1. Panalpina USA Atlanta, June 2010
Dealing with Unpredictable Demand
and Fluctuating Volumes:
Stay on target as business picks up
Lucas Kuehner, Panalpina Inc.

2. Managing the „Unpredictable“ – Panalpina USA – Lucas Kuehner
Advanced Demand Management Atlanta, June 2010 2
Is the Freight Forwarder the new Economist?
What’s certain about the future is that it’s uncertain

3. Origin(s) Destination(s)
Upstream or Source Downstream or Sink
Warehouse Network
Producers
Wholesaler
Network
Warehouse Network
Suppliers Retailer Network
Flow of Goods
Flow of Information
Flow of Ownership (via focal company)
Flow of Payments (vial focal company)

4. Managing the „Unpredictable“ – Panalpina USA – Lucas Kuehner
Advanced Demand Management Atlanta, June 2010 4
Common Information Gaps in Supply Chains
Benefits of VMI
and the Collaboration Approach
Supply Chain Mis-Alignments: SC Collaboration Approach:
• Uncertainty caused by lack of information  Reduce Inventory (work-in-progress and
of the demand forecast (Bullwhip effect, finished goods)
biased forecasts)  Sharing information to improve demand
forecast
• Complexity because of multiple players  Reliable supply for plant and retail stores
• Need to coordinate different activities,  Supply Chain Pull instead of Push
internal and external partners Principle
• Inventory as insurance against  Passing responsibility to suppliers for
managing inventory with agreed min/max
uncertainties (multi-echelon, rippled delta)
levels, define lead times and
• Long replenishment times replenishment cycles
• Insufficient definition and analysis of  More collaborative relationships
replenishment times  Improved time-to-market
• Sub-optimal utilization of economic order  More accurate planning and thus lower
sizes and trade-off versus inventory inventory and in-store inventories
carrying costs  Overall reduction of Transportation Spent

5. Managing the „Unpredictable“ – Panalpina USA – Lucas Kuehner
Advanced Demand Management Atlanta, June 2010 5
Capacity graph – Identifying the “Delta”
Delta Understanding the Delta:
• Identify multi-modal capacity
requirements
• Correlate forecasted demand with
anticipated supply
• Utilize advance planning
methodologies (rolling forecast,
statistical probabilities, etc.)
Month Ocean Baseline Air Baseline Transport Delta Demand • Understand the lifecycle of the Delta
1 20 4 3 27
2 25 4 3 32 – what drives demand?
3 42 7 4 53
4 16 1 0 17 • Actively manage the Delta – the
5 22 9 6 37
6 52 12 5 69
larger the Delta, the higher the
7 67 16 6 89 transport cost premium
8 89 22 13 124
9 110 14 7 131 • Develop contingency planning for
10 49 4 6 59
11 32 3 0 35
delta bandwidths
12 20 7 0 27

6. Managing the „Unpredictable“ – Panalpina USA – Lucas Kuehner
Advanced Demand Management Atlanta, June 2010 6
The Strategic View: Ways to avoid the Delta
• Customer segmentation strategies
• Identify ‘re-enforcing’ segment demand to spread volume
• Product mix strategies
• Establish priorities for products based on value to the business,
mapping their associated extended supply chain and identifying
those that require long lead times or are sole-sourced
• Far-sourcing versus near-sourcing
• Consider alternative routes to market if goods cannot be moved to
planned purchasers in a timely manner
• Strategic contingency plans: What-if scenarios (volcano)
• Consider supply chain diversification strategies to avoid single
points of failure

7. Managing the „Unpredictable“ – Panalpina USA – Lucas Kuehner
Advanced Demand Management Atlanta, June 2010 7
The Tactical View: Ways to manage the Delta
• Forecasting
• Apply Analytics for Supply/Demand Aggregation
• Rolling Forecast
• Periodic update intervals reduce uncertainty
• More deterministic decision environment
• Communication Triangle - Shipper / Carrier / Forwarder
• Lean SCM execution requires collaborative communication
• Supplier Management
• Suppliers are an integral part of the collaborative Supply Chain
and information layer and need to be integrated into the modeling

8. Managing the „Unpredictable“ – Panalpina USA – Lucas Kuehner
Advanced Demand Management Atlanta, June 2010 8
The Operational View: Ways to limit the Delta
• Carrier Strategies
• Collaborate on contingency plans with (air) cargo handlers to
verify suitability and ensure availability of capacity in a competitive
marketplace
• Developing plans for alternative ground transportation via
contractual agreements, in advance if possible, as air transport
alternatives will be in high demand
• Supplier Management
• Familiarizing the organization with suppliers' contingency plans
and related businesses that impact on the supply chain
• Reviewing contractual obligations with suppliers and key metrics
such as service level impacts between two parties (fill rates)

9. Managing the „Unpredictable“ – Panalpina USA – Lucas Kuehner
Advanced Demand Management Atlanta, June 2010 9
About Panalpina
Further information and news about Panalpina can be found
on our website at www.panalpina.com.
Thank you!