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LEAD LOGISTICS PARTNER (LLP)“DELIVERING A SUPPLY CHAIN TRANSFORMATION THAT DRIVES COMPETITIVE ADVANTAGE”

An Introduction to LLP

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Understanding Business NeedsEmerging Trends and Supply Chain Challenges

Reduce Cost

• Reduce logistics costs as they increase in % of sales

• Reduce working capital and inventory

• Direct and indirect cost pressure

Manage Complexity

• Improve visibility while increasing supply chain complexity

• Create “Actionable Insight” to improve control and subsequently improve reliability

• Reduce inefficiencies and layers of hidden costs

Risk and Continuity

• Manage risk and supply continuity

• Avoid supply chain disruptions

• Strikes, weather, nature, infrastructure

ABC Ltd´sSupply Chain

Lead Growth

• Leverage your supply chain as a strategic tool to support your business growth and stay ahead of the competition.

• Develop a supply chain capable of dealing with market variations as well as leveraging new revenue opportunities quickly

Improve Performance

• Improve the speed, reliability and flexibility of your supply chain

• Performance improvements can be achieved in parallel to meeting cost targets, allowing you to improve business competitiveness

Sustainability

• Sustainability is increasingly driving strategic supply chain decisions.

• Need for carbon measurement and management

• Reduce environmental footprint and improve waste management

“Supply chain management is an extremely interactive, complex system requiring simultaneous

monitoring of many conflicting objectives “

3DHL Supply Chain

POSITIONING LLP(4PL)AN ALTERNATIVE RESPONSE TO YOUR SUPPLY CHAIN CHALLENGES

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Positioning of LLP(4PL) vs. 3 PL Services

Planning

Co-ordination

ExecutionFreight

Trans-

port

Ware-

housing

Customer

Value

added

service

Freight

Trans-

port

Ware-

housing

Strategy

Customer

Traditional Typical

3PL

BusinessStrategy

3PL 3PL

Timeline

Core competence of customer

Core

Log

istics

Co

mp

ete

nce

Value

added

service

Freight

Trans-

port

Ware-

housing

Leading

LLP / 4PL

Customer

Functional Processes

LLP offers and evolution in our service offering that enables the release of new

value in the supply chain

• An integrated end to end approach across the all areas of logistics

• LLP reaches deeper into the planning and strategy competencies enabling robust continuous improvement

• Partnership Approach

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Typical supply chain

Many supply chains are unable to effectively deal with increasing internal demands and

simultaneously navigate effectively the external factors affecting logistics

• Fragmented internal logistics structures that are

siloed by brand or department producing a a

duplication of logistics resource & a limited

opportunity to effect change within supply chain

• Cost reduction achieved through RFQ approach

and cost down pressure to service providers

• Incomplete overview of supply chain

• Localized and varied supply chain management

and logistics arrangements

• Low transparency of logistics cost per unit

produced at each facility

• For inbound to manufacturing suppliers control

the supply chain (material purchased on DDP)

• Production have little control and llow

confidence in the performance of supply chain

which results in high levels of safety stock of

inbound supply chain

Current Supply Chain

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Standard reponse – 3PL and procuremnt led

• The standard response to dealing with growing internal requirements and increasing external

pressures is to do “more of the same” and quicker.

• Overall, companies that seek to deal with the growing supply chain pressure through continuing

current processes will achieve some limited savings and success.

• This success may be insufficient and unsustainable as the external pressures and internal demands

continue to drive increased costs

This may achive a small reduction however result is limited without network design changes

Potential to over promise on commercial agreements ending in contractual dispute

Significant addtional launch costs with new provider offset any savings

Seek to reduce cost through employing more local low cost providers

Apply greater pressure upon existing service providers

Procurement to increase the frequency of requesting tenders or change bidding format (e-bids etc)

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Flexibility

Change

Strategic

Complexity

Technology

Focus

An Alternative Response – Lead Logistics Partner

Below are some of the motivations that highlight the need for an LLP model

Outsourcing supports the need to become responsive to changing markets and more focused on core competencies.

