TDL & Exports Regional Intermediary Design II

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SEMI/NWOH/SWON Workshop Two

April 29, 2011

SEMI/NWOH/SWON Workshop Two

April 29, 2011

Sponsored by

New Economy Initiative

Hosted by

Detroit Regional Chamber

and

Michigan State University

TDL & Exports Regional Intermediary Design

http://www.detroitchamber.com/index.php

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AcknowledgementsAcknowledgements

• MSU, DRC, WSU and all participants would like to personally thank NEI for the resources to continue with the implementation of project results

• We are encouraged by the enthusiasm of all stakeholders to contribute to and continue with this important economic development and new jobs creation project

• Thank you to NEI for your vision and support to help transform the region!


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Workshop Two AgendaWorkshop Two Agenda

• Welcome• Introductions• Synthesize findings from Workshop One• Organizational model recommendation• Finalize Regional Intermediary design: Breakout

– Discussion– Report out

• Plans to work with pilot companies• Planning for next Workshop


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TDL & Exports Regional Intermediary DesignTDL & Exports Regional Intermediary Design

Workshop Guidelines:• All participants will give the meeting our full attention,

positive energy and commitment to the project• All participants will be open, candid and honest and allow

others to do the same• Respect will be the foremost goal of all participants; we will

center on issues, not personalities• All participants will center first on gaining understanding,

second on convincing others• All input raised will be captured for future use and shared

with all attendees• Think FUTURE; Think strategic; Think CAN DO !


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IntroductionsIntroductions

• Name• Role• Representing


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Workshop Two Desired Outcomes:

• Finalize Regional Intermediary design• Develop plan for Regional Intermediary

organizational model implementation• Discuss plan to work with pilot companies• Discuss Workshop Three topics


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TDL and Exports Strategy: Future Vision TDL and Exports Strategy: Future Vision

• World class cross-border distribution hub – Air freight to motor freight – Rail freight to motor freight– Value added services

• Lowest overall cost to serve for industry partners• Superior customer service for industry partners

and their respective customers• State of the art supply chain technology• Excellent management and labor talent • Win-win-win relationships with industry partners,

service providers, and supply chain hub


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The Bottom Line !The Bottom Line !

• Opportunity Assessment has re-enforced the economic development potential for the Hub– 66,000 new jobs created– Doing nothing may run the risk of additional jobs lost

• Maintaining momentum over the next few months will be critical to project success

• Each of us will play a key role to assure 66,000 new jobs are created…..starting today !


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Target Industries for SEMI/NWOH/SWON HubTarget Industries for SEMI/NWOH/SWON Hub

• Heavy Manufacturing– Automotive renewal– Alternative energy– Carbon fiber manufacturing– Chemical processing– Defense– Electronics – industrial

• Light Manufacturing– Food processing– Medical technologies– Water technologies

• Distribution– Beverage and alcohol distribution– Retail importing and value add– Waste management


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Summary of Enhanced Economic ActivitySummary of Enhanced Economic Activity

Industry Cluster Increase in Economic

Development

Number of New Jobs Created

Heavy Manufacturing $5 Billion 41,200 New Jobs

Light Manufacturing and Distribution

$5.5 Billion 25,500 New Jobs

TOTAL Over $10 Billion Over 66,000 New Jobs


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TDL and Exports Hub Capabilities from Best Practice ResearchTDL and Exports Hub Capabilities from Best Practice Research

• Supply Chain Expertise– Economic competitiveness and lowest supply chain

cost to serve– Supply chain sustainability– Infrastructure / modal support

• Economic Development– Competitive tax environment– Ability to serve global markets– Develop supply chain solutions

• Strategic Infrastructure / Intermediary Funding– Infrastructure support and capabilities

• Collaboration– Joint commission or authority– Strategic alliances


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Hub Capabilities: Best Practices ResearchHub Capabilities: Best Practices Research


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Hub Capabilities: Best Practices ResearchHub Capabilities: Best Practices Research


