Logisym Magazine - April 2015

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this issueq INTERVIEW WITH GABBY COSTIGAN 18q GREEN LOGISTICS IN ASIA 22q BUILDING DYNAMIC INSTITUTIONS IN ASIA 26q MANAGING SUPPLY CHAINS 30

Interview with the CEO of Linfox International Group - Gabby Costigan on the company’s vision and plans for Asiamain

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features18 Interview with Gabby Costigan22 Green Logistics in Asia26 Building Dynamic Institutions30 Managing Supply Chains

regular From the Editor 04 The Logistics Society 06 Air News 08 Maritime News 10 Logistics News 12 Supply Chain News 14 Technology News 16

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contents

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4 LOGISYM MAGAZINE APRIL 2015

NGO THANH MINHExecutive Publisher

FRANK PAULPublisher PETER RAVENDeputy Publisher

JOE LOMBARDOEditor

ANH THUDigital Editor

CONTRIBUTORSJohn GattornaGwyneth FriesMike KingStephanie KrishnanBob Gill

FRANK PAULAdvertising

LUONG THACH ANHLayout

FAUZI LEEArt Director

NGUYEN THI THANHProduction Manager

GENERAL ENQUIRIESLogiSYM Magazine 50 Kallang Pudding Road, #06-06Golden Wheel Industrial BuildingSingapore 349326 Tel. +65 6746 2250Fax. +65 6746 2251 Email: [email protected] Website: www.logisym.com

PUBLISHING HOUSE Dongnai Publishing210 Nguyen Ai Quoc Street, Trung Dung Dist. Bien Hoa Province, Vietnam.

COPYRIGHTAll material appearing in LogiSYM Magazine is copyright unless otherwise stated or it may rest with the provider of the supplied material. LogiSYM Magazine takes all care to ensure information is correct at time of printing, but the publisher accepts no responsibility or liability for the accuracy of any information contained in the text or advertisements. Views expressed are not necessarily endorsed by the publisher or editor.

from the editor

Dear Readers,

We are delighted to welcome you to The Magazine for Supply Chain Executives, a brand new industry journal, that brings you the latest developments in the logistics and supply chain industry. The magazine will be published monthly in digital format and quarterly in print, with regular news updates, industry features and one-on-one interviews with leaders in the supply chain industry.

Our mission is to bring a new dimension of information and knowledge to our readers, which will differentiate us from the many already existing publications. We aim to provide a range of topics from the latest industry news and developments, to articles on knowledge and solution based case studies. This Magazine is part of LogiSym brand name, a proven industry player in the field of education & training, as well as an organizer of Supply Chain Conferences both in Singapore and Malaysia. The magazine will focus on Asia with a strong focus on South East Asia, with operating contact points in Singapore, Malaysia, Vietnam, Myanmar and Thailand.

The editorial content will be structured into 2 main sections, that will help our readers to find their areas of interest. As time is of the essence, articles will be concise and of

substance, avoiding unnecessary lengthy worded texts. In the Regular Sections, each edition begins with a comprehensive digest of news views and expert analysis will be featured by most followed topics such as; AIR, MARITIME, LOGISTICS, SUPPLY CHAIN and TECHNOLOGY.

In the Special Features, each edition will examine common challenges topics as well as new & relevant topics to our time, region or industry, and are planned as follows; CEO INTERVIEWS (Every Edition), THOUGHT LEADERSHIP (Every Edition), OIL & GAS (April Edition) TALENT (June Edition) and A.E.C (September Edition).

Finally I would like to thank the many people who have been involved in the start-up of The Magazine for Supply Chain Executives, and to the many contributors for their excellent articles, to advertisers who have helped us launch the program and most of all to our readers, whom we trust will find be the magazine a useful resource in their daily work. Do please let us have your views and comments.

Joe LombardoInternational Editor, LogiSYM Magazine

new beginnings


Dear Readers,

Welcome to the first edition of LogiSYM magazine. The official publication of the Logistics & Supply Chain Management Society.

As Joe has said in the preceding page, we are delighted to bring you this brand new industry journal, thatprovides you with thelatest developments in the Logistics and Supply Chain industry.

The LogiSYM or Logistics Symposium name originated from the events organized by the Logistics & Supply Chain Management Society and we had at least 5 successful events in 2014.

A Symposium however does not necessarily mean a meeting or conference for discussion of a topic - especially one in which participants form an audience and make presentations. A Symposium could also be a collection of writing on a particular topic, as in a magazine. When the idea for the magazine was mooted in December last year, due to a confluence of events, we decided in just four short months to lend our name to this fledgling endeavor to make this idea a reality, with the help and support of a team of dedicated professionals.

A Word from the President

Much like the other LogiSYM events and activities we try and be as collaborative as possible in what we do and have also taken this approach when deciding to have this publication use the same brand name.

Collaboration is an important part of any successful Supply Chain and the ‘chain’ that has been involved in bring you this fledgling publication is no different.

We have been working with a team spread across Asia - in Hong Kong, Singapore, Thailand and Vietnam and with contributors and a circulation across Asia, Europe and the Middle East. We hope that this move will help spread the LogiSYM name and the activities around this for our industry.

LogiSYM 2015 which was held in Singapore in March was jointly organised with the Chartered Institute of Logistics & Transport. LogiSYM Malaysia which will be held in October, is jointly organized withGLCS and is already shaping up to be another excellent event.

Our mission is to bring a new dimension of information and knowledge to our readers, which will differentiate us from the many already existing publications and hopefully you will see that in this first issue.

Publishing a magazine is something that is very new to many members of the team and we have a long ways to go. We welcome all and any feedback and contributions so please do not hesitate to drop us a note with your feedback, input and even criticisms.We would love to hear from you!

Raymon KrishnanPresident, The Logistics & Supply Chain Management Society

A Word From The President

Raymon Krishnan


Air Cargo

The International Air Transport As-sociation (IATA) has called on In-

donesia’s stakeholders to partner in the development of an aviation mas-terplan based on global standards to ensure that the country is served by an aviation industry performing at its best. IATA identified three potential elements to be addressed in the mas-terplan: improving safety, ensuring ca-pacity and a smart regulation frame-work.“Indonesia’s aviation potential is huge. By 2034, it is expected to be the sixth largest market for air travel. By then some 270 million passengers are ex-pected to fly to, from and within the country. That’s three times the size of today’s market. There is a big role for collective leadership among industry partners – including the government – to make the aviation sector flourish. Indonesia needs an aviation master-plan based on global standards and developed in partnership by aviation stakeholders including the govern-ment. Such a plan should set a com-mon vision for addressing top priorities such as safety, capacity and regulation. And of course it must be followed by real actions,” said Tony Tyler, IATA’s Di-rector General and CEO, in his keynote address to the IATA Aviation Day in Ja-karta.

Improving SafetySafety is aviation’s top priority and the biggest concern for the successful de-velopment of aviation in Indonesia. IATA is investing resources to improve safety in Indonesia. “Indonesia is not, however, taking full advantage of IA-TA’s resources. The IATA Operational Safety Audit (IOSA) is a global stand-ard and is at the core of our efforts to improve safety. But of the 62 Indone-sian airlines operating scheduled or chartered flights, only Garuda is in the IOSA registry. Making IOSA compulsory for an Indonesian AOC will send a very strong signal of commitment to im-

prove safety. And experience shows us that it will make a difference in safety performance,” said Tyler.

CapacityIndonesia’s traffic growth needs to be supported by the aviation infrastruc-ture, both on the ground and in the air. For Indonesia this means building a world-class hub, managing scarce capacity to global standards and mod-ernizing air traffic management.Building a World Class Hub: ;Indonesia’s airports are in urgent need of additional capacity. By 2034, Indo-nesia’s airports are expected to handle an additional 183 million passengers compared to today. Tyler commended the government for its plans to expand infrastructure –building another 62 air-ports over the next five years, and ter-minal expansions at Jakarta’s Soekar-no-Hatta International Airport. Managing Scarce Capacity: “Soekarno-Hatta cannot be re-de-veloped over-night. So the airport’s scarce existing capacity must be al-located based on the IATA Worldwide Slot Guidelines. The network nature of the airline business means that global standards are critical. Unfortunately there are a large number of instances where Indonesia is not playing by es-tablished international rules” said Ty-ler. There are two slot management processes at Indonesian airports – one for domestic flights and another for international flights even though both are managing the same runway capac-ity. There is also no independent slot coordinator at the airports.“The IATA team is ready to assist with the introduction of professional and independent slot coordination, who could bring the working procedures in line with global standards,” said Tyler.Modernizing Air Traffic Management: “Increasing traffic puts pressure on air traffic management. There are over 800 aircraft on order by Indonesian airlines. As they are delivered, Indo-

nesia’s already busy skies will become even more crowded. The imminent full introduction of Automated Dependent Surveillance—Broadcast (ADS-B) will be a major step forward. But there is lot more work to be done,” said Tyler. He urged Indonesia to improve the skills of air traffic controllers, to move forward with the implementation of Performance Based Navigation and in-troduce Air Traffic Flow Management (AFTM).

