Logistics Collaboration — Finding

Ways to Win at Creating Joint Value

James Lisica
Research Director
Global Supply Chain & Logistics

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 85% of Leading Organizations Are Looking at
Logistics Collaboration in 2015

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Key Issues When Assessing Collaborative
Logistics Opportunities
1. What is driving logistics collaboration?
2. How do I build collaborative practices?
3. How are leading organizations leveraging logistics collaboration
to win?

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Key Issues When Assessing Collaborative
Logistics Opportunities
1. What is driving logistics collaboration?
2. How do I build collaborative practices?
3. How are leading organizations leveraging logistics collaboration
to win?

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 In the EU, 20% to 25% of all greenhouse gas
emissions are the result of transport and logistics.

Average utilization of the

logistics network is under 43%.

1 out of every 4 vehicles drives empty, and the

average loading factor of the other 3 is less than 60%.

Cost — €160B The World Economic Forum

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Key Issues When Assessing Collaborative
Logistics Opportunities
1. What is driving logistics collaboration?
2. How do I build collaborative practices?
3. How are leading organizations leveraging logistics collaboration
to win?

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 55%
3PL or Functional Collaboration

30%
Cross-Functional Collaboration

15%
External Collaboration

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Collaboration Comes in Many Forms …

SUPPLIERS SERVICE
PROVIDERS
3PLs AND
4PLs GOVERNMENT

VERTICAL

OTHER
COMPETITORS
VERTICALS
HORIZONTAL

CARRIERS
INDUSTRY
(AIR, OCEAN
BODIES
AND RAIL) MARKET

CUSTOMERS
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Logistics Excellence Requires Partnership

VALUE SUPPLY

?
CHAIN
CAPABILITIES
(External)
?
CHAIN
CAPABILITIES
(Organization)

LOGISTICS
CAPABILITIES
(3PL &
Function)

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Many Organizations Are Struggling With the Basics
What is your current level of supply chain maturity?
Supply Chain Maturity Stage:
Level 4 Level 5
5% 0.2% Level 1
21%

Level 3
30% 65% of Organizations
Are Still Not
Collaborating Internally

Level 2
44%

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How Do I build Collaborative Capabilities

EXTERNAL

INTERNAL

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Organizations Have Evolving Needs
Outside-in Mid Maturity Stage 5
CROSS ORCHESTRATOR OF
Stage 4 PROFITABLE
FUNCTIONAL CUSTOMER
COLLABORATING
COLLABORATION WITH THE VALUE VALUE High Maturity
CHAIN NETWORK

EXTERNAL COLLABORATION
Stage 3 Collaborate externally to create value
MINDSET INTEGRATED WITH
THE SUPPLY FUNCTIONAL COLLABORATION
CHAIN
Scale the logistics function to reduce costs

Integrate internally to
Stage 2 Low Maturity
optimize supply chain Stage 1
efficiency FUNCTIONAL
SCALE AND SILOED
EFFICIENCY AUTONOMOUS
OPERATIONS
Inside-out
Cost TARGET Service
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Build Collaborative Capabilities From The Inside Out

MARKET

HORIZONTAL
EXTERNAL
VERTICAL

CROSS-FUNCTIONAL
INTERNAL
FUNCTIONAL/3PL

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Partnerships Take Time To Evolve

Understand Trust Invest

Collaborative
SHARED VALUE

Neutral
SHARED PAINS
Leadership
Value Delivery

Cost/Risk Mutual
SHARED GAINS
Exposure Investment
Coordinated Transparent Symbiotic
SELF-SERVING
Activities Activities Activities

Opposed KPIs Weighted KPIs Aligned KPIs Merged KPIs

Preferential Collaborative
Bias Information Unbias Information
Information Information
INDIVIDUAL TACTICAL JOINT STRATEGIC
Divisional GOALS GOALS GOALS GOALS

Low Level Of Integration High

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Key Issues When Assessing Collaborative
Logistics Opportunities
1. What is driving logistics collaboration?
2. How do I build collaborative practices?
3. How are leading organizations leveraging logistics collaboration
to win?

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 Out of sheer necessity to cut costs and improve
efficiency, logistics leaders
are thinking outside the box.

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Kimberly-Clark Collaborative Shipping Pilot

"It's not just money. Gains could come from improved inventory
efficiency and retailer support."
— Scott DeGroot, Director of Supply Chain Strategy

• Line haul and • Reduced total • Inventory

fuel costs down truck miles by efficiency
18% 10% • Better product
flow

Logistics Cost Environmental Working Capital

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 As fuel and transportation rates rise, a growing
number of CPG companies are partnering on
intermodal rail service in EMEA, producing sustainable
results.

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CPG Intermodal Collaboration Pilot

"Moving from road to rail will save a bucketful of CO2"

— Jordan, Director (JIT)

• Transport cost • Reduced CO2 18 • Competitive

reduction million advantage
• Optimization kg p.a. • Inventory efficiency
increased

Logistics Cost Environmental Working Capital

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Lessons Learned From Early Adopters

• Increased on-shelf availability at the lowest cost.

• Efficiency gains.
• Environmental Impact significantly reduced.
• Proven competitive advantage.
• Combining physical networks is a likely next step for the industry in the
future to further address inefficiencies and eliminate costs.
• Collaborative logistics can be better enabled by technology
enhancements.

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Recommendations

 Find the right partners. Biggest is not always the best.

 Take the long term view
 Start from the inside out
 Build capabilities that deliver value to partners
 Understand the value, its not always $$$
 Top down but bottom up (senior and functional managers)
 Real commitment is required to achieve success.

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Recommended Gartner Research

 L'Oreal Collaborates With Suppliers to Fulfill Customer Demand

Steven Steutermann (G00257758)
 Kimberly-Clark's Collaborative Shipping Program Delivers True
Logistics Innovation
Steven Steutermann and Greg Aimi (G00230325)
 Toolkit: Self-Assess Your Capabilities With the Five-Stage
Logistics Maturity Model
Greg Aimi, James Lisica and David Gonzalez (G00259518)
 3 Steps to Develop Your Strategy For Logistics Excellence
James Lisica (G00275955)

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