John Pattullo, CEO of CEVA Logistics speaks on 'How Supply Chain Innovation Can Drive Customer Value' at the 7th European 3PL Summit in Brussels, November 25th 2009.
To download all of the slides from the conference for free visit www.3PLsummit.com/eu_2009ppts
4. Our vision & mission
CEVA will be the most admired company in the supply
chain industry exemplifying Unity, Growth and Excellence
UNITY: One company – one team
GROWTH: Outperform market growth
EXCELLENCE: Perfection is our goal
CEVA – Making business flow
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6. 1. CEVA
2. Innovation and value
3. Operational excellence
4. How supply chains can deliver value
7. A thought on innovation?
Human DNA and dinosaur DNA are 97% the same.
What matters is the 3% that separates the two species.
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8. Invention vs. innovation
Few ‘new to world’ ideas will ever come from logistics
BUT many innovation opportunities exist
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9. Some thoughts on innovation
• In the 1970s The automotive industry was fragmented & unprofitable
Industrial relations were poor
Car quality was worse
….and Toyota sparked a quality revolution
• In the 1980s The retail industry was national and fragmented
The customer proposition was narrow and limited
The prices were high (relatively)
…and Wal-mart gave us “every day low prices”
• In the 1990s The PC industry was fragmented with multiple players
Sold high price products that were often out of date
Had sales channels full of inventory
….and Dell reinvented the “supply chain”
• In 21st century The global logistics industry was highly fragmented
The service suffered from inconsistency
The customer saw little innovation and pushed margins down
….and how will our industry breakthrough?
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10. Drivers of supply chain innovation?
• Globalisation has increased the strategic and financial
significance of logistics
• Reducing product life-cycles creates a state of almost continuous
change
• Global imbalance of human talent supply and demand is
challenging international business
• Consumers and governments force business to accept social
responsibility re-shaping supply chain design
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11. Innovation in the supply chain – track record
Accenture
4PL, adding a consultation/ strategic level to SC thinking
Toyota
LEAN techniques and approach to improve efficiency
Dell
Responsive manufacturing & 100% demand pull
Zara
Putting the supply chain at the heart of the company &
introducing global standardization
PODS
Bringing standardization to moving house and storage
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12. Innovation from the 3PL’s?
Some great, but isolated, examples eg NHS Supply
Chain
As an industry we are not known for innovation
There are several barriers:
- open book contracts;
- development of supply chain mastery;
- low margins
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13. Prerequisites for 3PL innovation
• Customer confidence in the industry
• 3PL industry willing to invest in R&D
• Greater industry education and professionalism
Innovation fuelled by strong partnerships
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14. The journey to innovation
Innovation
Responsiveness
Operations Excellence
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15. 1. CEVA
2. Innovation and value
3. Operations excellence
4. How supply chains can deliver value
16. Operations Excellence culture in CEVA is built
on five pillars
Health, Safety
Smart Zero Defect
LEAN and
Solutions Start ups
Environment
Global Standard Metrics
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20. 4PL for an international automotive supplier
By re-engineering the supply chain and acting in a 4PL capacity, CEVA delivered a
productivity commitment over the five years of the contract and reduced total logistics cost
by 24%
Inbound
Outbound
17%
The LLP provided; TRSP
Delivering; cost
Centralised and standardised Reduced transportation
- Communication, Project Org, Account Mgmt
Reduced transaction cost 33%
- KPI Management and Reporting WHS
Reduced / variable transaction costs cost
- Blueprint specifications
Lower Inventory
(Processes in Material Flow and IT) 27%
Increased fill rates In-Plant
Standards for local Sub-Agreements cost
Reduced waste
Customer Commitment: global exclusivity 24%
Increased productivity Total
CEVA Commitment: productivity Logistic
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21. Innovation in ocean freight
By focusing on the entire ocean freight operation and implementing enhanced visibility
processes throughout, CEVA delivered benefits in container utilisation, product
throughput and reduced cost
Management of Ocean carrier allocation
complex CFS program management
Pre-payment of any
Management of supply chain Vendor management to ensure origin fees under ex-
from Asia = 1,700 FEUs pa bookings meet ordered ship works terms
windows and quantity
commitments are maintained Monthly itemized billing
of all import-related fees
Goal is 40% of the cargo bypasses customer DC and ships direct to customer Packaging engineering
Key Benefits
Option to build container direct to customer or trans-load in CEVA US facility enables postponement
distribution option & cost savings related to domestic re-handling
Provide customized EDI 856 ASN information where needed
Improved container utilization through consolidation process by 7%-10%.
