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EVO Logistics Yearbook 2013 edition

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Page 1: EVO Logistics Yearbook 2013 edition - evofenedex EVO 2013.pdf · Logistics) project to promote the Netherlands as a logistics front-runner. In 2020 the ... at Nyenrode Business University

EVO Logistics Yearbook

2013 edition

Page 2: EVO Logistics Yearbook 2013 edition - evofenedex EVO 2013.pdf · Logistics) project to promote the Netherlands as a logistics front-runner. In 2020 the ... at Nyenrode Business University

Colofon

EVO Logistics Yearbook 2013ISBN/EAN: 978-90-79470-09-9

Editor Maryse Tjoeng

Editorial production Feico Houweling, Rotterdam

Photography Marco Hamoen Photography, Bodegraven

Illustrations and design Helen Verbeek Graphical productions, Zoetermeer

Translation Marcus de Geus, Delft

Print Bal Media, Schiedam

© 2013, EVOEVO considers it a pleasure to give full permission to reproduce, disseminate, or otherwise disclose to a wider audience the contents of the Logistics Yearbook 2013, provided full source credit is given.Although EVO has prepared, compiled, and disseminated the information in this Logistics Yearbook 2013 with the utmost care, EVO cannot be held liable for any factual inaccuracies mentioned in the book, nor for damage of any kind whatsoever that might ensue from the use of the information the book contains.

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Contents | 3

Contents

5 Foreword

Science9 Soft skills turn out to be hard as steel

Opportunities21 Challenges for the Dutch logistics industry

Strategy33 Supply Chain Finance can strengthen cooperation

Road transport49 Green Freight Europe - Voluntary monitoring and reporting of carbon emissions

Labour65 A world of opposites

Knowledge distribution77 Wanted! Constructive team players

Sharing information89 Towards a Neutral Logistics Information Platform

Sustainability101 Innovation in sustainable logistics

Cooperation115 Network Orchestration, creating value through collaboration

124 The authors

129 About EVO

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Foreword | 5

Foreword

It is my great pleasure to present to you the EVO Yearbook 2013, the sixth instalment in the successful series informing EVO members and all other interested parties about the latest developments in the world of logistics.

It is a quite special edition, as the theme of this Yearbook and of the 2013 EVO Annual Conference is the ambition of the Dutch Logistics Spearhead Industry (Top sector Logistics) project to promote the Netherlands as a logistics front-runner. In 2020 the country should have reached an international top position in handling flows of goods, as the chain director of (inter)national logistics activities, and as a country with an attractive innovation and business climate for shipping companies and the logistics business community at large.

EVO contributes to these goals by securing the cooperation of more than 20,000 member companies in the Dutch logistics sector and by initiating numerous projects in this field. In this regard, EVO and Nyenrode Business University are very proud to announce the establishment of a research chair of Supply Chain Management, established in March 2013 and currently held by Professor Jack van der Veen.

The new chair will bring together different parties in the fields of business, science and related organisations. Its aim will be to initiate and stimulate research in the field of Supply Chain Management and to make the results available to the business sector. Special attention will be given to Small and Medium Sized Companies (SMEs) and their needs. This is just another example of the permanent link EVO seeks to establish between knowledge and day-to-day business.

In this Yearbook 2013, Professor Van der Veen sketches a vivid picture of what he thinks should be done to help the logistics sector forward. His surprising analysis definitely not only applies to the logistics industry in the Netherlands, but also has international value. In addition, authors form various backgrounds highlight new initiatives in logistics, such as the Neutral Logistics Information Platform (NLIP), which will help to streamline various information flows. The Logistics Knowledge Distribution Centres (Kennis Distributiecentra Logistiek) will help young and talented people to create a career in the supply chain world. Green Freight Europe is a new European project, strongly supported by EVO, which will certainly help European companies to simplify their efforts to make transport greener and more sustainable.

On behalf of the management and the board of EVO I would like to thank the authors for their contributions to this essential document, and I sincerely hope that this Yearbook may prove to be a source of inspiration to us all!

Chris Bruggink,EVO Chairman

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A multidisciplinary approach

Science

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Science | 7

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Summary of chapter 1

Professor Jack van der Veen has held the Supply Chain Management (SCM) chair at Nyenrode Business University since 1 March 2013. The chair was established by EVO with the express intention to provide SMEs with access to high-quality scientific information.

In this interview professor Van der Veen explains how he favours a multidisciplinary approach to supply chain problems. In the past the focus was all too often purely on aspects of business economics, whereas recent research has shown that proper collaboration throughout a chain is often hindered by psychological and sociological factors such as leadership, culture, trust and team spirit.

The Dutch logistics industry has a lot of catching up to do where innovation is concerned, especially in social terms. We appear to be lacking strategic intelligence. The causes of this failing lie in factors endemic to the industry (as is so often the case, our strength is also our weakness), such as a penchant for logical and mathematical thought processes and a focus on operational issues rather than strategic management.

An important research question is how existing models can be adapted to fit the supply chain and include human factors in order to achieve a measure of social innovation. SMEs form a perfect basis for this, as compact organisations have short communication lines and a greater sense of solidarity. They offer a great deal of social capital and better opportunities for implementing rapid changes. A large organisation all too often resembles a supertanker, slow to respond to the tiller, whereas smaller organisations are much easier to adapt to ever changing conditions.

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Science | 9

Jack van der Veen, holds

the EVO Supply Chain

Management Chair at

Nyenrode Business

University.

Soft skills turn out to be hard as steel

‘There is still a wide gap between academia and the world outside. We know that chain collaboration makes things better, faster and cheaper, more sustainable, more innovative, more of everything that’s good for organisations and the Dutch economy. This has been clearly and convincingly demonstrated by science. Even so, practical applications time and time again turn out to be complicated and troublesome.’

The expression of Jack van der Veen, professor of Supply Chain Management (SCM) at Nyenrode Business University, registers surprise. What caused the gap? Science keeps reporting things that ought to please organisations and businesses as customer satisfaction increases by leaps and bounds, but even so, it hardly ever works out in practice. Van der Veen: ‘The question is how this is possible. Is the theory wrong? Are people simply not listening to what the professors are telling them? What is really stopping organisations from managing their businesses in a different way?’

The question is aimed at both parties, businesses and science. This is exactly what moved Van der Veen to accept the challenge of this professorship. ‘In order to be able to cross this bridge from both sides, I immediately said yes to the opportunity of taking the EVO professorship of supply chain management at Nyenrode’, he explains. ‘An important reason to do so was that in addition to business economists, Nyenrode also has sociologists, psychologists and marketing people walking its corridors. This is a major opportunity to get a look at what’s on the other side of the fence.’

Logistics spearhead industry lacks social innovationCompared with other industries, the Logistics Spearhead Industry certainly doesn’t include a lot of innovative organisations. Only 15 percent of the organisations in the sector merits the label ‘socially innovative’, which is 10 percent below the national average. This means that relatively speaking, the logistics industry realises fewer new products and services for new customers and markets, and that both the industry’s performance figures and its investments in research and development are lower. Source: Erasmus Competition and Innovation Monitor 2011-2012, Erasmus University, Rotterdam.

On the other hand there is EVO, an organisation with more than 20,000 members, all with their own specific problems. Van der Veen: ‘They are constantly struggling with issues in the fields of logistics and supply chain management. If we manage to bring the two together, I have my research served to me on a plate. It’s great to be

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able to farm out questions I have been mulling over for so long and to see whether that gets us any closer to an answer.’

Six failure factors of the logistics industryThe Innovation Monitor 2011-2012 shows that where social innovation is concerned the Logistics Spearhead Industry lags behind. Hardly surprising, according to Jack van der Veen, but nonetheless alarming. In an expert’s view published on the logistiek.nl website he lists six causes for this lack of progress:

1. Monoculture The group of logistics policy-makers is heavily dominated by middle-aged Dutch white males. There are too few women, young people and immigrants.

2. Logistics and logic Too many people in the industry are in the habit of using calculations and technology to optimise solutions. There is a marked lack of creativity and meaning.

3. SMEs and self-made men There are lots of family-owned businesses built up from scratch by self-made men, but they often lack the capacity to let go of outdated management methods and embrace new ones.

4. Lots of logistics, too little management The emphasis on logistics results in a lack of interest in management training schemes such as those provided by EMLog, and means that a top-ranking scientific institute like Dinalog is used mainly to solve practical logistics problems.

5. Low profit margins The large number of mutually indistinguishable logistics service providers has created a buyer’s market. This leaves too little time and money for innovation, creating a vicious circle.

6. Focus on operations rather than strategy Putting in a lot of operational work causes the strategic side of running a business to be neglected. It’s like a lumberjack who’s too busy felling trees to sharpen his axe.

InterdisciplinaryIs Van der Veen explicitly looking for an interdisciplinary approach to supply chain problems? ‘Yes’, the professor asserts, ‘I think past methods of tackling these problems have been far too monodisciplinary. The issues of chain collaboration have been pushed too far into the realm of business economics. That is only part of the problem, because the real problem concerns people. I realise that I’m walking on thin ice here, because my training was as an economist, an econometrist even. I build models. Even so, econometrists also talk about change management, the fact

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Science | 11

that it’s the people who need to start doing things differently.’So it’s all about people, about incentives, about what triggers people. In other words, about economics. Van der Veen: ‘Economists have a tendency to think that all it takes to get the quality you want is to present people with the right KPI, but various fields of science have shown us that this is still subject to a number of behavioural factors. Behavioural operations is a completely new type of thinking.

Everything is not just a purely rational process; emotions are involved as well. After all, people have two brain halves, a left brain and a right brain, with ratio located on one side, and emotion on the other. The emotional side often is much stronger than the rational side.’

The problem is rooted in practice as well as in the models that are used. Van der Veen wouldn’t like to guarantee their universal validity. What’s more, he expresses his doubts: ‘Perhaps collaboration is not always the right thing to do. Or perhaps it is, but scientists are using the wrong way of trying to convince the industry. These are the kind of hypotheses we’re working with. As a scientist you need to be able to formulate a hypothesis while at the same time trying to refute that very hypothesis.’

Social capitalSo would it be possible at all to incorporate a human factor into economic models? After all, we’re dealing with highly unpredictable issues rather than cold facts. Van der Veen: ‘Of course it is. Unpredictable issues also get put into models. At the moment most of the models in the supply chain come from logistics and operations, from production, in other words, business economics and maths. But why should it all be about logistics? The supply chain also involves financial flows, marketing, purchasing, knowledge management, innovation and information management.’

According to Van der Veen the crux of the problem is that the emphasis is on economics-driven models that focus on maximising profit. Technically it’s all above board, but socially it doesn’t stand up to scrutiny. ‘It doesn’t really have to work like this in the real world’, the professor says. ‘People also have entirely different goals in life. The desire to live comfortably in a happy environment is something that could easily be introduced into a model. Mind you, it would still be a model, a simplified version of reality. You will never be able to capture all of life in a model, but you certainly can include certain aspects of people’s lives.’The question now remains how to adapt the models in the supply to include human factors. This is where Van der Veen consults colleagues in other fields. ‘Of course, I’m already doing so. I discuss matters like these with specialists in such fields as ethics, leadership, HRM and team building. We cover key points such as social capital. Supply chains have tended to disregard such matters, but they really are essential.’

Social capital within an organisation is what people have in common, what they share for example by drinking coffee together and talking to each other. Van der Veen: ‘This creates a motivation that is not incentive-driven, where people go to work because they enjoy doing so, because they have colleagues they get along with, or because they’re proud of what they do. Social capital results from the

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interaction between people and the value they place on their work. This is essential in organisations, because nothing much gets done without social capital.’

Relations in the supply chainFour types of relations between entities that work together in the supply chain:

Market Pricing:The exchange process by which organisations strive to pay a reasonable price for commodities in proportion to what is received, as a function of market prices and utilities. Rational-legal legitimisation; entities are looking for the best deal and bargains, and are willing to trade in collaborating partners for other, more beneficial partners. The social aspect of collaboration seems to be largely absent.

Equality Matching:Emphasises the importance of balanced reciprocity in its exchanges and where equal sharing or striving for a mutual benefit is emphasised. Encompasses turn taking, equal contributions, egalitarian distribution, balanced reciprocity, levelling compensation and a fair chance. The ‘norm of reciprocity’ is fundamental. The required levels of mutual trust are relatively high.

Authority Ranking:Emphasises the degree to which an entity is legitimised to dominate the entire supply chain. The legitimacy of authority, which can result in higher levels of trustworthiness and trust, may depend on the transparency of the dominant entity in terms of objectives, information and expectations, and fairness in relation to the achievements of the less dominating entities.

Communal Sharing:Entities are seeking for consensus, unity, and conformity concerning the overall purpose of the group of entities expressed in objectives, the structure of the transformation process, responsibilities, and the accessibility and use of resources. Labour which contributes to the final product is seen as a collective resource. Relationships are building social capital.

Based on: The Silver Lining of a Dark Cloud: Using Social Innovation to make the Supply Chain a Crisis-buster, by Robert J. Blomme, Jack A.A. van der Veen & V. Venugopal.

As an example of a negative approach he points to the development of the state-of-the-art Dreamliner, the new passenger jet produced by Boeing: ‘An aircraft is a highly complex assembly of many parts, and its design involves a lot of different decisions. You can’t be an expert on everything, nor do you have the money to develop everything in house, so Boeing decided to outsource as many tasks as they could to external specialists. Boeing used to design a complete aircraft, but this time the project got chopped up into little bits that were given to separate specialists to deal with.’

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Science | 13

The result was that employees lost their pride in their job and the organisation suffered the consequences of lost social capital. Van der Veen: ‘The employees became dissociated from the organisation, and worse, nothing came in its place. All the informal internal chain collaboration that you normally find in an organisation suddenly had to be formalised with external partners abroad. That turned out to be too much to ask.’

There are other solutions, as undertaken by fashion chain Zara. Van der Veen: ‘They have put everything together under one roof. The fashion industry normally deals with six seasons a year. The average shop will have everything in stock at the start of each season, and they will simply hope for the best to get the lot sold by the end of the season. There is no way to order extra stock or to cancel an order. The result is that we always get end of season sales of the stuff people don’t really want. Zara doesn’t do sales, they just respond very rapidly to what gets sold in their shops; their year has 50 seasons. They restock very quickly and much more often than comparable chains do. The concept is also known as Rapid Fire Fulfilment. And if they do outsource anything, they do it close to home, not somewhere in the Far East.’

The great thing about the Zara supply chain is that all the employees are in contact with each other and know what’s going on all the time. Van der Veen: ‘They have a lot of social capital. They are practically within each other’s workplace. Sales and production are next to each other, and their staff can walk in on each other. It’s all in house.’

SocialitiesSo, today’s main issues where chain collaboration is concerned are to do with human behaviour. This is why Van der Veen went to have a taste of sociology, where he looked at the theory of what are known as socialities. This theory assumes that there are four ways to organise a community. The first is based on market prices, i.e. the usual economist’s way of thinking. The other three are based on reciprocity, authority and communality.

‘Our society is becoming increasingly market-focused, so it follows the first of the four variants. If my son needs to read a book he doesn’t like, I can offer him twenty euros and then he might read it. Our society is increasingly inclined to feel that it is logical to pay for something you want done, but we need to ask ourselves if this is really the way we want to interact.’

The principle of authority is also dominant in western society. Van der Veen: ‘Why do large supermarket chain manage their supply chains so well? Because they want to be able to dictate the market. However, proper supply chain thinking wouldn’t focus on who’s boss, but on getting things done together so we can all profit from the results. It needs to involve a certain degree of reciprocity, without begrudging others the rewards. It’s a completely different approach.’

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So if logistics isn’t the issue, what is? Trust, according to Van der Veen: ‘If I walk into a company’s offices and ask them why they won’t cooperate with other companies, they immediately start to talk about trust. They simply don’t trust other companies. It’s nothing to do with incentives. They know full well that collaboration would be much better and would allow them to have a slice of a larger cake, but the fear remains that if you give them an inch, they’ll take the whole yard. So the question is not what kind of incentive you need to offset this lack of trust, but how to create trust between organisations.’

HabitsThe Dutch logistics sector needs to catch up on other sectors of the economy where strategic thinking and innovation are concerned. This is borne out by the Erasmus Competition and Innovation Monitor, a regularly recurring research effort by the Erasmus University of Rotterdam to study the innovative qualities in Dutch industry. Van der Veen: ‘Social innovation is really about a different way of managing, with less hierarchy, more doing things together, more collaboration with customers. Let’s just call it chain collaboration.’

The monitor compares six industry sectors plus a residual group. Logistics scores the lowest of them all. ‘They even insist on labelling it the Logistics Spearhead Industry’, Van der Veen says with a smile. ‘Just to emphasise the fact that it is a designated spearhead industry. On social innovation, this group scores lowest of all the industries. Why is this? EVO members need to do some soul searching for an answer to that question.’

Van der Veen himself has pinpointed a number of factors as possible causes. ‘First of all, the logistics industry is a monoculture, populated mainly by white males in their forties and fifties, rooted in economics and with a no-nonsense attitude.’

A major failure factor is the tendency to adhere to old habits, strategies that were once successful but no longer offer any guarantee for the future. Van der Veen: ‘The logistics industry comprises many SMEs, a large number of which have been established by self-made men. These are successful people in their early sixties who have single-handedly built up their businesses from scratch, from a lone lorry with themselves at the wheel to a fleet of six hundred trucks. There’s no point in telling those people to change their ways; it’s just not going to happen. We need to wait for a younger generation, which is a problem in itself in the logistics industry.’

Many logistics entrepreneurs would rather spend their time looking for logical solutions and doing calculations to see where they can cut costs. Strategy or management just isn’t their thing. ‘They love to talk about customer order decoupling points, but mention management and you’ve lost them’, Van der Veen says. ‘They don’t see the need for strategic thought. We offer a first-rate logistics training course, EMLog, but there are very few takers. Try discussing how to manage organisations, how to deal with other people within the organisation, how to persuade a marketing manager, and the conversation will soon turn to stock levels, route planning and load factors.’

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A major drawback is the low level of profits in logistics. It is seldom recognised that this is partly due to the lack of strategic innovation. The Erasmus Competition and Innovation Monitor indicates that socially innovative businesses create more new products and services for new customers and markets. Their performance is better and they invest considerably more in research and development. All these benefits are lost to the logistics industry. Van der Veen: ‘It certainly applies to the transport companies. Any fool can go into transport, but there is a major lack of differentiation, so logistics service providers get squeezed dry by the market. Lower margins also mean less money to invest, and innovation is the last thing on their mind.’

EVO: collaboration is the futureThe new EVO professorship of Supply Chain Management at Nyenrode Business University was created to enable EVO members to gain access to high-quality knowledge beneficial to the industry. In consultation with EVO and its associated businesses, Professor Jack van der Veen will be offering research and training on supply chain-related subjects.

‘There is a lot of interest in improving the communication between science and industry, but in spite of a number of excellent initiatives it’s still not enough’, says Maryse Tjoeng, Logistics Policy Consultant/Project Manager at EVO. ‘The starting point for both Jack van der Veen and Nyenrode has always been that their work was to be both for and by the industry. This fits in perfectly with our strategy, a pragmatic, hands-on way of doing things.’

For example, a quick scan has already been developed that helps businesses to take a look at their supply chain. Tjoeng: ‘This enables us to start by getting a picture of the state of affairs at our members, who can then indicate the issues they are facing so we can start looking for a solution.’

SMEs make up the greater part of the EVO member base. ‘We are trying to find the link between these smaller businesses and the big concerns’, Tjoeng explains. ‘We want to help them all. Smaller businesses often lack the necessary means, but they do make up the backbone of the Dutch economy.’

AgileEVO has over twenty thousand members. ‘You’re not going to mobilise them all in one go, so you’ll have to start working at a number of different levels’, Van der Veen says. ‘The first thing a group of companies needs to develop is awareness, a different way of thinking so they can see for themselves how things work. Organisations that have already progressed a bit further often struggle to see how they should make things work. The EVO professorship is intended to help these companies on their way, whatever their progress.’

SMEs are difficult to get hold of as a group. Members of the Dinalog logistics spearhead institute tend to be large companies rather than small ones. Van der Veen: ‘On the other hand, most SMEs don’t have distinct departments, which

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means that their social capital tends to be greater. We like to say that SMEs are driving the economy, but they could also be driving a different way of managing chains. They aren’t doing so yet, but they have the potential. There is a lot of vigour there that just needs to be developed. SMEs are the places where things can be turned around within a short time. They are real entrepreneurs, much more agile. And that makes them more future-proof if they do things right.’

Woolly language is not on the cards. ‘Reproaching me for woolly talk about social vistas is complete nonsense’, Van der Veen says. ‘Measurements don’t lie. It’s easy to say that chain collaboration reduces cost, but you must be able to prove it. If you want to instil confidence and trust, the facts need to be clear for all to see. You need to know about each other’s performance. So if I want to convince my customer, he will need to know how reliably I can deliver. The important thing is to be clear about the data involved. Once you’ve reached that point, you need to be clear about your targets. We’re talking about human factors, but we need to start with facts. Performance needs to improve on a daily basis, so we set up a monitoring service to measure how the performance improves week in, week out, year in, year out. That is our joint commitment. There’s nothing soft about that, it’s as hard as steel. The adage is: hard on contents, soft on relations.’

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Towards a circular economy

Opportunities

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Summary of chapter 2

The position of the Netherlands as Europe’s leading logistics region is no longer unassailable. At the same time the industry faces such challenges as traffic congestion, shortages of qualified staff, low transport profit margins and increasingly strict requirements regarding sustainability. Therefore the Logistics Industry Spearhead Team (Topteam Logistiek) has prepared six roadmaps to get the Netherlands back to the top of Europe in the year 2020.

The Council for the Environment and Infrastructure states that these roadmaps in the long term will prove to be insufficient. The reason is that the world is moving towards a circular economy: an economy in which products no longer end up as waste, but remain in use in the chain for as long as possible.