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Supply Chain Expertise – Workshop One Breakout ResultsSupply Chain Expertise – Workshop One Breakout Results

Descriptor SymbolAbove AverageAverageLaggingUnknown

CAPABILITIES: MI NotesSupply Chain SustainabilityCust Service & Reliability Strong position but costs and uncertainty increasing 12%Security Consumers and regulators expecting increased security 6%Green / Environ Aspects Firms strongly focus on low cost suppliers 5%Supply Chain Skilled Labor Readily available labor 11%Supply Chain Solutions and Services 9%

Economic CompetitivenessHub Operations Cost Higher cost to operate 11%

Hub Service LevelsManagerial and skilled labor may create advantages; northern fringe location may inhibit access to entire U.S. 8%

IB / OB Shipping Balance Trade imbalance; excess empty containers 9%

Infrastructure / Modal SupportIdentifying Strategic Corridors Identified, but importance is unclear 13%Land & Facility Availability Competitive real estate prices 10%

Technology EnablersGood resources and capabilities: EDI, RFID, GPS tracking, demand, visibility systems, TMS, WMS, trade mgmt systems skills 6%

Relative Importance


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Economic Development – Workshop One Breakout ResultsEconomic Development – Workshop One Breakout Results


CAPABILITIES: MI NotesAbility to Service Global MarketsUnderstanding Global Landscape Strong understanding of global supply chain operations 15%Use of Marketing Need for better communication 20%US Border Trade Corridor Some infrastructure and institutional barriers for US / Canada border 16%NAFTA Transport Links Access to multiple transportation modes but limited integration 9%Access to Ports Provides competitive option between U.S. eastern ports and Canada 8%Customs & Related Services Services already in place but benefits not fully realized 5%Foreign Trade Zone Facilities High quality, underutilized capability 7%

Competitive Tax ClimateTax Abatement and Incentives Competitive, targeted 6%Property Taxes on Equipment Relatively high 3%Business Tax Gross receipts intensity and surcharge issues 6%Personal Income Tax Relatively low and flat 4%

Relative Importance


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Strategic Infrastructure / Intermediary Funding – Workshop One Breakout ResultsStrategic Infrastructure / Intermediary Funding – Workshop One Breakout Results


CAPABILITIES: MI NotesInfrastructure Design

Airport CapabilityDTW airport capacity; frequent direct Asian flights; available capacity for dedicated and belly cargo freight 11%

Interstate HighwaysNetwork of I-75, I-94, and I-69 is less congested than Chicago’s, great connectivity, but aging 14%

Railroad NetworkUS-Canada railroads pass through Michigan; shipper access to NS and CSX through Conrail; access to U.S. East coast and Chicago 14%

Intermodal Capacity Several dispersed facilities with excess capacity 7%Distribution Facility Good private, leased, and public warehouse capacity 10%Port Capability Mostly bulk shipping and in need of funding 9%Network Resiliency Infrastructure developed, but in need of updating 10%Border Crossing Facilities 15%Modal Coordination Across Jurisdictions 9%

Relative Importance


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Collaboration – Workshop One Breakout ResultsCollaboration – Workshop One Breakout Results

Descriptor SymbolInnovativeAdequateLaggingUnknown

CAPABILITIES: MI NotesStrategic AlliancesStreamlined Government Complex business taxes and laws 12%Fostering Innovation Need for better promotion of collaboration 7%Community Involvement Need for better communication and outreach 24%Supplier Capabilities Strong supply base 7%Engaging Federal Government Understanding better role and responsibilities 5%Partnering with Education Need for additional collaboration projects 9%Leverage Business Partnership Better use of resources 10%

Joint Commission or AuthorityFinancial Capital Lack of venture capitalists and angel funding 4%Infrastructure Bank Does not exist 5%Strategic Transportation Plan Transportation dollars prioritized with local considerations 10%Information Sharing Need for additional opportunities and resources 8%

