Supply Chain Digital - March 2017

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M a r c h 2 017

Talking Biz with Staples’ Dean Krueger 7 emerging supply chain technologies Top 10 US trucking companies

INSIDE

‘ZUKUNFT BAHN’

DEUTSCHE BAHN’S masterplan for the future of rail operations in Germany

DHL Supply Chain: making its mark in the GCC

EDITOR’S COMMENT

ON TRACK HELLO AND WELCOME to March’s edition of Supply Chain Digital.

We have a host of exclusive insights from some of the world’s most influential supply chain players, starting with our cover feature with Deutsche Bahn, who tells us about the enormous work carried out by its procurement team.

Also featured this month are my interviews with HP’s Volker Schmitz and DHL Supply Chain’s Nick Murray, who is establishing a firm foothold for the company in Saudi Arabia and the GCC. Staying with the Middle East, find out how Hala Supply Chain Services and National Bank of Abu Dhabi are helping to keep business moving in the region.

Sky Europe, Scomi Oiltools and CBRE are among the other companies sharing their supply chain operations with us, while Jess Shanahan speaks to Staples’ Dean Krueger about the company’s procurement operations in the USA. Finally, we have a roundup of emerging tech to watch out for in 2017, along with a look at the top 10 US trucking companies.

As ever, join the debate @SupplyChainD.

Enjoy the issue!

Tom Wadlow Editor tom.wadlow@bizclikmedia.com

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The wo enables

The Supply Chain end-to-end ecosystem in attendance; learn and Expert speakers including:

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Brian Tessier Vice President, Global Supply Chain Innovation Schneider Electric

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F E AT U R E S

PROFILE

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The SMART supply chain

TECHNOLOGY

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7 emerging technologies that impact the future of supply chains

LIST

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Trucking companies in the USA

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C O M PA N Y P R O F I L ES

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HP

92

Europe

DHL Supply Chain Middle East

Deutsche Bahn Europe

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124

National Bank of Abu Dhabi (NBAD) Middle East

Gulf Cooperation Council Interconnection Authority (GCCIA) Middle East

106

Hala Supply Chain Services Middle east

116

Service Corporation International USA & Canada

136

CBRE Asia

164

150

GM Colmotores (Colombia) Latin America

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The SMART supply chain Business supply chains are constantly evolving, especially in the wake of the digital revolution.

Office supply store Staples is focusing on using the latest technology to improve sustainability and fulfil its customers’ every need while continuing to grow

Writ ten by: JESS SHANAHAN

PROFILE

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PROFILE STAPLES HAS BEEN in business since 1985, and it was all because of a broken typewriter ribbon that the company was formed.

Supermarket-executive-turnedentrepreneur Tom Stemberg was working on a business proposal when his typewriter ribbon broke.

Being the Fourth of July, all local suppliers and stationery stores were closed. After driving from

Mike Bhaskaran, Executive Vice President of Supply Chain at Staples, says: “Staples set the standard years ago, with a supply chain that could reliably deliver products by the next business day to 95 percent of North America at no additional cost.

“Today, the needs of our customers are changing and our supply chain has had to evolve to provide greater choice and flexibility. Beyond next

“Today, the needs of our customers are changing and our supply chain has had to evolve to provide greater choice and flexibility” – Mike Bhaskaran, Executive Vice President of Supply Chain at Staples

store to store, it became apparent to Stemberg that the world needed a supermarket for office products.

Ten months later the first office superstore opened, and since then the Staples brand has been constantly evolving to meet the needs of its customers. This means that not only is the product selection growing and the sales process being streamlined, but the supply chain has had to evolve to keep up with demand - not to mention the fact that customers want their orders quicker than ever.

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day delivery, Staples’ supply chain has evolved to meet a growing list of new customer requirements, including the delivery of electronics (requiring special protection and serial number capture), facilities supplies (requiring delivery of liquids and chemicals), and breakroom supplies (including foods that have special storage requirements and need to have expiration dates managed).”

With such a large operation, Staples has had to think about its impact on the planet too. The company is

T H E S M A R T S U P P LY C H A I N

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PROFILE working hard to reduce packaging and improve sustainability, as Bhaskaran explains: “One of our most successful initiatives has been the introduction of Smartsize packaging equipment into our fulfilment network. Almost every Staples fulfilment centre in the United States is equipped with technology that creates packaging specifically sized for each order. Not only does this mass customisation technology support sustainability goals by reducing the amount of corrugate and dunnage that Staples uses, the optimised carton sizes also result in reduced transportation costs.”

Staples isn’t the only company to use technology to streamline its supply chain and reduce costs, the Smartsize equipment is just one part of a wider digital transformation. Bhaskaran says: “Other uses of technology in our supply chain include automated box closers, packing slip insertion automation, and advanced software for optimising routing

for the Staples’ delivery fleet.”

Just because the Staples supply chain has changed drastically since the company was formed, doesn’t mean its evolution is going to stop any time soon. Staples itself is undergoing changes with the focus shifting to an omni-channel approach rather than the supply chain serving the retail stores alone – especially in the UK where it’s pulling its retail operation completely to focus on ecommerce.

Bhaskaran sees the Staples supply chain evolving and developing between now and 2020. He says: “Staples is a true omni-channel company. We have both an extensive network of retail stores and a large ecommerce business base. We have already taken significant steps toward creating a truly omni-channel supply chain to support every aspect of our business, and that evolution will be a priority going forward.”

The omni-channel approach is designed to make the purchase

Video: PACKSIZE ON DEMAND PACKAGING®

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“The move to omni-channel has enabled Staples to maintain or improve service levels for all of our business units while reducing our overall investment in inventory” – Mike Bhaskaran, Executive Vice President of Supply Chain at Staples

process as easy as possible for customers with one central stock pool, regardless of whether they prefer to shop in store or online. In being able to fulfil any order from the supply chain, Staples streamlines the process and is able to deliver within very small time frames.

Bhaskaran says: “The move to omni-channel has enabled Staples to maintain or improve service levels for all of our business units while reducing our overall investment in inventory. The ability to pool inventory is complemented by an improved understanding of our customer’s buying behaviour across the different channels, translating into a superior experience for our customers. We have also implemented a number of new capabilities in select markets as a result of our focus on omnichannel, including the ability to Buy Online and Pickup in Store, Ship

from Store, and Same Day Delivery (which we call Staples Rush).”

The use of technology in a supply chain is an important step for any business that wants to move forward on continually deliver on its customers’ needs. More and more supply chains are going to be embracing the latest digital tools as Bhaskaran explains: “A significant trend over the next year will be the increased use of data-driven decision making. This will impact all aspects of the supply chain, from inventory replenishment to network optimisation to pricing. More than ever, a successful supply chain will be one that works not just harder, but smarter.”

By listening to the needs of customers and equipping supply chains with new capabilities enabled by digital technologies, companies can unlock the full potential of the digital supply chain, just as Staples continues to do.

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S & O P I N N O VAT I O N S U M M I T

Aparna Singhal, Director of Sales Operations at Google

APARNA IS A recognized thought leader in sales operations, supply chain, finance and transformational change. She leads a team that performs as catalyst leaders in transforming business decisions and processes for Google Cloud. Focusing in ways to optimize the business, Aparna’s team builds consistent, scalable and comprehensive processes while applying bestpractice change leadership. Aparna also manages the vendor strategy, data and systems strategy, and functional budget including planning, forecasting and reporting. Aparna’s remarkable reputation as a strategic cross-functional partner has earned her a high degree of confidence

Supply Chain Digital Officia among her peers and associates.

Aparna’s goals in life and work will always involve seeking new experiences, challenges, and growth.

We sat down with her ahead of her presentation at the S&OP Innovation Summit, taking place in Las Vegas on January 25-26 2017.

Q: How did you get started in your career?

A: I got started in my career by working in a rotation program that allowed me to work in 4 different disciplines over two years. This taught me the importance of seeing many areas of an organization and how they are all dependent on each other. Most teams work mainly in their silos with their own objectives, but we need them to plan with joint objectives.

Q: S&OP has undergone something of a resurgence in recent years, what do you think has been behind it?

A:I believe the resurgence is due to companies having more of a focus on costs and the impact the G&A functions have on the bottom line. S&OP’s role in the ability to prioritize resources and funds to allow for greater customer success is more understood.

Q: Is IBP a progression of S&OP, or is it just an issue of semantics?

al Media Partners | 2017 A: IBP to me is an extension of S&OP. It is somewhat of a natural progression but leads to more holistic planning.

Q: What do you think are the main benefits of S&OP? Where do think some companies fall down?

A: The main benefit is the end to end view. Companies can make strategic decisions while considering the supply chain as well versus only the product features or sales cycle. Companies fall down when they don’t implement a long-term planning process and try to force fit short term needs. This occurs mainly when they lose the discipline.

Q: What do you consider the most important aspects of an effective S&OP strategy?

A: To me, the most important aspects of an effective S&OP strategy is the connection between engineering, sales, finance and operations. It allows for the ability to hold teams accountable and be aligned to common goals.

Q: Which technologies do you see as having a major impact on S&OP in the future?

3In a way, there are too many technologies that try to solve S&OP for organizations. Since the way each company is run has so many of its own nuances, a standard off the shelf technology may not meet the goals

of that organization. There is also data and data refresh that can impact decision making. The more we can have integrated planning tools across organizations that show revenue objectives all the way to customer support, the higher the success.

Q: What will you be discussing in your presentation?

A: In my presentation, I will discuss how data quality is critical to the impact and success of your S&OP process and the concept of master data management in your S&OP process.

You can hear more from Aparna, along with other industry leading S&OP practitioners, at the S&OP Innovation Summit. To register your interest, click here, and quote SCD20 to get an exclusive 20% discount.

Elliott Jay | Global Events Manager | Innovation Enterprise | +1 415 800 4713 | ejay@theiegroup.com

TECHNOLOGY

7 emerging technologies that impact the future of supply chains Written by: JESS SHANAHAN

EMERGING TECHNOLOGIES ARE having an impact on supply chains across the world, and while they have the opportunity to improve endto-end performance, they’re going to have a disruptive effect too. So many people within the supply chain industry are aware that emerging technologies could be a source of competitive advantage as well as a source of disruption for supply chains in the next 10 years. Here are seven technologies that are impacting current supply chain practices.

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TECHNOLOGY Internet of Things (IoT) Experts predict that by 2022, one trillion sensors will be connected to the internet. The amount of data these sensors will be able to share is astronomical and everything from lorries and warehouses, to toasters and kettles will be talking to one another.

The Internet of Things has huge implications for supply chain management as it could improve efficiency, reduce waste, resolve issues in their earliest stages, and help to reach targets.

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The Internet of Everything and the data generated from the supply chain leads to accelerated decision making. This video from Cisco Live US 2014 examines a simple winemaking operation with IoE elements integrated throughout the supply chain that enable the rapid integration of new suppliers.

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Big data and analytics With so many sensors connected to different parts of the supply chain, the huge amounts of data gathered from each stage can enable faster and better decision making from people.

Hans-Georg Kaltenbrunner, VP industry strategy for Manufacturing, EMEA at JDA Software – a provider of endto-end supply chain planning and execution solutions – says: “Big Data and the Internet of Things mean it is becoming increasingly important to adopt a bimodal supply chain.

“The very backbone of the supply chain has been shaken by the digital revolution, which is characterised by innovations such as the Internet of Things, 3D printing, robotics, machine-to-machine communication, and demand sensing, among other things. As supply chains merge with IoT and big data, the one-size-fits-all, linear supply chain that buys, makes, moves, stores and delivers products to all customers and channels in the same way is becoming archaic and no longer adequate for future success.”

Razat Gaurav, JDA’s EVP and Chief Revenue Officer, shares the impact of the Internet of Things and big data analytics on supply chains and how JDA is innovating to help companies navigate the rapidly changing world today.

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TECHNOLOGY Satellite communications Some companies are taking connectivity to a whole new level by utilising advances in satellite technology. Corry Brennan, Simplex Regional Sales Manager at satellite services provider Globalstar says: “Because satellite services have got cheaper and more reliable, and chips have got smaller, it is emerging as an important technology in transforming supply chains. Satellite solutions are allowing businesses to track cargo in trucks, trains and ships as they go beyond the mobile phone network.

“Whatever the cargo - from hazardous chemicals to craft beer – IoT sensors and satellite communications can share details about the location and environmental condition, such as temperature and pressure, to everyone in the supply chain. In the worst case, if a rail car with petrochemicals is involved in a collision, a sensor can instantly notify the relevant parties with always-on satellite communications.”

SIMPLEX TRANSMITTER UNIT (STX-3): Using the Globalstar Simplex data network, the STX3 allows information to be transmitted from areas well beyond the reach of reliable cellular coverage around the globe

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Machine learning Up until recently, any sales forecasting was done by humans by looking at previous data but it was an imperfect science as humans are not only swayed by previous experience, external biases and other factors, but they can’t handle large volumes of data. Alexander Khaytin, COO at machine learning and data analytics company Yandex Data Factory says: “Machine learning can help retailers to deliver accurate forecasts for product sales. By applying predictive and recommendation models to historical sales data, retailers are able to forecast at a granular level – by product, individual store and even day of the week. This helps to optimise supply chain management, lowering risks of overestimation or underestimation for product inventory and increase efficiencies across the whole business. “For example, Russian retailer Pyatyorochka piloted a specialised machine learning model that forecasted demand for individual products on sales promotions from its different stores. The project resulted in Pyatyorochka forecasting the exact number of wholesale packages needed 61 percent of the time, and was correct within one package 87 percent of the time. A phenomenal percentage when compared to those produced through human analysis.”

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IS MACHINE LEARNING A GAME CHANGER IN MARKETING? Perspectives and limitations.

A panel discussion moderated by Norbert Wirth (GfK, Global Head of Data and Science) Participants: Andreas Braun (Allianz, Head of Global Data and Analytics) – Martin Szugat (Predictive Analytics World Germany, Program Chair) – Raoul Kübler (Ozyegin University, Istanbul).

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Robotics and autonomy At the moment, there’s a partnership between the robots and humans that allows them to work collaboratively, but it’s likely more robotics will be introduced to further streamline supply chains. Japan is well ahead of the curve and for years many Japanese factories have been running ‘lights out’ for weeks at a time with little or no human presence. Steve Wickham, Supplier Relationship Manger and head of CSR at product design and procurement specialist Matrix Group, says: “The latest robots have the ability to learn how to complete multiple jobs much more efficiently and conveniently than humans ever could. Robots that are capable of interacting with staff are being trialled in one of Matrix’s factories in China to take low level tasks off the hands of its workers, in time this will increase production efficiency.

