MARIT. POL. MGMT., OCTOBERDECEMBER VOL.

2003

30,

NO.

4, 305320

The changing role of ports in supply-chain management: an empirical analysis

VALENTINA CARBONE INRETSThe French National Institute for Transport and Safety Research, 2, av. Du General Malleret Joinville, F94114, Arcueil Cedex, France and MARCELLA DE MARTINO CNR-IRAT, National Research Council, Institute for Service Industry Research, Via M.Schipa 115, 80122, Naples, Italy
As integrated supply-chain management (SCM) is now at the epicentre of business transformation, rms are breaking down boundaries between internal functions, as well as between the enterprise itself and key partners in the value chain (e.g. customers, distributors, suppliers and carriers). One of the main goals of such new management approach is to get everyone in the supply chain into a common platform of logistics transactions and information systems. Against such background, the aim of this work is to analyse how and if port operators can face the challenge of higher integration, on the assumption that the higher the integration between the actors the higher the competitiveness of the whole supply chain. Accordingly, we adopted an SCM approach in the analysis of the port of Le Havre in Renaults supply chain. More specically, we referred to the Lambert tri-dimensional model based on supply chains structure (actors), key business processes and links between actors. The eld workwhich mainly consisted of semi-structured interviews to Renault, logistics and port operators, and, nally, to the Le Havre Port Authoritywas crucial to gather the needed information.

1. Introduction Ports have been natural sites for transhipment in order to transfer goods from one mode of transport to another. They have historically provided the link between maritime and inland transport, and the interface between the sea and rivers and roads and railways. At present, ports play an important role in the management and co-ordination of materials and information ows, as the transport is an integral part of the entire supply chain. The objectives thus become to create synergies, as well as converging interests, between the players of port community in order to guarantee reliability, continuous service and a good productivity level. It is a fact that in the area of maritime transport, reliability and productivity are collective concepts stemming from a multiplicity of contributors.

Maritime Policy & Management ISSN 03088839 print/ISSN 14645254 online # 2003 Taylor & Francis Ltd http://www.tandf.co.uk/journals DOI: 10.1080/0308883032000145618

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In order to develop themselves as logistics platforms, ports have to simultaneously work in several directions, by also taking into account the requirements of the senders and receivers of goods as they become their business partners in addition to the traditional ones such as the shipping companies, terminal operators, forwarding companies, etc. The requirements for seaport services are growing accordingly: physical accessibility from land and systematic organization of the information ow are decisive factors for the industry with regard to the choice of a seaport [1]. Subsequently, the competitive position of a port is not only determined by its internal strengths (ecient cargo handling and hinterland connections) but it is also aected by its links in a given supply chain. As a consequence, the risk for ports of losing important customers can derive not only from deciencies in port infrastructures, terminal operations and inland connections, but also from the customers service network reorganization and its entry into new partnerships with logistics services providers, which may be using a dierent hub. In other words, port competitiveness is becoming increasingly dependent on external co-ordination and control of the whole supply chain. We can, therefore, interpret a port as a member of a supply chain. In this purpose, the port is considered as a cluster of organizations in which dierent logistics and transport operators are involved in bringing value to the nal consumers. This value comes into play when a port operator or, in general, a logistics supplier goes beyond the mere transport of merchandise, which could be dened as a basic service, and provides a package of logistics services dierentiated on the basis of customer requirements. A value adding activity is, therefore, an activity along the chain that adds value to the product or service and which the nal customer is willing to pay for. In a wide sense, ports are complex entities supporting the procurement of raw materials, the manufacturing and the distribution of nished goods. They are potential members of dierent supply chains. Their contribution to the satisfaction of specic customers requirements (and therefore their potential role in a given supply chain) will depend on: (1) The availability of ecient infrastructures and inland connections, as part of a global transport system. (2) The ability of logistics and transport operators to contribute to the value creation and to accomplish also the qualitative attributes of demand (reliability, punctuality, frequency, availability of information, and security). This paper deals with (2) i.e. the providers behaviour for the satisfaction of customer needs, leaving aside the role of the port authority (1) in shaping port features through investment decisions and land management and subsequently in making it attractive for specic supply chains. In particular the aim of this work is to analyse how port operators are involved in a given supply chain. The adopted methodology is based on a supply-chain management (SCM) approach. We describe the integration process undertaken by dierent port operators in relation to the focal rm of the automotive chain, taking into consideration (among other variables) the kind of services oered by port operators, namely their belonging to the cargo handling system, the more extended transport system or the logistics system.