This trend will have a long-term impact on Dutch logistics. Businesses are looking for ways to reuse products for as long as possible in order to reduce their dependency on scarce and expensive resources. They are therefore in search of business models that enable them to retain ownership of, or at least the responsibility for, their products throughout their lifecycle. The circular economy offers major opportunities, especially for the logistics industry as an enabler for other industries such as the high-tech, chemical and agrifood industries.

The transition to a circular economy also affects the Dutch logistics in a roundabout way. First of all the circular economy will lead to an increase of near-sourcing. After all, in a circular economy it becomes more profitable for manufacturers to be closer to their customers, who will become major supplier of resources. The transition to a circular economy will also impact the good flows at national and local levels. At a national level the transit function of the Netherlands will change. At regional and local levels the number of good movements will increase because of the growth of e-commerce, service logistics, return logistics and healthcare logistics. This will result in increasing congestion and emissions.

The six roadmaps of the Logistics Industry Spearhead Team provide a step in the right direction, but they are not sufficient to face the challenges that are the result of the transition towards a circular economy. Therefore the Council for the Environment and Infrastructure will present before the summer of 2013 a number of recommendations to the ministers of Infrastructure & Environment and of Economic Affairs that will enable the government to help focus the logistics industry on fulfilling the opportunities that present themselves en route to the circular economy.

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Marike van Lier Lels,

on behalf of the council

committee Dutch

Logistics 2040: Designed

to Last, Raad voor

de leefomgeving en

infrastructuur (Council

for the Environment and

Infrastructure)1

1 The council committee consists of: Marike van Lier Lels (chair and council member), Agnes van Ardenne (council member), Rob van der Heijden (external consultant), Dick van den Broek Humphreij (external consultant), Klaas Westdijk (external consultant) and Frank Witlox (external consultant).

Challenges for the Dutch logistics industry

In five years’ time the Netherlands has dropped from second place to a shared fifth place in the World Bank’s Logistics Performance Index1. Singapore still leads the pack, and in the past few years Hong Kong, Finland and Germany have overtaken our ranking on the index. Denmark’s performance is on a par with ours, while the difference with Belgium has become smaller.

Much has been said and written about the way in which the index is calculated and the value it represents, but one thing is clear: the position of the Netherlands as a European logistics spearhead region is no longer unassailable. At the same time the Dutch logistics industry is facing a number of major challenges including road congestion, a lack of qualified staff, low transport profit margins and increasingly strict demands regarding sustainability.

Additional effort will be needed to get the Netherlands back to the top of Europe. With this in mind, in 2011 the Logistics Industry Spearhead Team (Topteam Logistiek) has submitted a list of recommendations to the government that demonstrate a clear ambition2. By 2020 the Netherlands will have achieved an internationally leading position regarding the processing of goods flows, as a chain director of national and international logistics and as a country offering major innovation and location benefits to transhipping and logistics companies.

In the spring of 2012 the efforts of the logistics spearhead team resulted in an Innovation Contract comprising six roadmaps3:

• Neutral Logistics Information Platform (NLIP);• Synchromodality;• Trade Compliance;• Cross Chain Control Centres (4C);• Service Logistics;• Supply Chain Finance.

To enable these roadmaps to be implemented, 12.7 and 13.3 million euros were reserved for 2012 and 2013 respectively. Therefore, the Logistics Spearhead Team has its focus on the short to medium-long term, and as we have indicated, there is every reason to do so.

1 The World Bank (2012), Logistics Performance Index 2012.2 Topteam Logistiek (2011), Partituur naar de top. Adviesrapport Topteam Logistiek (Score for the top.

Logistics Spearhead Team recommendations report).3 Topteam Logistiek (2012). Innovatiecontract topsector logistiek (Logistics spearhead industry innovation

contract).

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From linear to circular economyOn a worldwide scale however, a number of current developments will also have a long-term impact on Dutch logistics, such as the decreasing availability of raw materials and energy sources, climate changes, shifts in geopolitical and economic powers, and a world population that is rapidly growing and becoming increasingly wealthy.

The minister of Infrastructure and Environment has therefore asked the Council for the Environment and Infrastructure to submit its recommendations for developing the logistical strength of the Netherlands. The Council’s reply to the request was worded in terms of the following question:

“What will the government have to do in order to enable the logistics industry in itself and as an enabler for the chemical, agrifood and high-tech spearhead industries to optimise performance by 2040?”

The reason for the focus on the chemical, agrifood and high-tech industries is that these spearhead industries provide a representative indication of the logistics challenges the Netherlands faces.

The long view taken by the Council has revealed the direction in which the world is moving: towards a circular economy, as previously acknowledged by the government in its coalition agreement4. An economy in which products no longer end up as waste, but remain in use in the supply chain for as long as possible. And an economy in which consumers consume responsibly.

If we take a good look around us, we can see an increasing number of initiatives that form the first step on the way towards a circular economy. The Mud Jeans company for example offers Dutch consumers a chance to lease a pair of jeans. After a year they will receive a new pair, and the old pair gets processed into a new pair. Another example is given by Lemnis Lighting, a manufacturer of LED lighting who is considering offering lighting as a service, possibly using power company channels. Meanwhile in Austria, there is a chemical company that no longer sells its metal-cleaning solvents, but offers them in the form of a lease contract so the solvents can be reused.

Decreasing resources, increasing consumptionWhat is causing the transition from a linear economy to a circular one? To find an answer, we will need to focus on the rapidly changing world around us. First of all, the world population is still growing, while the middle classes in countries such as Brazil, Russia, India and China are rapidly expanding. The Dutch centre for corporate social responsibility, MVO Nederland, has compiled a list of what the future is expected to bring:

4 VVD-PvdA coalition agreement (2012), Bruggen slaan (Building bridges).

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The world population will grow to number 12,000 million in 2100;The average wealth on Earth will double in the next 20 years.

In 2030 the world will have 3,000 million more middle-class consumers than it did in 2010.

Whereas overall consumption will increase, the available resources will decrease. In addition, shifting political and economic powers will make it increasingly difficult to acquire raw materials. China has already invested in companies, infrastructure and physical installations in resource-rich countries, mostly in Africa. This reinforces the Chinese influence in international logistics chains.

In addition to raw materials, energy too is becoming more difficult to obtain and consequently, more expensive. At the same time our mountain of waste keeps growing. These developments make it increasingly profitable to look at ways to reuse products or the raw materials and components they contain. The Ellen MacArthur Foundation expects the manufacturers of consumer products alone to be able to save 700,000 million dollars a year on raw materials on a worldwide basis.

Logistics opportunitiesThe autonomous trend observed by the Council consist of an accelerated transition from a linear economy to a circular economy. Businesses will want to start reusing products for as long as possible in order to reduce their dependency on raw materials that are hard to find and therefore expensive. This means that they will go search for business models that enable them to retain ownership of, or at least responsibility for, products throughout their lifecycle, in order to be able to lay claim to products once they get discarded by their end users.

Leasing solar panelsIn 2007, lease contracts accounted for 2 percent of all solar panel sales in California. In 2011 the percentage had risen to 33 percent. The supplier owns, insures and maintains the solar panels, and the house owner pays a monthly amount for 20 years (Korosec, 2012). In Europe this double whammy sustainability concept has been slow to gather pace, but nevertheless it might be on the point of finally breaking through.

Merkies, J. (2012). The lease society, the end of ownership.

This means that supply chains will change. More and more businesses will not sell products anymore, but will provide services based on the products they make available. Recovering raw materials from these products will become a major part of the business chain. At the same time consumers, stimulated by the growing interest in sustainability, will increasingly start to consume more responsibly. Products will no longer be used up, they will just be used. Borrowed for a while, is one way of putting it.

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A circular business model starts with product development. A smart product design can make it easier to reuse raw materials or components. Production techniques and product packaging and transport will also play a role in creating a circular business model. Also, a company’s position in the supply chain will become different. Which of the current activities will still be undertaken by the company itself, and which of them will be more suitable for outsourcing?

Opportunities for spearhead industriesThe circular economy offers a great many opportunities for all types of industry. High-tech industries for example use a lot of raw materials that are not easily obtained, e.g. indium for use in touch screens and LCD displays. New branches of industry have already sprouted to fill the resulting niches, e.g. urban mining, a collective term for all kinds of ways to recover valuable materials from household waste and wastewater. Consumers are also showing signs of ending their love affair with the disposable society, witness the emergence of Repair Cafés and on-line repairs.

High-tech industries are increasingly accommodating this trend by no longer supplying products and offering a service instead. Some suppliers of office copiers for example have stopped selling the machines they make and now ask a price per copied page. In other words, customers no longer pay for the machine, they only pay for the added valued offered by the manufacturer. Smart manufacturers who take this route will develop products that last longer, require less maintenance, and are constructed from components that are easy to reuse. This will lower costs and so increase profit margins.

Bulk chemical industries can find opportunities in an improved exchange of excess flows. One industry’s waste could be another industry’s raw material. Businesses need to find ways to create an industrial ecosystem. In the fine chemical industry, leasing offers opportunities, with chemical companies e.g. no longer selling chemicals for cleaning metals, and instead leasing them for repeated use. The company provides the customer with the expert knowledge to ensure optimum use of the chemicals, and reprocesses the waste or the residue to regenerate it if possible.

The agrifood industry will find opportunities in reducing food wastage and the use of residual products. Much food gets wasted or simply thrown away during each of the harvesting, processing, distribution and consumption stages. The industry could adapt by eliminating inefficiencies in the supply chain and optimising the value from residual flows. Other opportunities are presented by improving the last and most inefficient link in the supply chain, the consumer. By collaborating, retailers and logistics service providers will be better able to predict what consumers want. Of course, consumers themselves could also improve their behaviour.

All in all the circular economy offers major opportunities, not just for such spearhead areas as the high-tech, chemical and agrifood industries, but also

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for the logistics industry as an enabler of these spearhead industries. The Netherlands could grow into the European hub of the circular economy. Our logistics infrastructure with Rotterdam and Schiphol as internationally famous ports of call provides a first-class foundation. Innovative service suppliers will find new opportunities in such areas as service logistics and return logistics.

InterfaceFlor - Innovative carpetingInterfaceFlor designs and produces sustainable carpet tiles. The company’s objective is to achieve 100% sustainable operations by 2020 and to provide a recuperative contribution to the environment.

At InterfaceFlor, sustainability is about people, process, product, place and profit. Creative innovation is of major importance. The company has for example designed CO2-neutral carpet tiles. The company uses recycled material in its products wherever it can. At the end of their life cycle, the carpet tiles themselves get recycled. The company uses as little energy as possible, and has reduced the waste flow to a minimum. Employees are encouraged to compensate their CO2-emissions by means of a programme they have devised themselves.

In 2009 InterfaceFlor managed to achieve a net absolute CO2 reduction of 71 percent relative to 1996. Since then the parent company, Interface Inc. has achieved a cumulative cost reduction of 405 million US dollars on waste material. The company’s worldwide quantity of landfill material has dropped by 67 percent since 1996. The production of 1 m² of carpet tiles now uses 72 percent less water and 44 percent less energy. Worldwide, 28 percent of the total energy consumption is provided by renewable energy. In Europe in 2008, InterfaceFlor recovered and recycled more than 200,000 square metres of carpet tiles.

MVO Nederland (2012). InterfaceFlor – Innovative carpeting.

Van der Windt Packaging – Sustainable wrappingVan der Windt operates at the forefront of bio-based packaging, using materials made from renewable resources, often easily compostable. At the moment bioplastics are still somewhat of a niche market (1 percent of the total market demand). “But this is about to change,” says Ruurd Ouwehand, the company’s managing director. “It won’t be long before large national supermarket chains will be switching to sustainable packaging materials. It makes sense to put an organic cucumber in a sustainable wrapper. Which is great,” Ruurd laughs, “Because by the time the demand picks up, we will be ready!”Packaging tends to have a negative image in the public’s eye. Even so, it can provide a major contribution towards reducing environmental impact. Plastic film for example can increase the shelf life of products so less food gets thrown away. Van der Windt can also offer its customers resource-friendly alternatives or multi-use packaging, and so contributes to the responsible use of resources.

MVO Nederland (2012). Van der Windt Packaging – Sustainable wrapping.

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Toner-Store – Cartridges as a resourceToner-Store supplies clean toner cartridges for laser printers and fax machines. Previously, half of all used cartridges went straight to the incinerator. Recently the company has started to supply them at additional cost to the RIMA recycling company in Belgium. The materials making up the cartridges are separated in a special room so dust and CO2 emissions as well as water pollution are reduced to nil. Once the cartridges are reprocessed, 96 percent of the material can be reused as raw materials. The remaining 4 percent gets used as fuel.

MVO Nederland (2012). Toner-Store – Cartridges as a resource.

Increasing near-sourcingThe transition to a circular economy also affects the Dutch logistics industry in a roundabout way. In the first place, the Council expects near-sourcing to increase. After all, as manufacturers evolve into service providers, it becomes more profitable for them to be closer to their customers; close to the people who demand service and send back products, becoming major suppliers of resources in the process.

The increasing popularity of near-sourcing is reinforced by a number of other developments, including rising transport costs due to increasing fuel prices. In addition, the differences in production costs across the world are decreasing, on the one hand due to the levelling of labour costs, and on the other as a result of the increasing mechanisation of production processes. Shifting geopolitical and economic powers also stimulate regions in their desire to become more self-sufficient in order to mitigate risks.

Another development is the way in which customers are changing their behaviour by increasingly demanding customised products, so manufacturers are forced to look for ways to rapidly respond to continuously changing and specific demands. Time to deliver is becoming increasingly important.

An increasing number of businesses are in the process of discovering that moving production to Southeast Asia to profit from low wage levels tends to become less profitable when the overall chain costs are considered. In addition to transport costs and production costs these include inventory costs, which tend to rise rapidly when production is moved to the Far East. The longer the chain, the more a company’s working capital becomes tied up.

Restore the Made in America label…… “Yes, in an ideal world we would produce only in the region in which we sell. That not only eliminates all the costs involved in offshoring, but it also enables you to benefit from the closeness of the consumers, for you can much easier adapt your production to their demand.”

Grunsven, M. van (2012). Interview with Harry Moser, founder and president of the reshoring initiative, ‘Restore the Made in America label’. NRC Handelsblad,

3 November 2012.

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The question is how far the near-sourcing trend extends. The number of businesses that will decide to move their production from China to Eastern Europe, or even to the Netherlands itself, will vary for each type of industry. It also remains to be seen how much of the overall production will in fact be moved back. A possible scenario would be that the primary production of e.g. smartphones takes place in China, and that the upgrading of existing smartphones to later editions for European consumers will take place in Europe.

Increasing regional and local flowsNear-sourcing is a trend that is taking hold on a global scale. However, the transition to a circular economy also impacts the goods flows at national and local levels. At the national level the transit function of the Netherlands will change. Nowadays approximately 15 percent of all goods imported by air, sea and land moves on into the European hinterland or other parts of the world without any additional processing.

The question is how this transit function will develop, in particular if the economies in Eastern Europe continue to grow. The ports in Southern Europe are developing at a high rate, and containers from China can reach Moscow by the Trans-Siberian railway in half the time it takes them to get there via the sea route and through Rotterdam. And what will the anticipated biomass flows do?

At the regional and local levels the number of goods movements will increase, not just as a result of near-souring, but also because of the growth of e-commerce, return logistics, service logistics and healthcare logistics. People increasingly like to do their shopping on-line to have their orders delivered to their doorstep or dropped at a preferred location for collection. Thanks in part to the transition to a circular economy, the demand for service and return logistics is also increasing. And if we want to keep the cost of healthcare in check, the elderly and the sick will increasingly be receiving healthcare at home.

The increase in goods movements at the regional and local levels will result in increasing congestion and emissions. The logistics industry faces the challenge of minimising these adverse effects on the Dutch living environment. We will need to find ways to lay out our supply chain even more efficiently and effectively.

Greenport Logistics (GPL)De Winter Logistics (DWL), Van Es Logistics, Van der Helm Logistics, Mercuur Smart Logistics, Schiffer GmbH and Greenport Logistics GmbH collaborate in Greenport Logistics. As the initiator of this collaboration, some years ago DWL together with its GPL partners built up a Greenports-related logistics network with national coverage.

GreenPort Logistics focuses on improved collaboration in transport, based on divisibility, need and trust. By splitting up the joint physical transport capacity forming the connection between the various Greenports, the logistics range can be increased while minimising the transport of empty volume, as was the original purpose of the consolidation hubs proposed by the Van Laarhoven

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Committee. Greenport Logistics has in fact established a regular service between the hubs.

The participating businesses have set up the virtual network in such a way that other logistics companies with nodes that appear profitable can join in later. This helps to make the Greenports more competitive and so helps to improve the position of the participants in Greenport Logistics. The network provides its participants with collection and distribution opportunities in the Netherlands, Germany and Belgium that would not be achievable on an individual basis.

The participants are obliged to share information with all the other participants through a digital platform. Chain control makes it possible to bring the transport demand, shippers and modes of transport together in the most efficient manner. The result is more fully loaded trucks and bundling of smaller flows, transporting more goods using fewer people and fewer vehicles. Greenport Logistics gives them a network with national coverage.

De Winter, De Winter Logistics.

Roadmaps are insufficientAs demonstrated above, in the long term the Netherlands will be facing major logistics challenges. For a large part these challenges are the result of the transition from a linear economy to a circular economy. This transition will offer the industry many opportunities, but it will also pose challenges with regard to our living environment. The anticipated increase in goods movements at the regional and local levels in particular will demand measures to keep the Netherlands fit to live in.

The Logistics Spearhead Industry Team has prepared six roadmaps to provide a step in the right direction. Synchromodality and Cross Chain Control Centres will help create more efficient and more effective, in other words sustainable, ways of setting up our supply chains. The development of a Neutral Logistics Information Platform and the simplification of trade compliance can provide an additional impulse for the strong transit position the Netherlands currently has. The development of new concepts in service logistics and supply chain finance is helping to make the Netherlands a European hub in the circular economy.

In the long term these measures will prove to be insufficient, so before summer 2013 the Council will present a number of recommendations to the ministers of Infrastructure & Environment and of Economic Affairs that will enable the government to help focus the logistics industry on fulfilling the opportunities that present themselves en route to the circular economy5. The Council will also submit a number of recommendations to the industries themselves to help them prepare for a future full of opportunities. In this way we will be building bridges between governments and industries, between here and elsewhere, and between now and the future.

5 Raad voor leefomgeving en infrastructuur (Council for the Environment and Infrastructure)(2013), Nederlandse logistiek 2040: designed to last (Dutch logistics 2040: designed to last). To be published before summer 2013.

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References• Grunsven, M. van (2012). Interview with Harry Moser, founder and president of

the reshoring initiative, ‘Restore the Made in America label’. NRC Handelsblad, 3 November 2013.

• Merkies, J. (2012). The lease society, the end of ownership.• MVO Nederland (2012). InterfaceFlor – Innovative Carpeting.• MVO Nederland (2012). Van der Windt Packaging – Sustainable wrappers.• MVO Nederland (2012). Toner-Store – Cartridges as a resource.• Raad voor leefomgeving en infrastructuur (Council for the Environment and

Infrastructure) (2013). Nederlandse logistiek 2040: designed to last. (Dutch logistics 2040: designed to last). To be published before summer 2013.

• VVD-PvdA coalition agreement (2012), Bruggen slaan (Building bridges).• Topteam Logistiek (2011). Partituur naar de top. Adviesrapport Topteam

Logistiek (Score for the top. Logistics Spearhead Team recommendations report).

• Topteam Logistiek (2012). Innovatiecontract topsector logistiek (Logistics spearhead industry innovation contract).

• De Winter, De Winter Logistics.• The World Bank (2012), Logistics Performance Index 2012.

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Supply Chain FinanceStrategy

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Summary of chapter 3

Supply Chain Finance has been recognised as an important theme of the Dutch Logistics Spearhead Industry (Top sector Logistics). The Dutch logistics sector sees substantial opportunities in the further development of business services that steer, manage and control the supply chain. Managing the flow of goods, information and cash is at the core of these business services.

Supply Chain Finance models will increase in importance given the anticipated scarcity of raw materials and the need for good sustainable suppliers. There seems to be a transition towards new models, and techniques are needed to support the strategic supplier base. To capture and control these, banks will be requested to offer financing structures based on a deeper understanding of the supply chain. This is the direction SCF is taking. Far beyond reversed factoring, far beyond first tier suppliers and driven by the large dominant buyers.

One could conclude that the competitive strategy of a company needs to be based on a supply chain strategy, and that the supply chain strategy should be supported by a Supply Chain Finance Strategy. Such SCF strategy would seek to improve stability, loyalty and growth amongst its suppliers.

This article looks first at the various definitions of Supply Chain Finance in order to find a definition that is suitable to the new situation. Then the relations between SCF and the shippers, the banks and the logistics sector as a whole will be investigated.

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Supply Chain Finance can strengthen cooperation1

What is Supply Chain Finance?One of the challenges for the development of Supply Chain Finance remains the lack of a common understanding and definition. But we certainly need a good working definition for Supply Chain Finance to steer further research and development and capture the promised benefits.

Supply Chain Finance models will increase in importance given the anticipated scarcity of raw materials and the need for good sustainable suppliers. There seems to be a transition towards new models, and techniques are needed to support the strategic supplier base. To capture and control these, banks will be requested to offer financing structures based on a deeper understanding of the supply chain. This is the direction SCF is taking. Far beyond reversed factoring, far beyond first tier suppliers and driven by the large dominant buyers.

The future for Supply Chain Finance lies in structures where banks rely on big buyers to manage performance risks related to the goods flow in order to make it possible to finance operations based on order or purchase contracts. There are already inventory finance models in the market following this principle.

In addition, for second or third tier suppliers the purchase contracts can form the basis for financing equipment that is needed to fulfil the requirements of the contract. We see similar structures in emerging markets. Even the purchase of land by large firms for growing crops can be seen in this context.

It boils down to the importance of the supplied material and the importance of the suppliers themselves. The more critical the components are for the buyer the more willing he is to provide its suppliers, through banks or otherwise, with support structures for financing the necessary investments.

One could conclude that the competitive strategy of a company needs to be based on a supply chain strategy, and that the supply chain strategy should be supported by a Supply Chain Finance Strategy. Such SCF strategy would seek to improve stability, loyalty and growth amongst its suppliers.

