Logistics Control Tower

Control Tower European Coverage, Control Tower Model and Framework, Levels of Outsourcing and Control, Operational & Organisational Structure

2 | DSV – June, 2016

Air & Sea● Air Freight● Ocean Freight (LCL / FCL)● Inter-Modal (Short Sea / Rail)Service Levels: Budget – Classic – Priority

Special ServicesTemperature Controlled ●

/Cold Chain (GDP Pharma / Fresh) Technical Distribution / White Glove ●

1/2-Man Delivery ●Service Part Logistics (SPL) / Innight ●

Secure Transportation (TAPA TSR) ●

Road (Ground)Groupage ●

Part Loads (LTL) ●Full Loads (FTL) ●

Additional Services: ADR (D/G)

Courier Express Parcel (CEP)● Day Definite (Standard / Economy)● Time Definite (Express)● Courier (Premium)

Service Scope: B2B – B2C

Freight ManagementTransportation Service Portfolio

3 | DSV – June, 2016

Freight Management

Orchestrates the flows of goods and controls your logistics operations at the ‘right’ cost (minimal overall supply chain costs) with real time interventions by using the latest technology, advanced concepts and highly experienced & qualified logistics professionals.

Client

• Ultimate ownership and decision making on logistics strategy• In-depth knowledge of the market served and business implications2

DSV Control Tower• In-depth knowledge of transport industry and different modes of transport• People with hands-on experience in managing daily dynamics• Systems designed to manage transportation and to support the required

business functions (e.g. FMS – Freight Management System)

3

Goal

• Provide a tailor-made transport (distribution) management solution with the objective to effectively and efficiently manage the dynamic transport flows, by making use of the role and expertise of each party

1

Control Tower

4 | DSV – June, 2016

Control Tower

Operational Execution

Operational Account Management

Subcontractor Coordination

Subcontractor (Carrier) Management

Logistical Concept (Network) Design

Subcontractor Selection (Sourcing)

Distribution Channel Definition

Service Level Definition

Business Strategy

Logistics Strategy & Objectives

CLIENT

3 PL

Today

Operational Execution

Operational Account Management

Subcontractor Coordination

Subcontractor (Carrier) Management

Logistical Concept (Network) Design

Subcontractor Selection (Sourcing)

Distribution Channel Definition

Service Level Definition

Business Strategy

Logistics Strategy & ObjectivesCLIENT

DSV

3½ PL

Tomorrow

The client’s objectives determine the Control Tower configuration and model of cooperation• Enhanced partnership• Go beyond execution of day-to-day operations• Phased approach allows a partnership to develop• Have a common vision of the future• Respecting mutual business interests

Three Levels of Cooperation• Strategic• Tactical• Operational

Different Levels of Outsourcing

5 | DSV – June, 2016

DSV Control Tower Model

All freight management activity & transport chains controlled from a central location to ensure an efficient & streamlined operation.• Complete order fulfillment (transportation & documentation)• Logistics subcontracting based on competitive pricing & high

quality service• Optimal mix carrier selection (independent / market neutral):

Client & DSV sourced• End-to-end visibility & control (event management)• Constant monitoring & intervention (risk mitigation)• Single point of contact (SPOC): communication via dedicated CT

team• Experienced & trained staff• Coordinated planning: inbound; outbound; docks; WHS

processing• All transport modalities:

- Parcel (Standard / Express)- Road (Groupage / LTL / FTL)- Air & Sea Freight- Premium / Expedited- Special Services

• All trade flows:- Outbound- Inbound- Returns- Inter-Company / Cross-Trade

DSV Control Tower

Streamlined Operations

6 | DSV – June, 2016

DSV Solutions Freight Management

Based on the customer’s requirements, shipment size, weight and destination, DSV selects the most suitable distribution solution in terms of lead time, quality and cost by using advanced freight management tools & systems (FMS / TMS).We handle planning, execution and administration of all transport operations:

Transport Sourcing Market intelligence & procurement

Order Management Order receipt & consolidation

Shipment Planning Carrier selection & scheduling

Freight Execution Preferred subcontractor selection (all modes)

Financial SettlementFreight bill audit & invoicing

Performance Reporting Carrier management (KPI)

Exception Handling Pro-active communication & corrective actions

Shipment Monitoring:Event management (track & trace)

7 | DSV – June, 2016

Three Levels of ControlKey Control Tower Functinalities

• Subcontractor Management (Carrier Evaluation)- Carrier delivery performance: closely monitored service quality through KPI scorecards- Documentation: SLA / SOP / certifications / regulations- Contract maintenance: carrier details (CRM) / rate database / lead times