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The kind of supplied services determines in which measure a port creates value in a supply chain and, in perspective, if it could oer more value, for example investing in a certain activity more than in another one. Section 2 deals with SCM denition and the Lambert tri-dimensional model. Section 3 provides an overview of both the major trends taking place in the automotive industry and the make or buy strategies undertaken by auto-makers in managing logistics. In section 4, we describe the potential role of ports in the automotive supply chain, whereas in sections 5 and 6, after illustrating the Lambert model which has been adapted according to the research aim, we present the main nding of the empirical analysis. 2. SCM denition and the Lambert tri-dimensional model One of the most important changes in modern business management is that individual rms no longer compete as solely autonomous entities, but rather as supply chains. Martin Christopher [2] suggests that the supply chain is a network of organizations that are involved, through upstream and downstream linkages, in the dierent processes and activities that produce value in the form of products and services in the hands of the ultimate consumer. The management of multiple relationships across the supply chain is being referred to as SCM; strictly speaking, the supply chain is not a chain of businesses with one-to-one, business-to-business relationships but a network of multiple businesses and relationships. A comprehensive denition of SCM is proposed by the Global Supply Chain Forum. It clearly highlights the importance of the integration process in supply chains: . . . the integration of key business process from end user through original suppliers that provides products, services, and information that add value for customer and other stakeholders [3]. A conceptual framework to deal with the complexity of SCM issues has been dened by Lambert [4] and consists of three inter-related elements of the supply chain: (1) the structure, i.e. the member rms and their links; (2) the business processes, i.e. the activities that produce value to the customer; (3) the management components, i.e. the variables by which the integration can be realized. The SCM network structure describes the system of relationships between suppliers and customers at each level of the supply chain. Not all the links through the supply chain are relevant for the focal rm and, in the choice of partners, the management has to determine which members are critical to the success of the company and therefore have a crucial role in bringing value to the customer. The focal rm of the supply chain will choose companies who carry out value-adding activities (primary members to dierentiate from supporting members) as they aect directly the nal value delivered to a specic customer or market [5]. SCM involves the co-ordination of activities within the rm and between members of the supply chain through a set of business processes. The members of The Global Supply Chain Forum identied eight business processes that should be implemented within a rm and then linked up, as appropriate, with key supply-chain members: customer relationship management, customer service management, demand management, customer order fullment, manufacturing ow management,

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procurement, product development and commercialization, and returns. Anyway, business processes that are critical or benecial to integrate and manage between companies will likely vary. In any case, all functions aecting the product and providing information must work together. As a consequence of the choice of outsourcing rather than managing in-house specic activities (or business processes) the need to co-ordinate supply-chain processes increases since the focal rm becomes more dependent on suppliers behaviour. Finally SCM management components are the managerial variables by which the business processes are integrated and managed across the supply chain. Lambert divides management components into two groups: the rst group, physical and technical, includes the tangible, measurable components, such as the management of product and information ows and the related activities [6]. The second group is composed of the managerial and behavioural components such as organizational culture, the network of relationships between the rm and the other actors of the supply chain, the connected information sharing, etc. 3. The automotive industry: trends and characteristics In the last decades, rapid changes and developments have marked the automotive industry at dierent levels: consumer expectations, legislation, and business models. Consumers have developed particular expectations in what concerns vehicle features, performance and safety. In addition to the basic models, there is a myriad of features that can be added to each of the models, in order to satisfy the increasing customers needs for diverse cars. Government trade, safety, and environmental regulations establish incentives and requirements for modernization and change in design or production. Competitive rivalries and corporate strategies provide equally important impetus for research, design innovations, and changes in the manufacturing process. Moreover, in any of the Triad regions (Western Europe, Japan, and USA) auto-makers have been facing a mature market for the past 10 years, with stagnant demand, product proliferation, and hard price competition [7]. In this environment, IT (information technology) and telecommunications are having a great impact on the structure of the industry. On the supply side, they are speeding up the manufacturing process, increasing the amount of product customization which the manufacturer is prepared to oer, reducing product life cycles and expanding the area from which materials can be sourced. The need for systems compatibility is also reducing the number of viable manufacturersupplier partnerships, and leading to closer long-term relationships. On the demand side, the main eect is the raising of consumer awareness for price and service quality [8]. Despite increase in product variety and advance in technology, the industry focus on lowering costs has never been as acute as today. In fact, for an increase in car sales, it is required to meet all marketing and innovation challenges, while keeping costs down. All automakers are constantly under pressure to identify consumer preferences, national biases, and new market segments where they can sell vehicles and gain market share. 3.1. Automotive logistics: make or buy strategies Traditionally, the automotive supply chain was organized in tiers. Auto-makers designed and assembled the car. First tiers manufactured and supplied components directly to the auto-maker. Second tier produced some of the simpler individual

