Current and future Challenges in German-Chinese Logistics ... · Agenda: Working Group Meeting...

endowed by the Kühne Foundation

Current and future Challenges in

German-Chinese Logistics

Networks

Working Group

Navigator for German-Chinese Logistics Networks

Prof. Dr. Sidong Zhang

Prof. Dr.-Ing. Frank Straube

Christian F. Durach, M.Sc.

Shanghai, February 20th, 2014

Shanghai, 20th February 2014


Prof. Dr.-Ing. Frank Straube – 2 –

Agenda: Working Group Meeting “Current and future

Challenges in German-Chinese Logistics Networks”

09:30 – 10:00 Registration of the participants and welcome tea and coffee

10:00 – 10:30 Introduction of Participants (Prof. Dr. Sidong ZHANG)

10:30 – 11:15 Trends and Strategies in Logistics (Prof. Dr. Sidong ZHANG)

11:15 – 12:00 Introduction to the “Navigator for German-Chinese Logistics Networks”

(Prof. Dr.-Ing. Frank STRAUBE)

12:00 – 12:45 Lunchtime

12:45 – 12:50 Introduction to the Workshops

12:50 – 13:50 Workshop I: Status Quo in German-Chinese Logistics Networks

13:50 – 14:15 Tea & Coffee Break

14:15 – 15:30 Workshop II: Challenges and Solutions in German-Chinese Logistics

Networks

15:30 – 15:50 Summary, Feedback and Farewells




List of Participants 1st Working Group Meeting, February 20th, 2014

Participant Company Position

Patricia Beuter

Suzhou SILU Production Engineering

Services Assistant Project Engineer

Hans-Henning Dr. Toepper Bosch Automotive Diesel Systems VP Material Management

Gu Feng LVMH Perfume & Cosmetic Distribution Manager

Christian Foerster E.G.O. Components Warehouse Manager

Andreas Guip Comepack General Manager

Tomas Herman Brose China Logistics Manager

Harry Huang Comepack Marketing & Sales Manager

James Huang Polymax Group Assistant to GM

Yiming Ju Geberit Plumbing Technology Shanghai Head of Logistics

Sven Kothe M+R Forwarding China Director China

Andreas Langosch

BETTER Industrial Equipment Packing

Services General Manager

Markus Leutner GPS Logistics Managing Director

William Li Amber Road. Marketing Manager




List of Participants 1st Working Group Meeting, February 20th, 2014

Participant Company Position

Lisa Lu Infineon Technology Senior Logistics Manager

Mary Ma LVMH Perfume & Cosmetic Warehouse manager

Pascal Männche DEUTZ Senior Vice President Logistics

Bernd Reitmeier Startup Factory General Manager

Amanda Ren Bosch Investment

Senior Logistics Project

Manager

Stefan Ruhrmann

Suzhou SILU Production Engineering

Services General Manager

Angel Shen Mubea Automotive Components Logistics Manager

Matthias Stoiber MTU China Purchasing Manager

Ellen Tang JOST Auto Component Logistics Manager

Ying Tang EUROGATE China Representative

Qinbo Yang ZF Lemforder Shanghai Chassistech Logistics Manager

Ji Yuan Yun Virgil General Manager

George Zhang Schwing Shanghai Machinery Logistics Manager

Yuan Zhang GPS Logistics Logistics Manager


Trends and Strategies in Logistics



Working Group


Agenda

– 6 –

1. Chair of International Logistics Networks and Services at the

Tongji University

2. Status Quo and General Developments in Logistics

3. Overview of Logistics in China and Research Collaboration




Tongji University

Formerly Tongji German Medical School

Established: 1907

Seven disciplines: engineering, science, medicine, management, arts, law and economics with

strength in architecture, civil engineering and oceanography.

