AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32...

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AGCO Smart Logistics Network Performance and Visibility Options Greg Toornman Global VP Materials Management, Logistics, and Demand Planning

Transcript of AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32...

Page 1: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

AGCO Smart Logistics –

Network Performance and Visibility Options

Greg ToornmanGlobal VP – Materials Management, Logistics, and Demand Planning

Page 2: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

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AGCO Overview

AGCO Smart Logistics Overview

Global Performance Management

Global Visibility & Options

Summary

1.

2.

3.

4.

5.

AGENDA

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SINCE 29 YEARS “YOUR AGRICULTURE COMPANY” …

OUR MISSIONProfitable Growth Through

High-Value Customer Service, Innovations, Quality and

Commitment

Revenue 1990

$ 200 Millions

Employees

>20,000 worldwide

Revenue Shares

OUR VISIONHigh-tech Solutions

for Professional Farmers,

Feeding the World

Revenue 2018

$ 9,350 Millions

Plants

54 on 5 continentsEAME: 58%

APAC: 9%

SA: 10%

NA: 23%

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… TOGETHER MORE THAN 170 YEARS OF INNOVATIONS IN AGRICULTURE …

Solutions for grain storage & poultry equipment

Customized to fit your individual demand

The world most reknown tractor brand

Powerful machines for large scale application

Technology world market leader

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AGCO 2019 GLOBAL FOOTPRINT

Global Corporate Headquarters

Regional Corporate Headquarters

Manufacturing / Assembly

Manufacturing /Assembly

(Joint Venture)

Parts Distribution

Licensee

Future Farm and

Global Learning Center

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AGCO CHALLENGES IN AN INCREASINGLY COMPLEX GLOBAL ENVIRONMENT …

Market Volatility

Brand Variety Rapid Network Expansion

Global Platforms

1994

1997

2002

2004

2011

HighLow

Development wheat prices

US$ per tonModule standardization

54 manufacturing plants

32 After-Sales locations

>6.000 DM suppliers

>14.500 Transport

relations

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GLOBAL SUPPLY CHAIN MANAGEMENT TODAY

Transparency is imperative in a complex and

very dynamic global market environment.

Today’s challenges include rapid growth of

brands, quick network expansion, market

volatility, global platforms and unforeseeable

events.

Innovative processes and smart

technologies are key to gaining

insights and managing risks more

efficiently.

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AGCO Overview

AGCO Smart Logistics Overview

Global Performance Management

Global Visibility & Options

Summary

1.

2.

3.

4.

5.

AGENDA

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AGCO’s Vision

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… AND AGCO DEVELOPED ITS VISION OF AGCO SMART LOGISTICS

TO CONNECT AGCO’S GLOBAL SUPPLY CHAIN

From traditional inbound

logistics…

… to AGCO Smart Logistics

Local

suppliers

Regional

suppliers

Global

suppliers

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BUILDING BLOCKS OF AGCO SMART LOGISTICS

INNOVATION

INCREASE TRANSPARENCY

REDUCE RISKS

IMPROVE PERFORMANCE

Local

suppliers

Regional

suppliers

Global

suppliers

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Process integrationSystem integration

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DIGITALIZATION CONNECTS SUPPLIERS, CARRIERS, AGCO SITES AND THE 4PL TO AN INTEGRATED

SUPPLY CHAIN MANAGEMENT APPROACH

AGCO sites

Carriers

Suppliers

Supply chain orchestration

Strategic planningOptimizing the network‘s corner stones

Tactical

optimizationOptimizing actual

transportation

volumes

Route

implementationImplementing

optimized routings

Transport orderingAnnouncing actual transports

Reporting & Performance

ManagementDeriving further improvements

Freight cost

managementBilling procedures

Exception

managementSolving unexpected

disruptions

Dynamic balancingDispatching actual transports

iTMS

1

2

3

4

5

6

7

8

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THE DIGITAL APPROACH WAS STARTED IN THE PILOT REGION EUROPE AND BY NOW IS ROLLED

OUT TO 4 CONTINENTS

▪ > 40 sites globally fully implemented

▪ > 180 carriers implemented

▪ > 3,000 supplier locations implemented

▪ > 20,000 transport orders handled per month at

current volume

▪ > 750 saving initiatives implemented

▪ Big Data made accessible

Key facts Global roll out

EME: completed Q2 2015

APAC: completed Q2 2017

NA: completed Q1 2018

SA: completed Q4 2018

One AGCO wide integrated solution completed in 2018

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AGCO’s Objective

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AGCO’S OBJECTIVE WAS TO DIGITIZE AND OPTIMIZE THE GLOBAL

MATERIAL FLOW

Create global transparency on

material flow

Reduce transportation Costs

Increase network performance Reduce inventories

Build the basis for AGCO‘s supply chain execution

convergence and in preparation for IBP

Today’s

Discussion

Content

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AGCO Overview

AGCO Smart Logistics Overview

Global Performance Management

Global Visibility & Options

Summary

1.