Relative Importance


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Highest Priority Capabilities: Summary ofWorkshop One Breakout ResultsHighest Priority Capabilities: Summary ofWorkshop One Breakout Results

Capability Category MI Comments %Community Involvement Collab Need for better communication and outreach 24%Use of Marketing ED Need for better communication 20%

US Border Trade Corridor EDSome infrastructure and institutional barriers for US / Canada border 16%

Understanding Global Landscape EDStrong understanding of global supply chain operations 15%

Border Crossing Facilities SI / IF Capabilities there, but in need of improvements 15%

Railroad Network SI / IFUS-Canada railroads pass through Michigan; shipper access to NS and CSX through Conrail; access to U.S. East coast and Chicago 14%

Interstate Highways SI / IFNetwork of I-75, I-94, and I-69 is less congested than Chicago’s, great connectivity, but aging 14%

Identifying Strategic Corridors SCE Identified, but importance is unclear 13%Cust Service & Reliability SCE Strong position but costs and uncertainty increasing 12%Streamlined Government Collab Complex business taxes and laws 12%

Airport Capability SI / IFDTW airport capacity; frequent direct Asian flights; available capacity for dedicated and belly cargo freight 11%

Supply Chain Skilled Labor SCE Readily available labor 11%Hub Operations Cost SCE Higher cost to operate 11%

Strategic Transportation Plan CollabTransportation dollars prioritized with local considerations 10%

Leverage Business Partnership Collab Better use of resources 10%


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Workshop One Findings - EnvironmentWorkshop One Findings - Environment

• While service is important, hub cost is not a determining factor unless it is out of line.

• Flights from Asia can be differentiator.• Fuel cost increases will continue to drive local

sourcing.• Recognize that firms consider economic rather

than political boundaries.


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Workshop One Findings - FacilitatorsWorkshop One Findings - Facilitators

• Skilled labor is an asset and selling point.• Supply chain solutions and service needs to be

an intermediary service to both MEDC and industry.– Develop positive value proposition for pilot company– Network design– Quantify the impact of uncertainty and risk

• Increase cross-border efficiency of truck traffic.• Improved railway intermodal facilities.


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Workshop One Findings - CommunicationWorkshop One Findings - Communication

• Solutions should be used as a differentiator.• Develop positive message regarding suppliers,

customers, and skilled labor building on industry and academic credibility.

• Develop supply chain education and promotion message for legislators.

• Improve communication between economic developers and local regulators.

• Coordinate regional communication and marketing.– Strategy development– Strategy implementation


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Workshop One Findings - RequirementsWorkshop One Findings - Requirements

• Streamlined public sector approach with involvement of private sector partners.

• Intermediary model should reflect the strengths of the port authority lite, industry collaboration and public private partnership models.– Multi-nation, multi-state board with executive committee.– Should have planning and strategic visioning attribute.– One stop entry point.


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Best Practices Research – Hub Geographies Including Additions (Bolded) from Workshop One

Geography Title Target Industry

Arkansas / Oklahoma Bi-State Metropolitan Planning Organization Retail

Buffalo Port of Buffalo and Buffalo Niagara Enterprise Commodities & High Tech

Chicago Chicagoland Chamber of Commerce Diverse

Columbus Columbus Region Logistics Council/Chamber and Rickenbacker Global Logistics Park

Appliance / Fashion

Georgia Georgia Center of Innovation Logistics (Page Siplon) State/Georgia Tech Bioscience, Tech

Indianapolis Greater Indianapolis Chamber of Commerce & Develop Indy and Conexus Electronics

Hamilton Hamilton Port Authority Commodities

Kansas City KC SmartPort Fast Moving Consumer Goods

Laredo Laredo Development Foundation Automotive & Intl. Trade

Louisville Greater Louisville Inc. Repair / Maintenance

Memphis Regional Logistics Council/Chamber Distribution

NW Indiana NW Indiana Forum

New York / New Jersey NY/NJ Port Authority Diverse

Toledo Regional Growth Partnership/Port Authority/TMACOG Glass, Plastic, Metal

Toronto City of Toronto and Invest Toronto Financial Services, Life Sciences

Virginia Port Authority Plus with Assets Diverse

Windsor Port Windsor and Windsor – Essex Chamber of Commerce Eng, R&D, Agriculture, Tourism


