the port of le havre and renault

L E S C O L L E C T I O N S D E L ’ I N R E T S

THE INTEGRATION OF PORT OPERATORS IN THE AUTOMOTIVE SUPPLY CHAIN:“THE PORT OF LE HAVREAND RENAULT”

Valentina CARBONEMarcella DE MARTINO

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Rapport n°251Octobre 2003

Prix : 15,24 €Valentina Carbone, DépartementEconomie et Sociologie des Transports(DEST), est Doctorante à l’ EcoleNationale des Ponts et Chaussées (ENPC).

Marcella De Martino est Chargée deRecherche à l’Institut de Recherche sur les Services (IRAT), du Conseil Nationaldes Recherches (CNR), Italie.

ISSN 0768-9756ISBN 2-85782-592-7

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Reducing operational costs and modernisinginfrastructures do not seem to be the onlyfactors determining the competitive posi-

tioning of a port which is becoming increasinglydependent on external co-ordination and control.Does the Port of Le Havre play a crucial role inRenault's automotive supply chain? What integra-tion level exists between Renault and its maintransport and logistics providers involved with thePort? How can the Port Authority enhance theattractiveness of the Port for both automakers andtransport operators?These are the main questions addressed in thisreport, based on in-depth interviews with Renault,CAT, Wallenius, Hual-CETAM, CMA-CGM andthe Port Authority of Le Havre.

La réduction des coûts d'exploitation et lamodernisation des infrastructures ne sem-blent plus être les seuls facteurs détermi-

nant le positionnement compétitif d'un port. Cepositionnement dépend de plus en plus de la coor-dination et du contrôle des flux et des relations enamont et en aval du port. Dans ces nouvelles logiques, quel rôle joue le Portdu Havre dans la chaîne automobile de Renault ?Quel est le niveau d'intégration entre Renault et sesprincipaux fournisseurs de transport et de logis-tique concernés par le Port ? Quels sont les moyensde l'Autorité Portuaire pour améliorer l’attractivi-té du Port à la fois pour les constructeurs automo-biles et pour les opérateurs du transport ?Ce sont les questions posées dans cet ouvrage, issud'un travail de recherche basé sur des entretiensavec Renault, CAT, Wallenius, Hual-CETAM,CMA-CGM et l'Autorité Portuaire du Havre.

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Valentina CARBONEMarcella DE MARTINO

The integration of port operators in the AutomotiveSupply Chain : « The Port of

Le Havre and Renault »

Rapport INRETS n° 251Octobre 2003

Les auteurs :

Valentina Carbone est Doctorante ENPC/INRETS-DESTmél : [email protected] De Martino est Chargée de Recherche IRAT-CNR-Italiemél : [email protected]

L’Unité de recherche :

Département Economie et Sociologie des Transports (DEST)2, avenue du Général Malleret – Joinville – 94114 Arcueil cedex

Ce rapport a bénéficié des commentaires et remarques des référés suivants :

Eddy Van de voorde, Professeur à l'université d'Anvers UFSIA-RUCAElisabeth Gouvernal, Directrice de Recherche au Département Economie etSociologie des Transports – DEST

Institut National de Recherche sur les Transports et leur Sécurité

Service des publications : 2, avenue du Général Malleret-Joinville94114 ARCUEIL CEDEX Tél. : 33 (0)1 47 40 70 74 – Fax : 01 45 47 56 06www.inrets.fr

© Les collections de l’INRETSN ° ISBN 2-85782-592-7 N° ISSN 0768-9756

En application du code de la propriété intellectuelle, l’INRETS interdit toute reproduction intégrale ou partielle duprésent ouvrage par quelque procédé que ce soit, sous réserve des exceptions légales.

Rapport INRETS n° 251 3

Fiche bibliographiqueUR (1er auteur) Projet N° Rapport INRETS N° 251Département Economie et Sociologie des Transports (DEST)

TitreL’intégration des opérateurs portuaires dans la supply chain automobile: « Le Port du Havre etRenault »

Sous-titre LangueAnglais

Auteur(s) Rattachement ext.Valentina Carbone, Marcella de Martino Inrets

IRAT-CNR (National ResearchCouncil, Italy)

Nom adresse financeur, co-éditeur N° contrat, conv.

Date de publicationOctobre 2003

Remarques

RésuméLa recherche proposée porte sur le rôle du Port du Havre dans la « supply chain » de Renault.

Il s’agit d’une analyse qui implique la prise en compte des caractéristiques de la chaîne automo-bile et des ports en tant que maillons impliqués dans plusieurs supply chain. En particulier, nousconsidérons un port comme un groupe d’organisations liées par l’offre de services intégrés pourla création de la valeur tout au long de la chaîne.

Une des finalités majeures de cette recherche est d’ordre méthodologique. Nous avons testé unmodèle analytique fondé sur les principes du Supply Chain Management. Ce modèle vise à ana-lyser le rôle des acteurs impliqués dans une chaîne dans la création de la valeur pour le clientfinal. L’hypothèse du Supply Chain Management, et donc de cette recherche, repose sur le faitque plus l’intégration entre les acteurs est élevée plus leur contribution à la création de la valeurest forte.

Cependant, au-delà de l’intérêt purement méthodologique de cette recherche, le coté empiriqueest très développé et porte notamment sur les variables de gestion mobilisées par Renault et sespartenaires logistiques concernés par le Port du Havre (CAT, Wallenius, Hual-CETAM, CMA-CGM).

Mots clésSupply Chain Management, Automobile, Ports, Intégration

Nb de pages Prix Bibliographie104 15,24 € oui

4 Rapport INRETS n° 251

Publication data formUR (1st author) Projet N° INRETS report N° 251Department of Transport Economics and Sociology (DEST) CNS-2T

TitleThe integration of port operators in the Automotive Supply Chain: « The Port of Le Havre andRenault »

Subtitle LanguageEnglish

Author(s) AffiliationValentina Carbone, Marcella de Martino Inrets

IRAT-CNR (National ResearchCouncil, Italy)

Sponsor, co-editor, name and address Contract, conv. N°

Publication dateOctober 2003

Notes

SummaryThis Research deals with the role of the Port of Le Havre in the supply chain of Renault. Such analysis involves both the features of the automotive supply chain and the role of ports as

crucial links in supply chains. In particular, we refer to a port as a cluster of organisations mutual-ly linked by the provision of integrated services for higher value creation along the supply chain.

The aim of this work is to investigate if and how a port can face the challenge of greater inte-gration, on the assumption that the greater the integration between the actors, the greater thecompetitiveness of the whole supply chain. In this purpose a Supply Chain Management frame-work has been applied, through which the behaviour of different private operators offering theirservices to Renault and concerned with the Port of Le Havre have been examined.

Thus, the main results of the research consist of some theoretical premises for an innovativeanalysis of ports in supply chains, on the basis of the organisational and managerial approaches.

However, beyond the merely methodological interest of this research, we developed an empiri-cal analysis dealing with the managerial variables mobilized by Renault and its logistical partnersacting through the Port of Le Havre (CAT, Wallenius, Hual-CETAM, CMA-CGM).

Key wordsSupply Chain Management, Automotive, Ports, Integration

Nb of pages Price Bibliography104 15,24 € yes

Table des Matières

Acknowledgements 7

Introduction 9

1. Supply Chain Management 131.1 A review of definitions of SCM 131.2 Lambert tri-dimensional model 16

2. The research context: the Automotive industry and Ports 192.1 Mayor Trends in the Automotive Industry 19

2.1.1 Logistics and “make or buy” strategies 212.2 The new role of Ports: from transit point to logistics platform 25

2.2.1 Ports in the automotive supply chain 27

3. A process approach for the analysis of the integration of port operators in the Automotive supply chain 29

3.1 The suitability of a process approach to our survey 293.2 Lambert revised model 31

4. The empirical analysis: the features of the Renault Supply Chain and port operators’ responses 35

4.1 Renault Network Structure 354 1.1 Procurement Network Structure 374 1.2 Distribution Network Structure 39

4.2 Renault Business Processes 414.3 Port operators’ responses: the SCM components 45

5. Possible supply chain evolution at the micro and macro levels 515.1 The potential role of the different actors 51

5.1.1 Supply Chain dynamism and focal firm influence 525.2 The current and future role of the port of Le Havre in the Automotive S.C. 55

5.2.1 The Ro/Ro traffic: trends, markets and operators 565.2.2 The policy actions of the Port Authority 605.2.3 The future role of Le Havre in the Automotive S.C. 63


Conclusion 67

• References 71

• Abridged version in French / Synthèse 75

• Appendix 81


Acknowledgements

This study was made possible through the co-operation of many industryexperts, practitioners and researchers, all of whom, we would like to thank fortheir time and support in assisting our research.

In particular we would like to thank the following contributors:Jean Michel Blanchet, Le Havre Port Authority, Head of the Ro-Ro

Department; Cyril Chedot, Le Havre Port Authority, Development Manager;Dominique Chenet, CAT, Vehicle Logistics; Agens Desalmand, Renault –Boulogne, Overseas Flows at the “DDI”; Pierre Devalois, CAT, Manager of Deep-Sea Operations, Resource Development Dpt; Pascal Devernay, Renault – GrandCouronne Logistics Platform, Site Director; Georges Fassio, Professor atUniversity of St. Nazaire; Jean-Luc Furio, HUAL-Cetam, General Manager;Elisabeth Gouvernal, Senior researcher at INRETS; Thibault de Keghel, HUAL-Cetam, Business Development Manager; Xavier Langlois, CMA-CGM, Manager;Alfonso Morvillo, Research Director at IRAT-CNR, Italian National ResearchCouncil; Christophe Santoni, HUAL-Cetam, President; Roger Soulieux,Professor at Esc-Le Havre; Samir Takhedmit, Contship – TMM Lines FrenchSales Manager.


Introduction

The globalisation of production, the expansion of consumption and trade,innovations in transport technologies and communications – together with theport liberalisation process – have drastically modified port functions in the last10 years. Having started as merely an interface site for cargo between land andsea transport, then becoming a transport, industrial and commercial servicecentre, today’s “third generation port” is a dynamic node in the internationalproduction and distribution network.

Contextually, the role of the Port Authority has been considerably reduced tothe benefit of private operators. In most European countries, the Port Authoritiesare no longer involved in operations (operating the port), but deal with planningthe land to be used, building infrastructures, promoting port development,controlling free competition within the port and applying all the criteria forreducing the environmental impact of port activities (landlord port authority).

Additionally, ports also appear to be in continuous evolution with regard to thephysical organisation of space: changes in transport and handling technologieshave increased demand for operational areas, with the aim of avoidingoperational inefficiency and increasing the range of value-added logisticservices.

Concerning logistics and transport operators, the use of ICTs plays a crucialrole both in the realisation of global strategies (wider geographical coverage,multimodal operations, and more complete services covering all logisticsactivities) and in the fostering of vertical co-operation along the supply chain.Advance in ICTs allows the spread of the SCM model, as ICTs significantlyimprove information exchange in terms of lead-time, completeness andtransparency.

The aforementioned factors have made ports more competitive. However, ontheir own, the reduction of the operational costs and the modernisation ofinfrastructures do not seem to be enough to determine the competitivepositioning of a port. In fact, port selection does not depend exclusively on costs,but on the range and quality of the supplied services and on the port’s ability toact as a logistics platform. The type of supplied services is directly linked to theproduction and distribution systems that are considered to be the port’s “mainclients”. One of the leading industries that is influencing Ports to move towardsthe logistics platform model is the automotive industry. Multidisciplinary studies ofdifferent aspects of this industry’s activity have been carried out. The presentreport presents the main changes in logistics management deriving from therapid changes and developments which have marked the automotiveenvironment at different levels: consumer expectations (higher productcustomisation), legislation (liberalisation of distribution), car-makers behaviours


(mergers and acquisitions) and business models (e-commerce). To summarise,the new challenge auto-makers are facing is about “optimising the completepipeline by establishing a seamless supply chain to maximise market share andcustomer value”.

This research investigates the role of a port in pursuing such integration andthe level of response within the automotive supply chain. In particular, we see aport as a cluster of organisations mutually linked by the supply of integratedservices for higher value creation.

The approach proposed for carrying out our research is that of Supply ChainManagement, through which a port develops its own activities and competenciesin the effort to satisfy both the demand of port users and specific marketsegments (car-makers). To this end the analysis has been conducted at twolevels:

(1) At microeconomic level, to investigate the private port operators’behaviours in the pursuit of customer satisfaction;

(2) At macroeconomic level, to investigate the strategic planning conductedby the Port Authority.

Regarding (1), i.e. the analysis at micro-economic level, we refer to the abilityof each service provider to answer the demand requirements via a suitableportfolio of services and products.

With reference to (2), i.e. the port’s strategic planning, such decisions relateto the port infrastructures, to the concession of dedicated terminals and to theirconnection to the hinterland transport system. Such choices have to beconsistent with port users’ needs and with the final customer’s requirements.

We will concentrate on the micro level analysis. To this purpose we will applya Supply Chain Management framework, through which the behaviour ofdifferent private operators offering their services to Renault and active at the Portof Le Havre will be examined. The literature concerning SCM proposes variousmodels for analysing industrial and commercial firms, but they fail consider theport as a crucial link in a supply chain and as a cluster of organisations.Therefore, after a literature review on SCM (cf. 1.1), we will present the analyticalmodel developed by D.M. Lambert (cf. 1.2). We shall then demonstrate that thismodel is theoretically suitable for our research aim (cf. 3.1), but it willnevertheless be revised in the light of the advice of some experts (cf. 3.2); it willthen be tested on our specific case: the Renault supply chain involving the portof Le Havre. The dual research context will be described in Section 2. Withreference to the context and the chosen methodology, we will design adescriptive tool, namely a matrix to be used as a screening tool for analysingintegration in the supply chain, by matching the focal firm’s (i.e. Renault’s)requirements (cf. 4.1 and 4.2) to the port operators’ responses (cf. 4.3).

In section 5 we will introduce the main findings from the field work, concerningboth the micro and the macro analysis. Different levels of integration among the

The integration of port operators in the Automotive Supply Chain


actors will be shown, relating to the procurement and distribution halves ofRenault’s logistics flows. Some scenarios are also presented concerning theevolution of the relationships among the actors in the supply chain (cf. 5.1). A fewcomments are also made on the new Port Project 2000, emphasising the activerole of the Port Authority in shaping the Port of Le Havre’s specialisation inautomotive logistics (cf. 5.2).

With regard to the descriptive tool deriving from the present report, we willsuggest that the SCM Matrix can be used both by the Port Authority whenconsidering what path to follow in building and improving port competencies, andby logistics and transport operators, in order to determine how to better integratetheir activities within the supply chain itself.

Introduction



Supply Chain Management

1. Supply Chain Management

1.1 A review of definitions of SCMOne of the most important changes in modern business management is that

individual firms no longer compete as solely autonomous entities, but rather assupply chains. Martin Christopher (1998) defines the supply chain as the networkof organisations that are involved, through upstream and downstream linkages,in the different processes and activities that produce value in the form of productsand services in the hands of the ultimate consumer1.1

Business management has entered the era of inter-network competition andthe success of the single firm will depend on management’s ability to integrate thecompany’s intricate network of business relationships (Christopher, 1998). Themanagement of multiple relationships across the supply chain is referred to as“supply chain management” (SCM); strictly speaking, the supply chain is not achain of businesses with one-to-one, business-to-business relationships, but anetwork of multiple businesses and relationships.

Some authors distinguish supply chain management from vertical integration– the latter concept implying ownership of the activities of upstream suppliers anddownstream customers. This form of organisation is becoming less desirable asa strategy for success, in fact more and more organisations are focusing on theircore competencies and outsourcing most of the others. Indeed this growth inoutsourcing reflects the more general evolution of relationships between buyersand suppliers from an adversarial model to a more partnership-based model.

Mentzer et al. (2001), propose a review of the definitions of SCM by classifyingthe literature into three categories: studies in which SCM is a managementphilosophy, ones in which it is the implementation of a management philosophyand ones in which it is a set of management processes2. 2

1 The concept of value has been studied for long time in economics, although a univocal definition doesnot yet exist. The exact definition can, in fact, vary according to the theoretical discipline, the aim of theinvestigation, and the analysis perspective. In this study we adopt the value concept derived from thecustomer-consumer perspective. Creating value therefore rests on the understanding and interpretationof customer perceptions and demands, as well as on the ability of the supply chain members to offerproducts and services with attributes that are deemed to be in the customer’s interest, such as quality,efficiency, innovation and responsiveness (Porter, 1985; Johansson et al., 1993). A value adding activityis, therefore, an activity along the chain that adds value to the product or service and which the finalcustomer is willing to pay for.2 See also Tan K.C., 2001, “A framework of supply chain management literature”, European Journal ofPurchasing & Supply Management (7), pp. 39-48.



SCM as a management philosophy stresses the importance of intrafirm andinterfirm co-operation in developing innovative and individualised solutions for thefinal customer. The supply chain is viewed as single entity rather than a set offragmented parts, each performing its own function.

All the supply chain members should have a customer orientation and thefunctions within a firm and within the supply chain should be synchronised tocreate customer value and satisfaction.

SCM as the implementation of a management philosophy refers to theactivities that create and stimulate supply chain management: integrated behav-iour, mutually sharing information, mutually sharing risks and rewards, co-operation, the same goal and the same focus on serving customers, integrationof processes, and partnerships to build and maintain long term relationships.

These activities are necessary to successfully implement an SCM philosophyand are fundamental to achieving the ultimate goals of SCM: lower costs,increased customer value and satisfaction, and, ultimately, competitive advantage.

Finally, SCM as a set of management processes focuses on the businessprocesses rather than the activities that constitute supply chain integration3: allfirms within a supply chain must overcome their own functional silos and adopt aprocess approach in reorganising their functions. La Londe (1998) proposes thatSCM is the process of managing relationships and information and material flowsacross enterprise borders to deliver enhanced customer service and economicvalue through synchronised management of physical goods flow and associatedinformation from sourcing to consumption. 3

A comprehensive definition of SCM is proposed by the Global Supply ChainForum. It clearly highlights the importance of the integration process in the supplychain, which is a common element in all the previous definitions: “... theintegration of key business process from end user through original suppliers thatprovides products, services, and information that add value for customers andother stakeholders”.

