Supply Chain Management in a
multipolar world
Univ. Prof. Dr. Sebastian Kummer
Head of the Institute of Transport and Logistics,
WU Vienna
Univ. Prof. Dr. Sebastian Kummer
1982-87 Economics Business Adminstration and Philosophy at the at the
University of Tübingen and Cologne,
1987-97 Dissertation (Phd) and Habilitation at Wissenschaftliche
Hochschule für Unternehmensführung Koblenz (WHU)
1996-01 Chair of business administration, esp. Management of transport
companies, Dresden University of Technology
Mail: [email protected]
Tel.: +43 1 31336-4590
Sebastian Kummer is member of several scientific and company boards. He is/has been visiting
professor and lecturer at universities in China (Bejing, Changchun, Chengdu, Tianjin ), Indonesia
(Yogyakarta), Philippines (Manila UP), Vietnam (Hanoi), Russia (Moscow, St Petersburg), Ukraine
(Kiev), Germany (Hamburg, Marburg, Zittau), Austria (Leoben, Krems).
He has published more than 150 publications. He works as a adviser, consultant and
management trainer for companies and government bodies.
Since 2001
Head of the Institute for Transport economics and logistics management, WU-Vienna
Head of the Research Institute for Supply Chain Management, WU-Vienna
Co-Executive Directors of the European section of the MIT Forum Supply Chain Innovation
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 2
Agenda
Introduction
Development and Challenges of a
multipolar world
How companies (should) act in a
multipolar world
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 3 2 December 2013
1. Introduction
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 4 2 December 2013
WU is the leading university of
business and economics in Austria
Founded in 1898
EU’s largest educational institution for business and economics, business law, and social sciences
More than 27,000 students
Faculty of >500 (85 full professors)
12 academic departments, 14 research institutes
Member of CEMS (Community of European Management School)
EQUIS (European Quality Improvement System) accredited
Top rankings in FT Master in Management as well as other national and international rankings
Master SCM worldwide No. 1 at EduniversalRanking
Vienna University of Economics and Business (WU)
Copyright 2013 WU Wien. All rights reserved.PAGE 5
New Campus of WU Vienna
Investment of 500 Mio. €
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 6
WU Master SCM is ranked worldwide
No. 1 in the Eduniversal Ranking
1982-87 Economics Business Adminstration and Philosophy at the at the
University of Tübingen and Cologne,
1987-97 Dissertation (Phd) and Habilitation at Wissenschaftliche
Hochschule für Unternehmensführung Koblenz (WHU)
1996-01 Chair of business administration, esp. Management of transport
companies, Dresden University of Technology
Mail: [email protected]
Tel.: +43 1 31336-4590
Since 2001
Head of the Institute for Transport economics and logistics management, WU-Vienna
Head of the Research Institute for Supply Chain Management, WU-Vienna
Co-Executive Directors of the European section of the MIT Forum Supply Chain Innovation
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 7 2 December 2013
http://www.best-masters.com/ranking-master-supply-chain-and-logistics.html
The Institut of Transport is offering a
broad area of expertise for research
and industry projects
Strategy development:
Development of logistics and supply chain strategies for all industries
Strategy development / strategic realignment for transport and logistics providers
Logistics and supply chain optimization:
Supply chain performance measurement and management
Analysis, modeling and optimization of international supply chains
Transport optimization:
Transport optimization and transportation management for all industries
Optimization of transportation nets for transport and logistics providers
Socioeconomic assessment and evaluation:
Assessment of transportation infrastructure
Evaluation of transport policy measures
Sustainability:
CO2-calculations in transport and logistics
Green logistics concepts and programs
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 8
.. The „Kummertabellen“
(Toll calculation sheets)
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 9 2 December 2013
The „Kummer toll calculation sheets“ and Softeware are widely used to calculate the
toll costs for groupage services and Less than truckload shippments. They are
available for the following countries
Austria GermanyCzech
Repub.
