innovate or die, partner or perish may 25, 2012 istanbul, turkey

Innovate or Die,

Partner or Perish

May 25, 2012

Istanbul, Turkey

2

“Ok, you invented the wheel, but what have you done for me lately?”“OK, you invented the wheel, but what have you

done for me lately?”

time

innovation

8,000 BC 3,500 BC C 2008

1903

1957

1969

Innovation Curve:

Innovation: What Made Long Distance Flying Possible?

3

Jet Engines GPS Equipment Wide Body Aircraft

The Toilet

4

COLLABORATION“Partner or Perish”

INNOVATION“Innovate or Die”

EXECUTION

STRATEGY

5

AGENDA

• Strategy

• Strategy and Innovation

• Strategy and Collaboration

• Collaboration Execution

• 5 Areas Where Innovation Will Occur

6

Strategy Positions

Client Intimacy

Ops ExcellenceLow Cost

Product Innovation

Growth

Op Margin ROIC

ShareholderValue

AverageGrowth

& MarginRate

ClientTarget

ValueProposition

ServiceDelivery

Operations

7

0

10

Dell Fo

cus

0

10

IBM Fo

cus

0

10

Apple Fo

cus

SvcSalesDistQAMfgSCLProcPDEngR&DAdmin

SvcSalesDistQAMfgSCLProcPDEngR&DAdmin

SvcSalesDistQAMfgSCLProcPDEngR&DAdmin

Spend Varies by Market Position

Source: Break Through Bill Davidson

ClientIntimacy

ProductInnovation

ProductInnovation

8

AGENDA

• Strategy

• Strategy and Innovation

• Strategy and Collaboration

• Collaboration Execution

• 5 Areas Where Innovation Will Occur

9

Strategy Positions & Innovation: Low Cost—BMW Story

This approach to Specialization & Customization delivers for BMW a 20% Operating Ratio

Seven Automobiles

325i Sedan

M3

325i Sports Wagon

Mini Cooper

X3

325Ci Convertible

325Ci Coupe

SpecializationAll on 1 Platform

Multiple Options

Leather Vinyl Cloth

Hub capsAluminum

WheelsChromeWheels

Red Green Blue

CustomizationWith “Plug & Play”

Seven Markets

Business People

Racing Enthusiasts

Families with Kids

Urban Cowboys

Outdoor Enthusiasts

Sunshine Lovers

Dating Couples

UTi Innovation Strategy: Innovation & Cost Management

R&D &Innovation

Client Requirements

80-90%Configuration

ExpandConfiguration

Drive Lower Operating Cost

11

Strategy Positions: Product InnovationMicrosoft Integration

Word Processing LeaderWordPerfect

Spreadsheet LeaderLotus 1-2-3

Graphics LeaderHarvard Graphics

Database LeaderAshton Tate dBase

Best of BreedProducts

How manyof these products

are left ?

Best of BreedSolutions

History shows the integrated solution wins (beats the competition), even if the individual products of the integrated

suite are weaker than the “best of breed”

MicrosoftOffice

12

Product Innovation:APPLE Adjacent Industry Integration

MoviesStoreComputing Browsing Player

Apps

13

Busy Exec

On-The-Go

CulturalToilet

DesignerThrone

Out House

The FirstToilet

Client Intimacy Innovation: Innovation of a Commodity into a Solution

14

Other3PLs

Do ItYourself

Client Intimacy

Operations ExcellenceLow Cost

Product Innovation

Strategy Positions: Client Intimacy—Spaghetti Dinner

15

AGENDA

• Strategy

• Strategy and Innovation

• Strategy and Collaboration

• Collaboration Execution

• 5 Areas Where Innovation Will Occur

Partnership: Why Partner?

16

Why Partner? • Reduce risk• Fill a Gap• Speed to market• Gain expertise• Solve a problem• Operate at a lower cost• Do it better• Easier to get funding

Supplier Buyer

Why Not?• Compete in collaborative networks already• Rival each other in an industry • Promote competing technologies or infrastructures;• Create relationship exclusivity that prevents partners from working effectively with other partners.