• Reporting & Data Analysis (Business Intelligence)• Statistics: historic shipment profile & costs• KPI’s (Other): green / sustainability (CO2 emission)

Tactical

Manage

• Logistics / Transport Strategy Development Support• Transport Sourcing

- Carrier Selection: RFI – market intelligence (preferred subcontractor pool)- Carrier Procurement: RFP – tendering (negotiation / analytics / SLA-contracting)

• Transport Optimization & Engineering (Improvement Projects & Modeling)- Transport mode selection (routing guide)- Optimisation: network redesign / cost modeling (‘what if’ simulation) / frequency reduction

Strategic

Design

• Daily Transport Management (Forwarding)• Order processing- Load building: order consolidation- Load scheduling: planning (collection / dock management / ETD / ETA)- Carrier selection: operational sourcing (routing guide / rate shopping / RFQ - spot quote)- Transport booking: carrier load tendering & documentation (CMR / export docs)

• Admin Tasks- Event management (visibility): shipment monitoring & exception handling- Financial settlement: carrier invoice control (audit) & client billing- Freight query & claims handling: late / damage / loss

Operational

Execute

8 | DSV – June, 2016

Phased Implementation & TransitionPhased project management approach with clear deliverables per phase

Project Management

• Scope

• Objectives

• Constraints

• Team

• Project plan

• Operations

• Data (profile)

• Baseline model

• Incumbents (existing LSP)

• Processes

• Organisation

• IT / systems

• Transport Network **

• SOP• SLA• Training• Manuals• Instructions

• Execution• Monitoring• Reporting• Settlement

• Sourcing• Evaluation•

Optimization

•Engineering

1.Define

2.Analyse

3.Design

4.Document

5.Implement

6.Improve

** Take-over existing client operations ‘as-is’ during start-up phase in order to ensure business continuity and enable data collection, learning and experience. The transport network initially stays ‘as-is’ with existing contracts, logistics suppliers (incumbent carriers) and KPI metrics.

- Buck Consultants International, 2008

9 | DSV – June, 2016

Synchronised Supply ChainEnd-to-End Visibility and Control

Inbound Storage Outbound

Plan

Sour

ce

Del

iver

From Supplier To Consignee

Collection & Forwarding(Origin)

Transportation(Inbound)

Logistics & VAL(Warehouse)

Distribution(Outbound)

Delivery(Destination)

1. Pick-up

2. Cargo consolidation

3. Customs clearance

4. Shipment booking/ Pre-advice (ASN)

5. Documentation & Insurance

1. Air

2. Road

3. Sea

1. Warehousing

2. Picking & Packing

3. Planning booking & control

4. Docs & customs

1. Air

2. Truck distribution

3. Parcel (CEP)

4. Sea (Short)

5. Reverse

ClientControl Tower

Airport

Seaport

Control Tower

Airport

Seaport

Control Tower

Airport

Seaport

10 | DSV – June, 2016

Control TowerOperational & Organisational Structure

DSV Air & Sea DSV Road DSV Solutions

Control Tower (SPOC)

Sub-Contractors/ Carriers(External)

Suppliers &End-Customers(External)

CLIENT

11 | DSV – June, 2016

Outbound Distribution Network

1

2

3

4

CLIENT

DSV Control Tower – Streamlined Operations

CARRIERS

12 | DSV – June, 2016

Distribution Proposal

1

2

3

Parcel * Linehaul (Zone Skipping / Domestic Network Injection)Parcel * Integrator Network Routing (Central Hub Feed)Courier Premium / Expedited Service (Direct Dedicated Delivery)Road Groupage (Pallet Network) & LTL / FTL (Direct)Parcel * Routing dependent on Service (Standard / Express) & Cut-Off

1234

Network Model

4

13 | DSV – June, 2016

Distribution Proposal

123

1

2

3

Medical Devices (MD) Domestic Distribution (Central DC)Medical Devices (MD) International Distribution (Central DC)Pharma Domestic Distribution (Country RDC)

High Level Process & Network Model

14 | DSV – June, 2016

Outbound Shipping & Distribution

DeliveryOrder (D/O)

Origin &Export Docs

Load List &Docs / CMR

TransWide(twSlot)

Call-Off(Transport &Slot Booking)

High Level Process Map

15 | DSV – June, 2016

Specialist Distribution NetworksStrategic Industry Focus

Only a limited number of global logistics players (3PL) can deliver against the required industry dedicated requirements (integrated solutions offering)

Time

Cost Quality

General Cargo

High Tech

Pharma

DSV XPress

16 | DSV – June, 2016

Hub & Spoke Network – ‘Insinking’Synergy in Transportation

17 | DSV – June, 2016

Road transport Sea transport Air transport1

10

100

1000

82.2

11.5

762.0

74.1

11.2

745.0

80.3

10.3

721.1Energy efficiency - per transport activity

2010 2011 2012

CO

2 (g

/tonn

e-km

)

Energy efficiency varies considerably among the different means of transport used by DSV's subcontractors for transporting customers' goods. As illustrated, a container ship is one of the most energy-efficient means of cargo transport. 