“Factories are highly competitive environments, and technology is essential for keeping pace with burgeoning retail demand. Robots allow nearcontinuous production and eliminate the possibility of human error and harming employee wellbeing. With the addition of robots, employees can be more focused and productive in their roles, stepping away from menial tasks to completing work that is more fulfilling.”

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Wearables The use of wearables and the cloud enables businesses to track supply chain activity in real time in order to meet customers’ stringent demands. Supermarkets are pushing suppliers harder than ever to meet stringent traceability, food safety, and quality benchmarks - a situation that looks certain to continue throughout the coming years. Dealing with this pressure is the biggest challenge the industry faces.

Wearable technology also provides substantial benefits for job satisfaction and productivity. Employees who are

armed with wearable devices in the workplace, on average, increase their productivity by 8.5 percent and their job satisfaction by 3.5 percent. This is something that has been seen by Matrix as Wickham explains: “Networks and sensors using near field communication technology are now able to offer insights into employee working conditions, as well as their output. New age monitoring measures can benefit workers and employers alike. Our worker welfare app will have a direct and positive impact on the quality of workers’ lives, including their job satisfaction, hours and pay.”

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TECHNOLOGY 3D printing The implications of on-demand production for the supply chain are huge, with positive environmental consequences in terms of reduction in transport, pollution and production waste. 3D printing can also reduce dependence on large factory employment, particularly in developing countries where resources may be scarce. Supply chains are being disrupted from every angle by these new

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technologies and it’s the companies that embrace this digital revolution early on that will be the overall winners. Retailers, suppliers and service providers need to understand their offering might change but there’s no set path to digitisation, and every company will have to embrace these technologies in a different way.

Christian von Koenigsegg has changed the automotive industry by taking advantage of the benefits utilised by applying 3D prototyping and printing technology to his company’s development processes.

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Trucking companies in the USA Although many supply chains are embracing intermodal transport networks around the world, trucking is still a vital component for thousands of businesses, contributing billions to the US economy.

Here are 10 of the most important players Written by: TOM WADLOW

TOP 10

TOP 10

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Knight Transportation 2015 revenue: $952m The combined revenues of the top 25 trucking companies in the USA amounted to $27.2 billion in 2015, a slight drop of 2.3 percent on 2014. At number 10 in the list is Knight Transportation, which boasts comprehensive coverage across the majority of states in the country. The company has grown hugely since 1991, when revenues stood at $13 million. It now employees 5,000 people and what was a small family business is now listed on the New York Stock Exchange.

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T R U C K I N G C O M PA N I E S I N T H E U S A

9 Crete Carrier Corporation 2015 revenue: $1.01bn With a fleet of more than 13,000 trailers based in 18 facilities across the country, Crete Carrier draws on its 5,000-strong driver workforce to deliver the goods for businesses spanning almost all industries. The company is made up of three different divisions: Crete Carrier, Shaffer Trucking and Hunt Transportation, Inc.

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CRST International 2015 revenue: ÂŁ1.14bn CRST International has been operating for 60 years, now delivering a range of logistics services aside from traditional trucking. These include intermodal networks, warehousing solutions, home delivery and high value/ white glove services. The company operates at zero debt, allowing it to reinvest in its 4,500-strong fleet of trucks.

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Prime Inc. 2015 revenue: $1.56bn

7 U.S. Xpress Enterprises 2015 revenue: $1.34bn Founded in 1985 by Max Fuller and Patrick Quinn, what was formally U.S. Xpress, Inc is now among the most established trucking companies in the whole country. It prides itself on an employee focus, its mission being “to provide our people with an enjoyable, safe and dignified work environment in which all employees are challenged to continuously improve their skills, and are rewarded for superior work�.

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Prime is a provider of refrigerated, flatbed, tanker, and intermodal carrier services, with clients also able to lease vehicles. It has been in operation for more than 40 years and has surpassed the $1.5 billion annual revenue mark. The company has more than 6,000 tractors and 10,000 trailers to its name, a fleet which has undergone recent refurbishment.

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Werner Enterprises 2015 revenue: $1.62bn Werner Enterprises was founded in 1956 and is a leading transportation and logistics force in the USA, with coverage throughout North America, Asia, Europe, South America, Africa and Australia. It is among the five largest truckload carriers in the USA, with a portfolio of transportation services that includes dedicated medium-to-long-haul, regional and local van, expedited, temperature-controlled and flatbed services.

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Landstar System 2015 revenue: $1.7bn

Landstar System is a light-asset carrier and provider of integrated transport management solutions to clients around the world. The company draws on a network of specialist agents and third-party hauliers to provide services across the globe. “We offer our carrier network the ability to find the best loads and then get out of your way to let you run your business your way� - a key message the firm portrays on its website.

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J.B. Hunt Transport Services 2015 revenue: $1.84bn J.B. Hunt was incorporated in Arkansas on August 10 1961, and has been a publicly held company since its initial public offering in 1983. Service offerings include transportation of full truckload freight, which is directly transported utilising company-controlled revenue equipment and company drivers or independent contractors. The business also has arrangements with most of the major North American rail carriers to transport truckload

2 Schneider International 2015 revenue: $2.38bn Schneider is a major provider of transportation and logistics services. Offering one of the broadest portfolios in the industry, Schneider’s solutions include regional and long-haul truckload, expedited, dedicated, bulk, intermodal, final mile, LTL, brokerage, cross-dock logistics, supply chain management and port logistics. A $4 billion company, Schneider has been in operation for 80 years.

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TOP 10

Swift Transportation 2015 revenue: $3.51 billion Swift is based in Phoenix, Arizona, and operates a tractor fleet of approximately 18,000 units driven by company and owner-operator drivers.

The company operates more than 40 major terminals positioned near major freight centres and traffic lanes in the United States and Mexico. Swift offers customers the opportunity for “onestop shopping� for their truckload transportation needs through a broad spectrum of services and equipment.

Swift’s extensive suite of services includes general, dedicated and cross-border U.S./Mexico/Canada service, temperature-controlled, flatbed and specialized trailers, in addition to rail intermodal and nonasset based freight brokerage and logistics management services, making it an attractive choice for a broad array of customers.

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INSIDE

‘ZUKUNFT BAHN’ Produced by RICHARD DURRANT

Photo credit: Deutsche Bahn AG-Max Lautenschläger

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DEUTSCHE BAHN

The Deutsche Bahn procurement organisation optimises supply reliability, cost levels and process efficiency

D

eutsche Bahn and we, as its procurement organisation, achieved a great deal in 2016.

After the downturn in earnings in 2015, the DB Group is now back on track for success once again: we have not only delivered positive financial results, but also laid the cornerstone for improving the quality of railway operations by launching our “Zukunft Bahn” quality programme.

The target for 2017 is to make our performance even more stable.

Procurement is changing rapidly.

While procurement teams will always need to drive cost savings, they are constantly endeavouring to become a more complete business partner in order to unlock innovations and drive ever-greater value. They are faced with the continuous challenge of analysing procurement to transform their focus, their people and their whole operation.

And time is not on their side.

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It is by no means an easy journey to develop the scope and capabilities of your business function while continuing to meet your daily operational commitments.

“Zukunft Bahn” – the future of rail operations in Germany Joining forces for more quality, more customers, more success – last year we launched our “Zukunft Bahn” quality programme to tackle those matters which our customers found most unsatisfactory. Our customers have already noticed that we have made considerable progress in many areas. Elsewhere, however, we have not achieved results as quickly as we had hoped. We are pleased to say that we were able to improve the average annual punctuality rates year-on-year across all segments: from 94.2 to 94.8 percent for regional passenger traffic and from

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Photo credit: Deutsche Bahn AG

Uwe Günther (CPO Deutsche Bahn)

EUROPE

Photo credit: Deutsche Bahn AG-Claus Weber

72.8 to 76.0 percent for freight traffic. In the longdistance segment, punctuality improved by several percentage points, from 74.4 to 78.9 percent.

So what are our overall goals for this year?

We want to improve punctuality even more and increase customer satisfaction. On our way to becoming a profitable quality leader, one of our targets is to raise revenues and earnings before income and taxes (EBIT). We shall continue to raise our appeal as an employer to reach our objective of ranking as a top employer. In our role as eco-pioneer, we shall endeavour to reduce carbon emissions and noise even further.

‘DB is investing around one billion euros in digitalisation projects alone throughout the Group’

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DEUTSCHE BAHN

Achieving the objectives of Zukunft Bahn with the best suppliers We achieved our targets as a procurement organisation in 2016: we delivered our target contribution to the DB Group earnings with the help of our ProFit programme and ensured supply reliability. Exploiting all commercial and technical procurement levers was and still is one of the keys to our future success. We firmly believe that our long-term strategies for the individual inventory groups and, in particular, our close consultation with our colleagues in the technical and quality assurance organisations and our internal customers who place the orders, are still the basis for successful cooperation and the key to success.

For the DB procurement organisation, the year 2017 will again involve a high level of operational contract awards which will give us the chance to demonstrate our operational excellence on a daily basis. Our unequivocal target is a zero error policy. The systematic application of our reorganised supply management scheme is intended

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to deliver not only supply reliability, but also improve compliance with delivery deadlines. We plan to roll out a “Digitalised Supply Management� project to achieve these objectives and design a digital supply chain in consultation with our internal customers and selected system providers. As the DB procurement organisation, we are also actively involved in four central competence centres of the DB Group (Operational Excellence/Technology, Digitalisation, Transformation and Sustainability).

Suppliers are our partners when it comes to safeguarding the success of the DB Group. Their goods and services are an elementary part of the value chain and are also crucial for the competitiveness of Deutsche Bahn. Our supplier management makes procurement a strategic competitive factor. By working hand in hand with reliable partners, we guarantee high quality standards by implementing a harmonised control process. Our supplier management policies are valid throughout the DB Group and are an intrinsic element of the major IT systems at DB. Over

Global Procurement Network Meeting 2016

the medium and long term, we shall optimise the supply reliability, cost levels and process efficiency of the DB Group thanks to the continuous improvement of our supplier portfolio.

As our objectives are only viable on the basis of responsible management at our partner companies, we play close attention to compliance with sustainability principles within the management system and to the continuous improvement of

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the sustainability practices of our partners and their suppliers.

Close cooperation with the best suppliers is the only way we can achieve the designated objectives of Deutsche Bahn.

Heading for WorldClass Procurement Efficient procurement is based on undisputed best practices. The following factors are the key to the

Photo credit: Deutsche Bahn AG

Number of employees at Deutsche Bahn

300K+

success of Deutsche Bahn procurement: • A procurement strategy that is a firm element of the DB Group strategy, combined with clearly defined purchasing policies • A procurement organisation that makes use of local expertise to achieve flexible Groupwide coordination and regards purchasing as an interdisciplinary

top management task • Strategic sourcing based on the systematic identification of fundamental starting points and the use of individually targeted levers to reduce costs • Supplier management which focusses on increasing values together with our key suppliers, but which is also

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MOCG-A10012-00-7600

When intelligent infrastructures don’t just react but anticipate, that’s ingenuity for life.

With a growing need for mobility, advanced software solutions help to meet the demand for increased availability, optimized throughput and enhanced passenger experience. With over 160 years of experience in passenger and freight transportation and our IT know-how, we are constantly developing new and intelligent mobility solutions to provide greater efficiency and safety. These include prescriptive monitoring systems, dynamic control systems, and electronic information and payment systems.

With innovative solutions driving us into the future, urban living becomes modern living.

siemens.com/mobility

EUROPE

The DB infotainment system, ICE portal, keeps passengers entertained during train journeys. It provides the latest travel and local information, as from spring, passengers will also be able to watch TV series and feature films

DB seizes the opportunities of digitalisation in all dimensions Digitalisation meanwhile appears

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Photo credit: Deutsche Bahn AG

willing to consider new potential suppliers • Integration of strategic and operational functions via e-tools in our day-to-day business • Promoting breakthroughs instead of incremental savings as benchmarks and developing supplier volumes on the basis of supplier performance • Information systems which provide full transparency with regard to procurement volume and facilitate monitoring of compliance with contracts, rules and regulations etc.

• Purchasers with pronounced technical and strategic skills and by providing genuine career flexibility.

We are heading for World-Class Procurement.

According to an external benchmarking carried out by consultants from h&z, our procurement organisation was awarded the status of “Professional Procurement”.

But we didn’t and we won’t rest on these laurels. We have made great progress over the past couple of years improving from a 10.9 score in 2015 to a 12.4 score in 2016 (especially in the category internal client management). We firmly intend to continue on this positive course to achieve the “WorldClass Procurement” status.

DEUTSCHE BAHN

in many forms at DB and new aspects euros in digitalisation projects alone are appearing every day. Electronic throughout the Group and has newsletters and sightseeing tips additional venture capital amounting to on the ICE portal keep passengers 100 million euros which will be used to entertained during long train journeys provide strategic support for start-up and also provide customised activities between now and 2019. travel information. As from spring, passengers will also be able to watch Digitalisation in procurement TV series and feature films. Also – more than just IT... beginning in spring 2017, Digitalisation is therefore also a Flinkster customers key topic for procurement. will not only be We have drawn up our able to book cars own digitalisation through our car roadmap for sharing scheme, purchasing, based but also electric on the following scooters. Industrial four points: Deutsche Bahn customers already • Digitalisation of IT annual revenue have the option and processes in the of real-time tracking DB Procurement Network and tracing of their freight • Digitalisation of knowledge consignments and can even monitor management and knowledge temperature fluctuations or vibrations transfer, profiling/recruiting skills inside the containers. The first fully • Customer perspective: using IT to automatic rail vehicles are already simplify procurement processes; being tested. Driverless shuttle buses easier access and order processing already operate scheduled services on • Customer perspective: in our role the roads and self-driving, networked as procurement organisation, we trucks (platooning) will follow. support the implementation of DB is investing around one billion digitalised business models at

€40.5

BILLION

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excellence ... ‌IN TECHNOLOGY AND QUALITY.

Delivering the highest levels of safety and availability for operators. This is the goal of Knorr-Bremse. | www.knorr-bremse.com |

Intelligent building connects people.

