DHL GLOBAL TECHNOLOGY CONFERENCE 2015 · 30/12/13 High jacking (truck), Riyadh, Saudi Arabia,...
Transcript of DHL GLOBAL TECHNOLOGY CONFERENCE 2015 · 30/12/13 High jacking (truck), Riyadh, Saudi Arabia,...
DHL GLOBAL TECHNOLOGY CONFERENCE 2015 Supply Chain Resiliency: Taking advantage of the risk/reward relationship
Dubai, 14-16 April 2015
2 Breakout Session YYYY | DHL Technology Conference Dubai | April 14-16 2015 2 Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
Session Moderators
Tobias Larsson
Director
DHL Customer Solutions & Innovation
Mark Gruentjes
Senior Global Supply Chain Security Manager
Zebra Technologies
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Session Objectives
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
A resilient supply chain not only reduces risks but
also anticipates, rapidly adjusts, recovers and even
capitalizes on unanticipated supply chain events or
disruptions.
Review the risk/reward relationship and evaluate
the need for supply chain risk intelligence
Share best practices for how risk management can
be implemented and discuss opportunities for
applicability in the industry
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Session 1
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
Review the risk/reward relationship and evaluate the need for supply
chain risk intelligence
Share best practices for how risk management can be implemented and
discuss opportunities for applicability in the industry
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Middle East and Africa in a nutshell
MEA fastest growing middle class in the world
1,000+ languages
Nigeria largest economy on the African continent
Cities in MEA will be the fastest growing in the world
in next 10 years
17 African countries ahead of India on World Bank’s
Ease of Doing Business Index
The Middle East holds about 2/3 of the 1 tn barrels of
global proved oil reserves
ME is becoming a significant primary aluminum producer
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Opportunities & Risks O
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ort
un
itie
s
Ris
ks
Source: 1 African Roads and Rails, All Aboard http://www.economist.com/news/middle-east-and-africa/21645225-boom-building-roads-and-railways-should-unclog-economic-bottlenecks 2 Rise of the Gulf, Soaring Ambition http://www.economist.com/news/middle-east-and-africa/21638154-economic-power-and-political-influence-are-shifting-gulf-can-it 3 Fading hope, Iran’s Economy http://www.economist.com/news/middle-east-and-africa/21645738-foreign-businesses-are-looking-beyond-falling-oil-prices-and-limping?zid=308&ah=e21d923f9b263c5548d5615da3d30f4d
Improved infrastructure across Africa may increase growth by 2% a year1
African road network has grown by an average of 7,500km a year1
Dubai overtook Heathrow as the busiest airport hub2
Kenya’s new railway to boost economic growth by 1.5% annually1
Zambia to fund a transport plan that is a seventh of its annual budget1
With burgeoning talks with the West, Iran could become an attractive market3
ISIS and terrorist exploitation of the supply chain
The migrant crisis at the port of Calais
Compliance for conflict minerals
Ebola outbreak
Increased hijackings in South Africa
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Recent Supply Chain Disruption Examples
Sources: DHL Resilience360
Yemen: Zaidi Shia Muslim
Houthi rebels had taken over
Hodeidah city, and had erected
checkpoints on roads leading
to the city’s port area and
Hodeida International Airport.
Date: 14.10.2014
Lebanese authorities halted
trucks from entering Jordan
and Syria following an
overnight clash at the Jordan-
Syria border.
Date: 21.10.2014
Complications in the
Democratic Republic of the
Congos cargo clearance
system at the Kasumbalesa
border crossing has caused a
back-up of more than 1,000
cargo trucks on the Zambian
side of the border.
Date: 30.09.2014
Mauritania: Officials have
closed the border with Mali
over Ebola fears. There is no
initial estimate of how long the
border will remain closed.
Date: 30.01.2015
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
How do you react to events like these?
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Cost of Disruptions 2014
Droughts in Brazil: $4.88
billion
Winter weather in Japan: $6.7
billion
Airline strikes in Germany: $198 million
Belgium general
strikes: $1 billion
Cargo thefts in Germany: up from $39,882
in 2013 to $49,457 in
2014
South Africa had 1,100
incidents of cargo truck hijackings Illicit revenue
ISIS achieved from imposing tax on border
crossings: $12,000/day
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
Sources: 2014 SCREEN Global Intelligence Report: Supply Chain Threats, Risks, and Trends
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Taking advantage of the risk/reward relationship
Sources: DHL Resilience360
Foreign direct investment
FDI are the net inflows of
investment to acquire a lasting
management interest in an
enterprise operating in an economy
other than that of the investor.
