Logistics meets Innovation

Jim Fredholm

CFO, Agility

Jim Fredholm presented his experience on dealing with increasing amount of data from the CFO’s perspective. Most of Mr. Fredholm’s experience has been at the C-level suite of logistics companies. During his professional experience, data served a different role than the one at NXP and its volume represented different challenges. In the supply chain business, from financial perspective, data poses two challenges. Firstly, data is supposed to serve as a business decision-making tool. However, the greater the volume of data and the higher the complexity of the algorithms used to interpret it, the more difficult it becomes for business decision makers to verify the accuracy of the information they have. According to Mr. Fredholm, management meetings will often become not about making decisions, but arguments on whether the information to base the decision on is correct. Secondly, the more the volume of data increases, the more expensive it becomes to manage it. Therefore, the question for the financial department is whether to invest in data and information technology or whether to invest in the core competence of being a supply chain or logistics company. The increasing data volume drives a new focus of the logistics companies on information technology. Focusing on information technology will help logistics companies improve automation of processes and introduce disruptive technologies such as Internet of Things and block chain. Therefore, information technology is the main tool to bring logistics companies to Industry 4.0 and make their supply chains more agile, efficient and integrated with customers and business partners.

Evelien Klein

Director Global Demand Management, NXP

Evelien Klein presented the case of transforming NXP’s S&OP planning process by using systems integration. NXP is the 5th largest semiconductor manufacturer with the mission to contribute to a smart and connected world. In the past, NXP had decentralized planning organization without a dedicated demand manager. This prevented the company to capture on time the demand signals and supply the right products at the right time. After transformation of its forecasting process, the company has integrated systems with a central data repository. NXP is now focused on strategic and holistic ways of forecasting. The new approach of forecasting allows the company to account for real-time demand changes in case of market changes such as the recent product failure of the Samsung Galaxy Note S7. The integration across departments and systems allows the company to account for demand changes based on forecasting of other products that may overtake the market share of the failed product. The usage of a common data repository across information systems increases the volume of data used and adds complexity to the statistical methods used to analyze it. NXP’s case is an excellent example of successfully handling the complex process of unifying business systems. The process of integrating complex business systems poses threads such as decreased profitability increased IT costs and increased complexity, all of which suffocate innovation. Therefore, the companies have to ensure agility and room for further improvement in their systems.

Alban Francois

Vice President Cargo, Brussels Airlines

Alban François, Vice President Cargo at Brussels Airlines presented the success story of how the company managed to turn around their business with better capacity utilization based on information technology. Brussels airlines was not profitable in 2013 but managed to turn around in two years and make substantial profit in a low profit margin and very competitive industry. The key to profitability in the airline industry is ensuring high load factors for airplanes. Therefore, the airlines overbook capacity to mitigate the risk of “no shows”. However, the air cargo customers have a conflicting interest and do not want to be on the overbooked list. According to an IATA report, air cargo represents 35% of the total value of the transported goods and only 1% of their volume. When transporting high value products, speed is the most important logistics factor. Brussels airlines successfully optimizes capacity without hurting customer experience by overbooking flights. The strategy of the company is to make short-term and long-term capacity forecasts by using trend-analysis. The company achieves high capacity forecast accuracy by using external and internal factors in the two types of forecasts. The accurate capacity forecast ensures full airplanes and short wait times for its customers.

Alexander Petkov

Director of Operations, Speedy (DPD Bulgaria)

Transmetrics and Speedy (member of DPD Group) presented a case for line haul capacity optimization. Speedy is the largest courier company in Bulgaria. It has multiple distribution centers across the country and in neighboring Romania and Greece. The purpose of the case is to optimize linehaul capacity utilization for routes between the hubs of the company. A major problem the company faces is to forecast demand variability effectively and in real time. The Bulgarian market is unique in terms of demand changes based on winter peak season, e-commerce growth and public holiday-peaks. The Transmetrics software deployed at Speedy allows the company to use internal and external data sources to forecast demand accurately. Based on the demand forecast the software will apply network optimization model to plan the total capacity needed to support the linehaul routes on a daily basis. The optimized network will allow the company to utilize the capacity of its trucks, by allowing for better fullness and decreasing the number of trucks to fulfill demand.

Guy Jaspers

Senior Director, DHL

From the carrier’s perspective, Guy Jaspers, Senior Director at DHL in the Global Network Management team presented the second approach to improving asset utilization: predictive analytics. Mr. Jaspers mentioned two key benefits of forecasting future volumes. Firstly, to make sure there is enough capacity for on-time shipment delivery. Secondly, to know in advance how much free space is going to be available. In both cases predicting the numbers and planning ahead allows DHL, and other transport companies, to achieve significant cost savings. Mr. Jaspers also mentioned a project, which DHL undertook with Transmetrics exploring forecasting through Big Data and predictive analytics. With Transmetrics they analyzed data on the level of individual shipments in order to develop the best algorithms for forecasting. The project showed promising results, improving DHL’s forecasts by several percent, which can lead to significant savings.

Marc Verelst

Head of Supply Chain Research & Innovation, Procter & Gamble

The solution favored by participants at the conference was the smarter utilization of companies’ existing assets. This can be done in two ways: horizontal/vertical collaboration and predictive analytics. From the shipper’s perspective, Marc Verelst, in charge of Supply Chain Research & Innovation at Procter & Gamble, presented a New Intermodal Network Approach (NINA). This approach facilitates a collaborative shift from road transport to rail transport in line with P&G’s sustainability objectives. Mr. Verelst listed several reasons for this shift, including traffic congestion, the shortage of truck drivers and under-utilized rail infrastructure. He emphasized the need for an open network and multidimensional collaboration (both horizontal and vertical) for the NINA project to succeed.

Philippe Fierens

Director, a.hartrodt airfreight N.V.

From the freight forwarder’s perspective, Philippe Fierens, Director at a.hartrodt airfreight N.V., set out the importance of vertical and horizontal collaboration in supply chains. According to the studies referred to by Mr. Fierens, profit is not the main reason for collaboration. The main reason is the possibility of offering higher quality service while profit only comes in the third place. Collaborative projects allow companies to offer additional services, better geographical coverage, volume exchange, combined marketing and investments, and other advantages. Vertical collaboration between shippers and forwarders allows them to enter long-term relationships, establish a work-flow and data-flow between each other, and share accurate forecasts to achieve higher load factors at better rates. Although the collaborative approach is not new and its benefits are clear, in practice companies are still reluctant to collaborate. According to Mr. Fierens, we still need a “mental shift.”

Alex Van Breedam

Co-founder/CEO, TRI-VIZOR

Alex Van Breedam is a Founder and the CEO of TRI-VIZOR, the World’s First Cross Supply Chain Orchestrator. As a neutral matchmaker, trustee and logistics architect, TRI-VIZOR offers services and solutions to enable horizontal collaboration and freight flow bundling. In 2015, TRI-VIZOR won the ELA Gold Medal for a shared transport and warehousing community it helped create between FMCG competitors Nestlé and PepsiCo.