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Logistics: what is it?
ETF Seminar: ‘How to recruit and organise in the logistics sector?’
Runö, Sweden 8-11 February 2009
Paula Hamilton, [email protected]
What is Logistics?
The work of logistics Logistics in Central and Eastern Europe Main Actors in Logistics (in the region) Gearing up to strengthen our unions
Logistics
‘The work required to move and position inventory throughout the supply chain which serves to link and synchronise the overall supply chain as a continuous process and is essential for supply chain connectivity.’ (Bowersox et al, 2007)
Logistics Logistics is a subset of and occurs within the
broader framework of supply chains.
Logistics activities occur within and between all companies active within supply chains.
The rise of logistics is driving restructuring across the whole transport sector
The ‘new’ logistics industry plays a vital role in the global economy.
Physical Flows, Nodes and Networks
Global Gateways: Container and Air Cargo
CONTAINER PORT AIR CARGO TERMINAL
Information and Communication Flows
Enable faster and more consistent communication within organisations and between corporate actors in supply chains
Enhances effective communication between logistics information systems and their physical operating environments
ICT and Logistics
Customers demanding real time information
Used to reduce inventory, labour requirements and risk
Improve timing/speed Increase reliability Increase transparency in supply chains
ICT Systems
Supply Chain Information Systems (SCIS) are responsible for linking all logistics activities into an integrated process
These have four major components: Enterprise Resource Planning systems Communication systems Execution systems Planning systems
Information and Communication Technologies
Types of ICT used
Bar coding and scanning Global data synchronisation The Internet Satellite technology Image processing Extensible markup language
The work of logistics
Order Processing
Inventory
Transport
Warehousing, Materials Handling and Packaging
Facility Network Design
Order Processing
Order preparation Order transmittal Order entry Order filling Order status reporting Key customer interface
Inventory
Raw materials Work in process Finished goods Supplies
Warehousing, Materials Handling and Packaging
Many types of warehousing Traditional role has been to hold or store inventory
but Today many value added activities occur in such
environments, operations focus on customisation, velocity and movement
Packaging serves to protect products during the logistics process
Materials handling involves receiving, moving, storing, sorting and assembling.
Facility Network Design
A facility network is the number, size and geographical relationship of facilities used to perform logistical operations.
Include manufacturing plants, warehouses, cross-docks, ports and retail outlets.
Facility network design determines the number and location of all types of facilities used to perform logistics work
Facility networks are in a constant state of flux
Transport
These are the operations which geographically move and position inventory
Include road, rail, water, air and pipeline Is the largest element of logistics costs Reduces inventory, storage and materials handling Transport’s role is becoming increasingly important
in supply chains
Logistics Industry: Markets
Air Cargo Airports Contract Logistics Finished Vehicle Logistics Freight Forwarding Ports Express and Parcels Intermodal NVOCC
Rail Road Haulage and Trucking Service Parts Logistics Temperature controlled
logistics Warehousing and property
development Information and
Management Services Shipping
Barriers Between Modes Disappearing
Deutsche Post World NetPrivatizing German Postal Service•DHL•Danzas•Airborne Express•Exel: #1 US Warehouse Co.
NOL/APLSingapore Based•Steamship Line•Terminal Operator•#3 US Whouse Co.,•Rail = Liner Trains
Logistics in Central and Eastern Europe
Fundamental changes in the logistics market in recent years Production – ‘near sourcing’ in CEE Growing consumer markets Large LSPs – new models to serve clients Few indigenous international companies operating on a
global scale Pattern in most CEE countries = strong local logistics
presence serving the needs of small business + large TNC providers providing services for the international ‘incomers’
Possible restructuring with some CEE based companies grouping themselves together to provide services across the region
CEE: Contract Logistics Market Size and Growth
2007 grew to €991m, a growth rate of 24% Highest growth rate in the Slovak Republic
(39%) Baltic States also experiencing strong growth,
helped by proximity to Russian market 2011 market forecast = €1956m (18.56%)
CEE: Express and Parcels
Still major differences between CEE and WE markets but likely to change as shippers demand specialist levels of service and pricing
Growth is not homogeneous across the region, Baltic States and Slovenia show above average growth
Automotive is particularly important to the express sector in Poland, Czech Republic, Slovakia and Hungary
All major global express providers are well positioned in Poland and Czech Republic
CEE: Freight Forwarding
2007 grew to €2112m, a growth rate of 21.3%
2007 - Air forwarding grew to €637m, a growth rate of 17%
2007 – Sea forwarding grew to €1475m, a growth rate of 23.3%
2011 – freight forwarding market forecast is €3731m, a growth rate of 15.3%
CEE: Road
Source: Eurostat
By Type 2006 (m t km)
Logistics Actors in the Region
Include:
Manufacturers
Retailers
Local, regional and national Governments
The European Commission
AND Logistics Service Providers
Ocean carriers Inland transport
Manufacturers
3PL
POWER
“Wal-Mart is hard to do business with. I had a cardiac episode while I was working for them.” - Former Exel manager of Wal-Mart DC
Logistics Industry: Main Actors in the Region
Deutsche Bahn CEVA DPWN DPD DSV Ewals Cargo Care FedEx Fiege Logistics FM Logistics GAC GEFCO
GLS Geodis (SNCF) Kuehne and Nagel M&M AP Moller Maersk Group NYK Logistics Panalpina TNT UPS UTi Worldwide Wincanton
Logistics Industry: Main Actors present in all your home countries
Deutsche Bahn DPWN DSV GAC Kuehne and Nagel M&M Others (variable range of operations)
M&M: Militzer & Münch International Holding AG
Owned by TransInvest Holding AG Headquartered in Switzerland Operations divided into 6 regional groups A major partner in the System Alliance
organisation, a FedEx partner Products and Services include rail cargo, air
cargo, sea cargo, groupage, customs service, warehousing and logistics
Source: Transinvest
M&M Organisation
M&M: Strategies for Growth
Build its network in Eastern Europe Focus on developing its IT-aided processes Become more active in new and developing
markets with a focus on Central Asia and China
GAC
Head office in Dubai Privately owned Operates in over 40 countries, with 250
offices and over 7000 staff Business areas include shipping, logistics,
marine and solutions Target markets include oil and gas, retail,
automotive to dry bulk and cruise liners
GAC: Strategies for Growth
Aims to provide an integrated solution to its clients’ logistical needs
Expansionist strategy, particularly in emerging markets
Tends to enter new markets via partnerships first, then set up subsidiary
Four hub agency centres: London, Dubai, Singapore and Houston
Logistics revolution
Consolidator / freight forwarder, 3PL
Road transport
Manufacturer
Air freight
Ocean shipping
Port trucking
Warehouse: deconsolidator,
3PL, wholesaler, DC
Warehouse: deconsolidator,3PL, wholesaler, DC
Rail
Road transport
Road transport
Retailer
Small parcel deliveryHome
How to get started…
Sector
CompaniesGeography/Market
Union Strength