This broader understanding is illustrated in Figure 1, which depicts a simplifiedsupply chain network structure, its information and product flows, and its keybusiness processes penetrating both the functional silos within the company andthe corporate silos across the supply chain.

As already mentioned, the objective of SCM is to create the highest value forthe entire supply chain network, including the end consumer. Thus, the supplychain integration process and re-engineering initiatives aim at boosting totalprocess efficiency and effectiveness across the supply chain. In order to achievethis objective, key processes need to be identified and implemented within andacross the firms in a supply chain. Key business processes represent the best

3 The World Class Logistics Model (Global Logistics Research Team, 1995) defines “integration” along asupply chain as being a result of: Cooperation, Information sharing, IT system harmonization, Proceduresstandardization, Process reengineering.



way to realise integration and to synchronise the activities inside and outside thecompany. Consequently, every company has to co-ordinate its own primaryactivities on the basis of these business processes in order to obtain theadvantages of SCM (cost reduction, customer satisfaction and high profitability).

From an overall system perspective, SCM can be successfully implementedwhen at least three members of a supply chain have the so called Supply ChainOrientation, that is when companies share a common view on SCM drivers(factors enhancing or impeding an SCM approach) (see Table 1). 4

The factors that enhance the implementation of SCM are the essential pre-requisites to make co-operation work and to overcome such difficulties, such asdivergent objectives and search for short-term benefit. Only companies with aSupply Chain Orientation4 recognise the importance of collaboration and are

4 Supply chain orientation is defined as the recognition by an organisation of the systemic and strategicimplications of the tactical activities involved in managing the various flows in a supply chain.

Product flow

Customer service management

Customer relationship management

Demand management

Manufacturing flow management

Procurement

Product development and commercialization

Order fulfilment

Return

LogisticsPurchasing

Marketing& Sales

R & DFinanceProduction

Information flow

Tier 2 supplier

Tier 1 supplier Customer End customer/

Consumer

Manufacturer

Figure 1: Supply Chain Management: Integrating and managing processes across the supply chain

Source: Cooper et al., 1997.



therefore willing to integrate their own activities with those of the other actorsinvolved in a supply chain5. Companies implementing SCM must first have asupply chain orientation. 5

As is evident from the previous table, the implementation of a supply chainmanagement approach is a complex issue, involving the identification of supplychain members with whom it is critical to create links, the processes to beengaged in with each of these key members and the type/level of integration tobe applied for each business process.

1.2 Lambert tri-dimensional modelA conceptual framework to deal with the complexity of such issues has been

defined by Lambert (2001) and consists of three inter-related elements of thesupply chain:

(1) The structure, i.e. the member firms and their links.

(2) The business processes, i.e. the activities that produce value for thecustomer.

(3) The management components, i.e. the variables by which integration canbe achieved.

Concerning (1), the network structure describes the complex system ofrelationships between suppliers and customers at each level of the supply chain.Not all the links through the supply chain are relevant for the focal firm and, in thechoice of partners, the management has to determine which members are criticalto the success of the company6. 6

Table 1: SCM: drivers, implementation and effects

SCM drivers SCM implementation Effects

Willingness to address:– Trust; commitment.– Interdependence.– Organisational compatibility.– Vision.– Key process.– Leader

– Three or more contiguous compa-nies with a SCO.– Information sharing.– Shared risks and rewards.– Co-operation.– Similar customer services goals and focus.– Integration of key processes.– Long term relationships.– Inter-functional co-ordination.

– Lower costs.– Improved Customer Value and Satisfaction.– Competitive advan-tage.

Source: Based on Mentzer et al., 2001.

5 Concerning the importance of collaboration in SCM, see also Horvath L., 2001, “Collaboration: the keyto value creation in supply chain management”, Supply Chain Management: An International Journal,vol. 6, (5).6 The approach for differentiating between types of members is to some extent similar to how Porter (1985)distinguished between primary and support activities in his “value chain” framework.



To this end it appears useful to distinguish between the primary andsupporting members of a supply chain. The primary members of a supply chainare all those autonomous companies or strategic business units who carry outvalue adding activities (operational and/or managerial) in the business processesdesigned to produce a specific output for a particular customer or market. Incontrast, supporting members are companies that simply provide sources,knowledge, utilities and assets for the primary members of the supply chain.

The focal firm of the supply chain will choose companies who carry out value-adding activities (primary members) as they directly affect the final valuedelivered to a specific customer or market (Davenport, 1993).

Before describing (2), i.e. the supply chain business processes, it is importantto underline how the orientation towards customer satisfaction has led to a neworganisation of the supply chain, now decided downstream, that is to say drivenby the end customer. In particular, there has been a switch from pushed flows(upstream, forcing the flow downstream according to plans without consideringany particular demand) to pulled flows (goods flow being originated by the clientfirm’s demand)7. A pull supply chain places downward pressure on suppliers tobe more efficient and to operate for the common good (Cooper and Slagmulder,1997; Kaplan and Cooper 1998). In this environment, customers remain theprimary focus and managers have to allocate firm’s resources in a way that limitsuncertainty in customer demand. 7

The members of The Global Supply Chain Forum identified eight businessprocesses that should be implemented within the firm and then linked up, asappropriate, with key supply chain members.

7 In a push supply chain costs are transmitted up along the chain; input costs for the members of thechain are determined by the selling price of the preceding level (Hall and Braithwait, 2001). Conversely,a pull supply chain operates on the principle that, to deliver a product to the market at an affordable price,everyone in the chain has to ensure that operational costs and commercial structures support customersatisfaction.

Table 2: Key business processes and their characteristics

Main Characteristics

Customer relationship management

Identifies key customers or customer groups in order to establish the right level of performance for products and/or services.

Customer service management

Allows the firm to effectively satisfy customer requirements. The decisions related to the level of customer services generally deal with three headings pre-transaction elements, transaction elements and post-transaction elements

Demand management Balances customer’s requirements with the firm’s supply capabilities. Due to the high variability of demand, part of demand management involves attempting to determine what and when customer will purchase.



The business processes that are critical or beneficial to integrate and managebetween companies will likely vary. In any case, all functions affecting the productand providing information must work together. As a consequence, for somespecific activities (or functions), the choice of outsourcing rather than managingin-house will lead to an increasing need to co-ordinate supply chain processessince the focal firm will become more dependent on suppliers.

Finally with regard to (3), i.e. SCM management components, we refer to themanagerial variables by which the business processes are integrated andmanaged across the supply chain. Lambert (2001) divides management compo-nents into two groups: the first group, physical and technical, includes thetangible, measurable components, such as the management of product andinformation flows. The second group is composed of the managerial andbehavioural components such as organisational culture, the network of relation-ships between the firm and the other actors of the supply chain, connectedinformation sharing, etc.

In such an environment, it is evident that the management of a supply chainis particularly complex and requires a global understanding of all the elementsdescribed above.

Customer order fulfilment

Stresses the importance of effective integration of the firm’s manufac-turing, distribution, and transportation plans, in order to meet custo-mer requirements.

Manufacturing flow management

Deals with making the products and establishing the manufacturing flexibility needed to serve the target markets.

Procurement Defines how to interact with suppliers in order to satisfy customer requirements.

Product development and commercialisation

Identifies customer needs, selects materials and suppliers with a view to procurement, and develops production technology in order to supply the best “product-market” combination.

Returns It identifies what parts of the process have to be improved in order to meet increasingly high customer demands.

Source: Based on Croxton et al., 2001.

Table 2: Key business processes and their characteristics (suite)

Main Characteristics


The research context: the Automotive Industry and Ports

2. The research context:the Automotive Industry and Ports

The objectives of this section are to provide an overview of the major trendstaking place in the automotive industry and to highlight the new role played byports in the current economy.

Concerning the automotive industry, it is not a comprehensive but rather aconcise view of the main characteristics and behaviours of the major players,both auto-makers and suppliers, in managing the supply chain.

Regarding ports, we will try to show how their contribution to value creation insupply chain is increasing as the result of a switch from a role of transit point to arole of logistics platform.

2.1 Major trends in the Automotive IndustryIn recent years, rapid changes and developments have marked the automo-

tive industry at different levels: consumer expectations, legislation, and businessmodels.

Consumers have developed particular expectations as regards vehicle fea-tures, performance and safety. In addition to the basic models, a myriad offeatures can be added to each of the models, in order to satisfy increasingcustomer needs for a wide range of models.

Government trade, safety, and environmental regulations establish incentivesand requirements for modernisation and change in design or production.

Competitive rivalries and corporate strategies provide an equally importantimpetus for research, design innovations, and changes in the manufacturingprocess. Moreover, in any of the Triad regions (Western Europe, Japan, andUnited States) auto-makers have been facing a mature market for the past10 years, with stagnant demand, product proliferation, and hard price competition(Veloso and Kumar, 2002)8. 8

In this environment, ICTs are having a great impact on the structure of theindustry. On the one hand, they are speeding up the manufacturing process,increasing the amount of product customisation which the manufacturer isprepared to offer, reducing product life cycles and expanding the area from which

8 The demand for new cars has been growing on average less than 1 percent a year during the past10 years and this trend is forecast to continue.



materials can be sourced. The need for system compatibility is also reducing thenumber of viable manufacturer-supplier partnerships, and leading to closer long-term relationships. On the other hand, the main effect is the increase in consumerawareness of price and quality of service differences (Drewry Shipping Consul-tans, 2000).

In spite of increases in product variety and advances in technology, theindustry’s focus on lowering costs has never been as acute as today. In fact, toincrease car sales, all the marketing and innovation challenges must be met,while keeping costs down. All auto-makers are constantly under pressure toidentify consumer preferences, national biases, and new market segmentswhere they can sell vehicles and gain market share. Their ability to be flexibleenough to quickly respond to all these pressures determines their positioning inthe industry. Rising competitive pressures in terms of cost, quality, and speedhave led auto-makers (and first tier suppliers) to re-evaluate their corporatestructures.

To respond to new market trends and demands, auto-makers are pursuing aset of strategies that are common among major firms (Euro-CASE, 2000). Theyare leveraging their core business (focus on core competencies) and reducing thevertical scale of production (outsourcing non-core competencies). Consequently,integration with capable systems and module suppliers has become a key factorfor success (Camuffo and Volpato, 1999).

First, they are adopting a global perspective in their operations. Auto-makersare now planning operations on a global scale, with models being launched at thesame time in different locations with similar standards but with a focus on localrequirements. As a consequence, they are undertaking a reorganisation of theirvehicle portfolio around product platforms and car modules and systems. Byacting on common platforms and using interchangeable modules, auto-makersare able to implement solutions across the whole product range more rapidly andat lower cost, while tailoring vehicles to suit a multitude of consumer tastes andpreferences all over the world. In this way, they can assure enough differentiationbetween products while maintaining the scale efficiency of the production process(Lung et al., 1999).

Second, as auto-makers are expanding globally and moving into localmarkets, first tier suppliers are requested to follow their customers not only inorder to stay cost-competitive but also to be able to deliver vehicle parts andcomponents in time. The need for a global presence and systems capability hasled to a series of strategic alliances and acquisitions between auto-makers andfirst tier suppliers.

This reorganisation of the supply chain encompasses all processes fromprocurement of raw materials, manufacturing and assembly, distribution acrossthe channels, up to the final delivery of the product to the consumers. Successfulsupply chain management is contingent upon the ability of managers to synchro-nise the physical and information flows both within the firm and among the otheractors of the supply chain.



The new challenge auto-makers are facing is about “optimising the completepipeline by establishing a seamless supply chain to maximise market share andcustomer value” (Doran, 2001). This need for flexibility and responsivenessfundamentally affects the business processes of auto-makers as well as theirsuppliers and has dramatic implications on the automotive supply chain (Table 3).

As the automotive supply chain strives to become more responsive toconsumer demands, all the business processes are reorganised in order toenhance customer value. In fact, the shift from a forecast-based to consumption-based production system results in all production steps being directly linked totrue customer demand.

In this way, auto-makers can produce at the same rate as customers are using(or pulling) the product. This requires a high synchronisation between all thefunctions of the supply chain, finding and eliminating constraints or bottlenecks ina never-ending effort to improve the efficiency of the total process (Moritz, 2001).

2.1.1 Logistics and “make or buy” strategiesTraditionally, the automotive supply chain was organised in tiers. Auto-makers

designed and assembled the car. First tiers manufactured and supplied compo-nents directly to the auto-maker. Second tiers produced some of the simplerindividual parts for inclusion in a component manufactured by a first tier, andfinally third and fourth tiers mostly supplied raw materials.

The logistics function was directly controlled by auto-makers which conse-quently developed logistics expertise and know-how to support their industrialand commercial activities. As these tasks became more and more complex anddistinct from auto-makers’ core business, some subsidiaries were created inside

Table 3: Traditional vs. Modern supply chain

Traditional Modern

Procurement Long lead times.Great number of suppliers.

Synchronisation/responsiveness.First tier supplier.

Inventory High stock control.Centralised.

Condensed stock levels.Decentralised.

Manufacturing Push systems based on annual sales forecast.

Pull systems based on customer orders.

Physical Distribution

Slow and fragmented.Dealer-owned.

Faster and reliable.Home delivery.

Commercial practices

Sales from stocks.Mass approach non differentiated.

Build to customer order.High customisation.

Based on various sources.



the groups in order to re-organise and manage the logistics function. Forexample, Renault created CAT (Compagnie d’Affrètement et de Transport) in1957, in order to deliver its vehicles internationally.

At present, European auto-makers vary in their attitude towards the outsourc-ing of logistics. Some companies such as Renault and Ford have made a largecommitment to the use of third party logistics managers9, but for other companiessuch as Toyota or VW, logistics is a strategic know-how that effects theproductivity of the assembly process and both the reliability and the security ofdeliveries. It is therefore imperative to keep logistics functions in-house. 9

As a result, the need to decide whether to outsource or manage logisticsactivities in house has led to four different strategies (Eurostaf, 2002):

– The internal solution: a subsidiary is created, to handle all the logisticaltasks and arrange logistics services with its own resources (warehouses,containers, and fleets of trucks and wagons). In this way, the auto-makermanages logistics in house (example: VAG or PSA10). 10

– Subcontracting logistical tasks: the auto-maker defines the logistics solu-tions while subcontracting the transportation outside the group (example:Toyota).

– Outsourcing to a principal supplier: the auto-maker develops a long termrelationship with an independent logistics provider for transport and otherspecific logistics services (example: Renault).

– Turning to a logistics integrator: the auto-maker contracts the organisationand management of logistics with a logistics provider (example: Ford).

Table 4: Main advantages and disadvantages in outsourcing logistics

Advantages Disadvantages

– Specialised know-how of the supplier.– Reduction of logistics costs.– Lowering of the break-even point by transfor-ming fixed costs into variable costs.– Focusing on core business.

– Suppliers lack experience in industrial opera-tions.– Loss of autonomy and flexibility due to the dependence on supplier performance.– Difficulty to monitor and control logistics costs.

Source: Our elaboration on different sources.

9 For these auto-makers, logistics is not part of their core business. It is therefore advantageous toentrust the realisation of it to specialised providers: the outsourcing permits to reduce the logisticscosts while avoiding the dissipation of firm’s resources.10 PSA is the company formed by the merger of Peugeot and Citroen. In 1974 Peugeot bought its first30% share of Citroen and in 1976 completed the take over; since then the new company has beencalled PSA.



These four strategies imply an increasing degree of integration between theauto-maker and third-party logistics providers11. Generally, auto-makers do notadopt just one of these strategies, they tend rather combine two or three, even ifone dominates. 11

For example, Saab has expanded wheel assembling and warehousing linkswith Exel to include a 10 year contract for receipt, storage and sequencing ofcomplex parts at an assembly centre in Sweden (www.automotivelogisticsmaga-zine.com, 2002).

Automotive Consumer Services Group, Ford’s after-market division, hasengaged Schneider Logistics to manage transportation for the group’s supplychain in the United States and Europe.

However, auto-makers still tend to split the supply chain into two halves(inbound flow of components and outbound flows of finished vehicles) fordecisions concerning outsourcing. So far, attempts to reduce production costshave concentrated on the “upstream” processes before the car rolls off theassembly line, as this is where two-thirds of the final cost is incurred (see Table 5).

11 The role of Third Party Logistics Managers (TPLM) in the automotive industry is more difficult todefine than in other sectors because of the range of value added services which some of themprovide. These extend from basic functions such as packaging, quality control, and telecommunica-tions through customs clearance and bonded warehousing, to simple module assembly.

Table 5: Typical Cost Breakdown for Producing and Distributing a Car (%)

Item % of sales price

Components 30%

Assembly plant wages 20%

Manufacturers overheads 8%

Manufacturer’s gross margin 10%

Total: production costs 68%

Distribution costs 4%

Warranty 3%

Manufacturer’s marketing expenses 5%

Dealers marketing expenses 5%

Dealer’s gross margin 15%

Total: distribution costs 32%

Source: A.T. Kearney, 1999.



To be able to focus more on car-related services and to cope with the hugecosts associated with an ever growing number of new modules and systems,auto-makers are becoming less involved in manufacturing, passing the responsi-bility of developing, manufacturing and assembling important sections of the caronto a few first tier suppliers (Collins et al., 1997). In this process, first tiersuppliers organise the flow of components from lower level suppliers, effectivelytaking on an important logistics management role in the supply chain. As a result,first tier suppliers are gradually becoming system integrators12, blurring theboundaries between the manufacturing of parts and the marshalling of compo-nents. 12

“Downstream” logistics – the distribution of the finished car to the customer –applies different organisation models, in part because the existing regulatoryframework gives auto-makers less power over their dealers than over theirsuppliers. This has led auto-makers to exercise different degrees of control overthe distribution of their vehicles, according to the type of distribution channel:quite a low degree of control over independent franchised dealers, the highestdegree of control in the case of direct ownership of retail outlets.

The expiry of the Block Exemption from EU competition rules in 2002 is goingto have significant effects on the future shape of dealer networks:

– Dealers are now allowed to sell the products of more than one auto-maker(multi-franchising) providing that premises and management are separate.

