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

22/02/23 p. 2
Kuehne + Nagel Global

Air Freight Sea Freight Road & Rail Contract

Logistics

Global Top 4 Global No. 1 European Top 7 Global Top 3

 Cargo 2000 Phase II  Outstanding IT-  Focus on network  Global infrastructure for
certified (first mover!) based solutions services, LTL & FTL global contract logistics
 Strong partnerships with  Strong business coverage
preferred airlines partnerships with  Pan-European  Dedicated and shared
 Winner of the golden preferred carriers coverage of 38 warehousing &
Chariot Award 2008  Market Leader in countries distribution
„leader in transport and Logistics for  Innovative intermodal management
forwarding industry in Industrial solutions
Russia“ Projects

22/02/23 p. 3
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

22/02/23 p. 4
Agenda

Kuehne + Nagel Global / Russia

Kuehne + Nagel in Crises

Case study

22/02/23 p. 5
Kuehne + Nagel in Crises
2009

1890

Asian Crisis
Speculation
Kuweit-
Oil crisis crisis (new
Depth crisis in developing Crisis/
economy)
countries (i.e. Mexico) Irak War

Kuehne + Nagel established a stable and reliable market

position based on innovation, creativity and solid financial
management despite severe global crises

22/02/23 p. 6
Kuehne + Nagel – reliable anchor in crisis
Proactive crisis management with creative customer solutions and stable
financial management.

Crisis driver
 Intelligent cost reduction with customer
Costs  Solid stabilization of own finance management

 Focus on successful countries with potential

Market  Higher investments in important markets
 Offer IT-Tools und IT-Innovations to be flexible
within crisis
Technology
 Increase quality and service level to keep
customers
Customer Expectations  Being reliable partner for customers during
crisis
 Hiring and keeping qualified sales staff
 Supporting environmental oriented logistics
Environmental Concerns  Driving environmental responsibility and
sustainability
22/02/23 p. 7
 Costs
Costs - reliable anchor

• 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

22/02/23 p. 8
 Market
Markets - reliable anchor

• 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

22/02/23 p. 9
 Technology
Technology - reliable anchor

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.

22/02/23 p. 10
 Customer
Customer expectations - reliable anchor 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.

22/02/23 p. 11
 Customer
customer expectations drive many decisions … Expectation
Drivers of Customer Loyalty Customer Loyalty s
Price
… their 3PL‘s prices
Satisfaction

… their commitment to their 3PL Commitment

Retention of existing
customers through
… their 3PL‘s ability to proactively Proactive contract renewals
improve their logistics processes Improvement
Retention
Customers’ … their 3PL‘s service
Service Quality
evaluation of… performance

Extension
… market alternatives to their
current 3PL
Alternatives
Extension of business by
providing new services to
existing customers
Personal
… the trust they have in their 3PL
Trust

… their interaction and Relational

cooperation with their 3PL Satisfaction
Source: WHU Research

22/02/23 p. 12
 Environment
Environment - reliable anchor

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.

22/02/23 p. 13
Kühne + Nagel believes that environmental issues will Environment
dramatically impact how we do business in the future.

22/02/23 p. 14
The financial storm does not stop in front of logistics not Situation
only in Russia but also for the rest of the world.

Logistics companies deliver stability, reliability and security even

in rough times.

22/02/23 p. 15
Backup through professional and integrated crisis Management. Solution

Integrated crisis management in the field of logistics needs more

streamlined operations for all parties

22/02/23 p. 16
Agenda

Kuehne + Nagel Global / Russia

Kuehne + Nagel in Crises

Case study

22/02/23 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
22/02/23 p. 18
Case study Leading Telecommunication Provider

RESULTS
Exceeded Savings Goal By 62.5% Cost Reduction
Savings Goal Actual Savings
Reduced total logistics cost as
percent of cost of sales of 14%
16.0
Reduced per-unit transportation
14.0 cost by 15%
Increased use of ground, ocean
12.0
modes
Reduced warehouse space 45%
$ MM

10.0
globally and renegotiated fixed-rate
8.0 14.2 14.4 11.4 contracts to 50% variable
6.0 Administration
9.0 8.6 8.4 Reduced LSP base from 300 to 150
4.0
Quality
2.0 All service metrics sustained or
0.0 improved during transition
Year 1 Year 2 Year 3 CONTRACT RENEWAL
*savings achieved are independent of the cost impact
of reductions in business volume  New 3-year-contract in 2008
22/02/23 p. 19
Thank you for your attention!