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parts to be then included in a component manufactured by a rst tier and, nally, third and fourth tiers mostly supplied raw materials. The logistics function was directly controlled by the auto-makers; therefore they developed expertise and logistics know-how in support of their industrial and commercial activities. As these tasks became more and more complex and distinct from auto-makers core business, some subsidiaries have been created inside the groups in order to re-organize and manage the logistics. For example, Renault ` created CAT (Compagnie dAretment et de Transport) in 1957, in order to transport its vehicles on an international scale. The latest developments in the automotive industry revolving around critical key elements such as globalization, concentration on core competencies, competitive pressures, as well as alliances and acquisitions, have redened the strategic importance of SCM. At present, European auto-makers vary in their attitude towards the outsourcing of logistics. Some companies, such as Renault and Ford, have made a large commitment to the use of third-party logistics managers [9], but for other companies, such as Toyota or VW, logistics is a strategic know-how that aects the productivity of the assembly process and the reliability and security of deliveries. It is, therefore, imperative to keep logistics functions largely in house. As a result, the choice to outsource or manage in-house the logistics activities has led to four dierent strategies [10]: . The internal solution: a subsidiary is created, that regroups the set of the logistical tasks and arrange logistics services by using its own means (warehouses, containers, and eets of trucks and wagons). By this way, the auto-maker prefers to manage logistics in house (e.g. VAG or PSA [11]). . The subcontract of the execution tasks: the auto-maker denes logistics solutions while subcontracting the transportation outside the group (e.g. Toyota). . The outsourcing to a privileged supplier: the auto-maker develops with an independent logistics provider a long-term relationship for transport and other specic logistics services (e.g. Renault). . The turn to a logistics integrator: the auto-maker contracts with a logistics provider the organization and management of logistics (e.g. Ford). These four strategies imply a growing degree of integration between the automaker and a third party logistics providers [12]. Generally, no auto-makers enrol completely in one only of these strategies, they often combine two or three of them, but with a dominant strategy [13]. Moreover, auto-makers still tend to split the supply chain in two halves (inbound ow of components and outbound ows of nished vehicles) for outsourcing purposes. So far, attempts to reduce production costs have concentrated on the upstream processes before the car rolls o the assembly line, as this is where two-thirds of the delivered cost is incurred [14]. To be able to focus more on car-related services and to cope with the huge costs associated with an ever growing number of new modules and systems, auto-makers are becoming less involved in manufacturing and assembly, passing the responsibility of developing, manufacturing and assembling important section of the car to a few rst-tier suppliers [15].

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In this process, rst-tier suppliers organize the ow of components from lower level suppliers, taking, eectively, an important logistics management role in the supply chain. As a result, rst-tier suppliers are gradually becoming system integrators [16], blurring the boundary between the manufacturing of parts and the marshalling of components. Concerning downstream logisticsthe distribution of the nished car to the customerit presents a more dierentiated organization, in part because of the existing regulatory framework [17] which gives auto-makers less power over their dealers than over their suppliers. This has brought auto-makers to have dierent degrees of control over the distribution of their vehicles, according to the type of distribution channel: quite a low degree of control over independent franchised dealers, the highest degree of control is in the case of direct ownership of retail outlets.

4. The potential role of ports in the automotive supply chain In this section, we consider the inter-relation between the cargo handling system, transport system and logistics systems, in order to dene to which extent a port creates value in a supply chain. Figure 1 has to be interpreted starting from the lower part (cargo handling system, part of the transport system) which shows the traditional function and role played by ports. The second step, at the upper level, that is the logistics system, is the area where the added value services can display their eectiveness, thus giving a port a prominent role in a given supply chain. The cargo handling system consists of all the activities, such as pilotage, towing and stevedoring, that facilitate the loading and unloading of cargoes. Cargo handling is strongly linked to the transport system and is also part of the logistics system, since logistics encompasses transport. The necessity of temporary storage in ports and the presence of ecient transport services (shipping and intermodality) make ports potentially attractive locations for logistics activities.

Components

VAS

Storage

Assembling

Customer

Logistics system

Transport system
Shipping Cargo handling Delivery

Cargo handling system

Pilotage Towing Unloading Storage Loading

Figure 1.

The relation between cargo handling, transport and logistics [18].