RegulationIt is important to have government regulations which are consistent with global standards and facilitate success and growth. “But Indonesia has several regulations which are counter-produc-tive and which treat airlines unlike any other comparable business,” said Tyler.Tyler encouraged Indonesia to apply smarter regulation principles when establishing new regulations. These include clearly defining the problem to be solved, consulting with the indus-try, conducting rigorous cost-benefit analysis and ensuring consistency with global standards where they exist.Tyler also encouraged Indonesia to implement international conventions which help integrate the country into

Developing the Potential of Indonesia’s Aviation Sector

9LOGISYM MAGAZINE APRIL 2015

Air Cargo

Cathay cargo revenues rise 7.3%Cargo revenue for Cathay Pacific in-creased by 7.3% to HK$25.4 billion in 2014 despite a slow start to the year and falling yields, the Hong Kong-based airline revealed.After a prolonged period of weakness, cargo demand started to improve in the summer of 2014 and was very strong in the fourth quarter, the airline said.Over-capacity in the air cargo market put downward pressure on rates in the first half of the year. Yield for the full year for Cathay Pacific and Dragonair decreased by 5.6% to HK$2.19, despite improved cargo demand in the second half. Capacity increased by 10.4%, with the average load factor increasing by 2.5 percentage points to 64.3%.Capacity “was managed in line with demand in the first half of 2014 but an almost full freighter schedule was operated for most of the second half”, the airline said. “The new Cathay Pacific cargo terminal worked effectively in its

Third runway approved for Hong KongAirport Authority Hong Kong (AAHK) and aviation industry representatives have welcomed the Hong Kong gov-ernment’s approval for a third runway at Hong Kong International Airport (HKIA), although some questions have been raised about its proposed fund-ing mechanism.The third runway system, described as 3RS by AAHK, will be built on 650 hec-tares of reclaimed land and will cost HK$141.5 billion “at money-of-the-day prices”. The project’s key facilities include a new runway, taxiways and aprons, a third runway concourse, an expanded Terminal 2, an automated people mover and a baggage handling system.The project will need eight years for construction, meaning “it can be com-pleted by 2023 if the AAHK can com-mence work in 2016,” the airport au-thority said. The new runway system would enable the airport to serve 30 million more passengers annually upon its comple-tion.

Yangtze River Express quits Hahn for MunichChinese cargo airline Yangtze River Express (YRE) is leaving Frankfurt-Hahn airport and transferring its Ger-man operations to Munich.The loss of YRE’s seven B747-400F flights a week is a major blow for the west German airport and a significant gain for its southern rival. Last year, Yangtze shipped 50,000 tonnes of cargo through Hahn.The Hahn airport authority said Yangtze’s decision was down to “a relocation of the company’s business processes”, with a large part of the freight it loads coming from southern Germany and northern Italy.“We regret the withdrawal,” said Markus Bunk, business manager of Frankfurt-Hahn airport. “The freight business is under strong competitive

pressure. Each airline checks exactly how to optimize their business.”Yangtze’s general manager for sales and marketing, Sun Haidong, com-mented. “The change in global demand, customer specific requirements, and the intent to widen market penetra-tion made a network restructuring for YZR inevitable to serve the market in the best possible way. The decision does not reflect the excellent business relation enjoyed with Hahn as well as the full satisfaction with the services provided.”Earlier this month, Brussels Airport announced that Yangtze would be introducing three weekly stops in the Belgian capital on its ‘round the world’ service, effective 29 March.

the global system. He cited the exam-ple of the Montreal Convention 1999 (MC99). MC99 is a comprehensive in-strument which governs liability in 110 states. Under MC99, the compensation limit for personal injury or death is set at around $160,000.

first full year of operation and made the group’s cargo operations more ef-ficient,” the company added.While the group’s business benefited from lower fuel prices in the fourth quarter, this was partially offset by fuel hedging losses, Cathay said. Fuel ac-counted for 39.2% of the group’s total operating costs in 2014, compared to 39.0% in 2013.The airline said “managing the risk as-sociated with high and volatile fuel pric-es is a priority”, revealing that its fuel hedging contracts extend to 2018. “The sharp reduction in fuel prices in the fourth quarter of 2014 caused a very welcome net benefit to overall profits. However, it resulted in losses on our hedging contracts,” Cathay explained.“It also resulted in significant unreal-ised hedging losses. These unrealised losses are reflected in the consolidated statement of financial position at 31 December 2014 and caused a reduction in our consolidated net assets.The Cathay Pacific Group as a whole re-ported an attributable profit of HK$3.15 billion for 2014, a rise of 20%, year on year. Turnover for the year increased by 5.5% to HK$106 billion.

Air Cargo


Freight rates on the main east-west

trades continued to decline last week and are still below last year’s level.

The latest Shanghai Containerised Freight Index figures show that prices on services from Shanghai to North-ern Europe declined by $108 on a week earlier to reach $708 per teu.It is the lowest rates to northern Europe have been for 18 weeks, but prices last year also declined during March, before ral-lying at the end of the month in line with a general rate increase.

To the Mediterranean, there was a $178 week-on-week decline to $956 as all-in spot rates dipped below the $1,000 mark for the first time since mid-December.Prices on both of these trade lanes are at a lower level than last year, when carriers were able to command $888 per teu to northern Europe and $935 per teu to the Mediterranean.

GRIs delayed as rates slide again

Maritime


Port Klang to get $80m box investmentLast-mile delivery into Malaysia’s leading container hub port is due for a boost from a new government initia-tive designed to boost exports.Over US$80m has been allocated to a project to smooth cargo flows between Port Klang’s container terminals under a new government Logistics and Trade Facilitation Masterplan announced this week.Although details of the plan remain sketchy, previous announcements have focused on improving road and rail connections and traffic manage-ment systems.Business Monitor International pre-dicts box traffic at Port Klang will rise by 7.3% this to reach 11.9 m TEU.The government has previously been outspoken about its ambitions to take capacity at Port Klang to over 30m TEU by developing a new super port able to rival Singapore and adding a third ter-minal operator to rival incumbent ste-vedores Northport and Westports.Last year, the latter continued the development of Container Terminal Seven, which provides 600 metres of berth and took the stevedore’s annual handling capacity from 9.5 million TEU to over 11 million TEU. North Port also added an additional 600,000 TEU to its annual capacity during 2014 taking its nominal total capacity to 5.6m TEU.

While lower bunker prices may have had some impact on the rates, one contact remarked that while fuel prices may encourage carriers to cut rates lower, it was market conditions that set the price in the end.On the transpacific trade lane, prices from Shanghai to the east coast de-clined by $171 on last week to $4,569 per feu, while to the west coast there

was a $86 decline to $1,835 per feu.Prices to the east coast are well ahead of last year’s level of $3,287 per feu as con-gestion issues on the west coast are cre-ating extra demand to Atlantic and Gulf Coast ports.Prices to the west coast are behind last year’s level of $1,931 per feu.Carriers are attempting to push up pric-es through rate increases in the coming weeks.The Transpacific Stabilization Agreement has recommended a rate increase of $600 per feu to come into force on Asia-US services on April 9.On Asia-North Europe, carriers are aiming for an increase of around to $800-$1,000 per teu. The increases were initially due to come into force in mid-March but are now being postponed until April 1.Broker Freight Investor Services has questioned how successful these in-crease will be.“The past week has seen a rush of GRI an-nouncements of between $800-$1,000 per teu as carriers look to stop the rot on the key east-west route,” it said.“Rates have lost $548 over the past six weeks so it’s no surprise that the latest attempt to increase rates comes with such a large quantum.“At this point in time however there are question marks as to whether the funda-mentals in the market, namely utilisation, will be strong enough to support such an increase.”But with rates to northern Europe likely to continue to decline before then, they may have reached such a low level that carriers force through the increases.

Maritime

GRIs delayed as rates slide again


Agility’s Earning Release for Full Year 2014.

