Logistics Outsourcing ( Case Study Schiesser )

Transcription

1 Logistics Outsourcing ( Case Study Schiesser ) Eva Sikora Russell Sahusilawane Serly Chandrakasih

2 Market Volume Logistics Market Volume Germany, Billion Total: 150 bn Inhouse Logistics 5 11 Transportation Services 51 Outsourced Logistics Services 83 Warehouse, Cargo Handling & Commissioning Services Contract Logistics Services Source: Klaus: Die Top 100 der Logistik, 2003

3 TOP 10 Germany No Company Turnover 2001 in million Employees (Germany) 1 Deutsche Post World Net 4,449 40,000 2 DB Cargo 3,421 29,100 3 Schenker 1,959 10,400 4 Kühne % Nagel 1,480 4,000 5 Hapag-Lloyd 1,462 6,000 6 Lufthansa Cargo 1,300 5,411 7 Dachser 1,208 6,000 8 Volkswagen Transport 1,100 1,891 9 Panalpina (Hq. Basel-Switzerland) 950 1, UPS Deutschland ,000 TOTAL TOP 10 18, ,302 Source: Klaus: Die Top 100 der Logistik, 2003

4 Potential of Logistics Services High growth expected by Contract Logistics Services Integrated distribution services for mass consumer goods manufacturer and retail Integrated procurement and material control system for industrial contract logistics (e.g. automotive industry, construction, health care) Trends from passive handling of logistics operations towards active construction of customers specific Supply Chain Capacity building by contract logistics service provider (VW- Transport, Arvato/Bertelsmann, MGL/Metro, Hoechst, Schenker, DHL-Danzas, Dachser, etc.)

5 Role of Logistics Service Provider Classic Freight Carriers, with own fleet and other assets (e.g. warehouse) and provide transportation, cargo handling and warehousing without own assets and provide only switching control services 3PL or 4 PL as well as Lead Logistics Provider, who are specialists in Contract Logistics or IT, planning and coordination of Supply Chain Integrated Logistics Service Provider which offers a wide service portfolio and work for all areas (as 1. and 2.) Source: A Study of IBM Business Consulting Service and DVZ Deutsche Verkehrszeitung

6 Opportunities Increasing demand for Logistics Services in industries and commerce Various possibilities for logistics service providers to stretch their performance features and integrate themselves into logistics processes in many new areas

7 Positioning of Logistics Service Provider Services go beyond operative area of logistics processes in distribution and procurement Design of Outsourcing Processes Quality Management IT Management (Software Development, Hardware and Support) Future Plan of extended performance portfolio

8 Performance Features Distribution 91% 95% Quality Management Procurement Strategy & Conception of Outsourcing Projects 70% 68% 73% 84% 86% 86% IT Implementation 64% 75% Hardware Provision 55% 64% IT Management (Support etc.) Production Logistics 41% 48% 70% 73% Today Future Support of Development Processes 39% 59% Change Management Supplier Relationship Management 34% 34% 55% 59% Project Financing 32% 45% Recycling 30% 50% Customer Relation Management 25% 52%

9 Challenges Contribution to information logistics Automatic operation process Transportation optimization Inter-company inventory management Planning and controlling of complex process chains Intensive information exchange Requirements of Information and Communication Technologies

10 Eva s turn

11 Case Study Schiesser Outsourcing of Procurement Logistics Foundation Headquarter Sector Business fields Corporate structure Homepage Sales volume Employees Schiesser AG 1875 Radolfzell (D) Textiles Daywear, nightwear, underwear, beachwear, homewear for men, women and children as well as baby clothing Schiesser Group, Küsnacht (CH), as holding company to which Schiesser AG and all foreign subsidiaries belong Sales organizations in Europe and the USA Production plants in the Czech Republic (Pleas), Slovakia (Gemtex) and Greece (Pallas) : million 8000 in the Schiesser Group as a whole

12 Challenge in the textile Industry Short-lived fashion trends Product quality On-time delivery Punctual and cost-effective supply of raw materials to all production sites

13 Outline Procurement Process Selection of suppliers initially according to production size, delivery scope and quality Purchase of raw materials and textile accessories from the whole Europe, mostly Southern Germany Transport of goods to the production sites in the Czech Republic, Slovakia and Bulgaria including customs clearance

14 Problem Perception: The procurement process was timeconsuming and expensive Suppliers Production Sites Radolfszell Procurement Center Incoming Goods and Invoice Inspection Planning Scheduling Tracking Delivery Regrouping Custom Clearance Issue of pro forma invoices Transportation Service

15 Disadvantages High Transport Costs The level of on-time deliveries did not meet requirements. Large safety stocks in the plants were the consequence Goods and invoice checking was split between different companies. This caused settling of discrepancies which was often very time-consuming.

