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AGCO Smart Logistics –
Network Performance and Visibility Options
Greg ToornmanGlobal VP – Materials Management, Logistics, and Demand Planning
2
AGCO Overview
AGCO Smart Logistics Overview
Global Performance Management
Global Visibility & Options
Summary
1.
2.
3.
4.
5.
AGENDA
3
SINCE 29 YEARS “YOUR AGRICULTURE COMPANY” …
OUR MISSIONProfitable Growth Through
High-Value Customer Service, Innovations, Quality and
Commitment
Revenue 1990
$ 200 Millions
Employees
>20,000 worldwide
Revenue Shares
OUR VISIONHigh-tech Solutions
for Professional Farmers,
Feeding the World
Revenue 2018
$ 9,350 Millions
Plants
54 on 5 continentsEAME: 58%
APAC: 9%
SA: 10%
NA: 23%
4
… TOGETHER MORE THAN 170 YEARS OF INNOVATIONS IN AGRICULTURE …
Solutions for grain storage & poultry equipment
Customized to fit your individual demand
The world most reknown tractor brand
Powerful machines for large scale application
Technology world market leader
AGCO 2019 GLOBAL FOOTPRINT
Global Corporate Headquarters
Regional Corporate Headquarters
Manufacturing / Assembly
Manufacturing /Assembly
(Joint Venture)
Parts Distribution
Licensee
Future Farm and
Global Learning Center
5
6
AGCO CHALLENGES IN AN INCREASINGLY COMPLEX GLOBAL ENVIRONMENT …
Market Volatility
Brand Variety Rapid Network Expansion
Global Platforms
1994
1997
2002
2004
2011
HighLow
Development wheat prices
US$ per tonModule standardization
54 manufacturing plants
32 After-Sales locations
>6.000 DM suppliers
>14.500 Transport
relations
GLOBAL SUPPLY CHAIN MANAGEMENT TODAY
Transparency is imperative in a complex and
very dynamic global market environment.
Today’s challenges include rapid growth of
brands, quick network expansion, market
volatility, global platforms and unforeseeable
events.
Innovative processes and smart
technologies are key to gaining
insights and managing risks more
efficiently.
7
8
AGCO Overview
AGCO Smart Logistics Overview
Global Performance Management
Global Visibility & Options
Summary
1.
2.
3.
4.
5.
AGENDA
AGCO’s Vision
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… AND AGCO DEVELOPED ITS VISION OF AGCO SMART LOGISTICS
TO CONNECT AGCO’S GLOBAL SUPPLY CHAIN
From traditional inbound
logistics…
… to AGCO Smart Logistics
Local
suppliers
Regional
suppliers
Global
suppliers
10
BUILDING BLOCKS OF AGCO SMART LOGISTICS
INNOVATION
INCREASE TRANSPARENCY
REDUCE RISKS
IMPROVE PERFORMANCE
Local
suppliers
Regional
suppliers
Global
suppliers
Process integrationSystem integration
11
DIGITALIZATION CONNECTS SUPPLIERS, CARRIERS, AGCO SITES AND THE 4PL TO AN INTEGRATED
SUPPLY CHAIN MANAGEMENT APPROACH
AGCO sites
Carriers
Suppliers
Supply chain orchestration
Strategic planningOptimizing the network‘s corner stones
Tactical
optimizationOptimizing actual
transportation
volumes
Route
implementationImplementing
optimized routings
Transport orderingAnnouncing actual transports
Reporting & Performance
ManagementDeriving further improvements
Freight cost
managementBilling procedures
Exception
managementSolving unexpected
disruptions
Dynamic balancingDispatching actual transports
iTMS
1
2
3
4
5
6
7
8
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THE DIGITAL APPROACH WAS STARTED IN THE PILOT REGION EUROPE AND BY NOW IS ROLLED
OUT TO 4 CONTINENTS
▪ > 40 sites globally fully implemented
▪ > 180 carriers implemented
▪ > 3,000 supplier locations implemented
▪ > 20,000 transport orders handled per month at
current volume
▪ > 750 saving initiatives implemented
▪ Big Data made accessible
Key facts Global roll out
EME: completed Q2 2015
APAC: completed Q2 2017
NA: completed Q1 2018
SA: completed Q4 2018
One AGCO wide integrated solution completed in 2018
12
AGCO’s Objective
13
AGCO’S OBJECTIVE WAS TO DIGITIZE AND OPTIMIZE THE GLOBAL
MATERIAL FLOW
Create global transparency on
material flow
Reduce transportation Costs
Increase network performance Reduce inventories
Build the basis for AGCO‘s supply chain execution
convergence and in preparation for IBP
Today’s
Discussion
Content
14
AGCO Overview
AGCO Smart Logistics Overview
Global Performance Management
Global Visibility & Options
Summary
1.