Agility’s Financial Results for full

year and Q4 2014.Agility today announced its full-year 2014 financial results, reporting a net profit of KD 50.84 million, or 46.40 fils per share, an increase of 10% over the same period in 2013. Revenues for the year stand at KD 1.36 billion. EBITDA stands at KD 99.97 million, a 6% in-crease compared to FY 2013.For the last quarter of 2014, Agility re-ported a net profit of KD 13.70 million with an earnings-per-share of 12.50 fils, an increase of 10% over the same period in 2013. Revenue for the quar-ter stands at KD 364.29 million, a 6% increase when compared to the Q4 of 2013. EBITDA also saw a 7% increase compared with Q4 of last year, and stands at KD 26.84 million.The board has met and proposed a dividends distribution of 35% (35 fils per share) and 5% bonus shares for the fiscal year 2014.“Agility has steadily grown bottom-line profitability across its various business entities over the last three years. Agil-ity will continue to drive margin expan-sion in its Global Integrated Logistics business by focusing on strengthen-ing its operating platform, maintain-ing financial discipline, and focusing on high-growth markets, products, and verticals. We will also continue to grow our Infrastructure portfolio of compa-

Financial Highlights :

Figures in the table above have been rounded.

nies, which are uniquely positioned to capture opportunities in niche seg-ments in emerging markets. A key part of this growth will include accelerating our expansion on the African conti-nent,” said Tarek Sultan, Agility’s Vice Chairman and CEO.

Agility’s Global Integrated Logistics (GIL)GIL revenue for the full year of 2014 was KD 1 .06 billion, a 6% decline from the same period last year. This reflects both general economic volatility and the winding down of major project logistics contracts held by Agility in countries like Australia and Papua New Guinea. That said, GIL’s net revenue has im-proved by 1% in 2014. Margins have ex-panded from 21.8% in 2013 to 23.4% in 2014. This is attributed primarily to two factors. First, continued growth in con-tract logistics across the Middle East and Asia, where Agility opened new facilities, improved warehouse occu-pancy, and grew volumes from existing and new customers. Second, Agility’s air freight yields improved in 2014, off-setting some of the continued margin pressure on the ocean freight side. Agility Global Integrated Logistics will continue to focus on three areas:

* Commercial excellence through a strong trade lane management approach and focus on

high-growth markets and industries* Operational excellence by transforming its business through technology. * Financial discipline to ensure its cost structure remains lean and flexible.

Agility’s Infrastructure GroupIn 2014, Agility’s Infrastructure group of companies saw revenues increase by 18% to KD 302.90 million, when com-pared with the full year of 2013.Revenues for Agility’s real estate busi-ness grew by 12% compared to the same period this year. Agility main-tains a strong real estate platform in Kuwait, but is also actively developing holdings in other Gulf countries, the subcontinent, and Africa. In 2014, Agil-ity broke ground on an Agility Distribu-tion Park in Ghana, the first of a series of logistics hubs across the African continent that will provide internation-al-standard logistics infrastructure to local, regional and global companies.“Agility’s Infrastructure companies have historically performed well, and this year was no exception. We contin-ue to believe in the long-term oppor-tunities that the Infrastructure compa-nies have to tap into niche segments in emerging markets across the Middle East, Asia, and Africa,” said Sultan. “We add value to our customers by being willing to go in early, investing in infra-

Logistics

FY 2014(Million KD)

FY 2013(Million KD)

Variance(%)

Q4 2014(Million KD)

Q4 2013(Million KD)

Variance(%)

1,357.35 364.291,375.70 342.90-1% +6%

392.03 104.73386.30 102.85+1% +2%

99.97 26.8494.00 25.10+6% +7&

50.84 13.7046.21 12.44+10% +10%

46.40 12.5042.17 11.35+10% +10%

Revenue

Net Revenues

EBITDA

Net Profit

EPS (fits)


structure that enables trade, building local capacity, and continuing to deliver even through the tough times.” Africa is an area of focus for Agility’s businesses across the board. Global In-tegrated Logistics has operational ca-pacity in 11 Africa countries and is plan-ning to expand further, and our Project Logistics division has long-solved complex supply chain challenges for the oil and gas industry in West Africa. In addition, in 2014, National Aviation Services expanded its ground handling footprint on the continent with a new concession in the Ivory Coast. Tristar, a fuel logistics company, owns and oper-ates more than 30 terminals in Africa with more than 60 million litres in stor-age capacity. Agility recently opened new business development offices in Mozambique and Ghana with a view to offering truly integrated solutions across its various lines of business.

Recap of Financial Performance for the year of 2014

* Agility’s net profit stands at KD 50.84 million, a 10% increase from KD 46.21 million in 2013. EPS was 46.40 fils, compared to 42.17 fils a year earlier.* EBITDA stands at KD 99.97 million, a 6% increase from the same period a year before.* Agility’s revenues for the full year of 2014 stand at KD 1.36 billion, a decrease of 1% from KD 1.38 billion in the same period in 2013. Agility’s net revenues increased by 1% from the same period.* GIL’s revenue stands at KD 1.06 billion a 6% decrease from the same period a year earlier.* Infrastructure’s revenue is KD 302.90 million compared with KD 257.24 million in 2013, an 18% increase from 2013. * Agility enjoys a healthy balance sheet with a net cash position of KD 60 million as of 31st December 2014 and free-cash-flow of KD 24.7 million for the full year of 2014.

“Agility has grown steadily for the last few years. We will continue to maintain discipline and focus on execution in our core logistics business, but at the same time are also investing for the future on the Infrastructure side. As always, we remain committed to delivering value for our shareholders and engaging respon-sibly with our communities. We would like thank our shareholders, stakeholders and employees for their continuous sup-port,” Sultan said.

About AgilityAgility brings efficiency to supply chains in some of the globe’s most challeng-ing environments, offering unmatched personal service, a global footprint and customized capabilities in developed and developing economies alike. Agility is one of the world’s leading providers of integrated logistics. It is a publicly traded company with more than $4.8 billion in revenue and more than 20,000 employees in over 500 of-fices across 100 countries.Agility’s core commercial business, Global Integrated Logistics (GIL), pro-vides supply chain solutions to meet traditional and complex customer needs. GIL offers air, ocean and road freight forwarding, warehousing, dis-tribution, and specialized services in project logistics, fairs and events, and chemicals. Agility’s Infrastructure group of com-panies manages industrial real estate and offers logistics-related services, including e-government customs op-timization and consulting, waste man-agement and recycling, aviation and ground-handling services, support to governments and ministries of de-fense, remote infrastructure and life support. For more information about Agility, visit Agility.comTwitter: twitter.com/agilityLinkedIn: linkedin.com/company/agil-ityYouTube:youtube.com/user/agili-tycorp

Geodis India appoints new national sales managerGeodis India has appointed Martijn Tasma as national sales manager, with the overall responsibility for sales and market development of Geodis’ freight forwarding and logistics business line in India. The main priorities will be to strengthen and increase the company’s trade lane activities, particularly with a focus on Brazil, China and the USA, and to expand the business in key market segments such as Fashion, Retail, Industrial, Auto-motive, Hi-tech and Pharma.Tasma has been associated with Geodis since 2006, and in his previous roles has played an important part in driving key strategies for business development in the organi-sation. He brings more than 14 years’ of experience in the industry.Managing Director for Geodis in South Asia, Leif Voelcker, said: “We are certain that Martijn’s experience and knowledge of the industry will be a key advantage for us in India’s fast growing and de-manding market.”Tasma commented: “India is an incred-ible country with a large growth poten-tial. Our aim is to deliver the best service to our customers, whether this be ‘out of the box solutions’ or tailor-made to cus-tomer requirements.”DGF appoints New Zealand country managerMichael Dhu takes on new role for DHL Global Forwarding.Dhu was formerly Global Head of Sales Steering at DHL’s global head office in Germany and boasts 26 years of experi-ence in national, regional and global roles in the logistics industry. The return of the Australian national to his home re-gion will see him report directly to Tony Boll, CEO, DHL Global Forwarding South Pacific.“With Asia Pacific showing the most marked trade improvement compared to other regions, we see that capac-ity is tightening and demand is rising,” said Boll. “In this scenario, Michael’s ex-perience will be invaluable as we strive to meet and exceed customers’ crucial shipping needs across all industry sectors.