– Dealers can sell parts provided by organisations other than the auto-maker,providing they are of equivalent quality, and are used only for vehiclesoutside their warranty period.

– Auto-makers must supply technical information to independent garageswhich will allow them to compete with franchised dealers for after-salesservices.

– In addition, logistical make or buy decisions are also influenced by thedevelopment of ICTs, as they can improve the efficiency of information flowmanagement. Although ICT linkages between auto-makers and first tiersuppliers are improving, linkages between the upstream and the down-stream segments of the supply chain are still poor. Most dealers have weakinternal IT systems which will require improvement, as their territoriesbecome more extended and direct selling techniques are replaced by “e-sales”. Moreover, today the networking environment between suppliers andcar manufacturers is not yet sufficiently standardised and automated13. 13

12 A System integrator is a supplier capable of designing and integrating components, sub-assemblies, and systems into modules that are shipped or placed directly by the supplier in the auto-makers’ assemblyplants.13 Many suppliers (particularly at second and third tier level) are not equipped for EDI, or have refusedto adopt the EDI standards recommended for the automotive industry (ODETTE and EDIFACT),especially those who are also supplying other sectors of the economy which use different IT standards(Automotive Logistics, 2002).



While sophisticated technologies are emerging with the objective of generat-ing a responsive supply chain, no one package or single solution can address themultiple links in the automotive supply chain. The real challenge in Supply ChainManagement will not so much be technological, but rather contingent oncompanies’ ability to establish the appropriate organisational structures.

2.2 The new role of Ports: from transit point to logistics platform

Ports have been natural transhipment sites where goods are transfered fromone mode of transport to another. Historically, they have provided the linkbetween maritime and inland transport, the interface between the sea and rivers,roads, and railways.

At present, ports play an important role in the management and co-ordinationof materials and information flows, as transport is an integral part of the supplychain. The objectives thus become to create synergies, as well as converginginterests between the players of the port community in order to guaranteereliability, continuous service, and a good productivity level. In the area ofmaritime transport, reliability and productivity are collective concepts stemmingfrom a multiplicity of contributors.

In order to develop as logistics platforms, ports have to simultaneously workin several directions, by taking into account the requirements of new businesspartners such as the senders and receivers of goods, in addition to the traditionalones such as the shipping companies, terminal operators, forwarding companies,etc. The requirements for seaport services are growing accordingly: physicalaccessibility from land and systematic organisation of the information flow aredecisive factors for the industry with regard to the choice of a seaport (Herfort, R.et al., 2001).

Subsequently, the competitive position of a port is not only determined by itsinternal strengths (efficient cargo handling and hinterland connections) but it isalso affected by its links in a given supply chain. As a consequence, the risk forports of losing important customers can derive not only from deficiencies in portinfrastructures, terminal operations and inland connections, but also from thecustomer’s network reorganisation and its entry into new partnerships withlogistics services providers, which may be using a different hub. In other wordsport competitiveness is becoming increasingly dependent on external co-ordina-tion and control of the whole supply chain (Huybrechts et al., 2002).

In a wide sense, ports are complex entities supporting the procurement of rawmaterials and the manufacturing and distribution of finished goods. They arepotentially members of different supply chains. Their contribution to the satisfac-tion of specific customer’s requirements, and therefore their potential role in agiven supply chain will depend on:

(1) The availability of efficient infrastructures and inland connections, as partof a total transport system.



(2) The ability of logistics and transport operators to contribute to valuecreation and also achieve the qualitative attributes of demand (reliability, punctu-ality, frequency, availability of information, and security)14. 14

Topic (1) will be dealt with in section 5.2. We shall deal with (2), i.e. the servicecharacteristics leading to higher value creation, in section 5.1.

In particular, we shall develop our “two-step” analysis by considering the inter-relation between the cargo handling system, the transport system and thelogistics system in ports. Figure 2 should be interpreted starting from the lowerpart (cargo handling system, part of the Transport system) which shows thetraditional function and role played by ports. The second step at the upper level,that is the logistics system, is the area where the added value services can givea port a prominent role in a given supply chain.

In more detail, cargo-handling system consists of all the activities, such aspilotage, towing and stevedoring, that facilitate the loading and unloading ofcargoes. Cargo handling is strongly linked to the transport system and istherefore also part of the logistics system, since logistics encompasses transport.

14 See also Stank T.P. and Goldsby T.F., 2000, “A framework for transportation decision making in anintegrated supply chain”, Supply Chain Management: An International Journal, vol. 5, n˚ 2, pp. 71-77.

Logistics system

Compo-nents

V.A.S Storage Assembling Customer

Transport system

DeliveryShipping Cargo handling

Cargo handling system

Towing Unloading LoadingStoragePilotage

Figure 2: The relation between cargo handling, transport and logistics.

Source: P.W. De Langen, 2001.



The necessity of temporary storage in ports and the presence of efficienttransport services (shipping and intermodality) make ports potentially attractivelocations for logistics activities. As a result, the transport chain can become moreand more integrated within the production system, and as far as internationaltrade is concerned, within the trading pattern itself. This is a concept under whichthe transportation and distribution activities are considered as a sub-system of thewhole production system. Indeed, ports are more and more turning into integratedtransport centres and logistic platforms for international trade15. 15

After this description of the general trends that mean that ports are functioningas logistics platforms and as parts of integrated supply chains, we shall now turnour attention to the automotive supply chain.

2.2.1 Ports in the automotive supply chain

There are two principal types of cargo in automotive supply chains; individualparts or components on the one hand, and finished cars on the other. The partsor components are mainly shipped in standardised transport units such ascontainers or swapbodies. Up till now, finished cars have rarely been transportedin containers. In most cases they are carried on special land and sea transportequipment such as carrier vessels or specially designed trucks or railwaywagons.

With regard to these two types of cargo, it is important to underline that portshave a decisive role in the movement of finished vehicles. This is due to the factthat most of the value added services in port operations depend on the need forstorage of imported vehicles in the port area. These services are generally relatedto damage inspections, waxing and dewaxing, polishing, and go as far ascustomisation and body conversion (Holweg et al., 2001).

Procurement and pre-assembly stages, however, are taking on considerablesignificance and may well shape the future development of ports. For example, atSeaport Terminals/Katoen Natie in Antwerp, the value added services go furtherback down the supply line and include pre-assembly for car dashboards andwiring (Drewry Shipping Consultants, 2000).

As an additional example of the increasing role of ports in the automotivesupply chain, seaport will even disasssemble imported cars for special exportmarkets, in order to avoid high tariff barriers, and reassemble them later.

With increasing modularisation, port operators will benefit from being involvedin several stages of overseas or short sea supply chains. The same importedcomponents or parts are shipped out as larger components and then back againas a complete module or finished cars (Herfort, R. et al, 2001).

15 The World Bank (2001) describes this evolution defining what it called the “third generation ports”:after having been at first merely an interface location for cargo between land and sea transport, nexta transport, industrial and commercial service centre, the “third generation port” is a dynamic node inthe international production/distribution network.



As far as auto-makers are concerned, they will continue to find ports attractiveuntil new value added services can be conveniently supplied, without anyincrease in delivery times.

All these considerations led us to argue that the improvement in the port’soperational efficiency is not on its own enough to satisfy both the port users andthe final client of the supply chain. A comprehensive approach is needed tohighlight the contribution of both the operational system and the managerialorganisation within the entire supply chain.


A process approach for the analysis of the integration of port operators

3. A process approachfor the analysis of the integration

of port operators in the automotive supply chain

This work is an attempt to analyse how port operators16 are involved in a givensupply chain. To perform it we have adopted a methodology based on a processapproach. 16

Accordingly, we will try to describe the integration process undertaken bydifferent port operators in relation to the focal firm of the automotive chain, takinginto consideration (among other variables) the kind of services offered by portoperators, namely whether they belong to the cargo handling system, the moreextended transport system or the logistics system.

The kind of supplied services determines the extent to which a port creates valuein a supply chain and, raises the issue of whether it could offer more value, forexample by investing more in a certain activity than in another (Cooper et al., 1998).

In our research, the port is considered as a cluster of organisations, in whichdifferent logistics and transport operators are involved in adding value for the finalconsumers. As we have already mentioned, adding value consists of creatinggreater customer satisfaction. Thus, this higher value comes into play when a portoperator, or more generally, a logistics supplier, goes beyond the mere transport ofmerchandise, which could be defined as the basic service, and provides a packageof logistics services differentiated on the basis of the customers’ requirements. Avalue adding activity is, therefore, an activity along the chain that adds value to theproduct or service and which the final customer is willing to pay for.

3.1 The suitability of a process approach to our survey

We chose a process approach of this type for our analysis on the basis of:theoretical considerations (1), the specific research context (2) and lastly thesubject of the research (3).

16 We have used the term “port operators” in a wide sense, meaning all the operators supplyingtransport and logistics services and having a direct or indirect link with the activities performed in theport of Le Havre.



From the theoretical point of view (1), the literature suggests that a processapproach leads to the highest customer satisfaction because all the functionswithin the firm and between the other actors of the supply chain are re-organisedand co-ordinated on the basis of the customer’s requirements. As underlined inthe first chapter, the shift from push to pull supply chain (driven by customerorders) has led to the need for responsive and flexible supply chains, allowingfirms to be globally present while keeping a local focus on their customers’requirements. One way to do this is to identify the key business processes andmanage them in co-operation with key members of the supply chain.

As far as the chosen supply chain is concerned (2), i.e. the automotive supplychain, collaborative patterns help suppliers and auto-makers to better managetheir costs and to rapidly react to changing end consumer requirements (cf.Chapter 2). Industry drivers such as globalisation, demand variability, build-to-order, just-in-time delivery, or the need for responsiveness have shown theweaknesses of the traditional management approach. An integrated approach inthe management of the supply chain is required. In this context, the adoption ofa business process approach can lead to a synchronisation of all the activitiesbetween the actors of the supply chain, to a better management of relationships,information and materials flows, and so to greater integration inside and outsidethe company.

As a consequence when studying the automotive supply chain, whosefeatures rely mainly on business process reengineering, the adoption of atheoretical model based on business processes seems the most appropriate. TheLambert framework has been revised and adapted to the aims of our research,that is analysing port operators acting in the Renault Supply Chain with regard totheir involvement in the supply chain, and mainly with the focal firm.

Finally, another reason that prompted the adoption of such a model was (3),the involvement of a port in our research. As a consequence of marketglobalisation and the increasing use of ICT, transportation providers are seekingto co-ordinate physical and information flows at many different stages of thesupply chain.

Such factors are leading transportation providers to play a more important rolethan in the past in co-ordinating the supply chain and in creating a more efficientand flexible logistical system to respond to market changes. At the same time,such changes are producing growing inter-dependency amongst the parties in thechain.

Therefore, with the aim to create an individualised and unique source ofcustomer value (generating customer satisfaction), a process approach leads:

– Port Authorities to ask themselves about the path to follow in building andimproving port competencies. This also relates to the decisions to take inorder to facilitate the integration between port operators.

– Logistics and transport operators to integrate their activities within thesupply chain.



3.2 Lambert revised Model

Against this background, which recognises the new role for ports and theircontribution in the offer of added value services, according to a process approachin supply chain management, we have adapted the conceptual frameworkdeveloped by Lambert to better study the role of the port of Le Havre in theRenault supply chain (Fig. 3).

The first stage of the research was the definition of key port operators involvedin the Renault supply chain (Supply Chain Network structure). For this purpose,we directly interviewed the car manufacturer, using a semi-structured question-naire, in order to define the characteristics of the specific supply chain and todistinguish port operators with whom the focal firm (car manufacturer) sharesbusiness processes.

The second step was the identification of key business processes to extendour analysis. Basically, we adapted the processes shown in Figure 1 presentedin the first chapter according to the characteristics of the focal firm of the supplychain (Supply Chain Business Processes). We focused on Procurement, Inven-tory Management, Manufacturing Management, Physical Distribution and Com-mercial Practices (Customer service & Marketing).

(2) What processes link the key port operators with the focal firm and the other actors?

SCBusinessProcesses

SCMComponents

SC NetworkStructure

(3) What level of integration do they achieve for each businessprocess?

(1) Who are the key operators of the supply chain – mainly port operators?

Fig. 3: The adapted framework for the analysis of the port of Le Havre in the Renault supply chain

Source: Based on Lambert, 2001.



After describing the automotive supply chain from the car manufacturer’sperspective and identifying key business processes, we administered anotherquestionnaire in order to analyse the level of integration achieved for eachbusiness process. The literature suggests different indicators for the analysis ofthe level of integration. Lambert (2001) proposed two groups of managementcomponents for successful SCM:

– Physical and technical (planning and control, work structure, organisationstructure, product flow facility structure, information flow structure) and

– Managerial and behavioural (management methods, power and leadershipstructure, risk and reward structure, and culture and attitude).

Both components are important for integration across firms in the supply chainbut they can have a different impact on the management of supply relationships.As a consequence, taking account also of Table 1 based on Mentzer and theviews of industry experts, we chose the most suitable variables to investigate theintegration of port operators in the Renault supply chain.

Therefore, the following variables were selected as the SCM components,which better fit our analysis:

– Relationships: which kind of relationship exists between the actors of thechain.

– Supplied services: what services are supplied in order to satisfy thecustomer requirements.

– Information and Communication Technologies (ICT): which kind of informa-tion and communication technologies are used to achieve integrationamong the actors.

– Performance measurement: which key performance indicators (K.P.I.) areshared by the actors of the supply chain.

In particular, the questionnaire was administered to the following port opera-tors: Shipping companies, terminal operators and other logistics providers. All theinformation was subsequently utilised to complete a “SCM matrix” (Table 6). TheSCM matrix describes port operator response through the key supply chainbusiness processes. It provided insights into the strategic behaviours of portoperators in response to specific customer requirements.

This matrix analyses the following for each business process:

– The relationships between port operators and the other actors of theAutomotive supply chain.

– The different types of services that are provided to satisfy auto-makers’requirements.

– The use of ICT, as a catalyst and a necessary tool for the integrationprocess.

– The KPI taken into account by the different operators, in the provision oftheir services.



We completed different matrixes for every port operator involved in theRenault supply chain. Finally, the last output of interviews and questionnaires wasa comprehensive structured matrix that describes the integration along keysupply chain business processes concerning the named actors. It summarisesthe different matrixes filled in for each port operator involved in the supply chain.

Table 6: Demand features and port operator response in the automotive industry

SC

M A

pp

roac

h

Key

SC

Bu

sin

ess

Pro

cess

es

Ren

ault

DemandFeatures

Po

rt O

per

ato

r

Port Operator Response

Relationship Supplied Services I.C.T. K.P.I.

Procurement

Inventory Management

ManufacturingManagement

Physical Distri-bution

Commercial Practices


The empirical analysis

4. The empirical analysis:the features of the Renault Supply

Chain and port operators’ responses

The Automotive Supply Chain is a complex network of materials andinformation because the vehicle production involves a multitude of componentsuppliers. Some of them provide a dedicated service to a single manufacturer;others compete for the business of several auto-makers or produce componentsfor other industries too.

Taking into account the competitive pressures affecting the automotiveindustry and the strategic responses of the auto-makers to resolve the tensionbetween the need to be globally efficient but locally responsive, in this section wepresent an empirical analysis of the Renault supply chain and the role of portoperators in the value creation process.

To this end, in the first section we describe the Renault Supply Chain networkstructure (the key members), giving particular attention to the port operators. Inthe second section we analyse how Renault manages key business processesalong the supply chain (make or buy strategy). Finally, as our assumption is thatthe greater the level of integration among the actors of a supply chain, the betterthe performance of chain as a whole, in the third section an analysis of portoperators’ integration is presented through specific supply chain components.

4.1 Renault Network StructureThe Renault Group is one of the world leaders in its core business, which is

vehicle manufacturing. It has a significant share of the Western European marketfor passenger and light commercial vehicles. Following its acquisition of an equitystake in Nissan, the Renault Group now ranks among the six world leaders in theautomobile industry (www.automotivelogisticsmagazine.com). In addition, by theacquisition of two new brands, Dacia and Samsung, Renault has strengthened itspotential for penetrating new markets, such as Romania and Korea.

In describing the structure of the Renault supply chain, it is important toanalyse the different actors and their relationships in the value creation processfrom the procurement of raw materials to the delivery of vehicles to the finalcustomer.

In accordance with the aim of this research and in coherence with the above-mentioned auto-makers’ supply chain management strategies, we have split the



supply chain into two halves: inflow of components (including internal flowsbetween plants located in different countries) and outflow of finished vehicles.Spare parts and after-sales services have not been included in the researchbecause they are generally provided by different actors who are in competition:auto-makers and their franchised dealers, independent garages, repair centres,component suppliers, service stations and hypermarkets, such as Carrefour, and“fast fit” service chains such as Kwik Fit. Moreover, the revision of the BlockExemption will have a significant effect on the supply of these services: the flowof spare parts and servicing, now directly controlled and managed by themanufacturer, will probably bypass the manufacturer and be managed bycomponent suppliers and multi-brand dealers (Figure 4). Another reason led usto keep the spare parts and servicing supply out of our analysis: this part of theautomotive supply chain is driven by different requirements in terms of quality andservice attributes, that are directly demanded by the final customer.

Thus, our analysis focuses mainly on the procurement of parts and compo-nents and the distribution of built-up cars.

To explain, as this work represents the first step of a wider research, involvingboth theoretical and practical aspects, we examined some parts of the Renaultsupply chain: we investigated the actors involved in the procurement anddistribution flows passing through the CKD Grand Couronne Logistics Platformand the Port of Le Havre.

Moreover, it is worth mentioning that we did not identified an entire chain for aspecific article (ex.: Clio or Mégane), nor a door-to-door logistics chain thatrelates to a given assembly plant (ex.: Flin assembly plant or Envigado-Colombia).

Component Suppliers Manufacturer

Main dealer

Spare & Servicing

Dealers Customers

Tier 1 integrators

Figure 4: The evolving automotive supply chain

Source: Based on various sources.



Indeed, the basic subject of our survey was the actors and their mutual linksin the chain.