Political Violence
Evaluates the likelihood of state or non-state political actors
negatively affecting business operations in a country
through regime instability or direct/indirect interference.
Trade (% of GDP)
Trade is the sum of exports
and imports of goods and
services measured as a share
of gross domestic product.
Extreme Moderate Minor
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Risk intelligence supports strategic decision making
Brazil
Cargo Theft and Cargo Disruption
Nigeria
Terrorism
Sao Paulo Rio de Janeiro
Belo Horizonte Cuiaba
Curitiba
Abuja
Bama Maiduguri
Gwoza
Damboa
Lafia
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
Sources: DHL Resilience360
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Sources: DHL Resilience360
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Cargo Crime Impact on Business
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
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The Industry Fightback
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
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Crime Intelligence
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
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2014 Crime Intelligence
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
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Variety of Intelligence
Location Risks Incident Monitoring I 1 I 2
• Near real-time 24/7 alerts
on supply chain relevant
incidents and risk warnings
• Fed by classical alert
companies, DHL internal
network and social media
news feeds
• Deep dive analysis for
historic events per location
possible
• Geo-located risk scores
from leading risk
analysis provider in their
respective field
• Survey capability with
500 pre defined
questions to assess the
impact of risks to the
overall supply chain
Country Risks I 3
• Risk scores on country
basis
• Backed up by text
analysis of risks and
economical situation
• Data of historic
incidents, indicators,
existing locations, public
holiday and further
economic data
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
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Discussion
Do you feel confident that you know where in the supply chain sits your
biggest risks?
Have you experienced any supply chain disruption in the last few years?
1
2
Where do you obtain risk intelligence from on potentially disruptive
events? 3
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Session 2
Review the risk/reward relationship and evaluate the need for supply
chain risk intelligence
Share best practices for how risk management can be implemented and
discuss opportunities for applicability in the industry
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
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Regional Supply Chain Security Challenges
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
US / Mexican Border area (e.g. Reynosa/McAllen; Juarez/El Paso)
• Cargo is less desirable, despite the value, compared to the valuable load space on
the border-crossing trucks. Contraband shipments that replace or are added to legit
cargo put the employees and the supply chain at risk. √
• Regulatory licenses @Risk! C-TPAT, NECC. Proof of compliance to be provided by
the licence holder. √
• Unpredictable Drug Cartel activities involving daily roadblocks and shoot-outs. ?
• Cargo not always the primary target when supply chains are interrupted. ?
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Regional Supply Chain Security Challenges
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
South Africa & Brazil (e.g. Sao Paolo State: Campinas)
• Volatile and unpredictable environment √
• ‘04 KLM Freighter 591 robbed by a group of armed men at Johannesburg Airport
while being unloaded. Police exchanged fire with the robbers during raid, but the
gunmen escaped. South African media said they had stolen gold and diamonds. ?
• ‘12 Logistics Facility Invasion: Cajamar, Sao Paulo, Brazil, Approximately USD$
3.8M to USD$ 5.5 M in product was taken. According to reports, a logistics
manager from the facility was attacked while driving at night. The suspect had
pictures of his family held hostage and told him they would be killed if he didn’t help.
He then took three criminals in his car to the facility and requested access, which
was immediately granted by the security personnel. After accessing the site, the
logistics manager called security and requested access for five or more cars that
were arriving, which was also granted. ?
• ‘14 Around 20 thieves with automatic weapons raided a electronics manufacturers
facility in Campinas during the nightshift, subduing some 200 workers and guards in
a four-and-a-half-hour ordeal. The raiders kidnapped eight employees and used
their identity documents to gain access to the facility and took off with at least US$6
million worth of cellphones and tablets (~40000) in eight trucks. ?
