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LEAD LOGISTICS PARTNER (LLP)“DELIVERING A SUPPLY CHAIN TRANSFORMATION THAT DRIVES COMPETITIVE ADVANTAGE”
An Introduction to LLP
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Understanding Business NeedsEmerging Trends and Supply Chain Challenges
Reduce Cost
• Reduce logistics costs as they increase in % of sales
• Reduce working capital and inventory
• Direct and indirect cost pressure
Manage Complexity
• Improve visibility while increasing supply chain complexity
• Create “Actionable Insight” to improve control and subsequently improve reliability
• Reduce inefficiencies and layers of hidden costs
Risk and Continuity
• Manage risk and supply continuity
• Avoid supply chain disruptions
• Strikes, weather, nature, infrastructure
ABC Ltd´sSupply Chain
Lead Growth
• Leverage your supply chain as a strategic tool to support your business growth and stay ahead of the competition.
• Develop a supply chain capable of dealing with market variations as well as leveraging new revenue opportunities quickly
Improve Performance
• Improve the speed, reliability and flexibility of your supply chain
• Performance improvements can be achieved in parallel to meeting cost targets, allowing you to improve business competitiveness
Sustainability
• Sustainability is increasingly driving strategic supply chain decisions.
• Need for carbon measurement and management
• Reduce environmental footprint and improve waste management
“Supply chain management is an extremely interactive, complex system requiring simultaneous
monitoring of many conflicting objectives “
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Positioning of LLP(4PL) vs. 3 PL Services
Planning
Co-ordination
ExecutionFreight
Trans-
port
Ware-
housing
Customer
Value
added
service
Freight
Trans-
port
Ware-
housing
Strategy
Customer
Traditional Typical
3PL
BusinessStrategy
3PL 3PL
Timeline
Core competence of customer
Core
Log
istics
Co
mp
ete
nce
Value
added
service
Freight
Trans-
port
Ware-
housing
Leading
LLP / 4PL
Customer
Functional Processes
LLP offers and evolution in our service offering that enables the release of new
value in the supply chain
• An integrated end to end approach across the all areas of logistics
• LLP reaches deeper into the planning and strategy competencies enabling robust continuous improvement
• Partnership Approach
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Typical supply chain
Many supply chains are unable to effectively deal with increasing internal demands and
simultaneously navigate effectively the external factors affecting logistics
• Fragmented internal logistics structures that are
siloed by brand or department producing a a
duplication of logistics resource & a limited
opportunity to effect change within supply chain
• Cost reduction achieved through RFQ approach
and cost down pressure to service providers
• Incomplete overview of supply chain
• Localized and varied supply chain management
and logistics arrangements
• Low transparency of logistics cost per unit
produced at each facility
• For inbound to manufacturing suppliers control
the supply chain (material purchased on DDP)
• Production have little control and llow
confidence in the performance of supply chain
which results in high levels of safety stock of
inbound supply chain
Current Supply Chain
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Standard reponse – 3PL and procuremnt led
• The standard response to dealing with growing internal requirements and increasing external
pressures is to do “more of the same” and quicker.
• Overall, companies that seek to deal with the growing supply chain pressure through continuing
current processes will achieve some limited savings and success.
• This success may be insufficient and unsustainable as the external pressures and internal demands
continue to drive increased costs
This may achive a small reduction however result is limited without network design changes
Potential to over promise on commercial agreements ending in contractual dispute
Significant addtional launch costs with new provider offset any savings
Seek to reduce cost through employing more local low cost providers
Apply greater pressure upon existing service providers
Procurement to increase the frequency of requesting tenders or change bidding format (e-bids etc)
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Flexibility
Change
Strategic
Complexity
Technology
Focus
An Alternative Response – Lead Logistics Partner
Below are some of the motivations that highlight the need for an LLP model
Outsourcing supports the need to become responsive to changing markets and more focused on core competencies.
Gives time to the
customer to focus on doing
what you do best
A powerful coalition for
change LLP can act as a catalyst for change within an organisation.