Finally, the involvement of a port in the analysis of the management ofphysical flows within the Renault automotive supply chain requires a preliminarydistinction between:

– The management of CKD and component flows, which is performed bycontainers on specialised terminals, and

– The built-up car flow management, which is based on Ro/Ro transport.

In the following sections we therefore present an overview of Renault’sprocurement and distribution network structures.

4.1.1 Procurement Network Structure

In the procurement process, most of the car components and parts areproduced in Europe (39% in France, 22% in Germany, 3% in UK and Spain,and 4% in Italy) and then collected in the “Grand Couronne Logistics Platform”.The production of car components and parts is made by thousands ofsuppliers, of different sizes and tied to Renault on the basis of exclusive ormulti-client contracts according to the type of product (ex: Multi-client suppliersfor wheels, tyres and windows; dedicated suppliers for the powertrain andgearboxes).

Source: Renault Financial report 2002

USA 17%

Germany 22%

France 39%Italy 6%

Japan 3%

Sweden 3%

U. K. 3%Spain 3%

Other 4%

Figure 5: Procurement of car components by Countries – 2001



Most of the car parts and components are then brought together at the GrandCouronne logistics platform (owned by Renault), which provides the followingservices:

(1) Assembling of car components (Completely Knocked Down).

(2) Groupage and conditioning of car components and parts.

(3) Transfer to assembly plants.

In detail, regarding (1) and (2), Grand Couronne collects the different carcomponents and parts from different overseas suppliers and then delivers theCKD kits to the Renault automobile plants (for further information on Renaultautomobile plants see Appendix 1). By means of this logistics platform, Renaultdirectly manages the information and material flows with its first tier suppliers,responsible for the just in time delivery of components and parts and for thesecond tier supplier’s performance. On the basis of Figure 4, we may considerGrand Couronne as a Tier First Integrator even if it is owned by the Renault Group.

Concerning (3), there are two different logistics solutions for the flow manage-ment of CKD from Grand Couronne to the assembly plants according to theproduction volume. If production volume is small (i.e. the assembly plant has toproduce, for example, 15 Clios), Grand Couronne delivers the exact quantityneeded to produce the specific number of cars (assembling and collectionactivities). When production volume is greater, Grand Couronne delivers onlyspecific car components to the assembly plants (Individual Part Ordering). In thiscase, the activities performed are the groupage, the packaging and subsequentlythe shipment of car components.

In Figure 6, a simplified overview of Renault’s procurement process is presented.

2nd and 3rd Tier

suppliers

1st Tier suppliers

Grand Couronne

Overseas and European

Plants

European Plants

Port of Le Havre

Figure 6: Simplified overview of Renault’s procurement process

Source: Based on various sources.



In order to understand the role of the operators of the port of Le Havre in theprocurement process, it is helpful to consider three different materials flows:

(1) Those having European origin and overseas destination, i.e. car compo-nents and parts produced in Europe and delivered to overseas assembly plants.

(2) Those with an International origin and European destination, i.e. carcomponents and parts produced outside Europe and delivered to Europeanassembly plants; and finally.

(3) Those with European origin and destination, i.e. car components andparts produced and assembled in Europe.

Le Havre has a crucial role in relation to (1) and (2): the export of CKD to theoverseas assembly plants (Brazil, Mercosur, UK, and Eastern Europe) and theprocurement of car components from the overseas suppliers. Concerning (3),Renault makes mainly use of railway and road transportation (for examplebetween Valladolid (Spain) and Grand Couronne) thus bypassing the port.

In any case, Renault has direct control of all the materials flows, centralisingthe planning and scheduling of transport services.

Renault has two departments, “Deep sea” and “Short sea” which manage theflows passing through the port of Le Havre. Freight transport is contracted for shortterm (generally 1 or 2 years) to the following ocean carriers: TMM (a subsidiary ofContship), CGM-CMA (for traffic to Colombia only), P&O and Maersk Sealand.Renault specifies frequency, punctuality, the volume to be carried and the dailyreliability of the different ocean carriers (quality evaluation). The scheduling ofmaritime transport services is defined in common (according to the principle of flowsynchronisation) but the high contractual power of Renault forces ocean carriersto constantly improve the quality of supplied services while reducing freight rates.

As an example of a provider, we may refer to CGM-CMA, which is in chargeof car component and CKD transportation from the port of Le Havre to the port ofCartagena (port-to-port services). It is not involved in other legs of the transportchain, which remain controlled and managed directly by Renault. In fact thestuffing activity is performed at Grand Couronne logistics platform as is the roadtransportation to the port of Le Havre. CGM-CMA supplies only containerhandling and maritime transportation. Delivery to the assembly plant in Envigado(Colombia) is then performed by overseas subsidiaries of Renault.

4.1.2 Distribution Network StructureThe structure of Renault’s distribution process depends on the location of the

assembly plants and of the final market. In order to gain a more flexiblegovernance structure, in the year 2001 Renault sold CAT to Albateam, aconsortium formed by AutoLogic, TPG and Wallenius Lines. Through thistransaction, Renault decided to outsource its in-house finished vehicles logisticsdivision while keeping a long-term relationship with CAT for distribution17 . 17

17 At the present, CAT’s capital shares are as follows: 40% Albateam, 40% Wallenius Lines and 20%TNT.



If we consider Renault’s world-wide sales, Western Europe represents themain market (87% of world-wide sales) while the Eastern European and Russianmarkets have reported the highest growth rate since 1999 (Table 7).

In accordance with the aim of this study, we investigated the Renault’sdistribution process by considering three physical flows (Figure 7):

– (1) Vehicles assembled in European plants and delivered to the Europeanmarket without passing through the port of Le Havre.

– (2) Vehicles assembled in European plants and exported through the portof Le Havre to Europe.

– (3) Vehicles assembled in European plants and exported overseas throughthe port of Le Havre.

For the time being, the organisation of these three physical flows is realisedby CAT on the basis of an exclusive contract with Renault: 7 years for Short SeaTrade and 5 years for Deep sea transportation, starting from 2001. For theaccomplishment of the engagement, CAT set up different types of arrangementswith ocean carries, truckers and railway providers while maintaining overallmanagement control.

Regarding (1), i.e. flows using road-rail intermodal services, CAT organisesthe transport services from the assembly plants to the dealers, on the basis of theRenault’s requirements (transportation cost, transit time, frequency, consignmentsecurity). Transport operations are generally outsourced.

Table 7: Renault group world-wide sales (number of vehicles)

1999 2000 2001

Western Europe 1,948,449 1,873,990 1,904,371

Central Europe 78,211 76,270 94,618

Eastern Europe & Russia 4,356 63,671 69,805

Turkey 78,527 115,405 44,276

Total Europe 2,109,543 2,129,336 2,113,070

Latin America 124,484 147,322 147,866

Asia Pacific 10,024 21,438 84,372

Africa & Middle East 44,180 58,737 63,679

Total outside Europe 339,782 482,843 504,616

World-wide 2,288,231 2,356,833 2,408,987

Source: Renault Financial Report, 2002.



Regarding (2) and (3), i.e. intermodal services with a maritime component, CATcontinues to control and organise the transport chain, while outsourcing the maritimetransportation to the arrival port and the end transport leg to the dealers. In particular,through its subsidiary SGAN, CAT organises the maritime transport services anddeals with charter and commercial agreements with shipping companies.

Concerning short sea flows, the main operator is UECC (United European CarCarriers)18, which made a total of roughly 450 port calls in 2002. The secondlargest is CETAM, with 65 port calls (Spain, Northern Europe and the Mediterra-nean). With regard to deep-sea flows, the first operator for Renault is HUAL19,which entrusts part of the traffic (South Africa, Australia and Nouvelle Caledonia)to Wallenius. 18 19

In the rest of the report, we will focus our attention mainly on maritimetransportation to and from the port of Le Havre supplied by HUAL-Cetam, theNorwegian shipping company specialised in Ro/Ro traffic.

4.2 Renault’s Business Processes In this section, we shall analyse the features of Renault’s business processes

and its governance structures in terms of make or buy strategies. In particular, theaim is to describe how Renault manages the activities along the supply chain and

18 UECC is a joint venture between Wallenius Line and NYK Group, prominent in the operation ofadvanced feeder ships for cars.19 HUAL is among the major players in the world-wide vehicle transportation industry.

EuropeanPlants

European Arrival Port

European Marketplace

Value AddedServices

Port ofLe Havre

OverseasArrival Port

Overseas Marketplace

(1)

(2)

(3)

Figure 7: Simplified overview of Renault’s distribution process



what kind of relationships have been set up with the other actors in order to bringthe highest customer satisfaction.

All the information was gathered by direct interview with Renault managersand suppliers (see Appendixes 2 and 3) and then organised so it describes themain features of the following business processes: procurement, inventorymanagement, manufacturing management, physical distribution and commercialpractices (i.e. marketing and customer services).

The matrix presented is not an exhaustive description of Renault’s businessprocesses; but rather provides a basic description of Renault requirements foreach process. It will therefore be a useful tool for identifying the contribution ofport operators to the management of the supply chain. 20

Procurement of assembly plants follows different logistics scheme dependingon the constraints and the specific characteristics of the car components andparts. Nevertheless, Renault’s objectives in this stage of the supply chain are:

– The minimisation of total logistics costs.

Table 7: Renault’s business processes: main features

SC

M A

pp

roac

h

Key

SC

Bu

sin

ess

Pro

cess

es

Ren

ault

Demand Features

Procurement

Car components: high integration with first tier suppliers.

CKD: Grand Couronne logistics platform for the pre-assem-bly of parts and components and their delivery to assembly plants.

Inventory Management (car components and parts)

Minimisation of stock level and related costs.Different solutions for:– Slow movers.– Fast movers.

ManufacturingManagement

High integration with module suppliers,Common plants with other auto-makers,Postponement20: deferred car customisation close to the final market.

Inventory Management (finished vehicles)

Minimisation of stock level and related costs through sto-rage decentralisation,


Outsourcing to few privileged logistics providers.

Commercial Practices

Reduction of lead-time.Improvement of quality.

20 The concept of postponement involves organising the production and distribution of products insuch a way that their customisation is performed as close as possible to the moment when thedemand is first known (Pagh, 1998).



– The reduction of the delivery time (avoidance of delays and bottlenecks inthe production process).

In particular these constraints are deeply influenced by the evolution of thesector and by specific variables affecting the features of car components andparts, such as: technical characteristics, level of consumption, degree of custom-isation, etc.

For Renault, the need to respond to a sophisticated customer demand whilekeeping down logistics costs has led to:

– The localisation of small dedicated suppliers close to the plants in order toavoid high transportation costs.

– The creation of nearby logistics platforms, for the multi-daily deliveries tothe plants, in order to reduce storage costs.

– The creation of “synchronising sites” for component assembly and custom-isation .

Inventory management is concerned with the minimisation of the stock leveland related costs of car components in the production process. It also deals withthe storage of new vehicles. As far as car components are concerned, slowmovers (like options, air conditioning and ABS) are important for the customisa-tion and differentiation of cars, and to increase the number of items produced bysome car production lines (Scenic version 4x4). In order to overcome the tensionbetween the need for differentiation/customisation of cars and related higherinventory costs (due to the slow turnover), Renault has adopted the followingsolution, which mirrors the changes made for procurement management:

– Multi-client logistics platforms that allow the maximisation of the transportcapacity (by achieving economies of scale) and efficient scheduling of thetransport services.

– Nearby platforms for the delivery of car components in small quantities tothe procurement sites.

In relation to fast movers (standardised components such as wheels, tyres,windows, etc. necessary for the implementation of “lean manufacturing” prac-tices), inventory costs are minimised by the use of logistics platforms in the caseof large multi-client suppliers. Small clients are usually located close to the plant.

As far as finished vehicles are concerned, Renault does not directly managethe storage in the Port of Le Havre, as it is outsourced to an external logisticsservice provider.

Regarding manufacturing management, Renault has been pursuing areorganisation of its vehicle portfolio around product platforms and car modulesand systems. By focusing on common platforms and interchangeable modules,Renault is trying to deploy new solutions across the whole product range in afaster and less expensive way. For example, through the alliance with Nissan,Renault uses the Nissan assembly plant in Mexico for the production of theScénic and Clio for delivery to the Central American markets.



Moreover, to be able to focus more on car-related services and to cope withthe huge costs associated with a large number of new modules and systems,Renault is becoming less involved in manufacturing and assembly, passing theresponsibility of developing, manufacturing, and assembling important sections ofthe car to its first tier suppliers (long term partnerships with each major modulesuppliers).

Wih regard to physical distribution, in 2001 Renault stepped up its efforts totake costs out of distribution by restructuring the network and making the existingsystem more efficient. Cutting distribution costs by enhancing the network'scompetitiveness is a major strategic imperative to adjust to the emergence of newchannels of distribution such as e-commerce, and to prepare for changes in thecurrent distribution system.

It is possible to consider two strategic solutions for vehicle distribution,depending on the final markets:

– In Europe, Renault has the long term exclusive contract with CAT that hasalready been mentioned.

– Outside Europe, alliances with local auto-makers are being developed. Inparticular, Dacia supports the development of Renault in Romania, Sam-sung Motors in Korea and Nissan in Mexico and Central America, Japanand Asia Pacific.

Finally, with regard to commercial practices (customer services and sales),Renault's objective is to reduce the time needed to develop a new vehicle whileimproving quality and accelerating innovation. This is of cardinal importance, notonly financially, but also commercially, since shorter development times enablethe producer to respond more quickly to shifts in demand. To achieve thisobjective, Renault has defined a program (The New Distribution Project, deployedin 1999), aimed at securing and shortening the time between the day thecustomer places an order (except for a new model during the launch period) andthe delivery date. At the same time, the program is intended to improve theassortment and promote the diversity of the Renault product range.

The pursuit of quality is particularly important for Renault's offensive in thetop-range segment and for strengthening the brand image with models that mustmeet the expectations of a more demanding clientele. Better quality control isneeded to ensure greater customer satisfaction, not only in the use of theproduct but also of the other services provided, and to optimise the customerrelationship.

In this domain, the alliance with Nissan has brought important benefits toRenault in term of shared progress on product and service quality21. 21

21 Exchanges of staff between Renault and Nissan in this area have been in effect for two years. Theirwork is co-ordinated by a Functional Task Team (FTT) dedicated specifically to quality, which takespart in speeding up the group's progress in this area and is in the process of drawing up a commonquality charter for the Alliance.



4.3 Port operators’ responses: the SCM componentsIn this section we shall present an overview of port operators’ responses to

Renault’s requirements for effective business process management.

In particular, we shall investigate port operators’ integration in the Renaultsupply chain through specific variables: relationships, supplied services, Informa-tion and Communication Technologies (ICT) and Key Performance Indicators(KPIs).

To this end, we administered a questionnaire (see Appendix 3) to the followingoperators:

– CMA-CGM, a liner shipping company, in the procurement process of carcomponents and for the export of CKDs.

– CKD Grand Couronne Logistics Platform for the collection and assemblingof car components (CKD) and for their export via the port of Le Havre.

– CAT, the logistics operator, for the distribution of new vehicles in Europe.

– HUAL-Cetam, a shipping company, specialised in the maritime transport ofnew vehicles.

– SETH, a terminal operator, for the storage of new cars in the port of LeHavre.

All the information was supplemented by direct meetings with industry expertsand managers of the port of Le Havre.

The final output has been the realisation of an SCM matrix, providing theinformation needed to test the revised Lambert model (Table 8).

The matrix highlights Renault’s supply chain structure, the type of relation-ships among the actors of the chain, the services supplied for each businessprocess by logistics operators, the ICT solutions set up for each interface and theset of Key Performance Indicators adopted by each of the actors.

Each box must be read in the light of the main characteristics presented inTable 7, in order to evaluate the contribution of port operators to the managementof the key processes.

We can read the matrix by analysing each line, except for the cells in the lastcolumn – the “KPI” –, which will be analysed at the end of this section, as atransversal reading provides a better understanding of them. The matching of thefocal firm requirements with the operator response, in terms of services, relationsand ICT solutions will allow us to perceive the port operators’ contribution to theprocess management, according to the Lambert model.

As it has already been mentioned, procurement (and the other activities thatprecede the manufacturing process) are managed in house (vertical integration)and only maritime transport is contracted out to different liner shipping compa-nies. In fact, there are no long-term relationships with the shipping companies,just spot contracts (generally slot agreements for 1 year) directly managed andcontrolled by Renault’s Deep – Sea and Short – Sea operation departments.



As a response to this vertically integrated structure, CMA-CGM and the othershipping lines, such as TMM, P&O, Maersk Sealand concentrate on port-to-portservices by supplying transport services on specific maritime routes. For exampleCMA-CGM is involved in the containerised transportation of car components andCKDs to Renault’s assembly plant in Cartagena (Colombia).

Moreover, Renault’s high contractual power has led the liner shippingcompanies to keep freight rates down while meeting service quality requirements.In particular, CMA-CGM recognises the importance of transport and handlingcosts but also the transit time and the punctuality of its own services as Renault’sDeep – Sea and Short – Sea operation departments check the daily reliability ofthe various ocean carriers (quality evaluation).

In the inventory management, there are two main operators:

(1) CKD Grand Couronne Logistics platform, for the car components and CKDs.

(2) CAT, for the finished vehicles.

In relation to (1), i.e. car components and CKDs, Renault co-ordinates theimport and export flows in-house via the ownership of a logistics platform. Onlythe execution of the transport is outsourced to specialised providers.

Grand Couronne logistics platform organises the procurement flows fromAsian, Mercosur (mainly Brazil and Argentina) and Mexican assembly plants byscheduling their orders and production processes in accordance with the deliverytimes of the car components and parts. The reduction of total logistics costs andthe implementation of Just In Time deliveries (reliability) to overseas assemblyplants is therefore achieved by synchronising the inbound (car components andparts) and outbound flows (CKD’s) and centralising the inventory.

With reference to (2), i.e. the finished vehicles, CAT is in charge of the storageand physical distribution on the basis of an exclusive long-term contract. SETH,a company belonging to CAT, is in charge of the management of the “interface”between inland and maritime transport (vehicles’ storage) at the Ro/Ro Centre inthe port of Le Havre while the handling of the new cars is managed by SMR, astevedoring company belonging to HUAL-Cetam. Therefore the inventory man-agement of new vehicles is carried out through a complex network of relation-ships and services that can be summarised as follows:

– CAT organises the physical distribution on the basis of Renault’s requirements.