The more complex a construction project, the greater the challenges for everyone involved. This calls for knowhow – and for people who know exactly what they’re doing. PORR has been synonymous with the utmost expertise in every aspect of construction for more than 145 years – after all, specialist knowledge, dedication and team spirit always pay off. porr-group.com

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Photo credit: Deutsche Bahn AG

Virtual assembly of the tunnel boring machine in the pilot project Tunnel Rastatt

Development of the construction volume using the 4D model in the pilot project Filstalbrücke our customers’ companies (e.g. innovation partnerships, start-up management, lean purchasing, purchase of new technologies, such as cloud services etc.).

The following are just some examples of procurement digitalisation schemes that have already been implemented in practice: •E -contract award Electronic contract award refers

to an IT solution which handles the inquiry management process in all product sectors of corporate purchasing for the DB Group.

With the help of this software, contract award can be announced electronically in compliance with legal contract award regulations and offers accepted electronically.

E-contract award provides the DB Group with auditable documentation of all communications with bidders throughout the contract award

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process. The entire contract award documents are available in a clearly structured form, which leads to an immense reduction in the outlay required for filing hard copy and documentation. The process is monitored and handled in the form of e-contract award in compliance with contract award legislation and with all relevant directives.

The electronic contract award file satisfies all requirements of EU public contract award legislation and also includes digitalised tender documents, offers and contracts.

•D igital building at Deutsche Bahn Building Information Modelling will entail more changes than just the

technical platforms for planning, building and project management.

For us as the largest operator of railway infrastructure in Europe and as one of the largest building project clients on the European continent, Building Information Modelling, generally referred to as BIM, means a gigantic leap forward. The Federal Ministry has helped DB to fund BIM as part of its ‘Investments in the Future’ programme and has provided around 20 million euros.

Together with a further nine million euros of Deutsche Bahn’s own funds, we will then have almost 29 million euros to promote the transparency and quality of planning and project management.

In October 2016, Alexander Dobrindt, German Minister of Transport and Digital Infrastructure, and DB AG signed a financing agreement for 13 DB Netz AG pilot projects on rail which are to be planned with the help of digital Development of the construction volume using the 4D model in the pilot project Filstalbrücke

THE EXCELLENT S/CREW Ferdinand Gross is among the largest suppliers of fastening technology in Germany. We offer customer-specific solutions in all aspects of kanban.

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GPH-650R The GPH 650R is an LTE/GSM-R dual card dual active smart phone.

Our Company • The leading GSM-R terminal provider from China.

• Long term OPH/GPH provider of DB • Awarded Supplier of the Year for DB in 2016.

Key Technologies • Touch operating with gloves • Physical keys is used to initiate REC • Group call, point to point speech call • PTT Function Design • Dual, MIC noise reduction technology • IP54, railway-oriented and suitable to severe outdoor conditions.

• Working Alone Alarm • SIM lock functions • Cell Lock & Cell Forcing • Bluetooth

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EIRENE Functions • Group Call / Broadcast • Railway Emergency Call • Functional Numbering Management • Enhanced Multi-Level Precedence and Pre-emption (eMLPP) • Railway Communication Dialing

Product Description • The First GSM-R smart phone in the world • Support GSM-R/LTE dual modes dual active.

• Customized based on Android System, satisfying the application of railway industry.

HIGH CAPACITY I PRECISION I RELIABILITY

Manufacturing quality in series The new fleet of track maintenance machines of DB Netz AG demonstrates yet again our extraordinary manufacturing quality standards. The success of this project can easily be explained: the high precision in our Linz factory. www.plassertheurer.com “Plasser & Theurer“, “Plasser“ and “P&T“ are internationally registered trademarks

Innovative Signalling Solutions

We deliver modern interlocking systems with a communication-based architecture and high performance up to 1500 controlled objects. Our solutions are cost-effective to install and maintain because of the use of standard, industrial components and low requirement for infrastructure. info@inosig.com · www.inosig.com

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Building Information Modelling (BIM). The German government is investing around 20 million euros in these pilot projects, and DB will contribute approx. a further nine million euros of its own funds.

The digital planning and building method is based on transparency, trust, openness and cooperation on the part of everyone involved in the project and throughout all phases of the project – from the initial idea and analysis of requirements, to planning and approval procedures, contract award and execution right through to billing and commissioning.

Building Information Modelling can also be used to manage operations, servicing and maintenance, and

dismantling. Our experience of BIM to date in the course of the Rastatt Tunnel project is consistently positive: the quality of planning and project management could already be significantly improved, so that BIM is to be used for all future largescale Deutsche Bahn projects.

Procurement rewards the best suppliers The DB procurement organisation was well represented at InnoTrans in Berlin (international trade fair for transport technology) in September 2016.

The fair is an excellent opportunity for networking and for us to meet existing and potential suppliers. Our former CEO Dr Grube took the time

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to visit some of our partners (such as EVRAZ, CRRC, PESA and KnorrBremse) in person on his tour of the fair together with our CPO Mr Günther.

The highlight of the week was, of course, the presentation of the DB Supplier Awards and the Supplier Innovation Award. This was the seventh time that DB had presented Supplier Awards in three different categories (General Requirements

and Services, Rolling Stock and Parts, Infrastructure) to companies that stand out from the competition in their market segments, show outstanding achievements in terms of sustainable contract fulfilment, and help us to achieve our objectives and implement our ambitious corporate strategy DB2020+ by delivering premium performance.

In addition to the above, DB also

THE WINNERS OF THE DB SUPPLIER AWARDS IN 2016:

• INFRASTRUCTURE:

• GENERAL REQUIREMENTS AND SERVICES:

Technology Co., Ltd.: The Chinese

Ferdinand Gross GmbH & Co. KG: Since

company has supplied mobile

2012, this company has been DB’s sole

telephones to DB since 2012 for use in

supplier and has supplied the company

DB’s GSM-R (Global System for Mobile

with around 22,000 fasteners of all

Communications-Rail) internal mobile

kinds, such as screws, pins, spacers

phone network. DB is highly satisfied with

and washers, with absolute reliability.

the quality of the telephones and full range

• ROLLING STOCK AND PARTS:

of services offered by SED Wireless.

Shenzhen SED Wireless Communication

ALSTOM Transport Deutschland GmbH: ALSTOM’s South-West Diesel Network project succeeded in delivering the 38 LINT 41 and LINT 54 diesel multiple units with practically no defects and on schedule for deployment as from the

And the first DB SUPPLIER INNOVATION AWARD goes to… Siemens Mobility for the ICE4!

change of timetable in December 2015.

Photo credit: Deutsche Bahn AG-Uwe Miethe

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presented the very first Supplier Innovation Award in recognition of particularly innovative products and services which support the Deutsche Bahn AG portfolio and also exhibit a high level of innovation and sustainability. In specifying the criteria for the award, DB sought professional help from the Fraunhofer Institute for System and Innovation Research, ISI Karlsruhe.

This ensured that the criteria are based on international standards and that the method for identifying suppliers who demonstrate an aboveaverage innovation level is applied internationally. In contrast to the list of companies nominated for the Supplier Awards, contestants for the Supplier Innovation Award had to apply for the award on the basis of the published entry conditions. The central criteria were the level of innovation and uniqueness of the submitted entry, its application potential and capacity for integration, as well as its sustainability and contribution to earnings.

The winner of

1994 The year that

Deutsche Bahn was founded

the 2016 Supplier Innovation Award is Siemens AG, Division Mobility for the overall product ICE 4. Siemens received the award in recognition of the highly innovative character of the ICE 4, the great flexibility it affords for train configuration and the interior fittings, which make better use of the available space. All of these aspects were developed in close cooperation with the project team at DB. Thanks to its innovative engineering, modern travel comfort and prizewinning design, the ICE 4 ushers in a new era of high-speed transport. This is the backbone of our future long-distance concept.

We shall increase our range of longdistance services by 25 percent by

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Photo credit: Deutsche Bahn AG-Jochen Schmidt

the year 2030, linking up more cities and regions with one another.

The innovative engineering is based on lightweight trailer bogies with inner bearings, SIBAS PN electronic vehicle steering and a modular drive system consisting of independent powercars with identical traction technology.

This method, a joint development

by Siemens and Bombardier, enables flexible configuration of the ICE 4 to meet different traffic requirements. The 12-part train is driven by six powercars.

Despite its high seating capacity for

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830 passengers, the 12-part train is comparatively lightweight. Compared with an ICE 1 with 12 trailer coaches, the ICE 4 has an unladen weight of 670 tons, roughly 120 tons lighter than its predecessor. This reduction in weight has been achieved by using a new type of trailing bogie with inner bearings, which is significantly lighter than the previous bogies. Moreover, the unpowered end cars can be fitted with aerodynamic shrouds. This means that energy consumption per passenger seat is up to 22 percent lower than that of a modernised ICE 1.

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Like all models in the ICE fleet, the ICE 4 also has an air brake with additional dynamic brake which recovers energy during the braking process and feeds it back into the traction grid.

The DB long-distance transport division is planning to implement its largest ever range of customer services by the year 2030. By then, it intends to expand its range of longdistance services by 25 percent, which means the different regions and metropolises will be linked more frequently, faster, more directly and more comfortably. There will be an

additional 150 ICE connections per day and up to two ICE connections per hour between Germany’s major cities. The ICE 4 will play a key role in this development. At the end of 2016, the ICE 4 underwent exhaustive testing under real passenger operating conditions and is scheduled to begin regular operation when the timetable changes in December 2017. It will then gradually replace the previous ICE 1 and ICE 2 fleets.

The next DB Supplier Awards and Supplier Innovation Award will be presented at the next Innotrans

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in September 2018; entries for the Supplier Innovation Award can be submitted from the end of this year.

DB Procurement at the Railway Forum 2017 In 2016, the InnoTrans was not the only important trade fair for the Deutsche Bahn procurement organisation. In February 2016, the fourth Railway Forum took place with Deutsche Bahn as competence partner. The Railway Forum is a meeting place where more than 500 managers and decision-makers from the railway industry get together to discuss future developments, trends, challenges and key strategies for their sector. It is attended by executives from the Deutsche Bahn procurement and engineering organisations, system manufacturers, suppliers from all parts of the value

chain, political decision-makers and leading scientists.

This year, Uwe Günther (CPO, Deutsche Bahn AG) and Kay Euler (CTO & CQO, Deutsche Bahn AG) again served as patrons of the conference. The Railway Forum 2017 will take place in Berlin on 30 and 31 August and will focus on the topic: “Competitiveness 2025: The Innovation Agenda of the Mobility Industry”.

For more information, please visit: www.railwayforumberlin.com WiFi for everyone, everywhere In this digital day and age, passengers expect WiFi as part of the travel experience and politicians have also clearly demanded “Free WiFi, also for second-class

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passengers”. The Deutsche Bahn WiFi project (WLAN@DB), which is part of the corporate “Zukunft Bahn” quality programme, has responded to this challenge and WiFi has meanwhile been available free of charge in the second-class coaches of ICE trains since 1 January.

“WiFi will also be available free of charge in the second-class coaches of ICE trains”: this was one of the promises that DB had made to its customers at the beginning of 2016.

DB kept its word and officially announced on 1 January: free WiFi was available on schedule as promised.

Our telecommunications procurement department had to tackle some major challenges related to the procurement of on-board Wi-Fi. But with a great team and excellent teamwork with our end user, DB Long Distance, the procurement process was destined for success. In summer 2016, we completed the contract award process for on-board Wi-Fi hardware, which has meanwhile

been installed. In autumn 2016, we awarded the contracts for SIM cards and data to three providers: Telekom, Vodafone and Telefonica.

Installation of the new technology was a huge project: some 250 ICE trains had to be fitted with the new WiFi equipment within just 16 weeks.

The ICEs now have state-of-the-art WiFi equipment provided by the Swedish company Icomera. It makes use of the fastest data networks (LTE, UMTS) of all the mobile radio networks along the railway line and can bundle the capacities of several network operators. In the past, it used only the Deutsche Telekom network. Each passenger in a second class coach now has access to a data volume of 200 MB per day, which means they can now send and receive e-mails, chat and surf the net without any problems. Passengers in first-class coaches have access to an unlimited data volume.

German Unification Traffic Project lineside signals: the latest high-tech control system

Photo credit: Deutsche Bahn AG-Pablo Castagnola

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THE TARGET FOR 2017: BERLIN– MUNICH IN FOUR HOURS

High-speed trains will soon be able to use the entire new line at speeds of up to 300 km/h. They will take customers between Berlin and Munich from city centre to city centre in record time, making train a genuine alternative to car and plane. German Unification Traffic Project No. 8 (VDE 8), the link between Nuremberg and Berlin, is nearing completion. The new-build Erfurt–Leipzig/Halle line went into operation at the end of 2015 and all the new line sections between Nuremberg and Berlin will be ready for use in 2017.

This 10-billion-euro project was

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resolved by the German government back in 1991 in order to improve traffic connections between eastern and western as well as northern and southern Germany. At the same time, it closes the gaps in the German highspeed rail network. The new lines will also be used by freight trains.

This new route offers enormous potential for implementing bestpractice traffic concepts and marks the start of a new era of railway travel.

The inauguration of the newbuild Erfurt–Leipzig/Halle line in December 2015 (VDE 8.2) significantly increased the pace of

east-westbound traffic: passengers travelling between Dresden and Frankfurt now reach their destination one hour earlier. The upgraded and new-build Nuremberg–Erfurt line (VDE 8.1) through the Thuringian Forest will reduce the journey time between the major cities in the south and north of Germany by up to two hours. The journey time between Leipzig/Halle and Berlin was already reduced by half, to roughly one hour 15 minutes, when the upgraded line (VDE 8.3) went into operation in 2006.

RADIO-CONTROLLED TRAFFIC: ERFURT-HALLE/ LEIPZIG IS THE FIRST LINE IN GERMANY TO RECEIVE A NEW LINESIDE CONTROL SYSTEM

The European rail network is becoming more and more modern and the technical systems of the individual countries are gradually being harmonised. Work is currently underway on the installation of the European Train Control System ETCS, one of the major

elements for promoting the integration of railway operations between the individual European countries. ETCS is ultimately intended to replace the more than 20 national train control systems that are currently in operation in Europe. The core element is the permanent radio communication between the train and line control centre. This new technology will make rail connections faster and safer as there will no longer be any need for the time-consuming changeover between the different systems when the train crosses a national border.

The first German route to be equipped with the new system went into operation between Leipzig/Halle and Erfurt in December. This line, which is part of German Unification Traffic Project No. 8 (VDE 8), is now one of the most modern railway lines in Europe and, thanks to the automatic control system, can be used at speeds of up to 300 km/h. This would hardly be possible with conventional technology, as a train driver can no longer monitor and respond to signals manually when travelling at speeds of between 250 and 300 km/h.

