dhl global technology conference 2015...while being unloaded. police exchanged fire with the robbers...

DHL GLOBAL TECHNOLOGY CONFERENCE 2015 Supply Chain Resiliency: Taking advantage of the risk/reward relationship

Dubai, 14-16 April 2015

2 Breakout Session YYYY | DHL Technology Conference Dubai | April 14-16 2015 2 Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015

Session Moderators

Tobias Larsson

Director

DHL Customer Solutions & Innovation

Mark Gruentjes

Senior Global Supply Chain Security Manager

Zebra Technologies

3 Breakout Session YYYY | DHL Technology Conference Dubai | April 14-16 2015 3

Session Objectives

Supply Chain Resiliency: Taking advantage of the risk/reward relationship | DHL Tech Conference 2015

A resilient supply chain not only reduces risks but

also anticipates, rapidly adjusts, recovers and even

capitalizes on unanticipated supply chain events or

disruptions.

Review the risk/reward relationship and evaluate

the need for supply chain risk intelligence

Share best practices for how risk management can

be implemented and discuss opportunities for

applicability in the industry


Session 1


Review the risk/reward relationship and evaluate the need for supply

chain risk intelligence

Share best practices for how risk management can be implemented and

discuss opportunities for applicability in the industry


Middle East and Africa in a nutshell

MEA fastest growing middle class in the world

1,000+ languages

Nigeria largest economy on the African continent

Cities in MEA will be the fastest growing in the world

in next 10 years

17 African countries ahead of India on World Bank’s

Ease of Doing Business Index

The Middle East holds about 2/3 of the 1 tn barrels of

global proved oil reserves

ME is becoming a significant primary aluminum producer


Opportunities & Risks O

pp

ort

un

itie

s

Ris

ks

Source: 1 African Roads and Rails, All Aboard http://www.economist.com/news/middle-east-and-africa/21645225-boom-building-roads-and-railways-should-unclog-economic-bottlenecks 2 Rise of the Gulf, Soaring Ambition http://www.economist.com/news/middle-east-and-africa/21638154-economic-power-and-political-influence-are-shifting-gulf-can-it 3 Fading hope, Iran’s Economy http://www.economist.com/news/middle-east-and-africa/21645738-foreign-businesses-are-looking-beyond-falling-oil-prices-and-limping?zid=308&ah=e21d923f9b263c5548d5615da3d30f4d

Improved infrastructure across Africa may increase growth by 2% a year1

African road network has grown by an average of 7,500km a year1

Dubai overtook Heathrow as the busiest airport hub2

Kenya’s new railway to boost economic growth by 1.5% annually1

Zambia to fund a transport plan that is a seventh of its annual budget1

With burgeoning talks with the West, Iran could become an attractive market3

ISIS and terrorist exploitation of the supply chain

The migrant crisis at the port of Calais

Compliance for conflict minerals

Ebola outbreak

Increased hijackings in South Africa

http://www.economist.com/news/middle-east-and-africa/21645225-boom-building-roads-and-railways-should-unclog-economic-bottlenecks


























http://www.economist.com/news/middle-east-and-africa/21638154-economic-power-and-political-influence-are-shifting-gulf-can-it



























http://www.economist.com/news/middle-east-and-africa/21645738-foreign-businesses-are-looking-beyond-falling-oil-prices-and-limping?zid=308&ah=e21d923f9b263c5548d5615da3d30f4d





























Recent Supply Chain Disruption Examples

Sources: DHL Resilience360

Yemen: Zaidi Shia Muslim

Houthi rebels had taken over

Hodeidah city, and had erected

checkpoints on roads leading

to the city’s port area and

Hodeida International Airport.

Date: 14.10.2014

Lebanese authorities halted

trucks from entering Jordan

and Syria following an

overnight clash at the Jordan-

Syria border.

Date: 21.10.2014

Complications in the

Democratic Republic of the

Congos cargo clearance

system at the Kasumbalesa

border crossing has caused a

back-up of more than 1,000

cargo trucks on the Zambian

side of the border.

Date: 30.09.2014

Mauritania: Officials have

closed the border with Mali

over Ebola fears. There is no

initial estimate of how long the

border will remain closed.

Date: 30.01.2015


How do you react to events like these?


