HDL Executive Briefing


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HDL Executive Briefing

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  • History lesson showing significance of logistics. Napoleon invades Russia in the fall of 1812 with 600k men returning in the winter of 1813 with less than 10k. Focus on the role of the supply chain break down as a key reason for defeat.
  • Past-takes up back to time when freight was a back-end function. Viewed as a cost of doing business and very little focus was placed on innovation Today-extremely complex supply chains that are engineered for maximum efficiency. Focus has been on reduction of cost. Future-supply chain will be used by the most progressive companies to build competitive advantage and gain market share. One area of focus will be on “green” solutions.
  • This is a significant portion of a companies operating budget. Ask questions to the viewer to determine how much they know about their company. This can give great insight as to the level of person which you are dealing.
  • Macro Economy issue. How large of a total cost this constitutes to the nation. Rate of increase in real dollars is noteworthy.
  • Percentage of overall GDP. Some comparisons to other countries of the world as interest generator.
  • In spite of the large cost only a small percentage of senior executives believe that they are very effective or better. This is a good chance to Pre-sell the remaining survey result near the end of the briefing .
  • Three points: Everything is dependant on logistics The rate of change is fast and ongoing The options to execute are vast Transition with that while these are key issues of today’s climate we will now follow up with five specific issues that are worthy of strategic discussion.
  • Here they are laid out. We will cover them in detail one by one
  • The US currently has one high speed rail from Washington to Boston and it is limited to 80mph due to congestion France, Spain, Germany and Japan have extensive networks that travel at over 200 mph China operates 20 lines toady and will have an additional 8,00 mile of HSR by 2012 13 Billion set aside over next 5 years from recent stimulus package. The estimated cost of the California portion alone stands at over 40B.
  • Cap and Trade American Clean Energy And Security Act of 2009 Designed to reduce  economy-wide greenhouse gas emissions 17 percent by 2020 Passed the House, now in the Senate Heritage Foundation estimates that total costs will be 161B annually by 2020, rising to 586B annually by 2035 Britain’s Taxpayer Alliance estimates that the cpa and trade in effect only a few years is costing the average family $1,300 per year
  • HOS – Hours Of Service Safety and Drug & Alcohol testing programs NAFTA Trucking Regulation These are examples of regulation that is changing frequently –Are you informed?
  • This has affected everyone. More so in 2008 but prices are once again rising and we believe that longer term this is the most serious issue.
  • Facts of interest
  • ***Need an Update for $ per Gallon*** This is a visual of the longer term historical trend. We are current off the peak and obviously the trend is overall upward. Transition with the lead into the disturbing facts about the long term energy demands from the entire world.
  • Center vertical represents 2008. The top red line for the chart shows that the global demand for crude oil will rise 25% by 2030. This si at the same time that we must face the reality of “Peak Oil”
  • Center vertical represents 2008. The top red line for the chart shows that the global demand for crude oil will rise 25% by 2030. This si at the same time that we must face the reality of “Peak Oil”
  • Capacity for domestic all-cargo planes lost 3M lbs per day in early 2008 with the bankruptcy of Kitty Hawk. Commercial airlines are reducing capacity at double digit rates for the second consecutive year- over 25% of all US air cargo still flies on commercial passenger carrying jets. This reduced volume today will lead to further constraints in the future that will reduce the overall number of options.
  • 260,00 new truck orders in 2006, less than 100k in 2008 Major FTL carriers have taken over 10% of capacity out of operation
  • Relate it to customer – How the effect of extra capacity will play out Driver shortage of 20k existed as early as 2005. YRZ, the largest LTL company in North America has asked the federal government for bailout money. Volume is down 30% year over year and credit status has been downgraded to junk
  • Regardless of these tough issues we are required to perform. During the recession keeping clients is more important than ever. Client satisfaction is key to survival. Budgets must be met and reduced. Productivity must increase. Those who rely on critical logistics must be open minded to new ideas.
  • No significance to order of list. The important things are the lessons learned with experience within one industry that are transferrable to other industries through best practice.
  • In a recent survey, 1,644 customers talked about their experiences as customers of third-party logistics providers and freight forwarders revealing important trends that can help others shape and enhance their own shipping relationships These are the people who operate companies day to day and would know first hand the relevance of this topic. Draw a comparison to the earlier survey that showed only 37% of senior executives feel that a very effective or better job is being done. This represents an area of opportunity. Transition: One of the main tactics utilized to accomplish this would be to stay ahead of emerging trends
  • Velocity of change is increasing, the amount of knowledge required to stay on top of these changes is overwhelming Outsourcing new ideas from innovative partners is critical to staying ahead
  • More data that supports the outsourcing concept. In a recent study, companies going through recessionary periods fared better in the long run where they didn’t let the fear of recession affect their decision to strategically source Some companies during recession feel they should take over the duties in-house Unfortunately, 79% of those companies taking on non-core competency projects in-house (logistics included), lost profits during the recession
  • Superior value creators – based on mathematical formula Research by Bain and Company further supports the notion that the best performing businesses during and after recession are those that focus on the core activities. We do know that difficult periods have historically lead to innovation.
