Supply Chain Digital magazine - August 2017 by Supply Chain Digital

Aug u s t 2 017

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DELIVERING PROCUREMENT IN THE DIGITAL AGE

TALKING BIZ WITH MILBANK + COVESTRO THE TOP 10 COUNTRIES FOR SUPPLY

CHAIN RESILIENCE

INSIDE THE LIFEBLOOD

OF HEALTHCARE SCD TALKS TO SCOTT ALLISON, DHLâ&#x20AC;&#x2122;S PRESIDENT OF LIFE SCIENCES AND HEALTHCARE

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FOREWORD WELCOME TO THE August edition of Supply Chain Digital. Healthcare is an industry looking to digitise, and DHL is supporting the supply chains of health organisations in 220 countries. We asked Scott Allison, President of Life Sciences and Healthcare, about his work and the challenges facing such a complex industry. Staying with healthcare, be sure to also read our feature with USAâ&#x20AC;&#x2122;s Banner Health about its supply chain operations and projects. One company making huge strides in the supply chain tech space is SAP Ariba, recent signatories of a huge contract with oil giant Saudi Aramco. CIO Marcell Vollmer discusses the companyâ&#x20AC;&#x2122;s latest research findings, which looks at the readiness of companies to digitise procurement operations. We also have an exclusive look into US manufacturing company Milbank. A market leader for 90 years, the business looks set to head into the future with a lean, technologically sound manufacturing process. We spoke to President Brad Skinner and Vice President of Purchasing Douglas Ubel. Other exclusive interviews this month come from Covestro, ID Logistics and FLS Transportation Services, among others. As always, tweet your feedback @SupplyChainD

Enjoy the issue!

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F E AT U R E S

PROFILE

INSIDE THE LIFEBLOOD OF HEALTHCARE

18 TECHNOLOGY

Procurement in the DIGITAL AGE 4

August 2017

10 26

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PROFILE

INSIDE THE LIFEBLOOD OF HEALTHCARE “IN NOVEMBER 2016, when I took on leadership of the DHL Life Sciences and Healthcare sector, it was very clear to me that this industry lags behind others in its digitisation journey,” remarks Scott Allison. “In particular, the life sciences and healthcare supply chain still has some way to go to achieve digital maturity.” 10

August 2017

A logistics veteran of almost 30 years, 24 of which spent with DHL, Allison is a proud Scot who now resides in Texas as President of the company’s Life Sciences and Healthcare division. His task – to aid the maturation of life science and health supply chains in the 220 countries where DHL operates.

Wr i t t e n by : TO M WA D LOW

DHL is supporting the supply chains of health organisations in 220 countries. We asked Scott Allison, President of Life Sciences and Healthcare, about his work and the challenges facing such a complex industry

This is no small task. However, since 2004 the German logistical giant has adopted a sector specific approach, a move which has allowed it to build up formidable expertise and experience in the heart of numerous industries. “In the DHL Life Sciences and Healthcare Sector, our scope of operations is extremely broad,”

continues Allison. “In effect, we work across every area of the life sciences and healthcare value chain including inbound to manufacturing (I2M), primary distribution, secondary distribution, and reverse logistics. These activities occur in all different parts of the Life Sciences and Healthcare industry, from clinical trials 11

PROFILE and R&D to cold chain distribution, medical device logistics, and final-mile delivery to patients.” Triple challenge Allison points towards three major obstacles facing supply chains in the health industry at the moment. The first is what he describes as a near-constant downward pressure on costs from an operational and regulatory perspective. Second is rising expectations of patients, fuelled by a greater understanding of medical issues and what can be offered – quality must rise while prices must fall. It is the third challenge that Allison believes ties the rest together, chiefly how digitisation can help companies address the first two challenges. He cites two examples to underline his point made from the outset: “In two other sectors – the technology sector and the automotive sector – the inbound supply chain uses vendormanaged inventory solutions, and has been for a long time. Although a common solution in these sectors, the vendor-managed inventory has hardly been developed in life sciences and healthcare at all. By the way, this represents a big opportunity 12

August 2017

for life sciences and healthcare companies to reduce costs. “My second example of digital lag is the near-absence of customer-driven supply chains. Inventory in a hospital is often controlled by surgeons with the tendency to order stock ‘just-incase’ rather than ‘just-in-time’. This type of system simply isn’t efficient; it can meet patient needs, yet modern supply chain techniques are proven to optimise inventory processes while

About Scott Allison Scott Allison is President, DHL Life Sciences & Healthcare. He is a member of Customer Solutions & Innovation Senior Management Team, a member of the Solutions & Innovation Board, DHL Life Sciences Supply Chain Board and heads the DHL Life Science & Healthcare Steering Committee and the Customer Logistics Advisory Board. He is responsible for driving growth and development of the global Life Sciences and Healthcare industry sector and oversees strategy and solutions development in addition to his commercial duties. Allison is a supply chain professional with over 25 years of experience and has been with the DPDHL GROUP since 1992, working both in the DHL Global Forwarding and Supply Chain organisations before moving into more commercial and strategic roles in the early 2000’s. Most recently, he led DHL’s Technology sector in the Americas, having previously led the EMEA region. In both regions he was responsible for the development and execution of DHL’s global Technology strategy, including the development and delivery of supply chain solutions, strategies and growth for some of the world’s largest technology companies.

positively impacting customer care.” While there are significant opportunities to improve the supply chain practices within the sector, Allison believes it is going to need a connected approach by all parties involved to make it a reality. In order to address these challenges, DHL presents and promotes the brightest supply chain ideas both from within life sciences and healthcare and other industries.

The company also helps clients to pilot some of these ideas and practices. “For example, currently we are collaborating with one of the world’s premier biopharmaceutical companies to pilot an innovative warehouse ‘vision picking’ solution in Australia,” Allison says. “We’re investigating the extent to which using augmented reality (AR) glasses increases productivity and cuts order picking costs compared with standard 13

PROFILE manual scanning processes.” Another example is a pilot with a multinational chemical, pharmaceutical and life sciences company to equip an entire warehouse with wifi infrastructure beacons. This ‘connected warehouse’ solution enables precise location of tagged items throughout the facility, and a virtualisation of the environment so that the operations can be optimised using heat mapping software. “The supply chain is becoming a much more strategic issue on boardroom agendas,” Allison continues. “Although logistics costs are relatively low in this sector – well below 1% of sales revenues – the extreme margin-squeeze that our customers are experiencing mean that both the indirect supply chain costs such as inventory, obsolescence and lost sales, and direct logistics costs, such as transportation and warehousing are coming under closer scrutiny. Better, smarter supply chains provide the answer.” E-health Indeed, the demand for smarter health is leading to a proliferation of services being delivered online. This is one of 14

August 2017

the most significant trends Allison believes will impact the industry in the coming months and years, especially when looking at the American market. “A key prescription drugs online dispenser has been delivering medicines by e-commerce for the past two years,” he says. “The company claims to practice ‘smarter’ pharmacy, putting medicine within reach of tens of millions of people by aligning with customers, taking bold action, and delivering patientcentered care at a lower cost. “Others in the life sciences and healthcare sector are sure to

I N S I D E T H E L I F E B L O O D O F H E A LT H C A R E

follow this lead with the intention of getting closer to customers while also lowering costs. Patients in Germany, for example, will soon be able to order prescriptions drugs from the most popular online retailer, in partnership with the country’s largest retail pharmacy.” Allison believes that, although still high regulated, market pressures will drive the industry further in the direction of providing care in the home, e-commerce being one solution to address this need. Mobile apps are among other technology solutions that will also enable this transition. The second big trend is the increasing segmentation of

product types to the point at which e-commerce becomes a viable option. Allison continues: “Currently, many pharmaceutical manufacturers have portfolios containing both high-end drugs and unregulated over-the-counter products. As the consumer end of this range expands, each organisation becomes ripe for ecommerce innovation, and take-up is likely to happen at a very fast pace.” This marks a shift in the way businesses approach supply chain issues Allison observes that companies were, up until a year or so ago, justifying the status-quo based purely on the cost of transport and warehousing. Today, the picture looks markedly different. Allison concludes: “Life sciences and healthcare companies are instead securing a holistic perspective. While working to cut the cost of air, ocean, road and rail freight and the cost of storage and distribution, companies are now also questioning the cost of inefficient inventory, obsolescence, lost sales, and decreasing customer loyalty. The answers they need are in part, provided by digitising the supply chain, paired with increasing velocity in the adoption of supply chain techniques.” 15

