Working closely with your logistics providers to ensure the

provision of optimum capacity

( in the short, medium and long term)

Logichem 2010 Roger Moore

Dusseldorf Supply Chain & Customer Services Manager
 Leading questions

Who is Ineos Nova ?

Am I clear about my service and capacity requirements ?

Sourcing strategy –what are my options to secure capacity?

Do I have the right portfolio of LSPs ?

What is the right type of relationship for me?

What might we expect ? – the Ineos Nova experience

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 INEOS NOVA

Business:

Global manufacturer of styrene and styrenic polymers

History:

Formed in October 2005 through merger of BP and Nova European
styrenic polymer businesses,

Expanded in October 2007 to include North American assets – 50/50 JV
between Nova (IPIC) and Ineos

Headquarters: Joliet, Illinois; Fribourg, Switzerland for Europe
Shared service centre in Breda NL

Revenue:

Approximately €2.7 billion ($3.8 billion )

Employees: Approximately 1150

Sites: 11 manufacturing plants in 6 countries

Volume:

Styrene monomer– 1,675 KT

Polystyrene – 1262 KT

Expandable Polystyrene – 410 KT (all in Europe)

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 Working Together
What do service partners say about our industry?

Heavily regulated by external / internal controls

ADR / IMO etc SQAS / CDI / EN norms/ site rules

Inflexible in general : slow to change and risk averse

Low levels of outsourcing / lack of trustHow do we

Relatively low levels of vendor loyalty become the

Tendering processes
customer of
choice?

Cost driven despite insistence on quality / safety standards

Unwilling to support (re) investment in new equipment

Use volume as a lever to reduce costs
Horizontal collaboration not widely adopted

Operational constraints limit asset utilization

Plant loading hours

Customer unloading windows
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 Some impacts of recession-
What we see in the market

n !
i o t!

Service providers downsized / restructured o s k e
e r a r

Once gone drivers are lost i t yto the industry s m
a c le r

Aggressive and non a p
sustainable pricing el
policies
- c a s

ult
Significant imbalance and changes t oin traffic flows
e s n g

Marginal r
t intermodal services i
v withdrawn ( rail & ferry)
N e o
m increases not fully recovered

Significant unavoidable r e cost
a
we
•Maut increases
o
•Fuel pricewvolatility
d n
an
..
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 How do we secure capacity for the future
in a sellers market ?

More carriers / fewer carriers: portfolio management

Cross regional vs local / niche players

Time and mileage agreements / dedicated fleet

Look for productivity / efficiency gains: maximize utilization

Maximise inter-modal volumes = increase driver output

Stand by commercial agreements - esp. payment terms

Look for more flexibility on transit times / delivery dates

Manage the order profile – demand smoothing

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Developing a logistic sourcing strategy –
3 step approach to securing capacity

Understand own capabilities / attributes

Own marketing / selling strategies
Organizational capabilities / resources
Distribution cost or supply chain management ?
Achieve internal / external alignment…..
Critical performance criteria – what do we need from our carriers
‘Rules of engagement’ – customers and LSPs
Establish clear SLA terms and conditions
Measure performance

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 Logistics Landscape
-important in defining requirement

A mature commodity business - mainly repeat FTL business

Simple mode / product mix

Dry Bulk / 1000kg IBC (octabins) / 25 kg bags

ADR adds complexity

Compact logistical footprint

Europe wide markets

Av. Delivery -1000km

Small / medium size buyer

800kt / € 32m spend

Small central procurement and planning team

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 Business characteristics- what is the
service need ?

Niche purchases Speciality services

Sector/product/customer
one-off discrete items
Cost / service level

needs
high cost / low support
Critical service element

Commodity Purchase Leveraged volume

high volume / repetitive Combining service needs
transactions

Service level / SRM support

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 Service providers……
choose your partner with care !

‘I want to speak with the man who pays the driver’ = asset owning

Sub contracting is OK …. to a certain level

Chemicals require a particular mind – set Look for ‘best

Customer segmentation is a fact of life
fit’ synergies
Is my service provider a true partner ?

Does the LSP REALLY understand my business ?

How much can I afford to invest in this relationship ?

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 Commercial relationships – what are the options?

Spot purchase Value added logistics

high Higher risk of failure High level of integration between parties
Sub-contracted? Sustainable relationship
Lack of customer loyalty Investments / binding contracts
High cost of ownership for shipper Win – Win
M Performance incentives /benefit sharing
a Open book / cost plus structure
r Periodic tendering Long term partnerships
g Typical procurement strategy Lower cost of maintenance
i Relatively high implementation effort Low risk / high quality
n Start up risk – change management Often based on ‘ cultural alignment’
Used when capacity exceeds demand Value proposition is acknowledged
s
May not be sustainable Flexible to respond to market changes

low
limited extended
Business continuity
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 The Ineos Nova experience

Time spent in strategy definition is time saved in execution !

(but we still made mistakes )

Be prepared to make changes – ethically.

Mix of pan European – regional – local carriers

Bulk and packaged goods freight markets very different - demand different
approaches

Added value is for all – if it isn’t it isn’t added value

Put energy into strengthening relationships……….not building new ones

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