Creating a Sustainable Supply Chain dr. igor_egorov

1. Creating a Sustainable Supply Chain
The Cargo Show MENA 2015
Dr. Igor Egorov
by Dr. Igor Egorov

2. To Be Covered:
• Automotive parts SC – intro
• Challenges’ ranking
• Ways to SC sustainability
• Sustainability by SC professionals
• Ways to SC sustainability
The Cargo Show MENA 2015
Dr. Igor Egorov

3. • Highly complex logistics
– Thousands suppliers
– Dozens thousand customers
– Millions of SKUs
– Global yet localized
• Parts - profitable business
– 20-30% of the revenue
– 30% net profit (capital good industry)
– US automotive aftermarket = $318.2 billion (2013)
• Right part, right time, right place at lowest cost
• Full speed while looking at rear mirror
Automotive Parts SC
The Cargo Show MENA 2015
Dr. Igor Egorov

4. Triad markets – Central Logistics Centers
Secondary: Mixed 2PL and 3PL
Large markers, partially with own production: 3PL
Logistics hubs: 3PL
Dubai’s automotive spare
parts trade: AED 37 billion
Automotive Parts SC
The Cargo Show MENA 2015
Dr. Igor Egorov

5. 1. SC visibility
2. Risk management
3. Cost containment
4. Customer demands
5. Globalization
Challenges Ranking*
* Reference: IBM Automotive SCM Study The Cargo Show MENA 2015
Dr. Igor Egorov

6. Sustainability for SC Professionals
• 43% - cost reduction
• 35% - environmental
impact
• 25 % - customer
satisfaction
PwC, PwC’s Global SC Survey
Cost
Enviroment
Customer
The Cargo Show MENA 2015
Dr. Igor Egorov

7. Elements of SC Sustainability
• Redesigned logistics
• Warehouse management
• Obsolescence management
• Product compliance
• Customer’s protection
• IT
• People
The Cargo Show MENA 2015
Dr. Igor Egorov

8. Redesigned SC
• Transport management
– Reduce air shipments
– Consolidation
– Avoid unnecessary transshipments
• Reverse logistics
• Partners with sustainable policies
• Localization:
– Oil – move manufacturing from US to
Oman
– Batteries – to UAE
The Cargo Show MENA 2015
Dr. Igor Egorov

9. Warehouse Management
• Reduce energy cost:
– AC schedule, day-light, solar power
• Smart packaging, not “shipping air by air”
• Packaging re-use
• World Class Logistics policies reduce waste
• Automation and Productivity
• Interconnected inventory management
The Cargo Show MENA 2015
Dr. Igor Egorov

10. Obsolescence Management
• Supply chain visibility
• End-to-end inventory planning
• Strict shelf life monitoring at
each SC point
• Scrapping – environment
certificate
The Cargo Show MENA 2015
Dr. Igor Egorov

11. Product Compliance
• Automotive parts - high risk
(as per customs authority):
• SASO
• KUCAS
• EGYPT ECE
– Brake pads (asbestos free)
– Chemicals
– Oils
– Batteries
• etc.
The Cargo Show MENA 2015
Dr. Igor Egorov

12. Customers’ Protection
• Government agencies request wider
inventory
• Heavy fines
• Additional costs - airfreight & inventory
• Disruptions in SC
• High customer expectations
The Cargo Show MENA 2015
Dr. Igor Egorov

13. ICT: great servant, bad master
• Global networks impossible without IT-support:
ERP, WMS (Warehouse), TPS (Transport), SCM
• 50%+ of logistics systems outdated
• 3 of 4 companies’ systems “weak”
• Significant investments
* Reference: Study of Aachener Institut für Operations
Research und Management GmbH (Inform)
The Cargo Show MENA 2015
Dr. Igor Egorov

14. People
• Support educational needs
• Motive staff, incentivize improvements
& environment initiatives
• Measure managers not only on
cost savings, but on sustainable factors
The Cargo Show MENA 2015
Dr. Igor Egorov

15. THANK YOU
The Cargo Show MENA 2015
Dr. Igor Egorov