Working closely with your logistics providers to ensure the provision of optimum capacity ( in the short, medium and long term) By Roger Moore LogiChem 2011 will be the event's tenth anniversary and an opportunity for the most senior chemical supply chain & global logistics directors from the European chemicals community to come together once again share experiences, make new contacts and benchmark the latest chemical supply chain initiatives. Not only will LogiChem 2011 be a chance for the chemical industry to reminisce about the last ten years but an opportunity to shape the next decade. To celebrate a decade of LogiChem, there will be an exciting three day programme filled with networking opportunities in our new location, Antwerp.

1. Working closely with your logistics providers to ensure the
provision of optimum capacity
( in the short, medium and long term)
Logichem 2010 Roger Moore
Dusseldorf Supply Chain & Customer Services Manager

2. Leading questions
Who is Ineos Nova ?
Am I clear about my service and capacity requirements ?
Sourcing strategy –what are my options to secure capacity?
Do I have the right portfolio of LSPs ?
What is the right type of relationship for me?
What might we expect ? – the Ineos Nova experience
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3. INEOS NOVA
Business:
Global manufacturer of styrene and styrenic polymers
History:
Formed in October 2005 through merger of BP and Nova European
styrenic polymer businesses,
Expanded in October 2007 to include North American assets – 50/50 JV
between Nova (IPIC) and Ineos
Headquarters: Joliet, Illinois; Fribourg, Switzerland for Europe
Shared service centre in Breda NL
Revenue:
Approximately €2.7 billion ($3.8 billion )
Employees: Approximately 1150
Sites: 11 manufacturing plants in 6 countries
Volume:
Styrene monomer– 1,675 KT
Polystyrene – 1262 KT
Expandable Polystyrene – 410 KT (all in Europe)
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4. Working Together
What do service partners say about our industry?
Heavily regulated by external / internal controls
ADR / IMO etc SQAS / CDI / EN norms/ site rules
Inflexible in general : slow to change and risk averse
Low levels of outsourcing / lack of trust How do we
Relatively low levels of vendor loyalty become the
Tendering processes customer of
choice?
Cost driven despite insistence on quality / safety standards
Unwilling to support (re) investment in new equipment
Use volume as a lever to reduce costs
Horizontal collaboration not widely adopted
Operational constraints limit asset utilization
Plant loading hours
Customer unloading windows
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5. Some impacts of recession-
What we see in the market
ion! t!
os
Service providers downsized / restructured e
er a rk
Once gone drivers are lost to y the industry s m
a cit ler
Aggressive and non sustainable pricing el
c ap s policies
ul t-
Significant imbalance and changes
a
oin traffic flows
e s n gt
Marginal rintermodal services iwithdrawn ( rail & ferry)
ov
N et
em
Significant unavoidable cost increases not fully recovered
ar
we
•Maut increases
ow
•Fuel price volatility
dn
..an
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6. How do we secure capacity for the future
in a sellers market ?
More carriers / fewer carriers: portfolio management
Cross regional vs local / niche players
Time and mileage agreements / dedicated fleet
Look for productivity / efficiency gains: maximize utilization
Maximise inter-modal volumes = increase driver output
Stand by commercial agreements - esp. payment terms
Look for more flexibility on transit times / delivery dates
Manage the order profile – demand smoothing
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7. Developing a logistic sourcing strategy –
3 step approach to securing capacity
Understand own capabilities / attributes
Own marketing / selling strategies
Organizational capabilities / resources
Distribution cost or supply chain management ?
Achieve internal / external alignment…..
Critical performance criteria – what do we need from our carriers
‘Rules of engagement’ – customers and LSPs
Establish clear SLA terms and conditions
Measure performance
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8. Logistics Landscape
-important in defining requirement
A mature commodity business - mainly repeat FTL business
Simple mode / product mix
Dry Bulk / 1000kg IBC (octabins) / 25 kg bags
ADR adds complexity
Compact logistical footprint
Europe wide markets
Av. Delivery -1000km
Small / medium size buyer
800kt / € 32m spend
Small central procurement and planning team
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9. Business characteristics- what is the
service need ?
Niche purchases Speciality services
Sector/product/customer
one-off discrete items
Cost / service level
needs
high cost / low support
Critical service element
Commodity Purchase Leveraged volume
high volume / repetitive Combining service needs
transactions
Service level / SRM support
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10. Service providers……
choose your partner with care !
‘I want to speak with the man who pays the driver’ = asset owning
Sub contracting is OK …. to a certain level
Chemicals require a particular mind – set Look for ‘best
Customer segmentation is a fact of life
fit’ synergies
Is my service provider a true partner ?
Does the LSP REALLY understand my business ?
How much can I afford to invest in this relationship ?
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11. Commercial relationships – what are the options?
Spot purchase Value added logistics
high Higher risk of failure High level of integration between parties
Sub-contracted? Sustainable relationship
Lack of customer loyalty Investments / binding contracts
High cost of ownership for shipper Win – Win
M Performance incentives /benefit sharing
a Open book / cost plus structure
r Periodic tendering Long term partnerships
g Typical procurement strategy Lower cost of maintenance
i Relatively high implementation effort Low risk / high quality
n Start up risk – change management Often based on ‘ cultural alignment’
Used when capacity exceeds demand Value proposition is acknowledged
s
May not be sustainable Flexible to respond to market changes
low
limited extended
Business continuity
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12. The Ineos Nova experience
Time spent in strategy definition is time saved in execution !
(but we still made mistakes )
Be prepared to make changes – ethically.
Mix of pan European – regional – local carriers
Bulk and packaged goods freight markets very different - demand different
approaches
Added value is for all – if it isn’t it isn’t added value
Put energy into strengthening relationships……….not building new ones
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