Slova-
kiaPoland
Switzer-
landHungary France
European truck toll challenges
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 10
Big increase in European truck tolls (germany,
austria, …)
Low predectibility of governmental actions
Development and Challenges of the multipolar world
Reuters - CRB - Future -Index (CCI) – All Commodities
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 11
Nothing new in the
world: Globalization?
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 12 2 December 2013
Globalization is an old phenomenon
Jules Vernes in 80 days around the world
Man comes from Africa and conquers the world
Greek think that the world is a “globe”
Magelan organizes the first circumnavigation
Airplane in 24 hours around the world
Satellites in 90 minutesInformation within a second
Goods were exchanged on the Silk Road
Dschingis Khan from ca. 1160 to 1227
100.000 BC
ancient
1519-1521
19th century
today
Bronze Age420 BC
12th century
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 13 2 December 2013
The Silk Road
Already in Bronze Age definitely from the 5. century BC (Herodot about 430 BC.). Intermediary system, South route
Bildquelle: http://upload.wikimedia.org/wikipedia/commons/0/00/Seidenstrasse_GMT.jpgPAGE 14
Political and
economic power will
be globally
distributed
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 15 2 December 2013
1990: economic and political power is
concentrated in the triad economies
PAGE 16 2 December 2013
Now greater dispersal of economic power
as the developing economies contribute an
ever-increasing share of the world’s output
trade and investment
PAGE 17 2 December 2013
Economic power is becoming more
dispersed
Developed World
Share of global GDP World’s biggest economies
Real GDP at 2005 prices and PPP
Emerging World
202520071990
US
China
India
Japan
Germany
US
Japan
China
Russia
Germany
China
US
India
Japan
Germany
UK
France
Russia
Brazil
Italy
India
France
UK
Italy
Brazil
Russia
UK
Brazil
France
South Korea
CAGR
2005-
2025
Em
erg
ing
5.8
%
0
20
40
60
80
100
120
1980 1990 2005 2015 2025
61%
57%
49%
39%51%
43%39%
61%71%
29%D
eve
lop
ed
2.7
%
Source: EIU Source: EIU
Real GDP at 1996 prices and at PPP, US$ trillion
Source: Accenture (2010)PAGE 18 2 December 2013
The globalization and
diffusion of power is
a huge force in the
battle against poverty
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 19 2 December 2013
World-wide wealth 2005
miserable
Source: using ideas form Horx (2006)
poverty
wealthy
rich
Bill Gates und
Ingmar Kamprad +
ca. 1000 BillionairesCa. 10 Mio.
Millionaires
Ca. 1,8 Billion
Ca. 830 Mio.
Ca. 3,3 Billion
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 20 2 December 2013
Many people in Europe are afraid about the globalization challenge
Annual growth of 10 % in the
80th, 90th and beginning of 21th
century now slowing down to 8 %
Huge infrastructure investments
1000 km highways per year
Annual growth of 6 % in the
80th and 90th
Population still growing
Poverty declined from 51 % (1977) to
26 % in (2000)
Huge infrastructure investments
(2000 11 km new highways per year,
2005 11 km per day)
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 21 2 December 2013
Chinas economic and social
development
0
1000
2000
3000
4000
5000
6000
7000
1971 1980 1990 2000 2010
Per capita income per year (US $)
120 190310
950
4450
2012: 6190
Declining Poverty in China
Number and % of Poor
(und 1,25 US $ per day)
84 %835 Mio.1981
60 %683 Mio.1990
2009
157 Mio.12 %
using FAZ , 24.11.2013, S. 26, sources: Worldbank, Statistisches Jahrbuch ChinaPAGE 22 2 December 2013
World-wide wealth 2030
????
miserable
poverty
wealthy
richCa. 100 Mio.
Millionäre
Ca. 4,4 Mrd.