LogisticsLogistics


Supply Chain

NEW DELHI — April 1, 2015 — Menlo Logistics (Menlo), the

US$1.7 billion global logistics subsidi-ary of Con-way Inc. (NYSE: CNW), has continued to expand its automotive lo-gistics operations in India, moving to a new after-sales spare parts facility in Dharuhera, near New Delhi in Haryana state. The 3,846-square-meter facility is managed on behalf of a global brand-named client and is situated in an OEM automotive parts cluster including Manesar, Neemrana, Bhiwadi, Bawal and Dharuhera. Close to the highway network, the warehouse provides good access to a car transporter hub and also Delhi International Airport, which is 66 km away.“Our customers are expanding their operations across India, driven by consumer demand as car and truck sales increase. We are supporting that growth by moving to a larger, more modern facility for one of our lead-

ing automotive customers. We are planning to have the facility certified to Lean Bronze standard by the third quarter of 2015,” said Amit Dhingra, Director Operations, India, Menlo Lo-gistics.In other news, Menlo Logistics is also planning to certify its Lean processes at an in-plant truck assembly opera-tion in Rudrapur in Uttarakhand state — which began operations in 2014 — for another major automotive com-pany.Menlo manages all aspects of logis-tics and storage for the chassis line, engine line, cowl line and post-body operations, and this includes frames, engines, axles, leaf springs, bumpers, fuel tanks, canopies, spare parts and fasteners.“We have a deep under-standing of the complex supply chain requirements of our automotive cus-tomers in India, and we are investing in building our capabilities and solutions across the country in this dynamic in-dustry,” said Desmond Chan, Managing Director, South Asia, Menlo Logistics. Menlo Logistics’ India operations have grown to 18 sites in 2015 from five in 2007, and the employee base has in-

creased to 700 full-time and part-time staff. The company’s gross revenue in India has increased by five times in 2014 when compared to 2007. “We have also increased our pres-ence in other vertical markets such as health care, heavy engineering and high-tech — with strong footprints in the automotive sector,” said Dhingra.Menlo Logistics opened a regional of-fice in Pune in Maharashtra state, which is India’s leading automotive and IT hub. The head office is in New Delhi.Follow Menlo on Twitter: http://twit-ter.com/MenloLogistics. Menlo Logistics images are available at www.con-way.com/en/about_con_way/newsroom.

About Menlo LogisticsMenlo Logistics, LLC, is a US$1.7 bil-lion global provider of logistics, trans-portation management and supply chain services with operations in five continents, including North America. As a third-party logistics provider, San Francisco, California-based Menlo Lo-gistics’ services range from dedicated contract logistics to warehouse and distribution management, transporta-

Supply Chain

Menlo Logistics Expanding Automotive Presence in India


Manhattan Associates Named a Top Workplace in Atlanta for the Third Year in a RowManhattan Associates, Inc. (NASDAQ: MANH) proudly announces that it has been named one of Atlanta’s Top Places to Work by The Atlanta Journal-Consti-tution (AJC) for the third year in a row.More than 1,000 companies through-out the metro Atlanta area participated in the annual survey, conducted by The AJC and WorkplaceDynamics, LLP. The winners were featured in a special edi-tion of The AJC on March 22. The Top Workplaces are determined solely by employee feedback. The employee sur-

tion management, supply chain reen-gineering and other value-added ser-vices including packaging, kitting, order fulfilment and light assembly through a strategic network of multiclient and dedicated facilities. With nearly 20 million square feet of dedicated ware-house space in North America, the Asia Pacific, Europe and Latin America and industry-leading technologies, Menlo Logistics creates effective, integrated solutions for the transportation and distribution needs of leading business-es around the world. Menlo Logistics, LLC, is a subsidiary of Con-way Inc. (NYSE: CNW), a $5.8 bil-lion diversified freight transportation and logistics company. For more infor-mation, please visit us on the Web at http://www.con-way.com/en/logis-tics.

vey is conducted by WorkplaceDynam-ics, a leading organizational health and employee engagement research firm.“We work hard to create an environment where our associates can grow their career, and are fortunate to work with world-class customers and innovative technologies in a high-growth market,” said Terry Geraghty, senior vice presi-dent and chief human resources of-ficer, Manhattan Associates. “Our best showing to date in this prestigious list is a validation of our significant invest-ments to attract and retain the best of the best, including our award-winning training curriculum and industry-lead-ing wellness and benefit programs.”The AJC will host www.topworkplaces.com, a website devoted to top work-places in each region of the United States, on www.ajc.com and www.ajc-jobs.com for the next 12 months.Receive up-to-date product, customer and partner news directly from Man-hattan Associates on Twitter and Face-book.

About Manhattan Associates Manhattan Associates makes com-merce-ready supply chains that bring all points of commerce together so you’re ready to sell and ready to ex-ecute. Across the store, through your network or from your fulfillment cent-er, we design, build and deliver market-leading solutions that support both top-line growth and bottom-line prof-itability. By converging front-end sales with back-end supply chain execution, our software, platform technology and unmatched experience help our customers get commerce ready—and ready to reap the rewards of the omni-channel marketplace. For more infor-mation, please visit www.manh.com.

Supply Chain


British American Tobacco Renews Contract with GT Nexus

Technology

Oakland, CA. March 31, 2015 – GT Nexus announced today that Brit-

ish American Tobacco (BATS: London) has extended its commitment to the GT Nexus cloud supply chain platform.The technology platform automates and standardizes commercial engage-ments between British American To-bacco and its network of global ocean carriers.British American Tobacco (BAT) is a £15.2B global tobacco group founded in 1902, with brands sold in more than 200 markets. The company employs 57,000 people in more than 200 markets worldwide, and operates a supply chain that includes 46 facto-ries in 41 countries.

“GT Nexus provides us with a greater handle on our global transportation spend and sourcing strategy,” said Alan Richards, Global Procurement, Category Manager Logistics at British American Tobacco. “Technology ena-bled excellence in the way we run our annual ocean freight tender is critical because it encompasses a sizable an-nual investment for BAT. We see GT Nexus as an outstanding partner in this area not only from a technology perspective, but also with regards to strong professional services and con-sultative insights. Being able to simu-late spend scenarios as part of the carrier bid analysis is of great value

for an optimized freight allocation to ocean carriers.”“BAT understands the value of stra-tegic spend management towards services that are core drivers in the performance of their global supply chain,” said Sean Feeney, CEO of GT Nexus. “Logistics spend, managed strategically, improves the bottom line but it also directly impacts rev-enue performance and the customer experience overall. BAT’s ability to manage freight spend by connect-ing key parties in a cloud network enhances their ability to make bet-ter decisions and execute to meet demand.”


Alibaba expands logistics footprint into KoreaAlibaba is to further expand its logis-tics footprint later this year by extend-ing its service to South Korea.No firm date has been set for the launch by the e-commerce giant’s lo-gistics subsidiary Cainiao Network, but South Korean media reports claim the move could happen as early as next month. The service will facilitate pur-chases in China direct from South Ko-rean sellers.Alibaba has been aggressively expand-ing its fulfilment logistics services across Asia. Last year the company purchased a 10% stake in SingPost, which now offers global solutions and has been investing heavily in its own logistics subsidiary Quantum Solu-tions.Alibaba also last year entered into a cooperation agreement with China Shipping’s subsidiaries, China Ship-ping Container Lines and China Ship-ping Network Technology, to develop an online platform to be used by the three parties for freight enquiries, or-der placement, payment and tracking.

Technology


Gabby Costigan

1 Can you tell us a little bit about yourself and the journey that

has led to your current role at Linfox?I joined Linfox in early 2014 in the newly created role of CEO Asia and as a member of the Linfox International Board. In this capacity, I am responsible for delivering our regional strategy, effectively managing our Asian operations and expanding our footprint in Asian markets.Prior to this appointment, I have had a very diverse career that has enabled me to work and live in many different countries handling multi-modal logistics operations across multiple industries. I was fortunate and very proud to have had a long military career serving in the Australian Army. This led to opportunities to work with the US Government supporting logistics operations in both Iraq and Afghanistan. Subsequently I have worked in the Aviation Industry in a couple of different roles with a global responsibility.I am incredibly pleased with the opportunity to take on this role for Linfox. The Linfox International Group Board of Directors has provided me with a challenging but very exciting role. With my team in Asia, we want to expand our portfolio and grow our customer base to ensure that Linfox is a part of the ASEAN growth for the next couple of decades.

2 Can you give us a brief overview of Linfox International Group?

Linfox is a privately owned company with a proud 60 year history that began in Melbourne, Australia. Linfox began operating in Asia 25 years ago. Today, Linfox has expanded to ten countries in the Asia Pacific region and more than two-thirds of our growing team is based in Asia.Our Thailand business is one of the company’s first steps into Asia. It now employs more than 5,000 people delivering warehouse and transport services to several significant customers that include Tesco, Unilever and the Minor Food Group.In 2014, Linfox divided our businesses and formed a new Linfox International Board to strengthen our position as a supply chain leader across the Asia Pacific. Linfox continues to build a solid supply chain presence in the major growth economies of Asia. Our customers represent a mix of leading global and local brands which value our strong supply chain expertise and reputation for operational excellence.

3 LIG is known as niche market player mainly in Australia, with

some regional exposure, but your vision is to internationalise LIG in a bigger way especially since more than 2/3 of all Linfox staff are based outside of Australia.