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TECHNOLOGY

PROCUREMENT IN THE DIGITAL AGE

The future is bright for procurement. So says Dr. Marcell Vollmer, Chief Digital Officer for industry software giant SAP Ariba Writ ten by: STUA RT HODG E

DR. MARCELL VOLLMER’S job is to be at the forefront of the transformation for businesses looking to embrace the latest digital technology and cloud-based solutions. He’s been doing some research into the some of biggest concerns for companies in the industry moving forward, and is passionate about ensuring that procurement remains just as relevant in the future as it does today. Vollmer’s research was focused on seeing how prepared companies feel they are for the digital transformation which is taking shape in the market place. The survey found that there is indeed work to be done, with less than a quarter of companies in the United States feeling that they were ready, and the number in Europe (although the

research focused mainly on Germany) sitting at not much more than 10%. But one thing, more than any other, is at the forefront of concerns for companies involved in procurement and supply chain, and that is how to ensure that talent can be brought in and kept within the industry. Vollmer says: “We wanted to ask ‘what are the key priorities and the challenges for procurement companies to focus on?’ “Across Europe and North America, asking for the number one challenge for the future, we mainly got the same response across most people we asked; that is the ability to attract, develop and retain talent across the procurement function. In terms of respondents, 55% replied back 19

TECHNOLOGY

with that answer in the US, 49% in Germany, and 41% in the rest of Europe, so that was by far the number one topic that we have seen as being the key challenge for companies in preparing themselves for the future. â&#x20AC;&#x153;When you look back at procurement, itâ&#x20AC;&#x2122;s not necessarily a very strategic function right from the beginning. You can probably say that modern procurement started in the 1950s or 1960s when it was more operation and process-driven, and it has evolved over time, in the 1990s particularly. We were then able to see by going deeper and focusing more, the impact that a company 20

August 2017

could create with a professional procurement function that was really huge, both with hard savings and soft savings, looking at the numbers and seeing how they impacted profit.â&#x20AC;? Different approaches? Although there is a shared belief across continents that attraction and retention of talent is the main challenge for the industry, what motivated SAP Ariba and Vollmer to conduct such detailed research was the discrepancy in perception between what executives in the US thought about how to best move forward into the new digital age and then contrasting that with

P R O C U R E M E N T I N T H E D I G I TA L A G E

what European experts thought. The key for him was to get “more empirical data to work with” about what the differences are to allow SAP Ariba to best facilitate the varying requirements across different geographical regions. Vollmer explains: “Our feeling basically was that a lot of German CTOs and procurement executives, and supply chain executives on the finance side, were a little bit reluctant in terms of moving to the cloud, addressing systems and thinking about the future of their organisational setup and we wanted to bring this into the discussion. “I’m asking people all the time ‘what are you doing today to respond to all the digital trends we’re seeing and what they might mean for your organisation?’ “Operational tasks, for example, are becoming more and more automated, so you don’t need employees to necessarily sit on two screens when, say, the left screen has a scanned invoice and maybe you have a menu of purchase orders on the right screen. On our platforms, you put in the information and the system does this in a better way than a human being can do it. “And that is far from the most exciting

task when it comes to procurement or an accounts table. Therefore, I was thinking about ‘how do you prepare yourself for the future?’ The organisational readiness, the process readiness, as well as the systems you are investing in… And then, how we are going to transform procurement to ensure that you stay relevant in the future and that you will have a seat at the table of the business. “Other CTOs were not really working intensively on these topics, they were waiting to see how things developed rather than arming and preparing themselves for the future. “From my understanding, it’s absolutely key that procurement needs to become more strategic and more embedded within organisations, and this means focusing on supplier innovations, risk management, sustainable supply chain, etc. These are the kind of areas that supply chain needs to focus on more and more, especially with the smaller organisations. That’s exactly where I think procurement needs to be now to be ready for the future.” With that in mind, Vollmer feels that procurement is now at a fork in the road in terms of how 21

TECHNOLOGY it prepares for the future. It needs to develop in such a way that it can help different areas of a client’s business to ensure that the necessary opportunities are provided to stay relevant in the future. Vollmer is adamant that there now also needs to be a focus on strategic procurement as well as being involved in automating operational and tactical tasks. Despite the widespread worry that automation of operational tasks will lead to widespread job losses, Vollmer is not worried about the future of the industry and says that it has to evolve to remain relevant. He adds: “Procurement will play, in the future, a key role to the benefit of the company in all of these different sides of the business. “It’s perfectly true that a lot of people will use things like artificial intelligence and machine learning, and also things like RPA, and we can see more robots and things like that coming into the agenda so therefore people will lose their jobs. But when you see it from the other side you can look at the many transformational changes in all the different industries over time, starting with steam power back in the 1760s which meant the transport 22

August 2017

“It is up to the politicians and the economy and all of the people involved in the industries to make this change happen” DR. MARCELL VOLLMER

system fundamentally changed and expanded with the use of trains. “Following that you had the era of mass production, and now we can see what computing has done for us in everyday life. You look at the kind of processing power you have on a laptop now or on a smartphone with apps, every platform today has more CPU than the entire Apollo space missions. “Now the tricky thing is that you can’t necessarily develop somebody who was focusing on processing purchasing orders, or working in an accounts payable department, into a data architect or something, to work

in a totally different field. That’s not realistic. But with the change that is coming in that way, it is also providing new opportunities and also giving room for additional, totally new industries, especially in the services area today. “Take Uber for example, how they are significantly transforming the network taxi industry. Of course, on one side, in a negative sense, you can see ‘they’re stealing jobs from taxi drivers’ but, when you look at the overall growth, Uber is not just taking out of the existing market, but it is actually generating a new market. That is also what we are seeing in different areas

where we are only at the beginning of a transformational change. “It is up to the politicians and the economy and all of the people involved in the industries to make this change happen. Not everybody will be a winner, but I’m pretty sure there will be lots of opportunities in the future and people will jump on that. We cannot imagine yet what all the additional technologies will provide in terms of opportunities and also what they will transform to help us to become better, to grow more and to hopefully contribute to the overall GDP.”

TOP 10

THE TOP 10 COUNTRIES FOR SUPPLY CHAIN RESILIENCE Which countries are the most resilient when protecting their supply chains? We investigate Edited by: ANDREW WOODS

Every year, FM Global, a mutual insurance company, ranks 130 of the worldâ&#x20AC;&#x2122;s countries on their supply chain resilience. Its Global Resilience Index is designed to guide business leaders in finding new investor opportunities, Selecting stable suppliers and identifing customers that could be vulnerable. The company assesses countries on a litany of factors including productivity, local supplier quality, inherent cyber risk, urbanization rate and eight other components that could pose a threat to its supply chain or make it more efficient.

TOP 10

10 QATAR Qatar offers many elements that earn it a place on the list of top 10 countries in terms of supply chain resilience. In addition to a high degree of security, the Middle Eastern country – the only one to make it to the list – is recognised for its efficient labour and goods markets as well as its macroeconomic stability.

UNITED STATES 09 (REGION 3) Given the geographic spread of the United States, the country is broken into three regions with Region 3 denoting the central area. Though this central area – which includes the states of Kansas, Colorado, Kentucky and South Dakota – is subject to a diverse assortment of natural hazards, including tornados, ice storms and floods, it still exhibits far less exposure to these potentially disastrous hazards than the areas to the east or west.

August 2017

S U P P LY C H A I N R E S I L I E N C E

IRELAND

08 FINLAND

Ireland makes a strong showing in this yearâ&#x20AC;&#x2122;s index due in part to its reduced likelihood of being exposed to natural disasters and hazards. It is also known for keeping tight regulations on its fiscal expenditures and accountability.

Finland made a strong showing in several key factors that the index takes into consideration. Due to the high levels of private and public investment, Finland has exhibited innovative capabilities that it has channelled into both research and development. In addition, the country places a strong emphasis on education and training, as well as linking academia and companies within the private sector.

TOP 10

GERMANY Germany scored high on the supply chain factors that the FM Global Resilience Index looks at when computing its rankings. The European country’s high ranking in the index was driven – at least in part – by its strong showing in areas such as being able to pinpoint where products, parts and components are – in transit – from one part of the process to the next.

06 NORWAY Though Norway’s fire risk management could be improved, the areas in which it demonstrates excellence more than make up for this. The country continues to show strong results in areas such as control of corruption, low political risk, economic productivity and resilience in the event of an oil shock.