• Share it• Borrow It• Rent it• Lease it• Own It

Control

Control and Flexibility are Often at Odds: Can You ReachPrime with Collaboration

17

Control

Flexibility

AmountOf

Flexibility& Control Prime Time

l u i s h u e t e

10

100%

0%

18

AGENDA

• Strategy

• Strategy and Innovation

• Strategy and Collaboration

• Collaboration Execution

• 5 Areas Where Innovation Will Occur

19

Strategy & Collaboration: (Cost / Quality (including risk) / Speed Tradeoff)

Systems

Expertise

ClientFixed Asset

OperatorCarrier

ManagementPostponement &

Distribution Network

Optimization

• Network Design• Network Optimization• TM• Inventory Optimization• Postponement• Order Management

• Service levels• Risk reduction• Experts• Continuity / Staffing

Pooling• Shared Infrastructure• Shared Systems• Shared Expertise / Verticals

• Economic Advantage• Visibility & Control

Relationship

Other3PLs

Do ItYourself

Government& Regulatory

Compliance

ProcessesSystems

Expertise

An Open Business Model (OBM) for Open Innovation (OI)

20

EstablishTrust

BuildGoodwill

CreateValue

IndispensableDialogue

Steps

• Ensure all internal departments are on board & not competing with the partnership• Determine what can be shared• Identify legal and anti-trust issues• Assess whether the relationship can work

• Create & hold a similar vision• Build & share IP together• Determine the process for IP sharing in advance

• Supplier owns ingredients & technology (solution)

• Partner owns the application of the IP (smart application)

• Who gets what of the new monetized solution

• Communication, commitment, & transparency• Explicit knowledge is easy to share but the value comes from tacit knowledge (real time Info sharing)

• Use a methodology• View, Aim ,

Execute• Idea Store

• Who will do what so each party knows their role• By sharing and brainstorming build goodwill (win / win)• The enemy is each partners competitors, not each other

• Has to create commercial value for participants• Use project management to implement• Need to develop a mindset of “sharing is winning”• Need to focus on OI (Open Innovation by

• Leadership• Strategy• Partnership• Champions• Internal experts• Customers

21

Execution & Innovation:5 Things To Focus on in the Future

SystemsProcesses

SystemsExpertise

ClientFixed Asset

Operator

Customs

Expertise

• Network Design• Network Optimization• TM• Inventory• Postponement• Order Management

• Service levels• Risk reduction• Experts• Continuity / Staffing

Pooling

1

Relationship

Optimization

Compliance

CarrierManagement

Postponement & Distribution Network

• Economic Advantage• Visibility & Control

1) Network Design: 80-90% of Supply Chain Cost is Driven by Supply Chain Design

22

23

Execution & Innovation:5 Things To Focus on in the Future

SystemsProcesses

SystemsExpertise

ClientFixed Asset

Operator

Customs

Expertise

Optimization

Compliance

• Network Design• Network Optimization• TM• Inventory• Postponement• Order Management

• Service levels• Risk reduction• Experts• Continuity / Staffing

Pooling

1

2

CarrierManagement

Postponement & Distribution Network

Relationship

2) Static to Dynamic Execution—How We Do This?

24

StaticHistorical• RFQ• RFI

DynamicExecution

Real TimeData

Optimization

Total Cost

Key Metric:Purchase Price

Variance

Key Metric:Cost/Kg

How do you get consistency in the cost / kg so youavoid answering the PPV Question?

AgilityForecasting

VUCA

25

Execution & Innovation:5 Things To Focus on in the Future

SystemsProcesses

SystemsExpertise

ClientFixed Asset

Operator

Customs

Expertise

• Network Design• Network Optimization• TM• Inventory• Postponement• Order Management

• Service levels• Risk reduction• Experts• Continuity / Staffing

Pooling

1

3

Optimization

Compliance

CarrierManagement

Postponement & Distribution Network

• Economic Advantage• Visibility & Control

Relationship

2

26

Compliance

Why Compliance is Important

• Foreign Corrupt Practice Act (FCPA)• Anti-Bribery Laws• Entry into new markets• Emerging Markets (1st world solutions)• Increased & Changing Regulatory

Requirements• Increased compliance focus and penalties

What are the RISKS ofNon-Compliance?