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As a result, the transport chain can become more and more integrated within the production system and, as far as international trade is concerned, within the trading pattern itself. This is a concept under which the transportation and distribution activities are considered as a sub-system of the whole production system. Indeed, ports are more and more turning into integrated transport centres and logistic platforms for international trade. Once depicted general trends for ports, meant as logistics platforms the logistics features and constraints of our attention is now turned to the automotive supply chain. There are principally two types of cargo in automotive supply chains: individual parts or components on the one hand and nished cars on the other hand. Parts or components are mainly shipped in standardized transport equipment such as containers or swapbodies. Until recently, nished cars have rarely been transported in containers. In most of the cases they are handled with special land and sea transport equipment such as carrier vessels or specially designed trucks or railway wagons. With regard to these two types of cargo, it is important to underline that ports have mainly a decisive role in the movement of nished vehicles. This is due to the fact that most of the value added services in port operations depend on the need for storage of imported vehicles in the port area. These services are generally related to damage inspections, waxing and dewaxing, polishing, up to customization and body conversion [19]. Procurement and pre-assembly stages, however, are becoming of considerable signicance and may well shape the future development of ports. For example, at Seaport Terminals/Katoen Natie, in Antwerp, the value added services go further back down the supply line and include pre-assembly for car dashboards and wiring [20]. As an additional example of the increasing role of ports in the automotive trade, seaports will even dissemble imported cars for special export markets, in order to avoid high-tari barriers, and reassemble them later. With increasing modularization, port operators will benet from being involved in several stages of overseas or short sea supply chains. The same imported components or parts are shipped out as larger components and then back again as a complete module or as nished cars (see [1]). As far as auto-makers are concerned, they will continue to nd ports attractive until new value added services can be conveniently supplied without any increase in delivery times. All these considerations lead us to argue that the improvement of operational eciency of the port is not enough to satisfy both the port users and the nal client of the supply chain. A comprehensive approach is needed to highlight the contribution of both the operational system and the managerial organization within the entire supply chain. 5. The empirical analysis This work is an attempt to analyse how port operators [21] are involved in a given supply chain according to a SCM approach. The revised Lambert model will be presented, adapted to better analyse the contribution of the port of Le Havre to the value creation within the Renault supply chain passing through it. Focus will primarily be on managerial components encouraging the integration process between the actors of the supply chain.

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5.1. Lambert revised model: a process approach The rst step of the research was the denition of key port operators involved in the Renault supply chain. In this purpose, the car manufacturer was directly interviewed, through a semi-structured questionnaire, in order to dene the characteristics of the specic supply chain and to distinguish port operators with whom the focal rm (car manufacturer) shares business processes. The second step was the identication of key business processes to develop the analysis. Basically, we adapted the processes identied by the members of the Global Supply Chain Forum, focusing on: procurement, inventory management, manufacturing management, physical distribution and commercial practices (customer services and marketing). Once the automotive supply chain under the car manufacturer perspective had been traced and key business processes identied, another questionnaire was set up in order to analyse the level of integration achieved for each business process (SCM components). The literature suggests dierent indicators for the analysis of the level of integration. To the aim of this paper, the most suitable variables to investigate port operators behaviour in the Renault supply chain were chosen with the support of industry experts: . Relationships: which kind of relationship exists between the port operators and the focal rm? . Supplied services: what services are supplied in order to satisfy customer requirements? . Information and communication technologies (ICTs): which kind of information and communication technologies are used for the integration among the actors? . Performance measurement: which key performance indicators (KPI) are shared by the actors of the supply chain? As is evident from the choice of the variables, focus was on the managerial and behavioural rather than on the physical and technical components proposed by Lambert. This is due to the fact that this analysis was centred on companies behaviours and strategies for the service provision. In particular, the questionnaire was administered to the following port operators: shipping companies, terminal operators and other logistics providers. All the information was subsequently used to full an SCM matrix which describes port operators responses to customer needs, through key supply-chain business processes. It allowed us to have insights on port operators strategic behaviours. 6. Main ndings of the survey Taking into account the competitive pressures aecting the automotive industry, we present the results of the empirical analysis concerning the Renault supply chain [22] and the Le Havre port operators. First, we describe the Renault network structure (the key members), giving particular attention to port operators. Second, we analyse how Renault manages key business processes along the supply chain (make or buy strategy). Finally, as our assumption is that the higher the level of integration among the actors of a supply chain the higher the performance for the entire chain, in the third paragraph an analysis of the integration level undertaken by port operators is presented through specic supply-chain management components.