Close links with industry

Agenda

– 8 –

1. Chair of International Logistics Networks and Services at the Tongji

University






Study series: Trends and Strategies in Logistics

1988

1990

Trends in Logistics

Trends in Logistics in the 1990ths

1993 Perspectives of Logistics

Trends and Strategies in Logistics 2000 1996

5 Focus Surveys in Logistics 1996 1997

Towards the 21st Century 1997

1999 The Next Wave of Logistics

2000 Trends and Strategies in Logistics 2000+

Year Title

2002 Supply Chains in Transformation

2005

2003 Trends and Strategies in International Procurement

2008 Change of Global Networks

The Agenda of Logistics Management 2010

2013 Trends and Strategies in Logistics and

Supply Chain Management – 2.0 new

Enlargement of the

international coverage

Analysis of more than

200 studies and reports

on developments in

logistics

Conduction of over 60

interviews with Top

Managers

Participation of more than

1.700 individuals in the

online survey




Prof. Dr.-Ing. Frank Straube Exec. Director Department of Technology & Management

Chair of Logistics

Technische Universität Berlin

Member of the BVL Advisory Board

Project Team and Research Partners

• Tongji University, China (Prof. Dr. Sidong Zhang)

• American Production and Inventory Control Society, USA

• Bundesvereinigung Logistik (BVL), Germany

• Council of Supply Chain Management Professionals, USA

• East Carolina University, USA

Research Partners

Overall Scientific Supervision

Prof. Robert Handfield, Ph.D. Bank of America University Distinguished Professor

Director, Supply Chain Resource Cooperative

Poole College of Management

North Carolina State University

• European Logistics Association, Europe

• FDC Cabral University, Brazil

• Higher School of Economics, Russia

• ILOS – Instituto de Logística e Supply Chain, Brazil

• Internat. Assoc. of Commercial and Contract Managers

Prof. Dr. Dr. h.c. Hans-Christian Pfohl Head of the Supply Chain and Network

Management Group

Technische Universität Darmstadt

Dr. Andreas Wieland Center for International Logistics Networks,


Chair of Logistics

Technische Universität Berlin




Research Sample

1,757 participants from different regions 13%

28%

34%

6%

4%

12%

3%

USA

Brazil

Western Europe

Eastern Europe

Asia (except China)

China

Africa/Middle East

Retail 9%

Logistics Service Provider

31%

Machine and Plant Engineering

5%

Automotive 8%

Fast Moving Consumer Goods

6%

Chemicals Industry/

Plastics Industry 5%

Textile Industry 1%

IT/Hardware/ Telecommunication

industry 7%

Energy 4%

Other Manufacturing

18%

Materials/Mining 3%

Electronics 3%




Logistics and the Customer Order Process

Customers Sales Production Suppliers

Assembly Distribution

Info

rma

tion F

low

M

ate

ria

l F

low

Delivery

Sales Planning

Customer Order

Production

Planning

Disposition

Planning




Importance of Trends in Logistics

Irrespective of region and industry increased customer expectations in terms of delivery reliability and

cost pressure are perceived as the main forces in logistics today and in future.

Companies are not aware of increased risk and disruption; sustainability will soon be challenging.

1 1,5 2 2,5 3

Customer Expectations

Networked Economy

Cost Pressure

Globalization and Complexity

Talent Shortfalls

Volatility

Sustainability

Increased Risk and Disruption

Emergence of New Technologies

Lack of Reliable Logistics Infrastructure

Increased Government Regulation

Cultural Challenges

Today

Five Years




Importance of Logistics Strategies

Globally, a lack of logistics talents can be observed; managers are seeking to cope with this challenge.

Potentials for technology investments are often not fully recognized.

There is no clear trend for outsourcing/insourcing decisions.

1 1,5 2 2,5 3

Talent Management

End-to-End Integration

Integrated Planning

Global Network Visibility

Technology Investments

Cost-to-Serve Models

Governance and Process Standards

Rapid Decision-Making

Corporate Social Responsibility

Horizontal/Vertical Cooperation

Frequent Network Adaption

Green Logistics

Outsourcing/Insourcing

Government Cooperation

Today

Five Years




60

41

52

43

7

14

10

21

33

45

38

36

0 20 40 60 80 100

USA

Brazil

Germany

China

View of customers

Satisfaction with the Performance of

Logistics Service Providers

60

63

81

50

13

8

2

8

27

30

17

42

0 20 40 60 80 100

USA

Brazil

Germany

China

View of logistics service providers

Yes

No

Neither

Degree of customer satisfaction in the U.S. and in Germany is sligthly higher

Noticeable is the strong discrepancy between perception of German LSPs and their customers