Michiel Steeman,

Nyenrode, Senior

Researcher

Strategy | 33

1 Parts of this article are based on the work of Arjen Smit and Daan Poelman, PostDoc students at Nyenrode.

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Figure 1: Supply Chain Finance Strategy in relation to the Supply Chain and Competitive Strategy

In many papers, articles and other literature on SCF the authors highlight the problem around defining SCF and try to come up with a definition themselves. Let us look at some of the definitions that are currently in use:

“SCF is an approach for two or more organisations in a supply chain, including external service providers, to jointly create value through means of planning, steering, and controlling the flow of financial resources on an inter- organisational level”.

Hofmann, 2005

“SCF is a combination of Trade Financing provided by a financial institution, a third-party vendor or a corporation itself, and a technology platform that unites trading partners and financial institutions electronically and provides the financing triggers based on the occurrence of one or several supply chain events”

Aberdeen Group 2006

“Both the optimisation of financing between corporations and the integration of financial processes with customers, suppliers and logistic and financial service providers to create value for all participating companies.”

Dinalog White Paper, translated

“SCF is the name attached to the collection of products and services that financial institutions offer to facilitate the physical and information flow of a supply chain”

Camerinelli, 2008

“This study views SCF ... namely that financial flows are in contrast to physical flows and their related information flows along the C2C cycle. Thus, the optimisation of a company’s SCF can be considered equivalent to working capital optimisation.”

Hofmann & Belin, 2011

Price

Variety

Quality Time

Resources

Processes

Competencies Finance

Stability

Loyalty

Growth

CompetitiveStrategy

Supply Chain

Strategy

Supply Chain

Finance Strategy

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Strategy | 35

It is clear that establishing a definition would be helpful for SCF and for further research. The problem seems more profound than just agreeing on a definition. Citing Templar (2011): “Defining the true nature of SCF in itself appears to be difficult: model, discipline, technique, product or programme?”

Let us first briefly discuss the framework that Cosse developed.

Framing the DefinitionsThe framework developed by Cosse (2012) is very worthwhile to consider when categorising the different schools of thought. Cosse’s first school of thought, SCF as Financial Supply Chain Management, encompasses all activities in the supply chain that can be related to finance in a broader approach than payables or integrated working capital solution. It covers the entire end-to-end supply chain and, as put forward by Hofmann and Belin (2011) it follows the opposite direction of the physical supply chain, where materials flow from suppliers to buyers and funds flow from buyers to suppliers. It seems that Hofmann and Belin go one step further than Cosse, since they see the financial supply chain as the opposite of the physical supply chain whereas Cosse considers financial supply chain management to be part of the broader SCM context. In this school of thought, the information flow, technology, document and data management, order processing, etc. are all considered to be part of SCF.

SCF as Supply Chain Financing is described by Cosse as a set of supply chain financing instruments which can be used in managing the financial supply chain. It is different from the first school of thought in the sense that this stream focuses on financial instruments as a means of optimising the financial supply chain. As such, it considers specific financial solutions and evaluates their impact on the financial performance of the chain. Fields that can be part of this definition are trade financing, fixed asset financing, working capital financing and supplier financing.

Where the previous school of thought focuses on a variety of financial instruments which can be found throughout the chain in both directions (upward or downward), the third school of thought is even narrower. It views SCF as buyer-driven payables solutions and as such refers mainly to reverse factoring. Although reverse factoring is obvious the most common manifestation of SCF, we consider it too narrow an approach to consider only buyer-driven payables solutions as SCF. SCF can be initiated by any company in the chain and manifest itself both upstream and downstream, towards both customers and suppliers.

Looking for a new definitionWho?Irrespective of the definitions and the schools of thought there seems to be a common agreement that SCF is about collaboration. Some would say a collaboration between a financial institution and businesses. Others would include IT providers. We also believe that collaboration is at the heart of Supply Chain Finance. One could think of arrangements just between buyers and sellers. But this

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is too narrow a view. As supply chains have become more complex, the supply chain partner might include any company in or connected to the supply chain. One can distinguish 2nd and 3rd tier suppliers or go even deeper down the chain. Logistics service providers in particular have become more important as partners to optimise the supply chain, but dealers and distributor networks should also be included.

Why?The current definitions are quite different if you look at the goal of Supply Chain Finance. Why is SCF important to the supply chain partners? What do they want to achieve? Most common descriptions include terms like optimisation, value creation, financial benefits. In the end we believe it boils down to two main goals: improving financial performance and mitigating risk. Improving financial performance can include lowering transaction costs, financing costs, purchase costs, transport costs, and so on. Risk mitigation is about dealing with supply risk. SCF programmes can increase the stability of suppliers, allow for growth, increase loyalty and provide safety cushions against disruption.

What?The framework of Cosse is giving direction to this part of the definition. Is SCF as narrow as reversed factoring or as broad as financial supply chain management? We believe the focus should be on manifestations of the collaboration between supply chain partners in the form of contractual or financial arrangements. With financial arrangements we mean a wide range of equity, debt and financial contracts. Equity-related solutions can include acquisitions, joint ventures and minority interests. Debt-related SCF instruments can be loans, convertibles, lease constructions, reverse factoring and advance payments. The vast majority of capital equipment manufacturers would have leasing programmes in place and many retailers have now implemented reversed factoring programmes for their suppliers. Financial contracts can include profit and revenue sharing, risk sharing, vendor-managed inventory, buyer-managed inventory, dynamic discounting, options and futures.

How?The final element we try to capture in the definition is how SCF programs get started and come to life. This relates to the discussion whether SCF is buyer or supplier led. One can expect that the supply chain partner that has most to gain would probably initiate the discussion to start a programme. In principle this can be any type of company in the chain, large or small, robust or weak. However, in many supply chains one would see that there is a focal company – quite often a large buyer – that controls and dominates the chain. Other partners in the chain would need the support of that large buyer to implement SCF models. And the large buyer will typically steer the improvement processes in the chain. This big dominant buyer has two very strong assets that give him the power to manage and control the supply chain: creditworthiness and purchase volume. Big dominant buyers are generally the focal company in the SCF programmes and often the initiator, but almost always the facilitator, of SCF programmes.

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The DefinitionWhen we put all these elements together we arrive at the following definition of Supply Chain Finance:

“Financial arrangements used in collaboration by at least two supply chain partners, and facilitated by the focal company with the aim of improving the overall financial performance and mitigating the overall risks of the supply chain.”

Financial ArrangementsBy financial arrangements we mean a wide range of equity, debt and financial contracts. Equity-related solutions can include acquisitions, joint ventures and minority interests. As an example one could think of the strategic stake that Intel recently acquired in ASML. Debt-related SCF instruments can be loans, convertibles, lease constructions, reverse factoring and advance payments. The vast majority of capital equipment manufacturers would have leasing programmes in place and many retailers have now implemented reversed factoring programmes for their suppliers. Financial contracts one can include profit and revenue sharing, risk sharing, vendor-managed inventory, buyer-managed inventory, dynamic discounting, options and futures.

Supply chain partnersMost people would think about arrangements just between buyers and sellers. But this is too narrow a view. As supply chains have become more complex, the supply chain partner might include any company in or connected to the supply chain. One can distinguish 2nd and 3rd tier suppliers or go even deeper down the chain. Logistics service providers in particular have become more important as partners to optimise the supply chain, but dealers and distributor networks should also be included.

The Focal CompanyThe Focal Company can in principle be any type of company in the chain, large or small, robust or weak, that facilitates the implementation of SCF models throughout the chain. However, in many supply chains one will see that The Focal Company is a large buyer that dominates the chain. Other partners in the chain would need the support of the large buyer to implement SCF models. And the large buyer steers such improvement processes in the chain. These include the optimisation of logistics by forcing cooperation models or sustainability measures to address social and environmental issues. This big dominant buyer has two very strong assets that gives him the power to manage and control the supply chain: creditworthiness and purchase volume.

From the perspective of the buyer, Supply Chain Finance is about leveraging these two assets to reduce costs and uncertainty in the chain. It does not necessarily mean that banks need to be involved. Big buyers can often structure this themselves. There is vast experience amongst large firms using payment terms, consignment stock, VMI, VOI, tolling agreements and other structures where optimisation affects both the physical and the financial flows.

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SCF and Shippers: managing supply and controlling chain riskA concept in Operations and Supply Chain Management (OSCM) literature which is very useful for marking the relevance of SCF concerns Kraljic considerations about managing supply and controlling chain risk as crystallised in his famous Kraljic matrix.

low

strategic items

form partnerships

leverage items

exploit purchasing power

bottleneck items

ensure supply

non critical items

simplify and automate

low high

high

Supp

ly r

isk

Project impact

Figure 2: Kraljic Product Purchasing Classification Matrix

We noticed the fact that in SCF literature (Hofmann, Van Laere) the opportunities for using SCF in the market place are correlated to what we consider traditional microeconomics (the characteristics of an industry and the average size and number of transactions between buyer and seller predict the opportunities for SCF). Since in management accounting and OSCM the concepts of “power” and “trust” are used to explain and predict (and control) behaviour, SCF would benefit and mature if it were not seen as a one size fits all, affordable solution, and instead a clear idea could be had of the quadrant of Kraljic’s matrix in which a buyer-seller relationship is positioned and how any of the SCF solutions would best fit into that quadrant. Adding these OSCM insights to the SCF frameworks helps to further understand and develop SCF.

To start in the bottom left corner, buyer-supplier relations with regard to noncritical items will in our view only benefit from SCF if there are very standardised and commoditised solutions in the marketplace. The nature of such transactions does not justify making significant relation-specific investments for both the supplier and the buyer. Financial agreements will be based on market standards and switching costs will generally be low. Furthermore, noncritical items also have a good chance of representing a limited value. As outlined by the Manager Supplier Finance & P2P from Philips (Wolthuis, 2011), the reverse factoring program they offer is only for suppliers spending more than five million euros a year. He says it is a pity for smaller suppliers that the marketplace currently lacks easier and more accessible solutions. With the current reverse factoring program, it is simply too expensive for both the buyer and the supplier to go beyond traditional ways of transactions.

In the case of bottleneck items, things will be a little different. The supplier has strong negotiation power relative to the buyer. Outside of the SCF scope, buyers might consider engaging in long-term contracts in order to ensure a steady supply. In case of SCF solutions, the instrument should be positioned from the buyer’s

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perspective so as to please the supplier. For example, if both parties engage in a reverse factoring program, the buyer could offer to maintain the current payment term, but allow the supplier to pre-finance the payment against a discount calculated based on the buyer’s credit rating. However, buyers should just ensure that the supplies remain available, but as soon as this is guaranteed, should not invest too much in relation-specific instruments (given the limited project impact).

The motto for the bottom right quadrant is to exploit purchasing power. Supply risk is limited, but the financial impact is significant. Strong buyers are likely to be positioned in this corner, since it provides them with strong negotiation power. One could question whether such buyers should invest in SCF solutions, since they may be in a position to dictate payment terms. However, solutions like reverse factoring can enable buyers to use long payment terms but at the same time offer their suppliers flexibility in their cash flow management and the ability to finance their debtor position against a cost which is probably lower than of anything they have access to themselves. By doing so, the instrument is also a means of mitigating supply chain risk for the buyer and maintaining good commercial relationships and smooth transaction processing.

The upper right box contains the strategic items characterised by significant supply risk and financial impact. In such relationships, it is important for the buyer to actively collaborate with the supplier. Financing arrangements could be jointly developed and should support the long-term continuation and stability of the relationship. If a reverse factoring model is set up so that is beneficial to both parties, it will be worth the investment. But in these cases, SCF can go beyond reverse factoring. In the most extreme form, the buyer will acquire the supplier to ensure its own continuity. Although acquisition is of all time, if SCF is viewed as a way to ensure service reliability, this can be seen as the most far-reaching manifestation of SCF. Somewhat less extreme options are to take a minority interest, jointly invest in innovation, inventory financing, etc.

Cavinato (2004) distinguishes five sub-sectors of supply chain risks and uncertainties – Physical, Financial, Informational, Relational and Innovational – and connects items related to these subsectors to the Kraljic model.

low

strategic items

excessive time-to-market

costs and lost opportunities due to wrong innovations

leverage items

product/service flow and availability disruption

lengthened supply chain and working capital costs

revenue loss

customer service disruptions

cost above those of competitors

bottleneck items

downtime

poor operational utilization

non critical items

excessive overhead costs

organizational efficiency

low high

high

risk

uniq

uene

ss

value - profit

Figure 3: Items related to supply chain risks and uncertainties plotted in Kraljic (Cavinato, 2004)

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Cavinato (1999) is also known for his research connecting purchasing with a five-stage maturity framework of strategic settings. At the time of that research supply chain finance was not one of the 15 key purchasing attributes in his model, but the framework and concept is still relevant for positioning the purchasing process and function today. It would be interesting for further research to add the various types of supply chain finance solutions we identified earlier in this thesis to the purchasing attributes of Cavinato and to plot them against the strategic maturity stages.

In the following illustration we have identified a number of financial solutions in the broad categories of equity, debt and contractual financial arrangements which can facilitate and fit the procurement strategies based on the four Kraljic categories. With BMI we mean the reverse of VMI (vendor-managed inventory) in case the buyer owns the inventory and pulls it through the preceding parts of his supply chain (of only value adding companies, not transferring ownership of the inventory).

  Equity Debt Financial Contracts

Strategic items

Take-over Loans Profit/revenue sharing

Joint venture Advance payments Risk sharing  Reverse factoring Buyer Managed Inv. 

Vendor Leasing Vendor Managed Inv. 

Convertibles Dynamic discounting

    Options & futures

Bottleneck items

Minority interest Loans Profit/revenue sharing

Joint venture Advance payments Risk sharing

  Reverse factoring Buyer Managed Inv.

  Vendor Leasing Vendor Managed Inv.

  Convertibles Dynamic discounting

    Options & futures

Leverage items  Reverse factoring Dynamic discounting

  Advance payments Vendor Managed Inv.

Noncritical items

  Reverse factoring Dynamic discounting

  Advance payments Vendor Managed Inv

Figure 4: Expected SCF instruments (in the form of equity, debt or contracts) plotted in Kraljic

SCF and Banks: Moving towards dedicated supply chainsSupply chain management is a topic that always comes up in discussions between banks and clients. Price pressure, securing supply are key items of the risk discussion. As a bank dominant in the F&A sector, we see that over the past five years structural tightness has become a constant, in particular in the agricultural commodity markets. In our view, this situation is not about to change: in fact, the operating environment and challenges for companies are becoming even more complex and pressures on supply chains are increasing. We would argue that the best opportunities for companies to reach their growth aspirations lie in closer collaboration along the supply chain. Some companies are already materialising value in a dedicated supply chain model, others are cautiously taking their first steps in the process.

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Most traditional sectors are currently adjusting to pressures created by uncertainty, volatility and complexity. At the heart of this adjustment is the need to rebalance the traditional dynamics of supply and demand with the fragile and uneven outlook for global growth. Due to these pressures and the population growth, companies are being asked to do more than ever before: produce more with fewer resources, access new markets, reduce costs, respond to new consumer demands, adapt to new outside influences and prepare for a long-term and structural increase in demand.

Supply chains and relationships in different chains vary in terms of how developed they are. In the automotive industry, consumer electronics, clothing, oil & gas for example, downstream companies with big brands anchor their success in sophisticated relationships with suppliers all along the chain. Suppliers in these sectors are more deeply engaged in contributing to the success than in for example the F&A sector.

Rabobank believes that the formation of dedicated supply chains is the key to extracting more value from supply chains and chain partners in the near future. Dedicated supply chains will help to forge supply chain partnerships, to engage with players more than one step away in the chain and to generate greater value from cooperation in the supply chain than from working alone. Those companies most engaged with their supply chains are more likely to be winners.

Dedicated supply chains involve companies who interact normally but have made the decision to cooperate differently. They do this because they see more value in closer, more formalised cooperation than in working alone. Importantly, they agree that overall business value creation is stronger through this model than a traditional approach to regular negations over price.

BenefitsAlong the chain, ways of thinking need to shift towards adding value rather than pursuing price per se, as companies deepen supply chain partnerships. Understanding this value-price nexus will be critical to the success of dedicated chains. Dedicated chains can reduce risks along the chain and through this process create value. The case for dedicated chains is based on reducing risk, improving productivity, improving access to capital, increasing access to new markets and enhancing reputation as outlined in the table below.

Reduce riskReduce exposure to market price volatility through longer term, more stable pricing agreements

Improve resilience to market shocks

Improve

productivity

Optimise production through increased certainty on inputs and outputs

Improve process innovation through better insights into chain requirements

Work with partners to optimise resource flows and valorise waste flows

Improve access to capital

Improve investment opportunities through more stable cashflow and longer-term supply agreements

Access new models that provide leverage from chain partners, such as supplier fimance

Access new markets Improve product innovation-working alone or with chain partners-through better insights into downstream needs and opportunities

Enhance brand and reputation Work with chain partners on other product attributes, such as quality and sustainability

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Improved access to capitalDedicated supply chains offer the opportunity to improve access to capital, which has become increasingly important since the global financial crisis. In many cases, the financing of dedicated chains may rely on existing financial products and structures, but dedicated chains also offer the scope to apply new products and structures, such as trade finance, supplier finance and inventory finance. New approaches to financing are particularly relevant given the way margin pressure is shifting along the supply chain. Banks play a crucial role in the process of inventing new methods of financing and can function as the lynchpin between supply chain parties.

A lender or investor may be more interested in financing a company when it is part of a dedicated supply chain, given reduced risk, improvements in the cost base by increasing productivity, and the potential upside through access to new markets and enhanced reputation and brand. In addition, being part of a dedicated chain opens up the possibility of finance being provided through the chain itself. One example is the pre-financing of suppliers, which is a long-standing method of strengthening supply chain cooperation. For example, some European fruit importers selling Chilean grapes to UK food retailers have provided finance to their Chilean partners to enable the purchase of fertilisers and chemicals. The risk in this approach is that the produce may not be delivered when finally harvested. However, this risk can be reduced through stronger formalisation of supplier partnerships in a dedicated supply chain.

New models of trade finance-leveraging advantagesA new development of finance options associated with the agricultural commodity trade is a new financing model that is well suited to closer supply chain cooperation. Agricultural commodities are now seen as a short-term asset class that can be leveraged under specialised financial structures. Trade finance can allow F&A companies to move agricultural commodities from their balance sheet, freeing up capital in the process, while still retaining a guarantee over the commodities when they need to be delivered. Trade finance allows traders to better utilise the short-term value of agricultural commodities. The strengthening of the supply chain relationships between these parties leads to the formation of dedicated supply chains.

Supplier finance is another new finance model that can deepen relationships in a dedicated supply chain. Supplier Finance addresses the inefficiencies in current financing models, where goods are financed multiple times through the supply chain at the individual level of each company. As supply chains grow, the total amount of credit facilities in the chain can grow to a multiple of the value that is added in the chain itself. This duplication can be eliminated by offering supplier finance (or reverse factoring) solutions that provide financial stability to buyers (bank clients) and their suppliers, and by taking a supply chain approach to remove administrative inefficiencies, streamline the handling of disputes and errors, provide transparency of inventory positions, reduce the use of working capital and efficiently deploy securities.

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Inventory financeInventory finance is designed to provide an alternative source of funding for suppliers on attractive terms, where they have secure off-take arrangements, e.g. through a dedicated supply chain. Suppliers to large companies within a dedicated chain are often faced with a need to improve their cash flow and can look to do so by leveraging the balance sheet strength of a dedicated supply chain partner. This approach requires an off balance sheet solution, which can be advantageous to both the supplier and the buyer of strategic stocks and key ingredients that are underpinned by long-term contracts.

Source: Rabobank – Winning through the Supply Chain. Author: Justin Sherrard, 2013. To view the full report, visit www.rabotransact.com.

SCF and Logistics: the art of collaborationThe service has been delivered as agreed, and the ordering party is satisfied. And yet, you still have to wait another 30, 60 or more days before the invoice is finally paid. A useless tradition, which hurts the smaller nodes in the chain as they are left with additional pressure on their financing needs. Useless, as the buyers are usually in a better position to get favourable lending terms, but also because transporters could use this additional cash to invest and/or innovate.

Supply Chain Finance models like Reverse Factoring (RF) or Supplier Financing make the difference in this respect. It forces shippers to reduce the time they need to confirm the validity of the received invoices and thereby guarantee the payment of these invoices. On the other hand it allows the transporters to make flexible use of additional possibilities to get their invoices paid at an earlier time.

One of the parties to focus on Supply Chain Finance is the Supply Chain Finance Community (www.scfcommunity.org), which aims at creating awareness of SCF concepts and their benefits, and wants to share knowledge on these topics.

One of their current projects is the DEMO-SCF project, Expedited Payment, a joint effort including Nyenrode Business University, EVO, and TLN, supported by DINALOG.

The aim of the project is to introduce Reverse Factoring in the Logistical Sector. This sector faces strong competition, low profit margins and an economic crisis on top. Financing the business has become both more difficult and more expensive and payment terms are often not respected. With the introduction of reverse factoring, liquidity should be released to those companies that need it.

Partners in this project come from shippers and transporters, as well as their interest groups (EVO and TLN), legal and fiscal experts (Clifford Chance and Van Oers), a freight audit and payments provider (Cass Europe), with academic input from Nyenrode Business University.

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The structure of reverse factoring works through the confirmation of the buyer (shipper) that certain invoices will be paid at a certain date. This confirmation is the collateral for other parties to finance the invoices from the transporter. The transporter pays a lower risk premium, as typically buyers have a better credit rating, and liquidity is provided in order to do business.

In the end it is all about creating a standard that is tied to the AVC (Dutch Transport Terms and Conditions), since we want to avoid the necessity for individual companies to discuss how to set up such an arrangement. Standard contracts (terms and conditions) allow for commercial agreements between the different parties, but increase the chances of a successful introduction.

Throughout this project we focus upon the logistics industry (mainly road transport) in The Netherlands, but international standards are used to allow project results to be copied/used in other industries and/or countries.

