According to the World Economic Forum (Supply Chain Decarbonization Report 2009), the overall capacity use of EU transport networks is less than 50%. Horizontal collaboration offers a radically new way to organize supply networks and realize 2-digit improvements in logistics cost, service level and sustainability. Some of the largest corporations in the world are currently gearing up to bundle their supply chains by creating logistics communities built on trust, synergy and gain sharing. This presentation provides a brief summary of terms, concepts and examples which are relevant to this highly innovative and rapidly evolving domain.

1. Eyefortransport
Horizontal Collaboration in the Supply Chain Summit
Brussels, June 1st – 2nd 2010
Establishing a Common
Vocabulary:
What IS Horizontal
Collaboration?
Presented by Sven Verstrepen,
founding partner TRI-VIZOR
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2. About TRI-VIZOR...
≡ The world’s first “Cross Supply Chain Orchestrator”
≡ Impartial, transparent shareholder structure
≡ Spin-off of the University of Antwerp
≡ Strategic Advisory Board
≡ Wouter De Geest (CEO BASF Antwerpen)
≡ Luc Hooybergs (CEO NIKE CSC)
≡ Roger Roels (Member of Executive Committee of DP World, Dubai)
≡ Marc Vandenplas (former CEO of various LSP’s)
≡ Alain Verschoren (Rector University of Antwerp)
≡ 3PL Advisory Board
≡ Certified 3PL’s (NYK Logistics, Ewals Cargo Care, Hessenatie Logistics,
G.Snel, Nova Natie,...)
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3. Today’s lesson
Welcome to the age of « co-opetition » !
≡ Vertical collaboration (1990-2006):
≡ Between subsequent actors in the same supply chain
≡ Between suppliers, manufacturers and customers
≡ Outsourcing, VMI
≡ Driven by ICT (extended enterprise)
≡ Horizontal collaboration (2006 -…):
≡ Between companies in the same market
≡ Alliances, partnerships, network organisations
≡ Collaborate in some markets, compete in others
≡ “New frontier” or “paradigm shift”?
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4. Vision
≡ Before 2006 : Trade off between 2 supply chain forces
Supply Chain
Efficiency Effectiveness
Optimisation
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5. Limits of internal
supply chain optimization
Sustainability
≡ Before 2006: Trade off
between 2 supply chain
forces
≡ After 2006 (*) : Trade off
between 3 supply chain Supply
forces reduces further Chain
Optimisation
optimization potential
Efficiency Effectiveness
(*) 2006: An Inconvenient Truth; Stern Report;…
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6. Vision
≡ Only cross-company collaboration, consolidation and
bundling of flows can simultaneously improve efficiency,
effectiveness and sustainability
Effectiveness
Supply
Cross
Chain
Supply
Sustainability Supply Chain
Supply
Chain
Chain
Optimisation
Supply
Chain
Efficiency
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7. What’s in a name?
“A partnership is a tailored business
relationship based upon mutual trust,
openness, shared risk and shared rewards
that yields a competitive advantage,
resulting in business performance greater
than would be achieved by the firms
individually.”
(Lambert & Gardner, 1999)
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8. « On the origin of collaboration… »
commensalism mutualism
+0 ++
parasitism
+-
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9. Thesis
“If you want to be incrementally
better: be competitive.
If you want to be exponentially
better: be cooperative.”
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10. Bundling and consolidation
Point-to-Point: simple
Low effectiveness
Low efficiency
Low sustainability
Decoupling: challenging
High effectiveness
High efficiency through volume
High sustainability
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11. European distribution trend
1990 -2005 2005 -...
traditional central EDC structure Hybrid EDC structure
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12. Case Study 1
Horizontal Collaboration in
Belgian FMCG Distribution
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13. Present situation:
company A
≡ Clients: 55
≡ Orders: 1610
≡ Pallets: 20670
≡ Vehicles: 497
≡ Trips: 742
≡ Distance: 110154 Km
≡ Costs: 188685 Euro
≡ Working hours: 4134 hours
≡ Total C02-emission: 77561 kg
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14. Present situation:
company B
≡ Clients: 696
≡ Orders: 6086
≡ Pallets: 26174
≡ Vehicles: 1168
≡ Trips: 1374
≡ Distance: 244918 Km
≡ Costs: 446078 Euro
≡ Working hours: 9948 hours
≡ Total CO2-emission: 175576 kg
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15. Present situation: summary
AS IS A AS IS B
Costs (Euro) 188685 446078
Distance (Km) 110154 244918
Working time (Hours) 4134 9948
Orders 1610 6086
Pallets 20670 26174
Clients 55 696
Vehicles 497 1168
Trips 742 1374
Total CO2-emission (kg) 77561 175576
The average delivery cost per pallet is 9 euro for A and 17 euro for B