Ca. 400 Mio
Ca. 2,9 Mrd. Source: using ideas
form Horx (2006)
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 23 2 December 2013
Global SCM challenges
High unprecedented volatility in prices
Increase in risks
Increasing safety and security requirements
Increasing unpairities
Copyright 2012 Sebastian Kummer. All rights reserved.PAGE 24 2 December 2013
The business
environment has
become dynamic and
uncertain
Transport an logistics
markets remain
volatile
Don t claim: act!
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 25 2 December 2013
Volatility of world economy is
increasing and remains high
Reuters - CRB - Future - Index (CCI) – All Commodities
Thomson Reuters / Jefferies CRB Continuous Commodity Future Index (CCI-Index):
basket of 22 sensitive basic commodities their markets are assumed to be among the
first to react to changes in economic conditionsSource: Thomson Reuters (2010)
1st oil shock2nd oil shock
World economic
crisis
The supply chain is the tip of
the spear confronting
volatility:
Deteriorating demand
Volatile input cost
Unprecedented credit squeeze
Equity market turmoil
…
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 26 2 December 2013
Price development of charter rates
for Container ships: HARPEX
(Harper Petersen charter rates index)
World financial crisis
http://www.harperpetersen.com/harpex/harpexRH.do?timePeriod=Years10&&dataType=Harpex&floatLeft=N
one&floatRight=None, vom 16.1.2013
World financial
crisis
Overcapacity
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 27 2 December 2013
Increase of the KPI:
Transportation costs
product price
Development of transportationcosts and product prices
80%
90%
100%
110%
120%
130%
140%
150%
160%
Tra
nsp
ort
ati
on
co
sts
Transportation costs (realistic scenario)
50 % truck 50 % railProduct price trend (slidely negative)
80%
90%
100%
110%
120%
130%
140%
150%
160%
Ind
ex:
Tra
nsp
ort
ati
on
co
sts
fro
m p
rod
uct
pri
ce
Reduction of the KPI:
Transportation costs
product price
2005 2010 2015 2020
Copyright 2012 Sebastian Kummer. All rights reserved.PAGE 28 2 December 2013
Development of transportationcosts: Realistic Scenario (for both transport modes)
Truck
Fuel
Lubricant
Tiers
Repairing
Road pricing
Staff
Fix costs incl. Dev.
Overhead
Reduction of staff costs due to
cheap EU-25 drivers until 2005
than moderate increase
Introduction of road pricing
in all European countries
Railway
Track
Traction (Locomotive)
Energy
Staff
Waggons
Overhead
Shunting
realistic realistic
2010 2015 2020
100 133,8 179,1
100 127,6 162,9
100 115,9 134,4
100 115,9 134,4
100 121,7 148
100 115,9 134,4
100 115,9 134,4
100 110,4 121,9
realistic realistic
2010 2015 2020
100 121,7 148,0
100 105,1 121,8
100 127,6 162,9
100 110,4 128,0
100 115,9 134,4
100 113,1 131,2
100 105,1 121,8
Significant rise of energy costs
Realising of economies of scale
in production of locomotives
Moderate increase in nearly all
other railway cost categories
due to productivity gains (exept
shunting)
Copyright 2012 Sebastian Kummer. All rights reserved.PAGE 29 2 December 2013
Development of transportationcosts: Realistic Scenario
80%
90%
100%
110%
120%
130%
140%
150%
160%
170%
Year
Tra
nsp
ort
ati
on
co
sts
2005 2010 2015 2020
Truck 2005-2010
Rail 2005-2010
Truck realistic
Rail realisticExpected advantage of
a lower increase of
railway costs in
comparison to road
costs, about 16,4 %
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 30 2 December 2013
But risks are
increasing
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 31 2 December 2013
C-TPAT
C Customs
T Trade
P Partnership
A Against
T Terrorism
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Problem: Transparency for your competitors
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 33 2 December 2013
The business
environment has
become dynamic and
uncertain
Transport an logistics
markets remain
volatile
Don t claim: act!