August 2017

S U P P LY C H A I N R E S I L I E N C E

JAPAN

04 SWEDEN

In spite of Japan’s history of natural disasters – the country was hit with a tsunami that generated 45-foot high walls of water and a 9.0 earthquake during the same year – FM Global recognised it for the powerhouse it is in terms of supply chain resilience. Power generation and local production were both devastated in 2011 when Japan was hit with double weather disasters. In about four months after the March weather events, there was evidence that Japan was well on its way to recovery. Its resilient business system, coupled with the cooperative capitalism that the country is famous for, were the keys for its recovery. These components are the same ones that help Japan rank highly on this index.

Sweden gained the number four spot in the index because its exposure to natural hazards is lower than average. The FM Global Resilience Index places a hefty importance of a country’s exposure to things such as floods, earthquakes and windstorms that it cannot control and often cannot plan for adequately. 31

TOP 10

LUXEMBOURG While the tiny country of Luxembourg has nearly always ranked well on the Global Resilience Index, it moved significantly upward from its eighthplace slot in 2013 to the number two rank for 2017. The reasons for its rapid rise can be summed up by

factors such as a strong and growing network of service providers as well as a stable financial sector. The governmental regulations in place are accommodating to businesses that could putÂ the country in an advantageous position in terms of the fallout from Brexit.

August 2017

S U P P LY C H A I N R E S I L I E N C E

01 SWITZERLAND Switzerland earns the top place in the world for supply chain resilience. When judged in three separate categories – risk quality, economic and supply chain factors – Switzerland ranks as number one. A major driver in its resilience is the country’s resistance to fuel price fluctuations. In addition, Switzerland also ranked high

because of its superior supply chain metrics. This is because the country has an excellent infrastructure, corruption is low and the quality of its local suppliers is unquestioned. Switzerland is also an economically stable country which helps to balance its exposure to storms and other hazards that occur naturally.

A meter for success Written by: Dale Benton Produced by: Denitra Price

Milbank has been a market leader for 90 years and through strategic leadership will forge ahead with a lean, technologically sound manufacturing process

MILBANK

ounded in 1927, Milbank has established itself as a leading manufacturer of metering, electrical enclosures and enclosed controls across the US. Now celebrating its 90th year, the third-generation, family-owned company must embrace the future of manufacturing, while maintaining the long history of significant growth and unquestionable success of earlier generations. What is the secret to almost a century of success? An unrivalled commitment to quality, innovation, financial strength and community involvement. “What I think has been truly instrumental for the company, particularly over the last 12 years, has been our move down the path of lean manufacturing,” says Brad Skinner, President of Milbank. “In 2005, the company started to instil lean manufacturing within all our facilities, working to eliminate waste.” This turn to lean manufacturing saw a significant shortening of lead times, improved inventory management and taking what Skinner describes as “unnecessary” steps out of the manufacturing process.

“Customers don’t want to pay for waste, they want the product as fast as possible. Lean manufacturing has been an incredible success over the past decade” – Brad Skinner, President, Milbank 36

August 2017

USA

“Customers don’t want to pay for waste, they want the product as fast as possible. Lean manufacturing has been an incredible success over the past decade,” he says. Before Skinner became president in 2016, he worked his way through the company for over 31 years from factory floor to the top. Skinner now sits in a key position to oversee the company’s transition into the future of the manufacturing industry and maintain the marketleading reputation Milbank has earned. Master Plan Through a series of strategic planning meetings in 2016, Skinner and senior executives, board members and family owners sat down to pull together a strategy for the company’s future. Here, Milbank agreed to develop a Manufacturing Technology Master Plan. “This master plan serves as a tool to help us explore and develop a three-year timeline so we can prioritize the implementation of capital equipment, tools and technology,” says Douglas Ubel, Vice President

Brad Skinner President

of Purchasing. “We are looking for new capabilities to enhance quality, reduce costs, add capacity and improve safety. It’s not just to bring in new technology, but for a specific purpose to help with cost structure, improve products and enhance our capability in the marketplace.” Ubel joined the company in 2015 and has worked on a number of manufacturing projects including supply planning, capital investment processes and process improvements, and is now leading the strategic technology initiative. The master plan will see a series of subteams work through the company’s

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existing manufacturing plants and identify the current processes and technology that are in use, while also noting the age of current equipment. “We spent a number of meetings brainstorming and making an exhaustive list,” says Ubel. “From there, we identified where we had a known solution in place and where we didn’t. From those with a known solution, we could look at the benefits of what those solutions would bring.” The subteams are investigating to find potential solutions and will report back to the full team. This will generate a scope of work to be evaluated and prioritized. Milbank has targeted a completion date for this investigative work, and plans to begin implementation in early 2018. The company is committed to this effort, with automated technology being introduced to the fabrication element of the manufacturing process. “It’s a significant change, but already we are thinking about the next step in that process. You only know what you know. This technology scouting is helping us find new developments and possibilities we

Doug Ubel

Vice President of Purchasing

“This master plan serves as a tool to help us explore and develop a threeyear timeline so we can prioritize the implementation of capital equipment, tools and technology”

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didn’t know were out there,” says Ubel. Staying ahead With technology and innovation transforming on a daily basis, Ubel is all too aware of the need to stay abreast of the pace of change. “Technology scouting is not just a onetime occurrence; it’s an ongoing activity because developments are happening faster than ever before. We must keep up on those new possibilities.” This need to stay ahead of the game is a feeling shared by Skinner, who looks at it from a different perspective – the employee. “In order to retain high-preforming employees, we have to offer innovative technology. Adapting to,

Charlie Milbank

Founder of Milbank

and ultimately leading the technology shift, will allow us to develop our employees while simultaneously updating our product offerings. Implementing new technology is not an overnight process. As much as Milbank is improving and updating its processes, it still operates with existing technology and employees who are used to it. “When you look at the factory floor, some employees have worked at Milbank for more than 30 years. How do you take that employee, who’s used to working in a particular way and implement a piece of machinery or technology they aren’t used to?”

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“How are we going to adapt rapidlychanging technology? We have to work to be on the front side of that change to continue as an industry leader” – Brad Skinner, President, Milbank

Skinner says. “That has been a hurdle we are overcoming. We’ve had a number of business partners come in and effectively train our employees on new systems, machinery and software. We’ve also sent employees out to other manufacturers to get additional training, which has proved incredibly successful.” Engaged As president, Skinner oversees every facet of the company, including the transformational initiatives. In addition to the Technology Master Plan, Skinner and the executive team have implemented a new form of employee engagement. “The initiative team can go wherever they want inside and outside of the company, to figure out what

machinery or technology can help us grow,” he says. “We also wanted input from our employees. They’re the ones out on the floor everyday building our products. To gain insight on what we are doing right or how we can improve, we began visiting all our locations to conduct roundtable meetings where employees can voice their thoughts.” Employees are encouraged to share ideas on the company’s successes, shortfalls and areas for improvement that are personally relevant to their individual work. Skinner, speaking from his own

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Connecting You to the Right Product For more than 70 years, Connector Manufacturing Company has been dedicated to the design, engineer and manufacture of quality products for the OEM and MRO markets.

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experience, is a firm believer that the employees have the key vantage point to help the business to grow. “I want to hear from people on the floor. For us to take their messages and turn them into actual initiatives has really paid off – they feel valued, and they have a say.” As the company moves into the future, just shy of 100 years of operation, both Skinner and Ubel will play a huge role in the direction of Milbank through not only the Technology Master Plan,

but future initiatives that arise from both internal analysis and external market developments. For Skinner, the company must continue to ask the question that matters – how is the product going to change? “How are we going to adapt rapidly-changing technology? We have to work to be on the front side of that change to continue as an industry leader.”

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MILBANK

August 2017

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But above all, Milbank looks forward, building upon its marketleading legacy and reputation. Skinner attributes the success of the company to the solid foundation established by the previous generations of ownership. “We are very lucky to have had a founder, second and third generation family who invested so heavily in the quality and safety of our product. Their leadership is what worked to guide us and set us up for the future,” Skinner says. “We pride ourselves on being agile and proactive to respond to customer needs and industry demands.”

