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TAL17 - Michael Martin, DHL
- 1. PLEASE INSERT CLASSIFICATION HERE DIGITAL INNOVATION IN LOGISTICS Delivering insight today. Creating value tomorrow.
- 2. PLEASE INSERT CLASSIFICATION HERE 2 Welcome Michael Martin VP Strategic Development Global Automotive Sector, DHL Supply Chain • The automotive industry is a key focus sector within DHL Supply Chain • Role focuses on driving an aligned global sector strategy, using innovation and best practice to accelerate growth in both mature and emerging markets • Over the past 16 years has amassed a wealth of experience within the automotive logistics industry working for OEMs and Logistics Service Providers TAL Conference, Pilsen, September 2017
- 3. PLEASE INSERT CLASSIFICATION HERE 3 The supply chains of the future will be fully digitalized, enabled by technology and standardized processes TAL Conference, Pilsen, September 2017 Industry 4.0 is upon us – are we ready? 1750 1850 1950 Future 3rd Industrial Revolution Electronics, IT, automated production 2nd Industrial Revolution Mass production, labor division, electricity 1st Industrial Revolution Steam, mechanical production Industry 4.0 Supply chain 4.0 & Digitalization Today
- 4. PLEASE INSERT CLASSIFICATION HERE 4TAL Conference, Pilsen, September 2017 Ready for a fast changing world? CHANGING CUSTOMERS CHANGING LOGISTICS LANDSCAPE CHANGING TECHNOLOGIES European industries could grow EUR 1.25 trillion from Industry 4.01 by 2025 by adopting digital business models and improving their digital processes Demand for more flexible Supply Chain solutions is increasing 3 in 5 companies plan to invest significantly in demand forecasting and want to decrease safety stock levels 3 81% of logistics companies expect Artificial Intelligence to have a strong impact on their business5 AI will help to raise efficiency and open up new business opportunities More than 90% of companies say importance of data and integration with suppliers will increase 2. Significance of data gathering, analysis and utilzation for decision making is more important than ever. Efficiency needs to increase Leaders in digital supply chain management have 40% to 110% higher operating margins than their competitors 4 8By 2022, 1 trillion sensors will be connected to the internet 6. Data generated from sensors will be key for analysis and predictions 1. Fraunhofer 2. PwC 1. AT Kearney 2. BCG 1. Forbes 2. Supply Chain Digital
- 5. PLEASE INSERT CLASSIFICATION HERE 5TAL Conference, Pilsen, September 2017 It may be difficult to see past the now “Everything that can be invented has been invented.“ Charles H. Duell, Commissioner of US patent office, 1899. “What can be more palpably absurd than the prospect held out of locomotives travelling twice as fast as stagecoaches?” The Quarterly Review, March 1825. “The machine may even carry mail in special cases. But the useful load will be very small. The machines will eventually be fast, they will be used in sport, but they are not to be thought of as commercial carriers.” Octave Chanute, 1904. "The actual building of roads devoted to motor cars is not for the near future, in spite of many rumors to that effect." Harpers Weekly, 1902.
- 6. PLEASE INSERT CLASSIFICATION HERE 6TAL Conference, Pilsen, September 2017 It may be difficult to see past the now Lowering costs – freight spend has 41% variance between low and high Increase service – visibility of shipments, providing internal information Proactive – Able to anticipate problems and do something about it Where the disruptions are coming from? DEVELOPING SYSTEMS INCREASED CONNECTIVITY EXPONENTIAL DATA ARTIFICIAL INTELLIGENCE
- 7. PLEASE INSERT CLASSIFICATION HERE 7TAL Conference, Pilsen, September 2017 The changing landscape of the global automotive industry The challenge is that the market is constantly changing and uneven 1.2billion vehicles in use globally today 2.0billion vehicles in use by 2035 250million connected cars by 2020 Growth Increase in car ownership in new and emerging markets Developing Mexico, India and China New market entrants Geographical shift Government tax incentives for improving Co2 emissions Advances in powertrain development Investment controls by countries and regions Regulations Greater consumer expectations Increased personalisation Seamless service across purchasing, finance, insurance and aftersales Customer behavior 39% of drivers say their most important consideration is in car technology Self driving technology reducing incidents and driver errors Data – the next battlefield Technology
- 8. PLEASE INSERT CLASSIFICATION HERE 8 Increasing level of electrification will change the market and supply chain TAL Conference, Pilsen, September 2017 Emission > Regulations > Electrification > Market and SC dynamics Emission targets and regulations Countries setting sales targets of electric and hybrid vehicles in order to reduce emissions: 2040 – Diesel and Petrol in United Kingdom, France 2030 – Diesel and petrol in Germany, India, and The Netherlands 2025 - Norway only allowing electric or plug-in hybrid 2019 – All Volvo cars will have an electric motor Market and SC dynamics Vehicle “make- up” - reduction in number of components Move from manufacturing to assembly Supply chain operates differently Easier for new market entrants to enter and grow Less parts means less revenue and profit in the aftermarket