Enable earlier visibility to production issues and potential delays prior to scheduled ex-factory dates thus
reducing charge-backs from customers. Dynamic in-transit decision making options.
Manage carriers to ensure compliance and reducing ocean freight expense
Control supply chain earlier in the process and enjoy reduced costs by negotiating local trucking charges
Number of pairs shipped per container increased by 22%
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23. Optimizing our integrated solution to provide
real time visibility
For a leading automotive company, our complex solution includes the management of
facilities and delivering the physical flows. IT is the critical enabler in managing all the
elements and provides real time visibility for supply chain milestones
Resulting in
synergy savings
of $1.8 million
Customer
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24. Using information to develop International
capabilities
Global competition has resulted in this customer sourcing components internationally.
In partnership with CEVA has evolved the supply chain from purely domestic, to a fully
integrated, international operation.
Lines side staging
500 air pallets p.a. Multiple deliveries per shift
Air / Ocean Freight
Customer
68 Suppliers Demand schedule Warehouse receipts
• S.E Asia International and domestic
• China
• Mexico 1000 containers p.a. Demand Schedule 102 Domestic
• Canada via Internet/EDI Suppliers
• N America Global Suppliers
• Europe
Each partner focuses on core competencies
Fully integrated domestic and international JIT supply chains
CEVA is an extension of the customer’s manufacturing facility
No surprises, lowest total cost, and service reliability to the customer
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26. Aftermarket logistics for Chinese automotive
manufacturer
By using LEAN and proved aftermarket solutions, productivity increased by 50% with
service, inventory and cost improvements at all stages of the supply chain.
Warehousing
Operate Shanghai Central Parts Depot (50,000 m2) and Xian Regional Depot
(10,000m2)
Types of storage includes mezzanine, racking, stacking, vertical carousel, car
body cantilever
Parts repackaging in warehouse
Distribution
Distribute from Shanghai and Xian warehouses to more than 299 dealers in
Eastern China and Western China.
Linehaul replenishment from Shanghai CPD to 4 Regional depot
Direct delivery from suppliers to dealers
Benefits to Customer: Key Statistics:
LEAN warehousing adopted and improve pick productivity by Total warehouse size: 60,000 m2
> 50% No. of warehousing staff: 262
Part numbers handled: 25,000+
Service level enhanced direct customer satisfaction improved No. of dealers covered: 300
Cost savings via transparent control on transportation No. of truckloads per year:
8,600+
CPD inventory well controlled -> cost reduction
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27. Transferring best practice across sectors – I2M
CEVA has combined its GMM & VMI solutions with production capabilities to create an
I2M solution which has traditionally been utilised by technology and automotive
customers. This solution is moving more and more into the FMCG marketplace with
multiple projects and programs underway
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29. CO2 Reduction through supply chain
re-engineering
By re-engineering all supply chain operations and focusing on CO2, emissions
reduced by 18% with more opportunities identified for the future
-18% CO2
-1399 ton
Situation Analysis Results
Existing supply chain with Compare CO2 emissions for 9 Optimal solution is
9 warehouses in Europe regional warehouses versus 1 1 central warehouse:
central warehouse
Customers all over Europe (preferred) 18% CO2 reduction
and Suppliers all over the
World Predetermined modality per Inbound CO2 increases +7%
origin–destination and however outbound CO2
Different volumes per service customer service level decreases -27%
level and related transport
modality (air/road/sea) Predetermined emissions per Even more CO2 reduction
modality per ton-km opportunities identified
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30. In summary
• Historically, an industry which has under delivered on innovation
• Innovation starts with Operations Excellence and
• Is fostered by an environment of strategic partnership
• There are several broad channels:
- economies of scale
- leveraging information
- transferring best practice
- fostering social responsibility.
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