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Delivering

wellness to the West

Banner Healthâ&#x20AC;&#x2122;s supply chain is recognised by Gartner as one of the best in the country, and not just in the healthcare Supply Chain: this has been achieved by a culture that involves every decision making process from capital spending decisions down to the procurement of consumables Written by John Oâ&#x20AC;&#x2122;Hanlon Produced by Denitra Price

August 2017

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B A N N E R H E A LT H

ased at Phoenix, Arizona, Banner Health is one of the largest not for profit healthcare organizations in the United Sates. It was founded in 1999 out of a merger between Samaritan Health System and Lutheran Health System, since when it has grown the number of hospitals and medical centers under its umbrella to almost 30. Its Western Region facilities serve a number of rural areas -- many are the only inpatient facilities available within the community. It also embraces nearly 300 clinics, and employs more than 50,000 people in seven western states. In the Arizona Region, Banner Health is the state’s largest private employer, and is one of Northern Colorado’s largest employers. As such, Banner Health operates a highly complex and important supply chain process, and it is one that is known for being datadriven, disciplined in cost controls, and results oriented with its supply chain, leaders, physicians and clinicians all working together. The company’s efforts were

August 2017

acknowledged in this year’s Healthcare Supply Chain Top 25, which recognizes leadership in improving human life at sustainable costs. A regular in the report, Banner Health placed twelfth in the 2017 edition, lining up alongside such well-known names as Johnson & Johnson, Cleveland Clinic and Pfizer. “The company maintained strong Truven Health Analytics results and a strong bond rating,” said the report. “Banner Health is a $7bn regional system that has methodically built a cadre of solutions in the centralized distribution center over the past five years. Most impressive is how the company managed these capital projects on a limited budget with partners. Capabilities of their vertically integrated supply chain include traditional distribution as well as custom procedure trays, home delivery, pharmacy repack, compounding operations and global sourcing initiatives. “The company’s supply chain continues to be a model for alignment to corporate strategy. The supply chain’s alignment to

USA

“Women play a major role in Banner Health’s workforce, comprising 76% of its nearly 49,900 employees as of late May”

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USA

Banner Health’s 2020 vision has the organization moving from an acute care focus to clinical quality to now a focus on population health in its supply chain response. “The company’s acquisition of the University of Arizona Health Network is progressing. It is showing savings through a segmented supply chain response that takes a slightly different approach to supply chain for academic medical centers vs. its base community health efforts.” As part of Banner Health’s

continuous commitment to improvement, it recently signed a strategic deal with Amsterdambased devicemaker Royal Philips. The 15-year contract that will use technology to improve efforts in telehealth, population-health management and other areas. It’s the fifth partnership Philips has signed in North America in roughly a year and a half, and one of dozens the company has signed globally in the past decade. The agreement with follows up on collaboration between the two

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B A N N E R H E A LT H

organizations on telehealth. Banner previously piloted Philip’s Intensive Ambulatory Care program, which uses telehealth to support treatment of patients who are having complex medical issues due to multiple chronic conditions. By identifying populations that could benefit from coaching and linking care teams from different disciplines, the program aims to help hospitals better treat these patients, who carry significant healthcare costs. The companies say the Intensive Ambulatory Care program reduced overall costs of care by 35%, lowered hospitalisation by 50%, cut average length of stay by 50% and reduced 30-day readmissions by 75%. In the company’s history, there have been many mergers and alliances, a notable example of which is last year’s joint-venture with Aetna to develop a health plan in Arizona. The jointlyowned health plan company, Banner Aetna, was established with designs on improving quality, affordability and the patient experience. The partnership combines Banner’s care management capabilities and high-quality facilities, providers

August 2017

and delivery system with Aetna’s leading health plan expertise, cutting-edge analytics and health information technology. Together, they will provide health coverage to employers and their employees in Maricopa and Pinal counties with plans for future statewide expansion. The partnership builds on the success of Aetna and Banner’s five-year Accountable Care Organisation relationship, previously announced in 2011, strengthening the companies’ shared commitment to reward value over volume of care for the delivery of better outcomes and lower health care costs. The new health plan will focus on the consumer experience by combining fully integrated care teams, health insurance and administrative services, with a goal of eliminating redundancies in care as well as administrative hassles. Savings achieved by streamlining care and services will be passed on to consumers and employers through lower premiums. “We are committed to finding new ways to deliver more efficient and effective care for our members in

USA

“We are committed to finding new ways to deliver more efficient and effective care for our members in Arizona and across the country” Arizona and across the country,” said Gary Loveman, Aetna’s executive vice president and president of Consumer Health and Services. “Together, Aetna and Banner are rethinking, reimagining and redefining the health care model to reward better outcomes and create

healthier days for our customers.” Banner Health is also an organization with its finger on the technology pulse; its North Colorado Medical Centre (NCMC) recently announced its use of a 3D printer to enhance treatment for cancer

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patients undergoing radiation. NCMC’s Oncology Department began treating its first skin cancer patient using 3D-printed molds, called bolus, earlier this month. Since then, providers are now treating multiple cases with plans to expand its use to other cancer treatments and other Banner hospitals later this year. “The sky’s the limit when it comes

to 3D printing,” said Dr. Alexander Markovic, Medical Physics Program Director for NCMC’s Radiation Oncology. “With the 3D printed bolus, we are able to better target the radiation dose so that the treatment is more effective.” Markovic and his team pioneered the new 3D printing program at NCMC’s Cancer Institute, paving

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B A N N E R H E A LT H

“The sky’s the limit when it comes to 3D printing”

August 2017

USA

the way for providers to roll out the programme at Banner MD Anderson Cancer Center in Gilbert, Ariz., as well as McKee Medical Center in Loveland, Colo., in the coming months. In addition, Banner has proudly announced that its Desert Medical Center’s executive leadership team is now comprised entirely of women, following the recent addition of Chief Operating Officer Cristal Mackay. The facility’s leadership team also includes Laura Robertson, CEO; Tanya Kne, chief medical officer; Cindy Helmich, chief nursing officer; Cheryl Tong, chief financial officer. Many members of this team also lead Cardon Children’s Medical Center, which is located on the Banner Desert campus, along with David Morimosato, MD, who is chief medical officer for that facility.

“Banner Health takes great effort to maintain a diverse workforce, bringing together a wide variety of professionals to provide excellent patient care,” said Jackie Hunter, executive recruiter who oversees Banner Health’s workforce diversity efforts. Women play a major role in Banner Health’s workforce, comprising 76% of its nearly 49,900 employees as of late May. Several members of Banner’s Senior Leadership Team are women, including Becky Kuhn, chief operating officer; Alexandra Morehouse, chief marketing officer; and Naomi Cramer, chief human resources officer. More than half of Banner’s 348 senior managers are female. Among 21 CEOs across the system’s acute care facilities, 57% are women.

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Passion for polymers Written by: James Henderson Produced by: Charlotte Clarke

Covestro enjoyed a record year in 2016, not least because of the growth of its polycarbonates division which has continued to go Jens Kaatze SVP, Head of Global from strengthProduct Management, to-strength Polycarbonates

hile the picture for many businesses in 2016 was a mixed one, leading polymer manufacturer Covestro enjoyed a record year against the backdrop of a successful Initial Public Offering in 2015. Driven by demand for innovative materials used in a myriad of consumer and business products, the group’s core volumes increased by 7.5%, amounting to revenues of €11.9bn. Covestro’s polycarbonates division performed strongly with volumes increasing by 10.3% over the course of the year, compared to an overall growth of about 4% in the wider polycarbonate manufacturing market. “These excellent results show that we are increasingly successful at replacing conventional materials with superior plastics with a strong demand for polycarbonates”

August 2017

ASIA

said Michelle Jou, President of Covestro’s Polycarbonates Business Unit. “In 2017 Q1, we have recorded strong growth of 14.7% in core volumes year-onyear, mainly because of greater demand from the automotive and electrical/electronic industries. This is very encouraging.” Polycarbonate is a premium lightweight plastic combining a variety of properties such as being durable and freely formable. It is used in various applications including laptops, smartphones, medical devices, automotive parts and stadium roofs. Covestro markets the material in the form of granules, semi-finished products or blends with other plastics. The burgeoning demand for polycarbonates in the Asian market has led Covestro to unveil plans to significantly expand the production capacity of its Shanghai site to 600,000 tons per year, having only recently expanded up to 400,000 tonnes. This extremely rapid development is bringing the value of Covestro’s investment into this site up to $3bn, showcasing its commitment to the Chinese market and the organisation’s strong global

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C O V E S T R O ( S H A N G H A I ) M A N A G E M E N T C O . LT D .

footprint. Solid partners like Qi’An Construction are also essential in the implementation of such projects. Thanks to its impressive legacy and global reach, Covestro has production sites and R&D hubs across Europe, Asia and the Americas. All of them use innovative and ecologically compatible technology. To keep pace with the evolving business environment, Covestro works directly with partners and invests continuously in R&D and innovation. The idea is for Covestro to be as cost efficient, flexible and agile as possible, quickly adapting to customers’ needs. For instance,

Covestro works with TP Link, a network solution market leader. Fan Tianshu, VP of TP-Link, Global sourcing, considers Covestro to be a real strategic partner that we can count on for high and stable quality material but also professional technical support like various tests of products and materials, timely response and even joint production development”. For similar reasons, Covestro has been awarded “Preferred Partner” for its outstanding supply and service in May this year by Flex Mechanical Technology Solutions, the world’s largest contract manufacturers.