16 Step 1 Reorganization of Procurement Description Level Strategy Characteristic Interim Solution Central production planning Decentralized ordering responsibility Characteristic Old Central production planning and ordering responsibility Process Manual process steps Delivery to production sites Manual process steps Predominant handling by headquarter Systems Main Features of The Procurement Process after the Reorganization of Procurement

17 Procurement Process after Optimization Radolfszell Procurement Center Supplier Transportation Service Negotiate Outline Agreements Sales & Production Planning Order control Production Sites Order Materials Tracking delivery Incoming Goods Inspection Custom Clearance Pay Invoice

18 Inefficiency of the new procurement process Through direct delivery, full truckload deliveries were split into large number of small transport jobs No central grouping of deliveries to the production plants: vehicles to unload in place of the 2 3 large deliveries per week Overlapping tasks and competencies, especially in order monitoring and delivery tracking Lack of technical system support, in many cases the forwarder could only be ascertained by phoning the supplier or the forwarder normally used Lack of transparency in the supply chain: Schiesser could not state problem deliveries and improve on-time delivery

19 Project to Reorganize Transport Logistics: Goals Punctual supply of purchased goods to the production plants Reduction in personnel costs by outsourcing activities from the areas of transport and customs Creation of a single point of contact for everyone involved in the supply chain Reduce transport costs, customs documents and truck frequency at goods inward A saving in transport costs through consolidated transport Simplified billing of transport costs

20 Project to Reorganize Transport Logistics: Decision of Outsourcing Outsourcing of the complete management of the procurement process from order placement through to delivery to the plant Choice of the logistics provider Gebrüder Weiss, due to their strength in business with Eastern Europe Increase of the transparency of the supply chain with the aid of a software solution

21 Russell s turn

22 Project to Reorganize Transport Logistics: Execution Project was launched in August 2001 Project team included the Managing Director Procurement at Schiesser AG, an assistant and the head of Customs/Transport In collaboration with experts from Gebrüder Weiss and the software supplier inet-logistics In June 2002 the chosen software solution from the Application Service Provider (ASP) went into operation with two pilot suppliers Next stage will include the 30 strategically most important suppliers out of total of 68 currently active suppliers

23 Critical Success Factors Prompt communication to affected people and their involvement in the project work Interfaces with other processes were involved early Implementation was completed faster than planned Communication of workforce cut back started when 80% of the project has been completed Activities were outsourced to other processes at an early stage

24 Procurement After the Outsourcing of Procurement Logistics Description Level Characteristics New Characteristics Interim Characteristics Old Strategy Central production plan Decentralized order responsibility Outsourcing of procurement logistics Central production plan Decentralized ordering responsibility Central production planning and ordering responsibility Process Central control of supply chain Handling by distributor Manual process steps Delivery to production plants Manual process steps Predominant handling by headquarter Systems Join communication platform -- --

25 Procurement After the Outsourcing of Procurement Logistics Strategy Transfer of sub process procurement logistics to the globally active Austrian logistics company Gebrüder Weiss The 3rd party logistics provider takes care of operational management of the supply chain, the grouping of deliveries and customs clearance of goods

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27 Systems Supply chain management is taken care of by the information logistics solution provided by inet-logistics

28 Costs and Benefits Reduction of personnel costs by 85% Transport costs cut by 34% (approx. 65,000 p.a.) approx. 320'000 p.a. through outsourcing of customs clearance approx. 300'000 EUR p.a. through transfer of operational activities to the production plants approx. 200'000 EUR p.a. through outsourcing of monitoring Reduction in transport time 80% reduction in queries Reduction of fail deliveries Improved and observable delivery reliability Transparency of the supply chain for all the parties involved (approx. 12,000 purchase orders and 3,800 transport jobs are annually handled with 100 suppliers)

29 Summary Increase of speed and transparency of the supply chain Real-time information exchange Shortening of process times and the reduction of process costs through central transshipment of the goods More efficient transport handling and reduction of workload involved for Schiesser Improvement of process quality by giving Schiesser the possibility to react quickly to any imminent delivery

30 Thank you for listening Comments and Questions are welcome