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Photo credit: Deutsche Bahn AG-Max Lautenschläger

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The first anniversary of the International Procurement Office Asia: a look back One year after it opened in November 2015, our International Procurement Office (IPO) Asia can be proud of its first achievements. Our IPO Asia colleagues travelled nearly 250,000 kilometres over the course of the first year. The team visited suppliers at over 30 locations in China, Japan, South Korea and Taiwan, and established contacts with the procurement departments at the Chinese and Japanese rail companies. They saw many excellent suppliers that can manufacture in accordance with European quality standards and are equipped with state-of-the-art production and testing facilities.

At the end of 2016 we concluded a

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master agreement with the Chinese company Railteco. The agreement provides for Railteco to manufacture a total of 17,000 hollow shafts by 2019. The shafts will be used to secure cargo on the freight cars.

This is the first framework agreement which has been signed with the support of the IPO. Railteco is a spare parts provider which has evolved from a small-scale manufacturer to a global player.

CPO Uwe GĂźnther travelled to Shanghai to officially sign the agreement on November 16. The first purchase order has already been submitted. The first 2,100 shafts were successfully tested and are now on their way to Germany. The first delivery is expected in March 2017.

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The team is currently assisting with 10 procurement procedures. Uwe Günther (CPO Deutsche Bahn) reported on his trip to China and Japan in November 2016: “This trip was highly educational and

strengthened my belief that the decision to open a procurement office in Asia was correct. Asia has enormous potential and it is up to us to exploit that potential in the interests of our internal customers so that together we can identify the best product for our passengers.”

Sustainable procurement at DB Railsponsible’s activities in the past and the coming year Since 2015, Deutsche Bahn has been a member of the rail industry initiative Railsponsible which promotes a sustainable and efficient supply chain in the rail industry. In 2016 Railsponsible

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Photo credit: Deutsche Bahn AG-Claus Weber

Last year, our International Procurement Office Asia: • Identified almost 300 suppliers • Began the qualification process with 50 suppliers (including eight who participated in db tenders) • Signed the first ipo framework agreement in november 2016 (for hollow shafts) • Generated nearly eur 1 million in potential

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was happy to welcome its seventh member, the Swedish company Svenska Kullagerfabriken (SKF).

By the end of 2016, about 1,200 railway industry suppliers had been invited to take the EcoVadis assessment: around 480 of these companies participated and agreed to share their results with all Railsponsible members. Railsponsible doubled the number of supplier assessments over the course of last year, compared with the figure of 240 supplier assessments at the end of 2015. This was a key achievement for our new initiative that was made possible thanks to efficiency for both suppliers (who only need to fill in the questionnaire once and results are made available to all Railsponsible members) and also Railsponsible members (all members use a common standard and are in close contact with suppliers).

Railsponsible also finalised its 2020 Strategy which defines its roadmap for the coming years. For 2017, Railsponsible’s main focus will be the implementation of all the work streams of its 2020 Strategy, namely:

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• #1 Empower staff members and executives: share training tools and resources on sustainability and sustainable procurement, plan common training kits for buyers • #2 Build common programmes: work on common activities around GHG emissions, health & safety, and eco-friendly products, develop recommendations for updating member companies’ Codes of Conduct • #3 Railsponsible stakeholder engagement: target prioritised events to promote a responsible railway supply chain, apply for membership to the United Nations Environment Programme’s 10YFP Sustainable Procurement programme Connected to the latter, in 2017 Railsponsible will also contribute to impactful discussions at a number of high profile events on sustainability and rail industry gatherings. So far Railsponsible plans to be represented by its members at conferences such as Produrable (March 2017, Paris), EcoVadis Sustain (April 2017,

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Photo credit: Deutsche Bahn AG

During Uwe Gßnther’s recent fact finding trip to Asia to assess the need for a procurement office in the region, Uwe also visited China to meet with Railteco to formally sign a new supplier contract.

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Paris), 5th Railway Forum (August 2017, Berlin), Sustainable EUROPE Submit (October 2017, London), as well as Annual Global Strategic Sourcing and Procurement Summit (September 2017, London).

The member companies attending these events will be more than happy to answer any questions visitors may have on Railsponsible.

For more information, please visit: www.railsponsible.org StationGreen The Deutsche Bahn pilot project StationGreen promotes the construction of particularly climatefriendly railway stations in Germany.

‘The Deutsche Bahn pilot project StationGreen promotes the construction of particularly climatefriendly railway stations in Germany’

Ecological sustainability is a key criterion for making decisions about the construction and modernisation of railway stations. If the construction process has already begun, we concentrate on ecological optimisation to make the future operation of our stations climate-efficient.

On launching its StationGreen pilot project, Deutsche Bahn is implementing a construction programme for particularly climatefriendly stations in Germany. This pioneering project puts state-of-the-art ecological standards into practice.

In future, these stations will feature green roofs, building materials made of sustainable raw materials and high proportions of glass. They will also

use geothermal, photovoltaic and rainwater percolation technologies which, amongst other benefits, will permit carbon-neutral operation of the passenger buildings in future.

The first two stations are already up and running: since 2014, trains at Kerpen-Horrem in North RhineWestphalia depart from a green station. The second green station, in Lutherstadt Wittenberg in SaxonyAnhalt, was inaugurated in December 2016. The projects are funded by the regional governments, from Deutsche Bahn’s own funds and Kerpen-Horrem station also received financial support from the European Union’s INTERREG-IVB programme.

In addition to these ecological

aspects, the new station buildings offer passengers additional convenience such as digital reception facilities, which allow the customer to access comprehensive information and to communicate directly with service staff via a monitor.

The broad-based sustainability concept of “StationGreen” in Kerpen-Horrem and Lutherstadt Wittenberg points the way forward for the overall ecological design of our railway stations.

By delivering on StationGreen and such a wide range of other procurement projects in the coming months, Deutsche Bahn will continue to deliver excellence for its passengers and corporate clients.

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Photo credit: Deutsche Bahn AG-Christian Gahl

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SUPPLY CHAIN: THE GREAT ENABLER Written by Tom Wadlow Produced by Richard Durrant

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HP EMEA’s supply chain continues to strengthen the company’s market-leading position in printing and personal systems, helping it to better deliver for customers on a day-to-day basis. Listed at number 17 in Gartner’s top global supply chains, the combination of agility, brain power and strength is paying dividends for all stakeholders

“

Firstly, our supply chain is important for our customers.

The way we interact with customers, and take, update on and deliver orders is driving customer satisfaction,” says Volker Schmitz, Vice President and Head of EMEA Supply Chain at HP Inc. His mission: for the supply chain to go above and beyond for customers, delivering a competitive advantage for HP’s business and its partners.

On November 1, 2015, after 76 years of innovation, the printing and personal systems divisions became a standalone business as HP Inc., with servers, storage, networking and services forming

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Hewlett-Packard Enterprise.

Such has been the seamless transition to what is now HP Inc., it is testament to the multifaceted and hugely complex work carried out by a company-wide crossfunctional team that the business, and therefore customers, have suffered no disruption. In fact, the company’s global market position has actually strengthened over the course of the past year.

“The separation was the greatest cross-department collaboration the company has ever seen,” Schmitz explains. “The complexity was simply huge. Within Supply Chain we have changed so many

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HP INC.

structures, systems, logistics routes, supplier relations and organisational structures, and to do it in under a year was a huge achievement for the company.” HP also had a 76-year legacy to honour, an identity and hallmark of quality that is vitally important to keep intact.

Transition complete, the new company is already starting to reap dividends from a more flexible, agile supply chain setup, backed up by what is still a $48+ billion Fortune 100 organisation. “What has changed the most is our agility and how we are running our company,” Schmitz adds.

“Before the separation our strategy was extremely broad, ranging from cloud services and software to various products, but now we are focused on two major franchises – personal systems and printing.”

With fewer organisational layers to navigate, quick decision making between strategically-aligned senior management has facilitated flexible, rapid development. A more nimble employee base of approximately 50,000 compared to 300,000 under Hewlett-Packard has also helped

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create a leaner organisation.

If HP needed any more proof that progress is being made, Gartner has listed its global supply chain as the 17th best in the world with a perfect 10 in corporate social responsibility, identifying the company as a long-term leader in this area. Not only is HP delivering satisfaction for customers receiving its products, but also economic and social empowerment for the communities in which it operates.

The great enabler The supply chain is an important enabler in a number of areas, from customer satisfaction and cost effectiveness to cash flow and sustainability.

The ultimate result of a world class supply chain operation is to deliver numerous benefits to customers in terms of efficiency, reliability and cost, whether these be corporate clients running large scale business operations or a consumer ordering the latest HP PC or printer.

Schmitz and his team keep close tabs on net promoter scores,

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which assess the likelihood of customers recommending and promoting HP to others. What they have found is a clear correlation between improvements in speed and predictability of the supply chain and boosts in this customer satisfaction metric.

A key part of this is engagement between HP’s operational teams and its customers. Through continual dialogue and feedback, the company is able to communicate clarity and ensure reliability and responsiveness in its service. Strong customer engagement has doubtlessly lead to enhanced net promoter scores across the organisation.

Internally, HP’s supply chain is an enabler of cost effectiveness and ultimately increases in margins and profits. “We are in a business which does not allow mistakes on pricing,” Schmitz adds. “Our margins can be tight, so we are very focused on costs and making savings every day and every week.

“Cash flow is a big focus for us as well. It is not just about how we manage our inventories but also

50,000 Number of employees at HP

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about how we manage our suppliers and customers. Cash is king and there are times where this is as important as cost reductions.”

Personal systems and print powerhouse The ultimate consequence of continuous supply chain improvement is that HP can now deliver to customers its best ever product portfolio. It is the worldwide leader in commercial PCs, workstations and printing, and outright leader for all PCs and printing in EMEA. Add to this renowned graphics solutions and rapidly-growing 3D printing prowess, and it becomes clear that the supply chain requirements to fulfil this stature are formidable.

Schmitz explains: “Although we have just two distinct franchises, the variety of products and consequent supply chain needs are huge. Within printing we start with volume printers and corresponding supplies, and end up with graphics solutions and now 3D printers. A 20-metre long printing press will

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require a very different supply chain compared to an ink cartridge that we sell millions of every year.

Within Personal Systems we have high volume PCs and customised solutions, to high end workstations and accessories, which require targeted supply chain solutions.”

HP’s supply chain scale To grasp an idea of the sheer scale of the supply chain operation required to keep HP’s global engine room running, Schmitz breaks down oftcited annual numbers into facts and figures by the minute. Every 60 seconds the company ships 35 PCs, 26 printers and 280 ink and toner cartridges into more than 100 countries in Europe, Middle East and Africa – a supply chain which does not sleep.

“We can talk about billions of dollars and millions of units over the course of a year, but something more tangible to grasp the scale of HP’s supply chain is to picture what we ship in a single minute,” Schmitz says. “This is operating 24/7 and needs to be active 365 days a year.”

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“We can talk about billions of dollars and millions of units over the course of a year, but something more tangible to grasp the scale of HP’s supply chain is to picture what we ship in a single minute”

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Orders are manufactured by a network of factories across the world, with the company’s largest factory base being in Asia.

Regional factories nearer to key customers handle more specific, complex requirements. Distribution is handled through a network of distribution hubs and subcontracted logistics activities. Centres of excellence right across EMEA, staffed by hundreds of workers, manage this huge supply chain.

A considerable amount of activity is outsourced via several vital partnerships with big manufacturing and logistics companies. A very early adopter of the outsourcing concept, Schmitz believes that this is a crucial component in HP’s ability to achieve scale and remain agile.

2015

The year HP Inc. was founded

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Corporate citizen The environmental and social sustainability performance of HP is another area which stems from its supply chain, recognised by Gartner with a perfect 10 rating for Corporate Social Responsibility.

Environmentally, the company has

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three major goals in place to achieve by 2020. These include commitments to using 40 percent renewable energy in global operations with a long term goal of 100 percent, zerodeforestation associated with HP paper and paper-based packaging, and a 25 percent reduction in its product portfolio’s greenhouse gas (GHG) emissions intensity compared to 2010. The supply chain is already one step ahead in this regard; HP’s supply chain is already 20 percent less GHG intensive than it was just six years ago.

HP is also reducing the environmental footprint throughout both its value chain and product lifecycles by shifting both product design and business models toward a materials- and energy-efficient circular economy. HP innovations that support a circular economy include core technologies such as inkjet and LaserJet cartridges made with closed loop plastics and breakthrough technologies like 3D print solutions as well as transformative business models that offer printing and personal

systems as ongoing services rather than products to buy and replace.

On the social side, HP has a vital role to play in the communities it is present. This is no more apparent than in China, where much energy has gone into boosting economic areas inland. Schmitz explains: “We have been working closely with the Chinese government to establish economic activity inland, as historically a high proportion took place on the coast. We piloted the first factory inland which actually turned out to be a far better setup as workers don’t need to relocate for their jobs, and the area benefits from the development both of the factory itself and surrounding infrastructure.”

Such infrastructure includes the development of what is known as the new Silk Road, a train route connecting inland China with Duisburg in Germany, via Kazakhstan, Russia, Belarus and Poland. Opened in mid-2011, the line now carries up to five trains a week full of HP goods, greatly reducing turnaround times and cutting costs.

And HP continues to pursue further development of this route. Recently,

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printers produced in southern China are also shipped via this route.

HP has also been championing the rights of workers in the supply chain for decades. For instance, in China the company has been working with its manufacturing partner to ensure legal rights in areas such as overtime payments. “Sustainability has been one of the best kept secrets about HP, but Gartner has rightly pointed it out as an area where we excel,” Schmitz says. “The big commercial customers are very conscious about where their goods come from and more and more this is becoming a key part in contractual agreements.”

In Europe, HP was in a leading position in supply chain management when it became visible in the revitalisation of the Greek port of Piraeus. Schmitz continues: “In the past all of our sea freight into Europe went via Rotterdam, but several years ago we identified an opportunity to go via Greece and worked closely with our partners to develop the harbour.

We have used that base to reduce costs and turnaround times while also supporting the local economy.”

5 pillars of success – Customers first The success criteria for a supply chain are often measured with financials, however for HP it is determined by the satisfaction of customers. And this means catering to wide ranging set of requirements.

Schmitz explains: “Different customers have different expectations, for example we know that big corporate customers want something different than a European retailer in our distribution channel. In some areas predictability is the key to customer satisfaction, in others it is about speed or special services.