Gives time to the

customer to focus on doing

what you do best

A powerful coalition for

change LLP can act as a catalyst for change within an organisation.

Resource and technologies

that simplify

Provide greater strategic focus upon supply chain improvement and innovation avoiding tactical disruption

A flexible supply chain

resource

To be able to respond to unpredictable changes in demand the modern supply chain must be flexible and “on demand”

Access to best in class

technologies

Longer and more complex multi channel supply chains increase the requires ever increasing levels of resource

Increasing requirements and costs of keeping pace with changing technology across the supply chain

Relentless continuous

improvement

LLP provides a path overcome the limitations of the traditional 3pl model

Need Description. What LLP model provides

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Alternative response –LLP process driven transformation

To effectively deal with increasing internal demands and navigate the external factors affecting logistics

companies require to transform their supply chain through LLP

• Fragmented internal logistics structures that are siloed by brand or department producing a a duplication of logistics resource & a limited opportunity to effect change within supply chain

• Cost reduction achieved through RFQ approach and cost down pressure to service providers

• Incomplete overview of supply chain

• Localized and varied supply chain management and logistics arrangements

• Low transparency of logistics cost per unit produced at each facility

• For inbound to manufacturing suppliers control the supply chain (material purchased on DDP)

• Production have little control and low confidence in the performance of supply chain which results in high levels of safety stock of inbound supply chain

Current Supply Chain

• Integrated logistics structures that are shared by brand or department producing a a single logistics resource that can respond quickly to change

• Cost reduction is achieved through a holistic review of all cost drivers and utilizing data analysis tools and continuous improvement methodologies

• Complete overview of supply chain

• Central supply chain management able to adapt logistics solutions to local requirements

• High transparency and forecasting of logistics cost per unit produced at each facility at differing levels of production

• Full control of inbound to manufacturing supply (material purchased on Ex Works)

• Production have high confidence in the performance of supply chain which results in low levels of safety stock of inbound supply chain

Supply Chain Transformation

designed implemented and

managed in partnership with

LLP

Leading Supply Chain

9Product Overview

DHL SUPPLY CHAIN LEAD LOGISTICS PARTNER (LLP)

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LLP definitionTypical LLP construct (1/3)

Focus on core business

Increased flexibility & scalability

Shared risks and rewards

Driving top & bottom line growth (20–30% reduction on direct transport spend)

Catalyst for change

The LLP takes the role of a strategic partner to the customer that drives transformational change in its Supply Chain

Enhanced SC capabilities

Client Supply Chain Organization

Transportation WarehousingValue added

Services

InboundOutbound& Return

Manufacturing

IT Systems

Operate

Transformation

ContinuouslyImprove

Design

Manage

Source: DHL LLP; DPDHL Strategic Logistics Consulting

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Typical LLP construct (2/3)

• Continuous Network Design and Supply Chain optimisation

• Relentlessly seek to improve the design of all aspects of theSupply Chain

• Implementation of process through procurement and ongoing management of key stakeholders

• Control tower synchronizes material flow and provides visibility and control

• DHL may provide an operational support to your Supply Chain needs together with other carefully selected logistics service providers

• Bringing together all the services together with Change management to ensure a safe and secure delivery of transformation of your Supply Chain

• Leading IT systems that support and connect your Supply Chain across all service areas and partners

• Total Logistics Cost Mgmt. (TLCM) gives complete transparency of all Supply Chain costs

IT Systems

Transformation

Continuous Improvement

Services

Operations Services

Design Services

Management Services

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Typical LLP construct (3/3)Example services and approach

