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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 cold if America sneezes?

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The Future

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  1. The Future Mike Wallis

  2. Topics for today • Trend changes in world demographics and economic activity • Latest developments and market pressures • Integration in Global logistics

  3. Trend changes in demographics andeconomic activity • Does the world catch a 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 COUNTRIES BY GDP GROWTH

  4. Trend changes in demographics andeconomic 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

  5. Trend changes in demographics andeconomic 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?

  6. Trend changes in demographics andeconomic 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

  7. 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

  8. 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

  9. 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? Latest developments and market pressures

  10. 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

  11. 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

  12. 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

  13. Integration in Global Logisticsan 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

  14. Integration in Global Logistics

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