The plan is to have the results of this DEMO project available by the end of 2013. Will it be the ideal solution for all companies in the logistical sector? Probably not, but it is impossible not to cooperate within the supply chain, as this is the only way to get a strong and competitive chain. Supply Chain Finance will be an essential part of the supply chain strategy, and Reverse Factoring is only the beginning in this field.

If you are interested in joining this project or if you want to know more about the preliminary results, please contact the project manager, Steven van der Hooft, at [email protected].

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Voluntary monitoring CO2

Road transport

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Summary of chapter 4

Goods flows need to be organised so as to be socially responsible, environmentally acceptable and future-proof. This article describes how the international Green Freight Europe (GFE) project contributes to this objective where road transport is concerned.

Green Freight Europe provides businesses with a platform that helps them reduce the CO2 emissions produced by their road transport activities. The objective of GFE is to market a standard method for industries to monitor and report CO2 emissions.

The emissions are calculated and monitored using a central database. Shippers can use this to compare the environmental performance of different hauliers, enabling logistics managers to determine the carbon footprint of their products. Hauliers will see their efforts rewarded as they attract an increasing number of environmentally aware consumers. In addition a certification system will be developed as part of the programme.

Sustainability programmes aren’t exactly new of course, but until now they tended to reach only the leaders of the pack. The time has now come to mobilise the hundreds of thousands of smaller companies in Europe. These won’t be moved by highbrow concepts and theories. An essential ingredient of Green Freight Europe is to offer best practices, to provide access to verified technologies, and to compile these and make them easy to apply for a wide variety of companies.

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Ing. Peter J. van der

Sterre MBA, Secretary

General Green Freight

Europe

Green Freight Europe - Voluntary monitoring and reporting of carbon emissions

Sustainable goods transport features prominently on the agenda of both governments and industry. Not only are fossil fuels becoming increasingly difficult to obtain and therefore expensive, but climate changes and social responsibility are forcing all parties into action. In 2010 EVO established a strategic think tank, the Council for Logistics Knowledge, and asked it to come up with a number of strategic themes to be given priority on the agendas of Supply Chain Executives in the next few years. This has resulted in four strategic spearheads:

Innovation: how to support SMEs in making a logistics innovation turnaround.

Sustainability: an international approach and standardisation of sustainability in logistics.

Trade facilitation: removing the obstacles in the data flows within logistics chains.

Human Capital: we need to ensure that there will still be sufficient numbers of qualified logistics workers in decades to come.

As part of the sustainability spearhead, EVO instituted research into international developments. In 2011 the conclusion was that, although there were many developments, unfortunately there was no concrete programme or standard.

At the same time a group of multinationals were investigating the same issue, albeit within the restrictions of road transport. This group envisaged a European programme based on the American SmartWay Partnership. EVO had previously concluded a covenant with the Dutch government, and taken the step to participate in Lean and Green. In collaboration with the European Shippers’ Council and at the request of the companies backing the SmartWay Europe Initiative, EVO now set up a new organisation to give shape to the programme.

On 27 March 2012, the initiative, which as we have seen had until then been known as SmartWay Europe, was launched under the new name of Green Freight Europe. The objective is to expand Green Freight Europe into the single independent, voluntary programme for improving the environmental performance of the road transport industry in Europe.

Green Freight Europe provides the industry with a platform that can help them to reduce the CO2 emissions of their transport activities. The emissions are calculated and monitored by means of a central database. Shippers can use this to compare the environmental performance of different hauliers, enabling logistics managers to determine the carbon footprint of their products.

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Hauliers too benefit from the programme as their efforts are rewarded by a growing number of environmentally aware consumers. Also, a certification system is being developed as part of the programme. Green Freight Europe is not an isolated effort: worldwide collaboration is being sought with other, similar initiatives, programmes and working groups. One such initiative has already been launched in Asia.

The basic formula comes in three stages: measure – report – reduce.

Figure 1: Principles of the Green Freight Europe Programme

Logistics Spearhead TeamIn its list of recommendations, Partituur naar de Top (Score for the Top) the Logistics Spearhead Team (Topteam Logistiek), which has now been integrated in the Strategic Logistics Platform, describes the economic importance of the Dutch logistics industry. Thanks in part to its favourable location in the world combined with the innate commercial instinct of the Dutch, the Netherlands have managed to achieve a leading position in logistics. The Spearhead Team sketches a number of challenges to improve this position, for example: actions will be required if we are to be able to sustainably support the expected future growth of the goods flows and if we want to maximise our contribution towards the improvement of Dutch competitiveness in an international context.

Regarding sustainable logistics, the Spearhead Team reports:

“Goods flows must be organised so as to be socially responsible, environmentally acceptable and future-proof. This involves more than just reducing the emission of CO2. It also includes the reduction of negative effects such as congestion and noise pollution, the efficient use of public space, and the reuse of resources. This ties

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in with the strategy of businesses that are increasingly interested in improving the sustainability of products and processes.

By raising the loading ratio and improving the use of the existing infrastructure, logistics can help overcome the social challenges resulting from climate and energy issues. Oil will become an increasingly scarce commodity in the next few decades. The IEA recently indicated that the less successful the world is at ‘decarbonising’, the higher the price of oil will become. This is of course particularly disturbing to the transport industry. In addition, the EU has committed itself to drastically reducing greenhouse gas production in order to keep the temperature rise of climate change below 2 °C. In its recently published Roadmap for moving to a competitive low carbon economy in 2050 the European Commission indicates that as far as traffic is concerned, this will require a reduction in greenhouse gas emissions of at least 60 percent. Both developments demand the deployment of sustainable logistics.

The effect of the logistics agenda on sustainability is that goods flows will be organised into socially responsible, environmentally acceptable and future-proof processes by:

• improving the timing of goods flows by choosing the most effective and sustainable transport mode, and bundling cargo in transport and storage;

• improving the use of and coordination between the various transport modes in order to reduce the number of empty trips and to help keep down the emission of CO2, NOx and fine dust;

• improving the coordination between parties in the chain to prevent unnecessary trips, adapt the transport speed to the preferred moment of arrival and reduce waiting times;

• improving the large-scale use of return logistics and waste management to enable the reuse of resource (closing the loop, cradle2cradle).”

The Strategic Logistics Platform has worked out the findings of the Score for the Top document in the so-called Logistics Spearhead Industry Innovation Contract. This lists all the activities that need to be deployed in order to achieve the agenda. Finally, a number of roadmaps were defined.

Below is a selection of roadmaps that could have a positive effect on sustainability and CO2 emissions.

Synchromodality, the optimised use of different transport modes within an integrated transport solution. This can take place in corridors and regions with a sufficient supply of freight to enable high-frequency transport by railways and inland waterways. It should be noted that this development relates more to the most efficient processing of goods flows through the available capacities of the various modes of transport. This does not necessarily mean that the most sustainable

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transport mode is selected. However, more flexible use of the available capacity can drastically reduce the number of empty trip kilometres. Cross Chain Control Centres (4C), which provide simultaneous central coordination and supervision of multiple supply chains using state-of-the-art technology, advanced software concepts and supply chain professionals. This development can offer considerable relief where improved processing efficiency of goods flows is the aim. The smart combination of goods flows using advanced methods and insights into different chains can help reduce cost in a major way.

The question is to what extent these roadmaps can contribute to achieving the objective of 60 percent CO2 reduction in 2050, which is why the logistics spearhead industry refers to the other spearhead industries, High-tech Systems, Water and Energy. It takes more than just smart ways of arranging and processing freight. The Strategic Logistics Platform bases its views in the concept of growth, which in practice means that it becomes more difficult to achieve a total reduction of emission in an absolute sense. Therefore, investments will be needed in other areas too, which is exactly where the Logistics Spearhead Industry and Green Freight Europe come together.

TransparencyOne of the other agenda items or roadmaps within the Logistics Spearhead Industry is the NLIP, the Neutral Logistics Information Platform. In the innovation contract, the SPL writes: In 2020 businesses and authorities will be communicating with each other using standardised methods enabled by the NLIP. The open market platform and the Single Window for Trade & Transport are interconnected and share data while maintaining control (integrity and privacy) by the owner, who gets to say who may access the data and under which conditions.

This roadmap focuses on ways to improve efficiency by optimising logistics-related data flows. The idea is to ensure that it will not be necessary to visit a whole series of virtual information windows, and to prevent virtual bottlenecks, e.g. a malfunctioning customs system, from causing congestion in the logistics chain. This occurs for example when containers are held up at the loading location because their contents cannot be declared at the border control point. And the developments even go beyond that. Offering transparency for logistics-related data could greatly improve efficiency in one fell swoop. In this respect the development also provides a positive contribution to improving the sustainability of the logistics chains.

Within the framework of Green Freight Europe, data and information use are also distinct items. The objective of GFE is to market a standard method for the industry to monitor and report its CO2 emissions. If the ambition of CO2 reduction is to be achieved, it should be possible to compare the emission performance of a company with other companies offering the same services. This is not just because sooner or later customers will want to have this information, nor because the authorities will be introducing measures obliging the industry to report its CO2

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emissions. No, it will also be because it encourages competitiveness between businesses. Market mechanisms should also apply to CO2 emission performances, so businesses will no longer be competing only on aspects of price, service and reliability, and the awarding of contracts will also be guided by lower CO2 emission values.

Until now we lacked a standard monitoring and reporting method. The Green Freight Europe programme is intended to make up for this deficiency. In October 2012 the first version of the platform, developed by the industry in collaboration with the Energy Saving Trust, was launched. In December the first conclusions were presented to the members of Green Freight Europe at a meeting of its members. Based on the input from the members, the platform is continually being improved.

Figure 2: The present situation without centralised data collection.

Figure 3: The desired situation with the Green Freight Europe Platform.

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Green freight Europe launches carbon monitoring and reporting platform(Press release GFE, Brussels, October 16 2012) Green Freight Europe, the leading independent voluntary program for reducing carbon emissions of road freight in Europe has launched the first version of its CO2 equivalent (CO2e) monitoring and reporting platform today.

The aim of Green Freight Europe Green Freight Europe (GFE) is to generate strong market incentives to engage companies across supply chains in the sustainable procurement of transportation services in order to stimulate long-term improvements. To help enable this, GFE provides access to collaborative learning, best practice and comparative benchmarking, which will further drive improvements in their emissions performance.

The launch of the monitoring and reporting platform today is a key step in the development of the GFE programme. To be able to ensure impartiality, the scheme measures CO2 equivalent (CO2e) emissions using a consistent methodology, compliant with the latest European standards and the international Greenhouse Gas (GHG) Protocol. This also allows for the direct comparison of GHG emissions performance results of any carrier or shipper against the benchmark average from all submissions. GFE members are asked to submit transport data for transport services provided and/or contracted, where the origin and destination are within Europe (including non-EU-member countries such as Turkey and Russia), for both domestic and international traffic.

Figure: Flow scheme of the GFE Platform.

The platform has been developed by GFE members together with the Energy Saving Trust. At the GFE General meeting in December 2012 the first aggregated results will be presented to the members and other stakeholders

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The so-called Monitoring and Reporting Platform of Green Freight Europe is not based on models or manufacturers’ figures for a vehicle’s CO2 emission. The idea is to look at the amount of fuel used to achieve a certain production. Fuel volumes are easily converted into CO2 emissions. Link these with the trip distance performance and the load performance, and you end up with highly reliable data. So far, so good. Nonetheless, answers will have to be found on a few critical issues. For example, what to do with milk runs and grouped shipments? Which part of the cargo gets assigned which proportion of the CO2 emissions? How do you assign empty trip distances to transport performance figures?

How the platform worksThe GFE Platform takes data of road freight operations provided by GFE shippers, carriers and logistics service providers. The GFE members enter data covering their operations, organised in their respective preferences (e.g. by country, by supply chain, by product category etc.) Submitted data includes tonnage or pieces (for parcels and mail), distance carried, vehicle types used and fuel types and, if available, consumed fuel.

The methodology incorporates assumptions to calculate the CO2 equivalent performance measures and uses official DEFRA1-approved conversion factors for items such as fuel types and vehicle types, all of which are compliant with the CEN norm (European standard guidelines for calculating and reporting emissions) and aligned with such standards as the Greenhouse Gas Protocol. But of course the more details a member provides the fewer assumptions need to be applied and the more accurate the results are.

To submit data a company downloads a spreadsheet from the GFE Platform website (only available to GFE members). After annual figures for road transport operations are entered the spreadsheet is uploaded to a central, secure database. The data is then exported to a secure server where the calculations are made and reports for each member on their operations are produced. The members may then download their reports.

The output reveals comparable annual CO2 equivalent performance results for each category of operation and allows for comparisons by such parameters as vehicle types, contracted and owned fleets, by country, etc. The benefit of using the same methodology is a like-for-like comparison with the average for all the industry as represented by GFE members and further improves the transport market’s transparency.

Whereas the Spearhead Industry will be looking at advanced systems to optimise the chains, Green Freight Europe will initially focus, very pragmatically, on the actual CO2 emission. We can assume that the CO2 data will be set to become one of the relevant data structures, one of the properties connected with a certain shipment or route. All the more reason to develop a widely accepted method that will provide the industry with the means to start fleshing out the concept of such a label.

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Best practicesEurope has hundreds of thousands of transport businesses, most of them small to very small. The average transport fleet size is two to three vehicles. These businesses usually work as subcontractors for medium-sized and large companies. The spearhead industry developments tend to be far removed from the day-to-day running of these small businesses and it is mostly the major players within the transport market that profit from most of these developments.

The greater part of businesses will remain in their activities, fulfilling orders under the control of some third party. However, being actors within practically every chain, these companies must contribute their part just like the big multinationals do. This means looking on a wider scale into the efficiency when organising logistics flows. Technology and behaviour are essential components where chain sustainability is concerned.

If we are to achieve the Spearhead Industry ambitions, in particular where sustainability is concerned, it might be a good idea to go for a wider audience. Other sustainability programmes have of course already been launched, but until now these have tended to reach only the leaders of the pack. The time has now come to mobilise the immense group of smaller businesses, the ones that cannot be reached with high-brow concepts and theories. They will require a hands-on approach, with concrete and practical examples of proven improvements. This is an aspect that the Green Freight Europe programme caters for, with a substantial part of the programme devoted to providing access to best practices and verified technologies. Compiling knowledge and making it accessible to a wide group of businesses is an essential part of the programme.

BehaviourOffering low-hanging fruit is one way of stimulating changes in behaviour. The first 5 to 10 percent fuel savings can only be achieved without negatively affecting productivity or speed if we manage to change driver behaviour. Training and continuous attention to behaviour are essential. The market already offers on-board electronics that offer useful driving behaviour information as driver feedback. Businesses or clients will still need to pay attention and provide incentives.

Sustainability needs to penetrate down to the capillaries of an enterprise rather than remaining confined, as is often still the case, to the upper management levels. The initiative taken by TNT, the Drive Me Challenge, is a good example of how to introduce the concept of sustainability.

Drive Me ChallengeThe Drive Me Challenge is an annual driving competition that aims to engage, educate and inspire. The challenge targets our employed and subcontracted pick-up and delivery and line haul drivers worldwide to:• increase the fuel efficiency of their driving,• reduce blameworthy road traffic accidents, and• increase our service levels to customers.

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TNT Express employs and subcontracts more than 10,000 drivers who deliver parcels in communities around the world. Every one of them stands to influence those three objectives.

The Drive Me Challenge engages and rewards drivers through national and regional driving competitions. Our best national drivers are paired with senior Express managers to participate in the regional Drive Me finals.

For participants, Drive Me is more than just an event; it’s an experience that makes them immensely proud of their role within TNT Express. Those who participate become Planet Me ambassadors for fuel efficiency, road safety and customer experience amongst other employees.

Source: http://www.movingtheworld.org/drive_me_challenge

Organisation and management chainsNew operational aspects of the logistics chain, such as synchromodal transport and cross chain control centres, are receiving plenty of attention within the logistics spearhead industry. Synchromodal transport involves constantly weighing the pros and cons of different modes of transport to which which best meets the set criteria, all the while making the best possible use of the available networks (see text box).

Cross chain control centres (4C) are logistics nerve centres from which multiple complex supply chains are managed simultaneously. Collaboration and transparency are essential structures within the concept of 4C. Service providers are in fact offering the facilities to collaborate and distribute the cost savings among the participants, enabling major improvements in sustainability to be achieved in one fell swoop.

Synchromodal Transport Pilot results look promising(EVO press release, 2012-06-14)

Synchromodal transport not only results in money saved, but can also reduce the number of vehicle movements. This is the conclusion of the first Synchromodal transport, Rotterdam-Moerdijk-Tilburg pilot, launched late last year by Minister of Infrastructure and Environment, Schultz van Haegen, and Minister of Economic Affairs, Agriculture and Innovation, Verhagen. The results of the pilot were handed to minister Schultz van Haegen at Moerdijk, yesterday.

The essence of synchromodal transport is that clients – shippers, hauliers, terminals, shipping companies – no longer determine beforehand which mode or modes of transport to use. The logistics service provider is given the freedom, within certain limits, to make the decision and allocate more freight to routes by rail or water, for example. Containers that are urgently needed go by road, while containers with more time to travel are handled by rail or water routes.

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During a period of three months, the effects were measured on the Rotterdam-Moerdijk-Tilburg corridor of logistics service providers who had implemented this kind of flexible modality selection, with the collaboration of shippers Fuji, Samsung and Sony.

The pilot showed that railways and inland waterways could be used much more often than was generally done for the transport of goods to and from the Port of Rotterdam. The proportion of road transport became 19 percent rather than 57 percent, shipping accounted for 46 percent rather than 33 percent, and rail transport took 35 percent rather than 10 percent.

Minister Schultz is very pleased with the test results. ‘The pilot clearly demonstrates the possibilities offered by synchromodal transport. It must be possible to switch container movements from road to water and rail in other corridors to and from Rotterdam too, and so achieve additional CO2 emission reductions. As far as I am concerned we will take this up with the market to launch tests on other routes as well.’

More information: www.evo.nl.

These concepts are still in development and we must be careful not to regard them as the be all and end all of logistics sustainability. Instead, we should also look at the available opportunities for optimising the use of existing best practices. Examples might include modal shift, the further implementation of ICT and planning tools, etc. Green Freight Europe intends to open up this knowledge by offering a platform and bringing businesses together so they can exchange knowledge.

Verified technologiesMany businesses, and SMEs in particular, aren’t very clear about which techniques promise to bring the best results where the reduction of CO2 emissions is concerned. Technology offers many different ways to improve the fuel economy of existing vehicles by means of retrofitted modifications including side fenders, spoilers, additional fuel sources such as LPG, fitting aluminium rims because they are said to be perfectly round, etc. There is a distinct need for objective assessments of the various techniques on offer, since manufacturers tend to show only their side of the bargain. Green Freight Europe intends to collaborate with scientific institutes to create order in the present confusion and so provide the industry with better insight into the available technologies and their application in specific fields.

Aerodynamic tail reduces fuel consumption(Press release by M&C, 2012-01-19)

TNT Express successfully tested an aerodynamic trailer tail called ‘EcoTail’ on the trailer of one of its trucks, which reduced fuel consumption by 6 percent. Designed by ATDynamics (USA) together with TU Delft spin-off company Ephicas, EcoTail is a foldable and retractable rear wing attached to the end of

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the trailer. The five-month trial measured both fuel savings and the usability of the EcoTail by the driver whilst on the road. Over this five month period, a truck with EcoTail travelled daily between the Dutch towns of Ede and Duiven.

Trucks simply guzzle fuel because of their non-efficient aerodynamics. Ephicas creates innovative solutions for trailers, which contribute to fuel savings and a better environment. The operational tests showed 1.65 litre of fuel was saved per 100 km on a motorway route. Furthermore, the operational functionality of the EcoTail was tested. The EcoTail did not give the driver any problems, nor did it cause delays during docking, loading and delivery. A simple adjustment to the door hinges prevents the doors, which are slightly heavier, open suddenly. Irma Blanke, Director of Operations & Services at TNT Express Benelux: ‘Savings on fuel cost is an interesting business case, but it also helps us to reach our goal of reducing the CO2 emissions of our operations.’

Ephicas had to get official permission to run the TNT Express pilot, as Dutch law regulates the maximum length of a road vehicle and trailer to 16.5 m. The EcoTail adds almost 1.5 m to the trailer length, bringing it over the maximum. After safety tests had shown that road users were not in danger, the road transport authority gave a temporary exemption, supported by the knowledge that the tests comply with the Transport White Paper objective of reducing CO2 emissions by 60 percent.

Gandert Van Raemdonck of Ephicas explains about the EcoTail’s use on the road: ‘We are very happy with the test results and the collaboration with the authorities and TNT Express. During the operational tests, the driver was not hindered at all, nor did he suffer any delays because of the EcoTail. The results show that a simple innovation can significantly reduce fuel consumption and CO2 emissions.’

The next step will be to extend the Ecotail test to multiple vehicles, with domestic and international destinations. Ephicas, together with partner PART (Platform for Aerodynamic Road Transport), is in consultation with policy makers in Brussels to adjust regulations regarding maximum vehicle length to accommodate the use of aerodynamic tools.

More information: http://www.tudelft.nl/en/current/latest-news/article/detail/trailer-met-aerodynamische-staartstuk-dringt-brandstofverbruik-met-ruim-6-terug/ [sic]

Going for sustainability, from the top and from the bottomGoing for sustainability is not a matter of simply throwing in a few revolutionary ideas from the top down, or waiting for government measures to be enforced. All the parties involved will need to make an effort in order to achieve the European sustainability objectives. Within Green Freight Europe a cross-industry group of businesses is looking for practical ways to improve the chain’s sustainability, on the one hand by standardisation and on the other by helping businesses to improve their environmental performance.

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Collaboration is essential in this, and not just for the businesses involved. An initiative such as Green Freight Europe will also have to work in combination with other initiatives and projects. In most cases efforts tend to complement each other far better than expected. However, a lot of results from research efforts and projects end up sitting at the bottom of a drawer, which is a waste. These resources should be put to good use, and so Green Freight Europe is busy establishing connections with universities and research institutes as well as with other projects and initiatives including Lean and Green, COFRET, CO³ and SCALE. The purpose is to keep the entire field easily accessible for the industry and to establish a degree of synergy.