Transport Operations Warehousing & Facilities VAS Provision

Desig

nM

anage

Opera

te

Total Logistics

CostManagement

Contin

uous Im

pro

vem

ent

KPI and Dashboard

Management

Network Design Services

Inventory Optimization

Design

Control Tower Operations

Material Vendor Management

Logistics Strategy Design

LSP Management

LSP Procurement

ContainerManagement

Logistics Financial

Management

Finance Management

LLP

sys

tem

s P

latfo

rm

Transform - Change Management

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LLP services menu

Core LLP Service Offering

• Implementation Management• LSP Procurement • Logistics Claims Mgmt.• LSP Management & onboarding• Control Tower

– Order Management & Processing– Materials Management– Tactical Shipment Planning & Carrier Booking– Exception Mgmt. Issue Resolution & Service Desk– Track & Trace Visibility

Design Manage Continues Improvement

• Continuous Improvement Projects• Total Logistics Cost Mgmt. (TLCM)• Reporting & Analytics Visualization

• Network Design, Fixed Route Design• Transport Design• Transport Mgmt. Process Design

Transform

• Change Management

Additional LLP Services

Non-LSP-Parties & Assets Mgmt.• Vendor (Consigner) Mgmt..• Asset Mgmt.

Design Manage Operate

Logistics Service Delivery/Execution• Transport Operations• POD Mgmt../Electronic POD Mgmt..• Warehouse Operations• Packing Services• Customs Handling

Supply Chain Strategy Design• Logistics Strategy Planning• Business Impact Evaluation• Environmental Impact Evaluation

Inventory Strategy Design• Demand Forecasting/Replenishment Planning• Inventory Level Optimization

Packaging Design• Durable/Expendable Packaging Design• Co-Packing Strategy

Facility & Warehouse Design• Cross Dock & Warehouse Design • Facility Material Flow, Layout. Process Design

Logistics Financial Management• Budget Planning & Mgmt..• LSP Invoice Consolidation, Validation & Payment –

Freight Billing and Audit (FBA)

Document Management• Shipping Document Storage (BOL, AWB, Commercial

Invoice, Packing List)

Value Added Services• Supply Chain Risk Mgmt..• Customs Brokerage & Clearance• Carbon Accounting & Reporting

Resilience360• Risk Monitoring & Contingency Mgmt..

Value Added Services• Kitting/Sub-Assembly/Co-Packing• Waste, Recycling & Disposal Mgmt..• Quality Inspections

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LLP MODULAR solution model

Transport Control Tower.

Freight Pay & Audit

TLCM Reporting & Analytics

Core Carrier Mgt

Visibility / Track & Trace

SC/Network Design

“Foundation” “Low-Tier” “Mid-Tier”

Foundation Foundation

Inco terms Conversion

Supply Chain Process Eng.,

Facilities Design.

Advanced Analytics

Vendor Mgmt.

Financial Mgmt.

Supply Chain Risk Mgmt.

Order / Material Mgmt.

“High-Tier”

Foundation

Custom Implementation of various modules

Building from a base foundation modular services can be added and tailored to your requirements

and as operations mature over time

Continuous Improvement

OperateMangeDesign

KEY:- LLP Service Building Blocks

Transform

Change management

Increasing Complexity

Increasing Value

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Our Approach to LLP

We help clients address complex supply chain

challenges

Through Customized Supply Chain Management

Services

To achieve their business goals

LLP not only provides a consultancy to identify the path to new value …but is also able to deliver the

solution

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LLP Keys to delivering Value

Neutrality

“always with your

interests

paramount”

People and

long term

partnership

“Building a stable

relationship a foundation

for continuous

improvement”

Solution design

and operations

excellence

“provide comprehensive

supply chain design and

operation capabilities locally,

regionally and globally ”

4 LLP Keys to Value Delivery

Certain factors play a key role in delivering a successful LLP

Value creation

enabled

though IT

“Leverage supply chain

data and visibility to

provide real actionable

insight that delivers new

value”

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How LLP delivers value

– LLP will create transparency across the supply chain through implementing standard operating

procedures for all logistics activities.