16. Distribution network overlap
B
A
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17. Future scenario 1:
groupage
≡ Clients: 727
≡ Orders: 7696
≡ Pallets: 46844
≡ Vehicles: 1544
≡ Trips: 1931
≡ Distance: 326352 Km
≡ Costs: 612841 Euro
≡ Working hours: 13785 hours
≡ Total CO2-emission: 239555 kg
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18. Groupage: summary
AS IS (Sum) TO BE 1 Result
Costs (Euro) 634763 612841 -3,58%
Distance (Km) 355072 326352 -8,80%
Working time (Hours) 14082 13785 -2,15%
Orders 7696 7696 0%
Pallets 46844 46844 0%
Clients 751 751 0%
Vehicles 1665 1544 -7,84%
Trips 2116 1931 -9,58%
Total CO2-emission (kg) 253137 239555 -6%
≡ An incremental drop in kilometres, vehicles and trips is the result of reactive
order consolidation by date (=groupage) for both shippers.
≡ But in this scenario, the cost per pallet changes to 13 Euro per pallet for both
shippers -> no incentive for Shipper A to collaborate.

19. Future scenario 2:
horizontal collaboration
≡ Clients: 727
≡ Orders: 7696
≡ Pallets: 46844
≡ Vehicles: 1187
≡ Trips: 1647
≡ Distance: 243814 Km
≡ Costs: 456545 Euro
≡ Working hours: 10262 hours
≡ Total CO2-emission: 183172 kg
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20. Horizontal collaboration:
summary
AS IS (Sum) TO BE 2 Result
Costs (Euro) 634763 456545 -39,04%
Distance (Km) 355072 243814 -45,63%
Working time (Hours) 14082 10262 -37,22%
Orders 7696 7696 0%
Pallets 46844 46844 0%
Clients 751 751 0%
Vehicles 1665 1187 -40,27%
Trips 2116 1647 -28,48%
Total CO2-emission (kg) 253137 183172 -38%
≡ In the collaboration scenario, orders are orchestrated to maximize vehicle loads and to
synchronize delivery dates (with same or higher service level).
≡ The result is an exponential improvement in all parameters.
≡ The cost to serve decreases to 10 Euro per pallet in the horizontal collaboration scenario
-> collaboration and gain sharing between A & B become possible.

21. Case Study 2
Horizontal Collaboration in
European Healthcare Distribution
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22. Network overlap by destination country
(ex Belgium)
A
B
- Not drilled down
to destination
cities
- Exponential scale
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23. Example: weekly overlap BE - Ireland
4.500
4.000
3.500
3.000
2.500
Baxter
A
B
Pfizer
2.000
1.500
1.000
500
-
2 3 4 5 6 7 8 9 10 11 13 14 16 18 19 20 21 22 23 26 27 28 30 31 33 34 35 36 37 38 40 41 42 43 44 47 48 49 50 51
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24. Example: weekday overlap BE - Ireland
50.000
45.000
40.000
35.000
30.000
25.000 A
Baxter
PfizerB
20.000
15.000
10.000
5.000
-
Mon Tue Wed Thu Fri
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25. Business case: savings + gain sharing
(BE - Ireland)
 Cost to serve in present situation (=no collaboration): 1.5 euro / kg (shipper B) and 0.4
euro/kg (shipper A)
 Cost to serve after “minimal” collaboration (=LSP benchmarking): 50% saving for shipper
B; almost no saving for shipper A
 Cost to serve after “traditional” collaboration (=reactive groupage): 50% additional saving
for shipper B; almost no saving for shipper A
 Cost to serve after horizontal collaboration (=bundling and orchestration of freight flows ):
almost no additional saving for shipper B; 50% additional saving for shipper A
 Results: 75% decrease in total cost to serve for both shippers. Annual recurring transport
saving of 100.000 euro. Predictable freight volumes + steady margin for the LSP. Higher
vehicle utilization. Potential for attracting additional flows + roundtrips.
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26. Q.E.D.
“If you want to be incrementally
better: be competitive.
If you want to be exponentially
better: be cooperative.”
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27. Proactive
freight flow bundling
™
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28. Partnership paradox
Horizontal collaboration is not easy!
≡ Partners are competitors
≡ They all want to make money
≡ Actions and intentions of one partner determine risks and
rewards of other partners (« prisoner’s dilemma »)
≡ Hidden agendas & cultural differences
As a result, horizontal partnerships are…:
≡ Unstable
≡ Dynamic (life cycle)
≡ Highly influenced by external factors
≡ Unique
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29. Critical Success Factors
≡ Process, vision and methodology
≡ Critical mass (synergy)
≡ Partner alignment
≡ Legal framework (non-collusion!)
≡ CO3 initiative with P&G, NIKE, TRI-VIZOR, Wincanton, Jan De Rijk,
Argus-I, Kneppelhout Lawyers, Elupeg,...
≡ Impartial facilitation / orchestration
≡ Gain sharing
≡ ICT integration (collaborative scheduling and BI)
≡ Active involvement of 3PL/4PL
≡ collaboration and orchestration are NOT the same as adding up
purchasing power between shippers to squeeze LSP’s; this is not
sustainable!
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30. Roadmap for Collaboration
« Successful collaboration is not a matter of chance… it is
the result of a process.»
frequent evaluation and feedback
internal
negotiation
analysis
and valuation
(SW/OT)
collaboration collaboration
strategy contract systems control and evolution
driver or potential and
and vision (charter) integration management (growth)
objective intent
partner analysis form
and selection selection
1. Strategic alignment 2. Formation 3. Implementation 4. Control and Mgt.
Go/No go Go/No go Go/No go