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Organization and Governance ModelsOrganization and Governance Models

• Port Authority Model

• Port Authority “Lite” Model

• Public / Private Partnership Model

• Industry Collaboration Model


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Critical Success Factors for Hub ModelsCritical Success Factors for Hub Models

• Public sector funding• Integrated Regional and Statewide asset strategy• Commitment from a major logistics provider or

shipper as a catalyst to Economic Development• Economic Development driven by aggressive lead

management approach across all stakeholders to attract shippers and carriers

• Available physical capacity (Land, Facilities, People) to support growth

• Hub supply chain competitive advantages


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Example Critical Success Factors from Columbus Hub ModelExample Critical Success Factors from Columbus Hub Model

• Successful programs require:– A clear regional vision with community buy-in– Active leadership engagement in all phases of the effort, not just

the upfront strategy– A sense of urgency that acts as a forcing mechanism for change

and coordination– Quality of life that reinforces economic-development efforts and

regional prosperity– Belief that workforce development and K-12 education, which

strengthen long-term regional health and talent availability, helps address reputation as a place for businesses

– University involvement in research, commercialization and talent development

– Multi-generational commitment to economic development and a systematic approach


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TDL & Exports Regional Intermediary Model: Preparation for Break Out SessionTDL & Exports Regional Intermediary Model: Preparation for Break Out Session

I. Regional Intermediary Model Recommendation:

• What are the strengths and weaknesses of our public/private partnership organizational model recommendation?

• What model refinements or extensions would be necessary?


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Organizational Model Recommendation: Public / Private Partnership ModelOrganizational Model Recommendation: Public / Private Partnership Model

• Provide private sector value propositions which offer economic competitiveness and lowest total cost to serve

• Provide private sector the advantage of serving global markets

• Provide public sector advantages of good Infrastructure and support capabilities

• Provide public sector advantages of availability of very good human, land, supplier, and financial capital


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Our Public/Private Organizational Model Must Focus on Private Sector Value PropositionsOur Public/Private Organizational Model Must Focus on Private Sector Value Propositions

• Economic competitiveness and lowest total cost to serve– Lowest Cost to Serve for Industry Partners– Streamlined government environment and competitive

tax climate

• Ability to serve global markets• Good Infrastructure and support capabilities• Availability of very good human, land, supplier,

and financial capital


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Our Public/Private Organizational Model Must Focus on Private Sector Value PropositionsOur Public/Private Organizational Model Must Focus on Private Sector Value Propositions

• Economic competitiveness and lowest total cost to serve

• Ability to serve global markets– Integrated U.S./Canada border community– Leveraged foreign trade zone locations– International/NAFTA transport links– Customs house, forwarding, and related services

• Good Infrastructure and support capabilities• Availability of very good human, land, supplier,

and financial capital


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Our Public/Private Organizational Model Must Focus on Public Sector AdvantagesOur Public/Private Organizational Model Must Focus on Public Sector Advantages


• Ability to serve global markets• Good Infrastructure and support capabilities

– Excellent airport capabilities, railroad network, intermodal capacity and distribution facilities

– State of the art supply chain security– Development incentives for transportation assets– Private investment for transport infrastructure

• Availability of very good human, land, supplier, and financial capital


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Our Public/Private Organizational Model Must Focus on Public Sector AdvantagesOur Public/Private Organizational Model Must Focus on Public Sector Advantages


• Ability to serve global markets• Good Infrastructure and support capabilities• Infrastructure and support capabilities• Availability of very good human, land, supplier,

and financial capital– Supply chain expertise and skilled labor– World class technology enablers– Land and facility availability– Financial capital