What does the future hold for LIG? Expansion? Consolidation? M&A?Linfox is the largest privately owned logistics business in Australia. In Asia, our continued focus is on building and strengthening relationships with existing customers and establishing new customers. Our growth in Asia is associated with some of the world’s leading businesses and brands.The future for LIG is exciting; our shareholders believe in investment and see significant growth opportunities for the company. We are experts in supply chain solutions and with the expected growth for the region, LIG is well positioned to continue the support of our customer base but also to grow into new countries and new industries.

4 How is LIG prepared for the upcoming AEC and how does

it affect business?Shortly after the company restructure one year ago, Linfox decided to establish our regional head office in Bangkok. Thailand is our largest operation in the region and is a central location within ASEAN. We envisage the AEC will lead to a more regional supply chain setup which fits very well with the Linfox operational model. With many of the ASEAN countries among our most established organisations and our further investment in our teams and systems in those countries, we see

LogiSYM’s Joe Lombardo managed to catch up for an interview with Gabby Costigan, CEO of Linfox International Group for an interview at LogiSYM 2015 in Singapore which was held in March.

CEO of Linfox International Group


some very promising opportunities. Linfox’s history of investing in our own fleet, warehouses,systems and the countries we operate in will complement this vision.

5 How does the online shopping revolution affect the logistics

business and what do suppliers need to do to keep up with the changes?Online shopping leads to growth in individual orders and consequently overall business growth. Without sounding too simplistic, this growth will lead to greater logistics support demand to which Linfox can respond. We have extensive experience working to support ecommerce clients in Australia and are well placed to meet the growing demand in Asia.

6 What are some of the ways that customers are looking

to drive their 3PL relationships deeper? Does this consist mostly of further outsourcing?

The percentage of outsourced logistics activities in Asia still lags behind some of the more developed markets such as Europe, the US and Australia. We see our largest partners evolving to a more regional decision making model which leads more often to a reduced number of partners. Also, with some clients, we have established long term agreements to develop operations together in several Asia Pacific countries. We announced such a partnership just over a year ago with Unilever. Under this model, we build dedicated teams around our customers and their role is broader than responding just to tender but rather leveraging best practice across the region, running continuous improvement programmes, standardising KPIs and contracts, et cetera. It is a joint operational and management strategy.

7 How will warehousing / DC’s continue to deliver value

given the drive by companies to increase supply chain velocity and to reduce operating capital?

The roles of the traditional DCs may change with many hybrid models evolving to replace the more traditional. Customers may choose specific solutions in key areas of their market footprint supplemented by multi-user sites or cross docks to reduce time to market. Easing cross border traffic in the AEC will lead to more regionalisation and redesign of supply chains. A similar process would be possible in India should inter-state trade become easier. Many of our clients already are preparing for changes in their supply chain setup and Linfox assists and supports them in that process.The need for operating capital will reduce with improvements in infrastructure and, with more predictable services, inventory levels can be lowered. Linfox can support, for example, by deploying dedicated fleets to improve vehicle availability and also through our investments in transport and warehouse management systems.

CEO of Linfox International Group


8 Has the distribution centre strategy of your customers

changed as a result of volatile fuel prices? What are some of the changes that you are seeing?A number of factors, including fuel price, changing government policy, labour costs and currency exchange rates cause our customers to review existing models. We believe that companies will no longer adhere to a single sourcing strategy but will create a second source of supply including one that potentially produces closer to the markets. Teaming with peers is one solution to mitigate risk. Opportunities present for Linfox to invest in our customers through a more fuel efficient fleet as well as providing long term risk-reduced solutions to their supply chains.


Gwyneth Fries Green Logistics presents a great opportunity for Asia’s supply

chain community to save costs while adapting to the dynamics of a changing region, but it requires action on multi-levels, as well as collaboration across roles and sectors. Green Logistics is aboutCO2 and greenhouse gas emission reduction through more efficient use of fossil fuels, as well as the incorporation of renewable energy sources. Reductions in the use of natural resources in production andimproved waste management are also key components. Potential cost-savings from improved fuel efficiency, fewer trips and quicker routescan be quantified and realized even in the short-term.

Green Logistics across the supply chainGovernments and industry associations play a critical role in guiding the Green Logistics process, disseminating knowledge, piloting new technologies in the regional context, and providing real incentives for the adoption of emission-reduction measures. Green Freight Asia, a regional industry organization, recently announced the launch of the GFA label - a four-tier system to reward carriers and shippers for their commitment to green logistics. As the label grows, shippers will be able to make “green sourcing” decisions for product movement by choosing GFA member companies based on their level of commitment to environmental sustainability. The primary role for shippers is to

Green Logistics in Asia: Opportunities and Challenges

demand Green Logisticsfrom their providers and be willing to pay more for it. Since Green Logistics is only a small component of a comprehensive shift towards a more environmentally sustainable supply chain, initiatives like Green Freight Asia and the U.S. Environmental Protection Agency’s Smart Way Program are needed to clarify the concept and facilitate the transition. Fortunately for shippers, e-commerce is environmentally friendly. Unit packaging can also be redesigned to use only recyclable and non-toxic materials, as well as air-cushions. As the theoretical hub of the supply chain, logistics providers are in a position to lead holistic change. They can help shippers to achieve their sustainability goals by encouraging freight service providers to adopt green performance metrics, consolidate shipments and commit to increasing the proportion of goods delivered via rail and inland waterways. Asia’s own Agility logistics tracks its carbon footprint in more than 70 percent of its core logistics operations and partners with multinational customers like Nokia to curb emissions. Port authorities may “green” their ports by considering shore-side electricity to reduce emissions from vessel idling as well as infrastructure for alternative fuels like LNG and ethanol for bunkering. Industrial port clusters within ports may be redesigned to allow for sharing and recyclingof energy. Ocean shippers can reduce their carbon footprint alsoby reducing

Green Logistics in Asia


idling time for carriers and considering onboard conversion to methanol or LNG. Singapore’s Jurong Port is using recycled concrete, steel mesh and reinforcement bars to build one of the world’s first green berths. Construction is planned for a new container terminal at Tanjung Priok Port in Jakarta, where cold ironing and environmentally-friendly options are expected to be incorporated into operations.Specifically for Green Freight, carriers may adopt technological tools toimprove route planning in order to reduce the total number of trips and avoid empty trips, as well as provide training to improve driver behavior. Physical fuel-saving investments may include low rolling resistance tires, a reduced tractor-trailer gap, lightweight materials for the construction of tractors and trailers, automatic tire pressure monitoring systems, skirts and aerodynamic nosecones.At the warehouse, improved automation, electriclift trucks and reefer refrigeration units, recyclable pallets, as well as improvements to overall energy usage are all examples of Green Logistics enhancements. Australia’s Linfox is looking into powering new mega-distribution centers with solar energy.Lift equipment manufacturer Hyster offers a range of warehouse products that use efficient AC motor technology, and is innovating to produce trucks powered by biofuels and even hydrogen fuel cells.

A Context of OpportunityThe growth of road freight in Asia, together with increasing global concerns for environmental sustainability, makes it the right time to start incorporating Green Logistics into the industry.The global share of trucks accounted for by Asia is projected to reach 34% by 2050. At the same time, indicators signal an increasingly unsustainable industry; while trucks are 9% of the vehicle population in Asia, they are responsible for 54% of CO2emissions. Logistics costs in the region are between 15 and 25% – high compared to the OECD average of

10%. Fuel costs can account for up to 60% of truck operating costs, signaling a clear opportunity for savings from fuel efficiency. Partnering with the private sector for Green Logistics systems would give the region’s governments a change to address challenges of income growth, air pollution and urbanization.High economic growth rates and improved incomes have upgraded countries like Indonesia, Philippines and Vietnam from low-income developing countries to middle-income emerging markets. The upgrade is not without its challenges, and many countries at this point run the risk of falling into the Middle Income Trap, where rapid growth quickly stagnates without fundamental structural economic changes, investments in infrastructure and human capital.Rising wage levels make it increasingly difficult to compete with low-cost manufacturers right in the neighborhood. Beyond China and India, cities in Indonesia, Myanmar, Thailand and the Philippines also register high levels of urban air pollution. According to a McKinsey report, nearly 40% of growth in the ASEAN region over the next ten years will come from cities with between 200,000 and 5 million inhabitants.More urbanization means greater use of smaller trucks for last-mile delivery that tends to contribute disproportionately to overall emissions from transport. A holistic approach to Green Logistics could help ease the region’s growing pains, give governments a competitive advantage over lower-cost neighbors and help retain and attract business and investment. The ASEAN Economic Community (AEC) provides a regional framework through which governments can start to collaborate towards greener logistics.The Master Plan for ASEAN Connectivity includes a regional approach to infrastructure investment, including new construction and rehabilitation of existing rail networks and improved multimodal infrastructure for better usage of inland waterways.

