Optimization of logistics services: a transnational
companies’ experience in crisis environment
Perry Neumann
Managing Director Russia
dialog e.V.
Moscow, 26.03.2009
Agenda
 Kuehne + Nagel Global / Russia
 Kuehne + Nagel in Crises
 Case study
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Kuehne + Nagel Global
Air Freight
Global Top 4
 Cargo 2000 Phase II
certified (first mover!)
 Strong partnerships with
preferred airlines
 Winner of the golden
Chariot Award 2008
„leader in transport and
forwarding industry in
Russia“
Sea Freight
Road & Rail
Contract
Logistics
Global No. 1
European Top 7
Global Top 3
 Outstanding ITbased solutions
 Strong
partnerships with
preferred carriers
 Market Leader in
Logistics for
Industrial
Projects
 Focus on network
services, LTL & FTL
business
 Pan-European
coverage of 38
countries
 Innovative intermodal
solutions
 Global infrastructure for
global contract logistics
coverage
 Dedicated and shared
warehousing &
distribution
management
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Kuehne + Nagel in Russia
• Since 16 years in Russia
• 620 logistics specialists in 4 branches (7 offices, 6 warehouses)
• ISO 9001 Global Certificate valid for 3 offices in RU (Mow, Led, Uus)
• Winner of the Golden Car Award 2008
• Handling more than 7.000 tons airfreight per year
• 78,300 square meters of distribution space
Russia is an important strategic market to
Kuehne + Nagel even during crisis
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Agenda
 Kuehne + Nagel Global / Russia
 Kuehne + Nagel in Crises
 Case study
23/03/2016
p. 5
Kuehne + Nagel in Crises
2009
1890
Asian Crisis
Oil crisis
Depth crisis in developing
countries (i.e. Mexico)
KuweitCrisis/
Irak War
Speculation
crisis (new
economy)
Kuehne + Nagel established a stable and reliable market
position based on innovation, creativity and solid financial
management despite severe global crises
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Kuehne + Nagel – reliable anchor in crisis
Proactive crisis management with creative customer solutions and stable
financial management.
Crisis driver
Costs
 Intelligent cost reduction with customer
 Solid stabilization of own finance management
Market
 Focus on successful countries with potential
 Higher investments in important markets
Technology
Customer Expectations
Environmental Concerns
 Offer IT-Tools und IT-Innovations to be flexible
within crisis
 Increase quality and service level to keep
customers
 Being reliable partner for customers during
crisis
 Hiring and keeping qualified sales staff
 Supporting environmental oriented logistics
 Driving environmental responsibility and
sustainability
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Costs - reliable anchor
Costs
• Intelligent cost reduction with customer within the complete supply chain
instead of price dumping.
• Consequent cost saving programs and streamlining processes during crisis.
• Stabilisation of the company by increase of charter capital.
Costs have to be reflected seriously and sustainable
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Markets - reliable anchor
Market
• Be present in all important markets in the future with stable resources and
qualified staff for customers.
• Even in times of crisis taking investments to be able to offer high quality
services in changing world markets.
• Differentiate from price dumping to be a reliable partner even through crisis.
Be a reliable and stable partner in and after crises
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Technology - reliable anchor
Technology
 Auto-ID technologies can increase visibility of goods in the supply chain
and thus reduce overall inventory requirements (RFID, active auto-ID).
 Advanced WMS technologies can help optimize picking operations, labor
management and quality (Pick to voice, Labor standards and tracking,
Layer picking).
 Agent based transportation management systems can optimize shipment
activities in real time and reduce overall transportation costs (Node
Optimization, Inter-node optimization).
IT-Tools offer customers fast, efficient and flexible
crisis management.
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Customer expectations - reliable anchor
Customer
Expectation
s
 Even in crisis quality of service and customer care has to be on a high
level and still be improved.
 Investment in training of staff for stable crisis management and
operational excellence.
 Hiring new sales forces to strengthen customer care especially in crisis in
order to keep customers and to create new product and services where
necessary.
 Supporting of customers in their daily logistics processes.
To be a sustainable logistics partner concerning
repositioning and adjustments but also daily
business.
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customer expectations drive many decisions …
Customer
Expectation
Customer Loyalty
s
Drivers of Customer Loyalty
… their 3PL‘s prices
Price
Satisfaction
… their commitment to their 3PL
Commitment
… their 3PL‘s ability to proactively
improve their logistics processes
Proactive
Improvement
Retention of existing
customers through
contract renewals
Retention
Customers’
evaluation of…
… their 3PL‘s service
performance
Service Quality
Extension
… market alternatives to their
current 3PL
… the trust they have in their 3PL
… their interaction and
cooperation with their 3PL
Alternatives
Extension of business by
providing new services to
existing customers
Personal
Trust
Relational
Satisfaction
Source: WHU Research
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Environment - reliable anchor
Environment
 Develop environmental and payable solutions.
 Keeping reliable and sustainable towards customers especially in crisis.
 Driving innovations within logistics.
Even in crisis offer responsible and sustainable
behaviour and be open for innovations.
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Kühne + Nagel believes that environmental issues will
dramatically impact how we do business in the future.
Environment
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The financial storm does not stop in front of logistics not only
in Russia but also for the rest of the world.
Situation
Logistics companies deliver stability, reliability and security even
in rough times.
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Backup through professional and integrated crisis Management.
Solution
Integrated crisis management in the field of logistics needs more
streamlined operations for all parties
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Agenda
 Kuehne + Nagel Global / Russia
 Kuehne + Nagel in Crises
 Case study
23/03/2016
p. 17
Case study Leading Telecommunication Provider
Market Factors Driving
4PL Consideration
 Telecommunications
market decline
 Company drive toward asset
reduction and variable cost
models
 Need for Supply Chain visibility
tools; limited capital to invest
 Favorable experience with
outsourcing manufacturing
and logistics
STRATEGY
 Become an R&D and marketing
company. Divest logistics business
to single lead logistics provider.
OBJECTIVES
1. Reduce logistics costs
• Risk-based compensation based
on delivered savings
2. Create flexible logistics infrastructure
3. Improve service levels
4. Support revenue initiatives
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Case study Leading Telecommunication Provider
Exceeded Savings Goal By 62.5%
Savings Goal
Actual Savings
16.0
14.0
$ MM
12.0
10.0
8.0
14.4
14.2
11.4
6.0
4.0
9.0
8.6
8.4
Year 1
Year 2
Year 3
2.0
0.0
*savings achieved are independent of the cost impact
of reductions in business volume
RESULTS
Cost Reduction
 Reduced total logistics cost as
percent of cost of sales of 14%
 Reduced per-unit transportation
cost by 15%
 Increased use of ground, ocean
modes
 Reduced warehouse space 45%
globally and renegotiated fixed-rate
contracts to 50% variable
Administration
 Reduced LSP base from 300 to 150
Quality
 All service metrics sustained or
improved during transition
CONTRACT RENEWAL
 New 3-year-contract in 2008
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Thank you for your attention!