Transcript The Future

The Future
Mike Wallis
Topics for today
• Trend changes in world demographics and
economic activity
• Latest developments and market
pressures
• Integration in Global logistics
Trend changes in demographics and
economic activity
• Does the world catch a
100
90
80
70
60
50
40
30
20
10
0
>5%
>7%
1980
1990
2000
2008
COUNTRIES BY GDP GROWTH
cold if America sneezes?
• 5.2% global growth in
past 2 years is better than
anything in 80’s & 90’s
• Only Zimbabwe, Fiji &
Tonga shrinking
• Countries from mixed
turmoil hitting the heights
– Turkey; average 6.9%
– Slovakia; 5 mil out of work
to < 1mil
– Chile to GDP per head
$10000
Trend changes in demographics and
economic activity
• High growth meets high
•
•
populations
High growth meets
commodity export led
countries
Stability is being caused
by wealth creation,
people do not want to
risk losing it.
• Debt is being repaid
– Russia $22 billions in 2006
China
9.5
Developing Asia
8.4
India
7.8
Central Asia
7.5
Sub-Saharan Africa
6.1
Russia
5.9
CEE
5.5
Middle East
5.5
Global Average
4.9
Brazil
4.2
EU
2.7
USA
2.2
Japan
1.9
Trend changes in demographics and
economic activity
• Middle class being
•
created in all of these
territories
Consumption will increase
– China will consume all it
makes by 2025??
– Infrastructure behind this is
mixed
• We have all seen
international trade
increase
– How can we take
advantage?
Trend changes in demographics and
economic activity
• Service consistency
– Right product at right time
– Clear and accurate information
• Know your market, know the rules!
– Localise where you can
– Utilise foreign nationals
• Launch the next market or supply point
– Keep existing markets moving
– Repeat success formulas
• Treat supply chain as a core competence
– You have to use service providers at a level, work with them
– Maintain or improve internal competence
• In future we might catch a cold when China sneezes
Latest developments and market pressures
• Carbon footprint
– Research and statistics as a
defence
– Headline moves e.g. Offset
schemes
– Big hitting initiatives missing
as they have service effect,
sales!
– Return to local sourcing has
no critical mass yet, but
clients are asking!
– It is getting traction
– Taxation and regulation will
accelerate the trend
• Sustainability
– Sea freight is cheaper
– 50 tons on a container and
then by rail
– “Filler freight”
– Biofuels?
– Packaging
• We will see clients &
suppliers changing
strategy
– specific products
– sourcing policy
– collaboration
Latest developments and market pressures
• Globalization
– Political changes
• Iron Curtain
• China in trade talks
• Western initiatives
– Africa
– Middle East
– Communications and
technology
– Standardization
• EDI
• Packaging
• Deregulation
• Privatisation
• Rapid growth in trade
• Rapid growth in competition
• Speed and certainty of supply
is an area of differentiation
Latest developments and market pressures
• Consolidation
–
–
–
–
DHL buys Exel & T&B
NYK buys Panalpina
K&N buys Hays
Schenker & BAX
– Similar trend in retail and
manufacturing and service
industries
• Margin squeeze
– 20% of UK freight
forwarders at risk
– Procurement techniques
• Small can be beautiful
• Scale is a good defence
• Service & cost recipe
• One stop shop
• Can you get consistency?
One to watch
• The old Silk Route rail
network
– China – Kazhakstan –
Russia – EU border &
Balkans & Turkey
• Potentially 1,750,000 40’
containers per year
– = to 5-7 large container
ships departing each week
• Potentially 20% cheaper
than traditional routes
• 14-18 days Shanghai to
Berlin
Integration in Global Logistics
• The leading supply chain integrators are manufacturers;
– Not Logistics companies
– The manufacturer is the key element
• They have created the demand for services that Logistics companies
are trying to supply
– Automotive
– Pharmaceutical & chemical
– Hi-tech
• Large logistics companies have responded; but
– There are relatively few examples of real global integration, more
tactical and regional
– The most successful ones are long-term
– Japanese and American
Integration in Global Logistics
• Supply Chain is also the target of IT and Consultants
• Range of systems out there;
– i2
– Keywill, is an interesting one.
• It is the process and information flow that is needed as well as
some trust, and longevity
• Who has best knowledge of your processes?
– More important, your threats and opportunities and your culture
• Most services you need are out there, but not necessarily joined up,
or maybe not adding enough value
Integration in Global Logistics
an example
B&Q were sourcing many products from China
• Theoretically low cost suppliers
• Packaging in branded materials
• Producing and shipping in economic quantities
– Peaks and valleys of stock and availability
• We suggested that we took over the “packaging” part of production
• Opened 3 factories
– Ordered raw material from original suppliers, unpackaged
– Received sales data
– Used VMI techniques aligned to freight purchasing knowledge and
other traffics
– Delivered to UK DC on just in time basis by sea
• Reduced landed cost by 30%
• Information systems, trust, transparency, long-term, process
•
ownership
Plan to roll out to 9 departments
Integration in Global Logistics