Frederik Beelaerts van Blokland, Schenker on 'The Economy: Get Ready for the Rebound'
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Frederik Beelaerts van Blokland, Schenker on 'The Economy: Get Ready for the Rebound'

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Frederik Beelaerts van Blokland, VP Automotive, Schenker speaks at a session on 'The Economy: Get Ready for the Rebound' at the 7th European 3PL Summit in Brussels, November 25th 2009. ...

Frederik Beelaerts van Blokland, VP Automotive, Schenker speaks at a session on 'The Economy: Get Ready for the Rebound' 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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Frederik Beelaerts van Blokland, Schenker on 'The Economy: Get Ready for the Rebound' Frederik Beelaerts van Blokland, Schenker on 'The Economy: Get Ready for the Rebound' Presentation Transcript

  • DB Schenker Corporate Flexibility as Success Enabler DB Schenker Frederik Beelaerts van Blokland VP Automotive Logistics SCM/CL
  • Agenda Company Introduction: DB Schenker reAct09 G4G (go for Growth) Flexibility in Pricing Flexibility within a global corporate environment Flexibility through market trend adaptations FLEX Logistics flexibility as an evolution 2
  • We are a leading passenger and logistics company 1) DB Bahn DB Schenker DB Netze Track Long Distance Rail No. 1 Public transport in Rev. (EUR mn) 3,523 Rev. (EUR mn) 4,654 Rev. (EUR mn) 725 Europe EBIT (EUR mn) 306 EBIT (EUR mn) 307 EBIT (EUR mn) 670 Employees (‘000) 15 Employees (‘000) 29 Employees (‘000) 41 No. 2 Passenger rail transport in Europe DB Bahn DB Schenker DB Netze No. 1 European rail Regional Logistics Stations freight transport No. 1 European land Rev. (EUR mn) 6,687 Rev. (EUR mn) 14,680 Rev. (EUR mn) 344 transport EBIT (EUR mn) 857 EBIT (EUR mn) 381 EBIT (EUR mn) 210 Employees (‘000) 25 Employees (‘000) 62 Employees (‘000) 5 No. 1 Biggest rail network in Europe DB Bahn DB Netze Rev. (EUR bn) 33.5 DB Services Urban Stadtverkehr Energy EBIT (EUR bn) 2.483 Rev. (EUR mn) 1,962 Rev. (EUR mn) 112 Rev. (EUR mn) 554 EBIT (EUR mn) 205 EBIT (EUR mn) 131 EBIT (EUR mn) 74 Employees (‘000) 240 Employees (‘000) 12 Employees (‘000) 25 Employees (‘000) 2 As of 31.12.2008 1) Difference between the sum of the departments and DB concern result of other activities/consolidation d rove app 2008) (DB
  • reACT09 – An initiative to counter the recession and solidify our market positons Counter Measures – human resources, adapting our expenditures 1 and investments Ziele 2 Competitive Pricing –through processes and structure optimization Market Strategy – Further improve service offerings and strenghten 3 business development initiatives. 4
  • Flexibility on global scale - Go for Growth (G4G) Situation: Massive recession in process of development (Nov 08) Objectives: To structurally and globally counter the adverse contract logistic sales forecast Measures: Establish four clearly defined industry segment: automotive, electronics, FMCG and industrial Focus on developing/emerging markets per region Focus on specific logistic services Invest in 100+ FTE for: business development, tender management and implementation explore M&A opportunities to support our growth strategy Requirements/Challenge: Ability within DB Schenker to demonstrate it’s global flexibility…and do it swiftly Outcome: Short term incremental sales/revenue growth Proactive selling Established a clear regional & national logistic focus Increased our sales hit rate Established sales synergies through a globally aligned business development strategy Reduction in participation of “benchmarking” RFQs
  • Flexibility in pricing: Generic contract logistic costing model Costs V A FTE (partially) R Warehousing MHE I (partially) FTE (partially) A V B Consumable Warehousing MHE A Sales L materials (partially) R E prior Consumable to Transaction materials based Building & surface crisis payment Building & surface F area I Sales area X Facility equipment F during Facility equipment Investments I 2009 Investments X Fixed workforce Fixed workforce Administration and Administration & overheads overheads Conflict: Not all costs can be convereted to variable costs 6