As well as using our own internal metrics, we communicate a lot with customers about their metrics of evaluating us to see whether we are performing the best we can.”

In recent years a concept of a ‘perfect order’ was introduced, which not only measures delivery performance but also follows the concept of the right product, at the right time, in the right quality and with the paperwork at the customer. A series of projects

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triggered strong improvements in the performance towards customers.

Some supply chains are more internal, however reaching out directly to customers helps HP to bring more external perspectives into the supply chain. For instance, managers in Schmitz’s team are all made an operational sponsor of a corporate account, which involves direct interaction with key customers to further improve the service provided to them.

Operational excellence “First and foremost we need to run an operation that is the best it can possibly be, and there are many ways you can look at this,” Schmitz says.

A supply chain function will never

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operate at its best when not closely embedded into business processes and functions. It is key to be a reliable partner for internal stakeholders to deliver on their objectives such as revenue and market share. In addition, it is also about influencing other functions on programs which improve the end-to-end process, such as projects around forecast accuracy.

“On the one hand we can judge by our success in the market, which proves we can deliver the 35 PCs every minute. But on top of that we need to look at how we deliver those 35 PCs – you could simply do it with a lot of firefighting, but we are firm believers in strong process management.”

This means drawing on a network of experts who own various processes in the supply chain. For each process HP has identified a process manager who is always looking for ways to improve, using all available metrics to make informed decisions.

Automation is another area which is helping HP boost operational

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excellence. Robotics and smart automation techniques hosted in the cloud are taking on manual, repetitive tasks, cutting out human error and speeding up important processes.

Around 300 such smart robots are currently operating at HP worldwide.

World class financials “A supply chain is not just responsible for simply producing and delivering, but doing so within a sustainable cost frame. We are in a business where competition is tough and products can change every two or three months. Whether it’s planning, sourcing, producing or delivering, we have functional owners who operate with the mantra ‘make it better’, finding new opportunities to save money on a component wherever they can or improve processes to reduce costs or improve cashflow.

This ultimately helps us to have competitive prices on the market.”

“For me this is a triangle made up of inventory, costs and customer satisfaction, and balancing on the tips of this triangle is what we must do,” Schmitz adds.

A winning team Continuous development of employees makes up the fourth pillar. Employees based in European centres of excellence pool together knowledge from different functions into one place, which is backed up by extensive training programmes.

“In supply chain it is very important that we have specific skills and capabilities, and to ensure that we have very targeted development programmes, whether it be on analytics and spotting trends

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in data or being certified to run big projects,” Schmitz says.

“As a company we have a new learning concept which involves a greater focus on interactive ways of learning, not just training classes but online support and groups which connect people looking for the same outcomes.”

Futureproof through innovation Finally, and perhaps the most significant in terms of strengthening HP’s position at the front of the printing and personal systems industry, is supply chain innovation.

“To operate a supply chain as described, it is also important to spend sufficient time and energy on innovation and improvements – this is what often is called ‘Bi-modal’, Schmitz continued.

One example in a series of initiatives to drive innovation is Instant Ink, a new subscription service to cater for replacement ink supplies. Customers pay a monthly fee and in return receive ink as soon as the printer communicates to HP that it is running low – this

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ensures a continuous supply of ink while removing the need for clients to manually order.

Schmitz explains: “If you have a printer and run out of ink the usual step is to visit a contract supplier or retailer to acquire more, but we are asking why this can’t be done for you. We started this in several countries and are seeing huge growth rates and, because it is so easy, customers continue using it.

It is one of the fastest growing web services in the world – and for us it is like a digital supply chain.”

In the future, Instant Ink is likely to fill printers made with components that have themselves been printed.

While 3D printing is not new for HP, the latest product launches are based on technology that the company has developed in-house with its own intellectual property.

There are many implications for the supply chain when launching new categories like 3D printing, where a new ecosystem will need to be generated with a new supplier network.

“The really compelling thing is

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A 20-metre long printing press will require a very different supply chain compared to an ink cartridge that we sell millions of every year

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that we have started to 3D print components for our own printers,” Schmitz says. “There is no reason why we can’t print plastic components and when we started to change the design of those plastics, it has helped us to realise strong cost savings. We believe this can change the way manufacturing is done in the world, and HP is in a position to lead the growth of this. We are partnering with companies in sectors such as automotive, fashion and chemicals to explore opportunities and speed up this development.”

It is innovation in areas such as subscription printing and 3D printing technology that will allow

HP to maintain its global marketleading status, with Schmitz determined to deliver this at a sustainable cost and at speed.

He adds: “The quicker and cheaper we can develop this, the more we can increase volumes and make it a profitable venture. We did this with thermal inkjet printers decades ago, and we can disrupt the market again.”

Continual innovation in the supply chain will be key to enabling HP to further improve customer satisfaction levels in the months and years to come, maintaining a competitive advantage not only for itself but also its network of partners around the world.

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Leaders of transformation

in times of change

Written by Tom Wadlow Produced by Heykel Ouni 93

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DHL Supply Chain is looking to build on a proven track record in the Middle East by introducing transformational services it has long provided for clients around the world. With economic conditions in the region changing, now is the right time for businesses to evaluate their supply chains

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ith change and challenge comes opportunity. It is no secret that the economic realities in the Middle East have transformed markedly over the past year thanks to sharp falls in the price of oil, the longstanding bedrock of the region.

But, with businesses seeking to make adjustments to their supply chains or expand further down the value chain to open up different revenue streams, opportunities for the economies of the GCC to diversify are opening up.

Enter DHL Supply Chain. As the contract logistics division of DHL,

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which has more than 40 years’ experience in the Middle East with DHL Express, the supply chain unit is looking to build on the bridgehead it has formed in Saudi Arabia since 2003. Proven provider of key supply chain services in the energy and health sectors, the company is in a position to help navigate clients from all industries through new challenges that lie ahead.

Nick Murray has been DHL Supply Chain’s General Manager in Saudi Arabia for three years.

Having worked for the company in emerging markets across Europe and Asia for the past 16 years, he

Nick Murray General Manager Saudi Arabia

Murray joined DHL in 2003 and has spent most of his career developing emerging markets such as Central Europe, Asia and now the Middle East. He is responsible for the Saudi Arabian business unit; encompassing service provision for numerous blue chip customers in the Energy, Engineering, Healthcare and Consumer Goods sectors. DHL Supply Chain’s services in the country range from the Distribution of Oil Field Supply Materials across Saudi Arabia; global collection and importation into the Kingdom of engineering parts for major industrial plants and also medical supplies and foodstuffs supply chain services. Before taking up his present role, Murray was the Vice President of Sales for North Asia based in Shanghai and prior to that, the Managing Director for DHL Supply Chain in Hungary and Romania, all roles with a focus on expanding DHL’s business presence in markets undertaking considerable change. Before joining DHL Murray started his career in international companies, listing only a few for Mayne Nickless Logistics in Australia and SE Asia, P&O in Eastern Europe and Nestlé in the UK. In these roles Murray developed a passion for operations management and for engaging with diverse teams from many cultural backgrounds, all working together to serve a variety of customer demands and challenges and meet their changing strategic requirements for the supply chain. Nick holds a Master’s Degree and a Bachelor of Science Degree from the University of Huddersfield in the UK. In his spare time he enjoys walking mountains, cycling and scuba diving. Murray is a keen traveller with his wife and family enjoying the vast variety of local culture in the region.

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“Companies in the Middle East have been forced into re-evaluating the ways they do business, and this is where we can step in and help” is now charged with implementing the sorts of transformative services provided by DHL Supply Chain in other parts of the world. And there is no better time to do so.

“Companies in the Middle East have been forced into re-evaluating the ways they do business, and this is where we can step in and help,” he says. “There is also a firm belief that the Gulf should play more of a leading role as a logistics hub for the Middle East and Africa region, even the world.”

New times, new services The scope for businesses to transform their supply chain processes excites Murray, who describes some of the new services that can be offered to companies all over the Middle East.

“Examples of these include taking on inventory ownership for clients to

release inventory off of their balance sheets,” he explains. “We will then provide the physical logistics services on top of the inventory ownership service. We have also taken over assets in companies’ supply chains, for example warehouse networks that may have been acquired off the back of a long term logistics deal. These are the types of big structural transformations that we see as being hugely relevant for businesses in the Middle East today.”

Leveraging the power of DHL’s global operations is another huge advantage that can be rolled out to clients in the region. Through divisions such as Express and Global Forwarding, DHL Supply Chain is able to collect products from vendors all over the world, transport into Saudi Arabia, clear customs and deliver to customers’ doorsteps. “This allows them to

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access a global network of potential suppliers and maintain control of their supply chains,” Murray adds. “We effectively cut the middle man out.”

The Middle East public sector is another area which DHL Supply Chain is likely to approach, drawing on successful examples from the UK. The company recently won a bid to procure, supply and distribute uniforms for London’s Metropolitan Police force. DHL Supply Chain also has a long-standing partnership with the country’s National Health Service, which involves the procurement of consumables and nonpharmaceutical products.

In the aviation arena, a partnership with a food production company has enabled British Airways to reduce flight turnaround times and cut down on waste in its supply chain. Murray explains: “We’ve designed specific vehicles with two decks to optimise the loading and unloading process, meaning we can get the catering and cleaning crews on at the same time, cutting down time spent preparing aircraft between flights. The waste food is recycled into dried pellets which heat up water to clean trays, which can then be reused.”

It is these sorts of innovations to the supply chain which Murray believes can greatly benefit transforming businesses in the Middle East during times where change is needed to tackle fluctuating economic circumstances.

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or materials for oil companies. This DHL Supply Chain’s track record is certainly an area we are looking for operational excellence in to expand our involvement in.”

Saudi Arabia and the region Health and safety guardian makes it well-placed to expand Beyond operational excellence, and innovate its offerings. an uncompromising and Indeed, for a major energy client, determined stance towards health DHL Supply Chain processes over and safety has also helped to 700,000 orders a year, collecting establish DHL Supply Chain as from a pool of 3,500 suppliers a trusted partner in the region. and delivering to Unbeknown to 4,000 drop points. many is the fact that Alongside providing Saudi Arabia’s roads such enormous are something of a scale, the company death trap. In 2013, is also delivering 99 7,800 people died on percent of orders on the country’s roads, The year DHL Supply time, a remarkable around three times Chain SA was founded feat given the large the rate seen in the and challenging likes of Australia, the geography of Saudi Arabia.

United States and much of Europe.

Healthcare is another firmly “One third of the hospital beds established market for DHL Supply in the country are taken up by road Chain in the country. Murray traffic accident victims, meaning expands: “We already distribute there is a massive drain on the healthcare products within Saudi economy and society because Arabia, anything from heart valves people are simply driving too to dialysis equipment, which cannot dangerously,” Murray says. “As a go through the same network as result of this we have a leadership spare parts for the automotive sector role to play in our industry and

2003

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“We are winning over hearts and minds in regards to health and safety, and as an employer we have a major duty to deliver on this” with our employees – it is all about how we change attitudes towards road safety, it is about engaging with employees every day.”

At the company’s main facility, a huge banner reminds departing employees about the importance of driving safely, with icons illustrating messages about mobile phones, seatbelts and controlling speed and stopping distances.

All DHL Supply Chain drivers undergo thorough defensive driving courses, while telematics devices are fitted in every vehicle, with new forward facing in-cab cameras also being tested. These will provide real time data on driver behaviour, alerting the company on metrics including speed and breaking harshness.

This all helps generate league table reports on drivers which are then used in feedback sessions to help

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boost employee engagement.

“We are winning over hearts and minds in regards to health and safety, and as an employer we have a major duty to deliver on this,” Murray says. “A lot of progress has also been made with our major energy client. For instance, we have a world safety day initiative and competitions for staff and families to design posters, which all feeds into a culture we are trying to create.”

People power A key part of this company culture stems from the fact that 70 percent of DHL Supply Chain employees in Saudi Arabia are natives. Typical levels of Saudisation for international companies stand at anywhere between 15 and 30 percent.

“It is very unique for a foreign company to adopt anything like

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the level of Saudisation that we have, and this is not anything new either,” Murray says. “We have had this track record for years and have gone beyond simply hitting government quotas – we’re doing it because it benefits our business and customers.”

Around 850 of the company’s 1,000-strong workforce are blue collar workers such as drivers and warehouse operators. “We were told it would be difficult to find and retain many Saudis in these roles,” Murray says. “The opposite has been the case.

“Through our engagement processes we have ensured that people remain with us, for example our rounds of internal training feed into certifications on a DHL passport which they carry round with them.

This is all part of building a global corporate culture where employees

feel a true part of DHL Supply Chain.”

Staff awards have been another important component of employee engagement since 2011, while global annual surveys provide extensive feedback and requests on all manner of issues, from improved toilet facilities to explanations of wider DHL strategy to provide a more meaningful context to everyday work.

Thanks to a firm footing in countries like Saudi Arabia and a reputation for operational excellence, the company’s highly-skilled and motivated workforce is well-placed to help businesses in the Middle East negotiate times of change.

And through replicating the sorts of transformative supply chain services already provided around the world, DHL Supply Chain is ready to assume the position as regional transformation leader.

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Driving energy efficiency within the UAE and beyond Written by Catherine Rowell Produced by Heykel Ouni 107

With a vision to serve GCC countries, the GCCIA aims to extend its operations within an efficient power market, providing excellence in power systems integration

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orking in collaboration with six different member states, the GCCIA has diversified its operations within the energy and electricity sector, with a desire to expand into further markets overseas. With an increased focus on the development of the grid, the authority is continually looking for opportunities to provide savings and drive market growth whilst ensuring increased energy efficiency.

CEO Ahmed Ali Al-Ebrahim has been behind the company’s growth since its inception, stating: “The vision of GCC countries is that more renewables are being planned. The UAE has announced their 20/20 Expo vision, part of that task is to achieve 44 percent of renewables by 2026.”

By looking to export to other countries such as Jordan, India, Pakistan, Turkey and towards Europe, the GCCIA is also aiming to drive business towards Africa and is considering the potential of hydropower. Al-Ebrahim continues: “The Minister of Energy has recently announced plans that within the next six years, Saudi Arabia will be

undertaking $40-50 billion of renewable investments”, the key question being how the GCC will be able to integrate large volumes of renewables into its current and future strategic framework.

