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Converting your Warehouse Co-Packing Corner into Integrated, Value-Added Services ...

Converting your Warehouse Co-Packing Corner into Integrated, Value-Added Services
A presentation delivered by Tom Kimball, Vice President, Head of Global Consumer Sector DHL Supply Chain at CSCMP Europe 2011.

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CSCMP 2011 europe   tom kimball - dhl supply chain final CSCMP 2011 europe tom kimball - dhl supply chain final Presentation Transcript

  • Converting your Warehouse Co-Packing Cornerinto Integrated, Value-Added ServicesTom Kimball, Vice President, Head of Global Consumer Sector
  • Agenda• Where the Story Begins• Why is it Important?• What can we Do?• What have we Learned?• Thought Leadership on Next StepsCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 2
  • It All Started in the Back of the Warehouse!CSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 3
  • Sources of Co-Packing ActivityOvertime, the one-time requests have grown into day to day demands anddelivery. Flexibility and responsiveness have increased your COSTS!!!! Promotional Alternative Selling Units Pricing / Giveaways Club Packs / Mass Merch. Plant Faulty or Re-work Market WithdrawalsCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 4
  • Co-Packing Activity Takes on All Shapes and Sizes Gift Pack Blister Packing Stickering Hamper / Basket Shrink Wrapping Re-packing Tagging Price Coding PromotionalCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 5
  • Typical Co-Packaging Definition Supply Chain Primary Co- Retail Factory Packaging Packing Stores Shelf readying Promotional Channel specific a product activities customization Examples 2 for 1 New Co-Pack Packaging Materials WH & Sourcing Execution Value Chain Design Management DistributionCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 6
  • Global Market Size and Trends – Why Is It IMPORTANT? Global Market size & growth1) EUR 6bn EUR 8bn x% Market CAGR 08-12 10% 2008 2012(E) 14% Observations APAC Market size: € 1.3 bn • Increasing revenue 7% 8% and cost pressures North America Europe on large Consumer • Market size: € 2.2 bn • Market size: € 1.6 bn Sector companies is leading to 8% high growth market: – Increasing China (30%), secondary 25% Middle East & Africa expected to take packaging to Market size: € 0.3 bn over Japan, US as provide product Central & Latin America largest market by differentiation • Market size: € 0.2 bn 2011 – Shelf-Ready High Growth: – Postponement Brazil Strategies – Eco-Friendly*Source: 2008 numbers, Beroe Study, secondary packaging ~20% of CM&P, this definition includes complete range of management services from design to execution; DSC revenue:all known Co-pack revenues (not Consumer sector only); Revenue in Europe not comprehensive, covers most large countries in the regionCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 7
  • What Are We Going to Do About It? Understand our SPEND, establish our VISION ………… and CONTROL our destiny. Identify “Go to Market” requirements Stock Take and current process capability. Determine customer, sourcing, Strategy responsiveness, postponement, flexibility and investment Define standards, measures, and Optimization leverage best practice regionally or globallyCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 8
  • Visioning a Transformation Current Ideal Stock Take Strategy • No transparency • Ultimate Transparency • No shared best practices • Communities established • No focus & alignment on • CORE Logistics Investment strategic directions • Standardization of process Optimization • No Measurement or KPI • Commonization of components “Out of Control” Spend ! Optimized InvestmentCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 9
  • Transforming Your Network, Your Process, and Your Reach Less Customization More Standardization Replicable Uniquely Best Tailored Stock Take Practice Designs Modules Strategy Quotation or End-to-end Tender-driven Solutions Optimization Local Global Designs SolutionsCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 10
  • Co-Pack End-to-End Solution & Value Proposition Co Packing End-To-End Solutions Co-Pack Packaging Materials Sourcing Execution WH & D Value Chain Design Mgmt Packaging Traditional End-To-End Providers DSC scope Scope Supply Chain Supplier Core Activity Value Proposition Packing providers are “asset-providers”: Reduced Cost through Lower packaging SC Cost, m€ No focus on total SC cost volumes -20% Efficient designs that 3PL is a “non-asset” provider: reduce labor cost Neutrality to materials results Efficient designs, in strong focus on total cost optimised for transport 2010 2011pCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 11
  • What Can We Do? A CALL TO ACTION WITHIN YOUR OPERATIONCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 12
  • Define Your Packaging Scope and Required Services• Primary packaging – Manufacturing – Filling, mixing & bottling• Secondary packaging – Co-packing – Bundling – Labeling – Logistics compliance – Assembly – Kitting• Design & Engineering – Packaging design and consulting – Printing services• Procurement – Procurement of raw materials – Procurement of packaging materialsCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 13
  • Layout Design Is Critical for Efficiency• Designated traffic flow for goods• Dedicated Inbound / Outbound Staging Areas• Proximity of Materials and Tools• Temperature or GMP Specifications• 24x7 CCTVs, Alarm System & Security• Floor Materials or Ergonomic Designs• Efficient / Effective Lighting• Access to Employee Common Areas• Fire Extinguishers, Emergency Exit Doors, Sprinklers• Productivity Tracking System and KPI ReportingCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 14
  • Driving Results thru Measuring and Monitoring Productivity monitoring systems / KPI’s• Can be simple and high level to begin Full Pallet from• Must be timely and actionable – by Shift, by Line Production Cut open Scan Shipper Shipper• Account for all activities and resources barcode Empty shipper into trayCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 15
  • What Have We Learned? EVERY STEP COUNTS................SIMPLE THINGS WORK DON’T BE AFRAID TO TRY.................STEAL WITH PRIDE LOOK, LEARN, and REPLICATE!CSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 16
  • BEST PRACTICE – Stretch Film ReductionTo reduce stretch film usage, we are developing a method of using boardbelts as an alternative to stretch film in binding palletized product. Reduce Stretch film usage is not used→contributes to reduction of stretch film usage Recycle Made of recyclable polyester synthetic resin Reuse Over 1,000 times <Before> <After improvement> Stretch film Board belt Effect CO2 reduction: 0.45kg per 1 time usage Challenge Further price reduction and quality improvement, including method for pallet stabilizing Future Rollout Deployment of solution for products with boxes similar to PC boxesCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 17
  • BEST PRACTICE – Eco Friendly PackagingSome examples of eco-friendly packaging that enables environmentalimprovements Bio-decomposition Soy-Ink printing: Utilization regene- plastic: rated plastic: decomposes to 15% reduction from using scrap PC water and CO2 petroleum resin Customer Benefits spontaneously Bio-decomposition plastic Soy-ink printing for Regenerated plastic  Allow environmental bag (for mobile phone) packaging utilization (for client server) compliance due to CO2 reduction  Enable creation of a better corporate image (social responsibility)  Allow being first-mover in eco-friendly packaging Bio decomposition cushion (for server)Source: DSC JP Packaging TeamCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 18
  • BEST PRACTICE – Transport Efficient PackagingReduction of packaging material and transportation cost by changing the packagingmethod such as eliminating individual boxes to improve packaging efficiency Individual Box Pack in Outer Box Packing Complete (with Shock Absorber) Before Wrap Products Pack in Outer Box Packing Complete with Air Cap AfterImprovement Reduced box volume by 30%Source: DSC JP Packaging TeamCSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 19
  • Thought Leadership on Your Co-Packing Activity HOW MIGHT WE?CSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 20
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