– SETH stores the vehicles between the inland and maritime phases of transport.

– SMR and Roussel handle the vehicles. The minimisation of the inventory costs is therefore based on the efficient and

effective co-ordination of all the aforementioned activities. As regards theactivities of SETH, it is crucial to avoid delays or break points, as they affect thefurther steps of the outbound logistics.

The interviewed port operators have no direct involvement in the manufactur-ing process, whereas component and part suppliers show a high level of



integration with Renault. This seems to be a consequence of the position of theport of Le Havre with respect to the final destination market. In particular, vehiclesproduced in France for the national market are delivered by road and railway,bypassing the port of Le Havre, whereas vehicles produced in France for othersfinal markets are exported through the port of Le Havre. As the need to defervehicle customisation close to the final market leads to development opportunitiesfor arrival ports, on the basis of the current flow of finished vehicles through theport (export rather than import), Le Havre is not in a position to profit from suchopportunities.

Table 8: Port operators’ response to Renault requirements: the SCM matrixS

CM

AP

PR

OA

CH

Key

SC

Bu

sin

ess

Pro

cess

es

Actor interviewed Supply chain management components

Relation-ship

Supplied Services I.C.T. K.P.I.

Procurement CMA-CGM Spot (slot agreements)

MaritimeTransport EDI

Transport and

handling costs

Transit time

Inventory Management (components and parts)

Grand Couronne Logistics Platform

Fully integrated in

Renault Group)

Collection and assembling of

car components;Export of CKD

through the port of Le Havre

Inventory Mgmt

system;EDI and intranet

Reliability;Total

logistics costs

ManufacturingManagement No current involvement of port operators (only Axial for Nissan vehicles).

Inventory Management(vehicles)

SETHLong term contract

through CAT

New cars storage

EDI;Tracing

and tracking

Transit time;Consignmen

t security


CAT Long term contract

Door-to-door services;Storage;

Stock control;Damage

inspection

EDI;Tracing

and tracking;Custom Mgmt

System

Transport and

handling costs;

Availability of real time information

HUAL-Cetam

Short term (1 year) contract

through CATLong

relationship

Maritime transport;

Inland transportation

EDI;Tracing

and tracking

Transport and

handling costs;

Reliability

Commercial Practices No current involvement of port operators



Concerning the physical distribution, CAT will have a predominant role untilthe expiry of its exclusive contract. CAT is in charge of Renault’s vehicledistribution, organising the final delivery to the dealers. Maritime transport withinthe delivery flow involves a network of relationships with shipping companies andother transport providers. HUAL-Cetam and UECC supply the maritime transpor-tation between European and Mediterranean countries and overseas. CAT is themain customer of HUAL, which is strengthening its expertise in the automotivesupply chain, by setting up strategic alliances with specialised providers. Thesetwo operators work together for the satisfaction of Renault’s requirements, evenif CAT still has a monopolistic position in the management of the physicaldistribution.

Finally, some remarks are necessary on the key performance indicators,reported in the last column of the matrix, as they allow to see if there is a mutuallyshared system of KPI, eventually conceived jointly by two or more organisations,or if, on the contrary, a segmented and individual fixation of indicators character-ises the supply chain. Another issue could be the role played by the focal firm inconceiving and/or imposing a set of indicators on the actors.

What is evident from our survey is that Renault presents two differentgovernance structures in the management of the supply chain: vertically inte-grated for inbound logistics but more flexible for outbound. This has differentimplications on the performance indicators adopted by the operators involved ineach business process.

In procurement, the need to keep down the freight rate and reduce the transittime is the main competitive factor in the supply of transport services. This is aconsequence of Renault’s low level of outsourcing.

In car component and part inventory management, reliability and minimisationof total logistics costs are two factors of crucial importance. As a consequence,Renault has concentrated the inventory management at Grand Couronne logis-tics platform, which is also in charge of the flow synchronisation betweenoverseas assembly plants and first tier suppliers. As far as finished vehicles areconcerned, the responsibility for inventory management is in the hands of CAT.Transit time constraints and consignment security affect the storage activity(SETH), as they can compromise Just In Time delivery to dealers.

Finally, in the physical distribution it is possible to highlight two differentsituations: one related to CAT, and the other related to HUAL-Cetam, as CAT’smain transport providers. For both operators, the minimisation of transport andhandling costs is of fundamental importance but CAT’s performance is also basedon the availability of real time information due to its responsibility in organisingand managing physical distribution.

From an overall perspective, Table 9 presents the factors that are commonlyshared by port operators in responding to Renault’s elements of the Customersatisfaction (Table 10).



For all the port operators, the minimisation of transportation and handlingcosts (1) and reliability in providing logistics and transport services (2) are themost important elements in satisfying Renault’s requirements. In fact, Renaulthas a strong interest in knowing when the cargo will be available and whether theannounced date of delivery is reliable. The former (1) has repercussions onoperating costs while the latter (2) is an essential input in the production planningprocess (especially for flow synchronisation at Grand Couronne Logistics Plat-form). In more detail, the reduction of logistics costs affects the Group’scompetitiveness on international markets while service reliability favours thepursuit of J.I.T. strategies and efficient management of the inventory level. 22

Transit time has been considered as a key performance indicator mainly byshipping companies involved in procurement of car components and CKD. Thisis a consequence of the low integration level between Renault and oceancarriers, which act on the basis of short-term contracts. Ocean carriers, concen-trating on port-to-port services, also compete on the basis of price.

Table 9: Key performance indicators in the Renault supply chain:port operators’ perspective

Key performance indicators Cumulative value

Transportation and handling cost 31

Reliability 25

Transit time 23

Consignment security 23

Flexibility 16

Availability of real time information 15

Comprehensiveness22 7

Table 10: Key elements of customer satisfaction: from Renault’s perspective

Elements of the customer satisfaction Order of importance

Reliability 1

Total logistics cost 2

Flexibility 3

22 This refers to the extent to which a single operator will arrange and accept responsibility for allcomponents of the transportation chain between origin and ultimate destination



Unlike the shipping lines, Renault does not even consider transit time as aservice attribute to evaluate. In fact only reliability and meeting arrival dates bothfor components and finished vehicles matter for its customer satisfaction. Transittime is therefore a crucial factor for ports in satisfying port users (i.e. shippinglines) but not necessarily port final customers (e.g. Renault).

Neither port operators nor Renault see service comprehensiveness as a keyfactor due to the involvement of operators in specific activities of Renault’sbusiness processes.

In conclusion, we can state that Renault makes it compulsory for port actorsto meet its standards, in terms of reliability, cost reduction and service flexibility.Such factors highlight the high contractual power of the focal firm and the“adaptive behaviour” of its suppliers.


Possible supply chain evolution at the micro and macro levels

5. Possible supply chain evolutionat the micro and macro levels

In this chapter, the principal results deriving from the empirical work pre-sented in the previous chapter arise some considerations at the micro and macrolevels.

First we analyse the potential role of each of the operators in the very supplychain (micro level), second we approach the port as a cluster of organisations(macro level) where the Port Authority acts as the “brain” of the “organism”.

The reason for separating the analysis into two complementary halves is thatport performance derives from the quality of the interfaces between the membersof the cluster of organisations independently of the optimisation of the activity ofeach firm. We are concerned with the need to maximise the efficiency and theeffectiveness of logistics actors, taken into account in a global perspective.

5.1 The potential role of the different actors In this section, we present an analysis of the possible evolution of the Renault

supply chain. We took inspiration from a paper written by Zheng et al. (2001) ona taxonomy of supply networks, in which the authors suggest two dimensions forthe understanding of supply networks: the supply network’s degree of dynamismand the focal firm’s degree of influence within a supply network23. 23

Accordingly, the evolution of Renault supply chain will be analysed through itsinfluence in managing the supply chain structure and through the dynamism ofthis supply chain structure.

As far as the possible evolutions are concerned, a particular focus will be puton the future role of CAT after the expiry of its exclusive contract.

23 Zheng refers to supply networks rather than to supply chains. Even if the author may argue that theconcept of “supply network” is theoretically more complex and wide than “supply chain”, we believe thatthe SCM literature is characterised by a proliferation of definitions, often diverging because deriving fromdifferent disciplines and theories. Indeed, from an organisational point of view, we may also interpret theRenault automotive supply chain as a network firm, characterised by the co-ordination of a “constella-tion” of actors – each of them with different levels of involvement – through a “pivot” organisation. (Milesand Snow, 1992). Nevertheless, what is in common in all the definitions, supply chain, supply networkand constellations, is the inter-connections between different entities participating in the process ofcreating value for specific end customers. In practice such concepts lead to the understanding of inter-organisational relationships in pursuing the satisfaction of individual end customer segments.



5.1.1 Supply Chain dynamism and focal firm influence

Supply chain dynamism is linked to the internal and external environmentalcomplexity in which the focal firm has to manage its business processes while focalfirm influence is a measure of the focal firm’s ability to manage the actors of the chain.

For the purposes of this research, the number of actors participating in thesupply chain and the typology of their relationships with the focal firm can expressthe degree of the supply chain dynamism. Of course, the presence of long termpartnerships between the focal firm and few actors of the supply chain leads to alow degree of supply chain dynamism. At the same time, this kind of co-operationincreases the effectiveness of supply chain management, by encouragingprocess integration, stock minimisation, risk and benefit sharing and thereforehigh responsiveness to the customers’ requirements. On the contrary, spotrelationships lead to a high degree of dynamism which implies that the focal firmhas to cope with high variability of internal operations (the suppliers are directlyinvolved in business process execution rather than management). As a conse-quence demand management may result in some problems in terms of lowresponsiveness to the customers’ requirements.

Nevertheless, this variable has to be compared with the second one, namelythe degree of influence (a measure of power) of the focal firm. The degree ofinfluence expresses the focal firm’s ability to manage the supply chain and to takedecisions that have implications for other actors. As a consequence, a highdegree of influence means that the focal firm is in a position to choose its supplychain partners and to impose performance levels they must meet for the provisionof services. Generally, the degree of influence is directly related to the size of thefocal firm, to its contractual power, to its competitive position and to thecommercial attractiveness of the operation (especially in terms of its contributionto the other actors’ sales).

Summarising, the higher the degree of influence, the lower the negativeeffects deriving from a high dynamism of the supply chain structure, at least asfar as the focal firm is concerned. The reason is that if it has high contractualpower, the firm “imposes” co-operative behaviour on the other actors, thussurmounting the inefficiencies that may arise in an excessively dynamic context.In other terms, a “spontaneous co-operative attitude” is replaced by “imposed co-operative behaviour”.

On the basis of such remarks, we believe that the topic of integration amongthe actors (leading to higher performance) has to be kept apart from the topic ofthe mechanism of co-ordination among the actors. We are confronted by asituation where the integration level, at least for some parts of the chain, is quitehigh, even if the co-ordination of such integration is mainly in the hands of the focalfirm, as a consequence of its high contractual power vis à vis the other actors.

At the present, Renault’s supply chain presents a low degree of dynamismthanks to the integration level achieved with some key operators. These aremainly first tier suppliers and Grand Couronne logistic platform in inbound



logistics, and CAT in outbound logistics. As we underlined in Chapter 4, this typeof relationship has improved the responsiveness of the supply chain, especiallyas a consequence of Renault’s imposition of qualitative attributes in the provisionof logistics services.

As far as the degree of influence is concerned, Renault is one of the largestauto-makers in the world also thanks to its partnerships with Nissan, Dacia andSamsung. Such strategic alliances have not only strengthened its competitiveposition in the European market but also in new markets such as those of EasternEuropean countries and Asia. Since large size is necessary to operate in theautomobile industry, Renault has decided to maintain and to increase itscompetitiveness by increasing vertical integration in upstream activities, out-sourcing primarily transport, while preferring a more flexible structure in themanagement of downstream activities.

Its high degree of influence is also reflected in the co-ordination andmonitoring mechanisms for the relationship with CAT, the main logistics providerwhich is also the “broker” in the relationships between Renault and the otherproviders. The interviews showed that the most used tool to co-ordinate the CAT-Renault relationship is procedure formalisation, evidence of a highly pre-determined framework (operational and managerial guidelines) for service provi-sion. In addition, performance indicators were declared to be adopted on acontinuous basis by Renault. Such indicators are used not only to improveperformance level (reliability, flexibility, lead time, etc.) but also to obtain pricereductions during the contract deployment. Nevertheless, informal meetings(about one per month) were also declared to be useful for improving theagreement and information sharing.

The availability of “dedicated personnel” is another expression of Renault’shigh degree of influence over CAT, even if the latter is trying to enlarge itscustomer base, in order to become more independent from a dominant client. Ofcourse, as Renault generates 60% of CAT sales, such emancipation is quitedifficult to achieve!

The combination of the aforementioned two dimensions allows us to describethe current and the future possible evolutions of Renault’s supply chain (Figure 8).

A low degree of supply chain dynamism and Renault’s high degree ofinfluence on supply chain actors’ behaviours determine the “current position”.

On the basis of the characteristics of the Renault supply chain and the mainfindings of our research, we foresee an evolution towards greater dynamism ofthe supply chain due to network structure changes within outbound logistics.

In particular, we are referting to the expiry of CAT’s exclusive contract forvehicle distribution. The current situation, based on this exclusive contract and onco-operative relationships between CAT and the named shipping lines is likely toevolve towards a less stable environment.

New logistics providers specialised in the automotive industry may beinterested in supplying Renault. Nevertheless, some factors act as entry barriers



for new providers: the long-lasting Renault-CAT commitment, the direct contactof CAT with the “core” part of its customer, that is the assembly line and theconsiderable dedicated investments needed to deal with an auto-maker.

Another example which reinforces the scenario of greater dynamism inRenault supply chain with consequent higher instability for contracts and relation-ships is given by HUAL, which has decided to extend its business to vehiclelogistics24. The aim is to be ready to provide other customers in the industry, suchas Ford or GM, with sophisticated logistics solutions. 24

In this purpose, the company chose the port of Le Havre as its main hub.Focussing its operations on this port, the company extended its maritimebusiness towards:

– Short Sea trade, by the creation of CETAM, in 1999.

– Terminal management, by the setting up (via Autotrans25) of a stevedoringcompany, called SMR, in joint venture with Terminal Normandie (50%). 25

24 At the moment, Renault accounts fors the 50% of HUAL Ro/Ro traffic in France. 75% of this share iscarried by deep sea transportation and the rest by short sea transportation.25 Autotrans is a forwarding company fully dedicated to the logistics of both new and used vehicles. Ithas offices in Le Havre and Paris. It employs 17 people. In addition, Autotrans owns a 50% stake inSMR.

Degree of supply chain

dynamism

Low High

Degre

e o

f fo

cal

firm

sup

ply

ch

ain

in

flu

en

ce

Low

High

Renault S.C.

current situation

Possible evolution

(Expiry of CAT’s

exclusive contract)

CAT’s

Figure 8: Possible evolution of Renault supply chain

Source: Based on Zheng et al., 2001.

Deg

ree

of f

ocal

fir

msu

pply

cha

in in

flue

nce



– Inland transportation, by an agreement with STVA26, which is owned bySNCF. 26

– Logistics provision by the acquisition of Autotrans, a non-asset basedcompany.

HUAL recognises the importance of terminal operations and stevedoringactivities as they represent at the same time crucial stages of the transport chainand activities affecting service quality (reliability, frequency and punctuality).

Broadening its activities to include such operations will give HUAL theopportunity to further expand and co-ordinate its range of services in France,adding a full range of services to the present deep-sea and short-sea operations.

Another future objective of HUAL – Cetam is to be more involved in integratedlogistics. Thus, the company has entrusted Autotrans with the development ofspecific ICT solutions, for the sharing of information and documents in the supplyof door-to-door services. In an effort to bring more integration between thedifferent partners, the IT system will be extended also to railway terminals.Contracting out the design of integrated solutions to Autotrans is consistent withthe need of HUAL to be focussed on its core competencies (maritime transportand terminal management) and to build up know-how in car logistics.

5.2 The current and future role of the port of Le Havre in the Automotive supply chain

Both a crucial link within world-wide logistics network and a privileged settlingplace for import/export minded firms, the maritime port is a complex entity whichin many ways may be likened to a network company (Fredouet and Guerin,2000). Within the context of our research, we would rather talk about a “cluster oforganisations”. Consequently, it is worth questioning the role of the Port Authority,according to its double functions of manager of infrastructure, land and invest-ment and co-ordinator of private operator activities.

From this perspective, a port develops its own activities and competencieswith a view to satisfying demand from both port users and specific marketsegments. Thus, the extent to which the port creates “value” in a supply chain,promoting co-operation among the actors will depend, apart from port operators’behaviour, on PA policy actions.

With reference to the second aspect, which may be defined as a component ofa macroeconomic analysis, port strategic planning, public decisions such as portinfrastructures construction, concession of dedicated terminals and their connec-tion with the existing transport systems (hinterland connections) affect the attrac-tiveness of a port and stimulate new investments in value-added logistics activities.

26 The agreement presents the followings characteristics: for the supply of door-to-door services,Autotrans should contact STVA in priority. On the other hand, if a client asks for shipping services (withina door-to-door service) to STVA, HUAL has the priority.



Le Havre is the leading French port for containers and general cargo. Thanksto its geographical location and the high number of ocean-going shipping linesthat call at the port, Le Havre is also a major international crossroads for vehicletrading.

In order to keep its ranking position and to increase its competitiveness withrespect to the other ports of Northern Europe, the port of Le Havre has promoteda new development plan – the Port 2000 Project (primarily focussed on containertraffic) – to better satisfy the needs and requirements of the hinterland industrialand service sectors. In fact, as a consequence of the increasing importance ofports as part of supply chains, the extension and consolidation of cargo flowsdepend on a number of activities which are strictly related to the transport systembut also increasingly linked to the logistics system.

Thus, the analysis of the port of Le Havre in the Renault supply chain hasreferred to some key elements:

– Port facilities dedicated to the Ro/Ro traffic and their organisation.

