Logistics Horizontal Collaboration in the FMCG Industry: Where are

Logistics Horizontal Collaboration
in the FMCG Industry:
Where are we Today?
Alex Van Breedam
Sven Verstrepen
BABM-AIM Info Session, Sheraton Brussels
© TRI-VIZOR – February 26th, 2015
© 2015
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© 2015
World’s First Cross Supply Chain® Orchestrator™
Since November 2008
Spin-off of the University of Antwerp
Strategic Advisory Board with captains of industry (BASF, Nike,…)
100% Neutral Trustee
Dedicated facilitator of Horizontal Collaboration
Track record so far
2009
2010
2011
2011
1st horizontal
collaboration project
2011
2012
2013
2013
2013
2014
2014
2014
The
Collaborative
Control Tower
Spin-off of the
Collaborative
Control Tower
Prize of the Audience
© 2015
Future Supply Chains
Technology Wave
Lean
Supply Network
External
Optimisation
Supply Network
Internal
Optimisation
Integrated
Supply Chain
Procurement
Proc
Pr
ocur
oc
urem
ur
emen
em
entt
en
Manufacturing
Ma
anu
ufaact
ctur
u in
ur
ingg
Distribution
Internal
Internal
Intern
al con
consol
consolidations
solida
idatio
tions
ns
C
d li
Co-modality
Complete horizontal
&
vertical collaboration
Clustered and shared
Cross supply chain services
Sustainability
Collaboration
Platform
Horizo
Hor
H
izonta
ntall col
collab
labora
oratio
tions
ns
Horizontal
collaborations
Co-loadings/Roundtrips
C
Co-modal consolidation
C
Collaborative
Control Tower
Vertical collaborations
V
Control Tower
2.0
1.0
Supply Chain Maturity
© 2015
The Physical
Internet
Effectiveness
Service Level
Customer Domination
Agile
Efficiency
Cost
Supply Chain Performance
Orchestrating Scarcity
Fair
3.0
This might or will affect your
supply chain in the future!
© 2015
Is your supply chain ready for this?
CHALLENGE
Changing Environment
Demography
Urbanisation
Globalisation-Glocalisation
The Sharing Economy
The Servitization Economy
The Circular Economy
Corporate Social Value Creation
Changing
Customer
Behaviour
Supply Chain Risks
Faster - Smaller - More frequent - Cheaper
Omni-channel
Product Innovation
Speed of change in ICT technology
Changing Logistics
Supply Chain as a competitive advantage
Manufacturing and process innovation
Labour Force
Capacity Shortage
Co-modality
Hybrid distribution structures
Big Data
The Physical Internet
© 2015
World Economic Forum
Supply Chain Study 2009
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24%
of freight vehicles in the EU
U
are running empty
≡ Average loading of the rest is
≡ Overall efficiency:
57%
43% /
≡ Flow imbalance can only justify
half of this loss
Estimated annual loss:
160 billion €
© 2015
What’s in a name?
Welcome to the age of « co-opetition » !
≡ Vertical collaboration (1980- … ):
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Between subsequent actors in the same supply chain
Between suppliers, manufacturers and customers
EOQ, outsourcing, VMI
Driven by ICT (extended enterprise)
≡ Horizontal collaboration (2006 -…):
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© 2015
Between companies in the same market
Alliances, partnerships, clusters, network organisations
Collaborate in some markets, compete in others
“New frontier” or “paradigm shift”
The European Union is actively
promoting and supporting
collaborative logistics
“Collaborative Concepts for Co-Modality (CO³)” was a EU sponsored
FP7 consortium to create a legal framework, a scientific body of
knowledge, an educational package and a number of
inspiring pilot projects for horizontal collaboration in transport and
logistics. The ultimate goal is to make the European
transport market more competitive and more sustainable.
© 2015
CO3 Consortium
© 2015
High Level Industry Board (HLIB)
HLIB Mission:
¾ Review and discuss CO³ milestones and results
¾ Provide valuable market feedback for development and success of CO³ project
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What has CO3 delivered?
1. Operational framework for Horizontal Collaboration
2. Legal framework for Horizontal Collaboration
3. Development of new business models
4. Validation of framework with pilot projects
5. Mental shift !
All project results are freely available on the website
www.co3-project.eu
© 2015
FMCG Example 1:
North – South Intermodal Roundtrips (2013):
30% carbon reduction
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FMCG example 2:
SPAR inbound retail bundling
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Identification of potential
supplier clusters
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Methodology
& Building Blocks
3 steps to create horizontal collaboration:
Successful collaboration is not a matter of chance.
It is the result of a process!
© 2015
Legal context: EU anti-trust
A) Europe prohibits cartels (Art. 101 EU), but is not prohibiting
‰ cooperation between non-competitors; -> OK
‰ cooperation between competing companies that cannot independently carry out
the project or activity covered by the cooperation -> OK
B) EU Guideline (2011/C 11/01) on Art. 101 EU ‘horizontal co-operation agreements’
is not prohibiting Horizontal Collaboration, if using a trusted party (e.g. ‘joint purchasing
organisation’)
Legal role of Trustee to comply with EU law:
‰ no direct information exchange between the parties
‰ trustee does not compete with the parties on the selling market
‰ all information necessary for the purchases is only disclosed to the joint
purchasing organisation, not to the other parties
‰ example: quality specifications, quantities, delivery dates, maximum purchase prices
Ÿ Horizontal logistics co-operation is not violating EC Competition law !
Ÿ BUT: recommendation to use a neutral trustee to avoid anti-trust !
© 2015
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Roles and added value
of Neutral Trustees
Neutral Trusteess are essential
e
essenti
al new players to support horizontal
horizon collaboration
Trustees can perform 2 functions, depending on requirements and scenario:
• Offline: Neutral external support to the collaborating shippers
• Online: Neutral real-time coordination of daily collaboration process
Examples of offline functions:
• Shipper matchmaking
• Synergy calculation
• Stability and fair gain sharing
• Legal compliance
• Entry and exit
• Conflict resolution
• Data confidentiality
• Audit
© 2015
Examples of online functions:
• Loads combination and
synchronization
• Prioritization
• Real-time network
orchestration
• ICT Interfaces
• Freight payment
• Carrier management
• Collaborative Control Tower
• “4C”
Network synergy detection
& matchmaking (Big Data)
© 2015
Fair gain sharing:
Shapley value is always correct
IT’S MY MONEY !!
© 2015
Multilateral legal framework
Neutral Trustee
(EU antitrust compliant)
1-N
contract
Entry/exit
Volume variations
Gain sharing
Community
MAIN SHIPPER
Carrier 2
Carrier 3
Partner 1
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…
Partner N
Structured and organized per lane
(co-loading or roundtrip)
www.co3-project.eu
© 2015
Carrier 1
Traditional
Carrier
contracts
Carrier X
Collaborative Control Towers:
from 4PL to 5PL ?
© 2015
Conclusions
≡ The old logistics paradigm is no longer working
≡ The market needs a quantum shift in logistics efficiency,
effectiveness and sustainability
≡ Horizontal collaboration is the “next big thing”
≡ EU law permits competitors to work together
≡ But… pay attention to legal aspects (anti-trust)
≡ Neutral facilitator/Trustee is essential
≡ Big data analysis, methodology and ICT are key
≡ Start small, then scale up
≡ No external collaboration without internal strategy (“Future Proofing”)
≡ It’s people business!
≡ First movers in FMCG have already started !!!
© 2015
[email protected]
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