Cost of Disruptions 2014

Droughts in Brazil: $4.88

billion

Winter weather in Japan: $6.7

billion

Airline strikes in Germany: $198 million

Belgium general

strikes: $1 billion

Cargo thefts in Germany: up from $39,882

in 2013 to $49,457 in

2014

South Africa had 1,100

incidents of cargo truck hijackings Illicit revenue

ISIS achieved from imposing tax on border

crossings: $12,000/day


Sources: 2014 SCREEN Global Intelligence Report: Supply Chain Threats, Risks, and Trends


Taking advantage of the risk/reward relationship


Foreign direct investment

FDI are the net inflows of

investment to acquire a lasting

management interest in an

enterprise operating in an economy

other than that of the investor.

Political Violence

Evaluates the likelihood of state or non-state political actors

negatively affecting business operations in a country

through regime instability or direct/indirect interference.

Trade (% of GDP)

Trade is the sum of exports

and imports of goods and

services measured as a share

of gross domestic product.

Extreme Moderate Minor


Risk intelligence supports strategic decision making

Brazil

Cargo Theft and Cargo Disruption

Nigeria

Terrorism

Sao Paulo Rio de Janeiro

Belo Horizonte Cuiaba

Curitiba

Abuja

Bama Maiduguri

Gwoza

Damboa

Lafia




Cargo Crime Impact on Business



The Industry Fightback



Crime Intelligence



2014 Crime Intelligence



Variety of Intelligence

Location Risks Incident Monitoring I 1 I 2

• Near real-time 24/7 alerts

on supply chain relevant

incidents and risk warnings

• Fed by classical alert

companies, DHL internal

network and social media

news feeds

• Deep dive analysis for

historic events per location

possible

• Geo-located risk scores

from leading risk

analysis provider in their

respective field

• Survey capability with

500 pre defined

questions to assess the

impact of risks to the

overall supply chain

Country Risks I 3

• Risk scores on country

basis

• Backed up by text

analysis of risks and

economical situation

• Data of historic

incidents, indicators,

existing locations, public

holiday and further

economic data



Discussion

Do you feel confident that you know where in the supply chain sits your

biggest risks?

Have you experienced any supply chain disruption in the last few years?

1

2

Where do you obtain risk intelligence from on potentially disruptive

events? 3



Session 2

Review the risk/reward relationship and evaluate the need for supply

chain risk intelligence

Share best practices for how risk management can be implemented and

discuss opportunities for applicability in the industry



Regional Supply Chain Security Challenges


US / Mexican Border area (e.g. Reynosa/McAllen; Juarez/El Paso)

• Cargo is less desirable, despite the value, compared to the valuable load space on

the border-crossing trucks. Contraband shipments that replace or are added to legit

cargo put the employees and the supply chain at risk. √

• Regulatory licenses @Risk! C-TPAT, NECC. Proof of compliance to be provided by

the licence holder. √

• Unpredictable Drug Cartel activities involving daily roadblocks and shoot-outs. ?

• Cargo not always the primary target when supply chains are interrupted. ?




South Africa & Brazil (e.g. Sao Paolo State: Campinas)

• Volatile and unpredictable environment √

• ‘04 KLM Freighter 591 robbed by a group of armed men at Johannesburg Airport

while being unloaded. Police exchanged fire with the robbers during raid, but the

gunmen escaped. South African media said they had stolen gold and diamonds. ?

• ‘12 Logistics Facility Invasion: Cajamar, Sao Paulo, Brazil, Approximately USD$

3.8M to USD$ 5.5 M in product was taken. According to reports, a logistics

manager from the facility was attacked while driving at night. The suspect had

pictures of his family held hostage and told him they would be killed if he didn’t help.

He then took three criminals in his car to the facility and requested access, which

was immediately granted by the security personnel. After accessing the site, the

logistics manager called security and requested access for five or more cars that

were arriving, which was also granted. ?

• ‘14 Around 20 thieves with automatic weapons raided a electronics manufacturers

facility in Campinas during the nightshift, subduing some 200 workers and guards in

a four-and-a-half-hour ordeal. The raiders kidnapped eight employees and used

their identity documents to gain access to the facility and took off with at least US$6

million worth of cellphones and tablets (~40000) in eight trucks. ?