“These excellent results show that we are increasingly successful at replacing conventional materials with superior plastics with a strong demand for polycarbonates” – Michelle Jou, President of Business Unit Polycarbonates 66

August 2017

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ASIA

15,600 NUMBER OF EMPLOYEES AT COVESTRO Outlining the importance of the company’s supply chain operations, Jens Kaatze, SVP, Head of Global Product Management, Polycarbonates, says: “Supply chain is hugely important in our business, you need to provide the lowest cost of service to be competitive. Streamlining the supply chain with a reliable global network that we can tap into is crucial. This advantage enables us to serve our customers to the best of our ability wherever they are located while at the same time maintaining cost and carbon footprint as low as possible. “Think of a scenario where a customer of ours releases a phone case in blue but realises they actually need it a shade darker. We are able to match that request within 24 hours and provide a colour sample to them within three days, which we can then run and produce, if

approved. The fact that Covestro can combine low cost with agility makes it stand out from the rest of its competitors in the market.” Some could say being present everywhere and highly reactive is energy intensive, but Kaatze says that sustainability is one of the central pillars of Covestro. “We have significantly improved our specific carbon footprint, previously setting target to reduce our energy consumption by 25% by 2025, which we have actually already achieved. Instead of sitting back and congratulating ourselves on hitting this milestone we set a higher target of 50%. Consuming less energy helps both the planet and our profit,” he says. This is consistent with the company’s PPP – people, planet and profit – philosophy, which Covestro adheres to when developing new

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products, practices or procedures. In short, anything that is introduced must be positive for at least two of the PPP elements, and neutral for the third. Kaatze gives a specific example of what this means for the business: “At our plant in Shanghai, we have implemented a strategy to recycle our salt water. It technically helps us save some money but there is also an extra cost associated with the energy recycling process.

August 2017

We found a solution to help the business use the extracted salt for our chlorine production. It is a win win situation: eventually we have a lower amount of salt impacting the environment and we can re-use the salt for our own processes. “When we look at our products, we look at the whole life cycle to evaluate how much energy we are using during the process - the carbon footprint of the production - but also during the product’s entire lifespan.

ASIA

â&#x20AC;&#x153;For instance, if you replace the glass or metal part present in a car by polycarbonate you will significantly reduce the energy it takes to move the vehicle over its life cycle. This energy saving ultimately compensates for the amount of energy used during the production process eventually reducing the total greenhouse gas emission

Michelle Jou

President of Business Unit Polycarbonates

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C O V E S T R O ( S H A N G H A I ) M A N A G E M E N T C O . LT D .

‘The fact that Covestro can combine low cost with agility makes it stand out from the rest of its competitors in the market’

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Jiangsu Qi’an Construction Group Co.,Ltd Business involves: Construction, M&E engineering works of general constract and relevant maintenance service.

www.qaqa.com.cn jzhang@qaqa.com.cn

ASIA

for this product turning the overall balance to positive.” The challenge for Covestro now consists in following up on a record year, and it is one that Kaatze says it will take on with relish. “To stay on this track to success we continuously focus on innovation and collaboration. It goes back to our core pillars: optimisation and efficiency combined with an offering that provides a broad level of products and services in a cost and time friendly manner. Both require strong and open innovation with our network of partners. Our relationship with Mitsui and Co. in Asia Pacific has been a good example of working closely and effectively with a partner helping us being agile at supply chain level for our customers. This means that when we see an upturn in demand for example, we are

capable of meeting this demand. “Similarly, as the world’s biggest buyer of phenol, we work consistently with on-site or near-site partners on pipeline supply to ensure that we receive the product as efficiently as possible. Our suppliers in Thailand, PTT, are located in close proximity to our facility so we can benefit from a pipeline which cuts costs and improves efficiency. That might sound simple but a lot of companies haven’t managed to take that step yet.” Following a successful first quarter, Covestro is optimistic for the current year. For 2017, the company anticipates core volume growth in the low-to-mid-singledigit percentage range. It will continue to work closely with its partners to bring their innovative applications to life with the goal to ‘make the world a better place’.

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Written by: Catherine Sturman Produced by: Charlotte Clarke

ID LOGISTICS:

“INNOVATION IS PART OF OUR DNA” 75

Established in the early 2000s, French company ID Logistics has now expanded into Indonesia, and has had to adapt its business model to become increasingly flexible and agile to cater to the country’s competitive and challenging market

xpanding into the Indonesian market, supply chain and logistics company ID Logistics has fully adapted its products and services to develop new partnerships and opportunities, taking on all new challenges with enthusiasm. Since its establishment, the company has consequently grown approximately 20 percent year on year over the last 15 years. With more than $1 billion in revenue, the company now operates in 16 countries around the globe. Managing Director Vincent Holley is responsible for continually developing the company in Indonesia, which he recognises as “a difficult market,” but adds “there is no easy market, however.” With around 18,000 islands making up Indonesia’s archipelago, only 900 of them are inhabited by approximately 260 million citizens, creating significant logistical challenges. Holley explains: “There is a duality in Indonesia where we have to make sound

August 2017

18.5k Number of employees at ID Logistics

ASIA

decisions and quick actions. Things change very quickly here, which makes the challenges very interesting and demanding, but the country remains very promising.” Starting as a 3PL strongly focused on retail logistics, ID Logistics has further developed its services, incorporating high standards throughout its operations. With a motto to develop sustainable logistics solutions, the company guarantees operational excellence, which is all fully measured by KPIs, agreed with customers and clients. Increased performance With the implementation of KPIs, Holley explains that the

“Things change very quickly here, which makes the challenges very interesting and demanding, but the country is promising” – Vincent Holley, MD

company can place an emphasis on continuous improvement. “In a country like Indonesia which is an emerging country, it is important to get high standards and step by step, upgrade standards and performance to a world-class level,” adds Holley. “The management of ID Logistics is demanding with its staff and also demanding with its business partners.” Internally, the company incorporates a number of

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certifications. The Certification of ID Logistics (CID) works in parallel with ISO, alongside another certification, which the company calls LID (LEAN of ID Logistics). Whilst the purpose of CID is for staff to really focus on the daily operations of a logistics provider and micromanagement, the LID program involves value stream mapping, looking at waste and improving company processes step by step. Through these certifications, the company continually supports staff and promotes knowledge sharing in order to further develop high standards. Operations Managers are tasked with monitoring KPIs on a daily basis, where they escalate and explain any deviations to the norm. Additionally, weekly and monthly operational reviews are implemented, on top of quarterly business reviews, documenting all performance, policy changes and any change in activity. “Whilst business is in continuous change, we make sure that customer satisfaction remains a key focus,” says Holley. “The focus is simple - to make our customer happy and bring continuous positive change. “This is also what customers appreciate – since we are straight forward and organised, we are able to move quickly. Action to Customer and internal quick communication is key.” Developing partnerships Through promoting the cross-fertilisation of knowledge and skills, ID Logistics develops strong

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ID LOGISTICS

“Whilst business is in continuous change, we make sure that customer satisfaction remains a key focus” – Vincent Holley, MD

August 2017

partnerships. One such example is Schaffer, which has recently worked with the company on the revamping of an ID Logistics’ warehouse in Jakarta in less than three months during the Ramadan fasting period. With occasions such as this, it is imperative for the company to acquire committed partners who understand the ID Logistics’ strive for excellence. Another example is ID Logistics’ collaboration with Indonesian distributor of Everlight, which has been behind the company for the LED lighting project of its new warehouse. “Both Schaffer and Everlight are industry owned in the way they work and are solution

orientated, which is not easy to find in Indonesia,” comments Holley. “I can commit to customers because they can commit to me and deliver on time, according to the agreement. This has allowed us to focus more on pure operations.” Future planning Becoming widely renowned within Indonesia’s retail logistics sector, Holley recalls a conversation with the Head of Supply Chain of L’Oréal Indonesia. Whilst ID Logistics as a 3PL is aware of the ongoing issues within retail and consumer goods, Holley was asked whether he would support the development of a forum in order to not only align these constraints,

but find a compromise to improve the overall logistic costs within Indonesia. Since then, the duo has been behind the development of a forum (or community), incorporating supply chain directors from companies such as Nestlé and Danone, and also other 3PLs, with the aim to also attract technology companies. “The aim is to align our challenges to push the government here, and to some extent, improve the infrastructure and give Supply Chain actors the visibility for improvement,”

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ID LOGISTICS

adds Holley. “To define strategy for the improvement of the supply chain, we need to know roughly what the government plans to do in 10 years. “From a supply chain perspective, when you want to make a redesign of your distribution network, or even brief your supply chain by relocating some points, it is important to know where the new highways and industrial parks are, or deep-sea ports etc. That, at the moment, is

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lacking. That’s a good thing about being in an emerging country, it gives you the opportunities to address different challenges and to define different solutions. At the moment, we are just starting this community, but the aim is to lower the logistic costs in Indonesia.” Smart savings An ambition to develop sustainable logistics solutions,

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August 2017

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ASIA

whilst remaining sustainable and profitable, is something all businesses are currently tackling throughout their operations. Developing an initiative to find smart savings, ID Logistics has also focused on reducing its carbon footprint through the implementation of green trucks within the last three years, where the consumption of each NGV truck is monitored.

