>> Focus on sustainability,

innovation and international

Global Challenges in Smart Logistics - innovation driving supply

chain control

Presenter:

João Araujo - ILOS

NOST Network

Agenda

2

Institutional Presentation - ILOS

Brazil Overview

Service and reverse logistics

Future challenges and R&D partnership

Agenda

3

Institutional Presentation - ILOS

Brazil Overview

Service and reverse logistics

Future challenges and R&D partnership

Institutional Presentation - ILOS Our Background

1973

1991

1994

2008 The team led by Paulo Fleury,

founded ILOS – Institute of

Logistic and Supply Chain, an

independent Company located

at the UFRJ campus.

Led by Paulo Fleury, professor at

COPPEAD/UFRJ, with a partnership

with Petroleo Ipiranga, the Ipiranga

Operations Strategy Chair is

created.

COPPEAD, the Institute for Post

Graduation in Business Administration

of Rio de Janeiro Federal University

(UFRJ) starts with the first Master in

Business Administration class.

The Ipiranga Operations Strategy Chair

originated CEL (Center for Excellency

in Logistic) at COPPEAD, expanding

the original scope from Operations to

the Supply Chain.

4

5

MARKET

INTELLIGENCE

CONSULTING

FORUMS

EXECUTIVE

EDUCATION

ILOS expertise areas

work in constant

SYNERGY,

generating knowledge

and TRANSFORMATION

for its customers.

Institutional Presentation - ILOS Our Areas

Forums

International Technical

Mission

Panorama Series

Benchmarking

Customized researches

Demand & Supply Market

Analysis

Supply Chain Management

Advisory

PMO

M&A

Training Program

In company courses

Online courses

Company games

6

Institutional Presentation - ILOS Some International Partners

Institutional Presentation - ILOS Our Background in Sustainable Supply Chain

2010

2011

2012

2013

7

Operation strategy of reverse

logistics for post-consumer

packages and other 2 projects

2 forums with 17 sessions about

sustainability on supply chain

Operation strategy of reverse

logistics for post-consumer mercury

bulbs

2 forums with 18 sessions about

sustainability on supply chain

Panorama of Green Logistics in Brazil

Course Sustainability on Supply

Chain

2009 Planning of Network

Logistics considering

carbon footprint

Panorama of Post-Consume

Reverse Logistics in Brazil

Forum with 11 sessions about

sustainability on supply chain

Reverse Logistics and

Secondary Market Research

(Brazil and USA) presented

on International Forum of

Supply Chain (Rio de Janeiro)

Forum with 4 sessions about

sustainability on supply

chain

Agenda

Institutional Presentation - ILOS

Brazil Overview

Service and reverse logistics

Future challenges and R&D partnership

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Overview Brazilian GDP represents nearly 55% of South America GDP.

Uruguay Argentina

Chile Paraguay

Brazil

French Guyana Suriname

Guyana Venezuela

Colombia

Ecuador

Peru

Bolivia

Population (million)

GDP (US$ billion)

Area (thousand km²)

South America 402 4,133 17,800

Brazil 199 2,252 8,515

São Paulo City

Rio de Janeiro City

19.6

11.8

Argentina 41 470 2,780

Buenos Aires City 2.9

Chile 17 268 756

Santiago City 6.0

USA 314 15,685 9,832

New York City 8.3

GDP at current prices . Source: World Bank, IBGE, UNSD (ONU), Argentina Census, USA Census

1.5

1.2

0.2

0.6

1.2

2012

Overview However, the development and challenges are not the same in all regions.

North

Northeast

Midwest

Southeast

South

NATURAL WEALTH

DROUGHT/BEACH CONTRAST

MEGA CITIES AND ITS TRAFFIC

BRAZILIAN GRANARY

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ARAUCARIA FOREST AND LOCAL BUSINESS

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Infrastructure and costs Brazil has a huge lack of infrastructure. The World Bank´s Logistics Performance Index brings Brazil in 45nd position.

29,000 km of railway

1.6 million km of roads 219,000 km paved

34 major airports

46 organized ports and more than 120 private use terminals

Potential for 50,000 km of waterways 13,600 km in use

19,200 km of pipelines

Sources: World FactBook and World Bank, ANTT, ANTAQ, Infraero (2013)

USA 9º

China 26º

India 46º

Brazil 45º

Russia 95º

World Bank´s Logistics Performance Index (2012)

2014: New president election and FIFA World Cup 2016: Olympic Games

Netherlands 5º

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Infrastructure and costs The Brazilian transportation matrix is strongly road dependent.

67%

18%

11%

3% 0,04%

31%

37%

10%

21%

0,3%

Road transportation

Rail transportation

Water transportation

Pipeline transportation

Air transportation

Dollar exchange rate 2012: R$ 1,95 (Ipeadata) Source: BTS; AAR; AOPL; US Army Corps of Engeneering; 24th CSCMP’s Annual State of Logistics Report. ILOS Analyses

Comparison of % TKU between Brazil and USA (2012)

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Infrastructure and costs Therefore, transportation costs are the most important ones.

Dollar exchange rate: R$ 1,95 Only domestic transportation. ILOS Analyses

160 73

17 10

Transportation Inventory Carrying

Warehousing Administrative

Total 260

0,4%

0,3%

11,5%

8,7% 0,8%

3,2%

7,1%

0,8%

2,8%

4,8%

Logistics costs (US$ billion) 2012 Logistics costs as percentage of GDP (2012)

62% 28%

7% 4%

Agenda

Institutional Presentation - ILOS

Brazil Overview

Service and reverse logistics

Future challenges and R&D partnership

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Sustainable Supply Chain Reverse Logistics and Secondary Market are part of the context of the formation of a sustainable supply chain (environmental, economic and social aspects).