Middle East Region:

Few incidents reported – Intelligence sources to be identified

Law Enforcement Liaison to be developed

Examples:

20/09/09 Theft from Facility in Jebel Ali, UAE, Mobile Phones, ~650K$

07/11/12 Fraudulent Pick-up in Kuwait, Mobile Phones, ~150K$

24/10/13 Theft from Facility in Jeddah, Saudi Arabia, Copper, ~200K$

30/12/13 High jacking (truck), Riyadh, Saudi Arabia, ~900K$

30/08/14 Theft from Facility, Sharjah Industrial Area, UAE, Laptops & Mobiles, ~500K$

30/09/14 Theft from Facility, Jebel Ali Industrial Free Zone, UAE:

Electronic goods worth 215K$ were stolen. Police is quoted in the press as

saying that “preliminary investigations showed that the warehouse was not

properly secured and only had a simple lock that was easily broken by the

thieves, without drawing any attention to themselves”. There was reportedly

only a single CCTV camera, although the warehouse contained electronic

goods worth more than €2 million, according to media reports. Police also

said that the investigation showed that the thieves knew what kind of

products were kept in the warehouse.


Common Supply Chain Security Challenges


How to secure your valuable cargo during transit and while at rest?

• Secure trucks / Secure parking / Certified warehouses / Compliant partners. √

Which security standards should be followed?

• C-TPAT, AEO, TAPA, ISO.... √

How and where do criminals operate?

• IIS, Resilience 360, BSI SCREEN, Open Source, Networking (LEAs....). √

What problems are other business and areas facing?

• Cargo Crime: Less thefts, higher loss values (Organized crime). √

• Cargo Crime: Low Priority due to Shortage of Government Task Forces & Insurance √

• Cargo Crime: Increase in violent Modus Operandi. ?

• Geo-political security, Terrorism & Piracy, Geo-physical disasters, Extreme weather. ?

What can be done to tackle the problems?

• Supply Chain Risk Mitigation through global industry standards- and legislations

compliance. √

• Utilizing credible sources of intelligence to prevent dangerous/costly situations. !

• Utilizing enhanced tracking capabilities (e.g. RFID) to develop real-time reactive

capabilities to reduce the incidences of lost shipments, improve shipment security and

enhance the visibility of goods in motion. !


Supply chains of 11 sub-networks in scoped are visualized and

monitored in the Resilience360 Tool

Case Study – FMCG customer using Incident Monitoring

No effort for FMCG customer as Supply Chain Data already available for DHL via internal

shipment data

484 nodes and 831 lanes geographically mapped giving a realistic view of the supply chain

Data Received

• Turkey Gebze

• Turkey MDO

• Egypt Cairo

• East Africa MDO

• AP&P Jeddah

• AP&P Dammam

• South Africa J’burg

• South Africa MDO

• NW Africa Casablanca

• NW Africa Mohammedia

• West Africa Ibadan

Data collection Visualization

Turkey Saudi

Arabia Morocco

Egypt

Kenya Nigeria

South Africa




Customs strike, Pakistan,

Sept 2013

Strike causing slow movement of cargo,

The Netherlands, Oct 2013

Increased congestions at Lagos Ports,

Nigeria, Sept 2013

Indefinite strike at Nhava Sheva Port,

India, Oct 2013 Customs closure due to Eid Al Fitr,

Saudi Arabia, July 2013

End-to-end visibility of the supply chain established, resulting in 30%

reduction in lead time and 408 hours of shipment delays avoided




• Supply chain incident monitoring: DHL Resilience360

• Visualization of entire supply chain and alerting of incidents relevant to the supply

chain of the customer

• Pro-actively re-routing & information sharing involving suppliers of the customer

• Strategically assess risk of routes to identify low risk routes for lead time reduction

Solution

Situation & Challenge

• Shipment status was tracked manually and actions were taken only after a delay had

already occurred

• Long leads times to buffer for uncertainty

Result

• End-to-end supply chain visibility: Monitoring increased from 98 ports per week to

484 nodes and 831 lanes per day / continuously

• Substantial amount of delay and cost avoided: 408 hours of avoided shipment delay

due to proactive incident alerting already within the first 6 month

• Reduced lead time: Lead time reduced by 30% for the first assessed lane. Further

analysis of less ‘disruptive lanes’.

• Potential to reduce buffer stock in the long run

DHL Control Tower

Take actions

Shipment on time



Discussion

What functionalities and tools are required for risk management in the

Technology sector?

What challenges in implementation would you foresee? 3

1

2

What have you done in the space of supply chain resiliency and business

continuity management?


27 Breakout Session YYYY | DHL Technology Conference Dubai | April 14-16 2015

THANK YOU

dhl global technology conference 2015...while being unloaded. police exchanged fire with the robbers...

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