European 3PL Summit, Nov. 24-25 2009, Brussels
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7th European 3PL Summit, Nov. 24
LEGO strategy is to build long term relationshipwith our suppliers ….
• Partnership approach
– Open end contracts
– Performance/cost has to be on right level
• Supplier Relationship Management (SRM)
– Ensure a aligned Global LEGO approach to the supplier
– Maximize the outcome of the corporation – manage relations not transaction
– Innovation and challenge from suppliers is a must
7th European 3PL Summit – Peter Husted 24.11.09
– Innovation and challenge from suppliers is a must
• Joint constant challenge of cost level and structure
– Cost to reflect LEGO requirement, e.g. on service and performance
– Understand external cost drivers
– Identify and work with internal cost drivers and performance programs
• Make sure your suppliers earn money!
– Share cost reductions
– Price check models
– Check their financial situation
Anchor approach to supplier platform ….
Risk
Maximal Global Attention
Partnerships
Flexibility Anchoring 80 Anchoring 80 –– 90 %90 %
7th European 3PL Summit – Peter Husted 24.11.09
Flexibility Anchoring 80 Anchoring 80 –– 90 %90 %
After all tender processes: Re-looping to secure anchoring
High level process for 2009 European distributiontender ….
7th European 3PL Summit – Peter Husted 24.11.09
LEGO performance model for European Distribution
LEGO Performance Model
Network Deliveries
Above 98%
Below 98%
Direct Deliveries
Above 98%
Below 98%
Arrival Performance EDC
Above 95%
Below 95%
7th European 3PL Summit – Peter Husted 24.11.09
98%
Considered as carrier with potential
98%
Carrier to correct performance within 2
months
If no improvement invoice is deducted
with % which is below target
After 4 month and still no improvement
LEGO can change carrier
98%
Considered as carrier with potential
98%
Carrier to correct performance within 2
months
If no improvement invoice is deducted
with % which is below target
After 4 month and still no improvement
LEGO can change carrier
95%
Considered as carrier with potential
95%
Carrier to correct performance within 2
months
If no improvement invoice is deducted
with % which is below target
After 4 month and still no improvement
LEGO can change carrier
Price check and performance model for oceanfreight ….
Price Check Quarterly Process:
1. New Contracted Prices
2. Price check template is submitted from
suppliers
Purpose of Price Check Model
1. To keep TLG up to date on current market condition
2. Harvest Price reduction within the price period
3. Better forecasting for budget
4. Links into performance when evaluating
7th European 3PL Summit – Peter Husted 24.11.09
suppliers
3. Price comparison template is completed by
TLG and neutral external party is used for
benchmark
4. Supplier feedback on observations made in
the Price Comparison by TLG
5. Q-meeting
1. Supplier reacts on feedback by
lowering prices
Or
2. Supplier cannot change price and
gives an explanation
6. KPI performance is used as additional
parameter for deciding consequence
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Thank you for your attention - questions?
7th European 3PL Summit – Peter Husted 24.11.09
- questions?