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The human factorLabour

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Summary of chapter 5

Although only a few years ago we were discussing the looming labour shortage that was threatening to the economic growth and the social stability of our country, today’s message is quite different. The menace of labour shortage has been replaced by the spectre of a surplus. However true this may be, there is more to it, for surplus and shortage go hand in hand in today’s markets, including the labour market. The reality of the current economic situation demands a radical intervention in the short term without losing sight of the long-term objectives.

Especially where labour is concerned, short-term and long-term issues are often in conflict. Nonetheless, if we are to find a way out of the crisis, human capital requires a long-term strategy, demanding different choices than those that our immediate reflexes dictate. The long term plays a major role in the policy regarding the Logistics Spearhead Industry (Top sector Logistics), which is aimed at ensuring that the Netherlands will retain its leading position in international logistics. Part of this is the Human Capital Agenda.

This article looks at several aspects of the Human Capital Agenda for the Logistics Spearhead Industry1 in an effort to kick-start the discussion about human resources issues. I am well aware of the current problems, but in the interest of our human capital we must force ourselves to look ahead. As a member of the EVO Council for Logistics Knowledge I have a role to play in this discussion. I will do so from my position as a professional, looking at the world of logistics. I will not pretend that this is in any way a scientific text, nor am I under the illusion that it will be exhaustive or even correct. I do however intend to try and provide some inspiration, which is why I will also refer to other literature on the subject. If I can help you to ‘think around corners’, my present mission will have succeeded, and more2.

1 Human Capital Agenda Topsector Logistiek, December 2011. 2 As the author of this article, I bear full responsibility for its content. I have of course based my views on

research, publications and the remarks and opinions of others. I have made every effort to acknowledge my sources, and I am answerable for any shortcomings in this respect. If you have any questions or comments, or if you would like to discuss the contents of this chapter with me, please feel free to contact me by e-mail: [email protected] or through Twitter: @stevengudde. Special thanks are due to Maryse Tjoeng-van Elten, EVO policy consultant, and Angeline Markus, logistics business unit manager of the Olympia employment agency.

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Steven Gudde, Olympia

employment agency,

Amsterdam University of

Applied Sciences.

A world of opposites

A single market, or lots of smaller markets?As mentioned, today’s labour market is characterised by the simultaneous occurrence of shortage and surplus. Looking at unemployment figures the casual reader might be tempted to conclude that it can’t be very difficult to find manpower, but even so over 30 percent of organisations say they cannot get the right staff3. Apparently in our current surplus market, supply and demand are failing to meet. We have an allocation problem.

It would seem evident that eventually there will be a shortage. The demographics, with an average age steadily on the increase, make this inevitable. The only remaining question is how bad the shortage will be. Some reports predict a shortfall of labour in the Netherlands in excess of 1.2 million in 20504, whereas others think it won’t come to that5.

Aside: The future shortage of labour is based on the assumption that economic development and related parameters will continue in the present vein. However, the dynamics of the economic system will result in a new type of equilibrium. As early as 1997, in ‘Preventing long-term unemployment’, Richard Layard wrote that the structural number of jobs in a country is linked to the amount of available manpower. Supply and demand interact, so neither of them is a static fact. Given a surplus of manpower, the demand for employees will adapt to this, and vice versa, a drop in available manpower will result in reduced demand for labour, accelerated introduction of technological developments, or moving of production. Therefore, the problems of shortage can be avoided, provided the new equilibrium is found in time.

If we analyse the labour market figures in more detail and zoom in on the logistics market, we can see that there is no shortage worth mentioning at its lower end.6 The Netherlands has a sufficiently large supply in the elementary and lower ranges for functions such as order pickers and drivers. In addition, the labour force in these positions can be relatively easily replaced, offering scope for switching to foreign ‘capacity’.7

Aside: “Replacing labour at the lower end of the scale is all too often considered an easy task. It is much more difficult and delicate than people think. The basis for the success of a distribution centre is not just a question of running the right procedures; above all it depends on the input of committed and motivated employees who are responsible for the day-to-day running of the place. Don’t think too lightly about this: receiving and picking products is specialist work, and specialists can’t be replaced at a moment’s notice! This problem is all too often underestimated”.

Stephan Gieben, Operational Manager, Mediq pharmacy

3 34% according to research by MKB Nederland, February 2013.4 SEO Economic Research: Bridging the Gap, 2010.5 ABN AMRO, Recruitment lab: Social media & Arbeidsbemiddeling (Social Media and Labour Exchange),

March 2012.6 EVO special, Toekomst Logistiek Management (Future of Logistics Management), October 2012.7 It goes without saying that any switch to foreign labour may also be prompted by financial considerations.

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It is the higher-level functions, such as planners, system designers and supply chain managers at higher vocational and academic levels, that are hard to fill. This is already problematic at present, and it will become more of a problem, in particular since these functions will only gain in importance in the future.

It is the medium-level group of people, such as general administrative staff and junior managers starting from intermediate professional training level, who appear to be about to miss out on the developments, some of them technological, in logistics8 and who are increasingly struggling to meet the demands placed on them. This group is affected by both a qualitative and a quantitative mismatch: the supply is limited, and the demands are changing faster than the group can keep up with. This group could well become the real bottleneck for the logistics labour market where labour shortage is concerned.

Aside: Unfortunately many people are having to face the stark reality of losing their jobs. Apart from these victims the recession also has some winners. This Survivor Theory has been introduced before by Prahalad and Hamel9 and David Noer10, and recent field research has shown that it actually exists. A quarter of the employees will develop more rapidly as a result of the recession. This growth applies to both professional and personal aspects. These Recession Growers manage to develop in spite of the economic trend. This also makes this group a possible liability in the event that the economy improves: as the economy picks up, the group will no longer be able to cash in on its development, and today’s winners will become tomorrow’s leavers, leaving your business to suffer the consequences.

So, labour markets exists at several levels. Consequently, the concept of a labour market in relation to the logistics industry sector becomes as diffuse as the industry itself. This too can be considered in different ways: as an industry and as a function11. The labour market and education figures that get published can also cover both terms, making it practically impossible, and above all, useless, to heap them together. There is no such thing as the logistics labour market. At best there is a collection of smaller submarkets, covering function types, training levels, generations, and most of all, regions12. Each market demands a specific answer, but most of all we will have to start thinking much more in terms of regions, because the geographical labour mobility in the Netherlands is limited and regional ties appear to be gaining importance.

8 The lower and (to a lesser extent) mid-level functions within the logistics industry may not be a problem at present, but they form the industry’s highest average age group, which may eventually cause labour shortages as people retire. Source: CBS, ABU 2012.

9 Gary Hamel & C.K. Prahalad: Competing for the future, 1994.10 David Noer: Healing the Wounds, Overcoming the Trauma of Layoffs and Revitalizing Downsized

Organizations, 199311 Monitor Topsectoren (Spearhead Industries Monitor), CBS, 2013.12 In the Netherlands, the average time people are prepared to travel to their work is 39 minutes. In

combination with congestion problems this means that most jobs are regionally focused. Source: Intelligence Group.

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We will need to categorise the figures anyway, since in their present form they are too ‘big’, too general. We will need to filter them before they can become the basis for policy decisions and actions. Good policy and advice start with the right figures13.

The current labour shortages in the logistics industry will only increase over time. In addition to an increasing demand relative to the supply, the qualitative demands placed on logistics professionals are also increasing. Small wonder then that the Spearhead Industries Policy for the logistics industry is actively promoting training and development.

Train or tempt?What you don’t have, you need to create. That is roughly the gist of Theme 1 of the Human Capital Agenda for the Logistics Spearhead Industry (Top sector Logistics). Initiatives to give logistics training schemes a new impulse are being launched at various levels. A diversity of initiatives and collaborations between institutes and entrepreneurs not only needs to stimulate the supply side of the labour market, but also to raise it to a higher quality level. Much has been gained in a short span of time, and without detracting from these achievements, in my opinion the efforts run the risk of not producing the intended result. I think that this is caused by a lack of focus on context. The risk inherent in these initiatives is that they will appeal only to the logistics in-crowd. Let me explain.

The extent to which educational programmes contribute to the industry’s ambition is directly proportional to the number of students enrolling. Even more important is the number of students that will actually take a job in the logistics industry once they graduate. It’s not the quality of the training, nor the opportunities offered by the market, not the pay, but the image projected by an industry that determines the influx and success of educational institutions.

The soft factors, of which the projected image is one, determine the choice of education and work14. People do not work for the career and the money alone. Above all they want to enjoy their work, and this requires that people can identify with the organisation with regard to culture, image, social value, etc. Although the importance of good pay has increased in recent years due to the failing economy, as soon as matters improve the money gets pushed aside by softer values. The key to improving the yield of educational initiatives is to invest in a good perception and public awareness of the industry. These still leave a lot to be desired.

13 This is why in 2013 the EVO Council of Logistics Knowledge will focus on obtaining a clear set of figures covering this diffuse market, to be analysed from several angles, including the regional level.

14 ManpowerGroup Nederland: Jong talent, nieuw realisme op de arbeidsmarkt (Young talent, new realism on the labour market), 2012.

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Aside: The municipality of Zoetermeer some time ago started an intermediate vocational level musical training institute (DAPA: Dutch Academy of Performing Arts). The course it offers complements other previously existing musical courses. DAPA currently has over a thousand students, with about three hundred graduates a year. This (in combination with the other courses) is much more than the market can absorb. The basis for this ‘success’ was laid by the public perception of such television programmes as Idols, X Factor and The Voice. (www.musicalopleiding.nl)

The remarkable fact is that 92 percent of transport and logistics entrepreneurs are satisfied with their own brand image15, whereas the industry in general is perceived as unattractive by the labour market16. A lot of effort in the form of information and branding campaigns will have to go into matching the industry’s own perception of itself with that of the world at large.

More than ever before, the logistics industry sector will have to project itself outside its own sphere through campaigns that need to focus on the outside world17. When I say campaigns I don’t just mean communication campaigns and open-house events. Such initiatives have the drawback that they require the target group to make an effort. In today’s open information world potential employees and students want to be found. In addition, they need to be captivated by ‘the true story of logistics’18. To bring the inside story to the outside world, employers in the logistics industry need to step out of their own world and present themselves in an authentic and distinguishable way to prospective employees. Getting to know the world outside logistics19 is better done sooner than later20. And this is exactly where the logistics industry is slipping up21. Shame. The logistics industry already knows its own message and its own world. And anyway, its own world is not the place where these new employees will be coming from.

Aside: A great initiative to unlock the world of logistics is presented by the LogiXperience at the Floriade show in Venlo. It ‘confronts’ people in an unexpected environment with a world that is unknown to most. It is fantastic that such as institute is being continued, although it is also a pity that it happens behind the ‘closed’ doors of the InnovaTower, as it prevents an unexpected meeting between the outside world and the world of logistics for this initiative.

15 PwC: Samen sterker! Onderzoek 2012 transport en logistieksector (Strength in numbers, 2012 transport and logistics survey), 2012.

16 Research by ICMA as part of the Randstad Award, 2012.17 As it turns out, while employers are aware of such campaigns, employees (potential and existing) aren’t.

Logistic Labour Survey, Tempo Team, 2011.18 Geert-Jan Waasdorp et al: Bouwen aan het nieuwe employer brand (Building the new employer brand),

2012.19 Steven van Belleghem: The Conversation Company, 2013.20 The chemical industry actively presents various programs at primary schools in order to introduce people

to the world of chemistry.21 The number of logistics businesses participating in such nation-wide networks is relatively low. Within

Jet-Net for example, only 3 out of 84 participating businesses are connected with the logistics industry: Human Capital Agenda Topsector Logistiek, 2012.

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Once the industry manages to open up its own pride in, and its knowledge about, logistics to the labour market, the yield of educational investments will rapidly increase. Of course there will always be people who finish a logistics training course only to take up a job outside the industry, and vice versa. The logistics industry is full of successful people without any formal logistics training22. At present there is still too little insight into the backgrounds of these people. The result is that the industry is deprived of the opportunity to communicate directly with an ‘alternative labour market’. The benefits to be reaped from these other markets and people with other outlooks may well turn out to be unexpectedly high.

Aside: A remarkable example of how a different outlook led to improved development and quality comes from the Georgia Institute of Technology, GeorgiaTech in Atlanta. In the 1990s the recruitment and selection procedures, which until then had been based purely on getting good students with the right kind of knowledge and the right papers, were changed to focus on good students who in addition played a musical instrument, sang in a choir, wrote poetry, or played a team sport for example. The results were astonishing. The mixing and matching of disciplines produced substantially better results.‘The world is flat’, Thomas L. Friedman

Other industries and education aren’t just a source of new employees, they are also a source of innovation.

Innovate and let goNext to education, innovation is also high on the to do list of the Spearhead Industries Policy23 which for logistics has been split into six roadmaps. As is traditionally the case in the industry, the main targets and innovation objectives detailed in these roadmaps focus mainly on computer, information and general technology. The development of education and knowledge institutes (knowledge stacking) is considered to be the main driving force behind innovation, and therefore much is invested in the development and sharing of knowledge by universities and other educational facilities as well as institutes such as Dinalog, regional Knowledge Distribution Centres, the Conversation Factory, NLR and TNO. Regarding these investments, I would like to remark that the knowledge is concentrated on the main themes of the roadmaps, with a less than optimal link between theory and operational practice that is also mostly top-down24. So much is staked on ‘radical’ innovation, while opportunities abound closer to home if only the existing human capital were put to better use.

22 For example, in the past two years only half the finalists for the Logistics Manager of the Year Award had any formal training in logistics.

23 Innovatiecontract Topsectoren Logistiek (Logistics Spearhead Industries Innovation Contract), 2012. 24 Initiatives like Conversation Factory are intended to make knowledge development pay in practice.

This connection turns out to be still far from optimal. At present, some of the Conversation Factory programmes aren’t full yet.

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It all ties in with the conclusion voiced last year by professor Volberda, based on the Innovation Monitor 2011-2012, that “the Logistics Spearhead Industry lags behind in innovation”25 26. In previous research, Volberda demonstrated27 that the true basis of successful innovation lies in the type of organisation and the labour relations. According to Volberda, ‘social innovation’ is responsible for 75 percent of all innovation successes, with technological innovation accounting for ‘only’ 25 percent28. He also states that social innovation helps to ensure that technological innovations don’t get shelved: social innovation is the accelerator of technological innovation.

Social innovation may not be the single key to success, but it does enable organisations to access existing knowledge and so pave the way for improvements to processes, products/services and customer numbers (i.e. incremental innovation). This creates a fertile base for more fundamental product or service innovations (i.e. radical innovation). In view of the results of Volberda’s research, the logistics industry is currently insufficiently able to mobilise its own knowledge for innovation29.

Aside: “I would venture to say that the logistics industry makes too little use of the knowledge currently available in house. We have trapped each other in a structure in which the need for approval from above has become the norm and people hesitate to take responsibilities and initiatives. […] The real knowledge for the improvement of existing processes, services and products is to be found where people have operational responsibility. These people need to be given some leeway, and they should be listened to. At NSK we have been active for some years now to break out of the traditional pattern by giving everybody more room to manoeuvre”.

Michel van Nispen, NSK Logistics Director

As far as the reshaping of labour relations is concerned, the logistics industry is lagging behind somewhat. It is rife with traditional structures and concepts that may have been highly successful in the past, but are long overdue for revision. Top-down control, traditional organisation structures, fixed patterns and standard training schemes no longer fit in with today’s work ethos and current economic dynamics. No doubt the dominant role of these traditional ways is related to the relatively high number of SME family businesses. However, yesterday’s successes also hold back future development.30

25 Erasmus Concurrentie en Innovatie Monitor (Erasmus Competition and Innovation Monitor) 2010-2011, Inscope – Research for Innovation.

26 It didn’t take long for the industry to come up with a response to emphasise its innovative nature. See for example Aad Veenman (Strategic Logistics Platform Chairman) in >Logistiek<, February 2013, and Rene de Koster (professor of Logistics and Operations Management at Erasmus University), www.logistiek.nl. Rather than cover the same ground again (both parties are right) I have opted to use this chapter to focus on the aspect of innovation connected with labour relations and employees.

27 INSCOPE Concurrentie en Innovatiemonitor (Competition and Innovation Monitor) 2005-201028 Volberda & Bosma: Innovatie 3.0, slimmer managen, organiseren en werken (Innovation 3.0, the smarter

way to manage, organise and work), 201129 Erasmus Concurrentie en Innovatie Monitor (Competition and Innovation Monitor) 2010-2011, Inscope –

Research for Innovation.30 Jack van der Veen, www.logistiek.nl, 27 November 2012

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In times of economic recession the general reflex action is to fall back on past successes and increase management’s directing and control. This is exactly what’s holding back social innovation, as both strategies are anathema to stimulating any kind of innovation, whether social or not, and to creating scope for the knowledge and talents of your employees to flourish. If you want to optimise your use of employee talent, you need to take a step back and give your employees more leeway31. You will also need to be able to bring the current ways of control and reward up for discussion32. After all, a different approach means different requirements regarding management competence. The Spearhead Industries Policy focuses on the development and stacking of knowledge, but leaves the necessary competence shift out of the equation, causing it to wither.

Aside: “These times demand new ways of structuring educational and talent-spotting programmes. Employees used to find everything rigidly prepared and structured. Things will become much more fluid. Endless periods of employment have ceased to exist, and employees are looking for partners rather than colleagues. Managers will have to learn how to cope with these changes. The paradox lies in the concept of learning to give people more leeway in order to run a tight ship. This will be the main personal challenge for many logistics managers, and it always starts with self-reflection to achieve the matching behaviour. We call this Clear Leadership”.

Roberto Palland, Advance Group director

Movement and side-effectsIn spite of all the insights into the value of employees for organisation and innovation, any discussion about staff in the logistics world, dominated as it is by technology and processes, all too often ends up simply weighing the cost. In many – too many – cases staff come at the bottom of the list when operational finance is considered. The lower down the labour chain a function is, the more dominant the cost aspect becomes. At some point down the functional ladder an employee changes from being an asset to becoming a liability. This pattern is most clearly expressed in the use of temporary labour and reflects the employer’s investment in the labour relation: from high to low.

Aside: The profit margins in the logistics industry are constantly under pressure. In many cases this pressure is unilaterally passed on to the employees at the bottom of the ladder. In the longer term, this short-term cost strategy33 inevitably affects the company’s reputation34. In a world in which personal attachment and company image are becoming increasingly important this side-effect could well prove to be the industry’s soft spot in a very tight labour market. Investing in the labour relation will become increasingly important to safeguard the success of the enterprise and the industry. This goes for every layer throughout an organisation.

31 Lidewey van der Sluis, Talent is goed, ambitie is beter (Talent is good, ambition is better), 2012 – Ralf Knegtmans: Toptalent, 2012 – Peter Capelli: Talent on Demand, 2008

32 Daniel Pink: Drive, 2011 – Clay Shirkey: Here comes everybody, 201133 One might wonder whether this is in fact a strategy at all. As Michael Porter put it: “Cost reduction is not

a strategy”.34 Think e.g. of the discussion about Polish and Filippino drivers, the Zalando DC, the freelance workers

used by TNT Parcel Post.

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Even if people spend less time working for your company, it makes business sense to invest in them, for the opposite is much worse: imagine you don’t invest in them, and they stay on. That’s when you really have a problem.

Of course, market dynamics dictate that you count costs and that your organisation responds flexibly. In terms of strategic human resources planning this means ensuring that an organisation is not faced with a shortage or surplus of qualified staff. In view of the preceding I consider this approach due for revision. The knowledge and capacity you want are no longer confined to you and your staff. It is increasingly to be found among your customers, competitors and suppliers35. The way in which you give shape to the working relationship with your staff determines how you can move with the market to match knowledge and capacity. The concept of a labour relation involves more than just employment, and it applies to every contributor to your organisation. Or future contributor, for that matter.

Aside: Just like many other distribution centres, Herbalife’s EMEA distribution centre in Venray has to deal with unpredictable workloads. In order to handle fluctuations, a flexible shell of temporary workers is used. Nothing new in itself. What is remarkable is that in this solution, known as “The Breathing Factory”, the customer and the supplier use each other’s know-how to redesign the internal logistics processes. Even more remarkable is that in this collaboration the distinction between temporary and permanent company employees has been dropped. The external workforce is not only used to create additional capacity, but also to provide knowledge and put forward innovation proposals. Every person within the Herbalife distribution centre has the same labour relation with the organisation, regardless of the contractual context.

Herbalife – Olympia Employment Agency, 2013

Just like services and products are moved along the chain, so will capacity and knowledge have to be if we want to be able to optimise our use of these scarce commodities in the future. This is an aspect concerning which too little collaboration is still being sought by organisations36. Just like in the discussion about circular logistics37 the traditional linear concepts of labour relations, careers and promotion within a single organisation will need to be replaced with circular careers covering the entire industry.

Anyone who contributes to your enterprise, be it internal or external, permanent or temporary, employee or freelance, competitor, supplier, or customer, needs to be recognised as a source of knowledge and innovation.

People connect with you, provided you connect with them. They contribute by bringing along their knowledge and capacities, regardless of where they work or what their contractual connection with you is. Direct and personal contact between individuals is

35 ASML for example has outsourced part of its capacity and knowledge reserve to its suppliers.36 Even when product and service collaboration is involved, 36% of businesses indicate that they see room

for improvement in the collaboration. Source: PwC37 RLI: Nederlandse logistiek 2040: designed to last, kansen voor de logistieke sector op weg naar de

circulaire economie (Dutch logistics 2040: designed to last, opportunities for the logistics industry en route to the circular economy), 2013

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what forms the basis, and certainly the emphasis placed by the Spearhead Industries Policy on large-scale operations, institutes, education, knowledge development, knowledge centres, innovation and technology becomes very abstract and distant. This is what the challenge the logistics industry is facing boils down to.