– Modal share of the inland transportation.

– Value added logistics services.

– Information and Communication Technology.

Thus, in the following section, after a general overview of Ro/Ro traffic, itsorganisation and its inland modal share are presented. In the second section, thePort Authority’s policy actions are analysed. Finally, some prospects for the port,according to the Port Authority’s policies, are forecast.

5.2.1 Ro/Ro traffic: trends, markets and operatorsIn recent years, the port of Le Havre has registered an important growth of Ro/

Ro traffic. Initially dedicated to the export of Renault and Peugeot vehicles, it wasthen chosen by Nissan and other foreign auto-makers for their import activity. In2001, about 600.000 vehicles were handled, representing an increase of 35% inrelation to the previous year (figure 9).

This spectacular rise is mainly due to the start up of a new Renault productionline in Spain, with nearly 150,000 transfers per year from Le Havre to Santander.Such a service, managed by CAT and executed by HUAL and UECC, hasstrengthened the commercial relationships between Le Havre and Spain (Gefcoalso provides a service for PSA, between Le Havre and Vigo). This shows clearlyhow Ro/Ro traffic is highly dependent upon the car industry. In fact Renault is themain client of the Ro/Ro Centre in Le Havre for the import and export of newvehicles in the European area, the other auto-makers being Nissan, and PSAGroup constituted by Peugeot and Citroen (Table 11).

Concerning the Ro/Ro traffic split up per geographical area, the Europeanmarket accounts for about 70% of the total traffic thanks to the exceptional growthof vehicle trading between France and Spain. The short sea market has alsoincreased through:



Renault exports to the UK (182.803 vehicles):

– Nissan and Renault imports of vehicles (about 60% of the total) from UK.

– Renault and PSA exports to Ireland (32.554 vehicles, about 50% for eachof them).

The positive correlation between the variation of Ro/Ro traffic and vehicletrading is highlighted by the data presented by Table 12. In fact, Le Havre is themain gate for the export of French auto-makers to Europe; export accounts for80% of the port’s total traffic, 60% of which has a European destination.

Such data allow us to foresee rising importance of Le Havre for the Europeanmarket, mainly for Renault and PSA assembly plants and logistics platforms in

Table 11: Import and export of new vehicles per clients in Le Havre – 2001

Auto-makersNumber of vehicles

Import Export

Renault 91,491 342,391

Nissan 16,410 4,321

Peugeot 6,434 86,424

Citroen 14,329 39,783

Source: Le Havre Port Authority, 2002.

-

100 000

200 000

300 000

400 000

500 000

600 000

700 000

1993 1994 1995 1996 1997 1998 1999 2000 2001

Figure 9: New car traffic evolution in the port of Le Havre – N˚ of vehicles


700 000

600 000

500 000

400 000

300 000

200 000

100 000



France. French auto-makers trading affects considerably also deep sea transport,which is 30% of the total traffic. In relation to this segment, Le Havre offers a widerange of deep-sea services through companies such as HUAL, WWL, Mitsui OSKLines, NYK, K Line and Hyundai. In particular, WWL supplies deep sea services5 times a month, mainly to Africa and America; HUAL 12 times a month to Asiaand Africa. The others do not supply regular services.

Even if overseas trade is not as developed as short sea trade, Le Havre isfocussing on new foreign markets, such as Japan and Korea. In fact, the worldmarket growth for cars is estimated to be some 6 million cars per year, of whichJapan accounts for $3 million. Korea may represent a growing market as well

Table 12: Ro/Ro Traffic in the port of Le Havre by geographical markets(n˚ of vehicles)

1996 1997 1998 1999 2000 2001

Import Europe 37,627 43,283 40,677 41,862 56,488 115,753

UK 25,303 21,823 22,871 22,578 33,307 32,709Ireland 87 7 20 494 12 96Spain 10,127 20,676 17,129 17,629 20,865 91,988Portugal 181 2 8 162 12 55

America 4,413 4,078 3,047 5,155 10,662 6,401

Asia 2,672 10,971 9,370 6,544 1,544 459

Africa 304 399 168 161 131 397

Oceania 52 86 887 114 78 84

Total Import 45,068 58,817 54,149 53,796 68,903 134,094

Export Europe 129,231 187,286 177,543 183,550 208,430 278,077

UK 101,148 147,308 118,453 131,970 146,192 182,803Ireland 27,087 32,717 31,662 34,762 51,075 32,554Spain 42 3,998 16,119 12,455 3,562 43,850Portugal 24 245 536 63 69 430

America 61,215 53,123 66,168 71,385 71,500 69,268

Asia 9,790 12,498 12,283 10,777 19,506 30,763

Africa 39,936 42,335 47,116 44,170 64,580 65,020

Oceania 3,667 4,359 5,705 6,458 10,250 18,610

Total Export 243,839 299,601 308,815 316,340 374,266 461,738

Total General 288,907 358,418 362,964 370,136 443,169 595,832

Short Sea 166,858 230,569 218,220 225,412 264,918 404,830

Deep Sea 122,049 127,849 144,744 144,724 178,251 191,002




(Port Alliances, 2002). For this reason the Port Authority decided to open the portof Le Havre to foreign investments, such as Nissan.

The opening of Le Havre to new foreign investments led the number of Ro/Rooperators to increase. For example, Roussel, until last year, held a monopolisticposition in general cargo and there were no companies specialised in Ro/Rohandling. Recently, Autotrans and “Perrigault Manutention” have created a newstevedore company called SMR (Société de manutention du roll-on roll-off), forthe Ro/Ro handling27. Such stevedore companies are shown in the followingtable (Table 13), which gives an overview of all the different operators involvedin Ro/Ro traffic. 27

As far as logistics providers are concerned, apart from CAT, Gefco and Axialoperate in the Port of Le Havre.

Gefco is a logistics and transport company fully controlled by PSA, whichsupplies transport and vehicles logistic services. Unlike CAT, it is also involved ininbound logistics, managing numerous CKD traffics for PSA; to this end, Gefcoset up a new European platform PLIP (International Logistics Platform for CarParts) in the port.

Axial, recently acquired by Autologic, supplies Nissan vehicle storage, pre-delivery inspection (PDI), and other value added services (ranging from plasticremoval to optional installation) at Le Havre Ro/Ro centre. Autologic also gotstakes in CAT, in order to become a global logistics provider in the automotivesector.

Table 13: Ro/Ro traffic organisation: main operators in Le Havre

Logistics Operators

Shipping Lines(more 2 calls per month)

Stevedore Company

Short sea Deep sea

CAT

UECCCetam

HUALWWL

RousselSMRSMR

Roussel

Gefco

UECCSuardiaz

WWLHUAL

RousselRousselRoussel

SMR

Axial UECC Roussel


27 Autotrans is a HUAL subsidiary while Perrigault Manutention belongs to the Terminal of Normandy.



The shipping services are mainly supplied by HUAL and WWL for internationaldestinations and by Cetam, UECC and Suardiaz for the short sea trade.

The shipping lines involved in the “automotive” supply chain are selectedby logistics operators on the basis of the auto-makers’ requirements. This isclearly a consequence of the automotive supply chain characteristics inwhich the focal firm has a high degree of control and power over all the otheractors.

In conclusion, the organisation of the Ro/Ro traffic through the port of LeHavre can be summarised as follows:

– Logistics operators are in charge of transport management on the basis ofdifferent relationships with the auto-makers (long term contract, jointventure, ownership). The provision of door-to-door services depends onfurther commitments of transport operators (shipping lines, inland transportoperators), through specific contracts.

– Shipping companies are responsible for executing maritime transport. Theycan contract out the unloading/loading of the vehicles to a stevedorecompany, for example Roussel for UECC, or directly perform this activity bya subsidiary, like SMR for HUAL-Cetam. Apart from vehicle storage,logistics operators can also provide inland transportation.

The inland transportation of new vehicles towards the Port of Le Havre isstructured as follows: 65% is by road, 5% by rail and 30% by inland waterway(Port Alliances, 2002). These services are essentially provided by two maintransport providers:

– STVA for road and rail automobile transport and logistics.

– CFT, for the inland waterway transportation.

The STVA group is an 80% owned subsidiary of the SNCF Participation(SNCF Holdings) group; STVA re-distributes the vehicles supplied by its manu-facturing clients (including Renault, CAT, Ford, General Motors, Fiat, andVolkswagen) to their respective dealerships.

CFT is a group with 250 barges, involved in inland transportation withinFrance and between France and Belgium (Benelux). At present, 10 barges arededicated to vehicle transportation from the port of Le Havre, but the Group isplanning to increase the fleet due to the traffic growth in 2001 (more than 10%with respect to 2000). Barges are used by Renault for the delivery of carsassembled in the Flins and Sandouville plants as well as for part of the cargoarriving from Santander and heading towards the Parisian region. In total,100,000 vehicles are transported on barges.

5.2.2 The policy action of the Port Authority Le Havre Port Authority is a public body with legal status and financial

autonomy, mainly acting as planner, facilitator and regulator, whereas the privatesector acts as service provider, operator and developer.



As in many other ports, the Port Authority is now moving towards the landlordport model28, withdrawing from direct commercial operations to concentrate on itscore public statutory duties, represented by: 28

– The work of extending, improving, renewing and rebuilding port structuressuch as channels, docks, berths, access roads, etc.

– The economic development of the industrial zones by efficiently allocatingpublic funds.

– Ensuring fair competition within the port.

– Ensuring compliance with laws and conventions regarding public safety andsecurity, environment, navigation and health care.

With the aim to promote coherent development of port structures andconnected logistics activities, the Port Authority created an initiative named LeHavre Port Alliance, in partnership with the Le Havre Chamber of Commerce andIndustry, and the UMEP (Union of Port and Associated Professions). As a resultof this partnership, in the recent years the Port Authority has specified a new portdevelopment project that attempts to:

– Avoid investment duplication in expensive and technologically advancedfacilities by different ports within the national system that aim to attract thesame customers.

– Select the appropriate location for specific seaport facilities that willinterconnect maritime and land transport systems.

In particular, the Port 2000 Project foresees an investment of $600 million forupgrading existing container and bulk facilities, extending the Ro/Ro centre,purchasing new cranes and security equipment, and funding ongoing mainte-nance programmes.

“The Port Authority intends to increase capacity and attractiveness to accom-pany the sustained growth of external trade. Numerous jobs and significanteconomic consequences are expected to be generated by the project in logisticsand transport, but also, locally, in port trades, shops and services.

28 In the landlord port model, infrastructure is leased to private operating companies and/or toindustries. The lease to be paid to the Port Authority is usually a fixed sum per square meter per year,and is related to the initial preparation and construction costs (e.g., land reclamation and quay wallconstruction). The private port operators provide and maintain their own superstructure includingbuildings (e.g., offices, sheds, warehouses, Container Freight Stations, workshops). They alsopurchase and install their own equipment on the terminal grounds (e.g., quay cranes, transtainers,conveyor belts) as required by their business. In landlord ports dock labour is employed by privateterminal operators, although in some ports part of the labour may be provided through a port-widelabour pool system (World Bank, 2001). Concerning different models of Port Governance see alsoGouvernal, E. and Lotter, F., 2001, “L’offre de services portuaires. Evolution des systèmes institution-nels et nouvelles formes d’organisation”, Seminario Internacional Eficàcia Logistica Portuària,Curitiba, Brazil, 26 october



This project should double container trade through the port by 2010 and fosterthe use of the most competitive and least polluting means of connection” (PortProject 2000)29. 29

With the aim of redefining and substantially expanding hinterland industrialinfrastructures and services, Le Havre is developing three new logistics parksadjacent to the container terminals (www.port-technology.com):

– The Hode Logistics Park, a private area developed by the U.S./ French jointventure Garonor-Prologis, located within the port's industrial zone.

– Logistics Park 2000, which will be located next to the first four Port 2000 berths,and should be ready for occupancy in 2003. Plans include building up to2 million square feet of warehousing and manufacturing space, along with up-to-date information technology and customs clearance services at that location.

– Normandy Bridge Logistics Park, also located within the port’s industrialzone, which will be a new warehousing area, with facilities protected againsttheft and fire, and with all necessary certificates and approvals (veterinary,phyto-sanitary, excise) to take care of customers' goods.

The project also includes the improvement of rail, road and river access. Infact, hinterland connections represent an important element for facilitating thesmooth flow of cargo from port terminals to different inland industrial andcommercial areas and therefore for reducing congestion and waiting times.

Due to the complexity of the issue, the Port Authority has involved RéseauFerré de France (RFF) and SNCF in the analysis of the current and potentialinterconnections between port terminals and rail infrastructures. For the connec-tions between port terminals and the main road network, PAH has involved theDepartment Public Works Division (Direction Départemental de l’Equipement).For the river links, Le Havre will be serviced by a dedicated river terminal locatedin the southern part of the Ocean Dock with a quayside 200 metres long and aback-up area. The suitability of this terminal has been studied in detail by DTMPL(Direction des Transports Maritimem, des Ports and du Littoral, Directorate forSea Transport, for the Ports and the Coastal areas) and DTT (Direction desTransports Terrestres, Directorate of Inland Transport (PAH, 2002a).

Finally, in order to meet the increasing demand for vehicle storage andhandling, the Port Authority decided in 2001 to extend the Ro/Ro Centre. Thisextension includes the following re-developments (PAH, 2002b):

– 13 hectares of back-up storage for the parking of light vehicles.

– A quay 380 metres long, as well as a 1,7 hectare quayside.

29 The first phase includes four berths in the southern area of the present port facilities, with acorresponding access channel and breakwater and, according to requirements, two additional berths asan extension of the Osaka terminal as well as all the necessary development work for the related directinland connections. Port 2000 also considers the preservation of the biological functions and wealth ofthe Seine Estuary.



– A new rail spur for unloading vehicles within the boundaries of a plannedstorage area connected to the rail sidings of the Ocean terminal.

5.2.3 The future role of Le Havre in the Automotive supply chain

The changing situation of the car manufacturing industry (consolidation, take-overs and mergers, and widespread outsourcing) has considerably affected theflows of imports and exports. For the Roll-on Roll-off transport sector, the trend,as for containerised freight, is towards concentration and the setting up of “hubs”integrating genuine distribution platforms. The largest production and assemblycapacities together with the biggest car markets and the largest stream of shortand deep sea traffic are concentrated in the Central Europe area (Eurostat,1999). The ports of the so-called “Hamburg-Le Havre Range” handle most of theseaborne stream of goods from and towards Europe (Eurostat, 2001). This portarea is highly competitive, as 25% of the relevant port locations for car handlingare located in a relatively small geographical area. The two leaders are the portsof Zeebrugge and Bremerhaven. The port of Le Havre could assume the role ofa direct competitor, if the new strategies adopted by the Port 2000 Projet succeedin their objectives.

The effort to evolve from a transit point into a logistics platform offering addedvalue services makes the case of Le Havre an interesting one for forecastingfuture trends in Ro-Ro ports. Taking into consideration the Ro/Ro traffic charac-teristics and the PAH policy actions, some factors could affect the future role ofLe Havre in the automotive supply chain:

(1) The improvement of hinterland connections, by linking port terminals withthe current road, rail and inland waterway system.

(2) The promotion of value added logistics activities in new dedicated areas.

(3) The increasing use of ITC as a facilitator and necessary tool for theintegration process across the supply chain.

Efficiency of inland transport (1) has become a critical factor for the futuredevelopment of the port as well as that of overall trade growth. Today’s globallogistics organisation makes it mandatory for auto-makers (or their representa-tives) to be able to rely on seamless transport chains, in which the port is aprominent node. Smooth interactions between the different transport modesappear a prerequisite for the effective delivery of integrated logistics solutions.Since new trade patterns require quicker, cheaper and safer transport of vehiclesthan in the past, the main obstacle was found to be at each transport modeinterface, which caused delay and increased the cost of the whole transportchain. Modernised port facilities themselves are only part of the solution; thus,improved and well-integrated inland distribution networks with port terminals, bothat local and national levels will increase the responsiveness of all port operatorsto the customer’s requirements.

With regard to (2), the role of the Port Authority is crucial in planning,implementing and promoting the development of logistics activities and services,



as they affect the attractiveness of a port, as well as its strategic position in thesupply chain. Undoubtedly, Ro/Ro traffic can generate high added value in theport of Le Havre if the Port Authority and private operators both make an effort todevelop logistics activities strictly related to the automotive supply chain. Thisimplies that the attractiveness of the port of Le Havre could be increased ifefficient and reliable logistics and transport services and real time information areavailable to auto-makers.

The use of ICT (3) plays a crucial role both in the pursuit of global strategies(wider geographical coverage, multimodal operations, integrated logistics solu-tions) by logistics and transport operators and in the creation of vertical co-operation across the supply chain (Bollo et al., 1995). Technological advance inICT significantly supports SCM because via information exchange it improveslead-time, forecasts and transparency. ICT should increase the speed of vehicledistribution and reduce the amount of unproductive capital, whether in inflatedinventory levels or in vessel delays at the port.

With a view to improving information sharing within and outside the port, adata processing and telecommunication system (called ADEMAR +) jointlydeveloped by the Customs and Port Community, covers the administration ofcargo flows, by linking all the members of the port. This system simplifies themanagement of information flows by:

Collecting the data generated by the various operations of port trades;

– Linking different port operators, customs and shippers by EDI.

– Providing a wide range of simplified procedures (among the others, theCustom-free warehouse system “FREEDOM”).

Moreover, the Port Authority and the port of Marseilles recently agreed (afterlong lasting contacts) to pool their means and expertise to develop a common ICTsystem. Soget in Le Havre and GYPTIS in Marseilles formed a joint subsidiarycompany – SOGYP – for the development of AP+, a tool for the simplification ofthe procedures between the ports (PAH, 2002b).

Finally, we can highlight the impact of Port Authority actions on the future roleof the major port operators acting in the automotive supply chain. Achieving portcompetitiveness is more and more a question of taking into account competitionbetween operators acting at the same port, due to the increasing role of dedicatedstructures. Indeed, intra-port competition is becoming a burning issue, on whichPA choices can strongly impact.