- 9. PLEASE INSERT CLASSIFICATION HERE 9TAL Conference, Pilsen, September 2017 Localized challenges and opportunities across Europe Impacting the market in Europe Rising motor parc 9% rise since 2005 (573 per 1,000) Average vehicle life increasing Up from 9.7 to 10.7 yrs since 2015 Manufacturing growth 23% of all global production in Europe Emerging vs. mature markets Production moving to low cost economies
- 10. PLEASE INSERT CLASSIFICATION HERE 10TAL Conference, Pilsen, September 2017 Technology drives changes We see an ever increasing level of technology in cars Technology related parts 50+ computers in a premium car today Diverse range of suppliers New entrants to market Industry convergence Increased sequencing demands
- 11. PLEASE INSERT CLASSIFICATION HERE 11TAL Conference, Pilsen, September 2017 Complexity from technology The convergence with automotive and technology supply chains Sourcing from new suppliers High value parts Shorter product cycles Accelerated supply chain agility
- 12. PLEASE INSERT CLASSIFICATION HERE 12TAL Conference, Pilsen, September 2017 Connectivity is opening new doors Connectivity is driving large volumes of data Remote diagnostics Maintenance on demand Connected cars Protecting aftermarket sales
- 13. PLEASE INSERT CLASSIFICATION HERE 13 The automotive supply chain – it’s complex! Tier 3 Tier 2 Tier 1 Cross dock Subassembly Sequencing Knock down Warehousing Event Launch R&D Compound Dealers Tires RDC LDC Retail Recalls OEM Finished Vehicles AftermarketInbound OEM Returnable Packaging Packaging Containers Trailers Trucks Pallets Cars People GPS GPS Blackbox Shipment tracker Smartphone Scanner OEM Finished Vehicles AftermarketInbound OEM Finished Vehicles AftermarketInbound OEM WMS 1 WMS 2 WMS 3 TSP 1 TSP 3 TSP 2 Carrier 1 Carrier 2 Carrier 3 LSP 1 LSP 2 LSP 3 TAL Conference, Pilsen, September 2017
- 14. PLEASE INSERT CLASSIFICATION HERE 14 The automotive supply chain – it’s complex! Tier 3 Tier 2 Tier 1 Cross dock Subassembly Sequencing Knock down Warehousing Event Launch R&D Compound Dealers Tires RDC LDC Retail Recalls OEM Finished Vehicles AftermarketInbound OEM Returnable Packaging Packaging Containers Trailers Trucks Pallets Cars People GPS GPS Blackbox Shipment tracker Smartphone Scanner OEM WMS 1 WMS 2 WMS 3 TSP 1 TSP 3 TSP 2 Carrier 1 Carrier 2 Carrier 3 LSP 1 LSP 2 LSP 3 TAL Conference, Pilsen, September 2017
- 15. PLEASE INSERT CLASSIFICATION HERE 15TAL Conference, Pilsen, September 2017
- 16. PLEASE INSERT CLASSIFICATION HERE 16TAL Conference, Pilsen, September 2017 Complexity from growth Increasing need for standardization Recognizing infrastructure Skills requirements Replicable solutions Collaboration
- 17. PLEASE INSERT CLASSIFICATION HERE 17 Developing meaningful insights from data Active vehicle management TAL Conference, Pilsen, September 2017 Creating value from connectivity Predictive supply chain Real real time optimization Supply chain resilience End to end visibility Sequenced assured
- 18. PLEASE INSERT CLASSIFICATION HERE 18TAL Conference, Pilsen, September 2017 Active vehicle management Vehicle uptime boosted by up to 30% • Accurate information leads to efficient repairs • Grouping of maintenance work - reduced unnecessary driving time • Reduction of CO2 emissions and fuel consumption • Drives improvements in driver behaviour • Increase in health and safety metrics • Reduced waste of unnecessarily replaced parts • Safety improvements through condition monitoring • Potential scheduling of servicing integrated with daily deliveries
- 19. PLEASE INSERT CLASSIFICATION HERE 19TAL Conference, Pilsen, September 2017 Supply chain resilience 93% of the worlds top companies are not prepared for disruptions • Identify choke points, critical locations and clustering • Ability to visualise risk in real time for your supply chain • Determine risk hot spots and where the benefit of investing in mitigation work is to maximize benefits • Make better informed sourcing, supply chain set-up & network re-designing decisions based on risk profiling • Plan for the worst case scenarios with ready to execute back-up plans • Secure scarce material, transport and production resources during a disaster • Avoid emergency logistics costs due to unplanned coordination of mitigation actions • Save time for production re-sourcing, re-planning and alternative sequencing
- 20. PLEASE INSERT CLASSIFICATION HERE 20TAL Conference, Pilsen, September 2017 Predictive supply chain Predicting future demand can improve margins by 1% to 2%. • Understand most common failing parts for aftermarket use, how many years they last, what time of year they fail and why they fail • Data can be used to suggest a specific number of parts that will be required for certain months • Procurement plans can be adjusted accordingly • Using data to tell us where parts need to be • Leaner stock holding from historical data • 30% lower inventories • Improved customer service levels
- 21. PLEASE INSERT CLASSIFICATION HERE 21TAL Conference, Pilsen, September 2017 Real real time optimization Instant real-time asset monitoring • Tagged items enable more accurate and faster track & trace and condition monitoring • Across all modes of transportation • Improving integrity control and decision making • Dynamic consolidation on routes • Increased efficiency of vehicles by 11.8% • Increased fill loads by 3.8% (higher in non auto sectors) • DHL Smart Truck: • Reduced number of miles travelled by 15% • Reduced length of average route by 8% during its pilot stage • Reducing fuel consumption and CO2 emissions.