From 2008 to 2012, the energy efficiency of DSV improved by nearly 13%, mainly due to the increasing proportion of transport services being performed by container ships and the improved fuel consumption of the Road division's own and subcontractors' vehicles, as previously mentioned.

Energy efficiency

18 | DSV – June, 2016

Toxic emissions from heavy-duty diesel engines have been subject to EU regulation since the early 1990s.

The EU regulations on emission standards for trucks, the Euro norms, will gradually become stricter.

As an example, all new trucks sold in the EU after October 2009 must meet the emission standards defined in the Euro V norm.

A Euro VI norm is expected to become effective by the end of 2013.

Overview – Euro norm regulations for trucks

Type of Euro norm- Euro norm determined by year of registration

NOx

(g/KWh)HC

(g/KWh)CO

(g/KWh)Particles(g/KWh)

Euro 0 - Type app. 1/7 1988, new vehicles 1/10 1990 14.40 2.40 11.20 N/A

Euro I - Type app. 1/7 1992, new vehicles 1/10 1993 8.00 1.10 4.50 0.36

Euro II - Type app. 1/10 1995, new vehicles 1/10 1996 7.00 1.10 4.00 0.15

Euro III - Type app. 1/10 2000, new vehicles 1/10 2001 5.00 0.66 2.10 0.10

Euro IV - Type app. 1/10 2005, new vehicles 1/10 2006 3.50 0.46 1.50 0.02

Euro V - Type app. 1/10 2008, new vehicles 1/10 2009 2.00 0.46 1.50 0.02

Euro VI - Type app. 31/12 2012, new vehicles 31/12 2013 0.40 0.13 1.50 0.01

19 | DSV – June, 2016

DSV fuel consumption

• Carbon emissions from vehicles are directly related to fuel consumption; equivalent to approx. 2.65 kilograms of CO2 per litre of diesel fuel.

• In 2012, the DSV Road Division operated in a fragmented and highly competitive market with focus on domestic transports, typically resulting in many departures and short distances. As a result, the overall fuel consumption of the trucks used by DSV dropped by 2.7% on average.

• Factors influencing fuel consumption- Engine technology- Drivers' driving technique- Traffic congestion- Terrain- Weather 2008 2009 2010 2011 2012

0.27

0.29

0.31

0.33

Litre

s/km

Average fuel consumption (own and subcontractors' vehicles)

20 | DSV – June, 2016

IT Services

Track & Trace (D-Track)

Ordering Tracking Systems(D-Chain Pro)

Online Order Management

Statistical evaluation

EDI solutions

E-Billing

DSV Control Tower Update Call to Business Process Organisation Group

22 | DSV – June, 2016

Control Tower framework – 16 Building Blocks

MarketingProduct definition Commercial Operations

Basic Control Tower models- Flavor definition

1.3

Product definition- Business model- Supply chain scope- Control Tower functions

1.2

Supporting Systems- Systems inventory,

functionality and future landscape

1.4

Customer requirements- Which requirements lead

to a CT model- Value mapping of CT

1.1

Organization set-up and responsibilities- Where to position each

function

1.5

Market development- Market intelligence /

research- Competitor analysis- Marketing plan- Execution of the plan

2.1

Lead generation- Lead generation plan,

dependent on company maturity level

- Execution of the plan

2.2

1 2

Solution outline- High level process- Application suite- Testing on pitfalls

2.3

Assessment process- Readiness check- Basic flavor

2.2

Proposal & contract- Specification- Cost and value- T&C

2.4

Initial sales ppt- Present DSV vision- Show capabilities- Trigger next step

2.1

Site visit / demo- Real live experience- Customer process and

system support

2.5

3 4Implementation- Templates- Process flow- System mapping

4.1

Organisational set-up- Role/Responsibility

matrix- Organisation

structures

4.2

Run phase- Business Reviews- Continuous

improvement

4.3

CT Governance- CT organization

(product owner in DSV)

4.4

23 | DSV – June, 2016

DSV Control Tower takes the active lead on your supply chain

• Globalised and fragmented supply chains get predominant in the market, increasing cost and complexity.

• Market volatility drives the need for synchronisation of activities that results opportunities to create value to you

• DSV Control Tower drives this value by active management and synchronisation of activities

• Using IT systems that are fit for the job

• Combined with an appropriate model of cooperation

• With people that understand the practical implications

• By a company that has a proven track record

• With simple approach to start.

