Published on March 10, 2014
Unlock hidden value from your logistics operations through analytics Gianni Giacomelli Senior Vice President, Genpact
PROCESS • ANALYTICS • TECHNOLOGY 2© 2014 Copyright Genpact. All Rights Reserved. A Global Leader in Business Process Services: Process Transformation and Outsourcing, Analytics, Technology We help leaders of some of the largest enterprises transform and run their processes and operations, including the very complex and industry-specific What we do Unbiased, agile combination of process science, related technology and analytics limiting upfront costs and enhancing future adaptability Right critical mass: we are large (62,000+ global staff) but our solutions appropriately flexible; our top management is directly involved in our client partnerships How we do it Our impact We help enterprises to be more competitive by becoming more intelligent: adaptive, innovative, globally effective and connected… …by enabling tighter management of costs, risks, regulations, and growth enablement The results: US$22B* of impact for 800+ global clients *US$22B is a cumulative figure since 2006 *US$22B is a cumulative figure since 2006
PROCESS • ANALYTICS • TECHNOLOGY 3© 2014 Copyright Genpact. All Rights Reserved. Unlocking value – some examples Challenges in logistics Q & A Solution approach
PROCESS • ANALYTICS • TECHNOLOGY 4© 2014 Copyright Genpact. All Rights Reserved. Global economic recovery leading to increasing focus on managing logistics operations as a source of value Following the slump in 2009, logistics spend as a proportion of global GDP will regain its 2008 peak of 9.3% in 2013 Total logistics expenditures represent an average of 12% of sales revenues For a $1 billion industrial company with a 5% profit margin, a 10% savings on freight transportation can add about $6.3 million to the bottom line, a 12%profit increase Logistics is a significant and growing cost for supply chain organizations
PROCESS • ANALYTICS • TECHNOLOGY 5© 2014 Copyright Genpact. All Rights Reserved. However, logistics service providers face a complex and challenging environment • Volatile fuel costs and concerns of greenhouse gas emissions • Increased globalization leading to rising support costs • Highly agile and responsive operations needed to service customers • YoY logistics cost reduction with enhanced service levels
PROCESS • ANALYTICS • TECHNOLOGY 6© 2014 Copyright Genpact. All Rights Reserved. Each industry has specific issues requiring deep industry knowledge Electronics • Disintegrated global supply chain, long distance transportation, outsourced production and M&As • Shortening product life cycles • Inventory obsolescence Pharmaceutical • High sourcing costs • Need for secure temperature controlled transport; Counterfeiting • Product expiry issues • Complex network design Retail • ‘Last mile’ delivery, especially with online retail • Timely delivery of perishable goods • Near “real time” tracking of millions of SKUs and PPGs Telecom • Inefficient supply chain design • Poor visibility into inventory • Long cycle times Chemical • High logistics cost with heavy, bulky, difficult to store and hazardous products • Shortage of suitable carriers and certified drivers Automotive • Challenging in matching demand with supply • Customized containers and fuel price volatility
PROCESS • ANALYTICS • TECHNOLOGY 7© 2014 Copyright Genpact. All Rights Reserved. Logistics operations are often not optimized due to lack of visibility, limited analytics bandwidth and data silos • Silo operations, no clear feedback mechanism between planning and execution function • Local optimization, lack of global visibility • Lack of multi-disciplinary insight required to enable smart decisions • Person dependent and not process dependent • Shortage of logistics analytics talent, mostly dependent on local pool of people
PROCESS • ANALYTICS • TECHNOLOGY 8© 2014 Copyright Genpact. All Rights Reserved. Organizations struggle to answer - What data is useful?, What insights are needed for strategic and tactical decisions and… how to get to them? Increasing complexity of material and information flows Massive data explosion in the transportation industry… 30 Million sensors, 227 Petabytes data growing @ 40% per year US alone faces a shortage of 140,000 – 190,000 analytical positions by 2018 1.5 Million more data- savvy mangers needed to take full advantage of big data in the US1 1 Source: McKinsey Global Institute 2 Source: Economist Intelligence Unit Survey, October 2010 More than 80% of the companies do not effectively use their data to make informed decisions2
PROCESS • ANALYTICS • TECHNOLOGY 9© 2014 Copyright Genpact. All Rights Reserved. Unlocking value – some examples Challenges in logistics Q & A Solution approach
PROCESS • ANALYTICS • TECHNOLOGY 10© 2014 Copyright Genpact. All Rights Reserved. Up to 25% potential cost savings can be realized with logistics analytics 0% 5% 10% 15% 20% 25% 30% Network Design and Optimization Carrier Sourcing Analytics Distribution Center Analytics Total savings potential ILLUSTRATIVE 10–12% savings 8 – 10% savings 6 % savings %costsavings
PROCESS • ANALYTICS • TECHNOLOGY 11© 2014 Copyright Genpact. All Rights Reserved. 18% cost savings through strategic network design and optimization for a US furniture manufacturer • Agile and responsive network needed to meet demand growth and fluctuation • Optimal number and location of consolidation/ deconsolidation hubs to align the logistics network to the demand pattern • Potential cost savings through better consolidation, mode-shifts and continuous moves 18% savings generated due to mode shift, consolidation, continuous move and hub selection Challenges Our solution Delivered Impact