Since its inception, the volume of trading within the GCCIA in 2016 exceeded 1.5 million megawatts of power in 2016 alone, placing an increased emphasis of the importance of the grid and its focus on reliability for member states. By continuing to open channels of collaboration with global leaders, the GCCIA has become members of GO15, one of the largest power grid operators in the world, of which the GCCIA is the only member from the Middle East. By also signing an MOU with the Réseau de transport d’électricité, the national operator for the grid in France, Al-Ebrahim explains “we are always working with other companies in a bid to bring value and facilitate our role in order to reach our goals”. Furthermore, the company has become a member of the Edison Electric Institute, which Al Ebrahim says “brings a wealth of experience and utilities which can be used as a platform to share knowledge,

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common interests and ideas”. of trading, the largest ever volume of Through collaboration with member trading the company has ever seen. states, Al-Ebrahim explains that in Al-Ebrahim adds: “The GCCIA has 2016, the main thing the company saw a key role in providing these kinds was “the desire of CEOs in the GCC of economic utilities for the GCC to utilise the GCCIA as the connection and achieve the level of savings for a power trade platform, not only for that we have currently achieved.” electricity but for commercial deals Through expansion, the company that make them save money aims to not start from or make money”. As a scratch, but partner result, the GCCIA with large names has encouraged within the region member states to and finalise utilise the GCCIA the model interconnector for 2018. for the GCC Al-Ebrahim Power Trading explains: Number of employees at project, which “Now we GCC Interconnection implemented are achieving Authority two schemes around $400 of trading, carbon million, but the trading and cash trading. potential could reach Al-Ebrahim commented, more than $1 billion, “With carbon trading, users pay back which we can take advantage of.” the energy they consumed through Undertaking joint collaborations will the use of energy, whilst cash trading see the creation of an entity or power enables users to pay for consumed exchange platform, of which several energy through traditional payment.” discussions to achieve this goal have This method has enabled the company been undertaken. Al-Ebrahim adds: to achieve 1.3 million megawatts hours “The platform will be primarily a power

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grid platform, set on a commercial basis that allows members to easily bid and pitch for deals for power trade and exchanges. Power exchange is something we want to achieve this year, because all the leads we had last year were based on bilateral discussions and bilateral deals that the GCCIA may or may not have had involvement in. We want our exchange platform that is based on international practices like other areas.”

Partner power The company continues to utilise an informed client model, outsourcing maintenance operations, which Al-Ebrahim believes is best to deliver the highest possible quality of service whilst allowing a reduction in cost.

He explains: “Every year we try to optimise the model by reviewing

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the scopes and required work, as well as looking for other alternative suppliers.” Every year the company has worked to consistently reduce costs, ensure quality control, whilst continually building knowledge through the collaboration with key experts, engineers and service providers. He continues: “The GCCIA is in a very good standing in terms of maintenance and service operations.

With all our work, we ensure it does not compromise reliability – reliability is our number one.”

However, achieving sustainability is vital towards the company’s global outlook in order to connect with other regions and provide economic value.

To this end, the GCCIA has recently reviewed its financial and commercial model, enabling it to gain a larger portfolio of investments to reinforce

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“The vision of GCC countries is that more renewables are being planned.

The UAE has announced their 20/20 Expo visiown, part of that task is to achieve 44 percent of renewables by 2026” –A hmed Ali Al-Ebrahim CEO

its position and financial situation.

Al-Ebrahim says: “We are open to new channels of business so that we achieve sustainability in the long-term and so that we can rely on our own income.” It is believed the company has saved around $400 million in 2016 alone, at which Al-Ebrahim adds that the company will see every year a delivery in savings, which is “a very encouraging sign that the GCCIA is moving in the right direction”.

This year the company has had a change in Chairmanship, which rotates every three years to promote fairness and transparency. In April, chairmanship will move from the UAE to Bahrain, who will then chair the current board for three years. With the

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GCCIA’s long-term goal to expand and diversify, the company is awaiting results from a current study which will highlight the highest economic visibility and provide the best practices in operation and maintenance, not only to optimise the role of the GCCIA but to enable the company to take advantage of events which are occurring in the UAE and GCC countries. In order for this to come into fruition, the GCCIA is also partnering with Nord Pool, who will provide key software and upgrade previous technologies which are now outdated and unfit for purpose, in

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order to provide a world-class energy saving alternative to current methods.

The GCCIA will continue its role to coordinate all operations and planning with regards to setting energy efficiency targets for all GCC member states to hit. Al-Ebrahim concludes: “By doing this kind of planning in a collective way we are saving each member state a big percentage of their investment requirement, which was one of the main elements of the emirates feasibility of this project – it means we are reducing the investment requirement of each member state.”

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Delivering for the KSA Written by Nye Longman Produced by Heykel Ouni

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H Expanding its offering to customers, Hala SCS is also contributing to Saudi Arabia’s economic diversification

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ala Supply Chain Solutions (Hala SCS) is not content with resting on its laurels; in just over a decade, the company has certainly accrued an enviable list of local and international clients.

With the Saudi Government’s Vision 2030 gathering pace, Hala SCS is keen to make a meaningful contribution while expanding its offering to customers big and small. As its brand new warehouse in Jeddah nears completion, we speak to Pieter Spaarwater, the company’s CEO, to discover how the company is achieving this.

He says: “Hala’s strategy and immediate five year plan is to provide world-class supply chain solutions to the Saudi vision 2030 industry diversification objective and as such further contributing towards the economy and creating jobs.”

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In our supplier relationships, we try to incorporate collaboration, and that’s been our success story to a large extent” – Pieter Spaarwater, Hala SCS CEO Operations With the lofty aim of becoming the go-to supply chain company for the entire Kingdom, Hala SCS also wants to do so while retaining the strictest sustainability standards. All told, the company’s footprint covers around 125,000 square metres of warehouse space, spread across facilities in Dammam, Riyadh, and Jeddah, among others.

One of the Kingdom’s fastest growing companies, Hala SCS has 100 percent private Saudi ownership, divided equally between Arabian Hala Co. and Basamh Group. The company ship and clear around 350,000 tons of cargo per year, and it employs around 600 permanent workers.

“Our transport solution include a combination of in-house fleet as well as contractually manage sub contracted transport vendors,” Spaarwater adds.

“We carry about 7,000 to 8,500 loads per month. Our external relationships

are extended by having contacts with logistics providers and direct relationships with shipping lines. We are FIATA and IATA accredited so we can custom clear products for landing on any land or sea border throughout the Kingdom. To ensure effective and efficient utilisation of our fleet of trucks we make use of route planning tools and measure this plan against actual movement of the truck.

From a customer perspective, Hala SCS offers clients a comprehensive transport solution, covering everything from sub-contractor management, transport brokerage, and optimally-loaded, fully tracked route management capabilities. Deploying the latest technology, the company is able to

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monitor and streamline driver behaviour and track shipments in real time.

Hala’s abilities to provide a comprehensive one-stop supply chain solution include warehousing, freight forwarding and customs, records solutions, asset optimisation,

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and contract logistics. The business has worked with a wide range of leading companies across various industries, including FMCGs, pharmaceuticals, automotive, and industrial equipment, as well as energy, oil & gas, and mining companies. Hala differentiator has been its ability to provide value to its clients, recognising the need for customised solutions and value added services additional to the core functions listed. “Our technology and tools provide

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A client can have visibility on where the product is in the supply chain, whether it’s in the warehouse, on a truck, or the port” – Pieter Spaarwater Hala SCS CEO

visibility across the supply chain,” Spaarwater explains. “We have been the leader in providing distribution technology applications and solutions in Saudi since our inception.

Technology is an integral part of our internal solution to our clients that also involves process and people.

“We have a transport management system as well as a clearing system, which is integrated so a client can have visibility on where the product is in the supply chain, whether it’s in the warehouse, on a truck, or the port.”

Expansion With a market-backed plan to enhance its customer offering over the next five years, Hala SCS is poised to capitalise on the diversification of the Saudi economy while doing so sustainably. Over the past decade, the Saudi economy has grown by an average of four percent annually – it is now the 17th largest economy in the world according to recent GDP figures.

Spearheading Hala’s growth trajectory is its new, state of the art warehouse in Jeddah. The 36,000 square metre facility

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‘With a winning combination of talent, investment, and strategy, Hala SCS is offering a service houses package to the a number Saudi market of value like no added services, including re-works, other’

quality assurance and control, as well as dangerous goods handling capabilities.

“The warehouse is part of our expansion plan and is an element of our integrated supply chain solution that we offer to the trade,” Spaarwater explains. “It’s temperature controlled and has state-of-the-art material handling and equipment to better serve our clients in the surrounding areas of Jeddah, Makkah and Jizan, as well as the industries in Jeddah industrial areas 2 and 3.

“It’s not just an expansion drive - we already have warehouses in Jeddah and Riyadh. It’s really more to improve the quality of our warehousing service from both a cost effectiveness point of view as well as service ability. It is part expansion and part improved quality,” he adds.

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Valuing people In support of both operational excellence and streamlined working, Hala SCS has a sustainable approach to people management that extends from its staff through to its partners.

“In our supplier relationships, we try to incorporate collaboration, and that’s been our success story to a large extent, as well as being transparent.

The reason for the relationships is to further extend the skills and capacity of the company,” Spaarwater explains.

He adds that Halas’s strategy for talent development begins on day one: “It starts with recruitment, making sure we appoint the right people for the right job, which requires quite an extensive process. It starts with a proper job description and profile.

“In some cases we headhunt, and in others it’s just general employment.

We have career paths for staff that perform well. We offer a lot of on-the-job and classroom training - we believe in empowering our people,” he adds. “We have a very strong performance management programme with objective targets that we review on a regular basis in oneon-ones and performance reviews.”

MIDDLE EAST

For its efforts to develop local talent, Hala SCS has been endowed with platinum accreditation for Saudisation, an award that not only recognises the depth of its HR policies, but also makes the company well-placed to handle government contracts. With a Saudi workface now exceeding 30 percent, the Hala SCS represents a top performer in the market. “Coming from South Africa I was sensitised to what the old system did wrong,” Spaarwater recounts. “Being aware that local empowerment is important, we are fully committed to the Saudisation programme. We have strong career and succession plans in place.”

With a winning combination of talent, investment, and strategy, Hala SCS is offering a service package to the Saudi market like no other. Committed to full support of the Kingdom’s 2030 vision, the company is going from strength to strength and is likely to continue along its upwards growth trajectory for years to come.

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Procu place rement in ban ’s king Writt en by Wed Prod a uced

by He eli Chibe lu ykel Ouni shi

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N AT I O N A L B A N K O F A B U D H A B I ( N B A D )

WE SPEAK TO JASON BROWN, HEAD OF GROUP PROCUREMENT AND COMMERCIAL MANAGEMENT AT THE NATIONAL BANK OF ABU DHABI ABOUT PROCUREMENT, ABOUT WHY THE DEPARTMENT IS IMPORTANT TO BANKING

T

he National Bank of Abu Dhabi (NBAD): leading Middle Eastern bank, among the world’s safest banks, and has one the strongest combined ratings ever. These details can be gleaned from a simple web search, but what is known of the inner workings of the Bank? What processes lie behind the ATMs, the cashier desks and advisory helplines?

We want to know how procurement and a low visibility department contributes to NBAD’s international success, so we speak to Jason Brown, Head of Group Procurement and Commercial Management.

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Brown tells us that procurement has a strategic value for any company it’s in, let alone NBAD. “We contribute to the bank, we’re not just a service department,” he continues. “We actually value add to what we do to our customers internally.”

Brown heads procurement for all of NBAD’s services, which comprise personal, commercial and private banking. The bank spans five continents, operating in countries like Malaysia, the UK, Brazil and the US. Alongside his department, Brown helps manage these procurement operations too. “The team that I run

MIDDLE EAST

Jason Brown

Head of Group Procurement and Commercial Management Jason Brown Joined NBAD in 2012 with the remit to set up and run centralised procurement.Since his time at the bank he has led the team where it is today as a leading procurement organisation within the Middle East. The team was awarded the best Sustainable Procurement Award from CIPS in 2016. His previous role have been with major organisations such as Novartis Pharmaceuticals, Downer EDI, British American Tobacco and Dana Corporation. His experience is financial, pharmaceuticals, FMCG, automotive and electronics.He currently has MCIP’s and is working towards getting FCIP’s.

is full strength; we’re 41 people. I’ve just lost three good people in the last year and a bit, but they’ve all gone on to senior roles in other companies. It’s very hard to retain when you’re top of the game, unless they want my job,” he laughs.

“The good thing is that we’ve got the right people, because obviously, they’re moving on to bigger and better things,” In total, Brown’s team manages around 45 percent of the operational spend and has one core strategy – to reduce NBAD’s operating costs. By reducing spending the bank can maintain a lower operating base and an increased net profit ratio. The procurement department is split into four sections:

• Invoice, processing and payments (procuring low-value, everyday items) • Strategic (sourcing large spend, large cost items, such as software and hardware) • Supplier relationships (managing vendor onboarding, governance, business compliance and operational risk) • Market data

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MIDDLE EAST

“THE BANK HAS VERY STRONG TIES ON SUSTAINABILITY. WE DO A REPORT EVERY YEAR, AND PROCUREMENT IS A LARGE PART OF THAT IN TERMS OF HOW WE MANAGE THE SUPPLIER DATABASE, AND HOW WE DO BUSINESS WITH PEOPLE”

Market data is a relatively new interest for the procurement department.

To make sure that bankers remain informed, the procurement team sources financial data feeds from a broad range of data providers such as Bloomberg and Reuters. “For us, market data is the key thing that drives all of our traders,” Brown explains.

“If you’re looking at the trading floor, moving commodities and moving money around the trading market, we need accurate, up-to-date information about how trends are moving, so traders need to have the right information we deliver that to them.”

The procurement team also provides NBAD traders with feeds from NASDAQ, FTSE, and other global stock markets. These, along with the data feeds from Bloomberg and Reuters etc., allow the staff to carry out their jobs to the highest standards.

“If we don’t ensure that they’ve got the right tools (and there’s multiple tools and multiple data feeds) they can’t make informed decisions as to what to do with the global market,” Brown adds. Procurement uses a

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N AT I O N A L B A N K O F A B U D H A B I ( N B A D )

complex IT infrastructure to handle all this data. So, not only does procurement source the data, it manages it and controls it within the bank. Jason and his team are able to work closely with the IT department, as NBAD’s IT is mostly in-house.

“It is our largest spend unit that we deal with within the bank; they’re accountable for over 40 percent of NBAD spend,” Jason adds.