• Hands on steps to proceed..

24 | DSV – June, 2016

DSV Control Towers

Transport is a complex business full of potential pit falls and almost everything can go terribly wrong. It is an operation in the real world with large distances, challenging

terrain, extreme weather, language and cultural barriers, complex compliance issues, theft and, sometimes, plain danger…

At DSV we do not claim that we can control all these factors, but we have experience handling them when they arise. So you do not have to worry.

25 | DSV – June, 2016

...and create an opportunity for increased value for you...

• Value is created by focusing on three main aspects:

- Improved service- Lower costs- Increased ROIC

• During the development of a business case, main improvement drivers for above aspects are identified.

• The modular approach of DSV Control Tower enables a tailor made configuration, while making use of predefined processes and systems.

Carrier Contracting

Carrier Contract Management

Continuous Improvement

Supply Chain Innovation

Programme & Change Management

PO Vendor Management

Order Management

Transport Management

Operations Event Management

Customer Service Info Management

Financial Management

Improve Service Lower Cost Increase ROIC

Performance Management

Increased Control

Efficient Operations

Lower Rates

Lower IT Cost

Lower Inventory

Lower Assets

26 | DSV – June, 2016

...by active management of independent activities that are interdependent...

• The primary purpose is to organise and follow up transport in the most efficient way, reducing also the level of complexity

• This active management oversee networks that use a multitude of service providers and require complex transport organisation, such border crossing, multiple regions, multiple modes, and different supply chains

• These operations can be located on a centralised location for many customers in a shared environment or dedicated on-site or remote for a single customer

27 | DSV – June, 2016

The Systems Landscape

Control Tower Supply Chain Suite

TMS carrier A

TMS carrier B

TMS carrier D

TMS carrier E

Inbound Management Stock Management Outbound Management

Customer ERP system

Planning Execution Finance Reporting

EDIConnectivity Layer

Portal Access Interactive Layer

WMS LSP 1

WMS LSP 1

WMS LSP 1

Customer Team / Vendor team • The integration of IT solutions is a key success factor in order to achieve resource savings and optimise cooperation with the different parties

• Front end tools to be used by vendors or by you to access all the relevant information

• Feed your own ERP system thorough the extensive use of web services/EDI/XML messaging

• Full operational control and visibility

28 | DSV – June, 2016

...by people that understand the practical implications...

• The greatest asset in a control tower are the people and IT technology

• DSV employees understand what it is key for you and make sure that service is delivered at the expected standards

• Roles of the team operating CT are the key of a successful relationship and we focus on the key profiles and right knowledge to deliver premium customer service

International Staff

Empowerment

Lean Flat/Organisation

Ownership

Speaking culture to culture

Flat Management

Minimum hand over points

Hands on Management

Res

pons

ibili

ty

29 | DSV – June, 2016

Model Consultant 4PL Managing agent / 3,5 PL

Single carrier

Focus Study / solution implementation

Streamlining communication

Optimization / change management

Operational execution

Typically applied Re-engineering and implementation of short term change

Outsourcing of transport management activities

Implement strategic change and solve cost/performance issues

Stable environment, multiple modes of transport,

Order and transport management

Customer 4PL DSV DSV

Customer service and reporting

Customer 4PL DSV DSV

Financial management

Customer 4PL on behalf of Customer

DSV on behalf of Customer

DSV

Carrier performance management

Customer 4PL on behalf of Customer

DSV on behalf of Customer

DSV

Contract management

Customer 4PL on behalf of Customer

DSV on behalf of Customer

Only DSV as carrier

Execution Carriers Carriers DSV as well as other carriers

DSV

...combined with an appropriate model of cooperation...

• The objective of the control tower initiative will determine the configuration and the model of cooperation (not the other way around)

• Initially we will discuss the model that fits your business depending on the focus: manage change, manage performance or managing efficiency

• The result is to operate with the right liability / responsibility model, that will lead a better implementation and consistency within different agreements

30 | DSV – June, 2016

...and a simple approach to define...

Functions Complexity

I want a Control Tower that is defined by:Liability

Booking / invoicing

Consolidation planning

…..more

Order Management

Financial Management

PO / Vendor Management

Current process professionalism

…..more

Process variability

Number of ERP systems

Number of Locations/lanes

Number of transactions

Freight Forwarder

liability

Carrier liability

Consultant liability

Charging method

Variable transaction fee

Activity based costing

Fixed monthly fee

Combination of above

Internal / External charge

1 2 3 4

1

2

3

4

Pick your Control Tower Menu