How supply chain innovation can
drive customer value
John Pattullo, CEO
CEVA
1. CEVA
2. Innovation and value
3. Operational excellence
4. How supply chains can deliver value
Logistics market overview
    €300 billion market
                                                                        ...
Our vision & mission


      CEVA will be the most admired company in the supply
      chain industry exemplifying Unity, ...
Balanced global portfolio


                                Europe, Middle East, Africa
                                Em...
1. CEVA
2. Innovation and value
3. Operational excellence
4. How supply chains can deliver value
A thought on innovation?

    Human DNA and dinosaur DNA are 97% the same.
    What matters is the 3% that separates the t...
Invention vs. innovation

    Few ‘new to world’ ideas will ever come from logistics

    BUT many innovation opportunitie...
Some thoughts on innovation
    • In the 1970s      The automotive industry was fragmented & unprofitable
                ...
Drivers of supply chain innovation?
     • Globalisation has increased the strategic and financial
       significance of ...
Innovation in the supply chain – track record
     Accenture
     4PL, adding a consultation/ strategic level to SC thinki...
Innovation from the 3PL’s?
     Some great, but isolated, examples eg NHS Supply
     Chain

     As an industry we are no...
Prerequisites for 3PL innovation
     • Customer confidence in the industry

     • 3PL industry willing to invest in R&D
...
The journey to innovation



                        Innovation




                     Responsiveness


                ...
1. CEVA
2. Innovation and value
3. Operations excellence
4. How supply chains can deliver value
Operations Excellence culture in CEVA is built
     on five pillars



                                                   ...
Process driven approach
                                               Smart Solutions
                                   ...
1. CEVA
2. Innovation and value
3. Operations excellence
4. How supply chains can deliver value
Creating economies of scope
4PL for an international automotive supplier
     By re-engineering the supply chain and acting in a 4PL capacity, CEVA de...
Innovation in ocean freight
     By focusing on the entire ocean freight operation and implementing enhanced visibility
  ...
Leveraging information in the supply chain
Optimizing our integrated solution to provide
     real time visibility
     For a leading automotive company, our complex...
Using information to develop International
     capabilities
     Global competition has resulted in this customer sourcin...
Transferring best practice to ‘white space’
Aftermarket logistics for Chinese automotive
     manufacturer
     By using LEAN and proved aftermarket solutions, produc...
Transferring best practice across sectors – I2M
     CEVA has combined its GMM & VMI solutions with production capabilitie...
Fostering social responsibility
In summary
     • Historically, an industry which has under delivered on innovation

     • Innovation starts with Operati...
Of course, there is an alternative ...




31
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John Pattullo, CEVA Logistics on 'How Supply Chain Innovation Can Drive Customer Value'
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John Pattullo, CEVA Logistics on 'How Supply Chain Innovation Can Drive Customer Value'

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John Pattullo, CEO of CEVA Logistics speaks on 'How Supply Chain Innovation Can Drive Customer Value' at the 7th European 3PL Summit in Brussels, November 25th 2009.

To download all of the slides from the conference for free visit www.3PLsummit.com/eu_2009ppts

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John Pattullo, CEVA Logistics on 'How Supply Chain Innovation Can Drive Customer Value'