A lack of proper communication and different expectations may be the reasons




Characteristics of Top Performers*

• Wider scale and scope of

measurement systems and dedicated

and evaluated action plans to improve

sustainability

38 % of the top performers integrate

their suppliers in the implementation

of sustainability measures

28 % report their greenhouse gas

emissions

• Transparency on end-customer‘s

demand and supplier capacities

• Application of cost-to-serve models

in all logistics decisions

75 % share demand forecasts

with their supply chain partners

64% have integrated customers

in their planning processes

• Highly professional recruiting process with clear job

specifications

• Standardized process for the analysis of competence gaps

and the development of competences

• Global availability of

identification technology and

systems for supply chain

analytics

Almost 40 % of the top

performers already use „big

data“ applications

• Logistics as a discret

organizational function in close

cooperation with procurement

and manufacturing

• Functional logistics strategy and

innovation process to serve

specific requirements

Management

of competences

Sustainability Logistics

organization

End-to-end

planning

Supply

chain

visibility

* calculated based on high delivery reliabilty and low overall costs.

Agenda

– 17 –

1. Chair of International Logistics Networks and Services at the Tongji

University






Overview of Logistics in China

Logistics cost as proportion of GDP:

18.1%

Transportation cost is the highest portion

from total logistics cost

High share of total logistics costs of GDP

reflect inefficient logistics sector compared

to developed countries

Logistics performance index 2012: rank 26

(2010: rank 27)

Sources: He (2012): China Logistics Industry Development Review and 2013 Outlook

The World Bank (2012) Connecting to Compete – Trade Logistics in the Global Economy

8,2% 9,4%

11,0% 13,0%

18,1%

0%

5%

10%

15%

20%

EU USA Japan India China

Logistics cost as proportion of GDP 2012

Shortcomings of Logistics are one of the key limitations

to China‘s long-term growth potential




Logistics Costs in % of Overall Revenue (2011) by regions

8,79%

14,15%

17,80%

6,67%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

Germany

Brazil

China

USA

It is noticeable that about 14% of the respondents could not estimate their logistics costs




China‘s 12th Five-year plan (2011-2015)

Implications for the logistics sector

• Develop third-party logistics providers

• Modern infrastructure, systems, IT and management

• Integrated and multi-modal logistics solutions

Upgrade the underdeveloped

logistics sector for high-tech oriented

businesses

• Green vehicles

• Use of different transport modes

• Improve utilization of vehicles

Technologies and concepts to meet the

carbon emission targets

• Develop e-commerce solutions

• Optimize regional distribution systems

• Concepts for city logistics

Strategies to cope with the change of demand




Logistics Trends in China

83

78

63

66

69

57

59

61

65

56

42

55

52

58

44

59

48

39

43

38

44

33

0 10 20 30 40 50 60 70 80 90

Customer expectation

Networked economy

Cost pressure

Globalization and complexity

Talent shortfalls

Volatility

Sustainability

Increased risk and disruption

Emergence of new technologies

Lack of reliable logistics infrastructure

Increased government regulation

In 5 Years

Today




Logistics Strategies in China

43

32

46

57

50

31

41

43

42

47

22

31

46

54

77

54

69

74

65

57

58

64

53

65

55

53

59

77

0 10 20 30 40 50 60 70 80 90

End-to-end supply chain integration

Global network visibility and analytics

Integrated planning

governance and process standards

financial cost to serve models

network adaption

rapid decision-making

Technology investments

Outsourcing and Insourcing

Horizontal and vertical cooperation

green logisics

CSR

Government cooperation

Talent and people management

Today

In 5 Years











12:00 – 12:45 Lunchtime





Networks



The Navigator for German-Chinese

Logistics Networks

Working Group




Agenda

– 25 –

1. Chair of Logistics at the Technische Universität Berlin, Germany

2. The Navigator for German-Chinese Logistics Networks




Technische Universität Berlin – Facts and Figures

501 professors (including junior-, guest- and

honorary professors)