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6.1. Renault network structure To the aim of this research and in coherence with the underlined auto-makers strategies in managing the supply chain, we split the supply chain into two halves: inow of components (including internal ows between plants located in dierent countries) and outow of nished vehicles. Spare parts and after-sales services have been left out of the research because they are generally provided by dierent actors in competition: auto-makers and their franchised dealers, independent garages, repair centres, components suppliers, service stations and hypermarkets, such as Carrefour, and fast-t service chains such as Kwik Fit. Moreover, consumer needs in terms of quality service and timing seem to call for dierent critical success factors to be competitive in such a part of the supply chain. A specic analysis would be needed. 6.2. Renault business processes In this section, the features of Renaults business processes are analysed and their governance structures intended, within this context, as make or buy strategies. In particular, the aim is to describe how Renault manages logistics activities along the supply chain and what kind of relationships have been set up with the other actors in order to bring the highest customer satisfaction. All the information were gathered by direct interviews with Renault managers and suppliers and then organized in a way to describe the main features of Renault key business processes. The matrix presented is not an exhaustive description of Renaults activity; it rather supplies a basic description of Renault requirements for each process (see table 1). It has then been used for screening port operators contribution to the management of the supply chain. Procurement of assembling plants follows dierent logistics schemes depending on the constraints and the specic characteristics of the car components and parts. The need to respond to a sophisticated customer demand while keeping down logistics costs has led Renault to: . the set-up of direct relationships with rst-tier suppliers; these are in charge of the quality of the components and of deliveries to the logistics platforms; . the creation of Grand Couronne logistics platform for the delivery of car parts and components and assembly, to the European and international plants. The inventory management deals with the minimization of the stock level and relating costs of car components in the production process. It also deals with the storage of new vehicles. As far as car components are concerned, slow movers (like optional, air condition and ABS) are important for the customization and dierentiation of cars, and for the enlargement of the number of items in some car production lines. In order to overcome the tension between the need for car dierentiation/ customization and the related higher inventory cost (due to the slow rotation), Renault has adopted the following solution which reshapes procurement management: the use of a logistics platform that allows the optimization of the transportation capacity (by the achievement of economy of scale) and an ecient scheduling of the transport services. In relation to fast movers (standardized components such as wheels, pneumatics, glasses, etc. necessary for the realization of lean manufacturing

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practice) the minimization of the inventory costs is realized by the use of logistics platforms, when suppliers are multi-clients and have a large size. On the contrary, when suppliers have a small size, they are generally located close to the plant. As far as nished vehicles are concerned, storage in the port of Le Havre is not directly managed by Renault, being outsourced to an external logistics service provider. Regarding manufacturing management, Renault has been pursuing a reorganization of its vehicle portfolio around product platforms and car modules and systems. By focusing on common platforms and interchangeable modules, Renault tries to deploy new solutions across the whole product range in a faster and less expensive way [24]. Moreover, to be able to focus more on car-related services and to cope with the huge costs associated with a great number of new modules and systems, Renault is becoming less involved in manufacturing and assembling, passing the responsibility of developing, manufacturing, and assembling important sections of the car on to its rst-tier suppliers (long-term partnerships with each major module supplier). In relation to the physical distribution, in 2001 Renault stepped up its eorts to take costs out of distribution by restructuring the network and making the existing system more ecient. Cutting distribution costs by enhancing the networks competitiveness is a major strategic imperative to adjust to the emergence of new channels of distribution such as e-commerce, and to prepare for changes in the current distribution system. It is possible to consider two strategic solutions for vehicles distribution, depending on the nal markets: . In Europe, Renault has a long-term, exclusive contract with CAT. . Outside Europe, alliances with local auto-makers are being developed. In particular, Dacia supports the development of Renault in Romania, Samsung Motors in Korea and Nissan in Mexico, Central America, Japan and Asia Pacic. Finally, in relation to the commercial practices (customer services and sales), Renaults objective is to reduce the time needed to develop a new vehicle while improving quality and accelerating innovation. This is of cardinal importance, not only nancially but also commercially, since shorter development times enable the producer to respond more quickly to shifts in demand. To achieve this objective, Renault has dened a programme (The New Distribution Project, deployed in 1999), aimed at securing and shortening the time between the day the customer places an order (except for a new model during the launch period) and the delivery date. At the same time, the programme is intended to improve the assortment and promote the diversity of the Renault product range. 6.3. Port operators response: the SCM components Taking into consideration the Renault business processes features, we investigated port operators response to such requirements through specic variables: relationships, supplied services, information and communication technologies (ICT) and key performance indicators (KPIs). In this purpose, we administered a questionnaire to the following operators: . CMA-CGM, a liner shipping company, in the procurement process of car components and for the export of Completely Knocked Down (CKDs); . CKD Grand Couronne logistics platform for the collection and assembling of car components (CKD) and for their export via the port of Le Havre;

