This document discusses DS Smith, a packaging company operating in 37 countries. It summarizes DS Smith's logistics network and strategic plans to improve logistics operations over the next few years. Key focus areas include increasing visibility across the supply chain using telematics, redesigning warehouse infrastructure to reduce costs, improving data analytics capabilities, and developing centralized transport planning. DS Smith also aims to enhance supplier management through a center of excellence and leverage new technologies to make the logistics industry more efficient and less risk averse to change.

1. SCL Conference 2019
DS Smith Network & 3PL Strategic
Development

2. #PackagingStrategists
DS Smith
Background
An €8.5bn Packaging, Paper and
Recycling Company that sits in the FTSE 100
Formed in London in 1940
30,000+ people in 37 Countries
WE ARE Supply Cycle Strategists
Growth through acquisition: x2 in the last
5 years – x2 again in the next 4!
Caring Challenging Trusted Responsive Tenacious
2019201820162015 2017201420132012
€9bn
€8bn
€7bn
€6bn
€5bn
€4bn
Ecopac (RO)
Interstate (US)
Europac (ES)
Creo (UK)
Dekupac (DK)
Gopaca (GR)
P&I (PT)
DPF (FR)
Duropac (EE)
Lantero (IB)
Cartonpac (GR)
Milas (TK)
TRM (UK)
SCA
Packaging

3. #PackagingStrategists
€8.5bn
Revenue
40
Countries
globally
4.6m
tonnes
of
corrugated
packaging
6.3m
tonnes
of fibre
recycled
3.5m
tonnes
of paper
made
18
Paper
Mills
300
Packaging
Plants
28
Plastic
Factories
36
Recycling
Operations
2,000 year old manufacturing process –
innovation driven front end…

4. #PackagingStrategistsDS Smith 4
DS Smith Supply Chain
Supply Chain Circular Economy
► Box to Box Recycling in 14 Days!
Fibre & Paper TRADED COMMODITIES
Only 10% paper made from new fibre
► 1 tree replaced by 8 new trees
► Purest paper is called KRAFTLINER
Recycled paper is called TESTLINER
Raw material is Cellulose and Fibre
► 1 fibre can travel round the chain x8
► Asia is the biggest market globally for
European Recycling
Consumers
Retailers
/ FMCG
DS Recycling
DS Paper
DS Packaging
DS Plastics
External Paper
External Customers
External
Customers
DS Paper
Sourcing
4.6m Tonnes
Of Corrugated
Packaging
6.3m Tonnes
of Recycled
Fibre
3.5m Tonnes
of Paper
Manufactured
18 Paper Mills
36 Recycling Plants
15Bn
Cardboard
Boxes
300 Packaging Plants
Owned
Forests

5. #PackagingStrategistsDS Smith 5
DS Smith Logistics
Network
Push / Pull network = FTL to LTL
► Inventory + VMI
1.37m FTL equivalent movements each
year + 40,000 teu Ocean Freight
Our Products move approximately 350
million km per annum
600 Warehousing Locations:
► 10 Amazon operations
► 5 e-com centres
► 300,000 reels paper in VMI
2,000 Transport Partners
200+ RFQ each year
300 Trucks / 500 Trailers in-house fleet
Consumers
Retailers
/ FMCG
DS Recycling
DS Paper
DS Packaging
DS Plastics
External Paper
External Customers
External
Customers
DS Paper
Sourcing
>40,000 teu outbound
ocean moves (IND, PRC)
1 FEU ~ 18T
300,000 FTL
inbound Fibre
Trucks
160,000 FTL
outbound
paper
1 FTL ~ 22T
30,000 FTL
Inbound
Raw
Materials
800,000 FTL
Equivalents of
outbound card /
boxes
50,000 FTL
Export Truck
Deliveries
Paper
30,000 FTL
Equivalents
of Plastic
Deliveries
Collections
from
Homes and
Retailers
PULL
LTL
PUSH
FTL
FTL FTL
LTL
LTL

6. #PackagingStrategistsDS Smith 6
LOGISTICS DEVELOPMENT DRIVEN BY A CORE STRATEGY
Reporting & KPI’s
10
Governance
GlobalSupplier
Management
5
Central
Transport
Planning
6
Co-ordinated
Infrastructure
&Network
7
EndtoEnd
Processand
Integration
8
Acquisition&
Integration
9
Key Strategic Areas
Becoming
Customer
Centric
Creating Right
Structure &
Culture
Logistics IT
and Systems
Strategy
2 3 4 Enablers
Data Baseline / Analytics Strategy1 Baseline