2,452 research associates

30,635 students, including 5,919 international

students (20%) winter semester 2011/12

2,543 student assistants

284,4 million euro in state subsidies (in 2012)

155 million euro in external funding (in 2011)

TOP 10 of the strongest external funding

universities in Germany

Over 1,200 research projects

110 scientific cooperations with well-known

international universities in more than 30

countries

Source: http://www.tu-berlin.de/menue/ueber_die_tu_berlin/zahlen_fakten/ (Database 2012)

Center of Production Technology, TU Berlin

South campus of the TU Berlin




Chair of Logistics at the TU Berlin

Der Bereich Logistik der Technischen Universität Berlin

Current research projects of the chair (excerpt)

Chair of Logistics at the TU Berlin

Teaching

Research

Advanced Training

Center of Excellence for

International

Logistic Networks

Dr. A. Wieland

endowed by

the Kühne Foundation

Chair of Logistics

Head: Prof. Dr.-Ing. F. Straube

Founder: Prof. Dr.-Ing. H. Baumgarten

Honorary Professors:

Prof. Dr. S. Jürgens

Prof. Dr.-Ing. R. Klinkner

Prof. Dr. W. Prümper

Assistant Lecturer:

Dr. S. Doch (ITCL)

Dr. F. Schupp (Schaeffler-Group)

Dr. S. Wolff (CEO 4Flow AG)

15 research associates

2 technical staff members

Partner Institute of the

Chair of Logistics in China

International

Logistics

Networks and

Services

Prof. Dr.

Sidong Zhang

endowed by

the Kühne Foundation

Chinesisch-

Deutsches

Hochschulkolleg

(CDHK) of the Tongji

University in Shanghai

ProKoLog

Productivity in the contract logistics

Manufacturing Excellence Award

Navigator for German-Chinese

Logistics Networks

SLG

Smart Logistics Grids

Showcase for electricmobility

Smart e-User

Modulushca

Modular Logistics Units in Shared Co-

Module Networks




Cooperation with the CDHK at the Tongji-University

Close cooperation with the Kühne Foundation Center for

International Logistics Networks and Services at the CDHK of the

Tongji-University in Shanghai

• Dual doctoral programme

• Dual master’s programme

• Exchange programmes for students

and research associates

• Joint research projects

• Workshops / working groups

• Operating Successfully in China (2011)

• Guest lectures in Shanghai and Berlin

• “China Logistics Days” of the Kühne Foundation

• Research Project: “Navigator for German-Chinese Logistics Networks”




Selected China-Activities of the Chair of Logistics

Completed research projects (excerpt)

• Dissertations (excerpt)

Markteintritt in China (2012)

An Empirical Examination of Strategies to Cope with Supply

Chain Risks (2012)

Introducing Electronic Supply Chain Collaboration in China (2010)

Logistikmanagement in China (2009)

Logistik im Kontext des ausländischen Markteintritts (2009)

• Strategies International Procurement – Challenges and

Opportunities in Emerging Markets (2011)

• Trends und Strategien in der Logistik (2008, 2013)

Agenda

– 30 –

1. Chair of Logistics at the Technische Universität Berlin, Germany

2. The Navigator for German-Chinese Logistics Networks




The Navigator for German-Chinese Logistics Networks

Target Group

Supply Chain Planners from automotive, electronics, FMCG

industry and LSP, who do not plan logistics networks in their

everyday businesses.

I Develop a planning tool to support supply chain planners in

strategically building rescilient German-Chinese logistics networks.

Develop a standard planning procedure for selected logistics network

configurations.

Identify and take account for highly volatile demand patterns and

external/internal network disruption risks.

Project Goals

II

III




Selected Partners in the Navigator Project




Working Group Meetings

Berlin, June 2013 Maintal, November 2013

Goals:

• The working group meetings serve as platform for practitioners and researchers to exchange

ideas and concepts.

Content

• Identification of network characteristics/differences.

• Identification of challenges and best-practice solution of business practice.