FinallyAll-encompassing the start of this chapter may have seemed, but we end it on a small scale. Whatever the policy and ambitions of the Logistics Spearhead Industry Human Capital Agenda may be, in the end they will have to be supported by the smallest element in any organisation: the individual worker. It goes without saying that at the same time a large-scale effort needs to be made to improve education and knowledge development and create large institutes. Ultimately, social innovation and technical innovation reinforce each other.

The logistics industry was built by entrepreneurs who are justified in priding themselves in what they have achieved. Nonetheless, what you have now reached is only a half-way station on the road to the future. It takes courage to do away with old habits and venture forth outside one’s own world. The entrepreneurs and the current and prospective employees who manage to do so will form the building blocks for a rosy logistics future. They will need to be able to find, connect with, and stimulate each other. First the people, and then the organisation and technology will follow.

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Wanted! Constructive team players

Knowledge distribution

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Summary of chapter 6

The first part of this article explains what Knowledge Distribution Centres (KDCs) are, how they originated, and how they work. A Logistics KDC can be described as a regional knowledge and expertise network for the logistics industry (SME) that is intended to form the lynch-pin within a regional logistics community.

The first development concerns the previously existing regional initiatives, which required continued development at a professional level (bottom-up). Initiatives had been launched in a number of regions to mobilise the industry and promote smart, innovative logistics. . The regional networks mostly comprised combinations of government organisations, educational institutes and businesses. The objective of each of these parties is to bring knowledge and science to the industry in order to help develop innovative and strong logistics regions.

In the next part the Zeeland-Brabant Knowledge Distribution Centre is discussed in more detail as an example. Finally, the challenges presented by the future will be investigated. The good news is that we will continue to initiate, stimulate and facilitate knowledge flows that cater for the needs of the industry. Nonetheless, some concerns over what the longer-term future may bring will also be voiced.

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Leo Kemps, Director of

the Academy for Urban

Development, Logistics

& Mobility

Joining forces in knowledge development and innovation

IntroductionThis article is not intended as a political or scientific thesis, but I trust it will be stimulating enough to influence the mind set of the reader. The idea is to motivate stakeholders (authorities, shippers, hauliers, knowledge institutes, etc.) into commitment and the joining of regional forces. Only then will it become possible to excel so the Dutch logistics industry will be able to achieve an internationally leading position by 2020. This article is intended to challenge you to actively participate in the framework of the Logistics Knowledge Distribution Centres, either at a regional or a national level.

The first part of the article explains what Knowledge Distribution Centres are, how they originated, and how they work. In the next part the Zeeland-Brabant Knowledge Distribution Centre is discussed in more detail as an example. Finally, the challenges presented by the future will be investigated.

The Logistics KDC conceptUnder the influence of the spearhead industries policy of recent years, an excellent initiative bore fruit in 2010 with the development of six Logistics Knowledge Distribution Centres providing with national coverage. The coordination of the project is handled by the regional logistics higher vocational education institutes, which offer bachelor courses in logistics & economy and logistics & applied traffic management. The joint KDC project has resulted in a structure that focuses on intraregional and interregional knowledge development, knowledge distribution and innovation, with the aim of providing Dutch SMEs with improved access to new knowledge and innovation initiatives.

A Logistics Knowledge Distribution Centre can be described as a regional knowledge and expertise network for the logistics industry (SME) that is intended to form the lynch-pin within a regional logistics community. At a Logistics KDC, regional logistics-related entrepreneurs, authorities and educational institutes collaborate in order to create sustainable bundling, implementation, continued development and dissemination of spearhead knowledge and science while at the same time focusing on vitalising the SME logistics industry. We are helping to build a viable and energetic logistics industry by contributing sustainable innovation power.

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Figure 1: Structure of the Dutch

KDCs. Illustration: Kennisakkoord

Logistiek (Logistics Knowledge

Agreement), Dinalog.

Figure 2: Collaboration of the

six KDC’s showing knowledge

development and knowledge transfer.

Illustration: Kennisakkoord Logistiek

(Logistics Knowledge Agreement),

Dinalog.

Origins of the Logistics KDCThe origins of the Logistics KDC are rooted in two distinct developments.

The first development concerns the previously existing regional initiatives, which required continued development at a professional level (bottom-up). Initiatives had been launched in a number of regions to mobilise the industry and promote smart, innovative logistics. Most of these initiatives were initiated by industry organisations such as EVO, Transport & Logistics Netherlands and VLM, government

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organisations (Syntens, Chambers of Commerce, regional development companies) and educational institutes (professors, lecturers and various industry information points connected with the logistics courses).

Educational institutes at intermediate, higher, and academic levels played a major role in the initiation and coordination of these initiatives. The regional networks mostly comprised combinations of government organisations, educational institutes and businesses. The objective of each of these parties is to bring knowledge and science to the industry in order to help develop innovative and strong logistics regions. Hindsight shows us that in the past, various parties have taken up many similar initiatives, including projects, with varying degrees of success. The effectiveness and efficiency of these methods is therefore open to question.

By bundling the existing initiatives within a Logistics KDC community, the structure has now been formalised within the regional initiatives so that it has become clearly recognisable to all parties. It also enables cohesion and collaborations between regional initiatives to form.

The second development has been initiated top-down by Dinalog, the Dutch Institute for Advanced Logistics. In 2010 the institute started work on implementing the Partituur naar de top (Score for the top) programme that had been formulated by the Logistics Industry Spearhead Team. The main ambition as defined in the report, which formed the brief for Dinalog, is to support the Netherlands in its objective to become the European market leader in supply chain control by 2020. In this endeavour, Dinalog acts as a directing party.

Since the writers of Partituur naar de top had already found that the development of knowledge and the motivation in the logistics industry, and in SMEs in particular, was struggling, and that closer and more direct ties needed to be formed between knowledge and enterprise, the Human Capital Cathedral higher vocational education study group formed by Dinalog and led by Ad van Goor gave the initial impetus to tackle this problem using existing structures as a basis.

At the initiative of this study group and in collaboration with the existing Logistics Knowledge Agreement, a collaborative effort of logistics lecturers and industry organisations, the Logistics KDC project scheme was then produced. The Logistics KDCs were to play an leading role in the dissemination and application of knowledge developed within Dinalog, in order to raise Dutch industry as a whole to a higher level. At the time, the NHTV university of applied sciences in Breda, undertook to further develop this project, which had been partially financed by Dinalog (50 percent Dinalog, 50 percent educational institutes).

Ambitions and methodsThe following gives an overview of the concrete ambitions pursued by the KDCs.

Access to spearhead knowledge is to be provided by:• clearly showing the way to specific knowledge and ways of using it;

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• making the knowledge developed in the Dinalog programmes available to regional industry;

• stimulating more intensive interaction between industry (SMEs) and knowledge institutes;

• make higher vocational education institutes act as bridges to adjoining networks with a directly applicable approach.

Action is to be focused on SMEs by:• improving structure and cohesion within the region;• combining initiatives to make results last;• improving the exchange between different regions;• developing and defining specialisations per region (introducing focus).

The six KDCs therefore operate on the following principles:• The logistics higher vocational education institute of the region coordinates the

initial development of the KDC within the regional logistics community.• Industry will gain access to new knowledge and innovation by joining forces and

integrated approach.• A regional knowledge and expertise network has a regional information point

to which logistics businesses (SMEs) can direct their specific queries. The wide network will be searched to find practical and appropriate support in response to each query. In this way, KDCs expressly seek to become a demand-driven service community for regional industries. In addition a regional information point will also have a back office in charge of defining, monitoring and promoting the agenda of regional KDCs.

• Knowledge is gained first and foremost by the continued development of a number of pilot projects and through practical research.

• The methods of a KDC are twofold:- Regional queries and initiatives are picked up and translated into research and innovation projects (bottom-up). This is a major educational impulse and means that the training matches the demand from industry and that they can deliver professionals armed with up-to-date know-how who are ready to tackle the job in hand.

- In addition, top-down knowledge will be made available from within Dinalog, universities and higher vocational education institutes and adapted to match the industry’s needs. On the one hand this approach connects with spearhead knowledge and science, and on the other hand, having the right ‘dropping zone’ for new know-how, models and concepts means that the focus of a KDC is 100% aimed at practical application by the industry.

• A KDC contributes to the connection between the knowledge institutes at the academic, higher vocational and intermediate vocational levels. This stimulates the essential influx and throughput of logistics students and the emergence of professionals into the logistics industry, enabling the KDCs to contribute to the reinforcement of the human capital of the region’s logistics industry.

• The organisation, tasks and services of a KDC are given shape by the regional partners. A permanent organisation (including a logistics board, core feedback group and back office) handles the core business.

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• A KDC has a booster function; the effect, i.e. collaboration within the industry-education-government triangle, needs to be made permanent.

• The strength of a KDC is in proactive dissemination, communication knowledge sharing. Content is paramount!

In short, the purpose of a Logistics KDC is to contribute to:• acceleration of ‘knowledge to market’;• acceleration of ‘time to market’ for innovations;• vitalisation (healthy, vigorous and sustainable innovation power) of the logistics

industry;• dissemination of knowledge through the various educational levels.

How things work: Zeeland-Brabant

Figure 3: How the Zeeland-Brabant KDC operates.

The figures clearly show how the various Logistics KDCs are linked and which regions they cover. This makes it possible on the one hand to pick up the right trends and development at the national level, and on the other to pay extra attention to the regional logistics issues by means of regional profiles. This makes for a solid foundation in the regional industries, enabling operations to be more demand-driven. The specialisation of the Logistics KDCs will be further developed in the future in order to increase the focus on regional ties. After all, the Rotterdam

Logistics Service Provider

UniversitiesHigher vocational training institutes

Shippers

Provincial authorities

Large municipalities

Regional TLN officeRegional EVO office

ROMs

ICT suppliers

Logistics KDC Zwolle/Northeast NL

Logistics KDC Zeeland-Brabant

Logistics KDC Rotterdam

Logistics KDC Amsterdam

Logistics KDC Gelderland

Logistics KDC Limburg

Regional information point

Front office

Regional Training Centres

Back office

Knowledge management

Project implementation

Talent development

Business/project development

Industry research

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region is bound to have needs that differ from those of a region all the way across the country.

The partners participating in the Zeeland-Brabant Logistics KDC share an agenda, which more or less provides the businesses with a one-stop shop offering a programme that is tailor-made for the partners involved. This stops external organisations from approaching the businesses to seek contributions to all kinds of (no doubt well-intended) actions and proposals. The objective is to ensure that the future reputation and position of the Zeeland-Brabant Logistics KDC will enable more demand-driven projects to be realised with, for and by the industry.

The partners in the Zeeland-Brabant Logistics KDC are: the NHTV university of applied sciences in Breda, EVO, TLN, Syntens, ROC West-Brabant, ROC Tilburg, Avans University of Applied Sciences, Zeeland University of Applied Sciences, West-Brabant Chamber of Commerce, Zeeland Seaports, Midpoint Brabant, University of Tilburg, BOM, EIZ, Rewin, Province of Zeeland, Province of North Brabant.

A number of projects have already been successfully initiated and implemented by the Zeeland-Brabant Logistics KDC, including:

• Safefficient;• Goods flow bundling;• Sustainable goods transport compass.

ChallengesWith the opening of the Limburg KDC in April all of the six KDCs have become operational, and the national network is operating smoothly, with specialisations and profiles of the regional KDCs being decided in mutual consultation at the national level.

The continuity of the Logistics KDC has been safeguarded now that we have successfully managed to get the project (which is part-financed by Dinalog) funded (as from the end of 2013) by the Ministry of Education, Culture and Science as a Centre of Expertise within the performance framework agreed with the six higher vocational education institutes. The funding will cover the next four years and comes with the stipulation that the educational institutes foot the bill for the remaining 50 percent with a substantial contribution from the industry.

The plans and the use of knowledge methods, the implementation of a portal and a toolbox, and the exchange of best practices will be continued in view of the higher educational institutes’ desire to invest in fields that are important to the wealth and welfare of the Netherlands.

The good news is therefore that we will continue to initiate, stimulate and facilitate knowledge flows that cater for the needs of the industry. Nonetheless, some concerns over what the longer-term future may bring should be voiced. A sustainable consolidation of collaboration between government, education

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and industry requires that the industry develop an open mind set and take a good look at its own organisation with a view to creating a sustainable strategy. Collaborations between shippers and hauliers are still few and far between (apart from a limited number of exceptions), causing chain profitability to stagnate. Tendering is just a short-term solution.

Now is the time to stop weeping over all the things that just cannot be achieved or that turned out to be infeasible in the past; now is the time to collectively take up the challenge of the opportunities that present themselves and so further develop the logistics chains into a robust, flexible and profitable machine. This demands a cultural about-face that will free up time and money that can be used to increase profit, reduce costs, or create a sustainable chain. Freeing up time and money are essential requirements to safeguard the vitality of the business and to develop demand-driven projects even when the money for innovation and from government grants dries up. This is the only road that leads to innovation and excellence in the industry.

An assignment can also be formulated for the educational institutes and the education-related research establishments: make sure you create sufficient flexibility and capacity, both in a quantitative and in a qualitative sense. Only then will the industry be able to collaborate smartly and efficiently, and only then will knowledge flow freely.

Figure 4: National distribution

of higher vocational logistics

educations. Logistics & Economics

is offered in Haarlem, Amsterdam,

Rotterdam, Utrecht, Zwolle, Emmen,

Breda, Venlo and Arnhem. Logistics

& Technical Transport Management

is offered in Amsterdam, Rotterdam,

Breda and Venlo. Altogether, the

number of students involved is

approximately 3,500. (Illustration:

Logistics Knowledge Agreement,

Dinalog)

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Institute LTV L&E Total

Windesheim 80 198 278

Fontys 161 311 472

Rotterdam 178 419 597

Stenden 169 169

Utrecht 129 129

Amsterdam 545 279 824

Arnhem-Nijmegen 412 412

InHolland 129 129

Zeeland 65 65

NHTV Breda 215 305 520

Table 1: Number of logistics students at various higher education institutes.

List of Logistics KDCsZeeland-Brabant Logistics KDC,Breda NHTV university of applied sciencesLimburg Logistics KDC,Venlo Fontys university of applied sciencesGelderland Logistics KDCArnhem-Nijmegen university of applied sciencesAmsterdam Logistics KDCAmsterdam university of applied sciencesRotterdam Logistics KDCRotterdam university of applied sciencesNortheast Netherlands Logistics KDCZwolle Windesheim university of applied sciences

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Open logistics platform

Sharing information

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Summary of chapter 7

Open communication and information sharing are essential in the logistics industry. This is why the Dutch industry has focused on developing a Neutral Logistics Information Platform (NLIP), a smart system to deliver and share information throughout the chain. The system was developed to help the Netherlands regain its position at the forefront of the European logistics industries.

The concrete objective is to ensure that businesses and authorities exchange information through the NLIP. Market platforms and the government’s Digipoort platform will be interconnected, and data will be shared while maintaining the necessary integrity and privacy checks.

The owner of the information gets to decide who can access the data and under which conditions. The compulsory submission of data to government organisations will be free whenever possible.

The first steps have already been taken. Shippers, logistics service providers, main ports and the government have already reached agreement on common objectives, starting points, scope, prerequisites and methods. Further developments are expected to proceed much more rapidly thanks to effective coordination, the active sharing of knowledge and the adoption of common standards. The collaboration will also reduce the cost of innovation and management.

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Towards a Neutral Logistics Information Platform

Let’s start with a vision of the future: within the foreseeable future, businesses and government organisations will be exchanging information through the Neutral Logistics Information Platform (NLIP). Any information only needs to be submitted once and can then be efficiently disseminated for optimum reuse. Market parties will have developed a large number of commercial apps connected to the open ICT platform, supporting synchromodal planning for example. Government agencies will also have developed apps that enable them for example to plan inspections. The ownership within the open market platform will have been arranged between the market and the government by means of a PPS construction. The compulsory submission of data to government organisations will be free whenever possible. A suitable tariff structure will have been developed for other types of data exchange.

It probably sounds very ambitious, and that’s because it is. It needs to be if the Netherlands is to maintain and improve its leading position in worldwide logistics. We will have to complete a substantial part of this vision by the end of 2013.

A country with ambitionsIn the logistics field, the Netherlands clearly has ambitions. The year 2009 saw the establishment of the Strategic Platform for Logistics (SPL), which continued the work done on the recommendations proposed by a previous consultation body within the Dutch logistics industry, the Van Laarhoven Committee. The SPL was set up by major logistics parties, including the Port of Rotterdam Authority, the Flora Holland flower auction and Eindhoven Technical University. In charge was Leo van Wijk, former head of Air France KLM and a captain of the Dutch logistics industry.

In 2011 the SPL continued under the name Topteam Logistiek (Logistics Spearhead Team). Still led by Leo van Wijk, it published a list of recommendations entitled Partituur naar de Top (Score for the top). According to these recommendations, by 2020 the Netherlands should have reached a leading position in the processing of goods flows and the chain optimisation of national and international activities, and be offering an attractive environment for shippers and logistics industries to base their operations.

One of the most important prerequisites for realising these ambitions is optimised availability, i.e. full, correct and timely, and the maximised use and reuse of information so it need only be submitted once.

In late 2011 the Logistics Spearhead Industry Implementation Agenda (Uitvoerings-agenda Topsector Logistiek) was drawn up to fill in the concrete actions to take. This was done by means of a number of different roadmaps. At the top of the list is the roadmap for a Neutral Logistics Information Platform. Other important roadmaps on the agenda include:

Teunis Steenbeek,

programme manager,

Neutral Logistics

Information Platform

(NLIP).1

1 In April 2013 Teunis Steenbeek handed over his post as NLIP programme manager to his successor, Hans Zuidema.

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Synchromodality, optimising the use of different transport modes in an integrated transport solution. This can be implemented in corridors and regions with a sufficient supply of freight, allowing the use of high-frequency transport by rail and by water.

Border controls, improving the position of border controls by means of streamlining and rationalisation.

Cross Chain Control Centres, from which several supply chains can be coordinated and controlled simultaneously using state-of-the-art technology, advanced software concepts and supply chain professionals.

Service logistics, the whole set of logistics activities needed to ensure that all the systems – many of them very capital-intensive – can give optimal and uninterrupted performance throughout their life cycle, up to and including any decommissioning and possible reuse.

Supply Chain Finance, optimising the financing between businesses and integrating financial processes between customers, suppliers and financial and logistics service providers, in order to create value for all the participating businesses.

The logistics market and the Dutch authorities are currently working together on developing the NLIP. In April 2012, representatives of shippers, logistics service providers, main ports and government signed a covenant defining the objectives, starting points and various arrangements in order to provide a continued incentive to collaboration and formalised arrangements for doing so.

Intelligent conduitThe NLIP is intended to be an intelligent conduit, so information will need to be presented to the system only once, ready for maximum reuse. The system comprises a number of existing information platforms of both market and government:

Cargonaut – operational at Schiphol Airport, its purpose is to create chain-wide solutions by means of the electronic exchange of information between airlines, dispatchers, processors, hauliers, shippers, and customs services and other government agencies.

Portbase – provides all the logistics information from the ports of Rotterdam and Amsterdam. Through the cross-organisation Port Community System of Portbase, businesses benefit from a multitude of intelligent services for efficient and easy information exchange, both between businesses and to/from government organisations.

The logistics section of Digipoort, which handles the fast and safe delivery of messages between the industry and the authorities.

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Later in this article we will discuss the parties involved in more detail. New platforms will also be added, e.g. road transport and market sectors. Within the NLIP, information can be exchanged between all these platforms. The information can be used in various applications in use by market parties and government agencies (see Figure 1).

Figure 1: The setup of the Neutral Logistics Information Platform (NLIP) around a core of key parties

using common standards.

The platform will be open and neutral, but it goes without saying that there are limits to the kind of information that can be exchanged. The owner of the information needs to be able to keep a check on the data he has put into the system, and the owner alone gets to say who can have access to that information, and under which conditions.

Another very important prerequisite is that the NLIP needs to be an open ICT platform, equally accessible to all parties, provided a set of general conditions is complied with. Technical arrangements and procedural standards will need to make information exchange simple.

Whenever possible, existing systems, know-how and experience will be used. Existing platforms will still be owned by and form part of their current organisations, but will need to meet the agreed standards. The NLIP and the platforms it comprises will be neutral, i.e. non-profit, accessible to everyone under the same conditions, with no party or parties dominating the system.

The scope of the NLIP is to include all goods flows from, to, through and within the Netherlands. This involves information about physical goods flows, down to single item levels if necessary, and document status information. Commercial agreements and money transfers are out-of-scope.

The NLIP organisation consists of a small facilitating and coordinating team that focuses on technical arrangements, procedural standards and the promotion

Portbase Digipoort

Cargonaut Sector Y

Shippersgroup X

Standaarden

Community Apps PB

Community Apps Authorities

PB AuthoritiesApp

App

CN

Authorities

App

X or Y

Community Apps CN

Community Apps X or Y CN X or Y App

PB

NLIP NLIP

NLIP NLIP ...

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of NLIP use. The latter entails stimulating the reuse of information and the development of applications that access and use the information.

So, a number of basic conditions apply. The NLIP is not a new information platform that will render existing platforms obsolete, nor will it require the setting up of a major new organisation that will be developing its own systems.

The NLIP focuses on the development of an information platform, but this will only produce added value if the market and/or the authorities make information available and actually make use of such information. Based on current knowledge and insight the ambition is to use the experience of the next few years to make the system grow into a more integrated market platform.

Who are involved?GovernmentJust like in every other European member state, the government in the Netherlands is obliged to set up a single window through which information will only have to be submitted to the authorities once. This government platform is already under development as the Single Window Handel en Transport, SWH&T (Single Window for Trade and Transport) and forms an important part of NLIP. Part of the project is to look at additional ways of optimising the process within the government organisations. In addition, the authorities are involved because of the general importance of increased employment due to growth (in a general economic sense as well as within the logistics industry).

Logistics service providersThe market is increasingly focusing on improving the overall logistics chain and reducing its operating costs. This involves a variety of parties, a large number of which are actively involved in the NLIP: processors, barge operators, shippers, air freight operators, shipping companies, terminals, hauliers.