– This new process and organisation rollout will not only release value itself but more importantly will

provide the foundation for the LLP to instigate and manage “data driven” continuous improvement

across the whole supply chain. Belwo are the steps we follow

Engineer a comprehensive and integrated optimal supply chain process, organisation, integration and network solution

Identify“as is”

Understandrequirements

Design Implement & Manage

Measure & Continous Improve

Study & understand current supply chain including organisation, execution process, compliance,, performance management, and network optimization,

Identify and understand the customers internal requirements consider all stakeholders and the current and future anticipated external market demands,

Engineer a comprehensive and integrated optimal supply chain process, organisation and network solution

Phased Implementation of processes, services & organisation change across supply chain Prioritises maximise early value release while balancing risk

Lever new transparency to attack remaining waste and continuously Improve supply chain performance

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Leading Supply Chain

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What value LLP delivers

Driving your top & bottom line growth

Delivered with a flexible commercial mechanism that shares risk and reward

Enabling your supply chain and business strategy to create a competitive advantage

Strategic

Value

Financial Value

Commercial Value

As a Lead Logistics Partner we design, transform, manage,

operate and continuously improve our customers’ supply chains

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Lead Logistics Partner –Value Summary

� Savings potential: typically above 10% of total supply chain costs

� Improved revenues and customer retention through better operational performance and service

� Ongoing continuous improvement along all supply chain elements

Financial Value

Top and Bottom line Growth

Creating an Competitive Advantage

� Reduced complexity: streamlined processes, single point of contact

� Visibility and control: transparency over supply chain costs and KPIs

� Flexibility: adaptability of supply chain to accommodate growth and innovation

� Sustainability: : Control over supply chain environmental impact

Strategic Value

LLP = outsourcing partnership to achieve reduced complexity, transparency and cost leadership

in a jointly defined scope of Supply Chain processes and services!

� Partnership: Flexible and a balance commercial agreement that acts as foundation to developing relentless continuous improvement across the supply chain

Commercial Value

Creating a Win-Win Partnership

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LLP Solution Fit

Cost Reduced

• Optimising your supply chain network design continuously

• Reduced Inventory and capital costs

• Improved planning with accurate SC data

• Improved Cost Visibility

Managed Complexity

• Improve visibility while increasing supply chain complexity

• Control tower operational provides “Actionable Insight” to improve control and subsequently improve reliability

• Modular, innovative and simplified services

Risk Mitigation

• Supply chain dashboard monitoring you supply chain continuously

• Rapid reaction to incidnets through command and control to avoid supply chain disruptions ( Strikes, weather, nature, infrastructure)

Lead Logistics Partner

Leading Growth

• Improved revenues & customer retention through better customer service

• A managed supply chain capable of dealing with market variations as well as leveraging new revenue opportunities quickly

Improved Performance

• Increasing the Supply Chain cost visibility

• Improved planning with accurate SC data

• Providing a single point of contact

• KPI driven conformance to SC processes

Sustainability

• Sustainability is considered in network optimisation strategy

• Sustainability dashboard with environmental impact measured and managed

• Reduced environmental footprint and improve waste management

Delivering solutions to all your supply chain challenges

�

�

�

�

�

�

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Our joint path to launch a successful LLP – Key Milestones

4 Phases to LLP Engagement and typical timing

Business

insight

Supply chain

scanDue diligence

4-16 Weeks

ImplementationTransition

planning

Measuring and control are key to mitigate any implementation risk!All projects start with a Supply chain scan and a Proof of concept.

Vision and Diagnostics

• Analysis of current supply chain• Customer strategy• Configuration restrictions

Business Case andProof of Concept

• Operational framework design• Commercial design• Value identification

Transition Roadmap

• Implementation Strategy• Milestone management• Continuous improvement

2–3 Days

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LLP Commercial Approach

• For a successful LLP it is essential that the following characteristics prevail

– Co-operation & teamwork across the 2 parties

– Sharing information & transparency

– Overall group success

– Mutual respect

• This setup will ensure that Incentives exist to drive and motivate continuous improvement.