Costs Reliability Customer Satisfaction

Navigator Configuration - Framework

LSP-Selection/

Integration (WP3)

Supply

Network (WP1)

Culture/ People (WP2)

End-to-End (WP6)

Transport/

Traffic (WP4)

Distribution

Network (WP5)

RIS

K

VO

LA

TIL

ITY

Working Packages (WP)

Automobile

Electronics

FMCG

Re

se

arc

h M

eth

od

s

Delp

hi W

ork

shop

s

(Ch

ina

/Ge

rmany)

Se

mi-S

tructu

red In

terv

iew

s

+L

ite

ratu

r R

evie

ws

2

1

LSP

Wuxi,

China

Malacca,

Maleysia

Make-to-Stock

Automobile

Electronics

FMCG

LSP

(?)

(?)

(?)

(?)




Navigation Process

Self Asessment

Configuration State

Network Change Process

Risk Volatility

WS I WS I




Navigator Web Platform

Planning Tool

Access

Newsletter

TU Berlin and CDHK Forum

for Managing German Chinese

logistics networksendowed by the Kühne Foundation

Discussion Forum Navigation Menue

News and

Upcoming Events




Navigator Data Library

Scientific contribution:

The data library (“Content-area”) contains up-to-date logistics information to

support logistics managers.

General Information

• Logistics Region China

• GDP Growth

• Domestic express

business

• Pearl River Delta

• Port throughput

• Sales

…

…

…




Logistics is Facing Volatility and Risk

natural desasters

economic and financial crisis

piracy and terrorism

resource depletion and climate change




The World has Become More Volatile and Risky

Source: Christopher and Holweg (2011)

List of Constituents: Purchasing Managers Index; Sales Managers Index; exchange rates; Crude Oil Brent;

Gold Buillon; UK Clearing Bank Base rate;

** 1: Arab Oil Embargo

**2: Iranian Revolution

**3: Saudi Arabia abandons

swing producer role

**4: Black Monday

**5: Invasion of Kuwait

**6: Asian Economic Crisis

**7: Global Financial Crisis




Cultural Differences

An often underestimated part of

international logistics can be found in

cultural differences. These differences

can be an obstacle and challenge

during the cooperation both at

management level and at operative

level.

Boss

Opinion Dealing

with

problems




Working Definitions

Logistics Network Risk:

Chance of danger, damage, loss, injury or any other undesired

consequences, that includes everyday and exceptional disruptions

along the chain of interlinked companies.

Logistics Network Volatility:

Unexpected demand changes that have an impact on the short and

long-term planning of a company.




Risks in Logistics Networks

External Risks Internal Risks

Environment (shocks outside the logistics

network)

Business* (finances/management)

Physical* (equipment/facilities)

Supply (delivery failures-

quality/quantity)

Manufacturing* (internal operations)

Business* (key personnel, business

processes)

Planning and control* (inadequate assessment)

Mitigation contingency* (no backup plans)

Disruptions/Delays in Supply, Production, Distribution

Consequences

* (partly) controllable risks




Enablers of Resilience (excerpt)

External

• Node Criticality

• Bargaining Power

• Visibility

• Network Complexity

Internal

• Human Capital

• Communicative

Relationship

• Risk Management

Orientation

• Leadership

Commitment

Logistics Network

Robustness

“Resist or Avoid Risks”




Volatility in Logistics Networks

Finished Product (per Day/Month/Year)

Flexibility

strategic tactical

P/N – Part Number

Volatility

Volatility




Differences in Logistics Networks Characteristics of Focal

Industries

Automotive Electro FMCG

# Suppliers o o ++

# Customers - + ++

Importance of

Integration ++ + --

Importance of

Time o o ++

Production

Strategy pull/push (market

dependent) push push

Power/Leader OEM manufacturer producer

# of Part Numbers ? ? ?

Sourcing worldwide worldwide local/ww

Risk/Volatility

Types ? ? ?

WS I

WS II











12:00 – 12:45 Lunchtime





Networks





Please try to find a seat at the following tables.

Table 1 (Automotive)

Table 3 (Electronics)

Sven Kothe

Yiming Ju

Lisa Lu

Christian

Förster

Jonas Schindler

Ying Tang

Table 2 (FMCG)

Markus Leutner

James Huang

William Li

Gu Feng

Harry Huang

Ying Tang

Yuan Zhang

Pascal Männche

Thomas Herman

Angel Shen

Particia Beuter

Dr. Hans-

Henning Töpper

Ellen Tang

Qinbo Yang

Jin Yuan Yun


Workshop I: Status Quo in German-Chinese

Logistics Networks

Working Group








Workshop I: Status Quo in German-Chinese Logistics

Networks

Identification of

network

differences

• What are the differences in characteristics of the three

logistics networks of automotive, electronics and FMCG?