  1. 1. How supply chain innovation can drive customer value John Pattullo, CEO CEVA
  2. 2. 1. CEVA 2. Innovation and value 3. Operational excellence 4. How supply chains can deliver value
  3. 3. Logistics market overview €300 billion market €m DHL 27.0 Schenker/ Bax 14.7 Kuehne + Nagel 11.3 CEVA 6.3 UPS 6.1 CH Robinson 5.9 Panalpina 5.6 Geodis 5.1 DSV 5.0 Agility 4.6 Very fragmented, top 10 have 30% market share 3 Source: Annual reports, ED Wolfe Research, Morgan Stanley, CEVA estimates (2008 figures)
  4. 4. Our vision & mission CEVA will be the most admired company in the supply chain industry exemplifying Unity, Growth and Excellence UNITY: One company – one team GROWTH: Outperform market growth EXCELLENCE: Perfection is our goal CEVA – Making business flow 4
  5. 5. Balanced global portfolio Europe, Middle East, Africa Employees: 21,700 + # Countries: 100+ Revenue ’08: €2.9bn – 48% The Americas Employees: 19,300 + # Countries: 40+ Asia Pacific Revenue ’08: €2.1bn – 32% Employees: 13,100 + # Countries: 30+ Revenue ’08: €1.5bn - 20% 5
  6. 6. 1. CEVA 2. Innovation and value 3. Operational excellence 4. How supply chains can deliver value
  7. 7. A thought on innovation? Human DNA and dinosaur DNA are 97% the same. What matters is the 3% that separates the two species. 7
  8. 8. Invention vs. innovation Few ‘new to world’ ideas will ever come from logistics BUT many innovation opportunities exist 8
  9. 9. Some thoughts on innovation • In the 1970s The automotive industry was fragmented & unprofitable Industrial relations were poor Car quality was worse ….and Toyota sparked a quality revolution • In the 1980s The retail industry was national and fragmented The customer proposition was narrow and limited The prices were high (relatively) …and Wal-mart gave us “every day low prices” • In the 1990s The PC industry was fragmented with multiple players Sold high price products that were often out of date Had sales channels full of inventory ….and Dell reinvented the “supply chain” • In 21st century The global logistics industry was highly fragmented The service suffered from inconsistency The customer saw little innovation and pushed margins down ….and how will our industry breakthrough? 9
  10. 10. Drivers of supply chain innovation? • Globalisation has increased the strategic and financial significance of logistics • Reducing product life-cycles creates a state of almost continuous change • Global imbalance of human talent supply and demand is challenging international business • Consumers and governments force business to accept social responsibility re-shaping supply chain design 10
  11. 11. Innovation in the supply chain – track record Accenture 4PL, adding a consultation/ strategic level to SC thinking Toyota LEAN techniques and approach to improve efficiency Dell Responsive manufacturing & 100% demand pull Zara Putting the supply chain at the heart of the company & introducing global standardization PODS Bringing standardization to moving house and storage 11
  12. 12. Innovation from the 3PL’s? Some great, but isolated, examples eg NHS Supply Chain As an industry we are not known for innovation There are several barriers: - open book contracts; - development of supply chain mastery; - low margins 12
  13. 13. Prerequisites for 3PL innovation • Customer confidence in the industry • 3PL industry willing to invest in R&D • Greater industry education and professionalism Innovation fuelled by strong partnerships 13
  14. 14. The journey to innovation Innovation Responsiveness Operations Excellence 14
  15. 15. 1. CEVA 2. Innovation and value 3. Operations excellence 4. How supply chains can deliver value
  16. 16. Operations Excellence culture in CEVA is built on five pillars Health, Safety Smart Zero Defect LEAN and Solutions Start ups Environment Global Standard Metrics 16
  17. 17. Process driven approach Smart Solutions • Leveraging best-in-class Integrated service Operational review portfolio Sector Leveraging expertise scale • Full LEAN implementation Zero defect startup • Ongoing continuous • Operations Excellence improvement Trained Project • Robust project management experts management • Trained experts LEAN Implementation review • Identification of improvement potential 17 17
  18. 18. 1. CEVA 2. Innovation and value 3. Operations excellence 4. How supply chains can deliver value
  19. 19. Creating economies of scope
  20. 20. 4PL for an international automotive supplier By re-engineering the supply chain and acting in a 4PL capacity, CEVA delivered a productivity commitment over the five years of the contract and reduced total logistics cost by 24% Inbound Outbound 17% The LLP provided; TRSP Delivering; cost Centralised and standardised Reduced transportation - Communication, Project Org, Account Mgmt Reduced transaction cost 33% - KPI Management and Reporting WHS Reduced / variable transaction costs cost - Blueprint specifications Lower Inventory (Processes in Material Flow and IT) 27% Increased fill rates In-Plant Standards for local Sub-Agreements cost Reduced waste Customer Commitment: global exclusivity 24% Increased productivity Total CEVA Commitment: productivity Logistic 20 cost