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 34 2 December 2013
How companies act in a multipolar
world
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 35 2 December 2013
Speed up
globalization
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 36 2 December 2013
How the iphone conquered the world
July 2007 November 2007 Mid to End 2008 Since 2009
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 37 2 December 2013
How the iphone conquered the world
The iPhone 5 will debut in 9 countries until September 21:
the U.S., Canada, the U.K., Germany, France, Australia, Japan, Hong
Kong and Singapore.
On September 28, the iPhone 5 will roll out in 22 additional countries:
Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, Hungary,
Ireland, Italy, Liechtenstein, Lithuania, Luxembourg, Netherlands, New
Zealand, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden
and Switzerland.
The iPhone 5 will be available in a total of 100 countries by December
Apple plans to sell 10 million iPhone until end of September and sold 4
million of the iPhone 4S in its first three days of availability.
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 38 2 December 2013
Increase scale,
Increased global
market power,
global assets and
global employment
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 39 2 December 2013
Grohe´s global and flexible manufac-turing footprint with streamlined production across all products
PAGE 40 2 December 2013Source: Schachner (2013)
GROHE Group’s global manufacturing footprint and manufacturing base –clear specialization of each plant
PAGE 41 2 December 2013Source: Schachner (2013)
Stretch - Companies supply chains need
to grow
Maker Mover Integrator
Home Market
Near Shore
Off Shore
• Materials
requirements
• Sourcing &
procurement
• Inbound logistics
• Demand & forecasting
• Inventory management
& replenishment
• Order management &
distribution
• Channel control
• Customer care
• Network optimization
• Make-buy decisions
• Home geography
• Home customer/ product
clusters
• Adjacent geographies to
home
• Home or diversified
customer/product clusters
• Distant geographies to
home
• Diversified customer/
product clusters
Continental
Enterprises
International
Enterprises
Domestic
Manufacturing
Enterprises
• Capacity &
production planning
• Factory scheduling &
productivity
• Quality assurance
Geographical
presence
Functional
reach
The most
demanding Stretch
challenge – grow
both dimensions at
once
Source: Accenture (2010)PAGE 42 2 December 2013
Supply Chain
Segmentation:
From “one size fits all”
to differentiated
solutions
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 43 2 December 2013
Complexity - How to align supply chains
with customer needs
Source: Living Supply Chains, John Gattorna, FT Prentice Hall 2006 and accenture 2010
Your customers won’t be satisfied until you run 3 or 4 different
combinations, all at once
Relationship with customer
Predictability of demand
“Continuous
Replenishment”
“Lean”
Loose
TightHigh Low
Managed through close
collaboration with
customers.
Focus on maintaining
customer relationships
Price sensitive, with
largely predictable
demand.
Focus on efficiency
Unforecastable - respond
opportunistically. Focus
on providing creative
solutions for premium
price
Many unforeseen
demands needing more
resources to satisfy.
Focus on the service-
cost equation
“Fully Flexible”
“Agile”
The Four Generic Supply Chain Types
PAGE 44 2 December 2013
The idea of the Customer Interaction Modell (CIM) is that customers get the type of interaction they require and are willing to pay for
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 45
Source: BASF (2011)
BASF has defined 6 Customer Interaction Models (CIM) which cater to distinct customer needs
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 46
Source: BASF (2011)
Through the Customer Inter-action Portal (CIP) Customer Interaction Models get real
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 47
Source: BASF (2011)
Customer Segmentation: Translating Market Segmentation to BRM
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 48
Source: BASF (2011)
Business Rules Management is transparent through dashboard reporting
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 49
Source: BASF (2011)
Use powerful tools to
optimizes global
Supply Chains
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Use powerful tools to Map transport flows and to plot SC Structure as well as transport flows (SCNO)
Geographic
Information systemsGraph models
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 51
Use unbalanced
transport flows in
Global Supply Chain
Strategies
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 52 2 December 2013
Model to analyze transport flows
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 53
Analyzing European transport flows
Copyright 2013 Sebastian Kummer. All rights reserved.PAGE 54
Thank YouVielen DankDěkujiĎakujemDziekujeKöszönömMultumescHvala