ChallengesWhy is it so hard for Green Logistics to gain a foothold in Asia? In 2012, a survey of companies in the region revealed that only 10% of companies involved green freight as a part of their business strategy.As with logistics in general, Green Logistics measures are nearly invisible to the final customer. When shippers are adopting sustainability initiatives, they may prioritize more marketable social sustainability measures in production stages – such as guidelines for suppliers’ labor practices – over environmental initiatives in transport. Leadership from industry associations and individual companies can help raise awareness about the importance of emissions reduction as well as potential savings. The complex, multi-actor coordination that is necessary for Green Logistics is tough to establish. Governments mustenvision Green Logistics as a priority opportunity, and be open to new channels of communication with each other and the private sector. A July 2014 workshop organized by the Asian Development Bank and German International Technical Cooperation found that policies, standards and awareness in the region were not aligned with green freight. The diversity of language, culture and development stages also complicate a regional approach. Further, for last-mile fulfillment, urban freight is often ignored in the design of urban transport policies.Cost-savings from Green Logistics can be highly context dependent, and the



data isn’t really there. A collaborative project led by the Clean Air Initiative for Asian Cities (CAI-Asia) piloted green freight technologies in Guangzhou, the capital of China’s Guangdong province. Fuel and emissions savings of up to 18% were reported for garbage trucks using low rolling resistance tires and tire pressure monitoring systems.However, fuel-savings levels were a more modest 6.6% for long-haul trucks, in large part because average speeds did not meet the optimum levels for fuel savings using these tires; this result demonstrates the strong role of context in cost-saving estimates. Unsustainable practices such as container overloading, solicitation of informal payments, unnecessary physical inspections at border-crossings and opacity in the regulatory framework are endemic

to the region. These practices drain the profit expectations firms might perceive from greening their supply chains, and frustrate sustainability efforts led by 3PLs. The region’s highly fragmented trucking industries mean there are not enough powerful players to put pressure on the industry to be more environmentally sustainable. Only .1% of trucking companies own more than 100 trucks. In India, somewhere near 82% of companies own less than 20 trucks. Meanwhile, trucks are often resold every 3 to 5 years, as small operators get the most they can out of them in short periods of time in order to recuperate initial investments. In challenging environments, needed change happens slowly over time. The time is right to collaborate across industries and sectors towards a green logistics ecosystem for Asia.

SHORT BIO:Gwyneth Marcelo Fries is an expert on international trade and logistics specializing in agricultural exports from developing countries. Her recent experience includes over four years at the World Bank Group advising governments on addressing constraints to export performance, including providing technical assistance on projects related to regional integration, single window initiatives, port efficiency, risk management, food safety, informal cross-border trade and rural infrastructure. She is well-versed in a range of economic and statistical modelling and research methods and developed a supply chain analysis methodology that has been replicated in several World Bank projects. She holds a Master of International Affairs from Columbia University’s School of International and Public Affairs and a B.A. in International Development from Brown University.



The question remains however : How do we take advantage

of this situation for ourselves, our communities, our enterprises, and the general well-being of society at large? There are some principles that we must follow to approach this ideal state, and some important building blocks that must be put in place along the way.The first signpost is to find a way to reduce the degree of complexity we face day-to-day, and in this regard it seems we have been looking in all the wrong places. Taking the enterprise as an example, we have for decades been fighting a rear-guard action against increasing complexity, by focusing inwards, and generally getting nowhere. Why? Because the solution is in fact anti-intuitive. We thought that by introducing standard information technologies, underpinned by common processes, we would see significant progress towards complexity reduction. In reality, we experienced the opposite, mainly because of all the exceptions that had to be accommodated in a fast changing and increasingly volatile world.The other realisation that dawned on me during my years of contemplating the problems faced by enterprises, relates to the way we design our organisations is fundamentally flawed. The vertical functional structure may have worked in the early 20th Century, but only because the customers were

John Gattorna

essentially disenfranchised. In the new world where consumer power is king, the old functional structures are simply not responsive enough to the new demands placed on them. We still need deep specialisms inside the enterprise, but in addition, we need a second force to manage the horizontal flows of product, financial transactions, and information through the enterprise from the supply-side to the customer-side. These horizontal flows are akin to the central nervous system in the human body, and just as critical; these days we call them supply chains or supply pathways.Along these supply pathways are dotted concentrations of people, behaving in different ways according to their individual mindset and particular situation, making decisions that affect the rest of the eco-system- we call these people consumers and customers at the demand end; suppliers at the sourcing-end; and employees, staff, and management inside the enterprise itself. Indeed I would estimate that over 50 percent of the activity along enterprise chains is due to the presence of humans, yet we seem to be in denial about this reality, as evidenced by the lack of attention to integrating cultural considerations into the design and operation of supply chains, and the absence of this factor from university curricula. The truth is that enterprises, whether private or

public, will never produce sustainable operational and financial performance until we recognise that this takes a tightly integrated multi-disciplinary effort all along the pathways that link the supply base with customers.In our search for answers we must go well beyond the logistics networks and infrastructure that most enterprises have in place, and where cost-reduction is the only measure of performance. We want to extend this narrow view of the world to the wider eco-system represented by supply chains that run from the supplier of raw materials, through manufacturing, distributors of different types, to the end consumer/user. In this context, clever design can actually impact the top-line revenue and customer satisfaction, as well as reduce cost-to-serve. But to achieve this we have to accept that the entire enterprise must be mobilised for this purpose, and contribute to satisfying customer expectations as well as supplier expectations- that is perfect alignment in practice, and organisation design plays a big part in any success achieved. In this context, enterprises are in effect the aggregation of the supply chain that run through them. They are in effect the enterprise!I think there are a number of necessary ingredients for sustained corporate success in the foreseeable future and the following are a short abstract of what some of these are. They have

Building Dynamic Institutions For The New Networked World

We live in interesting times, where knowledge, technology, and the Internet have rapidly converged to produce a rate of change not previously witnessed in human history



been broken down into topics and will be discussed at our forum in Greece later this year:

Topic 1: Using ‘design thinking’ to evolve new supply chain configurations.The days of ‘inside-out’ one-size-fits-all supply chain thinking are dead and buried. Replacing this outmoded and flawed concept is the more enlightened ‘outside-in’ thinking based on design thinking principles developed by Roger Martin, and used extensively by IDEO in product design. And just in time too, for the world has become a dangerous and complex place in which to do business..My own proprietary concept, dynamic alignment, developed over the last two decades of empirical work in the field, in effect follows design thinking principles, as we set out to align the enterprise with the way the market is structured, and in particular the dominant buying behaviours represented in the market, expressed as customer behavioural segments..

Topic 2: Achieving ‘end-to-end’ digitization in your enterprise supply chains.Driven by a combination of consumer demand and the development of new information and communications technology (ICT), the world is rapidly transforming. We call this phenomenon ‘digitization’. As supply chains have evolved from traditional models to inter-connected networks, the pressing need for clean data, visibility, and speed along these supply chains has brought about the new era of ‘digitization’. The digitization trend has enabled firms to move away from the flawed concept of one-size-fits-all supply chain design, to the new multiple supply chain design configurations variously called ‘tailored’ or ‘dynamic’ supply chains. Now customers can not only access products and services through several different channels (omni-channels), they can also be physically fulfilled through a matching array of different supply chains

according to their particular need at the time, and the customer’s propensity to pay. The result: happier customers, serviced to their satisfaction; and happier enterprises because the new finely tuned alignment allows them to achieve better margins while serving customers (through lower costs-to-serve and higher sales revenues).

Topic 3: ‘Big data’ and ‘Big calculations’ to reduce complexity in enterprise supply chains.The quality of data is a perennial challenge for supply chain management, but that challenge has just become a whole lot bigger. The outright failure of conventional ERP systems to deliver transactional data in a consistently intelligible form suitable for managing supply chain operations has highlighted the pressing need for companies to build new data analytics capabilities in-house, and urgently. The accessibility and especially the consistency of a Firm’s master data is an essential building block for enhanced supply chain performance and performance monitoring. Add to this, a veritable deluge of transactional data coming at the Firm from all sources (video and social media; mobile signals; purchase transactions; point-of-sale; mapping and GPS; and sensors in all formats), and you have the makings of what is being called ‘big data’. The good news is that we now have the technologies and analytical tools to extract new and valuable insights from this veritable sea of data. By harnessing these newly available technologies we can drive productivity increases along the entire length of enterprise supply chains.