Resource and technologies
that simplify
Provide greater strategic focus upon supply chain improvement and innovation avoiding tactical disruption
A flexible supply chain
resource
To be able to respond to unpredictable changes in demand the modern supply chain must be flexible and “on demand”
Access to best in class
technologies
Longer and more complex multi channel supply chains increase the requires ever increasing levels of resource
Increasing requirements and costs of keeping pace with changing technology across the supply chain
Relentless continuous
improvement
LLP provides a path overcome the limitations of the traditional 3pl model
Need Description. What LLP model provides
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Alternative response –LLP process driven transformation
To effectively deal with increasing internal demands and navigate the external factors affecting logistics
companies require to transform their supply chain through LLP
• Fragmented internal logistics structures that are siloed by brand or department producing a a duplication of logistics resource & a limited opportunity to effect change within supply chain
• Cost reduction achieved through RFQ approach and cost down pressure to service providers
• Incomplete overview of supply chain
• Localized and varied supply chain management and logistics arrangements
• Low transparency of logistics cost per unit produced at each facility
• For inbound to manufacturing suppliers control the supply chain (material purchased on DDP)
• Production have little control and low confidence in the performance of supply chain which results in high levels of safety stock of inbound supply chain
Current Supply Chain
• Integrated logistics structures that are shared by brand or department producing a a single logistics resource that can respond quickly to change
• Cost reduction is achieved through a holistic review of all cost drivers and utilizing data analysis tools and continuous improvement methodologies
• Complete overview of supply chain
• Central supply chain management able to adapt logistics solutions to local requirements
• High transparency and forecasting of logistics cost per unit produced at each facility at differing levels of production
• Full control of inbound to manufacturing supply (material purchased on Ex Works)
• Production have high confidence in the performance of supply chain which results in low levels of safety stock of inbound supply chain
Supply Chain Transformation
designed implemented and
managed in partnership with
LLP
Leading Supply Chain
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LLP definitionTypical LLP construct (1/3)
Focus on core business
Increased flexibility & scalability
Shared risks and rewards
Driving top & bottom line growth (20–30% reduction on direct transport spend)
Catalyst for change
The LLP takes the role of a strategic partner to the customer that drives transformational change in its Supply Chain
Enhanced SC capabilities
Client Supply Chain Organization
Transportation WarehousingValue added
Services
InboundOutbound& Return
Manufacturing
IT Systems
Operate
Transformation
ContinuouslyImprove
Design
Manage
Source: DHL LLP; DPDHL Strategic Logistics Consulting
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Typical LLP construct (2/3)
• Continuous Network Design and Supply Chain optimisation
• Relentlessly seek to improve the design of all aspects of theSupply Chain
• Implementation of process through procurement and ongoing management of key stakeholders
• Control tower synchronizes material flow and provides visibility and control
• DHL may provide an operational support to your Supply Chain needs together with other carefully selected logistics service providers
• Bringing together all the services together with Change management to ensure a safe and secure delivery of transformation of your Supply Chain
• Leading IT systems that support and connect your Supply Chain across all service areas and partners
• Total Logistics Cost Mgmt. (TLCM) gives complete transparency of all Supply Chain costs
IT Systems
Transformation
Continuous Improvement
Services
Operations Services
Design Services
Management Services
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Typical LLP construct (3/3)Example services and approach
Transport Operations Warehousing & Facilities VAS Provision
Desig
nM
anage
Opera
te
Total Logistics
CostManagement
Contin
uous Im
pro
vem
ent
KPI and Dashboard
Management
Network Design Services
Inventory Optimization
Design
Control Tower Operations
Material Vendor Management
Logistics Strategy Design
LSP Management
LSP Procurement
ContainerManagement
Logistics Financial
Management
Finance Management
LLP
sys
tem
s P
latfo
rm
Transform - Change Management
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LLP services menu
Core LLP Service Offering
• Implementation Management• LSP Procurement • Logistics Claims Mgmt.• LSP Management & onboarding• Control Tower
– Order Management & Processing– Materials Management– Tactical Shipment Planning & Carrier Booking– Exception Mgmt. Issue Resolution & Service Desk– Track & Trace Visibility
Design Manage Continues Improvement
• Continuous Improvement Projects• Total Logistics Cost Mgmt. (TLCM)• Reporting & Analytics Visualization
• Network Design, Fixed Route Design• Transport Design• Transport Mgmt. Process Design
Transform
• Change Management
Additional LLP Services
Non-LSP-Parties & Assets Mgmt.• Vendor (Consigner) Mgmt..• Asset Mgmt.
Design Manage Operate
Logistics Service Delivery/Execution• Transport Operations• POD Mgmt../Electronic POD Mgmt..• Warehouse Operations• Packing Services• Customs Handling
Supply Chain Strategy Design• Logistics Strategy Planning• Business Impact Evaluation• Environmental Impact Evaluation
Inventory Strategy Design• Demand Forecasting/Replenishment Planning• Inventory Level Optimization
Packaging Design• Durable/Expendable Packaging Design• Co-Packing Strategy
Facility & Warehouse Design• Cross Dock & Warehouse Design • Facility Material Flow, Layout. Process Design
Logistics Financial Management• Budget Planning & Mgmt..• LSP Invoice Consolidation, Validation & Payment –
Freight Billing and Audit (FBA)
Document Management• Shipping Document Storage (BOL, AWB, Commercial
Invoice, Packing List)
Value Added Services• Supply Chain Risk Mgmt..• Customs Brokerage & Clearance• Carbon Accounting & Reporting
Resilience360• Risk Monitoring & Contingency Mgmt..