2.

3.

4.

5.

AGENDA

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BUILDING BLOCK #4 GLOBAL PERFORMANCE

MANAGEMENT

Integrated Supplier Relationship Management is AGCO’s holistic approach to support supplier performance and secure material supply.

ASPIRE – AGCO Supplier Performance & Relationship Excellence brings global supplier management to practice.

ASPIRE is supported by APEX, a Global Supplier Performance Management System.

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Cross-Functional Performance Requirements

ASPIRE Guideline 8

AGCO’s ASPIRE PROGRAM – HOLISTIC GLOBAL STANDARD FOR PERFORMANCE MGMT

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Page 17: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

On time supply measures the supplier’s ability to

meet AGCO Corporation’s requirements on time

and at the right quantity to our global locations.

Our objective is to achieve a stable flow of on time

supply into our operating sites in support of AGCO

Corporation meeting our customer delivery

expectations 100% of the time. One time supply

enables our AGCO Production System (APS) to

produce world class products on a consistent and

reliable basis.

AGCO Corporation desires to choose preferred

suppliers and strategic partners who consistently

supply the right quantity of product at the right

time to our sites around the world.

AGCO Corporation’s measurement for

on time supply is:

A. Direct Material Suppliers - 2 days early and

0 days late to the order shipping or delivery

date. 100% of the order line quantity, no partial

credit will be given for partial quantities.

Logistics & Materials

Management

Suppliers are expected to participate and

comply with the terms of the AGCO

Corporation Logistics Agreement. The

Logistics Agreement defines the AGCO

Corporation expectations in the key areas of:

1) Lead time, 2) Supplier Network

Collaboration (EDI or Portal) SNC System

participation, 3) Packaging and labeling

compliance, 4) Transportation Management

System participation, and 5) Capacity

Management System participation.

2. Logistics Agreement

1. On Time Supply (OTS) Performance

B. Freight Carriers - 0 days early and 0 days

late to the agreed to transit time and 100% of

the transportation order quantity . No partial

credit will be given for partial delivery

quantities. The transportation lead time is

based on the agreed to transportation time as

specified in the Transportation Agreement.

Defined Expectations

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Supplier performance compliance to AGCO

Corporation’s Materials Management expectations is

critical to our site operating performance and meeting

customer delivery expectations. The supplier’s

compliance with our critical system includes the

following:

SNC - Supplier Network Collaboration (EDI or Portal)

• Order confirmation completed on time,

• ASN (advanced shipping notice) transmitted

on time and accurate ASN data.

• Electronic invoicing

TMS - Transportation Management System

• Transportation order submitted on time

• Accurate Transportation data used.

Capacity Management System

• Review of available capacity done on time

• Capacity updates completed on agreed to frequency

Not all systems are available in all regions / sites.

Performance calculations will be the average of the

seven criteria outlined above and expressed as a

percentage.

ASPIRE Guideline

Logistics & Materials

Management

3. Performance Compliance

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Performance Expectations

Min. Threshold OTS: 90%

Preferred Target OTS: 100%

Compliance: 90%

Signed Logistics agreement

Compliance: 100%

Defined Expectations

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AGCO’S DIGITALIZATION APPROACH – SUPPLIER NETWORK PERFORMANCE

Carrier & supplier ScorecardBefore

▪ No clear view on carrier performance as exceptions were not

tracked

▪ Difficulty to distinguish late deliveries

Current Approach

▪ All transport exceptions are tracked in integrated system

▪ Exception data is used for a detailed carrier and supplier

performance scorecard

▪ Structured escalation procedures in case of substandard

performance

▪ Integration with AGCO APEX system and Aspire program

▪ Performance is Managed and Performance is awarded.

APEX report

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NETWORK PERFORMANCE: NORTH AMERICA FROM EU

SUPPLIERS

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NETWORK PERFORMANCE: CHINA INBOUND

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AGCO’S DIGITALIZATION APPROACH – SUPPLIER NETWORK PERFORMANCE DEVELOPMENT

Before

▪ Transport announcement on the day before pickup

▪ Due to capacity shortage on the transport market frequent rejections by

carrier despite agreed routes and rates

New

▪ Transport forecast is created based on material requirements and

packaging instructions for future demand.

▪ Forecast is shared with carriers as a rolling forecast, final confirmation

on day before pickup

▪ Better planning base for carriers leads to increased performance

Transport forecasting

Material call off /

forecast

Transport

forecast

Packaging

instructions

Input for tactical

planning

Load preview to

carriers

Increased Carrier Reliability by Integrating Transport forecast for Carriers

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BUILDING BLOCK 4: IMPROVE SUPPLY NETWORK PERFORMANCE

Through continuous monitoring & controlling of on-time delivery (carrier)

and process conformity, processes have sustainably improved.

