The State of Logistics in Latin America - 2008 : The State of Logistics in Latin America - 2008 Maria Rey
Executive Director, Center for Emerging Logistics & Supply Chains – CELSC
mariarey@celsc.org
A macroeconomic introduction to our discussion : A macroeconomic introduction to our discussion Economy, Trade, Infrastructure, Investments, Regional Forecasts What we know in a different context…
Mini-lesson on LATAM macroeconomics… : Mini-lesson on LATAM macroeconomics… 4 years of sustained GDP growth above 4%
GDP Growth
5.5% in 2007
4.6% (e) in 2008 but with less dispersion among countries
Controlled inflation in the majority of regional economies
Except Venezuela with price increases beyond 30% per annum
Appropriate handling of the commodities “storm” Source: CEPAL, 2007
This is good news for logistics… : This is good news for logistics… The last 2 years show the strongest growth in GDP per capita since the 80s Source: CEPAL, 2007
It means more logistics and SCM to support stronger, bigger and more demanding domestic markets : It means more logistics and SCM to support stronger, bigger and more demanding domestic markets Still Riding Last Year’s Virtuous Cycle
Greater global demand for commodities
More regional exports
Greater logistics activity (port related)
More employment
Higher internal consumption and demand Latin America's middle classAdiós poverty, hola consumption! Aug 16th 2007 | SÃO BERNARDO DO CAMPOFrom The Economist print edition
Infrastructure Challenges Mediated by Geographical Conditions : Infrastructure Challenges Mediated by Geographical Conditions Regional Trading
Activities by 2010 12 Countries
350m Inhabitants
$1.3b in GDP …despite natural barriers IIRSA (Initiative for the Integration of South America’s Regional Infrastructure)
LATAM needs economies based on productivity, not on the natural resources’ lottery : LATAM needs economies based on productivity, not on the natural resources’ lottery ¿Where to go?
The macro-logistics policy agenda should include... : The macro-logistics policy agenda should include... The obvious... Infrastructure
Beyond the obvious...
Customs – Standardization of procedures
Simplification
Fair checks
Stable business rules...
Education for competencies and productivity
Favorable investment conditions for new technologies and equipment
Logistics Performance Benchmarking in Latin America (2007/2008) : Logistics Performance Benchmarking in Latin America (2007/2008) 153 firms, 13 countries,
20 key performance indicators
Our Sample > Small Firms; In Manufacturing and Logistics Services : Our Sample > Small Firms; In Manufacturing and Logistics Services
A simple definition of supply chain management success : A simple definition of supply chain management success Do more > Productivity
With less > Financial
Better > Quality
Faster > Speed
Success > Satisfaction
A Supply Chain Management Performance Assessment Framework : A Supply Chain Management Performance Assessment Framework
Productivity of Logistics Resources in LATAM : Productivity of Logistics Resources in LATAM What’s the resource? What’s the output? Pr = Output r Consumptionr
Storage Density > A combination of space utilization and high-value products : Storage Density > A combination of space utilization and high-value products
No Wonder! = Retailers and 3PLs prevail in space utilization : No Wonder! = Retailers and 3PLs prevail in space utilization
Total Inventory Turnover…LATAM keeps 58 days in inventory! : Total Inventory Turnover…LATAM keeps 58 days in inventory! Inventory Turns measured as the ratio between total sales (in US$) divided by average annual inventory levels (in US$)
… and by major economic sectors : … and by major economic sectors
Fleet Utilization > KPI not used! Not reported, and making little sense… : Fleet Utilization > KPI not used! Not reported, and making little sense…
Our interpretation… : Our interpretation… They don’t know. They don’t care. The argument is simple: They OUTSOURCE!
Customer Orders per M-H : Customer Orders per M-H
Global Benchmarking with Asia, Europe and the U.S. (Any ideas?) : Global Benchmarking with Asia, Europe and the U.S. (Any ideas?)