Value Added Services• Kitting/Sub-Assembly/Co-Packing• Waste, Recycling & Disposal Mgmt..• Quality Inspections
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LLP MODULAR solution model
Transport Control Tower.
Freight Pay & Audit
TLCM Reporting & Analytics
Core Carrier Mgt
Visibility / Track & Trace
SC/Network Design
“Foundation” “Low-Tier” “Mid-Tier”
Foundation Foundation
Inco terms Conversion
Supply Chain Process Eng.,
Facilities Design.
Advanced Analytics
Vendor Mgmt.
Financial Mgmt.
Supply Chain Risk Mgmt.
Order / Material Mgmt.
“High-Tier”
Foundation
Custom Implementation of various modules
Building from a base foundation modular services can be added and tailored to your requirements
and as operations mature over time
Continuous Improvement
OperateMangeDesign
KEY:- LLP Service Building Blocks
Transform
Change management
Increasing Complexity
Increasing Value
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Our Approach to LLP
We help clients address complex supply chain
challenges
Through Customized Supply Chain Management
Services
To achieve their business goals
LLP not only provides a consultancy to identify the path to new value …but is also able to deliver the
solution
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LLP Keys to delivering Value
Neutrality
“always with your
interests
paramount”
People and
long term
partnership
“Building a stable
relationship a foundation
for continuous
improvement”
Solution design
and operations
excellence
“provide comprehensive
supply chain design and
operation capabilities locally,
regionally and globally ”
4 LLP Keys to Value Delivery
Certain factors play a key role in delivering a successful LLP
Value creation
enabled
though IT
“Leverage supply chain
data and visibility to
provide real actionable
insight that delivers new
value”
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How LLP delivers value
– LLP will create transparency across the supply chain through implementing standard operating
procedures for all logistics activities.
– This new process and organisation rollout will not only release value itself but more importantly will
provide the foundation for the LLP to instigate and manage “data driven” continuous improvement
across the whole supply chain. Belwo are the steps we follow
Engineer a comprehensive and integrated optimal supply chain process, organisation, integration and network solution
Identify“as is”
Understandrequirements
Design Implement & Manage
Measure & Continous Improve
Study & understand current supply chain including organisation, execution process, compliance,, performance management, and network optimization,
Identify and understand the customers internal requirements consider all stakeholders and the current and future anticipated external market demands,
Engineer a comprehensive and integrated optimal supply chain process, organisation and network solution
Phased Implementation of processes, services & organisation change across supply chain Prioritises maximise early value release while balancing risk
Lever new transparency to attack remaining waste and continuously Improve supply chain performance
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Customer
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Leading Supply Chain
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What value LLP delivers
Driving your top & bottom line growth
Delivered with a flexible commercial mechanism that shares risk and reward
Enabling your supply chain and business strategy to create a competitive advantage
Strategic
Value
Financial Value
Commercial Value
As a Lead Logistics Partner we design, transform, manage,
operate and continuously improve our customers’ supply chains
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Lead Logistics Partner –Value Summary
� Savings potential: typically above 10% of total supply chain costs
� Improved revenues and customer retention through better operational performance and service
� Ongoing continuous improvement along all supply chain elements
Financial Value
Top and Bottom line Growth
Creating an Competitive Advantage
� Reduced complexity: streamlined processes, single point of contact
� Visibility and control: transparency over supply chain costs and KPIs
� Flexibility: adaptability of supply chain to accommodate growth and innovation
� Sustainability: : Control over supply chain environmental impact
Strategic Value
LLP = outsourcing partnership to achieve reduced complexity, transparency and cost leadership
in a jointly defined scope of Supply Chain processes and services!