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. CAT, a logistics operator, for the distribution of new vehicles in Europe; . HUAL-Cetam, a shipping company, specializing in the maritime transport of new vehicles; . SETH, a terminal operator, for the storage of new cars in the port of Le Havre. All the information was complemented by direct meetings with industry experts and managers of the port of Le Havre. The nal output has been the realization of an SCM matrix, providing the needed information to test the Lambert revised model (Table 2). The matrix shows Renaults supply-chain structure, the type of relationships among the actors of the chain, the supplied services for each business process, the ICT solutions set up for each interface and the set of key performance indicators adopted by each of the actors. Each box has to be interpreted in the light of the main characteristics presented in Table 1, in order to evaluate the contribution of port operators to the management of Renault key processes. The matrix can be read per lines, except for the nal cells the column KPIwhich will be commented on in the end of this section, as they are better understandable via a vertical reading. The matching of the focal rm requirements with the operator response, in terms of services, relations and ICT solutions allows us to perceive the port operators contribution to the business management.

Table 1.
SCM approach

Renaults business processes: main features.

Key supply-chain business processes Renault features Car components: direct relationships with rst-tier suppliers. These are in charge of the quality of the components and of delivery times to the logistics platforms CKD: Grand Couronne logistics platform for the delivery of car parts, components and its assembling to the European and international plants Minimization of stock level and related costs: slow movers: logistics platform; fast movers: logistics platform, when the supplier is of a large size; location close to the assembling plant, when the supplier is of a small size Long-term partnerships with module suppliers Use of common plants for the minimisation of the production costs (for example Nissan assembling plant in Mexico) Postponement [23]: deferred car customization close to the nal market Minimisation of stock level and related costs through storage decentralisation downstream, in the supply chain (e.g. in the port of Le Havre) Outsourcing to few logistics providers Privileged logistics supplier for the European distribution, in charge of transport organization: dierent relationships with ocean carriers and other logistics and transport providers Reduction of lead-time Improvement of quality

Procurement

Inventory management (components and parts)

Manufacturing management

Inventory management (vehicles) Physical distribution

Commercial practices

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Table 2.
SCM approach Key supply-chain business processes Actor interviewed

Port operators response to Renault requirements: the SCM matrix.

Supply-chain management components Relationship Supplied services Maritime Transport EDI ICT KPI Transport and handling costs; transit time Reliability; total logistics costs

Procurement

CMA-CGM

Spot (slot agreements) Fully integrated in Renault Group

V. Carbone and M. De Martino

Inventory management (components and parts)

Grand Couronne logistics platform

Manufacturing management Inventory management (vehicles)

Collection and assembling of car components; Export of CKD through the port of Le Havre No current involvement of port operators (except Axial for Nissan vehicles) SETH Long-term contract through CAT Long-term contract New car storage

Inventory mgm system; EDI and intranet

EDI; tracing and tracking EDI; tracing and tracking; Custom mgmt system

CAT Physical distribution HUAL-Cetam

Door-to-door services; storage; stock control; damage inspection Maritime transport; inland transportation

Commercial practices

Short-term (1 year) contract through CAT Long relationship No current involvement of port operators

EDI; tracing and tracking

Transit time; Consignment security Transport and handling costs; Availability of real time information. Transport and handling costs; reliability

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Procurement is managed in-house (vertical integration) and only the maritime transport is committed to dierent liner shipping companies. In fact, there are no long-term relationships with the shipping companies but spot contract (generally slot agreements for 1 year) directly managed and controlled by Renaults deep-sea and short-sea operation departments. As a response to this vertically integrated structure, shipping lines concentrate on port-to-port services by the supply of transport services in specic maritime routes [25]. Moreover, the high Renault contractual power has led liner shipping companies to keep down the freight rates while respecting quality attributes of the services. In the inventory management, there are two main operators: CKD Grand Couronne logistics platform, for the car components and CKDs; CAT, for the nished vehicles. In relation to the car components and CKDs, Renault keeps the co-ordination of the import and export ows in-house, through the logistics platform. Only the execution of transport is outsourced to specialized providers. Grand Couronne logistics platform organizes the procurement ows of Asian, Mercosur (mainly Brazil and Argentina) and Mexican assembling plants by scheduling their orders and production processes on the basis of delivery times for the car components and parts. With reference to nished vehicles, CAT is in charge of the storage and European distribution on the basis of an exclusive long-term contract. SETH, a company belonging to CAT, performs the management of the interface between the maritime and the inland transport at the port of Le Havre. In the manufacturing process, there is no direct involvement of the interviewed port operators, whereas component and part suppliers show a high level of integration with Renault, concerning such a process. This seems to be a consequence of the position of the port of Le Havre with respect to the nal destination market. In particular, vehicles produced in France for the national market are delivered by road and railway transportation, bypassing the port of Le Havre, whereas vehicles produced in France for other nal markets are exported through the port of Le Havre. As the need to defer vehicles customization close to the nal market leads to development opportunities for arrival ports, referring to the current ow of nished vehicles through the port (export rather than import ows), Le Havre is not in the position to prot from such opportunities. Concerning the physical distribution, CAT will have a predominant role until the expiry of its exclusive contract. CAT is in charge of the Renault vehicles distribution, by organizing the nal delivery to the dealers. Concerning the maritime transport within the delivery ow, it is realized by a network of relationships with shipping companies and other transport providers. HUAL-Cetam supplies the maritime transportation between European and Mediterranean countries and overseas. CAT is the main customer of HUAL, which is strengthening its expertise in the automotive supply chain, by setting up strategic alliances with specialized providers. These two operators work together for the satisfaction of Renaults requirements, even if CAT still has a monopolistic position in the management of the physical distribution. Finally, we develop some considerations on the key performance indicators, reported in the last column of the matrix, as they allow the reader to understand if there is a mutual sharing of a system of KPI, eventually conceived jointly by two or more organizations, or if, on the contrary, a segmented and individual xation of indicators characterizes the supply chain.