  • Just like the story in the evolution of recorded music, one of the most complex problems faced by logistics managers is that the world is never static Supply chain requirements keep changing Customer demands change Manufacturer requirements change due to product changes Implementing a shipping plan based on today’s data will become obsolete under tomorrow’s conditions
  • This report has taken a look at the significance of logistics historically and into the future It has demonstrated that there are many issues that are complex and that many of them are constantly changing Talked about the importance of execution It has shown that in today’s recession, companies must control costs, while at the same time position themselves for future growth Companies need to select the best logistics partners in order to capitalize on innovation and best practices that achieve outstanding results
  • Efficiency of business model Pricing strategies Innovation
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  • HDL Executive Briefing

    2. 2. Areas Covered <ul><li>Significance of Logistics </li></ul><ul><li>Four Strategic Challenges </li></ul><ul><li>Emerging Trends </li></ul><ul><li>Innovation </li></ul>
    3. 5. Evolution of Logistics <ul><li>PAST </li></ul><ul><li>PRESENT </li></ul><ul><li>FUTURE </li></ul>
    4. 6. What % of gross sales are logistics costs? <ul><li>For companies, 5% to 25% of gross sales are logistics costs, depending on business, geography and weight/value ratio </li></ul>
    5. 7. U.S. Logistics costs rise to 1.3 Trillion Dollars in 2008 SIGNIFICANCE TO U.S. ECONOMY Source: Gilmore, Dan, State of the Logistics Union 2009 , Supply Chain Digest, 6/17/09 This represents an annual Dollar increase of approximately $450 Billion Dollars between 2003 and 2007
    6. 8. LOGISTICS VERSUS G.D.P. 23.3% 17% 7.15%
    7. 9. <ul><li>Only 37% percent of senior executives at large, U.S.-based industrial manufacturers responding to a recent PricewaterhouseCoopers Manufacturing Barometer survey believe their companies' current distribution network and logistics approach is very effective or extremely effective </li></ul>Source: Terry, Lisa, From the Back Room to the Boardroom: Logistics Gets on the Agenda, www.inboundlogistics.com , July, 2008
    8. 10. IMPORTANCE OF LOGISTICS TODAY <ul><li>NOTHING HAPPENS WITHOUT IT </li></ul><ul><li>Logistics has moved from the backroom to the boardroom </li></ul><ul><li>Dynamic nature of the logistics industry </li></ul>
    9. 11. TOPICS <ul><li>Infrastructure Underinvestment </li></ul><ul><li>Regulation & Compliance </li></ul><ul><li>Energy </li></ul><ul><li>The Impact of the Current Recession </li></ul>
    10. 12. Infrastructure Underinvestment
    11. 14. I-710 Corridor from the Port of Long Beach I -710 Under normal conditions I -710 During Port Shutdown
    12. 15. Land Side Access <ul><li>As of 2005, congestion resulting from landside access challenges was estimated to cost as much as $200 billion, wasting 2.3 billion gallons of fuel and 3.7 billion man-hours annually (USDOT MARAD 2005) </li></ul>
    13. 18. Auto Infrastructure & Congestion <ul><li>Each year, 42,500 people are killed </li></ul><ul><li>2.5 million are seriously injured in more than </li></ul><ul><li>6 million motor vehicle accidents </li></ul><ul><li>Accidents/Traffic cost Americans $365 Billion per </li></ul><ul><li>year = $1 Billion a day = $1,200 per American </li></ul>The Surface Transportation Authorization Act of 2009 – Committee on Transportation & Infrastructure, House of Representatives Motor vehicle crashes = leading cause of death of children & people ages 3 – 34 years old.
