Multi-Channel Challenges for Logistics How to manage ever smaller, ever more frequent Shipments? GS1 Event Rome, October 2014 Presenter: Jaco Voorspuij

4 Mega Trends moving Logistics Markets China: Many thousands of SME manufacturers selling through AliBaba manufacturing in villages (with sometimes dozens of these SME). Urbanisation still continues 160mln in 2013; appr 250 mln in next five years. Highlight the impact on both B2C and B2B Logistics. Refer to TESCO deck (Richard McKeating). Emerging trends (still smaller scale): Production (especially SME operating through Amazon or AliBaba) is more and more located outside cities (reducing the urbanisation trend). Even (very) small companies now have “global” Supply Chains. World Economic Forum: Well over 50% of world population in cities and increasing. By 2050 appr. 70% of population will live in cities.

Big Business now needs Small Logistics The Long Tail (C. Andersen; 2006) has finally hit even the biggest of businesses Consumers demand ever more “customised” product Consumers buy more often in smaller quantities with lots more “Sellers”. FMCG will continue to exist; fewer though Major Impacts on Logistics: Number of Large Consignments dropping Number of small consignments rapidly increasing Delivery any place, any time (through wide range of option) Logistics Speed and convenience standard features. Ever increasing complexity of end-to-end chains NOTE: Trends most evident in B2C but increasing in B2B also.

Break-Through change of Approach necessary Total Volume Transported increasing rapidly. Total Number of Shipments growing even more rapidly. OTIF (on Time In Full) essential Flexibility in Delivery; changes during execution. Increasing demand Real-Time transparency End-to-end (even to Consumers) Transport efficiency stagnant for over a decade. Logistics Fragmentation is horrendous (Top 10 LSP cover <15% of Logistics market) >10,000 Transport SP in NL alone Shippers (LSC) working with multiple LSP (and determined to use ever more). Current Urban Logistics is already failing. 5000 trucks per day into Amsterdam. Continuing past behaviours will surely fail to deliver future SC needs. Loading factors of delivery vehicles in cities are abysmally low. As an example, Transport For London reports an average load factor for vans in London of around 38 per cent (about 300kg payload) and 39 per cent are less than one-quarter full. (TFL, 2012)

Collaboration is the Key to Delivering Future SC needs Consumer Goods Forum Vision: Share Physical Logistics Transport (all stages) Warehousing incl. Cross Docks Pallets Information Identification and Labelling Demand Fluctuation Management joint planning, execution and monitoring In-Store visibility Efficient assets e.g. switching mode. Joint scorecards and business plans Integrate Reverse Logistics Bundling Flows (leg-by-leg) Synchronise production with demand Highlight: Bundling Flows; Sharing Pallets Identification & Labeling and Information. “Improved collaboration among all parties in the value chain will be essential in order to achieve a more efficient and effective Value Chain to better serve the needs of the Consumer

Building blocks for Collaboration Several initiatives already started. Several “Best Practice” examples available (Metro; Philips; Wal-Mart; reverse logistics HP, Braun, Gilette, Sony, Electrolux ). LSP offering various (value added) services enabling shared / multi-user utilisation of infrastructure (warehouses, cross-docks) LSP offering services enabling redesigning the Supply Chain configuration (changing the Customer Order Decoupling Point, moving work to other locations). Several initiatives to help companies find collaboration partners (GCI project, CO3 and STRAIGHTSOL). New / Emerging technologies that enable easier collaboration (information capture and sharing). E.g. Access Points as used by PEPPOL, e-Freight and iCargo. Mobile Technologies (smart phones …) Increased use of RFID.

Increasing need for Neutral Facilitator role in logistics Production Customer All products / Orders All Outlets / Channels Neutral Facilitator Infeasible for single Logistic Service Provider Infeasible for single Manufacturer Independent Facilitators play a major role in enabling Collaborative Inclusive Networks by: Creating a trustworthy environment for competitors to collaborate “safely”. Providing Services e.g. (software) solutions, intermediary services etc. that individual Network Participants cannot provide for various reasons (including Legal). Use of open systems of standards (GS1) “mandatory” to avoid “Tower of Babel” confusion. Allows a much wider community (including Medium and Small enterprises) to easily enter and participate in inclusive networks (often making the BC for some of the above Logistics models). Enables “Connect Once; Collaborate Infinitely” through emerging Open Integration Platforms. Eliminates ID-number confusion by using globally unique (GS1) ID keys for fundamental objects in Logistics (e.g. Shipments, Consignments, Logistic Units etc.).

Why Bother? Very impressive improvements that LSC will vigorously pursue (LSP for). For a collaboration of 8 manufacturers and 4 retailers GCI calculated Transport cost per pallet down >30%; Handling cost per pallet down ca. 20% Lead time down ca. 40%; Carbon emissions down per pallet down 25%; Improved On-Shelf-Availability Collaboration Carrefour, Bénédicta et alia delivered 34% increase in delivery frequency; 115% increase in load size per delivery. Philips CPFR with several Customers delivered forecast accuracy increased to better than 80%; Stock levels reduced by ca. 30%; On-shelf-availability increased to better than 95%. 3M changing the Customer Order Decoupling Point delivered >100% increase in vehicle utilisation (long haul); >50% long haul truck trips eliminated resulting in >50% carbon emissions reduction; Total Logistics costs reduction >35%.

Acknowledgements CO3 project (‘Collaboration Concepts for Co-modality’, or CO3 in short). www.co3-project.eu Consumer Goods Forum reports (amongst others) “2016 Future Supply Chain; Serving Consumers in a Sustainable Way”. “Future Supply Chain 2020; Building strategies FOR the new decade”. http://www.futuresupplychain.com/ Cap Gemini Consulting report “Are You Ready? How to Create an Always-On, Always Open Shopping Experience”. http://www.capgemini-consulting.com/are-you-ready http://www.efreightproject.eu/knowledge/defaultinfo.aspx?areaid=47&index=2 http://www.peppol.eu/ http://www.straightsol.eu/ http://www.i-cargo.eu/

Jaco Voorspuij DHL Supply Chain Jaco.voorspuij@dhl.com THANK YOU! Jaco Voorspuij DHL Supply Chain Jaco.voorspuij@dhl.com