2.
3.
4.
5.
AGENDA
BUILDING BLOCK #4 GLOBAL PERFORMANCE
MANAGEMENT
Integrated Supplier Relationship Management is AGCO’s holistic approach to support supplier performance and secure material supply.
ASPIRE – AGCO Supplier Performance & Relationship Excellence brings global supplier management to practice.
ASPIRE is supported by APEX, a Global Supplier Performance Management System.
15
Cross-Functional Performance Requirements
ASPIRE Guideline 8
AGCO’s ASPIRE PROGRAM – HOLISTIC GLOBAL STANDARD FOR PERFORMANCE MGMT
16
On time supply measures the supplier’s ability to
meet AGCO Corporation’s requirements on time
and at the right quantity to our global locations.
Our objective is to achieve a stable flow of on time
supply into our operating sites in support of AGCO
Corporation meeting our customer delivery
expectations 100% of the time. One time supply
enables our AGCO Production System (APS) to
produce world class products on a consistent and
reliable basis.
AGCO Corporation desires to choose preferred
suppliers and strategic partners who consistently
supply the right quantity of product at the right
time to our sites around the world.
AGCO Corporation’s measurement for
on time supply is:
A. Direct Material Suppliers - 2 days early and
0 days late to the order shipping or delivery
date. 100% of the order line quantity, no partial
credit will be given for partial quantities.
Logistics & Materials
Management
Suppliers are expected to participate and
comply with the terms of the AGCO
Corporation Logistics Agreement. The
Logistics Agreement defines the AGCO
Corporation expectations in the key areas of:
1) Lead time, 2) Supplier Network
Collaboration (EDI or Portal) SNC System
participation, 3) Packaging and labeling
compliance, 4) Transportation Management
System participation, and 5) Capacity
Management System participation.
2. Logistics Agreement
1. On Time Supply (OTS) Performance
B. Freight Carriers - 0 days early and 0 days
late to the agreed to transit time and 100% of
the transportation order quantity . No partial
credit will be given for partial delivery
quantities. The transportation lead time is
based on the agreed to transportation time as
specified in the Transportation Agreement.
Defined Expectations
17
Supplier performance compliance to AGCO
Corporation’s Materials Management expectations is
critical to our site operating performance and meeting
customer delivery expectations. The supplier’s
compliance with our critical system includes the
following:
SNC - Supplier Network Collaboration (EDI or Portal)
• Order confirmation completed on time,
• ASN (advanced shipping notice) transmitted
on time and accurate ASN data.
• Electronic invoicing
TMS - Transportation Management System
• Transportation order submitted on time
• Accurate Transportation data used.
Capacity Management System
• Review of available capacity done on time
• Capacity updates completed on agreed to frequency
Not all systems are available in all regions / sites.
Performance calculations will be the average of the
seven criteria outlined above and expressed as a
percentage.
ASPIRE Guideline
Logistics & Materials
Management
3. Performance Compliance
11
Performance Expectations
Min. Threshold OTS: 90%
Preferred Target OTS: 100%
Compliance: 90%
Signed Logistics agreement
Compliance: 100%
Defined Expectations
18
19
AGCO’S DIGITALIZATION APPROACH – SUPPLIER NETWORK PERFORMANCE
Carrier & supplier ScorecardBefore
▪ No clear view on carrier performance as exceptions were not
tracked
▪ Difficulty to distinguish late deliveries
Current Approach
▪ All transport exceptions are tracked in integrated system
▪ Exception data is used for a detailed carrier and supplier
performance scorecard
▪ Structured escalation procedures in case of substandard
performance
▪ Integration with AGCO APEX system and Aspire program
▪ Performance is Managed and Performance is awarded.
APEX report
20
NETWORK PERFORMANCE: NORTH AMERICA FROM EU
SUPPLIERS
21
NETWORK PERFORMANCE: CHINA INBOUND
22
AGCO’S DIGITALIZATION APPROACH – SUPPLIER NETWORK PERFORMANCE DEVELOPMENT
Before
▪ Transport announcement on the day before pickup
▪ Due to capacity shortage on the transport market frequent rejections by
carrier despite agreed routes and rates
New
▪ Transport forecast is created based on material requirements and
packaging instructions for future demand.
▪ Forecast is shared with carriers as a rolling forecast, final confirmation
on day before pickup
▪ Better planning base for carriers leads to increased performance
Transport forecasting
Material call off /
forecast
Transport
forecast
Packaging
instructions
Input for tactical
planning
Load preview to
carriers
Increased Carrier Reliability by Integrating Transport forecast for Carriers
23
BUILDING BLOCK 4: IMPROVE SUPPLY NETWORK PERFORMANCE
Through continuous monitoring & controlling of on-time delivery (carrier)
and process conformity, processes have sustainably improved.