    14. 19. “ Domestic air-traffic delays last year cost the U.S. Economy as much as $41 billion” - Joint Economic Committee Report, 2008
    15. 20. Regulation & Compliance
    16. 22. Cap & Trade
    17. 23. Government Agencies
    18. 24. <ul><li>The U.S. Department of Transportation website, under regulations.gov boasts over 1.2 Million pages of “Regulatory and adjudicatory information for easy research & referral” </li></ul>
    19. 26. <ul><li>&quot;Gas is so expensive SUV now stands for sport utility victim.&quot; </li></ul><ul><li>--Jay Leno </li></ul>ENERGY
    20. 27. Fuel bills totaling in the billions <ul><li>Every additional $1 per barrel of oil costs the domestic U.S. airline industry over $400 million </li></ul>“ A one-penny increase in the price of diesel annualized over an entire year costs the trucking industry an additional $391 million a year.” - American Trucking Association
    21. 28. The Price of Fuel
    22. 29. Future Demand Source: OECD/IEA -2008
    23. 30. PEAK OIL Source: www.thesocialcontract.com , May 29 th , 2005
    25. 33. “ International air cargo is expected to slump 17% this year World airlines are flying towards a combined global loss of $9Billion” - IATA (International Air Transport Association)
    26. 34. Challenging times for the air cargo industry
    27. 35. <ul><li>Idled ocean container capacity hit a new high of 1.41 million TEUs, or 11.3 percent of the world fleet on March 16, with 484 ships lying at anchor as carriers continued to retrench amid declining cargo volumes on most liner trade routes. </li></ul><ul><li>Citing the London based shipbroker Clarkson Plc the association said in a statement on July 1st that new shipbuilding orders worldwide totaled 1.6 million DWT in the first five months down by 98% from a year earlier. </li></ul><ul><li>For the year to date, Los Angeles and Long Beach remain 16% and 29% behind, respectively, on total containers handled. </li></ul>
    28. 37. Trucking <ul><li>New truck orders down 50% year over year </li></ul><ul><li>U.S. For-Hire Trucking Industry employment declines 124,700 in the last 12 months. </li></ul><ul><li>4,000 company failures per year – Avondale Partners </li></ul><ul><li>NAFTA Surface Trade Volume down 27% year over year - USDOT </li></ul>
    30. 39. Performance today is more important than ever
    31. 40. Industries rely on critical logistics <ul><li>For example: </li></ul><ul><ul><li>Live television broadcasting </li></ul></ul><ul><ul><li>Medical equipment and supplies </li></ul></ul><ul><ul><li>Aerospace /Aviation </li></ul></ul><ul><ul><li>Network equipment (Communications, IT systems, and point of sale ) </li></ul></ul><ul><ul><li>Food production & service </li></ul></ul><ul><ul><li>Printing, publishing & graphic arts </li></ul></ul><ul><ul><li>Critical parts and service contracts </li></ul></ul><ul><ul><li>Just-In-Time Manufacturing </li></ul></ul><ul><ul><li>Tradeshow and events </li></ul></ul>
    32. 42. They agree: logistics offers a competitive & strategic advantage <ul><li>In North America and Europe, 87% of user respondents agree that logistics represents a strategic, competitive advantage for their companies </li></ul>Source: The State of Logistics Outsourcing in 2008, Capgemini, 2008
    33. 43. Emerging trends <ul><li>Changing logistical management – as supply chains intensify, managers will need to know more and respond more quickly to take advantage of positive changes. </li></ul>Source: State of Logistics Union 2007,Gilmore,Dan,Supply Chain Digest, June 2007, Robert Malone on Logistics, Forbes Magazine, 12/27/07 Two major trends have surfaced in transportation/logistics: <ul><li>Logistics outsourcing - to reduce costs, take advantage of expertise or new options & technologies, companies are looking to 3 rd parties for their logistics solutions </li></ul>
    34. 44. Don’t let the recession cause you to make the wrong decisions Source: Penn State Smeal College of Business,  2008
    35. 45.
    36. 46. The best plans developed today can be obsolete tomorrow The best plans developed today can be obsolete tomorrow
    37. 47.
    38. 48. <ul><li>“ The industrial landscape is already littered with remains of once successful companies that could not adapt their strategic vision to altered conditions of competition.” </li></ul><ul><li> - Abernathy </li></ul>
    39. 49. High Definition Logistics Insert Logo Here High Definition Logistics Insert Logo Here
    40. 50. About High Definition Logistics <ul><li>High Definition was founded in 2007 </li></ul><ul><li>Expertise with solutions that include the management of expedited and time definite logistics within North America </li></ul><ul><li>Modern business model design taking advantage of current applications with a focus on back end efficiency </li></ul><ul><li>Client solutions are developed based on the unique needs of those served and vary from one application to the next </li></ul>
    41. 51. Services Provided <ul><li>EXPEDITED: </li></ul><ul><li>Air: Same day, next day, 2 day and 3 day. </li></ul><ul><li>Ground: Next day, 2 day, 3 day and 3 to 5 day. FTL and LTL. </li></ul><ul><li>TIME DEFINITE: </li></ul><ul><ul><li>Managed Delivery, Appointment and Installation, New product </li></ul></ul><ul><ul><li>build out and service contract support </li></ul></ul><ul><li>PROJECT MANAGEMENT: </li></ul><ul><li>Roll outs, Launch/Release distribution, asset recovery </li></ul><ul><li>CUSTOM CLIENT SOLUTIONS: </li></ul><ul><li>Technology, Information management </li></ul>
    42. 52. Unique margin of difference <ul><li>Information management </li></ul><ul><li>Efficiency of business model </li></ul><ul><li>Pricing strategies </li></ul><ul><li>Innovation </li></ul>
    43. 53. <ul><li>High Definition understands the challenges you are facing today and how important logistics is to your overall profitability. We also understand you are trying to cut costs, while at the same time, trying to build relationships with vendors who can help you grow your business and profit. </li></ul><ul><li>Allow us to evaluate your current logistics strategy. Contact High Definition today at: </li></ul><ul><li>High Definition Logistics 1102 East Dallas Road Suite 215 Grapevine, TX 76051 </li></ul><ul><li>Toll Free: 877.884.4443 Fax: 817.329.9400 </li></ul>Sales: [email_address] Customer Service: [email_address] CONTACT