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Organizational Model Recommendation: Public / Private Partnership Model ExampleOrganizational Model Recommendation: Public / Private Partnership Model Example

• Example Public/Private Model: KC Smartport• Board Consists of Public (DOT, MPO, Airports, Econ

Develop Corps), Private (TDL, Consultant, Chambers) and Universities from two states

• Funded in part by dues or donations (“investments”) from board members’ organizations

• Roles– Market– Site Location Assistance (Real Estate and Transportation)– Advocacy for Global Logistics Mindset– Transportation Resources Connections– Supply Chain Education– Supply Chain Data Exchange


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Recommendation Includes Private Features from the Industry Collaboration ModelRecommendation Includes Private Features from the Industry Collaboration Model

• Example Industry Collaboration Model – Columbus• Objectives of adding180,000 jobs by 2020 and attracting

capital investment of $10 billion• Focus on value added potential rather than infrastructure• Pillars of activity

– Retention and expansion of existing businesses– Attraction of major employers to establish operations in

Central Ohio– Creation of more commercial enterprises by leveraging

research assets– Support of civic infrastructure and political conditions

that enhance the economic development environment


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Recommendation Also Highlights Features from the Port Authority “Lite” ModelRecommendation Also Highlights Features from the Port Authority “Lite” Model

• Example of Port Lite Model – Virginia Port Authority• Mission statement- To be the primary gateway for

international cargo transportation through the Mid-Atlantic and Mid-West regions of the United States.

• Indeed Value Propositions & Goals– Provide a level of service and convenience unmatched

on the east coast (inland port is critical in achieving this)– Support and lobby for improved and increased rail

capacity from VA to the Mid-West– Recruit companies to establish distribution centers for

both direct economic benefit and to make VPA more appealing to international shiplines


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Recommendation Includes Public Features from the Port Authority “Lite” ModelRecommendation Includes Public Features from the Port Authority “Lite” Model

Virginia’s integrated supply chain asset strategy


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II. Metrics for Regional Intermediary Model:

• Validate the hub organization model evaluation metrics

• Will our public/private partnership organizational model outputs exceed the thresholds for the metrics?


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Hub Organizational Model Evaluation MetricsHub Organizational Model Evaluation Metrics

Primary Metrics:

1. Number of jobs created (Direct & Indirect)

2. Economic activity benefits (Dollars)

Secondary Metrics:

3. The number of new businesses attracted

4. Business retention rate (New and Existing)

5. Investment amounts with ratio: Public vs. Private

6. Inbound/Outbound shipments (Volume and Value)


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Hub Model Evaluation Metrics - Ohio Hub Model Evaluation Metrics - Ohio

Primary Metrics:

1. Number of Jobs Created (Direct & Indirect)

Rickenbacker Park: 12,500+ New Jobs

2. Economic Activity Benefits (Dollars)

Rickenbacker Park: $705 million

Secondary Metrics:

3. The Number of New Businesses Attracted

Rickenbacker Park: Wal-Mart, Home Depot, Ford, Honda, The Limited, UPS and the US Postal Service, J. B. Hunt, Schneider, Norfolk Southern


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Hub Model Evaluation Metrics - VirginiaHub Model Evaluation Metrics - Virginia

Primary Metrics:

1. Number of Jobs Created (Direct & Indirect)– Port Related business provide over 343,000 jobs

2. Economic Activity Benefits (Dollars)– Annually $41 billion in revenue, $13.5 billion in payroll compensation, and

$1.2 million in local tax revenue

Secondary Metrics:

3. The Number of New Businesses Attracted– VPA has attracted more then 80 port related distribution facilities – $500 million commitment from Maersk to develop a new marine terminal

4. Inbound/Outbound Shipments (Volume and Value)– 2010 VPA Imports/Exports: Exports 1,005,370 TEU’s

Imports: 889,648 TEU’s


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Hub Model Evaluation Metrics - GeorgiaHub Model Evaluation Metrics - Georgia

Primary Metrics:

1. Number of Jobs Created (Direct & Indirect)

- Logistics Report: GA Logistics Providers Employ 142,000 Georgians

Georgia Port Authority: 295,443 jobs

2. Economic Activity Benefits (Dollars)

- Logistics Report: Generate $16 billion in annual sales

Georgia Port Authority: $61.8 billion in annual sales

Secondary Metrics:


- Business Attracted by Hub Capabilities: Kia North America, Coca- Cola, Home Depot, Gulfstream, Blue Bird Corp., NCR, Mercedes-Benz

4. Inbound/Outbound Shipments (Volume and Value)

- Georgia Port Authority: Exports 1,139,983 TEU’s

Imports: 969,952 TEU’s


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Hub Model Evaluation Metrics – Kansas City Hub Model Evaluation Metrics – Kansas City

Primary Metrics:

1. Number of Jobs Created (Direct & Indirect)− KC Smartport created 900 jobs in 2009− Studies estimated freight and transportation industry accounted for

40,000 jobs annually− MARC estimates 250,000 new jobs in the next 30 years

2. Economic Activity Benefits (Dollars)– At the end of 15 years: Annual incomes of nearly $1 billion, Local

and state tax revenues with a present value of $500 million

Secondary Metrics:


- KC Smartport new businesses: Home Depot, Lowes, Smith Electric Vehicles, Sara Lee, FedEx SmartPost, Kimberly-Clark, DHL and OHL


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Hub Metrics - 2009 Shipping Volume in MtonsHub Metrics - 2009 Shipping Volume in Mtons

Buffa

lo

Chica

go

Colum

bus

Georg

ia

Indi

anap

olis

Kansa

s City

Lare

do

Loui

sville

Mem

phis

NW In

dian

a

NY / NJ

Toled

o

Virgin

ia0

100

200

300

400

500

600

IBOB


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Hub Metrics - 2009 Shipping Value in $BHub Metrics - 2009 Shipping Value in $B

Buffa

lo

Chica

go

Colum

bus

Georg

ia

Indi

anap

olis

Kansa

s City

Lare

do

Loui

sville

Mem

phis

NW In

dian

a

NY / NJ

Toled

o

Virgin

ia$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

IBOB


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III. Regional Intermediary Model Implementation:

• What obstacles exist for model implementation?

• Develop a plan to overcome the obstacles to implement our regional intermediary public/private partnership model

• What is the structure of the Hub Operating Board and who are the stakeholders represented on the Board?


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SE Michigan Public/Private Partnership Organizational Model OpportunitiesSE Michigan Public/Private Partnership Organizational Model Opportunities

• Cross-border distribution hub and NAFTA thoroughfare away from congestion of Chicago-Toronto

• Trans-loading heavy imports from Canadian ports to U.S. using railroads

• Good airport, highway, and rail infrastructure with limited congestion and very good reliability

• Skilled Export and TDL management and supply chain labor talent is readily available

• Economical outbound motor carrier capacity• Availability and affordable land

Unique Offerings of Our SEMI/NWOH/SWON Model:• Provide supply chain value propositions to attract companies• Commitment from State of Michigan to make this happen


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• Welcome• Introductions• Synthesize findings from Workshop One• Organizational model recommendation• Finalize Regional Intermediary design:

Breakout Groups– Discussion– Report out



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TDL & Exports Regional Intermediary Model Recommendation – Break Out SessionTDL & Exports Regional Intermediary Model Recommendation – Break Out Session

Small group breakout: Finalize Regional Intermediary organizational model design (Page 1 of 2)

I. Regional Intermediary Model Recommendation:• What are the strengths and weaknesses of our public/private

partnership organizational model recommendation?• What model refinements or extensions would be necessary?

II. Metrics for Regional Intermediary Model:• Validate the hub organization model evaluation metrics• Will our public/private partnership organizational model

outputs exceed the thresholds for the metrics?