� Partnership: Flexible and a balance commercial agreement that acts as foundation to developing relentless continuous improvement across the supply chain
Commercial Value
Creating a Win-Win Partnership
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LLP Solution Fit
Cost Reduced
• Optimising your supply chain network design continuously
• Reduced Inventory and capital costs
• Improved planning with accurate SC data
• Improved Cost Visibility
Managed Complexity
• Improve visibility while increasing supply chain complexity
• Control tower operational provides “Actionable Insight” to improve control and subsequently improve reliability
• Modular, innovative and simplified services
Risk Mitigation
• Supply chain dashboard monitoring you supply chain continuously
• Rapid reaction to incidnets through command and control to avoid supply chain disruptions ( Strikes, weather, nature, infrastructure)
Lead Logistics Partner
Leading Growth
• Improved revenues & customer retention through better customer service
• A managed supply chain capable of dealing with market variations as well as leveraging new revenue opportunities quickly
Improved Performance
• Increasing the Supply Chain cost visibility
• Improved planning with accurate SC data
• Providing a single point of contact
• KPI driven conformance to SC processes
Sustainability
• Sustainability is considered in network optimisation strategy
• Sustainability dashboard with environmental impact measured and managed
• Reduced environmental footprint and improve waste management
Delivering solutions to all your supply chain challenges
�
�
�
�
�
�
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Our joint path to launch a successful LLP – Key Milestones
4 Phases to LLP Engagement and typical timing
Business
insight
Supply chain
scanDue diligence
4-16 Weeks
ImplementationTransition
planning
Measuring and control are key to mitigate any implementation risk!All projects start with a Supply chain scan and a Proof of concept.
Vision and Diagnostics
• Analysis of current supply chain• Customer strategy• Configuration restrictions
Business Case andProof of Concept
• Operational framework design• Commercial design• Value identification
Transition Roadmap
• Implementation Strategy• Milestone management• Continuous improvement
2–3 Days
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LLP Commercial Approach
• For a successful LLP it is essential that the following characteristics prevail
– Co-operation & teamwork across the 2 parties
– Sharing information & transparency
– Overall group success
– Mutual respect
• This setup will ensure that Incentives exist to drive and motivate continuous improvement.
• Also to foster the correct behavior Risks/Liabilities must be balanced & in line with rewards
Key reference material ; Vested Outsourcing, by K Vitasek
Commercials based upon sharing the financial benefits of the value creation.
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LLP
LLP Commercials Delivering Net Value
Existing Supply Chain Operating Costs (Spend + Management
Costs)Supply Chain
Operating Costs
Gain Share
LLP
Savings
Supply ChainOperating Costs
Gain Share
Today Contract
Supply ChainOperating Costs
LLPGain Share
SavingsSavings
Key to LLP commercials is to assure that the LLP team delivers absolute value over the period of the contract
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Visibility & Control of your Supply chain
World Class Supply Chin Risk
Management
Fast delivery of savings
Global Reach, Scale & Network
DHL offers best-in-class Global LLP capabilities across your supply chain
Why Our Clients Choose DHL for LLP?
World leader in LLP services
Supply Chain Expertise
Win-win commercial model
Customer intimacy & partnership
Customer Intimacy& Partnership
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LLP Value Summary
The scope of an LLP is highly configurable and can vary from a geographic perspective and a service perspective
Flexible solution tailored to your specific needs
A reliable supply chain expert within your business
Relentless focus on delivering significant new strategic and financial value back to the business
Delivers new value across your business
An End to end platform to instigate “data driven” continuous improvement and provide full supply chain control
Delivers a single fully integrated supply chain
Builds a long-term sustainable partnership
“Delivering a supply chain transformation that drives competitive advantage”
New Value
Flexible Solutions & Resource
Integrated End to End Supply Chain
Expertise through Partnership
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Add as appropriate for customer
Find all approved case studies in the following location
http://ishare.dhl.com/sites/gbdm/Mar keting_Sales/Webparts/LLP.aspx
CASE STUDIES
PUBLIC
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DHL solution Customer benefitsCustomer challenge
Customer facts
DHL Supply Chain | 2014
Case study:LLP solution for a leading imaging company
Comprehensive LLP solution enables end-to-end domestic distribution supply chain transformation for Japanese manufacturer
• Redundant capacity within domestic warehousing network
• Insufficient visibility on costs and lack of vender management control
• High distribution costs due to dedicated network
• Inefficient in-house logistics operation that is not delivering against benchmarked performance or cost
• Rationalized warehouses by leveraging shared DSC sites
• Increased utilization of warehouse space by adapting productivity improvements and establishing new standard operating processes
• Developed new bidding process to select most cost efficient sub-contractors
• Optimized network and established new co-loading platform
• Set up an LLP operation that manages the supply chain operation and provides strong focus on performance management and continuous improvement
• Site consolidation results in a 5–10% reduction in space
• Handling costs reduced 10–15% through resource sharing
• Overall cost reductions of 8–12 % delivered over five years
• Benchmarked supply chain performance across entire business resulting in standardized KPI reporting and cost structure
• Flexible DHL resource to support customer strategy
Geography Japan
Sector Technology
Solution LLP
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Customer Facts
Geography EMEA
Sector Automotive
Customer Ford
• Improve efficiency and quality while also facilitate the specific requirements of lean manufacturing that were a cornerstone to the success of the entire enterprise.
