RESTRICTED RESTRICTED HOW TO OPTIMIZE YOUR LOGISTICS & SUPPLY CHAIN FOR RESILIENCE? C4L Conference Daniel Küster, Associate Partner 10 th October, 2019 DHL Consulting
RESTRICTED Agenda 1 DHL Consulting 2 Supply Chain Design Methodology 3 Supply Chain Resilience 4 Conclusion C4L Conference I Luxembourg I 10th October 2019 2
RESTRICTED DHL Consulting overview DHL Consulting service portfolio Supply Chain Strategy Supply Chain Transformation Operational Excellence • • • SC strategy development SC health check Operational audits & benchmarking • • • Network design Digital maturity assessment Warehouse design & optimization • • • SC risk assessment Operating model design Supply Chain and in-plant process • • design & optimization SC IT strategy & roadmap development Transformation program management • • • Inventory optimization M&A and post-merger integration Sustainability assessment • • • Transport optimization Omni-channel & e-commerce strategy Sales & operations planning • development • IT vendor evaluation After market & reverse logistics planning • • SC Academy training Outsourcing & LSP assessment Bonn, Germany > 1,200 20 4 Singapore years of Shanghai, China 100 professional management Miami, FL consulting and logistics experience consultants offices with local language skills consulting projects Why DHL Consulting? Logistics Expertise Customer-Centricity Business Consulting Skills Independent entity within DPDHL, trusted Seasoned strategy consultants ensure that Worldwide logistics expertise of the by industry leaders for providing objective your Supply Chain enables your DPDHL group across 220 countries and neutral advice business strategy Industry leading Supply Chain tools and Proactively involving your organization to Analytical, data-driven approach and databases with a focus on digitalization develop customized, future-proof implementable solutions that deliver solutions tangible results C4L Conference I Luxembourg I 10th October 2019 3
RESTRICTED Agenda 1 DHL Consulting 2 Supply Chain Design Methodology 3 Supply Chain Resilience 4 Conclusion C4L Conference I Luxembourg I 10th October 2019 4
RESTRICTED Terminologies A logistics network, consisting of Supply Chain network nodes and transport legs Ability of a system to return to its Resilience original state or move to a new, more desirable state after being disturbed C4L Conference I Luxembourg I 10th October 2019 5
RESTRICTED Typical Network Optimization Project Approach Proposed project for a holistic review of the current network preceded by a data collection As-is assessment & Recommendations & A B C Phases Data Collection To-be network design Implementation roadmap benchmarking • Conduct Centre of • Contract & NDA • Conduct kick-off workshop • Develop final Gravity Analysis (COG) signing • Map as-is supply chain recommendation and • Model up to 3 network • DHL to provide data high-level implement- setup based on interviews optimization scenarios ; tation roadmap request templates with key client stakeholders potential scenarios based • Alignment of final • Client to collect data • Model as-is network on initial CoG analysis recommendations based on template baseline (plants, demand and/or hypotheses • Handover of project • Scheduled calls with points, flows, costs and • Evaluate operational service levels) deliverables client team to review feasibility of scenario • Optional: Benchmark data collected results with inputs from Activities • Data cleansing (if current network vs. best-in- DHL operational experts class with up to 3 peers in required) same/similar industries - other Energy & Chemicals Data collection players phase is not • Final data approval charged, complete data collection is a prerequisite to commence project Source: DHL Consulting C4L Conference I Luxembourg I 10th October 2019 6
RESTRICTED Project Deliverables A As-Is Assessment & Peer Benchmarking This phase will deliver a baseline understanding and costing of the client’s as-is supply chain set-up with a list of improvement opportunities As-is assessment & Recommendations & A B C Phases Data Collection To-be network design Implementation roadmap benchmarking Key deliverables Supply chain mapping Supply chain priority setting As-is diagnostics report • High-level map of as-is end-to-end logistics setup with physical and information flows • Fully validated baseline with breakdown of as- is direct logistics cost, volumes, supply and demand points, etc. • Supply chain priority setting Supply chain cost baselining Network setup benchmark Optional: Peer benchmarking • Current SC performance and costs with global competitors with regard to top-in-class transportation, storage and handling costs • Other benchmark dimensions would be added if required by the client Source: DHL Consulting C4L Conference I Luxembourg I 10th October 2019 7