Main ports and their port community systemsAs main ports, Schiphol Airport and the Ports of Rotterdam and Amsterdam benefit greatly from integrated information flows. They have already developed community systems for this purpose, and these form a central point for information exchange by market parties with each other and with the authorities. With the NLIP using existing systems, know-how and experience whenever possible, Cargonaut and Portbase contribute to the NLIP while at the same time being enriched by the NLIP.

Last, but not least: shippersShippers benefit from reliable and efficient logistics chains and opportunities to innovate these. In this case too, efficient information exchange is essential, which is why EVO is involved in this development.

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Figure 2: The parties involved in the NLIP steering group. In addition, CAN, Cargonaut, Port of Amsterdam

Authority, KLM, LINC, Logius, NCTB, Portbase, TNO/TU Delft and the Market Garden Industry are actively

involved in the feedback group.

Added valueAs mentioned before, the purpose of the NLIP is to contribute to the ambitions of the Netherlands regarding logistics, in particular concerning its leading position in the processing of goods flows and chain optimisation of national and international operations in the near future.

The benefits can be defined more clearly as follows:

Chain optimisation and innovation: better information makes chains controllable, reliable, more flexible, more affordable and transparent, all of which will also contribute towards improving the industry’s public image and customer awareness while at the same time offering opportunities for innovative logistics concepts.

A single window contributes towards the ambition of creating an efficient and cost-effective government system, and indirectly helps to improve the competitiveness of the Netherlands.

Harmonisation of government reports will help to reduce the amount of red tape, administrative overhead and the cost of compliance.

Reducing transaction costs through paperless transport: digital waybills, transport orders en E-billing, reusing existing information.

Better information will help improve control and compliance: risk management will become more efficient, more focused, which helps to create opportunities for horizontal supervision and to reduce the number of inspections as well as the amount of red tape.

Improved safety and better calamity control.

Improved use of transport vehicles and equipment: complete and reliable information can help forecasting and improve processing efficiency, thus improving

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loading percentages and the matching of capacity supply and demand, and reducing turnaround times.

Improved planning and use of infrastructures such as railways, roads, berths and waterways, reducing investment costs.

Better business intelligence: forecasting and performance measurement.

Employee information: effective checks regarding identity, safety record, criminal history, certificates, abilities and availability.

For shippers the NLIP means opportunities to improve the reliability of the logistics chain, improve transparency, and reduce costs. This will help to improve the competitiveness while also reducing the impact on the environment.

It should be noted that although an information platform provides an essential basis, it will not represent any added value until information can be shared and acted upon. For this purpose, the so-called apps are being developed. The NLIP will therefore become the sum of the platform, the information it contains, and the systems that provide access to the information, i.e. the apps.

Ultimately there are three elements that will help the NLIP to provide important added value, and these are by optimising planning and execution, by providing supervision and safety, and by reducing administrative overhead and red tape. In doing so, the platform offers both technical/strategic and operational benefits, as shown in Figures 3 and 4.

Figure 3: Three elements that combine to add value

Tactical/strategic Operational

Optimised planning and execution

• Logistics concepts innovation• Optimised use of transport vehicles,

equipment and infrastructure• Flow bundling

• Chain optimisation (controllable, reliable, affordable and transparent), including synchromodal transport

Support for supervision and safety

• Improved setup and scheduling of supervision and inspections

• Broader basis for chain supervision• Horizontal supervision• Risk analyses

• Operational safety• Inspections• Calamity control• Legislation (NL and EU)

Reduced administrative overhead and red tape

• Dual filing opportunities• Pull concept

• Reduced transaction costs (e.g. E-documents, paperless processing, digital admin, government reporting, billing input, interfaces)

Figure 4: Areas in which the NLIP can provide added value

} Better and more efficient

Platform(s) Information App(s)

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StatusThe creation of the NLIP, which involves many different parties with different interests, is far from simple. The initial focus was on formulating objectives, starting points, scope, concept, roles and responsibilities, priorities etc. In 2012 these were agreed between the parties involved and laid down in the covenant mentioned previously.

In addition, the development of the basis, i.e. the question of which technical and procedural arrangements will be needed, was taken up. Message standards are crucial for information sharing. The NLIP will not dictate any message standards, but will build up a library with common standards and interfaces. The library will continue to grow, so an increasing amount of information can be shared efficiently and effectively. Ultimately though, message exchange traffic will be replaced by the exchange of data fields, which will make communications even more flexible.

Of course, a number of information exchange processes will have to be agreed on. Abuse of information must be prevented, arrangements will have to be made between the NLIP (the platform) and the users of information (the apps), these contracts will need to be managed, and costs charged to the right parties. The first steps have already been taken towards setting up these process prerequisites.

Finally, a first selection of applications was agreed upon.

FeaturesThe NLIP offers the opportunity to share and reuse much more information than already is the case, as it provides a national platform, a single window as well as an expansion of B-to-G towards B-to-B, all of which are concrete steps towards planning and execution, support for supervision and safety, and the reduction of administrative overhead and red tape.

The fact that shippers, logistics service providers, main ports and government authorities have agreed on common objectives, starting points, scope, prerequisites and methods, is a major leap forward in itself. Further developments can go much more rapidly because they are now being coordinated, with knowledge being shared and common standards being used. All combined this also represents a step up in scale, which will help render the necessary development, innovation and management less costly.

Future developmentsThe die has been cast, arrangements have been agreed upon, and principles laid down. The first major challenge will be to complete the technical arrangements and procedural standards regarding information exchange, which will need to be finalised in the first six months of 2013.

In addition, initial efforts will be focused on the following applications:

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Information and document flowsPaperless road transport: development and implementation of digital waybills, transport orders and E-billing. Also, digitisation of air freight document flows (E-Freight and Seamless).

Reporting to and by the authoritiesFurther development of the government’s Single Window for Trade and Transport (e.g. Fytosanitair at Schiphol Airport and the Maritime Single Window). Rationalisation of government reporting in order to prevent repeat or overlapping electronic messages.

Chain optimisationDevelopment of a platform for the fruit-growing industry (Fresh Corridor). Development of a platform for inland container shipping to support the chain to, from and within Rotterdam, to be eventually extended to other transport modes and synchromodal transport.

Naturally, additional initiatives and applications will be considered, provided these can be controlled and are supported by clear business cases. These could include applications for supervision and compliance, calamity control, infrastructural use, the use of vehicles and equipment, business intelligence and employee information.More information about this project can be found on the website, www.nlip.org, which includes a detailed presentation. EVO is represented in the NLIP feedback group NLIP by policy consultants, Godfried Smit and Dennis Heijnen.

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Potential for innovation

Sustainability

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Summary of chapter 8

The paper explains how a sustainable approach to logistics can provide an economic advantage for the logistics sector in the short and in the long term. We argue that sufficient energy saving options are available to be implemented in the short term, which can lead to operational cost savings with a rapid return on investments. In addition, however, we also state that aiming only for sustainability levels that can be achieved at a net cost reduction will not prepare the sector for the challenges it will face in the longer term.

These challenges are enormous: by 2050 we need to have achieved 50 percent more fuel efficiency and 80 percent less CO2 emissions per unit of energy used. In addition, changes for future generations will not only be driven by environmental concerns. Scarcity of food, energy and water is expected to lead to drastic changes in transport flows and supply chains. The logistics sector will only succeed in improving its sustainability if it utilises and strengthens its own innovative powers with creative, new and sustainable logistics concepts.

Our chapter continues with a description of the sustainability challenge from a broader perspective in section 2. In section 3 we illustrate the challenge of the strain put on the system by more people with fewer resources. Sections 4 and 5 provide some principles and examples of sustainable logistics practices. Section 6 provides a summary of the chapter along with some concluding remarks.

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Lori Tavasszy,

Corresponding author,

TNO and TU Delft; Ming

Chen, Richard Smokers

and Egbert Guis, TNO,

Delft

Innovation in sustainable logistics1

Potential for sustainability is underratedLogistics as a sector has a key role to play in reducing greenhouse gas emissions and reducing the dependency of our economy on non-renewable energy sources. Until now, the potential contribution of the logistics sector to sustainability has been to focus on the reduction of logistics costs. Its potential is larger, however, as logistics can make large steps ahead in sustainability with cost neutrality or with small cost increases.

As such, we argue, the full potential has been underrated in the national innovation policy and should be explored further. As an addition to the roadmaps developed for the Logistics Spearhead Industry, this paper provides some lines of thought that extend the current efforts in green logistics to global sustainability for the long-term future up to 2040.

Revisiting SustainabilitySustainability is not always defined in the same way. Sustainability covers different aspects and over time new aspects have been added. The following figure shows that sustainability is a combination of the people, planet and profit viewpoints where the situation should be bearable, viable and equitable.

Figure 1: Sustainability

Sustainability is still perceived by many as focusing on people and planet. The aspects related to scarcity have more of an economical and welfare preservation focus on the profit side of the spectrum. Sustainability is therefore a mixture of different viewpoints which is not limited to those of environmentalists alone.It is important to note that the attitude towards sustainability is changing.

1 This paper is a modified version of the paper presented at the Vervoerslogistieke Werkdagen 2012 Conference.

We were already quite good at

people and profit, so what are we

going to do differently tomorrow

for our planet?

What is the added value of

sustainable options?

quality / comfortaccessibility / affordability

safety

people

planet

bearable equitable

profitviable

sustainableair qualitynoise

CO2 emissionsbiodiversity

resilienceenergy securitymaterials / resources

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The scarcity aspects are also being picked up as being relevant for business operations, as illustrated by concerns over the availability of lithium and rare earth metals for the batteries and electric motors required in electric and hybrid vehicles. This can mean that over time when different impacts are weighed and valued differently, the package of suitable sustainability measures to be applied could also evolve.

Taking this all into account, we can conclude that it is important to have a clear idea of which problems we are trying to solve. Furthermore we should have an open mind towards necessary changes, and leave old paradigms behind where necessary.

Focal points and severity of the problemThe focal points for sustainability are currently the local environment (air quality and noise), climate change and energy independence. Over the next few years, resource scarcity will also become more important. What these targets have in common is that it is important to try and reduce the use of energy, and to increase the share of alternative fuels in the energy mix. There are also differences. CCS (Carbon Capture Storage) for example can help achieve the climate change objectives, but it is not making us more energy independent. Regarding the energy independence issue, the range of available alternative fuels could also include types of energy that produce even more CO2 than conventional fuels do.

When looking for solutions it is important to be aware of the dimensions of the problems we are facing. As a starting point, let us consider figure 2, which shows the growth of the world’s population. Between the years 2000 and 2050 the world population is estimated to grow by 50 percent. In addition the share of the working population (20 – 64 years old) will be increasing. Some studies show a global increase of the middle class (i.e. the consuming category) of up to 400 percent. In 2012 we can already see an increasing scarcity of energy and food, resulting in higher prices. Without making any further calculations the above already gives a pretty clear indication of the challenges that lie ahead.

Figure 2: Population by age group (Source: UN University)

10000000

7500000

5000000

2500000

0

1950

2,5 BILLION 6 BILLION 9 BILLION

2000

20500 -- 19

65 +20 -- 64

5%

44%51%

7%

39%

54%

16%

27%57%

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In order to show the driving factors of energy needs and CO2 emissions and the inevitable resulting challenges in more detail, the following decomposition formulas have been derived. Formula (1) shows that energy demand is related to world population, the global average of GDP per capita and the energy needed to produce one unit of GDP. Formula (2) shows the relationship between CO2 emissions due to energy use and CO2emissions per unit of energy used. It should be noted that at a global level this is a closed system.

(1)

(2)

Using these equations we find (see Chen et al, 2012) that in an unchanged energy/GDP situation we will end up using 4.5 times the energy used in the year 2000. In a scenario where 50 percent reduction is achieved this is still 2.25 times as much. The IPCC target of 50 percent reduction in worldwide CO2 emissions by 2050 relative to 1990, necessary to keep the global average temperature increase below 2 °C, is achieved only in the scenario in which energy use per unit GDP is halved and the carbon intensity of the energy consumed is reduced by 80 per cent.

These results do not say anything yet about the scarcity of energy in the period up to 2050. In order to gain insight into the availability of energy and in particular (in the case of the transport sector) oil (which is still used for 97 percent of all the world’s mobility), a sensitivity study was performed (Chen et al, 2010). The authors concluded that, if we maintain our current (2010) behaviour in mobility and logistics, we will be confronted with high oil prices and therefore a restriction on economic growth approximately in the year 2016 (!). If all the measures are implemented as defined to achieve the Kyoto agreement levels by 2020, we can have an additional 10 years of unrestricted economic growth. It should be noted that these measures should be implemented on time and will also need to achieve the predicted effect.

Sustainable logisticsThe difference between ‘logistics’ and ‘sustainable logistics’ is not always clearly defined. Many are of the opinion that the two are actually the same thing since more efficient logistic solutions also lead to a more sustainable situation. This is only partly true since the logistics industry is not only optimising its use of energy, but is also implementing other measures including the reduction of other operational costs (e.g. labour), better timing of deliveries, improved client services, and increased reliability of operations.

Sustainable logistics aims to put more weight on energy reduction in the complex optimisation function applied in logistics. In order to make a sufficient contribution, the logistics sector will need to go far beyond the current cost reductions in transport, as these have a limited impact, mainly because:• rebound effects will occur due to an increased consumption offsetting the

emission reductions;

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• cost savings are limited in their reach and fall far short of the ultimate environmental footprint reduction targets;

• cost savings may result in increasing footprints elsewhere, due to trade-offs in the supply chain (e.g. increased emissions in warehousing);

• other changes will be needed to handle other scarcity problems (fuel, food, etc.).

In a nutshell, new and further reaching ideas are needed. First of all the sustainability focal points as defined in the previous section can be translated to the following objectives in logistical terms:• fewer tons, same dispatch (weight packaging/product);• fewer ton-kilometres, same tonnage (production-consumption distance, hub

location, etc.);• fewer vehicle kilometres, same ton-kilometres (loading factor, vehicle capacity/

modal shift, etc.);• less fuel, same vehicle kilometres (modal shift, vehicle technology, alternative

fuels, etc.).

The development of sustainable options is needed to make the transition process possible. The development of sustainable options includes the development of logistical options, and this is what is actually the regular logistics. Moreover, technical options such as vehicle technology and driver support tools to help drive more efficiently are also included. Figure 4 shows a list of sustainable logistics categories.

In this scheme, in addition to the aspects mentioned above, supply chain management and design are included, as are as collaboration schemes involving more than one company. The options listed for Efficient vehicles and Efficient use of vehicles need to be developed by the automotive sector, i.e. vehicle manufacturers (OEMs) and component suppliers, and need to be adopted by the logistics industry as part of the transition process. In addition to these technical solutions the sustainability of logistics can be significantly improved by mobilising the innovative power of the logistics industry itself.

Figure 4: Sustainable logistics categories

Efficient vehicles

Efficient use of vehicles

Efficient logistics

Supply chain management

Supply chain design

Cooperation schemes

mobilize the innovative power of logistics sector

enginesaerodynamics, tyresweight driver trainingdriver support tools

adoption by users

OEMs

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Eventually, it will be the companies that will have to make the changes to their operations in order to become more sustainable. Of course companies do not have unlimited resources to make these investments, and a sustainable operation should therefore be matched to other business objectives. Investments that do not lead to additional revenue are normally considered impractical. And if they are considered to be practical, the payback period should preferably be less than one year, or two at the most, and even then only in exceptional circumstances. It is in the interpretation of this where the difference between conventional logistics innovations and sustainable logistics becomes apparent.

Figure 5 shows how investment costs increase in relation to the desired fuel (or emission) savings. The sum of the investment costs and the savings produces the net costs curve. For most applications there is a reduction potential that can be achieved at negative net cost to the user. The net savings depend heavily on the depreciation period (and residual value) that is used for determining the annuity of the investment, on annual mileage and on fuel prices.

Figure 5: Reduction in fuel consumption and CO2 emissions

Annu

al c

osts

Reduction in fuel consumption / CO2 emissions

point oflowestcosts

reduction potential available at zero net costs

fuel cost savings

annuity of investments

net costs

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The first steps towards improving the sustainability (in this case focused on reducing fuel consumption and CO2 emissions) of a logistics operation generally result in a net cost saving (the so called low-hanging fruit). Companies that focus on cost optimisation, or which interpret the profit/planet balance in such a way that there should always be a win/win situation in which improved sustainability also saves money, would therefore only implement sustainable options up to the point of lowest cost.

Beyond this point, however, further reductions are still possible at negative net cost. The reduction potential that can be achieved at zero net cost will generally be about double that of the reduction achieved at the lowest cost. Companies which interpret the balancing of profit and planet in their quest for improved sustainability as realising the maximum reduction achievable without a net cost increase will therefore implement more reduction options than companies that go for a win/win situation in the profit/planet balance.

Achieving long-term reduction targets as illustrated above may even require making fuel saving and other sustainability improving investments that will increase net costs. Generally speaking, strong policy instruments will be necessary to motivate the market to make such investments. One such instrument is the internalization of external costs. Figure 5 shows that a tax that becomes lower as sustainability performance increases will lead to a larger savings potential (tax in addition to fuel) and therefore will cause the point of lowest cost in the green curve to shift to the right. In other words, more solutions become commercially feasible that previously were not and the market will push itself further than before.

Nevertheless we can already see companies making investments in sustainability that are not fully earned back through direct operational cost savings. Their motivation is that the value of sustainability goes beyond direct operational savings. Companies that work in a more sustainable way often use their green way of operating in their promotional activities. Clients might also be willing to pay more for more sustainable services. And clients’ focus on sustainability may also enable front-runners in this field to gain market share over laggards. The long-term positive business impacts of this may justify investments in sustainability that first of all go beyond the point of lowest cost and may even go beyond short-term direct cost neutrality.

In the Netherlands TNO is involved in the organisation of the Lean and Green programme (Quak et al, 2012). Companies voluntarily join to benchmark their CO2 reduction achievements. It is observed that for many a 20 percent reduction in CO2 emissions turns out to be easily achievable and that therefore the point of lowest cost as indicated in the figure is in many (or even most) cases not achieved. For the front-runners it is off course getting more difficult to achieve additional reductions. Where this looks promising we also have to look at ways to effectively implement the next steps in CO2 reduction so progress will not halt when companies reach the point of lowest cost.

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Options for sustainable logisticsFigure 6 lists some examples of options in the technical, operational and logistical sphere that partly go beyond cost reduction and may require additional investment or taxing of producers and/or consumers to make business models work.

Figure 6: Technical, operational and logistical options

Technical and operational optionsDespite the fact that for some decades now, both the logistics industry and truck manufacturers have been implementing ways to increase fuel efficiency and cut fuel costs, there is still potential for further reduction of fuel consumption (and CO2 emissions) of trucks in various applications. These options relate to technical measures applied at the vehicle level as well as to operational measures that influence driving styles or that reduce the influence of the driver on the vehicle’s fuel consumption. If the vehicle configuration is a given, measures to reduce fuel consumption relate to improvements in:

• engine technology, ranging from e.g. reduced friction and advanced valve timing and lift to improved combustion concepts:

• transmissions, e.g. start-stop systems or increasing levels of power train hybridisation;

• waste heat recovery from the exhaust to either improve engine efficiency or to generate electricity for powering auxiliaries.

In addition to power train-related innovations, the vehicle body can also be modified to reduce the amount of energy needed to propel the vehicle. In urban areas weight reduction is an important measure, while for long-distance trucks, which move at higher speeds on motorways, improvements in aerodynamics offer significant improvement potential. This can start with simple measures such as spoilers,

Technical options Operational options Logistical options

• engine technology • alternative fuels • advanced power trains • e.g. hybridisation • efficient auxiliaries • resistance reduction • type pressure monitoring • low rolling resistance tyres • aerodynamics • integration truck + trailer • weight reduction

• driver behavior • driver training • driver feedback tools • ITS • predictive cruise control • traffic management

• network design • networked cooperation • organized consumers • multi-/synchromodale transport • improved planning • replenishment frequency (supplier) • delivery frequency and time windows (customer) • route planning / management • green warehousing • reversed logistics

• cradle to cradle

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fenders and side skirts, and culminates in more fundamental redesign of the vehicle through aerodynamic front ends and teardrop-shaped trailers. For all applications, rolling resistance can be reduced by the adoption of low rolling resistance tyres and tyre pressure monitoring systems.

Operational measures include measures that improve the driving style of the truck driver. A well-known example are eco-driving courses, the effect of which can be increased and sustained by installing devices that provide feedback to the driver. On the other hand, the impact of the driver on fuel consumption is reduced by the application of ITS-type measures such as predictive cruise control, route management and various levels of traffic management systems.

Another way to reduce transport-related CO2 emissions and oil-dependency can be found in the application of alternative fuels and energy carriers. Advanced dual fuel concepts using natural gas, as currently under development, may offer some CO2 benefits compared to diesel. Further reductions are possible through the use of biogas. Diesel can be blended with biofuels to reduce well-to-wheel greenhouse gas emissions, but the sustainability of various biofuels is currently under debate. In urban areas electric propulsion not only offers local zero-emission driving but also allows CO2 emissions to be reduced through the use of electricity from renewable sources such as wind and solar.

Logistical optionsBusinesses have access to many logistical options that could be implemented depending on specific circumstances (Ruijgrok, 2012). However this is not a straightforward task, due to the efforts and investments required. Some options are not preferred by companies but are imposed on them by regulators in order to come to a more sustainable situation. The following examples illustrate how companies struggle to find options and measures that go beyond the point of lowest cost by making long-term investments.

To reduce transportation and warehouse space, Centraal Boekhuis (Central Book Distributors) invested several million euros together with two printing companies and a supplier of printing machines in a printing facility at their own premises. The result is that it is no longer necessary to keep stocks of soft cover books with annual sales of less than 1,000 copies, which is the case for 80 per cent of all titles.

The distribution concepts in the retail sector are often based on round trips between distribution centres and shops. After delivering the goods in a shop, it is common sense to take the returns back. The trucks have a load factor of only 25 per cent on this leg. Planning full loads after the final delivery at the shop and setting up dedicated pick up routes for the returns of several shops could improve the load factor and reduce vehicle kilometres.