PROCESS • ANALYTICS • TECHNOLOGY 12© 2014 Copyright Genpact. All Rights Reserved. $5.2 MM cost savings through inbound network optimization for US consumer appliances manufacturer Challenges Our solution Delivered Impact • 432 suppliers ship material to 9 manufacturing plants • Higher shipments, dynamic shipment patterns, inefficient load planning and low capacity utilization resulted in high transportation cost • Cost savings through better consolidation, mode- shifts, optimizing supplier window times • Additional savings through frequency optimization $ 5.2 MM (22% of the baseline freight cost) annual cost savings
PROCESS • ANALYTICS • TECHNOLOGY 13© 2014 Copyright Genpact. All Rights Reserved. 20% labor productivity improvement in warehouse operations for US consumer appliances manufacturer Challenges • Increased labor and low labor productivity • Multiple data sources and no standard methodology to measure the labor productivity and improvement Our solution • Compiled the data to perform statistical analysis to identify significant variables (X-Dock , Golden Zone Picks and Major Units) impacting labor productivity • Recommended the optimal setting for significant variables Golden Zone and X-Dock to maximize the labor productivity Delivered Impact Improvement of 7.4 units handled/man-hour (20% productivity) in warehouse operations
PROCESS • ANALYTICS • TECHNOLOGY 14© 2014 Copyright Genpact. All Rights Reserved. Up to 30% reduction in freight spend by increasing Lowest Cost Carrier usage for a 3PL major Challenges • Lack of feedback on carrier performance to operations • Increased effort by operators to find carrier to ship loads • 30% of the loads shipped with increased freight spend Our solution • All loads tendered with greater than 2 day lead time to provide sufficient time to the carriers • Feedback to sourcing to re-bid lanes where Least Cost Carrier (LCC) is not able to cover the loads Delivered Impact Increased LCC usage to 90% Freight spend reduced by up to 30%
PROCESS • ANALYTICS • TECHNOLOGY 15© 2014 Copyright Genpact. All Rights Reserved. Unlocking value – some examples Challenges in logistics Q & A Solution approach
PROCESS • ANALYTICS • TECHNOLOGY 16© 2014 Copyright Genpact. All Rights Reserved. • Does my data accurately describe the current state of my operations? • Am I using data to predict future challenges? • Do I have analytical skills to prescribe improvement initiatives? Missing ‘A’ is Data SM RT Decisions
PROCESS • ANALYTICS • TECHNOLOGY 17© 2014 Copyright Genpact. All Rights Reserved. Most analytics resources with organizations today focused on descriptive analytics creating limited value… Analytical Capabilities and Complexity BusinessValue Collect and aggregate data to get visibility on current business performance Use historical data from internal operations and external sources to forecast future trends Identify lead indicators and simulate future scenarios to recommend continuous improvement initiatives Descriptive Predictive Prescriptive
PROCESS • ANALYTICS • TECHNOLOGY 18© 2014 Copyright Genpact. All Rights Reserved. Deep analytics can be done across the logistics planning and execution lifecycle Network visualization and opportunity assessment Dedicated fleet analysis Site selection strategies Network optimization Network Design and Optimization Warehouse design and planning Warehouse performance management Labor estimation and planning Operations improvement Distribution Center Analytics Spend analysis Savings opportunity assessment RFX management and analysis Carrier performance management Carrier Sourcing Analytics Metrics rationalization and development Scorecard design and production Business intelligence reports Metrics analysis Metrics Rationalization and Analysis
PROCESS • ANALYTICS • TECHNOLOGY 19© 2014 Copyright Genpact. All Rights Reserved. Execution factory with standardized processes and effective automation can power scalable analytics • Collaboration with customers • Access to external experts…industry, academia, cross industry, cross geography Extended Organization Collaborative Solutions • Catalog of ‘On Demand’ analytics work packages with pre-defined inputs/outputs • Access to dedicated teams or pool of hours of defined skillsets On Demand Services Talent – On Tap • Standardized processes • Technology enabled automation • Quality output through templates, checklists and six sigma processes Scale, Quality and Speed Execution Factory
PROCESS • ANALYTICS • TECHNOLOGY 20© 2014 Copyright Genpact. All Rights Reserved. Unlocking value – some examples Challenges in logistics Q & A Solution approach
PROCESS • ANALYTICS • TECHNOLOGY 21© 2014 Copyright Genpact. All Rights Reserved. About Genpact Genpact Limited (NYSE: G) is a global leader in transforming and running business processes and operations, including those that are complex and industry-specific. Our mission is to help clients become more competitive by making their enterprises more intelligent through becoming more adaptive, innovative, globally effective and connected to their own clients. Genpact stands for Generating Impact – visible in tighter cost management as well as better management of risk, regulations and growth for hundreds of long-term clients including more than 100 of the Fortune Global 500. Our approach is distinctive – we offer an unbiased, agile combination of smarter processes, crystallized in our Smart Enterprise Processes (SEPSM) proprietary framework, along with analytics and technology, which limits upfront investments and enhances future adaptability. We have global critical mass – 62,000+ employees in 24 countries with key management and corporate offices in New York City – while remaining flexible and collaborative, and a management team that drives client partnerships personally. Our history is unique – behind our single-minded passion for process and operational excellence is the Lean and Six Sigma heritage of a former General Electric division that has served GE businesses for more than 15 years. For more information, visit www.genpact.com. Follow Genpact on Twitter, Facebook, and LinkedIn.
Prashant.Shukla@genpact.com http://www.genpact.com/home/solutions/analytics-research/other-analytics- services/logistics-analytics Thank You
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