Safety first NBAD may invest a lot in IT, but Brown stresses that operating costs must be kept as low as possible. Among other results, this contributes to NBAD’s ‘safest bank’ accolades. It has been ranked by Global Finance as the

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Safest Bank in Emerging Markets and the Safest Bank in the Middle East.

“We’re the safest bank because we have high capital, we meet the certain requirements in terms of how much capital we have in reserve in certain areas, in case there was a run on the bank and things like that,” Brown says.

“By keeping costs low, procurement helps maximise that return to the bank.

The less money we have outgoing, the more we can reinvest into capital and assets. And by having a strong asset base and a strong capital base, that helps us be a safe bank. So, the more influence we can have on our operating costs and keeping our operating costs down, the more that influences our position on the bottom line.”

MIDDLE EAST

Corporate citizen How does procurement push costs down without forsaking ethics and sustainability? Brown explains: “The bank has very strong ties on sustainability. We do a report every year, and procurement is a large part of that in terms of how we manage the supplier database, and how we do business with people.

Our policy is clearly mandated.”

Brown’s team conduct investigations with suppliers to make sure that NBAD isn’t associated with practices such as slave labour and child labour. “We take those seriously and we will investigate if it is brought up to us, we have a supplier portal where we do

a lot of supplier due diligence, making sure we’re dealing with the right partners,” he explains.

The procurement team is also committed to supporting local Abu Dhabi companies wherever possible. Brown explains: “Quite a chunk of NBAD spend is spent locally with Abu Dhabi companies to keep the money sustainable within Abu Dhabi and the UAE.”

7,500

Number of employees at National Bank of Abu Dhabi

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Khalaf Sultan Bin Rashed Al Dhaheri

Group Chief Operating Officer Mr. Khalaf Sultan Bin Rashed Al Dhaheri joined NBAD in 1997. Mr. Al Dhaheri previously served as General Manager and Chief Risk Officer. Throughout his career with NBAD, Mr. Al Dhaheri has held senior positions and gained comprehensive knowledge of the Bank’s operations. In July 2012, he was promoted to Group Chief Operating Officer. Mr. Al Dhaheri supervises a range of functions such as Operations, Information Technology, Enterprise Projects & Architecture and Group General Services. Mr. Al Dhaheri is Deputy Chairman of Abu Dhabi National Islamic Finance (ADNIF), Chairman of Abu Dhabi National Properties (ADNP), Chairman of Massar Solutions, a Member of the Audit Committee in Abu Dhabi National Oil Company (ADNOC), and a Board Member of Masraf Al Rayan, Drake & Scull and the Emirates Institute for Banking and Financial Studies (EIBFS).

Mr. Al Dhaheri graduated from the UAE University with a Bachelor of Science degree in Accounting and has earned an MBA from Zayed University. He is a Certified Public Accountant (CPA) through the California Board of Accountancy.

Future growth Brown reveals further progressive plans: “So the West East corridor, that’s been our strategy for the last couple of years. The corridor is where some of the megacities of the world are going to be and they’re the most important markets coming up, and the idea is that we support those companies in the UAE that are actually investing in those areas; in Singapore, in Africa, in Hong Kong, those sorts of areas.”

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MIDDLE EAST

Brown uses the example of Etihad, the second-largest airline in the UAE. “We want them to bank with NBAD, not only in the UAE, but in Singapore and Hong Kong as well, for example.” For NBAD to support its customers and investors in this way, Jason recognises that the procurement team delivers its strategic value.

“We get the best commercial deals that help the bank maintain its competitive advantage in some areas, but make life easier for the people getting the service as well,” he states. Jason plans for the procurement team to continue pushing the bank forward in the next few years. “We do a lot of good things and we’re seen in the community as not only banking, but procurement. We’re known in the Middle East, especially as a team that’s doing what we do, in the right way.”

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Service Corporation International’s (SCI) corporate headquarters in Houston, TX

The business of empathy Rone Luczynski describes how he and his team have transformed SCI’s supply chain business processes to best serve the funeral needs of the US and beyond Written by Nell Walker Produced by Denitra Price

S C I S H A R E D R E S O U R C E S , L L C A N D A F F I L I AT E S

If

unfamiliar with the name, one wouldn’t be able to guess that the vaguely-entitled Service Corporation International* specializes in the provision of funeral goods and services across America, plus parts of Canada and Puerto Rico, and yet it is the largest of its kind.

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Its founder, Robert L. Waltrip, was the first person ever to consolidate funeral and cemetery locations under one umbrella. Today, Rone Luczynski and the procurement and supply chain team at SCI are working to leverage the latest in technology for a 10-year project designed to

S U P P LY C H A I N

SCI associates at the corporate office

help the company’s funeral homes and cemeteries better serve families during their time of need.

Luczynski has dual roles at SCI – he is the President of the Procurement Division and Senior Managing Director of Supply Chain, in charge of all procurement activities. He has worked

at the company for eight years and has a long history of re-engineering supply chains at Fortune 500 retailers.

“That’s why I was asked to come here,” Luczynski explains. “SCI was a decentralized company which hired a consultancy to come in and do a strategic assessment 10 years ago.

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SCI was just buying locally, locationby-location, and needed someone to centralize that process. My strategy is that of a center-led, retail-based supply chain, and we’ve been working on a 10-year transformation initiative in three phases.”

The transformation Luczynski’s transformation consists of three shorter road maps: a fiveyear road map, a three-year road map, and finally a two-year road map. He and his team completed the first road map by 2013, and are currently in year two of the three-year road map, which alone is set to save the company an additional $22,200 during the process of streamlining.

Luczynski admits that the death care industry of was not something he knew anything about when the role was offered to him, and he turned the recruiter down more than once before taking on the challenge. Eventually, the lure of assisting in the transformation of a large corporation with almost 2,000 locations got the better of him.

“I didn’t know companies like this existed,” Luczynski explains, “and the main issue was that the industry was very far behind when it comes to supply chain and procurement maturity.”

Why? I ask. The answer is simple: “This sector is 80 percent independently-owned mom and pop businesses, so it’s not like Microsoft is knocking on their doors. There’s been a massive shift in the last eight years and software companies are now actually looking at our industry thanks to the advent of smartphones and mobile computing, so businesses are starting to invest, but that’s all still new. SCI is a large company and yet there are 22,000 funeral homes in the United States and we have about a 16 percent market share. There wasn’t a market for large-scale implementation of software in this sector before and that’s only just changing.”

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I didn’t know

companies like this existed

– Rone Luczynski, President of the Procurement Division and Senior Managing Director of Supply Chain The first five years of Luczynski’s transformation initiative involved a fundamental foundational change, focusing on people, processes, and technology.

“First, we had to hire the right people, and then begin documenting absolutely everything,” Luczynski says. “After that we were finally able to develop an item hierarchy and get systems in place; we began using Coupa’s Procureto-Pay system, ensuring we could track spend data and analytics.

This gave us the information we needed to move the company’s culture from a decentralized one to the center-led system so we could leverage our scale.”

Rone Luczynski

President of the Procurement Division and Senior Managing Director of Supply Chain

Due to the family-orientated nature of the business, this initial road map was made into a five-year road map as opposed to a traditional threeyear road map. In Luczynski’s words: “We’re never going to let our process get in the way of helping a family. Our locations do an amazing job each and every day helping families at a difficult time of need and we didn’t want to do anything to disrupt that relationship.”

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S U P P LY C H A I N

SCI Supply Chain team meeting

The three-year roadmap Luczynski is currently undertaking is more about leveraging the established procurement practices and expertise to move beyond SCI’s more traditional supply chain areas, and to focus on lowering costs in other sectors. Luczynski’s team has now bought more of Coupa’s services to aid with its current road map, as well as integrating procurement systems with the customer-facing contracting system, which saves time for the location and the customer.

“Right now, we’re focusing on much more integration in our systems, and a large portion of our effort from last year into this year has been all about talent development,” Luczynski says. “A top issue for CPOs recently has been about enhancing employees’ skills and ensuring their knowledge base is up-to-date so they can keep up with the changes occurring in procurement and supply chain, which shift with technology and R&D. We want to make sure all our folks are ready for that.”

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We’re the only company in this industry that uses J.D.

Power, and it’s engrained in our company and our customer service processes – Rone Luczynski , President of the Procurement Division and Senior Managing Director of Supply Chain Supply chain The entirety of SCI’s supply chain is managed internally (with the exception of some support functions, such as those offered by Genpact, and some transactional functions), so despite the unusual nature of the industry, SCI’s procurement is no different than any large retailer when it comes to supply chain processes.

The company boasts a fleet of 7,000 vehicles with a team to run it, and it manages about 80 percent of spend from its headquarters, which is no different from any other large business aiming for consistency.

to SCI. While one could be forgiven for assuming that a large corporation such as this might lose touch with the human element, a business focused on family services can’t afford to become detached. SCI boasts 24,000 employees, with 23,000 of them working on location, and those people have to be extraordinarily good at caring for families.

“Our employees are very empathetic, they’re really good at comforting families, and they don’t lose that. The only thing that’s changed

The customer Maintaining a focus on people is integral

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S U P P LY C H A I N

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is that when I got here in 2009, a lot of younger people were being brought in who are more tech-savvy; they were asking ‘why can’t you put this information on an iPad?’ The result is that they can give the customer a better experience and assist them even in their home.”

Luczynski’s team has worked hard over the past eight years and it has paid off thoroughly.

“We’re the only company in this industry that uses J.D. Power, and it’s engrained in our company and our customer service processes,”

Luczynski says. “In 2016 we were awarded the President’s Award, which in the history of J.D. Power has only been given twelve times.

So the people out in the field are doing a tremendous job, and we’re here to support them,” he concludes with absolute modesty. *As used herein, “Service Corporation International,” “SCI,” or the “company” refers to Service Corporation International and all of its affiliated companies.

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A SUPPLY CHAIN TRANSFORMATION Written by Nye Longman Produced by Charlotte Clarke

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CBRE

HOW ONE OF THE WORLD’S MOST TRUSTED REAL ESTATE COMPANIES IS LEVERAGING CHANGES IN ITS SUPPLY CHAIN TO DELIVER COMPETITIVE ADVANTAGES FOR CLIENTS

O

verseeing a supply chain transformation at the world’s largest real estate services company is no easy task. With around 90 offices in Asia – alongside thousands more affiliates and managed properties – the potential for CBRE to save its clients time and money was high.

Backing up a plan to triple its present operations in the Asia-Pacific region, the transformation could not be timelier. With a remit to centralise supply chain operations, roll-out new

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technologies, and up-skill staff, we speak to two executives at CBRE, Mat Langley and Graham Morton, about how this is being achieved.

Operations CBRE began its Asia operations nearly 40 years ago. The company’s first foray into the market began with entry into Singapore – a vital location which now serves as the country’s South East Asia regional hub, housing around 1,100 employees. Consistently growing, the company has attained a well-earned

ASIA

reputation as a leader in terms of commercial leasing, investment sales, residential project marketing and commercial asset management in a number of key Asian markets.

The company’s comprehensive offering includes transaction, facilities management, advisory, and a wide array of capital and asset management services. The company also retains a high degree of knowledge and capability, covering a range of industry verticals, namely hotels, industrial, logistics, and workplace solutions.

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PARTNERSHIP POWER How does Vertiv help CBRE to deliver excellence and value to its customers?

Vertiv designs, builds and services critical infrastructure that enables vital applications for data centers, communication networks and commercial and industrial facilities.

With a global network of expertise to draw on, the company has developed a flourishing partnership with CBRE. We spoke to Barry Bunyi, Director, Service Sales, Vertiv Asia, about the partnership and the mutual benefits brought by ongoing collaboration.

Describe your relationship with CBRE. What work do you do for the company?

CBRE is one of our most valued customers in the Asia region; our relationship with CBRE spans for over 15 years, and has blossomed into a mutually beneficial partnership in the past five to eight years.

Vertiv is CBRE’s most trusted critical infrastructure provider, delivering Data Center solutions and services for its customers; Vertiv’s offerings of Power, Thermal and Infrastructure Management Solutions and Services complement and complete CBRE’s facility management portfolio.

How does this work benefit the operations of CBRE and what does the partnership deliver for you?

Through our wide array of products, CBRE is able to cater to the various requirements of its end users, from small computer rooms to large facilities. As CBRE’s customer base broadens and its needs grow ever complex, combined with pressures around controlling costs and growing profitability, our ability to provide encompassing yet flexible solutions supplement CBRE’s profile as the single point of contact to their customers. The technical capabilities of our Customer Engineers allow seamless installation and startup services, project management,

and periodic maintenance enable CBRE to deliver what customers expect 24x7 throughout the life of the equipment supplied.

Our partnership with CBRE allows us to cater to its large customer base, increasing Vertiv’s install base across different segments and industries where CBRE has strong presence.

Are you looking to expand on this partnership in the future?

We continuously nurture our relationship with our key customers, and CBRE is no exception. There are customer verticals where CBRE is strong in, and there are those where Vertiv is strong - we will look to work hand in hand and deliver our offerings together to these identified segments and be able to successfully increase both our market shares.

We have been extremely grateful for CBRE’s continued support for Vertiv the past several years, and we look forward more success in the future together as strategic partners.

Barry Bunyi - Director, Service Sales, Vertiv Asia

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Transformation strategy “I’ve been in procurement for 20 years,” says Langley, who holds the role of Director of Commercial Management at the company.

Within a few months of joining, he had developed a business plan with change at the forefront: “Last year I joined CBRE, having previously worked as the Procurement Head for Citibank where I helped design and build a number of procurement activities. I saw the potential for CBRE to establish a leadership in the procurement space regionally, applying some of the practices that the finance industry has taken forward.

“CBRE is a creative and entrepreneurial company,” he adds. “In two months I put together a business case that we needed to improve on our productivity.

There was a service centre in

Manila but we wanted to move the supply chain management up the value chain to form a centre of excellence and productivity.”

Morton, in his role as CBRE’s Regional Sourcing Director, is responsible for the company’s supply chain solutions in the APAC region.

His hand in the transformation has focused on meeting the needs of the client. He explains: “Clients demand the best value - they want consistency, they want governance and they want flawless execution.

“They’re all coming from different places. For us, it’s being able to manage consistency and getting the best value to those clients in the right way, so that you’re not putting up any walls. This process starts with visibility. It is hard to execute strategies if you can’t see what you’re looking at – it’s providing real visibility on what

“IF YOU DON’T HAVE SUPPLY CHAIN OPERATIONS WORKING WITH YOU, YOU HAVE A SPEND LEAKAGE AND A RISKIER SUPPLIER BASE” MAT LANGLEY

DIRECTOR OF COMMERCIAL MANAGEMENT w w w. c b re . c o m

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CBRE

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The year CBRE was founded

we are doing and where we are going.”