7. #PackagingStrategistsDS Smith 7
DELIVERED VIA 13 KEY PROGRAMMES
INFRASTRUCTURE REDESIGN
Fewer Warehouses / Lower inventory
ANALYTICS & DATA
Data, Dashboards & Analytics
EXPORTS PLANNING
CONTROL TOWER
Supply Engine Central Planning
TRANSPORT PLANNING
PACKAGING
Site / Cluster / Central Planning
SUPPLY ENGINE MILL
BASED PLANNING
Linking Paper & Fibre movements
at Mills
ORDER VISIBILITY &
TELEMATICS:
Telematics, Visibility & OTIF improvement
GLOBAL CUSTOMER SUPPORT
Working with Global Customers to drive
value
SUPPLIER MANAGEMENT CoE
Global Development of Transport
Supplier base
OWN FLEET DEVELOPMENT
Developing the capability on in-house
fleets & owned vehicles
COLLABORATION
Working with Suppliers & Customers
to drive joint value
ACQUISITION & INTEGRATION
Support Acquisitions & integrations across
DS Smith
E2E PAPER SOURCING IBP /
S&OP SUPPORT
IBP, VMI, Helix and Ship
OPERATIONAL EXCELLENCE
& END TO END STRUCTURE
Global Structure, Site Operational
Excellence &Continuous Improvement

8. #PackagingStrategistsDS Smith 8
Focus on 5 areas
INFRASTRUCTURE REDESIGN
Fewer Warehouses / Lower inventory
ANALYTICS & DATA
Data, Dashboards & Analytics
EXPORTS PLANNING
CONTROL TOWER
Supply Engine Central Planning
TRANSPORT PLANNING
PACKAGING
Site / Cluster / Central Planning
SUPPLY ENGINE MILL
BASED PLANNING
Linking Paper & Fibre movements
at Mills
ORDER VISIBILITY &
TELEMATICS:
Telematics, Visibility & OTIF improvement
GLOBAL CUSTOMER SUPPORT
Working with Global Customers to drive
value
SUPPLIER MANAGEMENT CoE
Global Development of Transport
Supplier base
OWN FLEET DEVELOPMENT
Developing the capability on in-house
fleets & owned vehicles
COLLABORATION
Working with Suppliers & Customers
to drive joint value
ACQUISITION & INTEGRATION
Support Acquisitions & integrations across
DS Smith
E2E PAPER SOURCING IBP /
S&OP SUPPORT
IBP, VMI, Helix and Ship
OPERATIONAL EXCELLENCE
& END TO END STRUCTURE
Global Structure, Site Operational
Excellence &Continuous Improvement
Transport Planning
Visibility
Warehouse Infrastructure
Data and Analytics
SUPPLIER MANAGEMENT CoE
Global Development of Transport
Supplier base
Supplier Management

9. #PackagingStrategistsDS Smith 9
DELIVERED VIA 13 KEY PROGRAMMES (Plus 1!)

10. #PackagingStrategists
Visibility &
Telematics
Business is driven by OTIF
AIM: complete network Visibility @ 2020
Needed a system that worked across
multiple partners AND subcontractors
► Visibility transport flows (ETA & delays)
to drive site productivity
► Sign on glass, e-POD, further reduce
administration and paperwork
► Drives KPI reporting and data
Using info available from existing vehicle
telematics systems
Pay as You Go (SaaS)
Create an end to end Order Visibility
Platform (OVP) drive Customer Service
-Use data available in suppliers’ Telematics systems
-Integrate them with data from TMS or ERP system
-Return data to ERP, or show them on a separate platform
INTEGRATOR

11. #PackagingStrategists
Infrastructure
design
Business built up through multiple
acquisitions over 5 years
600 warehouse locations across Europe
and USA (350 external)
Driving Inventory, Working Capital & Cost
Single Programme to reduce Warehouse #
& cost by 50% by 2021
Remove £30m across 3 years
Across ALL regions
26 warehouses.. ..to 2 warehouses
Warehouse Infrastructure Redesign
Complexity… ..to Simplicity
Regional Network Redesign
• Drive immediate opportunities
• Improve operations & capability
• Create a future Strategic warehouse network
• Manage inventory & improve Working Capital
• Optimise ‘make versus sell’ locations