• Also to foster the correct behavior Risks/Liabilities must be balanced & in line with rewards

Key reference material ; Vested Outsourcing, by K Vitasek

Commercials based upon sharing the financial benefits of the value creation.

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LLP

LLP Commercials Delivering Net Value

Existing Supply Chain Operating Costs (Spend + Management

Costs)Supply Chain

Operating Costs

Gain Share

LLP

Savings

Supply ChainOperating Costs

Gain Share

Today Contract

Supply ChainOperating Costs

LLPGain Share

SavingsSavings

Key to LLP commercials is to assure that the LLP team delivers absolute value over the period of the contract

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Visibility & Control of your Supply chain

World Class Supply Chin Risk

Management

Fast delivery of savings

Global Reach, Scale & Network

DHL offers best-in-class Global LLP capabilities across your supply chain

Why Our Clients Choose DHL for LLP?

World leader in LLP services

Supply Chain Expertise

Win-win commercial model

Customer intimacy & partnership

Customer Intimacy& Partnership

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LLP Value Summary

The scope of an LLP is highly configurable and can vary from a geographic perspective and a service perspective

Flexible solution tailored to your specific needs

A reliable supply chain expert within your business

Relentless focus on delivering significant new strategic and financial value back to the business

Delivers new value across your business

An End to end platform to instigate “data driven” continuous improvement and provide full supply chain control

Delivers a single fully integrated supply chain

Builds a long-term sustainable partnership

“Delivering a supply chain transformation that drives competitive advantage”

New Value

Flexible Solutions & Resource

Integrated End to End Supply Chain

Expertise through Partnership

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Add as appropriate for customer

Find all approved case studies in the following location

http://ishare.dhl.com/sites/gbdm/Mar keting_Sales/Webparts/LLP.aspx

CASE STUDIES

PUBLIC

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DHL solution Customer benefitsCustomer challenge

Customer facts

DHL Supply Chain | 2014

Case study:LLP solution for a leading imaging company

Comprehensive LLP solution enables end-to-end domestic distribution supply chain transformation for Japanese manufacturer

• Redundant capacity within domestic warehousing network

• Insufficient visibility on costs and lack of vender management control

• High distribution costs due to dedicated network

• Inefficient in-house logistics operation that is not delivering against benchmarked performance or cost

• Rationalized warehouses by leveraging shared DSC sites

• Increased utilization of warehouse space by adapting productivity improvements and establishing new standard operating processes

• Developed new bidding process to select most cost efficient sub-contractors

• Optimized network and established new co-loading platform

• Set up an LLP operation that manages the supply chain operation and provides strong focus on performance management and continuous improvement

• Site consolidation results in a 5–10% reduction in space

• Handling costs reduced 10–15% through resource sharing

• Overall cost reductions of 8–12 % delivered over five years

• Benchmarked supply chain performance across entire business resulting in standardized KPI reporting and cost structure

• Flexible DHL resource to support customer strategy

Geography Japan

Sector Technology

Solution LLP

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Customer Facts

Geography EMEA

Sector Automotive

Customer Ford

• Improve efficiency and quality while also facilitate the specific requirements of lean manufacturing that were a cornerstone to the success of the entire enterprise.