Topic 4: Coping with major ‘unplanable’ disruptions in enterprise supply chains.Sudden unexpected failures in supply chains can be due to multiple causes, including: Disruptions: natural disasters, terrorism, and war;

Delays: due to inflexibility of supply;Systems: failure of technology infrastructure;Forecasts: inaccurate forecasts, lack of forecasting;Capacity: capacity inflexibility; and the list goes on.So many risks abound in the way contemporary supply chains are designed and operated. For instance, if lean principles are taken too far, and stocks of components and finished goods in the pipeline are reduced to very low levels in order to cut costs, it will become susceptible to even the smallest disruption in supply or fluctuation in demand. In these situations, it is prudent to hold reserves of inventory (buffers) along the supply chain in different stages of completion. This in-built redundancy costs money, but has to be offset against the cost of lost sales and lost customers through non-supply. Given the rise in terrorism, which has injected even more uncertainty into the operation of global supply chains, the solution is to put much more forethought into developing risk mitigation strategies, before something catastrophic happens. The panel discussion will surface and debate appropriate strategies.

Topic 5: Campaign supply chains – bridging the gap between the supply base and major project customers/owners.One type of supply chain that has so far escaped formal attention is that which services the construction of major capital projects. We call this type of supply chain, Campaign, because we’re talking big: big in scale, big in complexity, big in dollars. And long in timeframe. To top it off, each project is unique. Capital projects can be Greenfield industrial sites or Brownfield projects, involving major overhauls of existing industrial facilities. It’s surprising that for such a rich industry – where an estimated US$1 trillion is spent in any one year, the construction industry has been relatively stagnant in its


to apply different solutions to that group, otherwise we will find ourselves involved in needless ‘over-servicing’.

Topic 10: The impact of ‘conscious capitalism’ on the design and operation of enterprise supply chains.The enlightened view of contemporary supply chains is that they are driven by people [rather than technology and asset utilisation as often thought]. These people come in various forms: customers and consumers, suppliers, employees and leaders in the business, and various other stakeholders in the operating environment- the wider community, investors, and government. So there is immediate overlap here with the notion of ‘conscious capitalism’, where all the same stakeholders are present.

A final word‘

As we approach the middle of the second decade of the 21st Century,

we can look back on the last 60 years and say that we have learned a lot. We know what all the dots are now,

but we must join them all to come up with the appropriate solutions for a

particular situation or in a marketplace environment. There are no more

excuses- the guesswork has to stop- and more precise methods used to

solve problems and meet challenges, for the benefit of all stakeholders.

The 2-days of intense multi-disciplinary discussions among an invited audience in Athens in late Sept’15 will be another milestone in the journey towards improved

performance through greater understanding of the mechanisms at

work in our world.. *John Gattorna’s new book: Dynamic

Supply Chains: how to design, build and manage people-centric value

networks, 3rd edn., Harlow, 2015, will be released by FT Prentice Hall in

May’15, and officially launched at the 2015 Athens Summit in Sept’15.

innovation compared with the strides made by other industries. To be brutal, ‘construction has historically been a slow, no-learning industry.’

Topic 6: Perspectives by influential women leadership in global supply chains.Women are increasingly playing pivotal leadership roles in private and public enterprises, and the armed forces, at a global level. This panel is comprised of women who have all achieved outstanding success in their careers in the supply chain domain, and in the process, demonstrated exceptional leadership. The objective of this session is to share their experiences and challenges along their respective journeys to where they are today, and take a look at what lies ahead. As more women have entered the fields of engineering, manufacturing, operations, procurement and logistics, we see an increasing number of women in influential leadership roles in supply chain management. More women are graduating from operations-based curricula in learning institutions, and these women are moving experientially through their respective careers. Some are now running large divisions of multi-national corporations and even entire global supply chains. To be qualified for these roles is not gender-based, but rather experiential-based, and increasingly we see more women with the appropriate experience, being considered for these senior supply chain roles. We will hear from several women who have become successful supply chain senior executives and the key competencies, know- how and experiences that have given them the opportunity to lead. This topic applies to anyone who wants to be a supply chain business leader of the future.

Topic7: Smoothing global trade flows through improved compliance and security protocols.Essentially, this topic is about how to address the impediments to world

trade, across country borders. The solution here is not more government regulation- quite the opposite. Instead, the suggestion is to map the major bilateral flows between pairs of major trading countries, and seek to apply dynamic alignment thinking at the macro-trade level. Tax, transfer pricing in multinational corporations, and Customs reforms will all be integral to the sweeping changes that are mandatory if world trade is to be unshackled from current impediments, and let fly for the greater good of world communities. It is a serious issue because it is materially affecting growth in a negative way in many economies that are trying to raise the living standards of their respective populations. Topic 8: Achieving a ‘social license to operating’ in sustainable-sensitive operation environments.Increasingly, consumers of FMCG’s are putting pressure on retailers, manufacturers, and upstream processors to know more about the ingredients that go into the products they buy, and where they are sourced from. This demand for ‘traceability’ is driven by social responsibility among consumers, and reinforced by the efforts of other activists such as Greenpeace, all of whom have an underlying objective of sustainability and corporate social responsibility. Where exactly does the truth lie?

Topic 9: Developing strategic partners in enterprise supply chains – a special case of ‘alignment’.One subset of the Gattorna behavioural segmentation methodology as developed in the field has been the identification of those parties (demand-side and supply-side) who have genuine ‘collaborative values, and prefer to work in partnership for mutual benefit. Not everyone will behave collaboratively, and we certainly want


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The pleasant hum of what we think is an efficient organisational machine can be shattered by a strong complaint from a customer. Poor service performance or failure to meet a crucial KPI can cause us to start down the path of a fix to the immediate problem at hand, where the problem must be addressed, assurances must be made and the blame game begins. Signals are the first alert that attention is needed, and many supply chain manager’s primarily daily focus is dealing with these signals - lurching from one crisis to another. These signals can encourage a silo mentality, reducing the organisation’s ability to recognise the internal and external signals that give an indication of a problem in the works. Must we wait for that external signal before we realise there is an issue? Having our daily routines prioritised by customer complaints is not only draining to morale,

but highly inefficient and ineffective use of a true supply chain manager’s time. Reducing impact on external customers is usually the result of an increase in awareness of the internal signals from our systems - the key is being able to read them.The internal signals are the most obvious and yet they are the ones so frequently missed or dismissed as they may not be attributed to logistics functions or supply chain issues. We see the internal signals all the time - increasing staff turnover, open disagreements &

squabbles amongst department managers, controversial and unilateral decisions at the expense of others, poor communications and even imposing spontaneous decisions by senior or high ranking directors. Supply chains are systems - interrelated parts that function together to achieve a common goal. Continual failures in the form of complaints from customers often stem not from a function of the supply chain, but rather from the dysfunction of the system. Rather than focusing on the relationships between components of the system and the working of the supply chain system as a whole, we focus on the parts. Usually these parts are easier to understand and address - the warehouse, or the customer service department - and quicker “solutions” often propose themselves. If we continue to apply similar solutions, how can we but fail to get similar, disappointing results?

Supply Chains are complex, and are becoming increasingly challenging with additional stresses from globalisation, increased trade compliance pressures and customer demands. This is a sentiment that is echoed across many industries, and conversations often centre around this complexity.The problem of managing complexity within supply chains is one that is evidenced by business performance and results. Customer surveys

and feedback can show spikes of dissatisfaction, which direct a manager’s focus on specific incidents but distract from analysis of trends that can point to causes of problems, rather than management of crises. This is the first article in a series which will look at managing supply chains holistically. We start this by first identifying that some business leaders find it difficult to manage their supply chains effectively. Is it really due to

the complexity of the supply chain or is there something more fundamental within the organisation

Managing Supply Chain

Managers often resort to “quick fix” solutions to fix problems. This can lead to a weakened culture of problem solving and the opportunity to better understand and

address the root cause of issues.

Business leaders find it difficult to manage their supply chains effectively. Is it really due to the complexity of the supply chain or is there something more fundamental within the organisation that

needs to be addressed?]

Why do some find it so challenging to manage their supply chains?

READING THE SIGNALS

CAN WE IDENTIFY THESE DIVERGENCES IN THE SUPPLY CHAINThere are several factors that can contribute to a divergence. Some of the more common causes can be attributed to:1. Organisational changes2. Changes in adequacy of skills and competency3. Economic and financial changes4. Changes in suppliers and procurement policies, resulting in changes in supplier service & quality performance

5. Transformation in delivery models - in-house versus outsourced and/or moved to low cost area6. C u s t o m e r - d i f f e r e n t i a t e d requests, resulting in changes to demand levels, performance and reaction timesIt will be evident that not only have there been new imbalances introduced in the supply chain, but also different expectations from participants within the supply chain. Changes could

also see a new demand for fast and aggressive KPIs. These may in-turn be in conflict or collision with the existing ones, resulting in departments with conflicting objectives. These conflicts can be a key indicator of divergence in the supply chain, and a signal that participants need to be brought together to re-establish common objectives in order to ensure supply chain continuity and growth.