31. Strategic collaboration drivers
≡ Cost (C): higher efficiency, lower operational cost, higher utilization,…
≡ Differentiation (D): customer service, brand building, USP,…
≡ Growth (G): market share, turnover, geographic coverage,…
≡ Innovation and learning (I): R&D, new products and services, technology,…
≡ Synergy (S): economies of scale, complementarity, "1+1=3”,…
≡ Agility (A): reaction speed, higher flexibility, lower dependency,…
≡ Social profit (S): environment, safety, modal choice, congestion,…
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32. Collaboration conditions
Resources
collaboration impossible
clear solid
H rules foundation
L
clear
quicksand
focus
Trust
0 L H
collaboration impossible
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33. Partner selection & alignment
cultural
fit
strategic fit
economic
and operational fit
trust and resources
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34. Who should be involved?
≡ Shippers: generate the freight flows + create the
vision (think outside the box)
≡ Logistic Service Providers: co-design the solutions +
operate the freight flows
≡ Orchestrators/Trustees: trusted referees of logistics
partnerships + neutral gain sharing function
≡ Governments & Infrastructure operators: are setting
the right conditions to stimulate (multimodal)
collaboration and to create legal “comfort zone”
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35. Two or more partners?
Collaboration complexityfunctiefunction of # partners
Samenwerkingscomplexiteit in as van het aantal partners
50
45
communication channels
40
Number ofAantal communicatiekanalen
35
Without Trustee/Orchestrator
30
25
20 With Trustee/Orchestrator
15
10
5
0
1 2 3 4 5 6 7 8 9
Number partners N
Aantal of partners N
Equal partners: N*(N-1)/2 Dominated network: N-1
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36. Added value of
neutral orchestration
≡ Impartial, neutral trustee / referee for the community
≡ Identify best-fit freight flows of different shippers to generate
maximum gains (critical mass)
≡ Manage the partnership from the perspective of the
company-specific objectives of the shippers (cost/service/Co2)
≡ Involve the 3PL/4PL in gain sharing
≡ Full transparency of the community KPI’s while keeping
confidential the company-specific information (“Chinese wall”)
≡ Maximum stability of the community based on contractual
exit strategies and volume bandwidths for each member
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37. Critical mass: towards a
“universal” freight flow database?
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38. Antitrust aspects
≡ National and European legislation:
≡ Trade laws (National Councils for Competition)
≡ Article 101/102 EC Treaty (European Commission)
≡ European commission is generally supportive of collaborative supply chain
initiatives which result in CO2 reduction and reduced road congestion
≡ Market disturbance is strictly forbidden:
≡ Price fixing
≡ Monopolies
≡ Cartels
≡ Market dominance
≡ Indicative tresholds: 15 mio (individual) of 40 mio (combined) EUR
≡ Unlikely to get in the way of “normal” logistics partnerships
≡ Risk management
≡ When in doubt or before any large project, seek legal advice!

39. Cost / benefit sharing…
how to divide the cake?
IT’S MY MONEY !!

40. Legal Framework
(Marco Polo CO³)
Developed in cooperation with
P&G, Nike, Jan De Rijk, Wincanton,
Kneppelhout Lawyers, ELUPEG,
Argus-I , EIA,… Trustee /
Orchestrator
Multilateral contracts incl.
• Enter/Exit strategy
• Volume variation mechanisms
Gain sharing Logistics Service
Shippers Contract Provider(s)
Community
S1 LSP1
S2 LSP2
Outsourcing
Contract
S3 LSPn
Sn
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41. What have we learned?
Top 10 management lessons
1. Look beyond cost savings: aim also for higher service or lower CO2
2. Mutualism: partner with non-direct competitors
3. Choose the right goods flows: partial loads offer most perspective
4. Gain sharing: discuss and agree the mechanisms in advance
5. Use a neutral facilitator to find a partner, create trust and stability
6. “Fit” between both organisations and people is essential
7. Maintain critical mass, but allow partner entry and exit procedures
8. Start with maximum 2 or 3 partners before adding extra partners
9. Collaboration takes time: allow room for error and learning
10. Have the legal aspects checked by an expert
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42. Thank you for your attention !
Questions?
sven.verstrepen@trivizor.com
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43. ®
TRI-VIZOR NV
Waterfront Research Park
Galileilaan 18
B-2845 Niel
T: +32 3 292 62 10
F: +32 3 292 62 11
www.trivizor.com
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