• Support change from local logistics management to a regional approach

• Need to protect increasingly complex production schedules more effectively

• Deliver cost savings and diminish environmental footprint

• Reduce emergency shipments

• Reduce global inventory

• Streamlined operations through one Lead Logistics Provider solution to set up and maintain efficient logistics

• Creation of a single European solution, with DHL staff deployed at all Ford European manufacturing locations

• Move from a destination based network to an origin based network for better network synergy

• Support of lean manufacturing and constant review of the supply chain to achieve cost optimization of material flows and full cost visibility

• Cost optimization of material flow

• Stability and confidence with a 95% on time arrival within 30 minutes of the engineered window

• Improved efficiency, supply chain transparency and vehicle utilization to achieve “Just in Time” deliveries

• Reduction of inventory, emergency freight and CO2 emissions by 20,000 tons

• Longstanding partnership between DHL and Ford

Lead Logistics Provider solution creates competitive advantage

for Ford

Customer BenefitsCustomer ChallengeCustomer Challenge DHL Solution

Case Study: Lead Logistics Provider – Ford

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Case Study: Integrating Supply Networks in the Middle East and Africa

Customer Facts

Geography EMEA

Industry Consumer

Revenue EUR 61.8bn

Employees 126,000

• Disconnected supply chains across 11 manufacturing sites in the Middle Eastand North Africa

• Overlapping supply routes from various manufacturing sites serving the same regions

• Service and cost inefficiencies

• High supply chain risk caused by limited transparency

• Designing, developing and implementinga fully integrated regional network

• Process-driven centrally-managed Control Tower to co-ordinate region’s inbound operations

• Satellite Control Towers in all manufacturing regions

• Central Total Logistics Cost Management (TLCM) team that relentlessly identifies and delivers new value

• Locally-based teams to oversee consistency and final stages of logistics process

• Improved supply chain visibility and reduced risk

• Reduction of transportation costs, transit times, inventory levels, demurrage, customs and other tax cost

• Control and reduction in CO2 emissions

• Increased On Time in Full and Case Fill Rate

Customer BenefitsCustomer ChallengeCustomer Challenge DHL Solution

A supply chain transformation that reduces costs

and improves service

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Customer Facts

Customer British American Tobacco

Sector Consumer

Industry Tobacco

Lead Logistics Solution delivers operational excellence and

creates cost savings for British American Tobacco

• Fully integrated, cross-border solutions

• Establishing a SCi-driven Freight Control Tower to manage movements across the region

• Increasing control of network flows through the introduction of 5 new carrier partners

• Optimizing networks, creating transformational supply chain projectsand providing better visibility to minimize working capital

• Centralizing spare machine parts into one global warehouse as part of MRO solution

• Manual supply chain with little integration over huge geographical area

• Volatile network and lack of visibility and control, leading to reactive decisions

• Changing needs of customers

• Reduce costs and environmental footprint while supporting growth

• More control and visibility of the supply chain

• A more sustainable and stable network, with 30% more capacity and 20% increased load-fill

• On target to reduce overall logistics costs by at least 18% in Western Europe

Customer BenefitsCustomer ChallengeCustomer Challenge DHL Solution

Case Study: Supply Chain Transformation Drives Competitive Advantage

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Customer Facts

Geography Europe

Industry Automotive

Revenue EUR 15.7bn

Employees 24,000

• Lack of flexibility and efficiency in the inbound deliveries of parts from over800 suppliers

• Meeting changing demand while ensuring transparency on costs

• Lack of efficiencies driven by a locked3-month planning cycle for freight deliveries

• Reducing environmental footprint

• Managing transport, stock handling and line feeding at the three plants as a Lead Logistics Provider (LLP)

• Dynamic planning of both EU and UK collections based on customer’s demand

• Using the latest software to optimizeroute planning and loading and reduce empty mileage

• Setting up seven cross-docks to consolidate loads before they aredelivered to the plants

• Procuring and managing third party providers

• Synchronized deliveries of parts to the plant with deliveries to the production lines when they are needed

• Reduced supply chain costs contributingto a reduced ‘Total Delivered Cost’

• Reduced inventory spend

• Reduced transportation costs by morethan 45%

• Improved fuel efficiency

• Reduced the carbon footprint by 25%

Lead logistics partnership increases efficiency and sustainability

Customer BenefitsCustomer ChallengeCustomer Challenge DHL Solution

Case Study: A World-Renowned Premium Car Manufacturer