Information technology
Product assembly/install.
Order fulfilment
Inventory management
Customer service
Order entry/processing
Current
9%
16%
17%
15%
20%
9%
10%
12%
16%
13%
11%
4%
7%
5%
7%
4%
Future
63%
63%
53%
49%
38%
32%
31%
23%
23%
19%
13%
12%
10%
9%
8%
7%
Growth in the
outsourcing market
Survey
Time frame
: 277 US shippers
: 2000-05
Source: Ernst & Young/University of Tennessee, 2000
38
The logistics rationale (6)
Different customer philosophies with
respect to outsourcing of logistics
”Movement towards more and more
outsourcing to systems integrators”
Lou Sorchevich, Director of international
transportation, GM
”Would like the carriers to provide more
value-added services, especially in booking
and control of various supply chain
activities like point to point services and
contracts where land side processes at both
origin and destination are managed by the
ocean carrier”
Bob Frinier, Vice President, Logistics, Nissan
”Do not know whether VWT is profitable
and feel it is probably irrelevant, since it is
viewed as a ”strategic” investment by
senior management”
Joe Manschke, Ken Fletcher, Chuck Domke,
Logistics, transport processes, VWT/VW
”Our company intends to co-develop
global process systems with our partners
and integrate operations with a few of the
best providers in the logistics area”
Bill Carrigan, Manager Global Marine
Transport, Ford
39
The Logistics rationale (7)
Cost of Distribution Typically Quoted as 30%
Dealer
Manufacturer
or
distributor
Product
development
Purchasing
Marketing
8-15%
Organisation
4-6%
Warranty
Logistics
1-2%
2-4%
Manufacturing
Contracting
Platform
Outsourcing
Development Commonality
Strategic sourcing
Partnerships
Dealer margin 10-18% The “black hole”
Distribution
25 - 35%
Total
vehicle
cost
Expanding
Lean
manufacturing
Outsourcing
Network factory
?
Source: A.T.Kearney
40
The logistics rationale (8)
The 3PL industry appears poised for significant growth
•
The world’s largest companies are heavy
users (50% have used for more than 5
years)
•
Survey of 500 firms by
Northeastern university &
Andersen Consult, 2000’
•
“Based on all research we have done,
logistics stocks over the next 5 years will
continue to outperform stocks of other
transportation companies. The crux of it is
that we think the logistics sector is at an
early stage, maybe in the first or third
inning, of a secular (long-term) growth
found in the outsourcing of transportation
functions”.
•
Lazard Freres (NY
investment bankers, 2000)
•
“Marine shipping business is mature.
Logistics will be our focus, equaling 1999
container revenue of $4.2 billion within 3
years.”
•
Flemming Jacobs, CEO of
NOL/APL, 2000’
41
The logistics rationale (9)
Shareholder Value Growth
35 %
30 %
25 %
S&P 500: 20%
20 %
15 %
10 %
5%
0%
Overall
Third-party Equipment
Transportation Logistics
Leasing
Industry
Services
Railroads
Air
Parcel
Trucking Truckload
Ocean
Carriers
Some of the large
ocean carriers are
familiy owned and
controlled,
implying that
stocks are underpriced.
Competitive
advantages from
capitalisation if
owners sell down.
Note that 3PLs
have no problems
in receiving funds
Source: Mercer Analysis. All figures for US public companies only, except ocean carriers. Compound annual
growth rate for market capitalization, 1993 - 1997.
42
The Logistics rationale (10)
Net logistics revenues for some
3PLs 1999, [million USD]:
Ryder
Penske Logistics
UPS Logistics
APL Logistics
Source: Armstrong & Associates
1287
959
488
406
43
The logistics rationale (11)
– Companies will in the future compete between
supply chains and not within them
C
o
r
e
C
o
m
p
e
t
e
n
c
i
e
s
Supply Chain “A”
The Market
Supply Chain “B”
The Customer:
Share,
Loyalty,
Retention
Supply Chain “C”
Customer Value
E.g. Ford/UPS/Exel
44
Players in Maritime
Logistics
45
Asset based logistics companies - Maritime
Logistics offerings can be seen as a continuum, ranging from single purpose offerings,
to enhanced core business services to fully integrated separate profit centers
Single
purpose
logistics
firms
• Many
container,
break bulk
and special
purpose
ships that
provide high
level maritime
and even land
transport
services
Some
enhanced
integrated
logistics
capability
• ANZDEL
• K-Line
• NYK
• Mitsui
• WWL
Emerging
profit
driven
logistics
units
• OOCL
• COSCO
• Hapag
Lloyd
• Yang
Ming
Fully
autonomous
physical &
I.T. based
logistics
units
•Maersk
Logistics
• APL
Logistics
Future ??
