Frederik Beelaerts van Blokland, VP Automotive, Schenker speaks at a session on 'The Economy: Get Ready for the Rebound' at the 7th European 3PL Summit in Brussels, November 25th 2009. To download all of the slides from the conference for free visit www.3PLsummit.com/eu_2009ppts

1. DB Schenker
Corporate Flexibility as Success Enabler
DB Schenker
Frederik Beelaerts van Blokland
VP Automotive Logistics SCM/CL

2. Agenda
Company Introduction: DB Schenker
reAct09
G4G (go for Growth)
Flexibility in Pricing
Flexibility within a global corporate environment
Flexibility through market trend adaptations
FLEX
Logistics flexibility as an evolution
2

3. We are a leading passenger and logistics company
1)
DB Bahn DB Schenker
DB Netze Track
Long Distance Rail
No. 1 Public transport in Rev. (EUR mn) 3,523 Rev. (EUR mn) 4,654 Rev. (EUR mn) 725
Europe EBIT (EUR mn) 306 EBIT (EUR mn) 307 EBIT (EUR mn) 670
Employees (‘000) 15 Employees (‘000) 29 Employees (‘000) 41
No. 2 Passenger rail
transport in Europe
DB Bahn DB Schenker DB Netze
No. 1 European rail
Regional Logistics Stations
freight transport
No. 1 European land Rev. (EUR mn) 6,687 Rev. (EUR mn) 14,680 Rev. (EUR mn) 344
transport EBIT (EUR mn) 857 EBIT (EUR mn) 381 EBIT (EUR mn) 210
Employees (‘000) 25 Employees (‘000) 62 Employees (‘000) 5
No. 1 Biggest rail network
in Europe
DB Bahn DB Netze
Rev. (EUR bn) 33.5 DB Services
Urban
Stadtverkehr Energy
EBIT (EUR bn) 2.483 Rev. (EUR mn) 1,962 Rev. (EUR mn) 112 Rev. (EUR mn) 554
EBIT (EUR mn) 205 EBIT (EUR mn) 131 EBIT (EUR mn) 74
Employees (‘000) 240 Employees (‘000) 12 Employees (‘000) 25 Employees (‘000) 2
As of 31.12.2008 1) Difference between the sum of the departments and DB concern result of other activities/consolidation
d
rove
app 2008)
(DB

4. reACT09 –
An initiative to counter the recession and solidify our market positons
Counter Measures – human resources, adapting our expenditures
1
and investments
Ziele
2 Competitive Pricing –through processes and structure optimization
Market Strategy – Further improve service offerings and strenghten
3
business development initiatives.
4

5. Flexibility on global scale - Go for Growth (G4G)
Situation:
Massive recession in process of development (Nov 08)
Objectives:
To structurally and globally counter the adverse contract logistic sales forecast
Measures:
Establish four clearly defined industry segment: automotive, electronics, FMCG and industrial
Focus on developing/emerging markets per region
Focus on specific logistic services
Invest in 100+ FTE for: business development, tender management and implementation
explore M&A opportunities to support our growth strategy
Requirements/Challenge:
Ability within DB Schenker to demonstrate it’s global flexibility…and do it swiftly
Outcome:
Short term incremental sales/revenue growth
Proactive selling
Established a clear regional & national logistic focus
Increased our sales hit rate
Established sales synergies through a globally aligned business development strategy
Reduction in participation of “benchmarking” RFQs

6. Flexibility in pricing:
Generic contract logistic costing model
Costs
V
A
FTE (partially)
R Warehousing MHE
I (partially) FTE (partially)
A V
B Consumable Warehousing MHE A
Sales
L materials (partially) R
E prior
Consumable
to Transaction materials
based
Building & surface crisis
payment Building & surface
F area
I Sales area
X
Facility equipment F
during Facility equipment
Investments I
2009 Investments X
Fixed workforce
Fixed workforce
Administration and
Administration &
overheads
overheads
Conflict: Not all costs can be convereted to variable costs
6

7. Flexibility in pricing:
Short Term counter measures
Reduced of temp workers
Variable Costs
Terminated of short term contracts
Variable-Kosten
Reduced shifts
Terminated short term leases
Fix-Costs Consolidated businesses
Fix-Kosten
Reduced FTEs
No long term business sustainability
7

8. Flexibility in pricing:
Long term measures for business sustainability
Proactive Service Maintainance
− Renovation & facility maintainance with own FTEs Conventional
Measures
Human Resource Training
− Raising skills set level, cross trainning, know-how transfer „Quick Wins“
Optimize Purchase
− Volume optimization, low cost sourcing, customer bundling
Driving Innovation
− IT refinements, process optim., lean engineering Innovation
Measures
Further Development of Management Systems
− EFQM, FLEX, 5S „Sustainable
Wins“
Reinforcing Business Development
− Go for Growth, Cross-Selling, Investement in resources
business sustainability
8

9. Flexibility within a global corporate environment
Some preconditions for flexibility
Global network
Predominately non-asset based
Structured global transfer of know how
Structure know-how (FTE) transfer – “flying team”
3+ years contracts – span recession
“Fair” contracts: gain sharing mechanism and price/volume structures
Shift our geogrpahic within our global network to focus on growth regions
Fully integrated solutions [SCM] covering all services (forwarding, rail & logistics)
Success Criteria
Qualified, Motivated and Flexible Workforce

10. Flexibility through market trend adaptations
Logistics:
The coordination of information, material and finances ranging from
procurement, production and distribution
including waste management
1. Service Bundling
2. Shift in purchasing criteria for logistic services
3. Acceleration of Cooperation
4. Light/complex assembly
5. VMI & O