Step 1: 30 min

Collection of

Facts

(each for own industry)

Discussion and

consolidation

(group)




Differences in Logistics Networks Characteristics of Focal

Industries

Automotive Electronics FMCG

# Suppliers

# Customers

Importance of

Integration

Importance of

Time

Production

Strategy

Power/Leader

# of Part Numbers

Sourcing




Workshop I: Status Quo in German-Chinese Logistics

Networks

Presentation • Presentation of the results of the group work.

Step 2: 30 Minutes

Each Group

Presentation of the results

and discussion











12:00 – 12:45 Lunchtime





Networks



Workshop II: Challenges and Solutions in

German-Chinese Logistics Networks

Working Group


Prof. Dr. Zhang Sidong






Workshop II: Risks/Volatility and Solutions

Risks/Volatility and

Solutions

1. Risk/

2. Risk

3. Risk

Consolidation

Selection of risks

and identification

of volatility

patterns

• What are the three main risks you experience in your daily

business?

• What are your solutions to those?

• What is the main reason for volatility in your industry? How

do you cope with such volatility?

Step 1: 50 min

Solutions

Solutions

Solutions

Volatility Solutions




Workshop II: Solutions and Best Practices

Presenation • Presentation of the results of the group work.

Step 2: 30 min

Presentation of the results

and discussion

Each Group











12:00 – 12:45 Lunchtime





Networks



Current and future Challenges in

German-Chinese Logistics

Networks

Working Group


Prof. Dr. Zhang Sidong






Questions we would like to ask you?

One final Question: What is the role of sustainability in your enterprise?

How did you like the workshop?

Is there any new lessons you draw from this meeting?

What recommendations do you have for us as a research team?




Back Up




State of Integration of Sustainability into Logistics Strategy

62

45

57

57

82

63

63

71

0 10 20 30 40 50 60 70 80 90 100

USA

Brazil

Germany

China

USA

Brazil

Germany

China

Gre

en

Lo

gist

ics

CSRPercentage of respondents, Answer: "Yes„ (all industries)

Logisticians have only in part integrated green logistics and CSR into their logistics strategies.

Considerable differences between regions.

Green

Logistics

Corporate

Social

Responsibilty




Trade Giant China – Import and Export Flows

1. USA

$ 446,7 billion Top Import: Hardware (computer parts)

Top Export: Soy beans

2. Japan


Top Export: Electronic components

3. Hong Kong



4. South Korea

$ 245,6 billion Top Import: Grain

Top Export: LCDs

5. Taiwan



6. Germany

$ 151,5 billion Top Import: Radio and TV components

Top Export: Cars

7. Russia



$122,2

$324,5

$15,5

$268

Trading volume (total): 3641 billion $

Source: www.stats.gov.cn; www.asien-auf-einen-blick.de (2011)




Facts and Figures of the People‘s Republic of China

Capital: Beijing

Largest City: Shanghai

Largest Country by Population : 1,321,851,888

Median Age: 31.8 years

Fourth Largest Country by Area: 9,596,960 Sq km

(3 x larger than EU)

Border countries: 15

Coastline: 14,500 km

Languages: Standard Chinese or

Mandarin, 205 dialects

Administrative divisions: 23 provinces,

5 autonomous regions,

4 municipalities and 2

special administrative

regions




Facts and Figures of Germany

Capital: Berlin

Largest City: Berlin

Largest Country by

Population in the EU : 80,586

Median Age: 42.1 years

Area: 357,122 Sq km

(27 x smaller than China)

Border countries: 9

Coastline: 14,500 km

Language: German

Administrative divisions: 16 provinces

Source: http://www.dw.de/china-kompakt/a-4607598 (2014)

Current and future Challenges in German-Chinese Logistics ... · Agenda: Working Group Meeting...

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