Holley explains: â&#x20AC;&#x153;Indonesia is a country which produces gas, which is cheaper than the cost of diesel. This NGV truck is more expensive than the diesel truck, but at the end of the day, when you consider the TCO (Total Cost of Ownership), this green truck is cost affordable, even cost efficient. The more important thing is looking at the standard of trucks on the Indonesian market at

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ID LOGISTICS

$1bn+ The revenue produced by ID Logistics

the moment in terms of CO2 emission, this green truck has an CO2 emission more than 60 percent lesser than the current market standard. In addition to the green truck initiative, a way to decrease the carbon footprint is to optimise the transport capacities as well. To do so, ID Logistics has been implementing over the last five years 4PL Transport Control Tower solutions. Doing that, ID Logistics has also implemented a QCD approach by improving the Quality, decreasing Costs and the Delivery lead-time by the usage of smart monitoring technologies, such as GPS devices, geo-fencing and sensors. Usually, the expected savings are from five percent until 15 percent of the total distribution transport budget depending on the market maturity. â&#x20AC;&#x153;Innovation is part of our DNA, so innovation is not only new technologies, it could be a simple, smart idea to implement. Implementing new technologies makes sense to any 3PL, with a quick return on investment.â&#x20AC;? Supporting education With the curriculum

August 2017

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for supply chain and logistics in Indonesia being less substantial than other APAC countries such as Australia, Japan and Singapore, ID Logistics strives to support local talent and the development of supply chain logistics in Indonesia through a number of investments. With limited supply chain actors on the market, ID Logistics has created a community to develop the supply chain scene in Indonesia. Additionally, to fund talent in Indonesia, the company works with universities to make this a more seamless process. Holley explains: “We work to upgrade the curriculum – so it is the type of investment to start enjoying in approximately five years – the rise of new talent in a sense of better education, and it will sit closer to western education in terms of supply chain and logistics. In the short term, develop talent through cross-fertilisation, and those people are supposed to be coached to develop the skills of my local team.” To further this drive, when the company can see an employee has potential, it sends them to

“Implementing new technologies makes sense to any 3PL, with a quick return on investment” – Vincent Holley, MD

another country, such as Taiwan, to see how different processes and technologies are used and gain increased exposure. “Sometimes you don’t change things because you don’t know see how to change it, it’s when you’re exposed to new things, you realise how you could do things differently,” adds Holley. Regional challenges Despite this, ID Logistics has come across a number of regional challenges since its establishment in Asia. Launching in 2002 within Taiwan, Carrefour also launched

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ID LOGISTICS

into Indonesia in 2007 and saw contrasting differences between the two countries. Whilst in Taiwan, Carrefour remains, the Indonesian Carrefour is no longer operating directly. Holley explains that whilst the brand name exists under a franchisee,

August 2017

this will likely disappear soon. From this experience, Holley explains that â&#x20AC;&#x153;the western retail industry has to adapt the way of doing retail in, I would say, non-western countries. Our main customers at the moment are retailers, but we need to change the way in which we are operating ourselves, which is part of the challenge, and to work more and more

ASIA

with ecommerce companies.” The rise in e-commerce, with companies such as Alibaba, as well as smaller e-commerce companies in Indonesia not yet known overseas, are slowly altering the business map in the country. However, “retailers are not the only one to move to ecommerce,” reflects Holley. “The second and third revenue of ID Logistics worldwide is the consumer goods industry – big players like Danone and Unilever are some, and even those ones are thinking to move in this direction.” To this effect, the company has had to adapt its ways of operating, such as the use of its work management system, which has been customised and upgraded in order to deliver quality and tailor-made solutions. Nonetheless, Holley says, “in e-commerce, there is some cut off. For instance, every order before

2pm can be delivered the next day, whereas in some areas there is same day delivery. It is a different way to address logistics which encompasses new challenges.” These challenges are also heightened through the increased Uberisation of the economy, where an individual can sell any product and ensure it is delivered to the other side of Indonesia by the next day, as everybody in the country is using Uber or local company GO-JEK. With all these complexities, ID Logistics continually transforms its services and the way it addresses business with clients and end users. We think properly and we move forward. It’s a lean organisation which makes communication flow quickly, ensuring the company remains competitive within the Indonesian market.”

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LEADING THE WAY

IN TRANSPORTATION AND PROCUREMENT WRIT TEN BY: CATHERINE STURMAN PRODUCED BY: CHAR LOT TE CL AR KE

We speak with Vijay Chintam, Head of Procurement and Supply Chain (India) and Filippo Fanfani, Vice President of Procurement at Ansaldo STS, regarding the company’s continual growth, which is underpinned by its exceptional procurement services

orking with global contractors worldwide, Ansaldo STS has become one of the leading multifunctional railway signalling and integrated transport companies in the world. Supporting individuals in moving from A to B, the company has amassed a USD $1.5bn (or €1.3bn) turnover, providing exceptional safety standards throughout its operations. An international technology company specialising in the development and delivery of integrated solutions for passenger and freight rail networks and Mass Transit worldwide, Ansaldo STS designs, manufactures, installs and commissions solutions for the

August 2017

management and control of new and upgraded railway, transit and freight lines in approximately 28 countries. “Ansaldo is a global organisation,” explains Filippo Fanfani, Vice President of Procurement. With two thirds of the company based outside of Italy, Ansaldo STS has undergone an internal shift in its procurement processes to cater towards this newfound global outlook, competing with larger competitors, such as Siemens in a number of projects. The objective to adopt best in class procurement practices in this sector has led the company to utilise the ERP system (SAP) for its procurement and supply chain functions; however, Fanfani explains that there has not

Vijay Chintam

Head of Procurement and Supply Chain (India) Vijay Kumar Chintam, a Techno-Commercial SCM professional with 14+ years of experience in the field of Strategic Sourcing, Procurement and Supply Chain Management. He has Masters Degree in Business Administration from Wharton Business School, Philadelphia and Bocconi School of Management, Milan besides being a Mechanical Engineer. He worked with Sterlite Industries and GMR Group, before joining Ansaldo STS. He has been titled as one of the Future Leaders in Ansaldo STS globally. Operations are his forte with expertise in Strategic Sourcing, Project Procurement and SCM. Implemented unique concepts of Strategic Sourcing in 2007 and continues to be passionate about this subject.

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“IN MOST OF OUR INDIAN PROJECTS, WE HAVE DELIVERED OVER €1M IN PRODUCTIVE SAVINGS THROUGH OUR VALUE ENGINEERING AND SUPPLIER COLLABORATIVE INITIATIVES” – Vijay Chintam, Head of Procurement and Supply Chain (India)

been much investment in terms of other sourcing tools, as the company is “focused more on organisation and current processes, before thinking of the required tools”. To this effect, Ansaldo STS has adopted a number of sourcing and cost optimisation strategies, involving not only procurement, but also the company’s engineering and construction functions, in order to deliver increased value to clients and stakeholders. “We decided that this should be part of our modus operandi within procurement,” Fanfani says. “We look forward to a new program ACE (Achieve Continuous Excellence) which we’ve just launched, where the leadership is situated in procurement.” To support this further, the implementation of value engineering has also proved invaluable in delivering

solutions to clients. “In most of our Indian projects, we have delivered over €1m in productive savings through our value engineering and supplier collaborative initiatives,” explains Vijay Chintam, Head of Procurement and Supply Chain in India. “We have a cross-functional and cross-entity value engineering initiatives,” he adds. “This enables the company to undertake value engineering with both the supplier and the customer (wherever feasible), where both parties gain an increased perspective of the subject. The state of the employee led bottom up value engineering activities, and supplier induced value engineering activities, has shown positive results.” Strong governance To ensure the company deliver a

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clear and visible decision-making process at a global level, Ansaldo STS has also strategically worked on its global sourcing processes. With three key parameters, viz., Organisation, Processes and Tools, the procurement function has embarked on a journey. “The journey”, as Fanfani puts it “would position Ansaldo among the league of advanced procurement organisations.” The journey had just begun by redefining its inter-functional processes. “Internal processes, in turn encapsulate the constraints, availability and timing of the sourcing, where we can then receive internal sourcing approval,” adds Fanfani. “Through these processes, we also define the procedures in order to identify key subjects which are very important for our global decision-making approach.” For instance, a high value deal includes multi-step process involving possibly all stakeholders owning up and aligning with the recommendation that procurement function had put forward.