  21. 21. Innovation in ocean freight By focusing on the entire ocean freight operation and implementing enhanced visibility processes throughout, CEVA delivered benefits in container utilisation, product throughput and reduced cost Management of Ocean carrier allocation complex CFS program management Pre-payment of any Management of supply chain Vendor management to ensure origin fees under ex- from Asia = 1,700 FEUs pa bookings meet ordered ship works terms windows and quantity commitments are maintained Monthly itemized billing of all import-related fees Goal is 40% of the cargo bypasses customer DC and ships direct to customer Packaging engineering Key Benefits Option to build container direct to customer or trans-load in CEVA US facility enables postponement distribution option & cost savings related to domestic re-handling Provide customized EDI 856 ASN information where needed Improved container utilization through consolidation process by 7%-10%. Enable earlier visibility to production issues and potential delays prior to scheduled ex-factory dates thus reducing charge-backs from customers. Dynamic in-transit decision making options. Manage carriers to ensure compliance and reducing ocean freight expense Control supply chain earlier in the process and enjoy reduced costs by negotiating local trucking charges Number of pairs shipped per container increased by 22% 21
  22. 22. Leveraging information in the supply chain
  23. 23. Optimizing our integrated solution to provide real time visibility For a leading automotive company, our complex solution includes the management of facilities and delivering the physical flows. IT is the critical enabler in managing all the elements and provides real time visibility for supply chain milestones Resulting in synergy savings of $1.8 million Customer 23
  24. 24. Using information to develop International capabilities Global competition has resulted in this customer sourcing components internationally. In partnership with CEVA has evolved the supply chain from purely domestic, to a fully integrated, international operation. Lines side staging 500 air pallets p.a. Multiple deliveries per shift Air / Ocean Freight Customer 68 Suppliers Demand schedule Warehouse receipts • S.E Asia International and domestic • China • Mexico 1000 containers p.a. Demand Schedule 102 Domestic • Canada via Internet/EDI Suppliers • N America Global Suppliers • Europe Each partner focuses on core competencies Fully integrated domestic and international JIT supply chains CEVA is an extension of the customer’s manufacturing facility No surprises, lowest total cost, and service reliability to the customer 24 24
  25. 25. Transferring best practice to ‘white space’
  26. 26. Aftermarket logistics for Chinese automotive manufacturer By using LEAN and proved aftermarket solutions, productivity increased by 50% with service, inventory and cost improvements at all stages of the supply chain. Warehousing Operate Shanghai Central Parts Depot (50,000 m2) and Xian Regional Depot (10,000m2) Types of storage includes mezzanine, racking, stacking, vertical carousel, car body cantilever Parts repackaging in warehouse Distribution Distribute from Shanghai and Xian warehouses to more than 299 dealers in Eastern China and Western China. Linehaul replenishment from Shanghai CPD to 4 Regional depot Direct delivery from suppliers to dealers Benefits to Customer: Key Statistics: LEAN warehousing adopted and improve pick productivity by Total warehouse size: 60,000 m2 > 50% No. of warehousing staff: 262 Part numbers handled: 25,000+ Service level enhanced direct customer satisfaction improved No. of dealers covered: 300 Cost savings via transparent control on transportation No. of truckloads per year: 8,600+ CPD inventory well controlled -> cost reduction 26
  27. 27. Transferring best practice across sectors – I2M CEVA has combined its GMM & VMI solutions with production capabilities to create an I2M solution which has traditionally been utilised by technology and automotive customers. This solution is moving more and more into the FMCG marketplace with multiple projects and programs underway 27
  28. 28. Fostering social responsibility
  29. 29. CO2 Reduction through supply chain re-engineering By re-engineering all supply chain operations and focusing on CO2, emissions reduced by 18% with more opportunities identified for the future -18% CO2 -1399 ton Situation Analysis Results Existing supply chain with Compare CO2 emissions for 9 Optimal solution is 9 warehouses in Europe regional warehouses versus 1 1 central warehouse: central warehouse Customers all over Europe (preferred) 18% CO2 reduction and Suppliers all over the World Predetermined modality per Inbound CO2 increases +7% origin–destination and however outbound CO2 Different volumes per service customer service level decreases -27% level and related transport modality (air/road/sea) Predetermined emissions per Even more CO2 reduction modality per ton-km opportunities identified 29
  30. 30. In summary • Historically, an industry which has under delivered on innovation • Innovation starts with Operations Excellence and • Is fostered by an environment of strategic partnership • There are several broad channels: - economies of scale - leveraging information - transferring best practice - fostering social responsibility. 30
  31. 31. Of course, there is an alternative ... 31
  32. 32. 32

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