The Future of Logistical Collaboration in Europe Professor Alan McKinnon Kühne Logistics University Hamburg CO3 General Assembly P&G Offices Brussels 28th May 2014 KÜHNE LOGISTICS UNIVERSITY HAMBURG  A private, independent, state- recognized university – founded in 2010  A university with expertise in logistics and management  2 MSc, a Bachelors, an executive MBA and a PhD program – 180 students  17 resident faculty plus contributions from a large group of external professors Logistical Collaboration: long history of rhetoric and disappointment IBM supply chain maturity model (2005) Key role in models of supply chain development Source: IBM, 2005 Major Challenges Facing Supply Chain Managers collaborate with multiple partners Prominent place in supply chain surveys 3 Source: Accenture (2004) Dimensions of Supply Chain Collaboration Vertical collaboration Between companies at different levels in the supply chain Core individual company capability Between business units – use of control towers Source: McKinnon, 2003 Horizontal collaboration Between companies at the same level in the supply chain: within same sector in different sectors Collaboration with and between LSPs Evolution of Logistical Collaboration Carriers Shippers 1980s partnerships 1990s alliances consortia 2000s 2010s vertical collaboration CTM ECR CPFR horizontal collaboration Starfish CO3 opportunistic systematic 2020s network based CPFR = collaborative planning forecasting and replenishment CTM = collaborative transportation management Rationalisation by Collaboration Horizontal Collaboration: 5- dimensional diffusion geography 6 Source: Cap Gemini (2008) 5 Ms of Horizontal Collaboration Mindset: - new age of collaborative enlightenment - acceptance of the ‘sharing economy ‘ Motives: - internal, company-level efficiency gains exhausted - external commercial and environmental pressures mounting Models: - evolution and refinement of collaborative business models - mathematical models and software tools to optimise gain-sharing Market: - establishing mutually-supportive roles for logistics providers - aligning HC with other market trends to maximise synergies Ministries - legal acceptance of HC as yielding wider societal benefit - promotion of HC through logistics best practice schemes 7 Impending Paradigm Shift ‘Rise of a Collaborative Commons as the dominant model for organising economic life’ ‘The Internet of Things (IoT) is the technological ‘soul mate’ of the emerging Collaborative Commons’ ‘ The IoT is made of a Communications Internet, an Energy Internet and a Logistics Internet that work together in a single operating system, continuously finding ways to increase thermodynamic efficiencies and productivity in the marshalling of resources, the production and distribution of goods and services and the recycling of waste.’ Physical Internet applying the networking of principles of the internet to the physical movement of freight ‘Physical encapulation’ of goods in a new generation of modularised containers’ Source: Montreuil, 2012 longer term vision of ‘network-based’ horizontal collaboration ? Collaborative bundling of freight to meet modal shift targets Target: EC White Paper target for 30% of freight tonnes moving over 300km to move by rail or inland waterway Without target: Business-as-Usual projection of modal split 90% 80% % of tonne-kms 70% 60% 50% Road 40% Rail IWW 30% 20% 10% 0% 2009 actual without target with target Based on analysis by Tavasszy and van Meijeren (2011) Will these targets ever be achievable without extensive horizontal collaboration? Collaborative bundling of freight to maximise the load consolidation benefits from high capacity trucks 4.5% % of EU tonne-km moved by HCV Source: Steer Davies Gleave, 2013 10 Bn tonnes of CO2 per annum The Scale of the Climate Change Challenge Nestle-Pepsico Benelux collaboration Kg CO2 / tonne 1. Separate delivery 43.8 2. Groupage 27.3 3. Collaborative synchronisation 20.3 Source: Jacobs et al 2014 11 Source: Clark, 2013 DHL Logistics Trend Radar Source: DHL, 2014 12 Need to integrate logistics service providers more effectively into HC schemes Extending the Scope and Objectives of Horizontal Collaboration improving the utilisation of existing assets and services joint planning of new facilities, systems and services catalysing and leveraging future logistics innovations Joint programmes for adaptation to regulations, climate change etc. Challenges Complying with evolving competition law Orchestrating more complex, broadly-based collaborative networks Professor Alan McKinnon Kühne Logistics University – the KLU Wissenschaftliche Hochschule für Logistik und Unternehmensführung Grosser Grasbrook 20457 Hamburg tel.: +49 40 328707-271 fax: +49 40 328707-109 e-mail: [email protected] website: www.the-klu.org