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Supplier relationships Ansaldo STS has a number of multiple, long-term and strategic suppliers, who have been supporting its operations at various regions the company is now situated. “We build relationships with global suppliers at a local level and encourage regional suppliers for global requirements. We also ensure that they all meet our global technical and quality standards” explains Chintam. “Everybody in the procurement organisation is trained in the multidimensional selection process which suppliers undergo. This is essential in selecting suppliers who fit our business aspirations.” Any supplier who adds value to our operations, especially with regards to quality and safety of the products and solutions, shall be nurtured. Future development With a continual focus to provide innovative products, such as driverless and freight transportation systems besides remaining competitive, Ansaldo STS is further looking to improve its procurement services

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through integrated platform solution. The company is currently exploring the possibility of implementing an IT platform, where entire sourcing and procurement processes could be managed. This is on top of all essential information, surrounding company contracting and collaboration with the large number of suppliers. Fanfani explains: â&#x20AC;&#x153;This opens up possibilities

August 2017

of operational enrichment, with essential information embedded in the systems. Another step would be to have increased links with the upstream and downstream processes, and with our other tools to consolidate further Supply Chain operations.â&#x20AC;? Through redefining its global strategies, Fanfani highlights the particular importance of tapping into the Asia market.

ASIA

“OUR CROSSFUNCTIONAL AND CROSSENTITY VALUE ENGINEERING INITIATIVE, ENABLES US TO UNDERTAKE VALUE ENGINEERING WITH BOTH THE SUPPLIER AND THE CUSTOMER” – Vijay Chintam, Head of Procurement and Supply Chain (India)

With two projects presently underway in Taiwan, Ansaldo STS is now tendering for a third project in the region. “From a procurement perspective, we decided to deploy a team in Taiwan,” says Fanfani. “It is an area of importance, and even more important with our suppliers alongside us,” in the development of advanced and reliable transportation systems. On the other hand, India market has been promising with multiple projects under execution and host of tenders being rolled out on several technologies. The price pressure is immense in this market hence the focus on costs takes

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4,000 NUMBER OF EMPLOYEES AT ANSALDO STS

Filippo Fanfani

Vice President of Procurement at Ansaldo STS Mr. Filippo Fanfani has a multiyear industry background within automotive, industrial and rail businesses, cross functional experiences and a strong international exposure. As part of the Ansaldo STS Executive team Fanfani leads the global Procurement organization (1bn€ spend and about 80 team resources) with the aim to transform it into an effective strategic function. Process and People development are his forte, besides, sourcing strategies and operational initiatives. He believes in sustainable and reliable relationship with key supply partners to achieve progress. According to him, values and behaviors are fundamental for a long term success in a professional business environment such as fairness and ethics, reliability, personal determination, relationship and interpersonal capabilities, team working, continuous challenge of the status quo and problem solving approach.

centre stage. Thanks to Ansaldo STS’s supplier community it have been able to remain competitive. It will continue to invest in developing greater supplier relationships to create more opportunities in the coming future. Although Ansaldo STS remains a medium sized company, its cuttingedge technology and integration possibilities will enable its future growth in emerging markets and secure its global reach. As an organisation, Ansaldo STS has become an integrated company, to which Chintam concludes: “This is one of the few companies which is integrated across the value chain which provides a connecting platform between its customer and its supplier partners.”

ASIA

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KEEP ON

TRUCKING FLS Transportationâ&#x20AC;&#x2122;s President, Mike Flinker, says that despite 30 years of success he is eyeing new opportunities for growth and acquisitions

Written by: James Henderson Produced by: Sharicka Braley

F L S T R A N S P O R TAT I O N

“W

e were three guys with a dream,” says Mike Flinker as he recalls the very earliest days of FLS Transportation. Fast forward 30 years and the Canadian-born President now leads a $400 million a year business that was taken over last year by a private equity firm, a development that will allow the business to now look for acquisitions of its own. But it wasn’t anything like all plain sailing; with just $1,100 between them, the three business partners only had enough money to incorporate the business, confident that their past experience of the transportation would be enough for the banks of Canada to open their doors, battling for the chance to offer the burgeoning business with financing. Not so. “With no capital to speak of, the banks turned us straight down,” says Flinker. Instead, the trio were forced to approach former clients asking if they’d support the newly formed FLS Transportation, with one caveat – could they pay us right away? “Initially it was a surprise how many of our former clients said they’d put business our way, but to ask for money up front really did startle a number of them, which is understandable because we’d always received payment from them in a timely manner. It was really tough to explain to them that it wasn’t a case of not trusting them, but rather the banks not wanting to finance the new company.” Perhaps surprisingly, a number of trusting clients agreed to turn around payment straight away,

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“We’re currently working on an acquisition and while we can’t say who it’s for, we’re really excited about it” – Mike Flinker, President

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Craig Swain Vice President, Strategic Operations

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Domenic Di Girolamo Chief Executive Officer

Jason Hollingsworth

Chief Information Officer

Pierre Gagne

Sandra Fraser

Vice President & Chief Financial Officer

Vice-President, HR & Corporate

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CANADA

meaning they could pay the trucking we had designs on really growing the companies 10 days later, thus business, but to do that we had to overcoming the banks holding their be a player in the US market – you’re checks for seven days. In Flinker’s wasting your time if you’re not and words it was “off to the races we you want to grow,” he comments. went”. He acknowledges that it was an By his reckoning it would take a atypical way to establish a company, couple of years, but that reckoning saying: “If you presented proved to be it as a business plan ambitious for a to a bunch of Harvard couple of reasons. Business students, they’d “It was a really tough probably say we’re going transition,” Flinker bust in a few days, but we admits. “We thought really defied the odds.” the clients that we had What followed was – which were mainly nigh-on two decades of American companies solid domestic growth in who were giving us Canada, as the business cross border business won itself a name for – would ultimately logistics excellence, – Mike Flinker, President give us business in the taking in truckloads, US, but that wasn’t intermodal, freight management, and forthcoming and we had to do what temperature controlled equipment. everybody else did and wait in line.” But keen to push the business The global downturn of 2008, forward, Flinker pushed for expansion 2009 and 2010 was also hugely into the potentially lucrative US market challenging for the sector, with a in 2005, something he marks as “a number of businesses falling by real milestone” for the company. the wayside in the process. “The Canadian dollar had begun to “In reality it took eight or nine years escalate in value and we knew that and really get traction in the US. That

“I think when it comes to companies like Walmart or Home Depot, it’s about gaining their confidence”

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was the biggest surprise to me, I never thought it would take that long. That’s not to say we weren’t growing in the time because we were picking up clients but it was the huge Fortune 500 clients that we had worked with in Canada that we reluctant to give us that domestic US business up until 2014. I think we showed a lot of tenacity in our pursuit that made them realize that we weren’t going to quit, and perhaps after so many companies fell away in the aftermath of 2008, 2009 and 2010, that they saw an opportunity for us,” he says. “I think when it comes to companies like Walmart or Home Depot, it’s about gaining their confidence and

FLS has worked diligently to fundraise for various charitable organizations. Whether a bake sale, food drive, or collecting and donating toys around the holidays, there is always a new charitable venture underway. The generosity of the FLS team, and affiliated donors, in giving both their tie and talents has yielded very positive results for members of our community with needs

showing them that what we can do, and then doing exactly that – we always felt like that but it’s irrelevant if the client doesn’t share that view. If you view yourself as a genius but the rest of the world thinks you’re an idiot, what good is that?” The breakthrough saw the company’s fortunes soar, and by the time FLS was sold in 2016, in the 11 years since it entered the US market it had achieved compound sales growth of 30% per year, and compound profit growth of 28% per year, leading to admiring eyes that ultimately saw the company acquired by Arby Partners in March last year. “What’s been added is real

CANADA

FLS takes pride in its ability to offer timely and costeffective transportaion and logistics solutions

More than 30 years of expreience in providing leading edge logistics solutions across North America.