Global
physical, IT,
analysis &
risk sharing
capabilities
are built into
provider’s
competitive
offerings.
46
Maersk Logistics versus APL Logistics (1)
A comparison of the key logistics attributes of two of the most advanced marine
logistics providers today is useful to benchmark ones’ own market position
Maersk Logistics
Strong endorsement from
parent A.P. Moller,
although appears less
enthusiastic than APL
Independent profit center
& staff. Report direct to
Moller not MS. Attempt to
leverage liner investments
and brand name
Key Attribute
Attitude of parent
company top
management
Relationship to
parent & sister
companies
APL Logistics
Per NOL top management
and CEO future is in logistics.
Sees liner shipping as mature
industry, growing only if
trade expands
Independent profit center. May
link more closely to parent
goals, e.g. IS joint strategy, &
“exception management”
approach. Note McKinsey &
Mercer roles today
47
Maersk Logistics versus APL Logistics (2)
A comparison of the key logistics attributes of two of the most advanced marine
logistics providers today is useful to benchmark ones’ own market position
Maersk Logistics
Revenues (net): $420m
Margins: $12-24m
Handle all physical and
information needs of key
global industries and
customers with strict
accountability
Key Attribute
APL Logistics
Estimated
Financial status
Revenues (net): $406m
Margins (EBIT): $28m
Logistics mission
Link together all information
from disparate operating units
to enable end to end
management of global
customer shipments
48
APL HomePort
From 10,000 to 67,000 Internet
business transactions per month
from Jan -98 to Sep -99
Types of transactions (Sep -99):
•Schedules 43%
•Tracing 32%
•B/L Print 8%
•Status 1%
•Other 14%
“Marine shipping business is
mature. Logistics will be our
focus, equaling 1999
container revenue of $4.2
billion within 3 years”
Fleming Jacobs, CEO, APL
49
Asset based logistics companies –
Motor/air origins
Logistics offerings can be seen as a continuum, ranging from single purpose offerings,
to enhanced core business services to fully integrated separate profit centers
Single
purpose
logistics
firms
• 10s of
thousands of
these firms
exist today
that provide
single purpose
capability
Some
integrated
logistics
capability
• Many firms
claim to
offer some
level of multiple
integrated
services as part
of core business
Separate
profit
driven
logistics
entity
Highly
developed,
technology
rich
company
• Potential
• UPS
for conflict • Fed Ex
with goals
• RIL
of parent &
customers
leads to
separation:
- Schneider
- Menlo
Future ??
Global
physical, I.T,
analysis &
risk sharing
capabilities
are built into
provider’s
competitive
offerings
50
Logistics outsourcing in auto industry
Large scale outsourcing has occurred in the auto parts sector in recent
years, but now there is evidence of expansion to include finished units,
e.g. Ford/UPS alliance:
Service related
Cost related
Technology related
Customer/dealer interface
has shifted dramatically
 Goal to speed vehicle
delivery to market by 40%

Inventory carrying costs
can be greatly reduced
 Inventory reduction versus
customer satisfaction?


Design and optimise
network
 Goal is no excuse
commitment to agreed
metrics from UPS
Logistics

UPS Logistics is capable of
total analysis & redesign of
network
 UPS has developed or formed
various IS alliances
 UPS Logistics will add
 UPS has committed to long100 people while Ford will
term systems support &
cut to around 20
functionality
 UPS willing to be
rewarded as % of cost
savings
 Reduction of total cost
including opportunity,
51
transport and inventory
UPS/Ford: North America
Transit time [days]
Current network versus new network transits
16,0
14,0
12,0
10,0
8,0
6,0
4,0
2,0
0,0
14,8
10
8
5,8
1999 Act (avg) Prior Plan
(avg)
New Plan
(max)
New Plan
(avg)
Source: Global Automotive Logistics conference, 2000
52
UPS/Exel/Ford: Europe
Exel and UPS Logistics Group Europe have formed an alliance to review
the effectiveness of all current inbound logistics processes for production
parts and components for the Ford Motor Company in Europe. (10/24/00)
Detailed process specifications will be jointly developed by Exel, UPS
Logistics Group and Ford in an alliance that will provide supply-chain
support across all Ford’s European plants.
The deal follows the successful strategic alliance of the Ford Motor
Company and UPS Logistics Group in the US and Exel's 20-year
relationship with Ford, including established operations in Southern Europe,
USA and Brazil. Ford's new inbound logistics network in Europe is designed
to achieve significant improvements in transportation and distribution
processes and inventory.