The decision to open Le Havre to new foreign investments through theextension works of the Ro/Ro centre and the concession of new dedicateterminals should foster the setting up of new operators for the vehicles handlingand storage, thus increasing competition and improving the efficiency of thesupplied services.

For example, HUAL’s interest in obtaining a dedicated terminal could expressa desire to process vessels immediately upon arrival, eliminating time losses and



to re-schedule service timetables because of an exclusive use of the terminal.Terminal ownership and management could ensure greater control over costs, asa result of priority for using of the facility, and, from a strategic point of view, itshould allow HUAL to control part of the supply chain beyond the coastal frontier.

With reference to the creation of logistics parks, the Port Authority is aiming toattract enterprises that are extending their logistics chains or providing them withspecialised capabilities to add value to cargoes. Such parks will be equipped withcomprehensive facilities for distribution operations close to the terminals and withmultimodal transport facilities for transit. They provide space for warehousing andforwarding facilities including the storage and handling of vehicles. Therefore inthese logistics parks, port operators could assemble car components and parts,and process vehicles according to specific customer and destination countries.They could do this either on their own or in partnership with other specialisedfirms.


Conclusion

Conclusion

As integrated supply chain management is now at the epicentre of businesstransformation, firms are breaking down walls between internal functions ordepartments, as well as between the enterprise itself and key partners in thevalue chain (e.g., customers, distributors, suppliers, and carriers). One of themain goals of this new management approach is to make everyone in the supplychain share a common platform of logistics transactions and information systems.

Against this background, the aim of this work was to see if and how a port canface the challenge of greater integration, on the assumption that the greater theintegration between the actors, the greater the competitiveness of the wholesupply chain. Thus, the main results of the research consist of some theoreticalpremises for an innovative analysis of ports in supply chains, on the basis of theorganisational and managerial approaches. Business economics research in thearea of maritime transport and ports is still at an early stage. In particular,scientific publications and the available techniques are mainly concerned withtransport and industrial economics, while empirical analysis has mainly beendeveloped at macro-economic level. As a result of these shortcomings in thebusiness organisational literature, we adopted the Lambert descriptive model thatstresses the importance of the following elements:

– Inter firm management (the emphasis is on a focal firm and on its core linksin the chain).

– The process approach (the key processes to implement to effectivelymanage the entire chain).

– Integration (the components and variables that allow higher integration).

The innovative aspect of the present work is of a methodological nature, aswe tried to test the SCM assumption on a specific case. We adapted an analyticalmodel for the study of the actors’ behaviour in supply chain management to thespecific context of the Renault automotive supply chain involving the port of LeHavre. Due to the complex nature of a port, from both managerial andentrepreneurial points of view, we analysed the port’s contribution to thecompetitiveness of a given supply chain in two different steps.

First, we analysed the role of each of the operators in the supply chain itself(micro level).

Second, we approached the port as a cluster of organisations (macro level)where the Port Authority acts as the “brain” of the “organism”. The reason forsplitting the analysis into two complementary halves is that port performancederives from the quality of the interfaces between the members of the cluster of



organisations aside from the optimisation of the activity of each firm. Whatinterests us is the need to maximise the efficiency and the effectiveness oflogistics actors, considered from a global perspective.

The chosen methodology was also consistent with the current evolution ofinternational maritime trade patterns, which is giving rise to the “third generationport”, which is a dynamic node in the international production and distributionnetwork. The idea is that when a port has gained the status of a crossroadsbetween the production and the distribution spheres there is a need for higherintegration with its main customers, both direct port users and final clients.

Our detailed analysis has been essentially confined to the micro-level via theidentification of the key logistics service providers involved in Renault SC, with aparticular focus on those supplying services through the Port of Le Havre. Next,we identified Renault’s key business processes and their main features. Finally,after a description of the Automotive supply chain from the car manufacturer’sperspective and identifying key business processes, we have analysed theintegration achieved for each business process by the LSPs of the port of LeHavre. Such results derive from the application of the descriptive model proposedby Lambert and revised according to the specific nature of our research. Themain goal was to test the level of integration between the actors, in both theprocurement and the distribution halves of their activity.

Concerning procurement, we observed that Renault adopts highly centralisedand internally controlled management, because the requirements of the assem-bling sites in terms of punctuality and flow synchronization pushed the Frenchautomotive producer to develop distinctive capabilities which are not transferableto an external provider without radical process re-engineering or a demandingtransfer of competencies. The role of maritime transport providers, with regard toflows of CKDs and components is thus merely operational. The transportation ofthese components by container is normally provided on the basis of a 1 yearcontract (slot agreement) between the liner shipping company (for example CMA-CGM) and Renault, the latter imposing its conditions in terms of delivery timesand prices for the service, for a previously fixed level of quality.

With regard to the distribution of new vehicles, the role of CAT, Renault’s mainlogistics provider, remains vital at least until the expiration its exclusive contractsthat last seven years for European distribution and five years for intercontinentaldistribution (starting in 2001). CAT represents 60% of the Ro/Ro exchanges ofthe Port of Le Havre. In order to meet its commitments in relation to Renault, CAThas set up different types of arrangements with maritime companies (Cetam andUECC for Europe; Hual and Wallenius for the intercontinental transportation),with freight forwarders (Autotrans) and with providers specialised in railwaytransportation (STVA), while keeping management control for itself. Other actorsinvolved in the transport chain are the stevedoring companies, such as SMR andRoussel. It is CAT that imposes the contractual conditions on service providersand it is CAT that is responsible vis-a-vis Renault for the quality and the efficiencyof the integrated provision.


Conclusion

We have also considered the possible evolution of the supply chain in termsof relationships between the actors and their co-ordination mechanisms. Wewondered about the coordination mechanism used to achieve higher integration.Are we dealing with spontaneous process integration on the part of all operatorsin order to achieve greater efficiency for the entire chain? Or is the focal firm,Renault, able to impose cooperative behaviour on its providers through itscontractual power?

In particular, the possible evolution of the Renault supply chain has beenanalysed through:

– The degree of influence of the focal firm in managing the supply chainstructure (a measure of the focal firm’s ability to control the chain);

– The dynamism of the supply chain (the number of actors participating in thesupply chain and the typology of their relationships with the focal firm).

Interviews with Renault, CAT and the other operators have shown that for themeantime Renault founds its strategy of global management of the chain on itsstrong contractual power. Even CAT seems to play a subordinate role to itscustomer's requirements. In addition, the end of CAT’s exclusive contract couldpresage a new configuration of the distribution chain, with a possible opening upof the market to new operators who have already developed expertise inautomotive logistics. However, long term collaboration and knowledge ofRenault’s managerial culture of Renault remain two strong entry barriers for newcompetitors, to CAT’s advantage.

As far as the macro analysis of the Port of Le Havre is concerned, it isnecessary to keep in mind that for the meantime the Port of Le Havre is mainlyinvolved in the car exports (for one car imported via the Port, four are exported).It is known that added value services (such as PDI-pre delivery inspection,dewaxing, option installation, etc.) in the automotive chain are normally providedin the import Ports, which thus become key links of the chain. Consequently, thePort of Le Havre cannot really take off as a hub for the automotive industry untilinbound flows have increased.

Of course, PAH policy actions can encourage the reorientation of operatorstowards Le Havre at the expense of the Ports of the Northern Range, such asZeebrugge, the industry leader.

Another interesting question that emerged from the macro analysis of the Portand that deserves to be explored further is the difficulty for a port to provideperformance that satisfies simultaneously both the user of the supplied service(maritime company, freight forwarder, stevedore, etc.) and the final customer (themanufacturer or the recipient of the merchandise in transit). For example, thetransit time seems to be important for the shipping line company, while it is not aport selection criterion for the final customer. A possible port selection criterion forindustry is the supply of logistical services for freight.

When conducting the analysis and writing this report, we have endeavouredto show the limits of this approach for analysing the level of integration between



the actors of a chain. We consider that further theoretical validation and widerfield testing are both required.

Concerning the theoretical issue, our research is exclusively focused onsupply chain actors and their behaviours, in terms of supplied services, mutualrelationships, ICT systems and types of performance measurements. The nextstep should be to undertake economic evaluation, via some performanceindicators for the whole supply chain. Without ‘quantification’ no comparison ispossible between “integrated” and “fragmented” supply chains. In the same way,a port cannot appreciate in a thorough manner the benefits of investing in anddeveloping a given supply chain if a cost analysis for each elementary activitywithin the port is not conducted, by means of an approach involving comparisonswith equivalent supply chains.

With regard to the field test, the area of investigation was limited to somespecific segments of a specific supply chain. A wider analysis, extended to therest of the supply chain could allow a better understanding of the dynamics ofrelationships, of the integration levels, and of the performance indicator, for ageneral, as opposed to a partial, optimisation of the entire chain. Subsequently,a comparative analysis of two different supply chains passing through the sameport could result in useful benchmarking aiming to identify the appropriatemanagerial model. Such benchmarking could also be useful for the PA whenmaking decisions about infrastructure investments, hinterland connections andland management.


Conclusion

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Abridged version in French / Courte synthèse

SynthèseAbridged version in French

La recherche proposée porte sur le rôle du Port du Havre dans la supply chainde Renault. L’analyse de la contribution des opérateurs portuaires à la créationde la valeur au long de la chaîne est au centre de la recherche. Il s’agit d’uneanalyse qui implique la prise en compte à la fois des caractéristiques de la chaîneétudiée (la chaîne automobile) et des ports en tant que maillons impliqués dansplusieurs supply chain.

La finalité de cette recherche est d’une part d’ordre méthodologique. Nousavons testé un modèle analytique fondé sur les principes du Supply ChainManagement. Ce modèle vise à analyser le rôle des acteurs impliqués dans unechaîne dans la création de la valeur pour le client final. L’hypothèse du SupplyChain Management, et donc de cette recherche, repose sur le fait que plusl’intégration entre les acteurs est élevée et plus leur contribution à la création dela valeur est forte.

D’autre part, l’intérêt du cas spécifique a animé le travail de terrain qui a ététrès riche et stimulant du fait de l’ouverture et de la disponibilité à partager lesinformations disponibles de la part des opérateurs et des experts impliqués dansnotre démarche de collecte des données.

Concernant le double contexte de la recherche, nous avons présenté lesenjeux qui affectent le développement de l’industrie automobile et le changementen cours du rôle des ports au niveau du commerce et des échanges internation-aux.

L’industrie automobile est l’une des plus étudiées sous l’angle d’approches etde disciplines très différentes. Nous avons souligné principalement les évolutionsdans la gestion du processus logistique qui dérivent des changements rapides auniveau de la réglementation (libéralisation de la distribution), du comportementdes acteurs (concentration croissante du secteur) et du consommateur (person-nalisation de plus en plus élevée), des innovations des technologies de l’informa-tion et de la communication (places de marché et systèmes EDI). Nous avonsdonc établi, de façon schématique, quatre modèles alternatifs de gestion de lalogistique suivant le degré et le type d’externalisation choisis.

À propos du deuxième objet de notre recherche, les ports, nous avons pris encompte leur évolution vers des fonctions de plates-formes logistiques. Enparticulier, nous avons convenu que l’amélioration de l’efficience opérationnelledes ports n’est pas suffisante pour satisfaire les utilisateurs des ports et lesclients finaux de la chaîne. Une approche à double volet est donc nécessaire afin



de mettre en valeur le rôle du système opérationnel (transport et manutention dela marchandise) en même temps que celui de l’organisation manageriale àl’intérieur de toute la chaîne (services logistiques à forte valeur ajoutée). Danscette recherche nous avons défini principalement les caractéristiques du servicequi mènent à une création de la valeur la plus élevée. En particulier, en ce quiconcerne le rôle des ports desservant le secteur automobile, les nouvellesstratégies des constructeurs automobiles ont affecté considérablement les fluxd’importations et d’exportations. Ainsi, à l’instar des constructeurs, lesprestataires logistiques et de transport s’allient pour trouver des solutionsglobales aux échanges. Pour le secteur Roll-on Roll-off (Ro/Ro) la tendance,comme pour le fret en conteneur, est à la concentration et à la mise en place de« hubs » intégrant de véritables plates-formes de distribution.

Du point de vue méthodologique, parmi les nombreux modèles existants duSupply Chain Management pour l’analyse du rôle des acteurs dans une chaîne,nous avons retenu le modèle de Lambert. Il s’agit d’un modèle tridimensionnel,où trois éléments sont étroitement liés et permettent d’analyser le niveaud’intégration parmi les acteurs d’un supply chain, et notamment le niveaud’intégration entre la firme focale (dans notre cas Renault) et les acteurs clés (lesprestataires logistiques et de transport concernés par le Port du Havre). Ceséléments sont : la structure de la chaîne (les acteurs clés), les processus degestion (ceux qui lient les acteurs au long de la chaîne) et les composants SupplyChain Management (les variables qui permettent une gestion intégrée desprocessus de la part des acteur clés). L’aspect innovant de la méthodologieproposée repose sur le fait qu’aucun travail n’a été fait, à notre connaissance, surla supply chain automobile et ses relations avec une communauté portuairespécifique selon une approche Supply Chain Management.

En conséquence, les résultats principaux de la recherche consistent dansquelques outils théoriques (ce qu’on a appelé « Matrice Supply ChainManagement ») pour une analyse innovatrice des ports dans des supply chainssuivant une approche organisationnelle et manageriale. L’état courant de laconnaissance sur le transport maritime et les ports paraît être modeste en ce quiconcerne la recherche en gestion et en théorie des organisations. En particulier,les publications scientifiques et techniques disponibles font référence principale-ment aux transports et à l’économie industrielle, tandis que l’analyse empirique aété principalement développée au niveau macro-économique.

Cependant, au-delà de l’intérêt purement méthodologique de cette recherche,le coté empirique est développé et porte notamment sur les variables de gestionmobilisées par Renault et ses partenaires logistiques concernés par le Port duHavre. Ces prestataires gèrent le transport maritime intra européen et extraeuropéen à la fois des composants de voitures et des produits finis. L’étude de lachaîne des pièces de rechange n’a pas été abordée, car il s’agit d’une gestion quirépond à des attentes des consommateurs finaux et à des logiques de distribu-tion tout à fait différentes de celles des deux segments de la chaîne étudiés. Nousn’avons pas non plus suivi une chaîne entière pour un véhicule spécifique (ex. :



Clio ou Mégane), ni une chaîne logistique de bout à bout concernant un sited’assemblage donné (ex. : Flin ou Envigado – Colombie).

Nous avons analysé une partie de la supply chain de Renault, ayant laplateforme logistique Grand Couronne comme point de départ et le Port du Havrecomme point de transit. Il s’agit d’une première étape d’une recherche plus large,aussi bien du point de vue théorique qu’empirique. Nous avons étudié le rôle desacteurs impliqués dans les flux d’approvisionnement et de distribution touchant lePort du Havre.

Pour la gestion de ses approvisionnements Renault s’appuie sur une gestionfortement centralisée et contrôlée en interne, car les exigences des sites demontages en termes de ponctualité et de synchronisation des flux ont poussé leproducteur automobile français à développer une expertise très pointue etdifficilement transférable à un ou plusieurs prestataires externes sans un fortinvestissement en un process re-engineering ou en un opération de transfert decompétences. Les opérateurs du transport maritime, en ce qui concerne les fluxdes composants et des modules pour l’assemblage des voitures, sont cantonnésà un rôle d’exécutants. Le transport par conteneur de ces composants estnormalement offert sur la base d’un contrat d’un an (slot agreement) entre lacompagnie de ligne des porte-conteneurs (par exemple CMA-CGM) et Renault,qui impose ses conditions en termes de délais de livraison et de prix pour leservice, pour un niveau de qualité préalablement fixé.

Concernant la gestion de la distribution des véhicules, le rôle de CAT,prestataire logistique « privilégié » de Renault, reste fondamental au moinsjusqu’à l’expiration de son contrat d’exclusivité de la durée de sept ans pour ladistribution européenne et de cinq ans pour la distribution extra européenne (àcompter du 2001). CAT représente 60 % des échanges havrais de voitures. Pourle respect de l’engagement avec Renault, CAT met en place des types différentsd’accords avec des compagnies maritimes (Cetam et UECC pour le cabotageeuropéen ; Hual et Wallenius pour le transport intercontinental), des manutention-naires (SMR et Roussel), des commissionnaires (Autotrans) et des sociétésspécialisées dans le transport ferroviaire (STVA), tout en gardant le contrôle dela gestion totale. C’est CAT qui impose les conditions aux fournisseurs deservices de transport et c’est CAT qui est responsable vis-à-vis de Renault de laqualité et de l’efficacité de la prestation intégrée.

Nous nous sommes intéressés principalement aux rapports existant parmitous ces acteurs afin de vérifier quel était le niveau d’intégration et par quelmécanisme de coordination cette intégration, là ou elle existe, est atteinte : s’agit-il d’un effort spontané de coordination des processus de la part de tous lesopérateurs pour une efficacité globale de la chaîne plus élevée ? Ou bien la firmefocale, Renault, arrive à imposer un comportement collaboratif aux prestatairesimpliqués dans la gestion de sa chaîne, du fait de son pouvoir contractuel ?

Les entretiens avec Renault, CAT et les autres opérateurs ont mis enévidence la stratégie de gestion globale de la chaîne de Renault fondée sur sonfort pouvoir contractuel. Même CAT, l’opérateur logistique « privilégié » semble



jouer un rôle assez subordonné aux exigences de son client. En plus, la fin ducontrat d’exclusivité de CAT pourrait préfigurer une nouvelle configuration de lastructure de la chaîne de distribution, avec une ouverture probable du marché àdes opérateurs nouveaux qui ont déjà une expertise dans la logistique automo-bile. Cependant, la collaboration de longue durée et la connaissance de la culturemanageriale de Renault restent deux fortes barrières à l’entrée pour desconcurrents à l’avantage de CAT.

Le deuxième volet de la recherche empirique portait sur le rôle de l’Autoritéportuaire dans le développement du Port en tant que nœud de la chaîneautomobile au niveau européen et mondial. En étant confronté à deux géantsspécialisés dans cette industrie, Zeebrugge et Bremerhaven, les actions desoutien et de promotion promues par l’Autorité Portuaire du Havre peuvent êtrecruciales pour l’essor de cette branche dans le Port.