Managing Supply Chain

Managing the corrective factors to re-align the divergence will require major effort by the organisation and solid management leadership. How many organisations are willing to this, is however the question. A lack of understanding of what Supply Chain really is, other commercial pressures and a slew of other distractions often result in little or insufficient effort and resources being given to this crucial area.As a supply chain can touch many deparatments, functions and people in the organisation, managing changes needs to be a structured process. If done haphazardly it could result in even more difficulties in managing corrective actions. The people factor is still a high influencer in the effective management equation. In a supply chain we can expect to see many clusters of operations, people, processes, systems & resources. If all of these areas are experiencing some difficulties and internal turbulence, then we can only expect to see problems riddled throughout the entire supply chain. Managers often resort to “quick fix” solutions to fix problems. This can lead to a weakened culture of problem solving and the opportunity to better

understand and address the root cause of issues. The result of “quick-fix” or “fire-fighting” due to business pressures or in some cases the lack of know-how or empowerment of managers in supply chains is detrimental in the long run.Adding more resources to fix the individual issues or to immediately cut a process or resource to avoid any potential crisis is simply reacting. Reactive solutions do not usually add any effective long termvalue to supply chain deliverables nor the enterprises performance goals. So why is Supply Chain Management, something that has been around for more than a decade, so complex and difficult to manage effectively?The contributing factors to this question are many. Often, as alluded to earlier is the there is simply a lack of understanding of what a supply chain is, and how it is intended to work in and between organisations. The ability of business process owners to understand the big picture is weakened when there is no alignment to the management strategy. If the link between the business strategy and the supply chain are not clear within

the organisation, it likely that this is also not clear to the management. Consequently the leadership and priorities to making the supply chain work effectively, are neither visible nor seen as relevant to the business strategy and therefore success of the organisation. It is a reality that business models change and evolve to suit the conditions in their market environment. If these dynamics

are not effectively coordinated across the entire organisation, the natural tendency will be to see departmental or functional silos grow and independent “sub-organisations” emerge. This is where we will see performing results optimised at departmental levels but under-performing at the overall company level.

Failure to align activities and ensure that a control-tower

is effectively in place to monitor performance and identify issues will result in a wider divergence between company objectives and supply chain functionality and performance.

Internal signals are often pointed to and identified as the cause of the problem. Taken alone they may appear as causes, however independent signals considered one-by-one can mask much larger issues. If we take a wider view of the system as a whole, then ultimately we must attribute the reasons for a dysfunctional or under-optimised supply chain to the key decision-makers of the organisation, as they ultimately should have enterprise-spanning (or supply chain-spanning) perspectives that should allow for patterns to be spotted. Are customer complaints related to high

staff turnover? Are poor internal communications related to declining sales? Systemic problems may only become apparent when some distance is given between the signal and the solution, and when multiple signals from a variety of sources are able to be evaluated with a true systems thinking approach. Operational personnel who are responsible for logistics and other functions within supply chains must continue to support the business, ensure continued operations and put out fires as they occur. It is the

responsibility of business leaders to ensure that a control-tower approach is taken, operational activities are aligned with the overall business strategy, and signals are monitored collectively to ensure that systemic problems can be identified and solved. Failure to align activities and ensure that a control-tower is effectively in place to monitor performance and identify issues will result in a wider divergence between company objectives and supply chain functionality and performance.

WHERE IS THE PROBLEM

CAN WE FIX THE PROBLEM QUICKLY


As we analyse more closely the organisational dynamics, functional structures and management roles, we will identify where the problems and difficulties arise in managing the supply chain. The problems and difficulties to effective management lie fundamentally in the misalignment of key business processes, and the imbalances in the performance capabilities of the organisation.

These misalignments and imbalances are the direct consequence of both the lack of focused management leadership, and in the various independent changes made by stakeholders in the supply chain. Attention to these key elements, will immediately transform the organisation’s performance

capabilities. It may be surprising to read that these basic conceptual failings are being experienced in many companies, large and small. Left unaddressed for too long (as is often the case) realignment to restore the correct balance at later stages of strategic development will be costly and time-consuming.

All is not lost however. If every CEO or Senior Executive decision maker take a direct interest and commitment to working with the supply chain professionals in their organisation this backbone of any organisation can be made to perfume at its optimal level.

In Part 2 of this 6 part series we will elaborate on the principles of

managing supply chains. At the end of the day, business decision makers and supply chain professionals will better understand the value of a supply chain structure that supports the business goals of the organisation.

--------------------------------------This 6 part series on optimising Supply Chain performance is written by the Logistics & Supply Chain Management Society – www.lscms.org

THE SUPPLY CHAIN MANAGEMENT CHALLENGE

ABOUT THE AUTHORS

Stephanie Krishnan Raymon Krishnan Joe LombardoStephanie Krishnan is Academic Campus Director – South East Asia and lecturer for the University of Wollongong. She is conducting research in the area of national culture and supply chain management, and is a logistics and supply chain consultant.

Raymon Krishnan currently serves as President of The Logistics & Supply Chain Management Society. He sits on the board of several SME’s and works with local and multi-national companies to improve their business and supply chain performance.

Joe Lombardo with over 30 years experience in corporate global supply chains & logistics management, has founded ESP Consult. This consultancy is focused on Supply Chains Performance Management, Internal Trade Compliance Programs & Free Trade Agreements deployment.


Augmented reality (AR) is one of those terms you may have heard of but perhaps are not completely familiar with, especially compared to virtual reality (VR), its better known cousin. Whereas virtual reality completely immerses the user in a computer-generated environment, augmented reality maintains an existing physical reality but adds a digital element to create an environment that becomes a value-added mix of the real and the virtual.As a relatively nascent technology, commercial applications of augmented reality are stilll rare. One of the more well-known is the so-called smart fitting or digital dressing room. Here, the shopper, standing in front of an interactive screen, can “try on” multiple clothing items, each time seeing her physical reality augmented by a digital image of the selected fashion piece.

Over in the logistics arena, DHL recently trumpeted the success of a pilot project involving the use of augmented reality for warehouse order picking. For three weeks, 10 workers at a DHL customer (Ricoh) facility in the Netherlands were equipped with smart glasses (including Google Glass) that displayed information, such as aisle number, location, and product quantity, necessary for order picking. With the smart glasses on, each operator could still see the physical reality of the warehouse aisles and racks, but augmented by a superimposed AR code in the form of a graphical work instruction telling him where to go, how many

items to pick and where to place in his trolley. And the result? With 9,000 orders comprising 20,000 picks fulfilled over the three weeks, the faster, hands-free picking enabled by the AR technology delivered an impressive 25 percent increase in productivity compared to the facility’s usual pick practice of RF scanning.

Aside from the warehouse, there are other areas where augmented reality could potentially help to increase logistics efficiencies. For instance, in transportation, AR could enable rapid, hand-free checking of pick-up loads by a driver using smart glasses to rapidly scan items for collection and then given instructions on where to place the loads inside the vehicle.

While it may be some time before AR-based picking comes to a warehouse near you and replaces technologies such as RF scanning or voice systems, with warehouse owners constantly looking to boost productivity and reduce error rates in an environment of increasingly high-frequency, small order pick operations, augmented reality is one technology worth keeping an eye on. ---------------------------------Bob Gill is General Manager, Southeast Asia, ARC Advisory Group www.arcweb.com

Keep an Eye on Augmented Reality

The Last Word Ử



events

1 GCC Supply Chain & Logistics Conference 2015, Oman

April 13-16th, 2015www.alnimrexpo.com/gccscl

3 Retail World Asia 2015 – Singapore

April 22-23rd, 2015www.terrapinn.com/exhibition/retail-world-asia

6 GLCS LogiSYM Malaysia 2015 – Kuala Lumpur, Malaysia

October 7-8th, 2015glcs-2015.logisym.com/

9 BioPharma India Convention 2015 – Mumbai, India

November 3-4th, 2015www.terrapinn.com/conference/biopharma-india

5 Supply Chain Logistics Professional Networking – Hong Kong

June 11th, 2015 (6.00pm – 8.00pm)[email protected]


August 20th, 2015 (6.00pm – 8.00pm)[email protected]


November 17th, 2015 (6.00pm – 8.00pm) [email protected]

2 Home Delivery World Europe 2015 – London

April 28-29th, 2015www.terrapinn.com/conference/home-delivery-world-europe

4 PARCEL-EXPO Asia Pacific – Singapore

May 13-14th, 2015www.parcel-expo.com


October 15th, 2015 (6.00pm – 8.00pm)[email protected]

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Documents

Logisym Magazine - April 2015