  • Flexibility in pricing: Short Term counter measures Reduced of temp workers Variable Costs Terminated of short term contracts Variable-Kosten Reduced shifts Terminated short term leases Fix-Costs Consolidated businesses Fix-Kosten Reduced FTEs No long term business sustainability 7
  • Flexibility in pricing: Long term measures for business sustainability Proactive Service Maintainance − Renovation & facility maintainance with own FTEs Conventional Measures Human Resource Training − Raising skills set level, cross trainning, know-how transfer „Quick Wins“ Optimize Purchase − Volume optimization, low cost sourcing, customer bundling Driving Innovation − IT refinements, process optim., lean engineering Innovation Measures Further Development of Management Systems − EFQM, FLEX, 5S „Sustainable Wins“ Reinforcing Business Development − Go for Growth, Cross-Selling, Investement in resources business sustainability 8
  • Flexibility within a global corporate environment Some preconditions for flexibility Global network Predominately non-asset based Structured global transfer of know how Structure know-how (FTE) transfer – “flying team” 3+ years contracts – span recession “Fair” contracts: gain sharing mechanism and price/volume structures Shift our geogrpahic within our global network to focus on growth regions Fully integrated solutions [SCM] covering all services (forwarding, rail & logistics) Success Criteria Qualified, Motivated and Flexible Workforce
  • Flexibility through market trend adaptations Logistics: The coordination of information, material and finances ranging from procurement, production and distribution including waste management 1. Service Bundling 2. Shift in purchasing criteria for logistic services 3. Acceleration of Cooperation 4. Light/complex assembly 5. VMI & O
  • Flexibility through market trend adaptations 1. Logistic Trends: Service Bundling Bundling of logistic services (demand side) A. OEM’s and increasingly tier-1 want: One contract (multiple services) One overhead One pricing module One system (IT) Costs synergies through consolidation of services
  • Flexibility through market trend adaptations 1. Logistic Trends: Service Bundling OMS Outbound consolidation Forwarding Customs Inbound warehousing Quality checks Light & heavy assembly JIS/JIT Waste Management Complete SCM visibility – IT Logistic / Lean engineering VMI & O Spare parts logistics Returns management & repair Reverse Challenges for Integrated Logistics Logistic service providers are largely fragmented in service offering ….but with a growing tendency to bundle services Customer concerns Loss of know-how Loss of control Procurement Production Distribution “All eggs in one basket” Not a specialist in all fields
  • Flexibility through market trend adaptations 1. Logistic Trends: Service Bundling Bridging the customers concern gap…. Develop partnership with stronger stakes between customer & logistic provider Gradual expansion of services Logistic providers seek partnerships with other logistic companies to offset their short comings Establish customer Control Tower functions for Challenges for Integrated Logistics Challenges for Integrated Logistics large integrated projects Customer concern Customer concern Establishment of new legal entities Loss of know-how (customer & logistic provider) Loss of control Multiple suppliers contract 1 LP for common client “All eggs in one basket” Not a specialist in all fields
  • Flexibility through market trend adaptations 2. Shift in primary purchasing criteria for selelction for logistic providers Service Quality 3 References 2 Price/Rates Decision Financial Process Stability 1 Innovation 4 1 Financial stability of LP Risk 2 Proven track record of performance Aversion 5 3 Reliability of service 4 Ability to reduce FTE, costs & time 5 Ability to mitigate/reduce previous risks