Performance Cockpit
Supplier Management &
Development
Non-Conformance (NCR)
Tracking & Reporting(internal & external)KPI Tracking & Reporting
Reporting & Tracking
of Savings
Risk Management
24
AGCO Overview
AGCO Smart Logistics Overview
Global Performance Management
Global Visibility & Options
Summary
1.
2.
3.
4.
5.
AGENDA
ELEMENTS OF GLOBAL VISIBILITY – PERFECT CASE
Global Visibility
System Process Flow
Global performance management & improvement
▪ One system for all
regions, accessible by all
regions
▪ One system for all
transport modes
▪ Integration of transport
into supply chain
management
▪ Globally standardized
processes
▪ Manage process
performance and
deployment globally
▪ Structured global process
for process management
& improvements
▪ Visibility on all material
flows
▪ Early identification of
deviations
▪ Support of root cause
analysis / improvement
▪ Prediction of supply chain
disruptions
25
Global Transportation Visibility
26
PROCESS MATURITY LEVELS EVOLVE TO REAL TIME AND
INTEGRATED GLOBALLY TRANSPARENT SUPPLY CHAIN
Le
ve
l o
f m
atu
rity
Potential Development Path
Exception management
▪ Implementation of
standardized reporting
processes
▪Clear responsibilities,
single-point of contact
for exception reporting
➔ Re-active exception
handling
Milestone tracking
▪Status setting in iTMS
for pick-up and delivery
by carriers and hubs
▪Follow-up of missing
milestones next day
➔ Re-active exception
handling (in-time reaction
possible)
Real-time tracking
▪Receiving real-time GPS
data
▪Automatic transfer of
transport status, ETA,
location data via
standard interface
▪Visualization of trucks
and material in transit
➔ Pro-active exception
handling
Predictive management
▪Dynamic ETA
calculation based on
transferred geo-data /
truck identifier from
carriers
▪ Identification of potential
exceptions in advance
▪Use artificial intelligence
and big data for further
data evaluations
➔ Anticipatory exception
avoidance
+
+
+
Implemented
Under investigation
To be Enabled
GLOBAL VISIBILITY ON THE MATERIAL FLOW IS A MAJOR NEXT STEP TOWARDS REAL TIME SUPPLY CHAIN INTEGRATION
▪ Increase visibility on all transport flows
▪ Predict ETAs and supply chain disruptions in order
to initiate early counter measures
▪ Identify potential risks and mitigate them
▪ Reduce cost of delays/ early delivery
Objective
▪ High visibility on transport flow (historic) and
exceptions
▪ Limited mile stone visibility for current transports
▪ Fully dependence on milestone input from external
partners
Current Status
▪ Integrate best in class 3rd party solutions for global
tracking and predictive analytics.
▪ Develop business case and benefits to the business
as well as customer impact
Next steps
27
Ways how to enablereal-time tracking
28
THERE ARE MULTIPLE WAYS TO ENABLE GPS & REAL-TIME
TRACKING BUT NO OFFERING WILL NOT COVER FITS ALL
NEEDS▪ Logging unit installed i.e. trucks
▪ Data logging of location, speed further
operational information
▪ Data is transmitted via GSM / GPRS to
central data platform
▪ Multiple providers of services
▪ Single hardware devices which continuously
send GPS information
▪ Devices can be attached to shipments.
▪ Device contains internal source for energy
▪ Return process and tracking of
devices needed
▪ A number of offerings in the
market place
▪ Integration of e.g. various logging
devices or telematics systems
▪ Own platform for suppliers, carriers,
receivers
▪ Integration into basic TMS is possible
▪ Multiple providers of services
▪ Integrate various sources for
real-time tracking, e.g.
telematics systems, LSP, IoT
devices
▪ Additional services for
visualization, dynamic ETA
calculation or fleet management
are provided
▪ A number of offerings in the
market place
Real-time
tracking
technology
1) Internet of Things
Findings of IoT Platforms
29
THERE ARE A NUMBER OF PROVIDERS OF GLOBAL VISIBILITY AND
PREDICTIVE ANALYTICS
▪ Increased transparency of material in transit
▪ Real-time tracking of shipments
▪ Dynamic ETA calculation based on latest available data
▪ Enabling increased levels of resource planning.