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Focused on providing exceptional service to clients of various sizes across a number of diverse industries, FLS is passionate about developing customer centric solutions, hand-crafted from a wide portfolio sf services.

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As leader in the third-party logistics space, FLS invests early and often in new technologies and infrastructure that position its clients to be supply chain leaest in the markets it serves

structure,” says Flinker. “If we had weaknesses it was on the administrative side. We bolstered all of our accounting, we have a first rate CFO and a top quality controller, as well as a great assistant controller. Concurrently, they’ve given us the freedom to keep doing what we’re good at, and given us capital to make acquisitions. We’re currently working on an acquisition and while we can’t say who it’s for, we’re really excited about it. We hope to see that close by the end of the summer and we’ll look to make more acquisitions after that.” The company is also making inroads into the Mexican market, and

has Mexican nationals to smooth the process, while it is working closely with its clients to ensure its technology offering is best-in-class. Flinker is a 37 year veteran of the business, but says he is “massively excited for the future.” If the last three decades at FLS Transportation is anything to go by, he has every right to be so.

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FEBC: PERFECTION IN PROCUREMENT Written by: Catherine Sturman Produced by: Heykel Ouni

Imad and Stefano during their weekly team meeting

DELIVERING PROCUREMENT SERVICES TO CLIENTS WORLDWIDE, FEBC INTERNATIONAL DISCUSSES HOW IT HAS GROWN TO DELIVER AN EXCEPTIONAL PERSONALISED SERVICE DELIVERY TO ITS CLIENTS

riginally founded in 1989 as a project and cost management consultancy firm, FEBC hit the procurement sector of furniture, fixtures and equipment (FF&E) in the 1990s with full force. Obtaining ISO certification in 2015, incorporating ISO 9001, 14001, 28000 and 18001, the company has become the sole provider of ISO certified hospitality procurement services worldwide, enabling it to gain global exposure and a strong edge over competitors. Consequently, FEBC has fully cemented its presence in the MENA region, and is now headquartered in Dubai, with regional offices in Treviso and Hong Kong and local offices in Doha, Riyadh, Brunei, Malaysia and Nigeria. “Obtaining ISO certification in 2015 has allowed us to bring a lot of accuracy and precision to

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the work that we do from many different angles; from a supply chain management angle, health and safety management angle, environmental compliance and quality assurance programs,” explains Communications Manager Tarek Dajani. “This foundation is beneficial to clients, allowing them to have complete trust – whether this is through tracking or by knowing that they are dealing with a company that is completely compliant with ISO standards, the highest standards with any supply chain management company worldwide.” FEBC has completed a number of projects across the Middle East and Africa, ranging from residential, boutique to five-star hotels. Recent projects, such as the Oberoi Al Zorah in the UAE, highlights the company’s focus on delivering world-class procurement of FF&E, collaborating

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We work and live by our values – whether that’s how we treat our own staff or when we communicate with our clients” Tarek Dajani, Communications Manager

Bespoke production Producing excellence anywhere

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Speciality Turkish restaurant, BESH with a number of suppliers. Additionally, FEBC is currently working on one of the largest projects in Algeria, the Marriott Bab El Zowar Hotel development, with over 2,300 rooms and 380,000 sq m of built-up area. The project is by far the largest privately funded hospitality development in the whole of Africa. “I think this corporation is really invaluable for the customer,” comments Stefano Giudici, Regional Director for Europe and Africa. Tarek Dajani supports this further, stating: “We are proud to be working with top operators, such as the Marriott, Starwood, Hilton, Accord, Hyatt, Mandarin Oriental, Kempinski, Oberoi etc...

We value the relationships we build with our clients and they repeatedly come back to work with us based on their positive experiences.” Ongoing operations FEBC’s development of in-house procurement software, febcProcure, has enabled clients to gain access to live tracking of all company projects, in an aim to provide complete transparency. Through the software, clients can access log books, documents and see the progress of various projects, as opposed to solely presenting projects which have been completed.

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SERVING HOSPITALITY WITH A HEART Rikan is a leading manufacturer and supplier of luxury accessories for Rooms and F&B for the Hospitality Industry.

www.rikanworld.com

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The team gather at the regional head office in Treviso, Italy Tarek Dajani explains: “It’s a journey not only for us, but for our clients as well. We want to make sure that we are flexible enough to provide clients with the services that they are paying for, and not just be a company that buys, sells and procures furniture. That’s why we view ourselves as procurement consultants.” With this approach, FEBC repeatedly meets with clients wherever they are located, irrespective of other

S U P P LY C H A I N

We undertake value engineering with the customer and work together to find solutions, and where we can find potential savings” Stefano Giudici, Regional Director for Europe and Africa

ongoing projects. Tarek Dajani adds: “Whether its small touches like gifts during Ramadan or Eid, or a simple catch up over dinner, we always make sure that we strengthen the bond, because we view our relationships with clients as more of a partnership. “Trust is a very important value that we hold, and we work and live by our values – whether that’s how we treat our own staff or when we communicate with our clients. It’s all founded on trust, strong relationships and dependability as a company, precision, accuracy – these are a lot of the values that we hold.” Cost savings These values filter into FEBC’s strict processes, with the implementation of value engineering. Giudici explains:

“We undertake value engineering with the customer and work together to find solutions, and where we can find potential savings. For example, we are in discussions surrounding a new project in Sweden. The design has been completed by the architect, and we are now working with the customer to find a way to make this project a reality.” FEBC places an increased focus on not only remaining competitive, but to repeatedly add value for its clients. Whilst an expensive fabric is often selected, for example, FEBC will offer the same or an alternative product, which will achieve the same result, with a firm focus on retaining and respecting quality. “Our first point is respecting the quality and the price for our customer,” adds Giudici. “It is

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FEBC

Inside the 5-star Al Zorah Oberoi Resort

In certain areas, we are encountering order delays and putting projects on hold. However, other areas are warming up â&#x20AC;&#x201C; for example, in Africa there is a lot going onâ&#x20AC;? Imad Dajani, Chief Executive Officer

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very important to make our customer satisfied, and to expect the quality requested within the project.” “We don’t aim for satisfaction – we aim for perfection,” adds Tarek Dajani. “In aiming for perfection and excellence, we then constantly tend to meet the client’s requirements. Every client has their own unique understanding and representation of what quality means to their hotel and brand. We always try to match the quality on day one from there, to the finished product.” In deliberately cutting out the

middle men, FEBC now goes direct to suppliers and manufacturers to not only guarantee cost savings, but ensure ongoing positive relationships. Although suppliers continue to remain an important focus, Chief Executive Officer Imad Dajani explains that it is essential for the business to “remain aware of supplier performance, experience, the type of level pricing and supplier flexibility, in order to not only add value, but also to offer the right price and performance accordingly”. With this in mind, alongside the implementation of febcProcure

Outdoor furniture at the Al Zorah Oberoi Resort

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and use of value engineering, the company is continually able to build a strong base of manufacturers and suppliers worldwide. Additionally, to support clients further, FEBC also adopts a payment by performance approach, giving it a competitive edge within the procurement sector in the region. Tarek Dajani adds: “The more projects we have taken on board and the operators that we’ve worked with, the more we understand what our clients’ needs are. We learn their needs, we build a strategy and we drive the process, understanding what our core clients and customers require.” Future growth Whilst FEBC continually works to improve its service, Imad Dajani highlights that the company is seeing a number of challenges. With clients becoming increasingly cost conscious, the company is also seeing increased delays in regards to payments and released monies, creating project delays. “I think it is a combination of financial worries about the current political position

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around the world,” he says. “In certain areas, we are encountering substantial order delays and putting projects on hold. However, other areas are warming up – for example, in Africa there is a lot going on.” With this in mind, FEBC aims to expand its operations in India and ex-Soviet Union areas, such as Kazakhstan, Azerbaijan and surrounding areas. Furthermore, FEBC places great importance on expanding in Europe and developing its current footprint within London. “We want to expand our operations and become a real leader in the European Market over the next 10 years,” concludes Tarek Dajani. “We have set our vision really very high and this is our goal – we want to continue developing our operations worldwide, increase our local presence globally, and continue to innovate our service and operation.”

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