En considérant les caractéristiques du trafic Ro/Ro et les politiques d’action duPAH, quelques éléments pourraient influencer le futur rôle du Havre dans la supplychain automobile : l’amélioration des connections des terminaux portuaires avec laroute, le rail et la voie navigable intérieure ; la promotion des activités logistiques àvaleur ajoutée dans les nouvelles zones dédiées ; l’utilisation croissante desTechnologies de l’Information et de la Communication comme catalyseurs et outilsnécessaires pour le processus d’intégration tout au long de la chaîne.

Le Port du Havre reste pour l’instant un Port concerné principalement parl’export (pour une voiture importée via le Port, quatre voitures sont exportées).Car les services à valeur ajoutée qui permettent à un port de jouer un rôle clefdans la chaîne automobile sont effectués dans le port d’arrivée. Sans unecroissance des flux d’import, ce pas vers un rôle stratégique à l’intérieur deséchanges d’automobiles ne pourra pas être fait. A l’import, la préparation desvéhicules avant distribution directe est maintenant devenue une spécialitérecherchée dans les terminaux. Dénommée PDI (pre-delivery inspection), cetteactivité est en forte croissance dans les ports concernés par des flux de voituresen entrée. Elle comprend plusieurs prestations, telles que le déprotexage(élimination de la couche de protection en cire), l’installation d’un pack GPL,l’assemblage d’engins de chantier, etc.

Un des problèmes soulevés par cette recherche est la difficulté pour un portde satisfaire en même temps l’utilisateur du service offert (compagnie maritime,manutentionnaire, commissionnaire, etc.) et le client final (l’industriel ou ledestinataire de la marchandise en transit), en termes de performances àrespecter. Le rôle des ports qui doivent répondre à des exigences et à desattentes diverses se complexifie. Par exemple, le temps de passage portuaireimportant pour la compagnie maritime ne fait pas partie des critères d’évaluationdu client final. Pour l’industriel c’est l’offre de prestations logistiques « sur lamarchandise » qui représente davantage un des critères de sélection d’un port

Tout au long du travail, nous nous sommes efforcés de rendre compte deslimites que comportait cette approche pour l’analyse du niveau d’intégration entreles acteurs d’une chaîne, selon l’hypothèse qu’une intégration élevée entraîne



une performance plus importante. La validation théorique du modèle d’analyseproposé reste à développer car notre recherche s’est concentrée principalementsur les acteurs de la chaîne, et sur leurs comportements, quant aux servicesfournis, aux rapports contractuels, aux systèmes ICT et aux dimensions individu-elles de la performance prises en compte par chaque opérateur. Le pas suivantdevrait aboutir à une évaluation économique, par le biais de quelques indicateursde la performance totale de la chaîne. Sans « quantification » aucune comparai-son n’est possible entre chaînes et entre segments d’une chaîne.

De la même façon, un port ne peut apprécier de manière fiable l’intérêt dudéveloppement d’une chaîne donnée, si une analyse des coûts pour chaqueactivité élémentaire dans le port n’est pas réalisée.

L’envergure de l’enquête Port du Havre-Renault limitée à quelques segmentsspécifiques de la chaîne, est très instructive. Une analyse plus large, étendue aureste de la chaîne reste à développer pour une compréhension profonde de ladynamique des rapports entre les acteurs, du niveau de l’intégration, et desindicateurs de performance. L’optimisation générale de la chaîne entière pourraitainsi remplacer une optimisation partielle. Par la suite, une analyse comparative dedeux supply chain différentes qui passent par le même port permettrait unbenchmarking intéressant pour l’identification du modèle managerial le plus efficace.


Appendix

Appendix

Appendix 1: Renault’s plants in the world - 2002Source: Renault Financial Report, 2002

Automobile plants in France

Plants Activities Outputs

Batilly (Sovab) Bodywork/Assembly Master Mascott

Choisy Powertrain Reconditioned engines Reconditioned injection pumps Reconditioned nozzle holders Reconditioned sub-assemblies New engines

Cléon Powertrain Engines Gearboxes

Dieppe Bodywork/Assembly Clio Renault Sport Espace

Douai Bodywork/Assembly Mégane Scenic

Douvrin (FM) PowertrainCasting

EnginesIron castings

Flins Bodywork/Assembly TwingoClio

Gennevilles Bodywork/Assembly Trafic body-in-white

Le Mans PowertrainCasting

Front/rear axlesIron castings

Maubeuge (MCA) Bodywork/Assembly Kangoo carKangoo LCV

Ruitz (STA) Powertrain Automatic transmission

Sandouville Powertrain Laguna II Hatchback Laguna II Sport Tourer Vel Satis

Villeurbanne (SMV) Powertrain Front/rear axles

Romorantin Bodywork/Assembly EspaceAvantime



Automobile plants in Western Europe

Automobile plants outside Western Europe


SPAIN (Fasa Renault)

Valladolid Bodywork/AssemblyPowertrain

ClioEngines

Palencia Bodywork/Assembly Mégane

Seville Powertrain Gearboxes

PORTUGAL (Renault Potuguesa)

Cacia Powertrain Gearboxes Axles Gears Oil pumps Engine components

UNITED KINGDOM (General Motors plant)

Luton Bodywork/Assembly New Trafic


ARGENTINA

Cordoba Bodywork/Assembly Clio Kangoo car Kangoo LCV Mégane Trafic

BRAZIL

Curitiba Bodywork/Assembly

Powertrain

ClioMéganeEngines

CHILE

Los Andes Powertrain Gearboxes

CHINA Bodywork/Assembly Trafic

COLOMBIA

Envigado Bodywork/Assembly Twingo Clio Mégane Renault 19

KOREA (Renault Samsung Motors)

Busan Bodywork/AssemblyPowertrain

Samsung SM5Engines


Appendix

MALASYA Bodywork/Assembly Trafic Permas

MEXICO (Nissan plant)

Cuernavaca Bodywork/Assembly Mégane Scenic

Aguaclientes Bodywork/Assembly Clio

ROMANIA (Dacia)

Pitesti Bodywork/Assembly

Powertrain

Dacia 1300 range Dacia Nova Engines Gearboxes Front/rear axles Transmissions

SLOVENIA

Revoz Bodywork/Assembly ClioFront/rear axles

TURKEY (Oyak – Renault)

Bursa Bodywork/Assembly

Powertrain

Clio Mégane Renault 19 Engines Gearboxes

URUGUAY

Montevideo Bodywork/Assembly TwingoExpress




Appendix 2: Questionnaire for the analysis of Renault demand features

The Renault demand features

Corporate Name

Legal status

Address

Person interviewed

Position in the company

Telephone Fax:

E-mail Web-site

All the answers to the following questions will be confidentially used.

In any case, all the data and the information provided will be submitted to theinterviewee before any publication.

Institut National de Recherche sur le Transport et leur Sécurité

2 av Général Malleret-Joinville 94114 ARCUEIL France Tél : +33 (0)1 47 40 70 00 Fax : +33 (0)1 45 47 56 06

National Research Council Research Institute on Service Activities

Via M. Schipa 115 80122 Naples - Italy

Tel: +39 (0)81 2470924 Fax: +39 (0)81 2470933


Appendix

1. The Automotive supply chain structure passing through the Port of Le Havre

1.1 The Automotive supply chain.

What supply chain structure does your firm present and where does the portof Le Havre play a crucial role?

Traditional Automotive Supply Chain

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The current Automotive Supply Chain

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Component Suppliers Manufacturer Dealers Customers


Main dealer

Spare & Servicing

Dealers Customers

Tier 1 integrators



1.2 Who are the main actors involved in the Supply Chain?

* Freight Forwarder, Shipping Company, Terminal Operator, etc.

Main actors involved Details: Name, location, contact details, activity performed

First tier components suppliers (or integrator)

Second tier components suppliers

Logistics Service Provider (LSP) for procurement process (Type of actor)*

Manufacturer’s main activities (production plants, location, assembly)

Logistics Service Provider (LSP) for distribution process (Type of actor)*

Main dealer

Dealers

After sale (spare parts) and service providers

Other actors


Appendix

1.3 Which kind of relationships30 do you have with the actors involved? 30

Main actors involved Details: Name, location, contact details, activity performed

First tier components suppliers or integrator

Second tier components suppliers

Logistics Service Provider (LSP) for inbound logistics in case of outsourcing

Manufacturer’s main activities

Logistics Service Provider (LSP) for outbound logistics in case of outsourcing

Main dealer

Dealers

After sale (spare parts) and service providers

Other actors

30 Merger or acquisition, joint venture, formal or informal agreement, short or long term contract, spotstransaction, other.



2. Business processes featuresCould you give us a general description of the following business processes?

2.1 Description of Procurement Business Process:

2.2 Description of Inventory Management Process

Number of components suppliers

Sourcing markets (National, European, International)

Flow Management (in house or outsourced)

Software for Procurement Mgm

Frequency, punctuality and quantity

Components

CKDs

Quality and performance standard

Components

CKDs

Other

Centralized or decentralizedComponents

CKDs

In-house or outsourcedComponents

CKDs

Stock holding pointsComponents

CKDs

Software for Inventory Mgm

Inventory Mgm System (Safety stock level, batches, etc.)

Other


Appendix

2.3 Description of Manufacturing process

2.4 Description of Distribution process

Assembling or producing

Standardization and/or differentiation

Centralization or decentralization of plants

Product design

Software for Manufacturing Mgm

Production Mgm system (MRP, Kanban, JIT, )

Other

Product to be delivered (car components, CKDs)

Geographical coverage (markets)

Flow Management (in house or outsourced)

Software for Distribution Mgm

Frequency, punctuality and quantity of deliveries

Components

CKDs


Components

CKDs

Other



2.5 Description of Commercial practices

2.6 Description of Transport process

Other considerations on the Business Processes

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Communication (brochure, Web-Based,...)

Supply Chain Visibility (Tracing and Tracking)

On line ordering processes

Lead time

Channel distribution

After sales services (SAV): in-house or outsourced

Other

Modal choice for Procurement

Modal choice for Distribution

In house or outsourced

Number and type of transport suppliers

Software for Transportation Mgm


Other


Appendix

3. Performance measurement

3.1 What factors do you consider more important in responding to the customer requirements?(Put them in order giving 1 to the most important and 7 to the less one)

3.2 What is, in your opinion, the level of importance of the following factors for the future development of your company?

Elements of the Customer SatisfactionImportance

Present Future

Total logistics cost

Transit time

Consignment security

Reliability

Comprehensiveness*

Flexibility


Others

* It refers to the extent to which a single operator will arrange and accept responsibility for all compo-nents of the transportation chain between ultimate origin and destination.

Critical success factorsImportance

1 2 3 4 5

Range of the services supplied

Level of customerization

Geographical coverage

Information System

Partnerships with suppliers/clients

Price

Company brand/Image

Marketing channels

Optimization of the distribution network

Customer service

Other (please specify)

(1 = no importance, 5 = very important)



4. Trends at European level in the Automotive industryThe automotive industry has undergone important changes in the last years,

due to the markets globalization and the increasing develoment of Informationand Telecommunication Technologies.

In the following pages, we summarized some of the most important trends thathave affected the automotive industry at European level.

For each of them, we would know if you agree and what implications they hadon your business.

4.1 Procurement a) Components suppliers and dealers are forming alliances in order to

become the main point of contact with the manufacturer.

Comments on your case

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b) Large Components suppliers are more powerful (bargaining power)respect to the car manufacturer.


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c) Tier 1 suppliers are becoming larger and more international.


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d) East European countries all seem likely to become important producers ofcars for the West European market.

Fully agree Partially agree Disagree





Appendix


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4.2 Inventory a) The movement of components from Tier 1 suppliers to car assembly lines

can be through warehouses; direct delivery (Just In Time); and direct delivery ofparts in a pre-arranged sequence.


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b) Responsibility for stocks has been transferred away from manufacturers toupstream suppliers or Logistics Services Providers (LSP).


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c) Cheap standard products still tend to move through warehouses,


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d) Central pooling of stock are managed by dealers/LSP.


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4.3 Manufacturing a) There has been a switch from “push” to “pull” manufacturing.


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b) Although the demand for new cars has been growing slowly, manufactur-ers have continued to invest in additional production capacity.


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c) Manufacturers are outsourcing increasingly large amounts of “upstream”design and production work to Tier 1 suppliers.


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d) The automotive sector has placed a great deal of emphasis on thedevelopment of lean manufacturing techniques.


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e) Some Third Party Logistics Managers are beginning to venture into moduleassembly as an extension of their normal services.







Appendix


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4.4 Distribution a) Manufacturer have taken shareholdings in large dealers and used them to

build up hub-and-spoke distribution systems.


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b) Distribution is increasingly becoming customer-oriented


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c) The use of ICT smoothes the distribution system and reduces logisticalcosts.


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d) Home delivery of cars allows the company to sell cars in areas of thecountry where a dealership would not be viable.


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4.5 Commercial practices a) Some dealers are moving from exclusive to multi-product franchises.


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b) Some parts of the supply chain are being short-circuited,


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c) The supermarkets are new distribution channels.


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d) ICT development may force independent garages out of business.


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4.6 Transport a) Transport costs are particularly high in the automotive sector.







Appendix


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b) LSPs have been expanding across borders more rapidly than manufactur-ers.


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c) European supply chains are less tightly controlled by the manufacturers.


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d) The consolidation of flows of components with products not related to carindustry, allows logistics and transport operators to achieve economies of scale.


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e) The use of hub-and-spoke transport, realized by LSP, affects the efficiencyof automotive supply chain.


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f) The automotive industry makes more use of rail transport than almost anyother manufacturing sector.


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g) Freight forwarders and shipping lines are in competition for the supply ofdoor-to-door services.


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Appendix

Appendix 3: Questionnaire for the analysis of port operators’ integration level in the Renault supply chain

The Role of port operators in the Renault supply chain

Corporate Name

Legal status

Address

Person interviewed

Position in the company

Telephone Fax:

E-mail Web-site

All the answers to the following questions will be confidentially used.

In any case, all the data and the information provided will be submitted to theinterviewee before any publication.

Institut National de Recherche sur le Transport et leur Sécurité

2 av Général Malleret-Joinville 94114 ARCUEIL France Tél : +33 (0)1 47 40 70 00 Fax : +33 (0)1 45 47 56 06

National Research Council Research Institute on Service Activities

Via M. Schipa 115 80122 Naples - Italy

Tel: +39 (0)81 2470924 Fax: +39 (0)81 2470933



1. Relationships and logistics services supplied in the Automotive Supply Chain

1.1 Could you specify your role in the Automotive Supply Chain?

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1.2 Which kind of relationship31 do you have with Renault? 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Main dealer

Spare & Servicing

Dealers Customers

Tier 1 integrators


Appendix

1.3 How do you participate to each of the following business processes?

Business processesParticipation Level

1 2 3 4 5

Procurement

Inventory Management

Transport Management

Manufacturing Flow Management


Commercial practices

(1 = execution; 2 = planning; 3 = planning and execution; 4 = partially managed; 5 = totally managed)



1.4 Could you specify what logistics and transport services you supply?

Logistics and transport services In house Outsourced

Transport Services

Maritime Transport

Intermodal Transport (Road, Railway, etc.)

Door-to-door Services

Specialised Transport Services

“Time constraint” Services (JIT, daily delivery,)

Track and Trace

Customs documentation

Warehousing/Distribution

Storage

Load consolidation

Order processing

Stock control

Pick and pack

Cross-Docking

Supporting Services to products

Damage inspection

Waxing and Dewaxing

Pre-delivery inspection

Fitting of parts and accessories

Customisation

Car reparation

Assembling of components

Quality control/product testing

After-sales services

Reverse Logistics

Other


Appendix

1.5 With reference to outsourced services, which kind of relationship32 have you set up with the supplier? 32

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1.6 What tools do you use to monitor your relationship with Renault?

1.7 Which is the importance of the following features in the relationship with Renault?


Tools Never Seldom Often Very often Always

Meeting

Performance indicators

Quality auditing

Formalised procedures

Other

1 2 3

Sharing of the daily business information

Availability of Account Management

Participation to the customer’ strategic planning

Participation to the design and new product development

(1 = not important; 2 = relatively important; 3 = very important)



1.8 With regard to the others customers of the chain (________). Which is the importance of the following features in the relationship?

2. Information and communication technology

2.1 Could you indicate the Information Technologies used to communicate with your clients and suppliers at the moment? And what do you expect to use in the future?

2.2 In relation to the previous question, which actors stimulated the adoption of such Information Technologies?

1 2 3

Sharing of the daily business information

Participation to the customer’ strategic planning

Availability of Account Management

Participation to the design and new product development

(1 = not important; 2 = relatively important; 3 = very important)

Client Supplier

Present Future Present Future

EDI System (ODETTE)

Email

Internet

Intranet

You Supplier Client

EDI System (ODETTE)

Email

Internet

Intranet


Appendix

2.3 What Information and Communication Technology solutions do you use at the moment and what are you going to use in the future?

3. Performance measurement

3.1 What factors do you consider more important in responding to the customer requirements? (Put them in order giving 1 to the most important and 7 to the less one)

Information and Communication Technologies Present Future

EDI

EDP System

Tracing and tracking

Transport Management System (TMS)

Forwarding Management System (FMS)

Warehouse Management System (WMS)

Customs Management System (CMS)

Other (please specify below)

Elements of the Customer SatisfactionImportance

Present Future

Transportation and handling cost

Transit time

Consignment security

Reliability

Comprehensiveness*

Flexibility


Others

* It refers to the extent to which a single operator will arrange and accept responsibility for all compo-nents of the transportation chain between ultimate origin and destination.



3.2 What is, in your opinion, the level of importance of the following factors for the future development of your company?

Critical success factors Importance

1 2 3 4 5

Range of the services supplied

Level of specialisation

Geographical coverage

Information System

Partnerships with suppliers/clients

Price

Company brand/Image

Marketing channels

Optimisation of the distribution network

Customer service

Other (please specify)

(1 = very important, 5 = no importance)

Imprimé en France – JOUVE, 11, bd Sébastopol – 75001 PARISN° 335143X – Dépôt légal : Janvier 2004

Documents

the port of le havre and renault