Purchase Order Cycle Time (Days) : Purchase Order Cycle Time (Days)
Sourcing Cycles : Sourcing Cycles
… by region by sector… : … by region by sector…
Ciclo Total del Pedido (Horas) : Ciclo Total del Pedido (Horas)
Esto es lo que los clientes experimentan en términos de tiempo de servicio : Esto es lo que los clientes experimentan en términos de tiempo de servicio
Logistics & SCM Quality Indicators : Logistics & SCM Quality Indicators Line Fill Rate %
Perfect Order %
Perfect Purchase Order %
% Order Fill Rate : Analysis by Economic Sector : % Order Fill Rate : Analysis by Economic Sector
LATAM: % Order Fill Rate by Firm Size >>> No Conclusive Information : LATAM: % Order Fill Rate by Firm Size >>> No Conclusive Information
LATAM: Perfect Order Percentage : LATAM: Perfect Order Percentage POP = perfect entry* in-full * on-time * no damages
LATAM: Perfect Purchase Order : LATAM: Perfect Purchase Order ¿Quality metrics have not reached procurement?
And after all, there’s money!… : And after all, there’s money!… Financial Indicators
Four Families of Supply Chain Financial Indicators : Four Families of Supply Chain Financial Indicators The Cost of Doing
Cost-to-Serve
Transformation Cost
Total Sourcing Cost
Total Fulfillment Cost
The Cost of Ownership
Logistics Assets – Cost of Ownership
Inventory Carrying Costs The Cost of Errors
Lost Sales Costs
Reprocessing Costs
Error Processing Costs
Underutilised Capacity Costs
The Cost of Outsourcing
Contract Manufacturing Costs
In-sourcing and Out-sourcing costs
LATAM: Total Logistics Cost (as % of sales) by Process by Sector : LATAM: Total Logistics Cost (as % of sales) by Process by Sector 14.7%
Total Logistics Cost (as % of Sales) by Process and Company Size : Total Logistics Cost (as % of Sales) by Process and Company Size Smaller Firms Pay Twice!
Micro-level strategies balance the firm’s objectives and the challenges of the region : Micro-level strategies balance the firm’s objectives and the challenges of the region Strategies that work for Latin American supply chains
Measuring as if they are part of the Forbes 500! : Measuring as if they are part of the Forbes 500!
They don’t discover “warm water”! : They don’t discover “warm water”! Standards in all aspects of logistics operations!
… documents
… communication
… technology
… language
… facility lay-outs
… product ID
Smart Buyers! : Smart Buyers! … of Technology!
Leveraging internal know-how.
Knowledge Management as a fundamental value.
Investment in Human Capital… : Investment in Human Capital… … is a business problem!
It’s not a performance “PRIZE”
Compensation based on Competencies
SCM/LOG Content but also values and attitudes.
SmartSourcing & Outsourcing! : SmartSourcing & Outsourcing! May be the difference…
Investments in developing and maintaining SC relationships! : Investments in developing and maintaining SC relationships! Supply Chain Management depends on business relationship Training on relationship management
Joint Scorecards
Technology as a relationship leverage
Same Language ? Same Culture
TOLERANCE!
CONTRACTING! : CONTRACTING! ... Beyond the lawyers...
Watching the environment is not only for BIG Companies : Watching the environment is not only for BIG Companies Leaders know their Logistics Carbon Footprint! Environmental implications of:
… Packaging
… Routing
… DC Location
… Sourcing
… Service Levels
EQUITY as a VALUE! : EQUITY as a VALUE! Even the parking space?
They DON’T play our regional sports… : They DON’T play our regional sports… ENVY!
INDIVIDUALISM!
Slide 47: MultiLatins are proof that some of these principles work!
LOGISTICS FOR THE BUSINESS INTEGRATION OF LATIN AMERICA … : LOGISTICS FOR THE BUSINESS INTEGRATION OF LATIN AMERICA … Supply Chain Management for Competitiveness!