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1

INFORMATION INFORMATION A Cornerstone for CompetitivenessA Cornerstone for Competitiveness

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CustomersCompetition

Change

People

ProcessesProducts

The Business The Business EnvironmentEnvironment

STRATEGYSTRATEGY

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0

2

4

6

8

10

12

14

16

18

20

1960s 1970s 1980s 1990s 2000s

% o

f G

DP

0

5

10

15

20

25

30

35

40

Days

Logistics Costs (% GDP)

Inventory Costs (% GDP)

Cycle Time Requirements (days)

Logistical Improvements Logistical Improvements Manufacturing Sector 1960-2000Manufacturing Sector 1960-2000

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Strategic Planning

Information TechnologyMarketing

Supply ChainManagement

2000s

1980s

Evolution of Logistical IntegrationEvolution of Logistical Integration

MaterialsManagement

Demand Forecasting

PurchasingRequirements

PlanningProduction Planning

Manufacturing Inventory

Warehousing

Materials Handling

Packaging

PhysicalDistribution

Inventory

Distribution Planning

Order Processing

Transportation

Customer Service

Logistics

1990s

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Logistics in the 90'sLogistics in the 90's

% of Products Shipped for “Just-in-

Time” Manufacturing

0

5

10

15

20

25

30

35

40

45

1990 1992 1995 2000

Logistics has given rise to two fundamental features of the contemporary economy:● Just-in-Time (JIT).● Door-to-Door (DTD).

Both favour use of the least energy efficient modes:● Road.● Air.

Impact:Impact:● Cycle time requirements

down by 25% between 1990 and 2000.

● Half of the productivity boom of the late 1990s resulted from logistics.

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Distribution Fleet management Returns and reverse logistics Sorting

Warehouse Warehouse operations Inventory management Order picking and

packing

Local delivery

Call center

Online

OR

Data center Order processing Customer

analysis Inventory

analysis

Order origination Order receipt Order tracking Customer and call

center management

A Supply Chain PerspectiveA Supply Chain Perspective

50% inventory reduction. 40% increase in on-time deliveries.27% decrease in cumulative cycle time.Doubling of inventory turns coupled with a nine-fold reduction in out-of-stock rates.17% revenue increase.

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Supply Chain LogisticsSupply Chain Logistics

First Generation(1970s - 1980s)

Transportation / warehousing

Freight forwarders / brokers

Shipper’s agents

Second Generation(1980s - 1990s)

Non asset-based companies

Asset-based companies with increased service offerings

Third Generation( 2000 and beyond)

Online freight marketplaces

Web-based 3PLs

Increasing supply chain integration

Bro

ad

er

more

in

teg

rate

d

serv

ices

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34.239.6

46.0

54.0

1997 1998 1999 2000

Market Growth of 3PLMarket Growth of 3PL

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Source "What's ahead for 3PLs“ Modern Materials Handling, April, 2000

The Main Users of 3PL The Main Users of 3PL

Computer

Consumer

Retail

Chemical

Medical

Automotive

75.9

71.1

61.4

56.2

53.8

82.2

Industry

European Commission

Information has become the fuel of our knowledge society. The ability to manage the right information in due time is therefore pivotal for the assurance of competitive advantages.

Technology doesn't usually save companies time or money but, in a competitive world, it often keeps them in business.• Anonymous

The Role of Information The Role of Information

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1991 1998 1999 2000 2001 2002 2010 2015

Inland Waterways Rail Road

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

750

800

850

900

950

1000

1050

Volume

Year

20002000

20202020

Freight Market – A SnapshotFreight Market – A Snapshot

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Consumer

The Freight Business ProcessThe Freight Business Process

Producer

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A Supply Chain A Supply Chain BusinessBusiness Rationale RationaleImprovement of customer service by

delivering

• The right goods

• In the right quantities

• In the right condition

• Delivered to the right place

• At the right time

• For the right cost.

• Ensure revenue growth

• Improve asset use

• Reduce inventories

• Accelerate “cash to cash” cycle

• Enhance supplier/supply management

• New integrated higher-revenue services(e-services-based)

• Responsive order management

• Improvement of demand planning

• From supplier to partner

CustomerCustomerFocusFocus

GlobalGlobalCompetitivenessCompetitivenessInnovationInnovation

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Innovative business and operational processes from service origin through to destination

Continuity of service, notably across borders

Coherent management of information across the commercial, logistic and operational chains of the railways

More reliable and flexible management of infrastructure and mobile assets notably under degraded operating conditions

Enhanced demand/supply management

TAF-TSI TAF-TSI An Enabling Information Backbone An Enabling Information Backbone

TAF TSI – A “quick start”TAF TSI – A “quick start”

Not a final goal Not a final goal

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TAF TSI TAF TSI Potential Deployment ScenariosPotential Deployment Scenarios

System DevelopmentPartnerships

Information Providers

SystemNetworking

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TAF TSI - A SWOT AnalysisTAF TSI - A SWOT Analysis

Strengths

Opportunities

Weaknesses

Threats

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A SWOT Analysis I A SWOT Analysis I

•Quality of Service across Value-Chain• Better management of operational processes • Responsiveness mainly in degraded mode

conditions• Innovation capability

Strengths

•Quality of information/Confidentiality Issues•Management of intangible rather than

tangible assets• IT systems know-how of the rail sector

(railways and traditional suppliers alike)• Contractual Issues relating to System

Procurement

Weaknesses

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A SWOT Analysis IIA SWOT Analysis II

• Competition interests between parties• Fragmentation of deployment• Limitations of legacy IT systems• Priority of Investments/ROI timing• Problems of interoperability of IT systems• Cultural Change

Threats

• Innovation potential for revenue growth• Requirements from customers• Shortcomings of legacy IT systems• “In lieu” investments – IT as a means to

achieve enhanced operational performance• Better management of assets

Opportunities

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System Development Challenges System Development Challenges

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0

20

40

60

80

100

1955 1970 1985 2000

Hardware

Year

Perc

en

t of

tota

l co

sts

SoftwareSoftware

DevelopmentDevelopment

MaintenanceMaintenance

System LCC – Cost BreakdownSystem LCC – Cost Breakdown

2 5 65

7

867

Requirements

Specification

Design

Coding

Testing

Integration

Maintenance

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It is not necessary to change. It is not necessary to change. Survival is not mandatory.Survival is not mandatory.

EpilogueEpilogue

The mind is like a parachute,It works much better when it is open.