Performance Cockpit

Supplier Management &

Development

Non-Conformance (NCR)

Tracking & Reporting(internal & external)KPI Tracking & Reporting

Reporting & Tracking

of Savings

Risk Management

Page 24: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

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AGCO Overview

AGCO Smart Logistics Overview

Global Performance Management

Global Visibility & Options

Summary

1.

2.

3.

4.

5.

AGENDA

Page 25: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

ELEMENTS OF GLOBAL VISIBILITY – PERFECT CASE

Global Visibility

System Process Flow

Global performance management & improvement

▪ One system for all

regions, accessible by all

regions

▪ One system for all

transport modes

▪ Integration of transport

into supply chain

management

▪ Globally standardized

processes

▪ Manage process

performance and

deployment globally

▪ Structured global process

for process management

& improvements

▪ Visibility on all material

flows

▪ Early identification of

deviations

▪ Support of root cause

analysis / improvement

▪ Prediction of supply chain

disruptions

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Page 26: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

Global Transportation Visibility

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PROCESS MATURITY LEVELS EVOLVE TO REAL TIME AND

INTEGRATED GLOBALLY TRANSPARENT SUPPLY CHAIN

Le

ve

l o

f m

atu

rity

Potential Development Path

Exception management

▪ Implementation of

standardized reporting

processes

▪Clear responsibilities,

single-point of contact

for exception reporting

➔ Re-active exception

handling

Milestone tracking

▪Status setting in iTMS

for pick-up and delivery

by carriers and hubs

▪Follow-up of missing

milestones next day

➔ Re-active exception

handling (in-time reaction

possible)

Real-time tracking

▪Receiving real-time GPS

data

▪Automatic transfer of

transport status, ETA,

location data via

standard interface

▪Visualization of trucks

and material in transit

➔ Pro-active exception

handling

Predictive management

▪Dynamic ETA

calculation based on

transferred geo-data /

truck identifier from

carriers

▪ Identification of potential

exceptions in advance

▪Use artificial intelligence

and big data for further

data evaluations

➔ Anticipatory exception

avoidance

+

+

+

Implemented

Under investigation

To be Enabled

Page 27: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

GLOBAL VISIBILITY ON THE MATERIAL FLOW IS A MAJOR NEXT STEP TOWARDS REAL TIME SUPPLY CHAIN INTEGRATION

▪ Increase visibility on all transport flows

▪ Predict ETAs and supply chain disruptions in order

to initiate early counter measures

▪ Identify potential risks and mitigate them

▪ Reduce cost of delays/ early delivery

Objective

▪ High visibility on transport flow (historic) and

exceptions

▪ Limited mile stone visibility for current transports

▪ Fully dependence on milestone input from external

partners

Current Status

▪ Integrate best in class 3rd party solutions for global

tracking and predictive analytics.

▪ Develop business case and benefits to the business

as well as customer impact

Next steps

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Page 28: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

Ways how to enablereal-time tracking

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THERE ARE MULTIPLE WAYS TO ENABLE GPS & REAL-TIME

TRACKING BUT NO OFFERING WILL NOT COVER FITS ALL

NEEDS▪ Logging unit installed i.e. trucks

▪ Data logging of location, speed further

operational information

▪ Data is transmitted via GSM / GPRS to

central data platform

▪ Multiple providers of services

▪ Single hardware devices which continuously

send GPS information

▪ Devices can be attached to shipments.

▪ Device contains internal source for energy

▪ Return process and tracking of

devices needed

▪ A number of offerings in the

market place

▪ Integration of e.g. various logging

devices or telematics systems

▪ Own platform for suppliers, carriers,

receivers

▪ Integration into basic TMS is possible

▪ Multiple providers of services

▪ Integrate various sources for

real-time tracking, e.g.

telematics systems, LSP, IoT

devices

▪ Additional services for

visualization, dynamic ETA

calculation or fleet management

are provided

▪ A number of offerings in the

market place

Real-time

tracking

technology

1) Internet of Things

Page 29: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

Findings of IoT Platforms

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THERE ARE A NUMBER OF PROVIDERS OF GLOBAL VISIBILITY AND

PREDICTIVE ANALYTICS

▪ Increased transparency of material in transit

▪ Real-time tracking of shipments

▪ Dynamic ETA calculation based on latest available data

▪ Enabling increased levels of resource planning.