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What is evident from our survey is that Renault presents two dierent governance structures in the management of the supply chain: vertically integrated in the inbound logistics while more exible in the outbound. This has dierent implications on performance indicators adopted by the operators involved in each business process: . In the procurement, the need to keep down the freight rate and reduce the transit time is the main competitive factor in the supply of transport services. This is a consequence of the low outsourcing degree of Renault. . In the car components and parts inventory management, reliability and minimization of the total logistics costs are two factors of crucial importance. As a consequence, Renault decentralized the inventory management to Grand Couronne logistics platform, also in charge of the ow synchronization between overseas assembling plants and rst tier suppliers. As far as nished vehicles are concerned, the responsibility for the inventory management is in the hands of CAT. Transit time constraints and consignment security aect storage activity (SETH), as they can compromise just in time delivery to dealers. Finally, in the physical distribution it is possible to highlight two dierent situations: one related to CAT, and the other related to HUAL-Cetam, as main CAT transport providers. For both operators, the minimization of the transport and handling costs is of fundamental importance but CATs performance is also based on the availability of real-time information due to its responsibility in organizing and managing the physical distribution. 7. Conclusion The innovative aspect of the present work is of a methodological nature, as it was attempted to assess the SCM assumption on a specic case. An analytical model was adapted for the study of the actors behaviour in supply-chain management to the specic context of the Renault automotive supply chain involving the port of Le Havre. Due to the complex nature of a port, from a managerial and an entrepreneurial point of view, we analysed the role of each of the operators in the very supply chain. Accordingly, the main results of the research consist in some theoretical premises for an innovative analysis of ports in supply chains, on the basis of the organizational and managerial approaches. The current state of knowledge on maritime transport and ports appears to be modest as far as business economics research is concerned. In particular, scientic publications and available techniques refer substantially to transports and to industrial economics, while most of the empirical analysis have been developed at macro-economic level. Conversely, the business organizational insight is poor. The chosen methodology was also consistent with the current evolution of international maritime trade patterns, which is giving rise to the third generation port, a dynamic node in international production and distribution network. The claim that a port has gained the status of a crossroad between the production and the distribution spheres calls for higher integration with the main customers, both port direct users and nal clients. Nevertheless, the present contribution is still lacking in both further theoretical validation and wider eld testing.

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Concerning the theoretical issue, our research is exclusively focused on the supplychain actors and their behaviours, in terms of supplied services, mutual relationships, ICT systems and types of performance measurements. The further step should be the denition of an economic evaluation, via some performance indicators for the whole supply chain. Without quantication no comparison is possible between integrated and fragmented supply chains. In the same way, a port cannot appreciate in a thorough manner the interest in investing and developing a given supply chain, if a cost analysis for each elementary activity within the port is not developed, according to a comparative approach with other substitutable supply chains. With regard to the eld test, the area of investigation was limited to some specic segments of a supply chain. A wider analysis, extended to the rest of the supply chain could allow a better understanding of the dynamics of relationships, of the integration levels, and of the performance indicator, for a general optimization of the entire chain, instead of a partial one. Subsequently, a comparative analysis of two dierent supply chains passing through the same port could permit a protable benchmarking aimed at the identication of the proper managerial model. Such a benchmarking could also be useful for the Port Authority in the decisions relating to infrastructure investments, their hinterland connections and land management. Acknowledgements This study was only made possible through the co-operation of many industry experts practitioners and researchers, all of whom we would like to thank for their time and support in assisting our research. References and notes
1. 2. 3. 4. Herfort, R., Lagoudis, I. N. and Laiwani, C. S., 2001, Port selection for integration in logistics supply chains in Europe: a case study of automobile transport through ports. Logistics Research Network, 6th Annual Conference. Christopher, M. G., 1998, Logistics and Supply Chain Management: Strategies for Reducing Costs and Improving Services (London: Financial Times Pitman Publishing).