- 22. PLEASE INSERT CLASSIFICATION HERE 22TAL Conference, Pilsen, September 2017 End to end visibility Integration of providers, systems and data sources to provide one view • 637million shipments expected across international CEP market1 • How many of these shipments are checked and when do people start to believe in the data vs. interrogation? • How many of those checked are due to something going wrong? • How much wasted time spent on “checking”? • How do we get hold of issues before they arise? • Integrating multiple systems, providers and data sources • Creating an integrated industry Source: 1 ATKearney: Europe’s CEP Market
- 23. PLEASE INSERT CLASSIFICATION HERE 23TAL Conference, Pilsen, September 2017 Sequenced assured Creating a connected inbound supply chain • Standardised, visualised, lean in-plant sequence operation manufacturing sites • Improved service level by visualising material flow • Visibility for key supply chain points (Supplier despatch, en route, receipt into plant & stock position) • Introduction of a new level of control for sequenced product • Sequence progression status against live manufacturing build achievement • Creates real time alerts for early management decision making • Pushes supply disruption away from manufacturing • Allows visibility to see in plant stock & prevent unnecessarily shipping • Operations team can make a priority assessment live when vehicles arrive
- 24. PLEASE INSERT CLASSIFICATION HERE 24TAL Conference, Pilsen, September 2017 New technology drives new business models and logistics solutions Digitalization enablers Automotive impact Logistics response Enables Synergies • Value added aftermarket set- ups (service orientated) • Fleet management • Ecommerce distribution • Delivery to cars • AGVs • Remote diagnosis based maintenance • Digital warehouse • Supply chain connectivity & visibility • Multi-modal optimization • Dynamic planning • R360 Risk management • Mobility Service • Car sharing • Ecommerce • Data monetization • Social marketing • Connected cars • Remote diag • OTA updates • 3D printing • Infotainment • Manufacturing automation • Big Data • M2M • Machine learning New business models New products & services Process optimization INTERNET OF THINGS BIG DATA CLOUD COMPUTING Solutions offerings New technologies Value Requires
- 25. PLEASE INSERT CLASSIFICATION HERE 25TAL Conference, Pilsen, September 2017 Aligning the wheels… Supplier manufacturing Inbound logistics Finished vehicle logistics AftermarketManufacturing logistics Using data to synchronise the automotive supply chain TODAYTOMORROW
- 26. PLEASE INSERT CLASSIFICATION HERE 26TAL Conference, Pilsen, September 2017 Moving from individual (silo) systems to one environment Buildings People Vehicles System System System Buildings People Vehicles System Value comes from connecting people and assets through one system
- 27. PLEASE INSERT CLASSIFICATION HERE 27TAL Conference, Pilsen, September 2017 Integrating AI Potential challenges Boundary setting for better decision making Human trust and decision making process – i.e. parts value exceeds overall value DATA ANALYSIS ACTIVE VEHICLE MGMT. PREDICTIVE SC INVENTORY SAFETY LEVELS NETWORK DESIGN PURCHASING MGMT. Potential opportunities
- 28. PLEASE INSERT CLASSIFICATION HERE 28 The future TAL Conference, Pilsen, September 2017 Harnessing the data New business models Efficient asset utilization Drives Enables
- 29. PLEASE INSERT CLASSIFICATION HERE Thank you Michael Martin VP Strategic Development Global Automotive Sector, DHL Supply Chain michael.martin2@dhl.com