▪ Increasing planning quality by reduction of “black box” during sea / air transportation
▪ Reduction in risk of supply chain disruption
Precise Predictive Logistics by Providers
▪ US and EU based specialists in supply-chain
predictive analytics
▪ Solutions are cloud based application
▪ Collects massive big data from IoT devices
(public and private) via API’s and direct
connections
Main benefits
Findings of IoT Platforms
30
BENEFITS / ADVANTAGES OF GLOBAL VISIBILITY WITH IOT PROVIDERS
Enabling
AGCO to
achieve
visibility on
its global
flows:
Fast
Precise
Integrated
Visibility across
transport modes
▪ Different transport modes (sea / air /
road1)) and all carriers to one platform
▪ Continuously adding new functionalities
and enhancements
▪ AGCO will benefit of future enhancements
Continuous
Improvement
▪ No need to individually connect AGCO
carriers for sea / airfreight visibility
▪ Fast implementation and setup possible
Flexibility and
adaptability
▪ Uses multiple data sources to predict
arrival times
▪ AGCO can base their decision and
actions on better information
Prediction of
arrival times
Findings of IoT Platforms
31
INTEGRATION OF IOT PROVIDER CONTENT INTO AGCO’S CURRENT ITMS LANDSCAPE
AGCO iTMS
4flow vista
data center
Transport
management
Freight cost
management
4flow vista planning
4flow vista exception
management
4flow vista route
manager4flow vista analytics
4flow vista cockpit
IoT Provider Information
Seafreight load:(Load ID, BOL, Articles,
Consignor, Receiver, Routing,
Container ID. Vessel. Carrier
ETA/ ETD …)
Airfreight load:(Load ID, MAWB, Articles,
Articles, Consignor, Receiver,
Routing, Carrier ETA / ETD)
Road Freight Loads:(Load ID, BOL, Articles,
Consignor, Receiver, Routing, .
Carrier ETA/ ETD …)
5 Year Cost Estimates
Service Provider Air Freight Ocean Freight Road Freight
Total Cost All
Modes
Average cost per
Transaction
A $ 248,041 $ 274,312 $ 1,125,868 $1,648,221 $ 1.12
C Not Available $ 620,302 $ 3,056,032 $3,586,882 $ 3.36
D $ 2,635,040 $ 2,663,910 $ 3,599,685 $3,676,985 $ 3.45
E $ 171,275 $ 315,625 $ 4,994,500 $5,381,000 $ 5.05
B $ 200,075 $ 344,425 $ 5,023,300 $5,409,800 $ 5.07
F $ 270,613 $ 487,138 $ 7,505,450 $8,085,200 $ 7.58
32
AGCO Global Track and Trace – Cost Options with IoT Service Providers
A wide range of proposals have been provided by various IoT
service providers – the question is …. How do you develop a ROI
??
33
AGCO Overview
AGCO Smart Logistics Overview
Global Performance Management
Global Visibility & Options
Summary
1.
2.
3.
4.
5.
AGENDA
34
IMPLEMENTATION SUCCESS STORIES
A. iTMS – Implemented in EME, N.A. , S.A. &
China
B. SAP SNC - Implemented in EME, N.A. , S.A. &
China
C. Smart Logistics – Award Winning
German BVL 2016 Supply Chain
D. European Logistics Association 2017 Supply
Chain Innovation Gold Medal award winner.
E. Recognized by Forbes 2017 & 2018, Supply
Chain World 2017 & 2019, Automotive
Logistics and Supply Chain Digital.
F. Logistics Innovation Award 2018 from China
Federation of Logistics and Purchasing
G. Organization – Regionally lead / Globally
Integrated / One Strategy / One Vision.
Summary
35
NETWORK PERFORMANCE AND TRACK AND TRACE
Create one global vision
▪ Early discuss global vision with
process owners at multiple levels
▪ Standardized format and
methodologies
▪ Customize where needed
▪ Involve all business function
Prototype, validate, learn
▪ Quick prototyping and piloting of
new ideas and innovation
▪ Validate and benchmark
▪ Involve network partners
Understand the True Benefits
▪ Align on objectives.
▪ How will the business benefit from
the investment?
▪ How will the increased volume of
data be utilized?
▪ What will fund the investment?
Collaborate & partner up
▪ Find the right partners with a high
cultural and strategic fit
▪ Ensure common vision and
objectives for all parties
▪ Find partner, not suppliers
36
THANK YOU!
Greg Toornman
Global Vice President, Materials Management,
Logistics, and Demand Planning
AGCO Corporation
4205 River Green Parkway
Duluth, GA 30096-2568 USA
Tel +1 770.232.8345
Cell +1 678.294.9454
Email: [email protected]
www.AGCOcorp.com
Exceeding customer expectations with AGCO Smart Logistics!