• Damage to company image• Fines and penalties• Sanctions• Interruptions or loss of privileges• Supply Chain Disruptions

What can a Supply ChainPartner do?

• Minimize Risk• Act as buffer• Knowledge and training• Communication• (Global) Processes • Controls

27

Execution & Innovation:5 Things To Focus on in the Future

SystemsProcesses

SystemsExpertise

ClientFixed Asset

Operator

Customs

Expertise

• Network Design• Network Optimization• TM• Inventory• Postponement• Order Management

• Service levels• Risk reduction• Experts• Continuity / Staffing

Pooling

1

3

Optimization

Compliance

CarrierManagement

Postponement & Distribution Network

• Economic Advantage• Visibility & Control

Relationship

2

4

Data to Knowledge

28

• Control• Optimization• Real time execution• SC Design• Predictability = Reduce PPV• SC disruptions Convergence

& Combination

29

Execution & Innovation:5 Things To Focus on in the Future

SystemsProcesses

SystemsExpertise

ClientFixed Asset

Operator

Customs

Expertise

• Network Design• Network Optimization• TM• Inventory• Postponement• Order Management

• Service levels• Risk reduction• Experts• Continuity / Staffing

Pooling

1

5

3

Optimization

Compliance

CarrierManagement

Postponement & Distribution Network

• Economic Advantage• Visibility & Control

Relationship

2

4

Best Practice For ONE Industry Might Not be Innovative in Another Industry

30

"If Ford had kept up with technology like the computer industry has, we would all be driving $25 cars that got 1,000 miles to the gallon."

Bill GatesComdex

31

If Ford had developed technology like Microsoft, we would all be driving cars with the following characteristics:

#10:

For no reason whatsoever, your car would crash.........

Twice a day.

32

If Ford had developed technology like Microsoft, we would all be driving cars with the following characteristics:

#9:

Every time they repainted & updated the lines in the road, you would have to buy a new car.

33

If Ford had developed technology like Microsoft, we would all be driving cars with the following characteristics:

#8:Occasionally your car would die on the freeway for no reason. You would have to pull to the side of the road, close all of the windows, shut off the car, restart it, and reopen the windows before you could continue. For some reason you would simply accept this.

34

If Ford had developed technology like Microsoft, we would all be driving cars with the following characteristics:

#7:Occasionally, executing a maneuver such as a left turn

would cause your car to shut down and refuse to restart, in which case you would have to reinstall the

engine.!!!!

35

If Ford had developed technology like Microsoft, we would all be driving cars with the following characteristics:

#6:

Macintosh would make a car that was powered by

the sun, was reliable, five

times as fast and twice as easy to drive - but would run on only five percent of the

roads.

36

If Ford had developed technology like Microsoft, we would all be driving cars with the following characteristics:

#5:

The oil, water temperature, and alternator warning lights would all be replaced by a single warning light . . .

“This Car Has Performed An Illegal Operation”

37

If Ford had developed technology like Microsoft, we would all be driving cars with the following characteristics:

#4:

The airbag system would ask 'Are you sure?' before deploying.

38

If Ford had developed technology like Microsoft, we would all be driving cars with the following characteristics:

#3:

Occasionally, for no reason whatsoever, your car would lock you out and refuse to let you in until you simultaneously lifted the door handle, turned the key and grabbed hold of the radio antenna.

39

If Ford had developed technology like Microsoft, we would all be driving cars with the following characteristics:

#2:

Every time a new car was

introduced car buyers would have to learn how to drive all over again because none of the controls would operate

in the same manner as the

old car.

40

If Ford had developed technology like Microsoft, we would all be driving cars with the following characteristics:

#1:

You'd have to press the 'Start' button to turn the engine off.

41

Ford’s Final Comment

… when all else fails, you could call 'customer service' in some foreign

country and be instructed in some

foreign language how to fix your car yourself!!!!

42

COLLABORATION“Partner or Perish”

INNOVATION“Innovate or Die”

EXECUTION

STRATEGY