Packaging Industry

Bottler/Potting Industry

DCs/Hubs

Wholesaler/ Retailer

Collection (Transportation)

DCs/Hubs

Separation/ Disposal

Raw material extraction

Manufacturing Industry Landfill

Secondary Market

Traditional Supply Chain

Reverse Supply Chain

After Sales or Post-Consumer

Internal Use

Consumer *With no

consumption

*Items that were not sold (surplus on industry, DCs/Hubs, Wholesale, Retailer).

Legislations, Costs, Shorter product life cycle, etc.

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Brazilian Landfills Brazilian National Policy about Solid Waste (2010) defined goals to reduce the use of landfills and to eliminate or recover improper landfills.

Solid Waste Destination

Source: IBGE. Includes household and public waste.

95 million of tons

(2008)

Improper landfills

Landfill

33%

65%

1% 0%

1%

Improper Landfill Landfill

Recycling Incineration

Others

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Solid Waste Destination Comparing to the Netherlands situation

3%

80%

16%

1%

33%

65%

1% 1% ImproperLandfill

Landfill

Recycling

Incineration

Others

Solid Waste Destination

Sources: IBGE. Includes household and public waste. Twenty years of experience in waste management. Herman Huisman. Fiesp Conference, Sao Paulo. April 10, 2012.

61 mln tons (2010)

95 mln tons (2008)

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Waste Management Evolution in Brazil Waste generated in the different steps of the supply chain are treated differently by the government and by each stakeholder.

Extraction of Raw Materials

Industrial Waste Commercial Waste

Production Retail

Post-Consumer Waste

Returns

• Law 6.803/ 1980 (Industrial zone) • Law 6.938/1981 (Enviromental National

Policy) • Leaw 7347 / 1985 (Public civil liability for

damage caused to the environment)

• Law 11.445/2007 (Sanation)

• CONAMA 257/263 e 258 (batteries and tires): 1999

• Federal Decree nº 4.074/2002 (Pesticides)

• PNRS/10

Law 8.078/1990 (Consumer Protection Code)

The Brazilian Nation Policy is the latest and refers to the disposal of post-consumer waste.

~ 1

98

0

~20

05

~19

90

2000 - Currently

Criminal sanctions

Law No. 9.605/1998 - Environmental Crimes Law: Art 3 - "Fines from R$50.00 to R$ 50 millions"

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Reverse Logistics (Post-consumer waste) In 2010, Brazilian Government released the Brazilian National Policy about Solid Waste (PNRS) , requiring a Reverse Logistics System for some groups.

Pesticide - waste and packaging

Batteries

Tires

Lubricating oils - packaging and waste

Mercury Lamps

Appliances

PNRS

Packaging

These will be just the first segments of products to define and sign a plan. Governement will include other segments after these plan will be signed.

Last december the Brazilian Governement included drug on the list of products.

First release

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Reverse Logistics (Post-consumer waste) Current situation

Pesticide - waste and packaging

1 2 3 4

Lubricating oils - packaging and waste

Tires

Electronic products and components

Batteries

Fluorescent lamps, sodium vapor lamps and mercury and mixed light*

Items with reverse logistics plan mandatory

General packaging**

ABILUMI/ABILUX

ABINEE

ABIPHEC, ABIOVE, ABIPLA, ABIVIDRO, etc.

SINDICOM

ANIP/RECICLANIP

ABINEE

Drugs -

INPEV -

Associations

1

2

3

4

Definition of Legal Principles

Dealing with Sectors

Decrees and Agreements

Implementation and Monitoring

-

-

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Reverse Logistics (Post-consumer waste) Current situation

Pesticide - waste and packaging (2011)

Lubricating oils - packaging and waste (2012) (Volumes in thousands of m³)

Tires (2011)

Batteries (2011)

Fluorescent lamps, sodium vapor lamps and mercury and mixed light*

Items with reverse logistics plan mandatory

General packaging**

Drugs

Volume¹ (thousands of tons)

36.4

Collection (thousands of tons)

% of collection

¹ Volume of products in Brazilian market. ² Estimated on average weight of 0,05ton/unit . ³Estimated on average weight of 0,019kg/unit. Sources: INPEV, RECICLANIP, ANIP, ALICEWEB, ABINEE, http://www.abepro.org.br/biblioteca/enegep2001_tr104_0146.pdf, http://www.cnt.org.br/Paginas/Agencia_Noticia.aspx?noticia=oleo-lubrificante-coleta-conama-rerrefino

34.2 94%

473.1² 320 73%

14.9³ 0.28 1,9%

1,413 417 37%

TARGETS (Brazilian National Policy about Solid Waste - 2010)

2012: 36.9%

2013: 37.4%

2016: 60.0%

Agenda

Institutional Presentation - ILOS

Brazil Overview

Service and reverse logistics

Challenges and Partnership Opportunities

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Main Challenges and Opportunities

Business

Games

Researches

Training

International Benchmarking (International

KPIs)

Consulting Projects/

Business Advisory

Sustainable Supply Chain

City Logistics

Customs Clearence

Executive Education

João Guilherme M. E. de Araujo

BD & Consulting Director

joao.araujo@ilos.com.br

+55 21 9 9192 4665

+55 11 9 3847 1909

ILOS

www.ilos.com.br

+55 21 3445 3000

+55 11 3847 1909