Lambert, D. M., 2001, The supply chain management and logistics controversy. In: Handbook of Logistics and Supply Chain Management, edited by Brewer, Button and D. A. Hensher, Vol. 2, (Pergamon), pp. 99125. 5. Davenport, T. H., 1993, Process Innovation, Reengineering Work through Information Technology (Cambrige, MA: Harvard Business School Press). 6. Lambert, D. M. et al., 1997, Fundamental of Logistics Management (New York: McGraw-Hill). 7. The demand for new cars has been growing on average less than 1% a year during the last 10 years and this trend is forecast to continue. 8. Veloso, F. and Kumar, R., 2002, The Automotive Supply Chain: Global Trends and Asian Perspectives. Working paper series no. 3, Economics and Research Department, Asian Development Bank. 9. For these auto-makers, logistics is not part of their core business. It is therefore advantageous to entrust the realization of it to specialized providers: the outsourcing permits the reduction of logistics costs while avoiding the dissipation of rms resources. 10. Eurostaf, 2002, Le logistique automobile (Paris: Eurostaf-Les Echos). 11. PSA is the merger of Peugeot and Citroen. In 1974 Peugeot bought its rst 30% share of Citroen and in 1976 completed the take over; since then the new company was called PSA. 12. The role of Third Party Logistics Managers (TPLM) in the automotive trade is more dicult to dene than in other sectors because of the range of value added services which some of them provide. These extend from basic functions such as packaging, quality

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control, and telecommunications through customs clearance and bonded warehousing, right up to simple module assembly. For example, Saab has expanded wheel assembly and warehousing relations with Exel to include a 10-year contract for receipt, storage and sequencing of complex parts at an assembly centre in Sweden. Automotive Consumer Services Group, Fords after-market division, has retained Schneider Logistics to manage transportation for the groups supply chain in the US and Europe. Kearney, A. T., 1999, The Future of Automotive Distribution (A. T. Kearney, Inc.). Collins, R., Bechele, K. and Pires, S., 1997, Outsourcing in the automotive industry: from JIT to modular consortia. European Management Journal, 15(5), pp. 498508. A system integrator is a supplier capable of designing and integrating components, subassemblies, and systems into modules that are shipped or placed directly by the supplier in the auto-makers assembling plants. The expiry of the Block Exemption from EU competition rules in 2002 is going to have a signicant eect on the shape of dealer networks. First, dealers are now allowed to sell the products of more than one auto-maker (multi-franchising) providing that the premises and management are separate. Second, they can sell parts provided by organizations other than the auto-maker, providing they are of equivalent quality, and are used only for vehicles outside of their warranty period. Third, auto-makers must supply technical information to independent garages which will allow them to compete with franchised dealers for after-sales services. De Langen, P. W., 2001, A framework for analysing seaport clusters. WCTR 2001, Seoul. Holweg, M., Miemczyk, J. and Williams, G., 2001, How to organise automotive logistics in a build-to-order environment. The 3DayCar logistics studysystem and environment streams, version 2.55, April. Drewry Shipping Consultants, 1999, Market outlook for car carriers: new opportunities in a new millennium (London: Drewry Shipping Consultants). The term port operators is used in a wide sense, meaning all the operators supplying transport and logistics services and having a direct or indirect link with the activities performed in the chosen port, that of Le Havre. The survey focused on a specic segment of the Renault Supply Chain: the part of the supply chain involving the logistics platform Grand Couronne (France) and the Port of Le Havre. We consider both the procurement and the distribution ows. The concept of postponement lies in organizing the production and distribution of products in such a way that the customization of these products is made as close to the point when the demand is known as possible. For example, through the alliance with Nissan, Renault uses the Nissan assembling plant in Mexico for the production of the Scenic and Clio, to be then delivered to the Central American markets. For example CMA-CGM is involved in containerized transportation of car components and CKD to Renaults assembling plant in Cartagena (Colombia).

13.

14. 15. 16. 17.

18. 19. 20. 21. 22. 23. 24. 25.