53
Non asset based logistics companies
Logistics offerings can be seen as a continuum, ranging from basic forwarding firms
to complex public and private solutions driven enterprises
Small
under
capitalized
firms
10s of
thousands of
these firms
exist today
that provide
a wide variety
of services
Niche
focused
intermediaries
Many firms
in this category
that survive by
customizing
their services
to particular
customers
or industry
sectors.
Hybrid relationships
betwn asset
and non
asset firms
Examples:
- Lufthansa
Cargo Services
- Cosco and
Bolero alliance
2 types of
mega global
forwarders
have emerged
as result of
acquisitions
• Type 1:
Driven by
public sector
• Type 2:
driven by
private FF
expansion
Future ??
Public driven
expansion
Who will
emerge with
sufficient IS
content and
SC skills to
manage all
or most
customer
logistics?
TPT Post
Deutsche
Post
Panalpina
Private driven
expansion
NFC/
Exel
Schenkers
ABX
Logistics
54
Competitor actions:
Develop a competitor rating scheme
Example only
Logistics
attribute
Parent company
support
Key:
- Low
Logistics vision
- Medium
Current financial
- High
Marketing strat
Operating strat
55
E-logistics
56
Why e-logistics (1/2)
• Increase value to customers, partners and
suppliers through expanded service
offerings
• Improve communication channel with
established market, open to new
segments/niches
• Improve efficiency, reduce costs (automate)
57
Why e-logistics (2/2)
E-logistics will bring three areas of functionality:
• Increased pipeline visibility, e.g. global inventory
management
• Improved collaboration between all SC participants
• Improved functionality in managing global SC, e.g.
applications that can be downloaded, e.g. booking in
transport, trade compliance in trade management, finance
and duty paid landed costs, etc.
58
E-Logistics: Trends (1)
• The significant increase ($1 trillion seems to be a
consensus estimate) in global electronic logistics
over the next 4 years will be driven by 3 forces:
– Increase value to customers/partners/suppliers
– Lower cost
– Improved internet functionality
59
E-Logistics: Trends (2)
• Supply chain visibility – information transparancy
– Internet – open standard infrastructure
– Reduced IT systems cost (Internet/ASP)
– Customer core business focus – outsourcing
• Supply chains ”without fat” – impossible to hide &
protect high profit activities over time
• Logistics capabilities of increasing importance
60
E Logistics: Implications
• To compete globally shippers will focus on supply
chain process improvement as a major source of
competitive advantage.
• Increasingly this process improvement will be
enabled by web-based information technology
• Carriers and other providers of logistics services
must assess the impact these emerging logistics
offerings have on their business and develop an
appropriate strategic response
61
Group Work
• What effect will the future competition
between value chains have on traditional
shipping companies?
• What effect will the future development in
e-commerce have on traditional shipping
companies?
• Which new fields of competence should
shipping companies develop to participate
in the new economy?
62
WW ASA’s
Logistics Strategy
63
The Need for Change
Customers’
Customers’
Value Chain
Customers’
Value Chain
Planning and
Forecasting
Procurement
Manufacturing
Distribution/
Sales
WW ASA’s’s
Global Services
(and Internal Processes)
WW ASA’s s
Organisation
& Systems
64
Possible Project Approach
•
•
•
•
•
•
Understand the market development
Identify core competencies
Develop standardized products and services
Develop global infrastructure
Train organization
Implement strategy (Balanced Scorecard)
65
Strategic Challenges
• WW ASA has to develop a thorough
understanding of both its customers and
customer’s customers value chains
66
Strategic Challenges
• Market developments
– The customers and customer’s customers value
chains
– Competitors value chain
• Standardization of products and services
• Throughout identification of core
competencies
67
The Strategic Processes in WW ASA
Market Analysis
Scenarios
Scenarios
Scenarios
Balanced Scorecard
GLM Concept Development
Pilot 1
Implement
new
services
Pilot 2
Pilot 3
68
WW Global Logistics Strategy
Physical cargo flow and WW focus
WWL
Manufacturer
Land
Transport
Port
Sea
Transport
Port
Land
Transport
Customer/
Dealer
BI
BARWIL
WW Chartering
69
WW Global Logistics Strategy
Develop cross-functional competence and cooperation
in the WW Group:
- between the principal companies
- between the principal companies and corporate
- within the principal companies
WW
50%
WWL
Wilship
Barber Int.
