April 27, 2007 Otto Schacht Senior Vice President, Global Seafreight Kuehne + Nagel International AG
Agenda Market trends / challenges Customer and Kuehne + Nagel IT solutions Customers initiatives 27/4/07 p. 2
Understanding the Market Place and Trends Ongoing trends / challenges Globalisation Reduced Product Lifecycles Increased Customer Demand (Time, Quality) Increase Shareholder Value International Procurement, Production and/or Distribution Networks Rationalised & changing Procurement-, Production- and Distribution Networks Increased Supply Chain Reliability, Speed and Visibility Capital Efficiency Cost Pressure 27/4/07 p. 3
Understanding the Market Place and Trends New trends / challenges Globalisation Globalisation Increased Supply Chain Complexities (more parties involved, e.g. Contract Manufacturing) Increasing Move from Push to Pull Environmental Issues Carbon Footprint of the Supply Chain 27/4/07 p. 4
Understanding the Market Place and Trends Demand for information and process integration is growing exponentially Next plateau to drive improvements Financial Inventory, Cash-to-Cash Cycles, Efficiencies, Infrastructure, ROI Service Driven by Fill rates, lead times ERP, Internet, ease of EDI, XML 27/4/07 p. 5
Traditional and Enhanced Value Proposition by Kuehne + Nagel Enhanced value proposition by Kuehne + Nagel Supplier Customer Customer s customer Overall supply chain visibility and optimisation for the customer Improved delivery performance Reduced inventory Reduced fulfilment cycle time Increased overall productivity Lowered supply chain costs Improved order fill rates Improved capacity utilisation Traditional 3PL value proposition Supplier Customer Customer s customer Transport cost reduction Operational efficiency cost reduction cost reduction 27/4/07 p. 6
Need for Visibility Impacts of lack of transparency Late delivery High logistics cost Expediting costs Lost revenue Asset cost Operating cost Risk Lost customer loyalty Excess inventory Poor customer service Replanning Production downtime Warranty Long cycle times Firefighting Returns Rework Litigation Major impacts due to lack of transparency are not visible but nevertheless MASSIVE 27/4/07 p. 7
Customer s Perspective Many points of entry (difficult management) Detailed various ocean carriers and/or Various forwarders Different systems Track & trace Invoicing Reporting Transfer of liability 27/4/07 p. 8
Seafreight Consolidated Management Advantages Fewer points of entry for a customer Simplified rate structure Simplified invoicing Single reporting system Single track & trace system Clear transfer of responsibilities Outsourcing of administration More control to warehouse partners Manage complete supply chain 27/4/07 p. 9
Customer Solutions Traditional Model No common standard of information and restricted no. of carriers Carrier I Customer Carrier II Carrier III Carrier IV Carrier V Information / Contracts 27/4/07 p. 10
Customer Solutions Kuehne + Nagel s role Customer Production Production planning Sales forecast Marketing Research and development Public relations Detailed information Kuehne + Nagel Planning Optimising Monitoring Controlling Reporting Execution Vendor I Vendor II Carrier I Carrier II Carrier III Carrier IV Carrier V Airline I Airline II Airline III Information Contract 27/4/07 p. 11
Integration with Carriers Customers Single access to multiple carriers reduces training, mistakes, and time! Schedules Booking Shipping instructions Bill of Lading Track & trace Reports 27/4/07 p. 12
Reliability through People, Processes and Technology CIEL (FA/FS) Single Global Operational Platform to plan transportation, create documentation and post events. Driven by a standard workflow to ensure SOP conformance CIEL (FA/FS) Captures information from carriers and other supply chain partners to increase data quality and availability CIEL (FA/FS) First Generation Information directly interfaced to KN Login KN Login Web-based window to view and manage transportation across carriers & modes KN Login Enables carriers and supply chain partners to directly input information 27/4/07 p. 13
KN Login Visibility and process management tools Provides online visibility to order lines across vendors and source channels Provides online integrated visibility to order line allocations to respective shipments across carriers and modes Enables reliable and efficient transportation and information flow management Visibility KN OMS Enabling Customers to Effectively Implement and Manage Global Procurement Strategies Monitoring Activities Protocols KN Login Visibility and Process Management Tools Kuehne + Nagel Global Logistic Network Collaboration Information management 27/4/07 p. 14