• Support change from local logistics management to a regional approach
• Need to protect increasingly complex production schedules more effectively
• Deliver cost savings and diminish environmental footprint
• Reduce emergency shipments
• Reduce global inventory
• Streamlined operations through one Lead Logistics Provider solution to set up and maintain efficient logistics
• Creation of a single European solution, with DHL staff deployed at all Ford European manufacturing locations
• Move from a destination based network to an origin based network for better network synergy
• Support of lean manufacturing and constant review of the supply chain to achieve cost optimization of material flows and full cost visibility
• Cost optimization of material flow
• Stability and confidence with a 95% on time arrival within 30 minutes of the engineered window
• Improved efficiency, supply chain transparency and vehicle utilization to achieve “Just in Time” deliveries
• Reduction of inventory, emergency freight and CO2 emissions by 20,000 tons
• Longstanding partnership between DHL and Ford
Lead Logistics Provider solution creates competitive advantage
for Ford
Customer BenefitsCustomer ChallengeCustomer Challenge DHL Solution
Case Study: Lead Logistics Provider – Ford
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Case Study: Integrating Supply Networks in the Middle East and Africa
Customer Facts
Geography EMEA
Industry Consumer
Revenue EUR 61.8bn
Employees 126,000
• Disconnected supply chains across 11 manufacturing sites in the Middle Eastand North Africa
• Overlapping supply routes from various manufacturing sites serving the same regions
• Service and cost inefficiencies
• High supply chain risk caused by limited transparency
• Designing, developing and implementinga fully integrated regional network
• Process-driven centrally-managed Control Tower to co-ordinate region’s inbound operations
• Satellite Control Towers in all manufacturing regions
• Central Total Logistics Cost Management (TLCM) team that relentlessly identifies and delivers new value
• Locally-based teams to oversee consistency and final stages of logistics process
• Improved supply chain visibility and reduced risk
• Reduction of transportation costs, transit times, inventory levels, demurrage, customs and other tax cost
• Control and reduction in CO2 emissions
• Increased On Time in Full and Case Fill Rate
Customer BenefitsCustomer ChallengeCustomer Challenge DHL Solution
A supply chain transformation that reduces costs
and improves service
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3030
Customer Facts
Customer British American Tobacco
Sector Consumer
Industry Tobacco
Lead Logistics Solution delivers operational excellence and
creates cost savings for British American Tobacco
• Fully integrated, cross-border solutions
• Establishing a SCi-driven Freight Control Tower to manage movements across the region
• Increasing control of network flows through the introduction of 5 new carrier partners
• Optimizing networks, creating transformational supply chain projectsand providing better visibility to minimize working capital
• Centralizing spare machine parts into one global warehouse as part of MRO solution
• Manual supply chain with little integration over huge geographical area
• Volatile network and lack of visibility and control, leading to reactive decisions
• Changing needs of customers
• Reduce costs and environmental footprint while supporting growth
• More control and visibility of the supply chain
• A more sustainable and stable network, with 30% more capacity and 20% increased load-fill
• On target to reduce overall logistics costs by at least 18% in Western Europe
Customer BenefitsCustomer ChallengeCustomer Challenge DHL Solution
Case Study: Supply Chain Transformation Drives Competitive Advantage
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Customer Facts
Geography Europe
Industry Automotive
Revenue EUR 15.7bn
Employees 24,000
• Lack of flexibility and efficiency in the inbound deliveries of parts from over800 suppliers
• Meeting changing demand while ensuring transparency on costs
• Lack of efficiencies driven by a locked3-month planning cycle for freight deliveries
• Reducing environmental footprint
• Managing transport, stock handling and line feeding at the three plants as a Lead Logistics Provider (LLP)
• Dynamic planning of both EU and UK collections based on customer’s demand
• Using the latest software to optimizeroute planning and loading and reduce empty mileage
• Setting up seven cross-docks to consolidate loads before they aredelivered to the plants
• Procuring and managing third party providers
• Synchronized deliveries of parts to the plant with deliveries to the production lines when they are needed
• Reduced supply chain costs contributingto a reduced ‘Total Delivered Cost’
• Reduced inventory spend
• Reduced transportation costs by morethan 45%
• Improved fuel efficiency
• Reduced the carbon footprint by 25%
Lead logistics partnership increases efficiency and sustainability
Customer BenefitsCustomer ChallengeCustomer Challenge DHL Solution
Case Study: A World-Renowned Premium Car Manufacturer
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