Langley adds: “We will be moving the rest of CBRE to a cloud-focused organisation using Zycus. This migration will be significant for the firm, and throughout the transition period, we are using fit-for-purpose SaaS platforms Shortlist and Gatekeeper (eRFx/VMS and Contract Management tools respectively) to move the supply chain organisation along the transformation journey.”

Morton explains that the company is eyeing the next 18 months as the time to deliver the majority of

its changes – and that, after this time, the company will be far better equipped to deliver for clients. He says: “We will be continuing and accelerating the path that we have been going down and leveraging scale for our clients to the point where we are ahead of the procurement game and ready for further automation and AI opportunities.

“It’s about moving forward, from my perspective, and being at that proactive front end to create the solutions that give the clients the best value and superior

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“CLIENTS DEMAND THE BEST VALUE - THEY WANT CONSISTENCY, THEY WANT GOVERNANCE AND THEY WANT FLAWLESS EXECUTION” GRAHAM MORTON

REGIONAL SOURCING DIRECTOR outcomes in all their locations.”

Langley adds: “We have partnered with finance on an initiative to go through and improve operations and the accounts payable process.

We have strengthened the standard sourcing and supplier management foundations there; controls and risk management are more consistent across the supplier base.

“We have our insurance levels mapped to the vendors, and increased visibility in our supplier base, which we are managing closely.

Another work stream we are working on is to hit the rest of the Procureto-Pay process and really prepare for what we expect regulators are going to be focused on and what clients increasingly expect.”

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Delivering change From a training perspective, Langley is broadening skill sets in the supply chain management teams to include a stronger focus on stakeholder, change, and project management, through to developing strategic souring, category management and true vendor partnerships with an end goal of becoming a more trusted advisory/commercial consultant.

CBRE has reinforced this through setting up a productivity centre in Manila, which also houses a number of centralised supply chain functions.

“This improves spend analytics and management reporting,” Langley explains. “We centralised all the contract management here, which was previously handled at a

ASIA

country account level. We are seeing improvements in standardising contract templates across the region.

You can see where the gaps are, and really improving the insurance levels, risk, and control. And we’re also seeing faster adoption of technology and best practices.

“Having the vision and producing documents that people go ‘Wow – I can take that to the head of my country and explain what’s happening’ you really get some momentum.”

Delivering a revolutionary supply chain transformation across a relatively large, diversified business is not without its challenges. Old habits and technologies can often be difficult to change; the right approach to delivery is critical. Langley continues: “We had two businesses and five divisions that, while present in the same industry, have been operating differently. We have also had legacy technology and country complexity that has added challenges.

To this end, communication is key.

Langley and Morton are broadcasting the value that this transformation can bring to both the business and

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its clients. Langley explains: “This is really helping us move from the perception that we are just doing the buying and getting a couple of quotes. Supply Chain Solutions is moving from the back office to the executive level and creating major value.

“Support from our Suppliers has also been key.

Suppliers such as SBM and Securitas have been open to the changes and different way we want to work with them. From better alignment of incentives through the use of outputs based pricing to increased operational performance management reporting.”

CBRE has set in motion a supply chain-led transformation that will enable it to become more intimately involved in the operations of its clients, while simultaneously hardwiring excellence across the entirety of its operations.

Langley concludes: “Most of my career I was a negotiating category manager. I used to do the deal and didn’t care about the buying process.

“What I realised at Citi is that if you don’t have supply chain operations working with you, you have a lot of leaking of spend and a risker supplier base, which will cause the best category and negotiation strategies in the world to crumble.”

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EXCELLENCE

in manufacturing, sales and after-sales Chevrolet is the preferred and leading brand in Colombia thanks to the outstanding work of GM Colmotores, a production, logistics, distribution and aftermarket service pioneer

Written by Mateo Rafael Tablado Produced by Taybele Piven Interviewee: Rodrigo Godinho, VP and Director of Global Purchases and Supply Chain, General MotorsColombia and Ecuador; and Juan Carlos Landรกzuri, VP of Manufacturing and Quality, GM Colmotores

GM COLMOTORES

G

M Colmotores, a subsidiary of General Motors Company in Colombia, boasts 60 years of experience, throughout which it has strengthened its vehicle manufacturing, distribution and sales operations. Colmotores is not only lauded a forerunner in vehicle assembly operations, but is today the acclaimed leader in vehicle body manufacturing.

Colmotores operations reached a major milestone thanks to its Free Economic Zone (FEZ) designation in 2012. This launched a new stage for Colombia’s vehicle manufacture.

Embracing GM company guidelines, adopted in more than 30 countries throughout five continents, has also boosted the Colombian operation for the guidelines provide models to refer to: the equally competitive GM operations in India and Mexico.

“Colmotores has improved its level of competitiveness, quality and supplier relationships, but we are currently especially competitive locally,” says Rodrigo Godinho, Vice President and Director of Global Purchasing and Supply Chain (GPSC) for General Motors, Colombia and Ecuador.

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The staff at Colmotores undergoes demanding training programs

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MobilTM congratulates General Motors for its 60 years of success in Colombia.

Š 2017 ExxonMobil. All trademarks used herein are trademarks or registered trademarks of ExxonMobil Corporation or one of its subsidiaries.

We celebrate the trajectory of one of the leading companies in the country, and more than a decade as strategic allies with the highest performance lubricants in the market.

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Godinho is a mechanical engineer who graduated from the University of Sao Paulo, where he also acquired a Masters in Quality Management.

Notably, he continuously sharpens his exceptional leadership skills at institutions such as Harvard. The Brazilian executive has experience in supplier development, worked for the US corporation as an accessories and spare gears purchaser, and been involved in projects within Brazil as well as abroad – namely the launch of the highly successful Chevrolet Onix – after which he led projects under the title of Vice President for Colombia and Ecuador.

Excellence in manufacturing, sales and after-sales

Thanks to strong support at the industrial level, as well as dedicated (and creative) efforts to get the product to where it should be, GM Colmotores offers a wide range of vehicles for all purposes. The Chevrolet Spark (Life and GT), Sail, domestically manufactured

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Your promise. Delivered.

MAERSK LINE & GENERAL MOTORS IN COLOMBIA: A PARTNERSHIP THAT CONTINUES TO SAIL For more than 10 years, we have been constantly driven to help General Motors to deliver promises for satisfied customers in Colombia.

Maersk Line’s expertise in shipping has been an important asset for General Motors (GM) in Colombia. Here are reasons why we continue to be the best partners in what we do: WE DELIVER ALL THE TIME, EVERY TIME

WE PROVIDE SOLUTIONS

General Motors in Colombia imports over 6,000 containers every year, with 80% of its materials coming from Asia. From ensuring materials are delivered on time to assembling vehicles with the highest quality standards, we both ensure that we deliver on what is really important: our customer’s promises.

We come in with meticulous planning and contingency managment with the common goal of delivering precious cargo to our customers.

WE COMMUNICATE AND PRACTICE TRANSPARENCY We at Maersk Line connect with General Motors on all aspects of the business. A clear communication is key to propel business ambitions and we have a clear partnership of trust for both our businesses.

We at Maersk Line are confident in doing business with GM in Colombia because we want to deliver the promise of the best customer experience. Together, we continue to propel business ambitions on a global scale. Our businesses grow from our constant innovation of products and services. And with every shipment that travels across oceans, our partnership strengthens well into the future.

Click the Youtube button to learn more about this strategic alliance.

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“Logistics can be quite challenging in Colombia. To improve competitiveness, multimodal logistics, including train freight and the Magdalena River, would perhaps be a good alternative with an interesting future” – Rodrigo Godinho, VP and GPSC Director of General Motors for Colombia and Ecuador.

buses and trucks, the Onix, Sonic, Cruze, the sporty Camaro and comfortable and practical trucks such as the Trailblazer, Tracker, Captiva, Traverse and Tahoe are but a few of the vehicles GM Colmotores has to offer. A network of 29 dealers across the country paired with colossal distribution efforts have made these vehicles available to Colombian drivers.

Likewise, many of the country’s leading companies trust GM Colmotores buses and trucks, as well as vehicles, to make up the bulk (if not all) of their fleet – proof that Chevrolet is a recognized reliable partner.

The manufacturing process, including stamping, was implemented in recent years and transformed the company from an assembly plant into the country’s only automaker. Today,

the company manufactures the components it once had to import from abroad. Interestingly, and perhaps serendipitously, the limited availability of automation suppliers resulted in having to train a group of employees to become specialized in robotic integration for the production processes.

Under an initiative developed in 2011, today, 30 robots have been integrated into the assembly as well as the car body welding lines.

“These are advances that allow us to maintain a competitive edge.

The milestones reached here have repositioned the brand and today we are Colombia’s manufacturer of choice,” says Juan Carlos Landázuri, Vice President of Manufacturing and Quality for GM Colmotores.

Originally from Ecuador, Landázuri is a mechanical engineer who graduated from the Tecnológico de

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Somos una empresa confiable, emprendedora, flexible y humana.

FANALCA, manufacturer of radiators, condensers, AC lines and Steel autoparts, congratulates GM Colmotores on their 60th anniversary contributing to the industrial development of Colombia. ncortess@fanalca.com.co

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In 2015, following the implementation of an energy management system, work that was carried out in conjunction with the United Nations Industrial Development Organization (UNIDO), Landázuri was invited to present this program to a forum in Vienna, prior to a world leaders’ summit on climate change in Paris.

Rodrigo Godinho VP and Director of GPSC of General Motors for Colombia and Ecuador

Monterrey (Monterrey Technological Institute) in Mexico, and also holds a degree in Business Administration from Ecuador’s IDE Business School. Landázuri has been with GM for 17 years now, perfecting his efforts at four of its production plants: one in Ecuador, two in Brazil, and, for the past year, as Manufacturing and Quality Operations Director at Colmotores.

Top-level technology in each vehicle

All GM Colmotores vehicles boast the latest technological advances.

Most of these technological developments focus on driver safety, meaning accident prevention, no matter how small they may be.

Blind spot warning, front distance control, reverse camera, automatic and semiautomatic perpendicular or parallel parking assistance and automatic light changes are just some of the features offered by the latest vehicles.

For its part, the ChevyStar system, an innovative remote diagnostics system for vehicles, will be, among others, a preventative security and

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GM COLMOTORES

Every part is now locally available, importing supplies is no longer necessary

ALUMINUM WHEELS

STEEL WHEELS

HEAVY SUSPENSION

LIGHT SUSPENSION

BRAKES AND FRICTION

BRAKE FLUID

CLUTCH DISCS AND COVERS

MOTORCYCLE PARTS

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sustainable mobility solution for the country, as it contributes to the development of smart cities.

Now in its eighth generation, it relies on small sensors located in various parts of the vehicle so that it is able to provide service maintenance notifications, report tire inflation volume, fault codes and other diagnostic.

“ChevyStar is something we are proud of. We have pioneered this type of support system,” declares Landázuri.

to the dealer network in such a way that external conditions such as a driver’s strike would hardly affect Colmotores’s operations.

“Logistics can be quite challenging in Colombia. The government has worked hard to improve its infrastructure, creating alternate roads such as the 4G highways.

To improve competitiveness, multimodal logistics, including the train and the Magdalena River, would perhaps be a good alternative with an interesting future,” Godinho points out.

Logistics: a solution for every challenge

Qualified suppliers

GM Colmotores’s logistics department, headed by Godinho, counts on different methods in order to complete each task and to generate efficiencies, resulting, on average, in a 30 percent cost reduction over the last two years.

The factory has its own transportation operators that handle inbound logistics and use a single provider for outbound logistics. In other words, vehicles are distributed

GM Colmotores has an excellent network of suppliers, able to comply with the company’s strict guidelines and requirements.

Suppliers develop new components quickly and efficiently and are open to the company’s suggestions and recommendations. Working openly has made it possible to locate many supplies at competitive costs without sacrificing quality.

All suppliers are evaluated by

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Juan Carlos Landázuri, VP of Manufacturing and Quality, GM Colmotores

a team of quality engineers to ensure that they are aligned with Colmotores’s expectations. Yearly supplier reassessments guarantee that QSB (Quality Systems Basics), ISO and other such internal certifications pertaining to each operation are maintained.

“We work transparently and communicate clearly. To us, this is key. Our suppliers feel comfortable, and we with them,” says Godinho.

GM’s global support and Colmotores’s contribution

Working for an auto giant like GM means that Colmotores operates under a set of tried and true

standards and guidelines. There is also an openness to share experiences with other subsidiaries in the area. Colmotores primarily reports to GM Brazil, South America’s headquarters, and subsequently to the global office.

The Brazil office receives the corporation’s support and best practices. As a result, its production volume is now the third largest in the world. It boasts a 25 percent local market share, placing it among the brands with the highest local market share in the automotive industry and making it a major global contributor for GM.

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“The milestones reached here have repositioned the brand and today we are Colombia’s manufacturer of choice” – Juan Carlos Landázuri, VP of Manufacturing and Quality, GM Colmotores

Development and preparation of the workforce

GM Colmotores offers virtual training, classroom training, and considerable backing from General Motors University.

One of Colmotores’s greatest responsibilities is maintaining employee satisfaction so as to prevent turnaround.

Surveys reveal an 89 percent employee satisfaction rate.

“We work hard so that inhouse talents choose to stay and make important contributions,” adds Godinho.

Sustainability policies and social action

Colmotores is certified as being

Welding and embossing procedures are also performed at the Colmotores plant

environmentally responsible. Efforts to ensure its efficient operation include sound savings programs and efficient use of water and energy. Colmotores is a benchmark in the region in terms of energy consumption per unit produced, and places second in lowest water consumption. Moreover, since 2014 its operation is certified ‘landfill free’, which means it does not generate waste that goes to landfills thanks to strict re-use and recycling programs.

Additionally, through the Chevrolet Foundation, Colmotores pursues various social initiatives that support improving the quality of life for vulnerable communities, and promotes sustainable mobility

programs and employability.

“We hope that all these programs make a significant contribution to reducing carbon footprint,” Landazuri concludes.

Excellent results with regards to exploration

GM Colmotores plans to continue growing in 2017 given the opportunities Colombia’s automotive industry has to offer. The work done so far has managed to catapult Colmotores among GM’s major plants based on manufacturing quality.

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