The system used to collect milk from dairy farms offers the potential to cut many vehicle kilometres. A large volume of the collected milk is used to produce milk powder. Because almost 90 per cent of the milk consists of water an improvement

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would be to remove a large part of the water at the farm, avoiding the need for its transport.

Attempts to shift the transport of goods from roads to other modalities like rail or inland waterways are often thwarted by a lack of connectivity with, and inefficiency of, the pre and post haulage stages. Focus in a modal shift program should primarily be on improved information exchange in order to allow synchronised scheduling.

A big step forward in City Logistics could be to regulate that in inner cities all goods are to be delivered using electric vehicles. This forces the delivery of goods to smart hubs outside the cities and this decoupling enables optimal bundling of goods to the final destination with environmentally friendly means and at the appropriate time.

Internalization of external costs can go beyond the current taxes, if a fair and efficient regime can be implemented. Recent calculations (TNO, 2013) show that the increase of costs and the effect on the economy would be minor, but that the reduction in external effects would be substantial. This would lead to a net positive welfare effect for the Netherlands, even in the scenario that internalization is not implemented in all countries simultaneously.

Eventually, the economy will increasingly dematerialise and product systems will be replaced by product-service systems (PSS), where ownership of the product will be subordinate to its use. For example, consumers would buy hours of light instead of light bulbs and mobility instead of cars. The PSS-based economy will be a more natural environment than the current one for the implementation of closed-loop supply chains, cradle-to-cradle production and, in the long term, the circular economy. This will require a reorganisation of supply chains, from physical to virtual logistics (added value linked to physical flows outside the country) and from global-to-global to local-for-local.

These examples could be interpreted as milestones along a roadmap of several decades, leading us into the age in which wellbeing will not only be measured by GDP but by the extent to which we are able to live in harmony with our natural environment and that of the next generations.

ConclusionsSeveral conclusions can be drawn from this paper:

In addition to climate change, energy is a sustainability driver that is growing in importance. The challenges up to 2050 are enormous and are of the order of magnitude of 50 percent more efficient use of energy and 80 percent reduction of CO2 for the energy used.

In a situation where we maintain our current behaviour, very high fuel prices can be expected within 5 years from now, which will lead to a restriction on economic growth. The sense of urgency should be increased.

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In the short term, energy-saving options will need to be implemented, and in the medium to long term a transition to (CO2-neutral) alternative energy carriers will be necessary. This should be initiated by field trials and market formation activities in the short term.

The full potential of sustainable logistics will be reached by the adoption and use of more efficient vehicles on the one hand, and the mobilisation of the innovative power of the logistical sector itself on the other hand. The latter can be achieved by giving more weight to sustainability objectives in the complex logistical optimisation function.

Many options are available to most companies to achieve a reduction of operational fuel consumption in the short term of up to 20 percent or even more. In the long term however, more reductions will be necessary. Generating suitable long-term options and preparing them for market uptake is a continuous process that should be actively maintained.

From a company perspective, sustainable logistics can lead to cost reductions, but the potential for the reduction of CO2 emissions and energy consumption will be significantly higher if combined with an attempt to maximise the reduction of sustainability impacts at equal costs (profit/planet balance) compared to the current situation.

Sustainability will be crucial for the right-to-play of the logistics industry, and improves the competitiveness of businesses in the long run. Companies can justify investments that on the short term lead to higher costs if they anticipate this situation.

The transition has to be made in a difficult economic and social situation which on the one hand complicates the process and on the other hand stimulates creativity and forces us to let go of old paradigms. Changes will not be driven by environmental concerns alone. Whatever the case, shortages of food, energy and water may be expected to lead to drastic changes in transport flows and supply chains. The required response of the logistics industry to these challenges offers great opportunities to improve the sustainability of the sector itself at the same time.

Sources• Chen T.M., Koppelaar R., 2010. Restricted oil supply in the transport sector and

economic growth, Conference Proceedings, European Transport Conference, Glasgow.

• Connekt, 2008-2011. Lean and Green Award plans.• TNO, 2013, Internalisatie van externe kosten in het goederenvervoer, Report for

Raad voor Leefomgeving en Infrastructuur (Internalisation of external costs in goods transport, Report by the Council for Living Environment and Infrastructure), The Hague.

• Quak H, de Bes J, Leijnse M, 2011. Eerste stappen richting een duurzamere

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logistiek; Korte termijn maatregelen en lange termijn doelstellingen (First steps towards sustainable logistics; Short-term measures and long-term objectives), VLW 2011.

• Rijk G, Gulpers M, 23 March 2010, The third industrial revolution, ING.• Ruijgrok, C.J. (2012), Innovatie en duurzaamheid in de logistiek: Uitdagingen

en ontwikkelingsmogelijkheden voor de periode tot 2040 (Innovation and sustainability in logistics: Challenges and development opportunities for the period up to 2040), The Hague, Raad van Leefomgeving en Infrastructuur (Council for Living Environment and Infrastructure), www.rli.nl/sites/default/files/u53/essay_kees_ruijgrok_definitieve_versie_13_februari_2012_0.pdf.

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Network orchestration

Cooperation

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Summary of chapter 9

The optimisation of supply chain coordination is a theme in the programme of the Dutch Logistics Spearhead Industry. Supply chain coordination (Dutch: ketenregie) is the art of coordinating and directing the flows of goods, including the connected information and finances, from supplier to customer. Network orchestration, the ability to create, maintain and orchestrate the networks that handle the flows mentioned above, is an indispensable tool within supply chain coordination. It is included in various ways in the spearhead industry projects.

In today’s economy, every organisation has to collaborate with external business partners to create value and compete successfully. Current developments in technology accelerate this trend. Organisations are moving from relatively stable and slow-moving business networks into what we call smart business networks.

As a consequence, competition increasingly takes place between networks of organisations that enable firms to quickly respond to new market opportunities. This also means that the classical value disciplines of Customer Intimacy, Product Leadership and Operational Excellence are no longer sufficient and that there now is an additional value discipline required from companies. This is Network Orchestration, i.e. the ability to create value by working together with external business partners.

This article digs deeper into the drivers and consequences of network orchestration: results from a large-scale survey conducted by the Rotterdam School of Management (RSM) and BearingPoint Consulting will be presented to show the success and failure factors of network orchestration. In this article some outcomes of the 1st Network Orchestration Survey will be highlighted. Evidence-based, practical guidelines will be presented as well as recommendations and leading practices.

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Axel Visser

(BearingPoint), and Otto

Koppius (RSM)

Network Orchestration, creating value through collaboration

To thrive in the current environment, CEOs around the world are dealing with the question how to address the challenges at hand, including:

• Reduced distances: Technological progress has resulted in suppliers all over the world using just-in-time schedules, making resilience a key concern.

• Transparent and powerful IT: IT systems allow us to easier share information than ever before, including Cloud computing, SaaS developments and social media, but how to best harness this power remains unclear.

• Limited resources: The expanding world population and increasing wealth keeps the pressure on finite resources such as food, water, clean air and raw materials.

• Increased speed of change: The speed of change is tremendous and the winners of today may find it hard to compete in the near future.

• Increased specialism: The marketplace requires organisations to perform at the best levels in every step of the value chain. Companies therefore focus on their core competencies, at the risk of missing integrative opportunities.

These challenges are getting too complex for organisations to handle on their own. Therefore, companies increasingly turn to collaboration in business networks in order to turn challenges into opportunities. Collaboration is a proven method to tackle challenges that are bigger than one can handle alone. What has changed over time is the reason for collaboration and consequently the way we collaborate.

In our practice, we see organisations moving away from views that can best be describe as ‘Controlled Relationships’ towards a view characterised as ‘Orchestrated Networks’. In the former, the supplier-customer relationship is the norm, short term individual gain is important and the world is dealt with in 1:1 relationships. In the latter, organisations work together in equal partner relations, gain sharing is important and the world is seen as a many-to-many network. In this view, benefits to the wider business network are pursued rather than benefits to a single organisation. We have termed the new environment an ‘Orchestrated Network’ environment and its players Network Orchestrators.

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Like evolution changed mankind, so did time change the way we work together. Collaboration is not new, but how we work together has been changing all the time. We see the current way of working together shifting from control to empowerment and we see collaborations shifting from 1:1 relations to N:N relations.

Network Orchestration SurveyRotterdam School of Management is the international business school of Erasmus University Rotterdam. BearingPoint is a leading European management and technology consulting company serving commercial, financial and public services clients. Together, RSM and BearingPoint conducted a survey into this new way of collaboration between businesses.

The Network Orchestration Survey had four main objectives:• to identify the drivers of Network Orchestration;• to define the consequences of Network Orchestration;• to find the success factors for Network Orchestration;• to find the failure factors for Network Orchestration.

MethodologyThe approach was based on the principle of evidence-based management. Best-practice models for cooperation within networks were found in the relevant literature in the fields of Strategy, Processes, Information & Technology and People & Culture. We looked for practices designed to help management make decisions based on the best available evidence.

For the Network Orchestration Survey, we identified the following sources and technical means:

Controlled Relationships

The control model of collaboration has the following characteristics:• Control is driver• Focus on ‘me’• One-on-One relationships

Network Orchestration

The Network Orchestration model of collaboration has the following characteristics:• Empowerment of players• Focus on ‘us’• Network relation Figure 1: Controlled Relationships versus

Network Orchestration.

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Academic literature, industry reports and exploratory interviews with companies to identify potential success factors for network orchestration.

A group of highly qualified respondents.

A set of quantitative survey measures that have been validated in previous research and pre-tested with potential respondents.

Appropriate statistical techniques to analyse the data.

The survey results then should offer answers to various questions. For example, what different roles do Network Orchestrators fulfil? Does Network Orchestration improve business performance? Does Network Orchestration improve agility? And what are the factors that make for good Network Orchestration? The main hypothesis was that good Network Orchestrators should experience two types of positive outcomes, higher business performance and higher agility.

Potential critical success factorsAn extensive review of the academic and industry literature on business networks, supply chains and interorganisational relations revealed four categories of potential success factors:

StrategyThe Network Orchestrator should have a well-articulated Network Philosophy. The networking company has a mentality of ‘partner unless’ instead of ‘in-house unless’. He has a clear position within the network and all attention is focused on cooperation and win-win. Competition with business partners is not the name of the game.

ProcessesThe Network Orchestrator must have a drive for process excellence, be capable of modular process design and be excellent in Internal Process Excellence (OpEx). This can only be realised if the partners are included. Moreover, he must have the necessary Quick Connect capabilities.

Information & TechnologyWithin the network there must be a high degree of information visibility and open information sharing between network partners. IT standards should be capable of facilitating quick connect between the partners. Cloud and SaaS technologies are enablers used to support the collaboration.

People & CultureThere must be a general Network Mindset within the organisation of the Network Orchestrator. One-on-One relationships must be moving towards N:N relationships, sharing relations and opening up to business partners. Invest in the network; not only the ‘current partners’ are important, the future partners are too.

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Figure 2: The theoretical model with orchestration roles.

The survey was designed using validated multi-item measures from past research (Cronbach alpha > 0.70), and pre-tested for clarity through multiple interviews. It was sent to approximately 1,000 BearingPoint contacts at senior management level and to alumni from the RSM MBA programme. Those who did not respond received a reminder after two weeks as well as telephone follow-up. In total, there were 110 complete responses for the performance part and 93 complete responses for the CSF part. Data analysis was done through factor analysis and OLS regression, after checking that the statistical assumptions were met.

Below are some examples of survey questions. The answers had to be given as either Yes or No.

Network Philosophy: We see our success as directly dependent upon the success of business partner.

Network Horizon: We often take the initiative in approaching firms with partnering proposals.

Network Orchestration Performance: Our company is better at managing partnerships than competitors.

Business Performance: In comparison to similar organisations, we are doing very well.

Cooperative Climate: When disagreements arise in our alliances, we are willing to compromise in the short-term to maintain a beneficial cooperation in the long-term.

Quick-Connect Capability: When we cooperate for the first time with a business partner it usually takes a long time to set up our cooperation.

Roles Network Orchestrator:Architect, Judge, Developer, Leader

Network Orchestration Performance

Strategy

Process

People & Culture

AgilityInformation Technology

Business Performance

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RespondentsLooking at the respondents and their functions within their organisation, it is clear that all functional areas were well represented, with representatives from the Board of Directors, Finance, Operations and HR forming the largest groups.(Figure 2). Not surprisingly, the surveys were mostly answered by people in senior positions, almost half of these in management and one third in chief officer positions.

Figure 3: Respondents per functional area and per level

Detailed resultsLooking at the responses in more detail, it was found that an important main conclusion is that Network orchestration is definitely not ‘old wine in new bottles’. Network Orchestration is neither the same as outsourcing nor just general ‘good business practice’.

Regression analysis shows that several of the critical success factors identified earlier (such as Knowledge Sharing and Safeguarding, Joint Decision Making, Autonomy, IT Proactiveness, Business Process Understanding and Dependence), do not impact network orchestration performance. Network Orchestration is a distinct mindset and a set of practices compared to regular business. The four factors that stand out in this regard are:

• Network philosophy• Process modularity and standards• Quick-connect capability• Cooperative culture

A second result is that network orchestration matters. The regression models used have high explanatory power, which clearly showed that Network Orchestration has a strong statistically significant effect on both Business Performance as well as Agility, over and above other strategic factors.

Good orchestrators have high business performance. Companies that have a high score on business performance usually have a high score on Network Orchestration as well. Most companies that score low on business performance also perform below par in the field of Network Orchestration.

Respondents per functional area

Respondents per level

■ Finance■ Marketing■ Operations■ Supply Chain■ IT■ HR■ Board of Directors■ Other

■ CxO■ Management■ Operational■ Other■ N/A

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Network Orchestration also matters for agility: companies that are agile also score high on network orchestration (the converse is not true, because there are good network orchestrators that are not agile). We can therefore say that network orchestration is a necessary condition for agility: without a well-orchestrated network of business partners, a company will never be agile.

Figure 4: Network Orchestration matters for agility. Note that the upper left corner is completely empty,

which means that there is no agility without a high level of Network Orchestration.

A third result from the survey is that Network Orchestrators fulfil different roles and that these roles matter. We distinguished between the following four roles:

Network architect They define the objectives of the network. They decide who becomes a member of the network. Network judge They define and maintain performance standards. Network developer They are the physical and intellectual assets. Network leader They motivate partner firms and create network identity. The four orchestrator roles fulfil two main functions for the network: The coordination of processes in the network: who does what and how well

are they performing? (architect and judge) Collaboration in the network: knowledge sharing and joint innovation.

(developer and leader)

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Our results show that both these functions (and therefore all four roles) are necessary for high performance, but the leader role is of special importance here. Leading by example to overcome the initial barriers to a networked way of collaboration is key.

The overall picture is that high performing orchestrators are collaborative process champions.

One the one hand, Operational Excellence (OpEx) is (still) very important for business performance. However, as with the findings for agility, we find no high OpEx without high network orchestration. This, coupled with the earlier findings on the importance of process modularity and standardisation suggests that network orchestrators are process champions.

However, it is not only a process focus that is important, it is also an outward-looking focus: a business process does not stop at the boundaries of an organisation. Processes need to be managed jointly with business partners in a cooperative climate. This cooperative climate between business partners is the single most important factor for successful network orchestration. As such a cooperative climate becomes the norm in the business network, it also implies a shift from direct reciprocity (you will help me) to indirect reciprocity (someone in the network will help me). This enables companies to compete as a well-integrated, flexible network and meet the challenges of the 21st century.

ExamplesThere were some clear examples of forward-looking companies that put this into practice. Examples of such companies were CAROZ and the BAM-UTS collaboration.

CAROZ is a neutral, non-asset-based, Network Orchestrator. The mission of CAROZ is to set the new standard in logistics by improving the traditional logistics world in an innovative and sustainable manner. According to CAROZ, modern companies have increasingly exploited logistics optimisation possibilities throughout their own supply chain. However, collaborations beyond the boundaries of individual supply chains include interesting opportunities for further improvement. The benefits obtained through a transparent collaboration between CAROZ and its network are proportionally distributed among the participants.

BAM is one of the largest building and contracting organisations in The Netherlands, whilst UTS is a large removals management firm. These two companies developed the Smart Building Logistics concept. A collaboration in which UTS applies the removals concept to building sites, taking care of the logistics and making sure all building materials are pre-checked and made available on a just-in-time schedule. At the same time UTS removes all waste from the work floor and is responsible for all recycling activities. This structure allows the BAM workforce to really focus on their core activities, resulting in faster renovation and fewer delays.

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BearingPoint is convinced that collaboration and creative ways of working together will be used to address the challenges at hand. Organisations that use Network Orchestration concepts to tackle these challenges will be the shapers of the future.

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The authors

Ming Chen is senior consultant for the TNO groups ‘Sustainable Transport and Logistics’ and ‘Strategy and Policy’ and EU account manager for logistics. He is an expert in the field of economics and freight transport modeling and forecasting, data- and information systems, sustainability and impact assessment. Chen has broad international experience and was coordinator of several large research projects for the European Commission.

Steven F.A. Gudde is Innovation and Development Manager at Olympia. Steven graduated from Delft Technical University as a systems engineer, having studied the effect of staff structures and organisation cultures on enterprise results. His subsequent education includes business management and labour market studies at Nyenrode Business University and the University of Amsterdam. He has worked for Brunel, PricewaterhouseCoopers

Consulting, IBM and Randstad. In his current position he is responsible for innovation and complex customer query solutions, operating on the intersection of sales and consultancy in the domain of business flows, sustainable deployment, labour relations and improving organisational flexibility. He is also a lecturer at the Amsterdam University of Applied Sciences, and a visiting lecturer at the University of Amsterdam and a number of other institutes. He is a member of knowledge platforms and working groups, including the EVO Council of Logistics Knowledge.

Egbert Guis is associate partner of the TNO group ‘Sustainable Transport and Logistics’ and former team leader of this group. He is an expert in the field of supply chain management. Main focus is redesign of international end-to-end supply chains due to challenging dynamic circumstances. Modeling and simulation tools are key assets in his approach together with a clear vision on collaboration between supply chain partners.

Leo Kemps is the director of the Academy for Urban Development, Logistics & Mobility, part of the NHTV university of applied sciences in Breda. He has been connected to NHTV since 1990, initially as a business management teacher, later as an educational manager and logistics courses director, and since 2001 as director of the academy. Kemps also is or has been a member of the Purchasing & Logistics editing council (1996-

2001), the Infra & Mobility council of the province of North Brabant, the Logistics

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Human Capital Table, the steering committee for Strategic goods transport in West Brabant (Rewin), and he is the originator and secretary of the Knowledge Distribution Centre project (Dinalog project).

Otto Koppius is an Assistant Professor at the Rotterdam School of Management at Erasmus University. His research focuses on smart business networks and network orchestration, as well as evidence-based management and business analytics. He enjoys working with forward-looking companies in these areas.

Marike van Lier Lels is a member of the Dutch Council for the Environment and Infrastructure (Rli, Raad voor de leefomgeving en infrastructuur) and chair of Netherlands Logistics 2040 (Nederlandse logistiek 2040: designed to last.). She studied building engineering and shipping management at Delft University. She was member of the management team of Nedlloyd, CEO of Van Gend&Loos, member of the Board of Management of Deutsche Post

Euro Express and COO Schiphol Groep. Since 2005 she owns Lels & Ko. She is also member of the Board of Directors of KPN, Reed Elsevier, USG People and TKH Group.

Michiel Steeman is an expert in Supply Chain Finance and currently working for Nyenrode Business Universiteit, Involvation Interactive bv, and Partnership Foundation. Previous occupations: Factor chain International, ING Lease Holding, and ING Commercial Finance. He studied at Erasmus University Rotterdam.

Teunis Steenbeek was Program Manager of the Dutch Neutral Logistics Information Platform (NLIP) from October 2011 until March 2013. He is a partner at Oxalis and has previously held a number of other industry positions, including Manager of European Operations and Strategy Director at Nedlloyd; Fleet Director at P&O Nedlloyd; and Manager of European Transport and Distribution at TNT Logistics.

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Peter van der Sterre is Secretary General of Green Freight Europe and Association Manager of EVO. His previous positions with this organisation included those of Policy Staff Member and Senior Project Manager. He has an MBA from Avans+University for Professionals.

Lóri Tavasszy is a principal scientist at TNO and a part-time Professor of Goods Transport and Logistics at TU Delft. He researches models, prognoses and scenarios, spatial economic effects and government goods transport policies. He leads the Sustainable Goods Transport Systems project of the NWO programme, Duurzame Bereikbaarheid Randstad (Sustainable Randstad Access) and is a member of the EVO Raad van Logistieke Kennis

(Logistics Knowledge Council)

Jack van der Veen holds the EVO Chair in Supply Chain Management at Nyenrode Business University since 1 March 2013. He studied econometrics at Groningen University, where he took his doctorate and later accepted a position. In 1990 he became a lecturer at Nyenrode, where in 2000 he first took up tenure as Professor of Supply Chain Optimisation. Following an interval from 2009 to 2012 as Professor at the University of Amsterdam he

returned to Nyenrode. He is a popular speaker and acts as consultant in the field of supply chain management.

Axel Visser is manager in the Supply Chain & Operations practice of BearingPoint. His main interest is in design and implementation of logistical, planning and procurement processes, with a focus on (supplier) collaboration processes. He has 8 years of experience in process improvement projects and ERP implementations within Europe.

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About EVO

EVO promotes the interests of about 20,000 businesses that transport goods for their own account or outsource to professional transport companies. They range from every industry sector, including wholesale, retail, construction, agriculture and business services.

Our members are users of all modes of goods transport: deep sea, short sea, air, road, rail and inland waterways. They operate both within Europe and abroad.EVO brings the viewpoints of its associated businesses to the attention of policy makers and authorities at regional, national and European levels. We also communicate our own visions and those of our members to carriers in all modes of transport, both directly and through their separate organisations.

EVO is a member of the European Shippers’ Council (ESC), International Road Transport Union (IRU), Union of Industrial and Employers Confederations in Europe (UNICE) and the International Chamber of Commerce (ICC).

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