Logistics Strategy Logistics Strategy Logistics Strategy
Barwil
Logistics Strategy
WW Group Logistics Strategy
70
Logistics Strategy Project Structure
Feasibility Study
Dec ‘99 - April ‘00
Main Project
Implement new services
1999
2000
2001
2002
71
Global Logistics Strategy Project
Future Market/
Scenario Analysis
Present & Future
Customer
Requirements
Logistics Services
Requirements
Logistics
Organisation
Implications
Competitor
Analysis
IT Solution
Knowledge
Management
Process
Re-engineering
Methodology
Alliance
Agreements
Tools
Alliance Building
Process
Performance
Measurement
System
72
Supply Chain Reengineering
73
New Holland’s Supply Chain
Model
Credit check management
Distribution Scheduling
Markets
forecast
Demand
capacity
Reconcil
(MOP’s
creation)
Market
allocation
POCQA
explosion
Order
inquiry
(Locator)
Order
entry
Manufacturing
Scheduling
(W+7)
Schedules to suppliers
Shop
Manufacturing floor
Sequencing
control
(W+2)
(W+0)
Shipment
Invoicing
Develop
and
Reporting Implement
Improvements
Supplier call-off
Order tagging and specs change
2. Schedule
3. Execute
4. Report
1. Plan
Interaction between New Holland
and WWL
5. Implement
Improvements
74
Physical Cargo and Information
Flow
Land Transporter
Pre
Booking
WW
Pre
Booking
Pre
Loading
Planning
(orders/
prognosis)
Loading
Land
Voyage
Pre
Loading
Sea
Transport
Port
Delivery/
production
Land
Transport
Port
Customer/
Dealer
CustPost
Disomer
Evaludischarge
Follow- ation
charge
up
Loading
Pre
Booking
Land Transporter
Manufacturer
Land
Transport
Manufacturer
Physical Cargo Flow
Sea
Voyage
Post
Disdischarge
charge
Pre
Loading
Logistics
follow-up
Customer
Followup
Evaluation
Loading
Land
Voyage
CustPost
Disomer
discharge
Followcharge
up
Customer
Follow-up
75
Evaluation
Evaluation
Process Re-engineering
Map present
state
Reengineer
distribution
process/lanes
Test & evaluate
new distribution
lanes
Implement
improved
solution
Main deliveries:
 Detailed mapping of existing distribution process/lanes
 Proposed improved distribution process - validated and improved distribution
process from WWL
 Identified possible improved IT solutions with; infrastructure, software and
potential alliance partner(s)
76
Germany - UK Dealer logistics
chain
1
2
3
4
Pre-release
Load planning
Short-Sea voyage
UK distribution
5
Invoicing/Reporting
File
77
Germany - UK Dealer logistics
chain
1.6
Rastatt
1.9
Train transport
1.13
A-class
Discharge
Canada Quay
1.5
Dusseldorf
1.8
Truck transport
1.12
Sprinter
Discharge
Canada Quay
(Detail
ed 1)
1.17
Surveyed
ITS
1.18
Parked
SeaRO
1.11
Cars & M-class
Discharge
Canada Quay
1.4
Graz
1.3
Bremen
1.7
Truck transport
1.10
Cars & M-class
Discharge
Britannia dock
1.14
Washed
SeaPARK
1.15
Surveyed
ITS
1.2
Sindelfingen
Load sheets
(electronic)
FR
Vehicle record
1.1
Create vehicle
record
DC
X2
1.16
Parked
SeaPARK
Arrival to
Zeebrugge
report
1.19
Enter arrival report
into RL system
ITS
ZA
Damage report
1. Pre-Release
2.2
Print Load sheets
Coblefret
Load sheets
(paper)
2.3
Enter info details into
vessel load planning
Cobelfret
2.4
Copy Load sheet
to SeaPARK
Cobelfret
PL
1.20
Enter damage report
into RL system
ITS
1.21
Advise RL for
vehicle release
DC
Dealer Order
2.1
Build deliverable
loads
RL allocator
Vehicle release
advise
(electronic) OK
2. Load planning
78
Germany - UK Dealer logistics
chain
Total tim e: 60 hrs.
Immingham sailing
20 hrs.
Approx. 25 % of total shipped units
33%
15
40 hrs.
67%
10
5
Hours
Dead time
Active time
0
-5
2.1 Build
deliverable
loads
2.6 Load
lanes
assembly
2.8 Move to
berth
3.3 Load to
vessel
3.5 Seavoyage
3.7 Discharge
4.1 Park in
load lanes
-10
-15
79
Time Mapping
Process 1
Pr 2
Process 3
Process 5
Pr 7
Process 8
Process 4
Process 6
Time
80
Cost Mapping
Costs
100
90
80
70
60
50
40
30
20
10
0
s 1 ss 2 ss 3 ss 4 ss 5 ss 6 ss 7 ss 8
s
ce oce oce oce oce oce oce oce
o
Pr Pr Pr Pr Pr Pr Pr Pr
81