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TDL & Exports Regional Intermediary Model Recommendation – Break Out SessionTDL & Exports Regional Intermediary Model Recommendation – Break Out Session

Small group breakout: Finalize Regional Intermediary organizational model design (Page 2 of 2)

III. Regional Intermediary Model Implementation:• What obstacles exist for model implementation?• Develop a plan to overcome the obstacles to implement our

regional intermediary public/private partnership model• What is the structure of the Hub Operating Board and who

are the stakeholders represented on the Board?


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Pilot Company PartnershipsPilot Company Partnerships

• Review piloting value proposition with representatives from firms and development authorities.

• Identify firms and firm demographics that might be interested in having support to identify and refine their value proposition for regional supply chain activities.

• Complete end-to-end integrated supply chain value proposition for pilot company.


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End-to-End Integrated Supply Chain Model End-to-End Integrated Supply Chain Model

SUPPLYNETWORK

Information, Product, Service, Financial and Knowledge Flows

MATERIALS

Capacity, Information, Core Competencies, Capital and Human Resources

Relationship Management

Procurement

Manufacturing

END

CONSUMERS

INTEGRATEDENTERPRISE

MARKETDISTRIBUTION

NETWORK

Logistics

Order

Administration


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End-to-End Integrated Supply Chain Total Cost Analysis ApproachEnd-to-End Integrated Supply Chain Total Cost Analysis Approach

Cost Components

Sourcing +

Production +

Handling +

Inbound Transport +

DC Handling +

Inventory +

Customer Transport +

Duties and Taxes

____________

Total CostDealers


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Pilot Implementation for Industry Partners:Step by Step Approach for Value CreationPilot Implementation for Industry Partners:Step by Step Approach for Value Creation

• Step 1: Identify Pilot Company Candidates• Is the company within the focused industries?• Is there high potential for job creation in working with the company?• Is the company interested in improving bottom line performance via

innovative SEMI/NWOH/SWON supply chain solutions?

• Step 2: Explain value proposition to pilot company• Explain process of assessing their current supply chain• Explain process of optimizing their future supply chain • Explain role of MSU Supply Chain in preparing the supply chain

value proposition and conducting the opportunity assessment


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• Step 3: Complete value proposition by analyzing pilot company’s end-to-end supply chain• Analyze current process for company’s end-to-end supply chain• Evaluate economic, service, reliability and sustainability

performance of current supply chain• Develop proposal for state of the art future process for company’s

end-to-end supply chain using SEMI/NWOH/SWON as a Hub• Evaluate economic, service, reliability and sustainability

performance of future supply chain• Compare current supply chain performance to future supply chain

performance and document value proposition• Prepare value proposition for pilot company based on supply chain

opportunity assessment results• Prepare for discussion associated with Step 4A or Step 4B


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• Step 4A: Positive value proposition to use region as a Hub and proceed towards implementation• Value proposition for future supply chain using SEMI/NWOH/SWON

as a hub provides a competitive advantage to pilot company• MSU and MEDC work with company towards implementation

• Step 4B: Value proposition to use region as a Hub needs more work• Value proposition for future supply chain using SEMI/NWOH/SWON

as a hub does not provides a competitive advantage to pilot company• MSU and MEDC work with company towards defining economic

incentives and economic policy changes to make the value proposition attractive to pilot company

• Value proposition is now attractive; go to Step 4A


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• Step 5: Implement pilot approach and monitor value with key metrics• MSU and MEDC work with company to implement solution and

transition from current supply chain• Key metrics are developed and tracked to assure value creation

opportunity is harvested


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Global Supply Chain Dynamics are ChangingGlobal Supply Chain Dynamics are Changing

• Firms looking for more balance between scale and reliability.

• Infrastructure congestion is becoming increasingly problematic.

• Increased energy cost will shift supply chain mode selection and design.

• Previous NEI workshops have emphasized the importance of being able to quantify the value proposition related to supply chain changes.