RESTRICTED Project Deliverables B To-Be Network Design This phase will deliver a to-be CoG 1) analysis, a to-be scenario modeling, sensitivity analyses and a comparative assessment of scenarios As-is assessment & Recommendations & A B C Phases Data Collection To-be network design Implementation roadmap benchmarking CoG 1) analysis Key deliverables Scenario modeling Center of gravity (CoG) analysis • COG analysis of future demand • Potential to-be DC locations Logistics impact assessment of distribution model change in selected countries • Projection of inventory and throughput volumes • Additional costs of warehousing & distribution • Reduction in distributor margin • Other pros & cons such as direct market access Sensitivity analysis Comparative assessment To-be scenario modeling (up to 3 scenarios) • Would be based on kickoff discussion with client Sensitivity analysis & comparative assessment • What-if scenarios (up to 2) and impact of change in input parameter on e.g. cost • Comparative assessment of to-be scenarios Source: DHL Consulting; 1) Center of Gravity C4L Conference I Luxembourg I 10th October 2019 8
RESTRICTED Project Deliverables C Implementation Roadmap This phase will deliver a final recommendations on the to-be network set-up and a roadmap to guide the client in the next stage of implementation As-is assessment & Recommendations & A B C Phases Data Collection To-be network design Implementation roadmap benchmarking Key deliverables Implementation roadmap Recommendations on optimal logistics network based on e.g. • Direct logistics cost effectiveness (quantified) • Lead time and service level (quantified) Implementation roadmap (high-level) covering e.g.: • High-level implementation timeline of recommended logistics network • Pre-requisites and required efforts from client for each milestones defined Milestones & pre-requisites Hand-over project deliverables e.g. • All analyses, calculation files • Knowledge transfer session • Post-project clarification of questions Source: DHL Consulting C4L Conference I Luxembourg I 10th October 2019 9
RESTRICTED Key Criteria for Supply Chain Design Optimization Optimization criteria in a network design project is often either service increase or cost decrease Service increase Resilience? Cost decrease C4L Conference I Luxembourg I 10th October 2019 10
RESTRICTED Service Increase Approx. 6 warehouses for Western and Middle Europe cover a 24-hours service level 9 hours x 2.400km 50km/h = 450km 900km 2.400km C4L Conference I Luxembourg I 10th October 2019 11
RESTRICTED FOR DISCUSSION Cost Decrease Customer CoG CoG analysis supports scenario definition phase of network studies; testing validity of current setup & narrowing option space for to-be scenarios Single center of gravity Dual center of gravity Center of gravity, known as Greenfield analysis within LLamasoft Supply Chain Guru, calculates the theoretically optimal DC location(s) based on minimizing the weighted average distance travelled within the network Can be calculated based on demand and/or supply through the following aggregate formula: Minimize σ 𝑬𝒋𝒕𝒖𝒃𝒐𝒅𝒇 ∗ 𝑬𝒇𝒏𝒃𝒐𝒆 Source: DHL Consulting; 1) Center of Gravity C4L Conference I Luxembourg I 10th October 2019 12
RESTRICTED Agenda 1 DHL Consulting 2 Supply Chain Design Methodology 3 Supply Chain Resilience 4 Conclusion C4L Conference I Luxembourg I 10th October 2019 13
RESTRICTED SUPPLY CHAIN RISK TRENDS The world is a risky place. Companies need to better understand how to protect their Supply Chains. Source: DHL Resilience360 C4L Conference I Luxembourg I 10th October 2019 14
RESTRICTED Resilience in Europe When you think, that we are safe regarding Supply Chain risks in Europe … Source: DHL Consulting C4L Conference I Luxembourg I 10th October 2019 15
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