▪ Increasing planning quality by reduction of “black box” during sea / air transportation

▪ Reduction in risk of supply chain disruption

Precise Predictive Logistics by Providers

▪ US and EU based specialists in supply-chain

predictive analytics

▪ Solutions are cloud based application

▪ Collects massive big data from IoT devices

(public and private) via API’s and direct

connections

Main benefits

Page 30: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

Findings of IoT Platforms

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BENEFITS / ADVANTAGES OF GLOBAL VISIBILITY WITH IOT PROVIDERS

Enabling

AGCO to

achieve

visibility on

its global

flows:

Fast

Precise

Integrated

Visibility across

transport modes

▪ Different transport modes (sea / air /

road1)) and all carriers to one platform

▪ Continuously adding new functionalities

and enhancements

▪ AGCO will benefit of future enhancements

Continuous

Improvement

▪ No need to individually connect AGCO

carriers for sea / airfreight visibility

▪ Fast implementation and setup possible

Flexibility and

adaptability

▪ Uses multiple data sources to predict

arrival times

▪ AGCO can base their decision and

actions on better information

Prediction of

arrival times

Page 31: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

Findings of IoT Platforms

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INTEGRATION OF IOT PROVIDER CONTENT INTO AGCO’S CURRENT ITMS LANDSCAPE

AGCO iTMS

4flow vista

data center

Transport

management

Freight cost

management

4flow vista planning

4flow vista exception

management

4flow vista route

manager4flow vista analytics

4flow vista cockpit

IoT Provider Information

Seafreight load:(Load ID, BOL, Articles,

Consignor, Receiver, Routing,

Container ID. Vessel. Carrier

ETA/ ETD …)

Airfreight load:(Load ID, MAWB, Articles,

Articles, Consignor, Receiver,

Routing, Carrier ETA / ETD)

Road Freight Loads:(Load ID, BOL, Articles,

Consignor, Receiver, Routing, .

Carrier ETA/ ETD …)

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5 Year Cost Estimates

Service Provider Air Freight Ocean Freight Road Freight

Total Cost All

Modes

Average cost per

Transaction

A $ 248,041 $ 274,312 $ 1,125,868 $1,648,221 $ 1.12

C Not Available $ 620,302 $ 3,056,032 $3,586,882 $ 3.36

D $ 2,635,040 $ 2,663,910 $ 3,599,685 $3,676,985 $ 3.45

E $ 171,275 $ 315,625 $ 4,994,500 $5,381,000 $ 5.05

B $ 200,075 $ 344,425 $ 5,023,300 $5,409,800 $ 5.07

F $ 270,613 $ 487,138 $ 7,505,450 $8,085,200 $ 7.58

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AGCO Global Track and Trace – Cost Options with IoT Service Providers

A wide range of proposals have been provided by various IoT

service providers – the question is …. How do you develop a ROI

??

Page 33: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

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AGCO Overview

AGCO Smart Logistics Overview

Global Performance Management

Global Visibility & Options

Summary

1.

2.

3.

4.

5.

AGENDA

Page 34: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

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IMPLEMENTATION SUCCESS STORIES

A. iTMS – Implemented in EME, N.A. , S.A. &

China

B. SAP SNC - Implemented in EME, N.A. , S.A. &

China

C. Smart Logistics – Award Winning

German BVL 2016 Supply Chain

D. European Logistics Association 2017 Supply

Chain Innovation Gold Medal award winner.

E. Recognized by Forbes 2017 & 2018, Supply

Chain World 2017 & 2019, Automotive

Logistics and Supply Chain Digital.

F. Logistics Innovation Award 2018 from China

Federation of Logistics and Purchasing

G. Organization – Regionally lead / Globally

Integrated / One Strategy / One Vision.

Page 35: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

Summary

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NETWORK PERFORMANCE AND TRACK AND TRACE

Create one global vision

▪ Early discuss global vision with

process owners at multiple levels

▪ Standardized format and

methodologies

▪ Customize where needed

▪ Involve all business function

Prototype, validate, learn

▪ Quick prototyping and piloting of

new ideas and innovation

▪ Validate and benchmark

▪ Involve network partners

Understand the True Benefits

▪ Align on objectives.

▪ How will the business benefit from

the investment?

▪ How will the increased volume of

data be utilized?

▪ What will fund the investment?

Collaborate & partner up

▪ Find the right partners with a high

cultural and strategic fit

▪ Ensure common vision and

objectives for all parties

▪ Find partner, not suppliers

Page 36: AGCO Smart Logistics Network Performance and Visibility ... · AGCO Smart Logistics ... 32 After-Sales locations >6.000 DM suppliers >14.500 Transport relations. GLOBAL SUPPLY CHAIN

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THANK YOU!

Greg Toornman

Global Vice President, Materials Management,

Logistics, and Demand Planning

AGCO Corporation

4205 River Green Parkway

Duluth, GA 30096-2568 USA

Tel +1 770.232.8345

Cell +1 678.294.9454

Email: [email protected]

www.AGCOcorp.com

Exceeding customer expectations with AGCO Smart Logistics!