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Changing Dynamics of Supply Chain DesignChanging Dynamics of Supply Chain Design

$/unit

Economies of Scale

Transport Cost

Manufacturing Cost


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$/unit

Economies of Scale

Transport Cost

Result of increased fuel cost

Manufacturing Cost


- 63 -


$/unit

Economies of Scale

Transport Cost

Result of increased fuel cost

Result of increase risk

Manufacturing Cost


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Example A: Pilot Company ImplementationExample A: Pilot Company Implementation

Positive value proposition to use SEMI/NWOH/SWON as a Hub for SE Asia electronics manufacturer

• Current Supply Chain:• SE Asia electronics manufacturer makes components in SE Asia,

assembles the finished product in SE Asia, and ships finished product to US for US sales

• Future Supply Chain:• SE Asia electronics manufacturer makes components in SE Asia• Manufacturer air freights unassembled components to Detroit• SEMI/NWOH/SWON Hub assembles the finished product • SEMI/NWOH/SWON Hub ships finished product for US sales

• Value Proposition:• Reduced air freight by using Detroit as destination air hub• Reduced duty and taxes by shipping components• Improved service to customers using SEMI/NWOH/SWON Hub


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Example B: Pilot Company ImplementationExample B: Pilot Company Implementation

Value proposition to use SEMI/NWOH/SWON as a Hub needs more work for shipments from Europe

• Current Supply Chain:• Europe manufacturer ships alcoholic beverages to US using NY/NJ

Port Authority as destination port for US sales• Future Supply Chain:

• Europe manufacturer ships alcoholic beverages to Port of Halifax• SEMI/NWOH/SWON Hub receives shipments from Port of Halifax • SEMI/NWOH/SWON Hub ships finished product for US sales

• Value Proposition:• Improved service to customers using SEMI/NWOH/SWON Hub• No supply chain cost advantage by using SEMI/NWOH/SWON Hub• Identify regulations and constraints that impede the achievement of

positive value proposition and design solution with economic incentives or policy changes to overcome constraints

• Modified value proposition now becomes attractive


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Example C: Global Supply Chain Reliability and Sustainability OpportunitiesExample C: Global Supply Chain Reliability and Sustainability Opportunities

Global supply chain failures offer opportunities for automotive supply chain redesign

• Current Supply Chain:• Japan automotive electronics manufacturer makes components in

Japan, assembles the finished product in Japan, and ships finished product to US for US automotive sales

• Global supply chain is world scale for performance but is very vulnerable to reliability and sustainability risks

• Future Supply Chain:• Japan electronics manufacturer makes components in Japan• Manufacturer air freights unassembled components to Detroit• SEMI/NWOH/SWON Hub assembles the finished product • SEMI/NWOH/SWON Hub ships finished product for US sales

• Value Proposition:• Reduced duty and taxes by shipping components• Improved reliability and sustainability and reduced risks


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Pilot Implementation for Industry Partners:Summary of Five Step ApproachPilot Implementation for Industry Partners:Summary of Five Step Approach

• Step 1: Identify pilot company candidates• Step 2: Explain value proposition to pilot company• Step 3: Complete value proposition by analyzing

pilot company’s end-to-end supply chain• Step 4: Positive value proposition to use region as

a Hub and proceed towards implementation• Step 5: Implement pilot approach and monitor

value with key metrics


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TDL and Exports: Implementation of Opportunity Assessment FindingsTDL and Exports: Implementation of Opportunity Assessment Findings

• Recommendation of organization model and Regional Intermediary– Intermediary Design Workshop One: March 11– Intermediary Workshop Two: April 29– Implementation Workshop Three: June 10

• Education, sharing of findings, and communications

• Piloting the implementation approach with partners– April 1 Symposium– Joint Workshop with MEDC: TBA


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Preparation for Workshop Three:

June 10, 2011 at MSU Detroit Center

Workshop Three topics:• Finalize intermediary organizational model implementation plan• Develop plan for pilot company implementations• Develop framework for integrated supply chain asset strategy• Finalize project recommendations for review by sponsors


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Workshop Participant Feedback and

Follow-up Survey