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Regional Supply Chain Security Challenges
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
Middle East Region:
Few incidents reported – Intelligence sources to be identified
Law Enforcement Liaison to be developed
Examples:
20/09/09 Theft from Facility in Jebel Ali, UAE, Mobile Phones, ~650K$
07/11/12 Fraudulent Pick-up in Kuwait, Mobile Phones, ~150K$
24/10/13 Theft from Facility in Jeddah, Saudi Arabia, Copper, ~200K$
30/12/13 High jacking (truck), Riyadh, Saudi Arabia, ~900K$
30/08/14 Theft from Facility, Sharjah Industrial Area, UAE, Laptops & Mobiles, ~500K$
30/09/14 Theft from Facility, Jebel Ali Industrial Free Zone, UAE:
Electronic goods worth 215K$ were stolen. Police is quoted in the press as
saying that “preliminary investigations showed that the warehouse was not
properly secured and only had a simple lock that was easily broken by the
thieves, without drawing any attention to themselves”. There was reportedly
only a single CCTV camera, although the warehouse contained electronic
goods worth more than €2 million, according to media reports. Police also
said that the investigation showed that the thieves knew what kind of
products were kept in the warehouse.
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Common Supply Chain Security Challenges
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
How to secure your valuable cargo during transit and while at rest?
• Secure trucks / Secure parking / Certified warehouses / Compliant partners. √
Which security standards should be followed?
• C-TPAT, AEO, TAPA, ISO.... √
How and where do criminals operate?
• IIS, Resilience 360, BSI SCREEN, Open Source, Networking (LEAs....). √
What problems are other business and areas facing?
• Cargo Crime: Less thefts, higher loss values (Organized crime). √
• Cargo Crime: Low Priority due to Shortage of Government Task Forces & Insurance √
• Cargo Crime: Increase in violent Modus Operandi. ?
• Geo-political security, Terrorism & Piracy, Geo-physical disasters, Extreme weather. ?
What can be done to tackle the problems?
• Supply Chain Risk Mitigation through global industry standards- and legislations
compliance. √
• Utilizing credible sources of intelligence to prevent dangerous/costly situations. !
• Utilizing enhanced tracking capabilities (e.g. RFID) to develop real-time reactive
capabilities to reduce the incidences of lost shipments, improve shipment security and
enhance the visibility of goods in motion. !
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Supply chains of 11 sub-networks in scoped are visualized and
monitored in the Resilience360 Tool
Case Study – FMCG customer using Incident Monitoring
No effort for FMCG customer as Supply Chain Data already available for DHL via internal
shipment data
484 nodes and 831 lanes geographically mapped giving a realistic view of the supply chain
Data Received
• Turkey Gebze
• Turkey MDO
• Egypt Cairo
• East Africa MDO
• AP&P Jeddah
• AP&P Dammam
• South Africa J’burg
• South Africa MDO
• NW Africa Casablanca
• NW Africa Mohammedia
• West Africa Ibadan
Data collection Visualization
Turkey Saudi
Arabia Morocco
Egypt
Kenya Nigeria
South Africa
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Case Study – FMCG customer using Incident Monitoring
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
Customs strike, Pakistan,
Sept 2013
Strike causing slow movement of cargo,
The Netherlands, Oct 2013
Increased congestions at Lagos Ports,
Nigeria, Sept 2013
Indefinite strike at Nhava Sheva Port,
India, Oct 2013 Customs closure due to Eid Al Fitr,
Saudi Arabia, July 2013
End-to-end visibility of the supply chain established, resulting in 30%
reduction in lead time and 408 hours of shipment delays avoided
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
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Case Study – FMCG customer using Incident Monitoring
• Supply chain incident monitoring: DHL Resilience360
• Visualization of entire supply chain and alerting of incidents relevant to the supply
chain of the customer
• Pro-actively re-routing & information sharing involving suppliers of the customer
• Strategically assess risk of routes to identify low risk routes for lead time reduction
Solution
Situation & Challenge
• Shipment status was tracked manually and actions were taken only after a delay had
already occurred
• Long leads times to buffer for uncertainty
Result
• End-to-end supply chain visibility: Monitoring increased from 98 ports per week to
484 nodes and 831 lanes per day / continuously
• Substantial amount of delay and cost avoided: 408 hours of avoided shipment delay
due to proactive incident alerting already within the first 6 month
• Reduced lead time: Lead time reduced by 30% for the first assessed lane. Further
analysis of less ‘disruptive lanes’.
• Potential to reduce buffer stock in the long run
DHL Control Tower
Take actions
Shipment on time
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
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Discussion
What functionalities and tools are required for risk management in the
Technology sector?
What challenges in implementation would you foresee? 3
1
2
What have you done in the space of supply chain resiliency and business
continuity management?
Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015
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THANK YOU