Logistics Horizontal Collaboration in the FMCG Industry: Where are we Today? Alex Van Breedam Sven Verstrepen
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1 Logistics Horizontal Collaboration in the FMCG Industry: Where are we Today? Alex Van Breedam Sven Verstrepen BABM-AIM Info Session, Sheraton Brussels TRI-VIZOR February 26th, 2015
2 World s First Cross Supply Chain Orchestrator Since November 2008 Spin-off of the University of Antwerp Strategic Advisory Board with captains of industry (BASF, Nike, ) 100% Neutral Trustee Dedicated facilitator of Horizontal Collaboration
3 Track record so far st horizontal collaboration project The Collaborative Control Tower Prize of the Audience Spin-off of the Collaborative Control Tower
4 Future Supply Chains Orchestrating Scarcity Fair Supply Chain Performance Technology Wave Lean Procurement ent Manufacturing ur Distribution Integrated Supply Chain Vertical collaborations Customer Domination Agile Supply Network Internal Optimisation Internal consolidations Co-modality Control Tower Supply Network External Optimisation Horizontal collaborationslaboraoratio Co-loadings/Roundtrips Co-modal consolidation Collaborative Control Tower Collaboration Platform Clustered and shared Cross supply chain services The Physical Internet Complete horizontal & vertical collaboration Sustainability Effectiveness Service Level Efficiency Cost Supply Chain Maturity 3.0
5 This might or will affect your supply chain in the future!
6 Is your supply chain ready for this? CHALLENGE Changing Environment Changing Customer Behaviour Changing Logistics Demography Urbanisation Globalisation-Glocalisation The Sharing Economy The Servitization Economy The Circular Economy Corporate Social Value Creation Supply Chain Risks Faster - Smaller - More frequent - Cheaper Omni-channel Product Innovation Speed of change in ICT technology Supply Chain as a competitive advantage Manufacturing and process innovation Labour Force Capacity Shortage Co-modality Hybrid distribution structures Big Data The Physical Internet
7 World Economic Forum Supply Chain Study % of freight vehicles in the EU are running empty Average loading of the rest is 57% Overall efficiency: 43% Flow imbalance can only justify half of this loss Estimated annual loss: 160 billion
8 What s in a name? Welcome to the age of «co-opetition»! Vertical collaboration (1980- ): Between subsequent actors in the same supply chain Between suppliers, manufacturers and customers EOQ, outsourcing, VMI Driven by ICT (extended enterprise) Horizontal collaboration ( ): Between companies in the same market Alliances, partnerships, clusters, network organisations Collaborate in some markets, compete in others New frontier or paradigm shift
9 The European Union is actively promoting and supporting collaborative logistics Collaborative Concepts for Co-Modality (CO³) was a EU sponsored FP7 consortium to create a legal framework, a scientific body of knowledge, an educational package and a number of inspiring pilot projects for horizontal collaboration in transport and logistics. The ultimate goal is to make the European transport market more competitive and more sustainable.
10 CO3 Consortium
11 High Level Industry Board (HLIB) HLIB Mission: Review and discuss CO³ milestones and results Provide valuable market feedback for development and success of CO³ project
12 What has CO3 delivered? 1. Operational framework for Horizontal Collaboration 2. Legal framework for Horizontal Collaboration 3. Development of new business models 4. Validation of framework with pilot projects 5. Mental shift! All project results are freely available on the website
13 FMCG Example 1: North South Intermodal Roundtrips (2013): 30% carbon reduction
14 FMCG example 2: SPAR inbound retail bundling
15 Identification of potential supplier clusters
16 Methodology & Building Blocks 3 steps to create horizontal collaboration: Successful collaboration is not a matter of chance. It is the result of a process!
17 Legal context: EU anti-trust A) Europe prohibits cartels (Art. 101 EU), but is not prohibiting cooperation between non-competitors; -> OK cooperation between competing companies that cannot independently carry out the project or activity covered by the cooperation -> OK B) EU Guideline (2011/C 11/01) on Art. 101 EU horizontal co-operation agreements is not prohibiting Horizontal Collaboration, if using a trusted party (e.g. joint purchasing organisation ) Legal role of Trustee to comply with EU law: no direct information exchange between the parties trustee does not compete with the parties on the selling market all information necessary for the purchases is only disclosed to the joint purchasing organisation, not to the other parties example: quality specifications, quantities, delivery dates, maximum purchase prices Horizontal logistics co-operation is not violating EC Competition law! BUT: recommendation to use a neutral trustee to avoid anti-trust!
18 Roles and added value of Neutral Trustees Neutral Trustees s are essential new players to support horizontal collaboration Trustees can perform 2 functions, depending on requirements and scenario: Offline: Neutral external support to the collaborating shippers Online: Neutral real-time coordination of daily collaboration process Examples of offline functions: Shipper matchmaking Synergy calculation Stability and fair gain sharing Legal compliance Entry and exit Conflict resolution Data confidentiality Audit Examples of online functions: Loads combination and synchronization Prioritization Real-time network orchestration ICT Interfaces Freight payment Carrier management Collaborative Control Tower 4C
19 Network synergy detection & matchmaking (Big Data)
20 Fair gain sharing: Shapley value is always correct IT S MY MONEY!!
21 Multilateral legal framework (EU antitrust compliant) Neutral Trustee 1-N contract Entry/exit Volume variations Gain sharing Community MAIN SHIPPER Partner 1 Carrier 1 Carrier 2 Carrier 3 Partner N Traditional Carrier contracts Carrier X Structured and organized per lane (co-loading or roundtrip)
22 Collaborative Control Towers: from 4PL to 5PL?
23 Conclusions The old logistics paradigm is no longer working The market needs a quantum shift in logistics efficiency, effectiveness and sustainability Horizontal collaboration is the next big thing EU law permits competitors to work together But pay attention to legal aspects (anti-trust) Neutral facilitator/trustee is essential Big data analysis, methodology and ICT are key Start small, then scale up No external collaboration without internal strategy ( Future Proofing ) It s people business! First movers in FMCG have already started!!!
24 TRI-VIZOR NV Waterfront Research Park Galileilaan 18 B-2845 Niel (Antwerp South) T: F:
Kurt Jacobs, TRI-VIZOR Charlotte Van Lent, TRI-VIZOR Sven Verstrepen, TRI-VIZOR Mike Bogen, Giventis
CO³ TEST PROJECT REPORT: HORIZONTAL COLLABORATION IN FRESH & CHILLED RETAIL DISTRIBUTION Kurt Jacobs, TRI-VIZOR Charlotte Van Lent, TRI-VIZOR Sven Verstrepen, TRI-VIZOR Mike Bogen, Giventis The research
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