12. #PackagingStrategists
Analytics & Data
Data is reason Logistics fails in DSS
Data from 60+ ERP systems /
over 200 sources
Maintain Logistics Data Lake
Medium Data not Big Data
Create one version of the
truth across ALL locations
KPI’s, Dashboards, predictive
analytics
Develop corporate
dashboards by 2019
Set up a Data Analytics Centre in Athens in Q2 2018
6 resource + Management - €5.2m savings identified
Logistics
Dashboards
Supplier KPI’s
Inventory Analysis
Network
Analytics
Predictive Analytics
Spend
Analytics

13. #PackagingStrategists
Transport Planning
Transporeon at the Core (SaaS)
Develop 3 Types of Planning model:
European Export Control Tower (FTL):
► FTL Cross Border movements + backloads
► Central Control Tower in FRA
Mill-based Planning Operations (FTL)
► Inbound Fibre / Outbound Paper / Pack
► DE, UK, NL, RO, IT, HR
Packaging Cluster Central Planning (LTL)
► Scheduling LTL – multi-drop routing
► Centralised Planners / Cluster Sites
► SE Control Tower
Self
Billing
Exports
Control Tower
Mill Based
Planning
Pack Cluster
Planning
• Avoid one big system
• There isn’t ONE solution
• Focus on solving problems
One Layer of
Visibility
RFQ
Performance
Modelling

14. #PackagingStrategists
Supplier
Management
Rapid growth – multiple acquisitions
60+ ERP-> multiple sources-> data issues
Not the first choice for larger
hauliers – somebody else’s backload!
► Pack: €200 per pallet / LTL short
delivery distance; Paper: FTL long
distance / cross border
► Procurement driven -> process focus ->
commodity market -> disrupted
forecasting
► Locally driven relationships -> need for
cultural change
FTSE 100 -> behaviour changes ->
accreditation, service / quality > price
DS Smith are ‘discovering the function….
~2,000 Suppliers across the Globe ~ €200k SofW
70% spend in Packaging Division - LTL
In-house is our biggest spend at £28m.. Good??
Top 20 suppliers spend £170m of total £500m
58 Suppliers > £1m = 53% of total spend

15. #PackagingStrategistsDS Smith
3PL Market is Growing
A great market for 3PL’s:
► Tight Capacity
► Complexity
► Technology
► Customisation
► BREXIT
10-15% Growth Forecasts
Highly Fragmented – top 4
players <15% of market
Increasing consolidation & M&A
BUT TO CREATE WHAT?
BIGGER / LESS COST
VERSIONS OF THE SAME
THING?
Logistics has improved but – at best – at a
gradual pace.
There is a low willingness to adapt a
systemic change in our industry.
We are a RISK AVERSE industry.
2011 – 2015 ~ Private Equity invested $150m in digital logistics
start-ups <$10m came from the Logistics industry
2012 – 2018 ~ US Banks invested in $4Bn in FINTECH start ups!
(US Banks and Logistics Industry have the
same % of Global GDP)
WHY?

16. #PackagingStrategists
73 years ago McLean completely revolutionised the Transport industry with invention of the
Shipping Container – taking cost per T from $5.83 to $0.16… where are the next giant steps?
Technology is NO LONGER a barrier to entry: easy, SaaS, inexpensive, connective
► UBER Freight; digital freight forwarding; self driving, load sharing + disappearance of Agents driven by
asset sharing platforms +cloud computing and connectivity
Amazon started to disrupt and disturb the market place
Structure and hierarchy is old fashioned and slow
Boom – Bust approach – doesn’t move the industry forwards!
4PL’s – do they exist anymore? Data. Systems. SaaS. Easy
DS Smith 16
LOGISTICS IS ‘RIPE’ for DISRUPTION!
New breed of technology engaged and
enhanced, data rich & savvy, asset-light,
service focused partners – understand
customers and customer strategy – risk aware
and risk sharing.
Pipe
Dream!!