  • Flexibility through market trend adaptations 2. Shift in primary purchasing criteria for selelction for logistic providers Service 2007 - 2008 2009 Service 2007 - 2008 2009 Forwarding Price/Rates Price/Rates Warehousing/JIS/ Price/Rates Price/Rates production Risk Aversion Risk Aversion Risk Aversion Process Optimization Quality Process Optimization Quality Quality Process Optimization Quality Financial Stability References Financial Stability References Process Optimization Risk Aversion References Financial Stability References References 20% of forwarding RFQs have increased their focus on process 73% of decisions are based on process optimization initiatives proposed in the initial Optimization. Forwarding is still predominately price driven bidding. Fixed “Wall/people/process, IT” are open for optimization at bidding phase. Service 2007 - 2008 2009 Service 2007 - 2008 2009 IT (Visibility Trading Tooling) Quality Quality Finance* Quality Risk aversion Process Optimization Process Optimization Price / rates Price / rates Risk Aversion Financial Stability Risk Aversion Risk Aversion References Process Optimization References References Process Price/Rates Price/Rates Optimization Quality Financial Stability Financial Stability Financial Stability References No change in decision priority. Many RFQs = few bidders Implementation timing guarantees and start-up cost models Key issues :Product liability, Pricing, Inventory duration, Engineering changes
  • Flexibility through market trend adaptations 3. Acceleration of Cooperation Traditional Automotive Cooperation In establishing new cooperations, industries are focusing on innovations that lead to cost improvements as opposed to functional improvements This development of cooperations is driven and accelerated by financial crisis. Cooperation of Mutual Support - Network Tier 1 LP1 Tier 0 OEM Tier 3 LP2 Tier 2
  • Flexibility through market trend adaptations 4. Light & complex assembly as an integral part of SCM Demand for value-add services are developing to include assembly functions Why? Shortage of production space at OEM/tier-1 It’s cheaper on account of LP wage structure Less FTE on OEM/tier-1 payroll OEM/tier-1wish to focus on their core competence Cost pressure These services are predominately rendered outside OEM/tier-1 facility Demand is growing in particular where warehouse outsourcing opportunities have already exist Inventory is increasingly often owned by LP Main Outsourced modules Move from basic/simple assembly to complex Instrument panels Engine drerssing Axels Tyre and wheel Headliners Pedal boxes Modules (IPs, engine dressing, axles, etc.) Wire harness Fuel tank Consequence: Emergence of production and engineering oriented LP
  • Flexibility through market trend adaptations 5. VMI & O (Vendor Managed Inventory & Owned) There is an increase in demand for VMI& O for intercontinental supply chains - China to US, EU to Russia & S. America - inbound SCM Supply chains with high value-add components (i.e. forwarding with: warehousing, quality control, light assembly) Supply chains with high commodity value International banks were increasingly addressing this demand by offering new solutions to LPs VMI: a process in which a supplier generates orders for its distributor based on demand information sent by the distributor The coordination of information, material and finances ranging from procurement, production and distribution including waste management.
  • Flexibility through FLEX: Flawless Execution The business excellence model for contract logistics FLEX Program Vision Tool kit & Regional FLEX program Management HQ Services with specific target setting reviews Region 1 Region 2 Region … Region 7 Implementing first class Region benchmark practices within time Continuous FLEX ScoreCard Global support + Human Common targets Improvement Profitability Resources Process Country Growth Customer satisfaction and budget Workflow Operation Knowledge Management Management Approach Feed back Efficient reporting Develop measures within a FLEX Tool Box global team that can support Human Resources Continuous Improvement local business units. Carrier development Schenker- 5S-Audits Taskforces for project Continuous Customer Centric Value Map´s Applications Human Resources implementation Improvement Process Roll out of Six-Sigma LEAN Complete supply chains Bonus mechanism based on Methode KPI-Performance solutions including business FLEX development, tender Knowledge Management Workflow Management management, implementations PM Training for contract Standardized logistic process and business monitoring logistics .reporting tools Knowledge Management Vertical Market Training Workflow Management Implementation support tools Process standardization for Establishment of project control, BD,tender management, Risk-Management mitigation contracts & implementaiton.
  • Flexibility as an evolution Market Trends Worldwide for LSP
  • Thank you!