17. #PackagingStrategists
1. Market Changes:
► Shortages are biting! The market has bounced back for 3PL’s.
► Making up for profits lost in previous years and POOR deals / fuel (whose fault is that?)
► Rates up by 5%, 10%, 15%! With restrictions & add-ons. BUT little service improvement!
► Boom – Bust – crazy raises (profiteering?) -> don’t want to work harder for an increased profit
2. Restricted Market -> less choice
► Carriers moving larger % of their fleet to SPOT MARKET – larger profits
3. Lack of Innovation -> focus on Profit -> disappearance of CI
► Intelligent Transport Solutions aren’t necessarily used intelligently
► ‘Poor deals’ - Bad planning = more revenue
4. Commercial understanding / commercial ‘adolescence’ -> commercial ‘adulthood’
5. Nowhere to Run + Nowhere to Hide – absolute visibility and understanding + data capability
WE CREATED THE MONSTER!!
DS Smith 17
OUR OBSERVATIONS

18. #PackagingStrategists
DS Smith Supplier
Strategy
Forced to react:
► Insource intellect & data
► Outsource Transactions
►Innovate in-house
► We create platform
►SaaS driven – PoC value case
► Work with Partners able to work
with us!
► Maintain core OWN FLEET:
• NOW an interesting concept!
What is the impact of this type of decision and
approach on the future of 3PL’s??

19. #PackagingStrategists 19
DS Smith Supplier
Strategy
Driven by necessity
►Cost & FTSE 100 demands
Integrating S&OP + IBP approach
War Room approach –remove
50% Suppliers in 12 months
Create Supplier Management
Centre of Excellence – by 2020
► New Structure & Talent
SPARTA supplier consolidation
► Few Large Suppliers
► Medium sized & Local suppliers
SPARTA
Aggressive
Supplier
Rationalisation
Supplier
Segmentation
Supplier
Management /
Accreditation
using
RFQ
Management /
Supplier Selection
Value based / CI
driven Contracts

20. #PackagingStrategistsDS Smith 20
Conclusion
Complex DS Smith Network
3 Year Strategy
Key Strategic Programmes
Supplier Management
Changes in 3PL Marketplace
..our response to that
How do we adapt to that
marketplace

21. Thankyou

22. #PackagingStrategists
DS Smith Supplier
Strategy
ERP
Logistics Data Centre
Plan / Route Track
• Report
• Analyse
• Model
• Touchless
• Control Tower
• Self Billing
TMS
Supplier
Management

23. #PackagingStrategistsDS Smith 23
Things are changing.....we GET that…
..It impacts us too!
1. The Customer is King / Queen is changing to the Consumer is King / Queen..
► 70% WW spend – Millennials by 2020 ->Choice; Convenience; on-demand; individualism
► Disappearance of physical retail infrastructure
► Rent & Use – Re-use and Repair
2. E-come represents 4% sales in 2009 – it will represent 20% sales by 2020:
► EVERY purchase will start on-line
► JIT is a prerequisite not an optional extra - Responsiveness and Service will drive Supply Chains
3. Recycling / CSR: Plastic Free aisles; circular supply chain; de-carbonisation; drive the buying
decision
4. Acute cost focus driven by mega-orgs: Amazon; ABC; Alibaba -> drive cost DOWN the chain
5. Megacities: 2050 – 2/3rds of world’s populations will live in cities
► UNBEARABLE congestion and pollution + instant deliveries -> complex city logistics solutions
6. Uberisation and Sharing Platforms
7. Weather, Catastrophy, and Risk – unpredictability and Resilience
8. Geo-politics and threats to Globalisation – protectionism and regional blocks

24. #PackagingStrategistsDS Smith
3PL Market is Growing
A great market for 3PL’s:
► Tight Capacity
► Complexity
► Technology
► Customisation
► BREXIT
10-15% Growth Forecasts
Highly Fragmented – top 4
players <15% of market
Increasing consolidation & M&A
2016 - $8.1Tn -> 55Bn Tonnes
2023 - $15.5Tn -> 92Bn Tonnes
BUT TO CREATE WHAT?
BIGGER / LESS COST
VERSIONS OF THE SAME
THING?
It took the telephone 75 years to reach 50 million people
..it took Twitter 9 months…
…it took ‘Pokemon GO’ less than 20 days
That is the speed of development that OUR
industry has to match as we move forwards!

25. #PackagingStrategistsDS Smith 25
OUR OBSERVATIONS (2)
Scary for the established players - development of ALTERNATIVES
► Market consolidation
► Technology is NO LONGER a barrier to entry: easy, SaaS, inexpensive, connective
Commercial understanding / commercial ‘adolescence’ -> commercial ‘adulthood’
Cultural & talent issues
Nowhere to Run + Nowhere to Hide – absolute visibility and understanding
► Analytics and data are under-utilised and a ‘second thought’
THIS WILL COME BACK AND BITE 3PL – CHANGE WILL SHIFT THE POWER BASE