11. Flexibility through market trend adaptations
1. Logistic Trends: Service Bundling
Bundling of logistic services (demand side)
A. OEM’s and increasingly tier-1 want:
One contract (multiple services)
One overhead
One pricing module
One system (IT)
Costs synergies through consolidation of services

12. Flexibility through market trend adaptations
1. Logistic Trends: Service Bundling
OMS Outbound consolidation Forwarding
Customs Inbound warehousing Quality checks
Light & heavy assembly JIS/JIT Waste Management
Complete SCM visibility – IT Logistic / Lean engineering VMI & O
Spare parts logistics Returns management & repair Reverse
Challenges for Integrated Logistics
Logistic service providers are largely fragmented in service offering
….but with a growing tendency to bundle services Customer concerns
Loss of know-how
Loss of control
Procurement Production Distribution
“All eggs in one basket”
Not a specialist in all fields

13. Flexibility through market trend adaptations
1. Logistic Trends: Service Bundling
Bridging the customers concern gap….
Develop partnership with stronger stakes between customer & logistic provider
Gradual expansion of services
Logistic providers seek partnerships with other
logistic companies to offset their short comings
Establish customer Control Tower functions for Challenges for Integrated Logistics
Challenges for Integrated Logistics
large integrated projects Customer concern
Customer concern
Establishment of new legal entities Loss of know-how
(customer & logistic provider)
Loss of control
Multiple suppliers contract 1 LP for common client
“All eggs in one basket”
Not a specialist in all fields

14. Flexibility through market trend adaptations
2. Shift in primary purchasing criteria for selelction for logistic providers
Service Quality 3
References 2
Price/Rates
Decision
Financial Process
Stability 1 Innovation 4
1 Financial stability of LP
Risk
2 Proven track record of performance Aversion 5
3 Reliability of service
4 Ability to reduce FTE, costs & time
5 Ability to mitigate/reduce previous risks

15. Flexibility through market trend adaptations
2. Shift in primary purchasing criteria for selelction for logistic providers
Service 2007 - 2008 2009 Service 2007 - 2008 2009
Forwarding Price/Rates Price/Rates Warehousing/JIS/
Price/Rates Price/Rates
production
Risk Aversion Risk Aversion
Risk Aversion Process Optimization
Quality Process Optimization
Quality Quality
Process Optimization Quality
Financial Stability References
Financial Stability References
Process Optimization Risk Aversion
References Financial Stability References References
20% of forwarding RFQs have increased their focus on process 73% of decisions are based on process optimization initiatives proposed in the initial
Optimization. Forwarding is still predominately price driven bidding. Fixed “Wall/people/process, IT” are open for optimization at bidding phase.
Service 2007 - 2008 2009 Service 2007 - 2008 2009
IT (Visibility Trading
Tooling) Quality Quality Finance* Quality Risk aversion
Process Optimization Process Optimization Price / rates Price / rates
Risk Aversion Financial Stability
Risk Aversion Risk Aversion
References Process Optimization
References References
Process
Price/Rates Price/Rates Optimization Quality
Financial Stability Financial Stability Financial Stability References
No change in decision priority. Many RFQs = few bidders
Implementation timing guarantees and start-up cost models Key issues :Product liability, Pricing, Inventory duration, Engineering changes

16. Flexibility through market trend adaptations
3. Acceleration of Cooperation
Traditional Automotive Cooperation
In establishing new cooperations, industries are focusing on
innovations that lead to cost improvements as opposed to
functional improvements
This development of cooperations is driven and accelerated
by financial crisis.
Cooperation of Mutual Support - Network
Tier 1
LP1 Tier 0
OEM Tier 3
LP2
Tier 2

17. Flexibility through market trend adaptations
4. Light & complex assembly as an integral part of SCM
Demand for value-add services are developing to include assembly functions
Why? Shortage of production space at OEM/tier-1
It’s cheaper on account of LP wage structure
Less FTE on OEM/tier-1 payroll
OEM/tier-1wish to focus on their core competence
Cost pressure
These services are predominately rendered outside OEM/tier-1 facility
Demand is growing in particular where warehouse outsourcing opportunities have already exist
Inventory is increasingly often owned by LP
Main Outsourced modules
Move from basic/simple assembly to complex Instrument panels Engine drerssing
Axels Tyre and wheel
Headliners Pedal boxes
Modules (IPs, engine dressing, axles, etc.) Wire harness Fuel tank
Consequence: Emergence of production and engineering oriented LP

18. Flexibility through market trend adaptations
5. VMI & O (Vendor Managed Inventory & Owned)
There is an increase in demand for VMI& O for intercontinental supply chains
- China to US,
EU to Russia & S. America
- inbound SCM
Supply chains with high value-add components (i.e.
forwarding with: warehousing, quality control, light assembly)
Supply chains with high commodity value
International banks were increasingly addressing this demand by offering new
solutions to LPs
VMI: a process in which a supplier generates orders for its distributor based on demand information sent by the distributor
The coordination of information, material and finances ranging from procurement, production and distribution
including waste management.

19. Flexibility through FLEX: Flawless Execution
The business excellence model for contract logistics
FLEX Program Vision
Tool kit & Regional FLEX program Management
HQ Services with specific target setting reviews
Region
1
Region
2
Region
…
Region
7
Implementing first class
Region
benchmark practices within time
Continuous
FLEX ScoreCard
Global support +
Human
Common targets
Improvement Profitability
Resources
Process
Country
Growth
Customer satisfaction
and budget
Workflow Operation
Knowledge
Management Management
Approach
Feed back Efficient reporting
Develop measures within a
FLEX Tool Box global team that can support
Human Resources Continuous Improvement
local business units.
Carrier development Schenker- 5S-Audits
Taskforces for project Continuous
Customer Centric Value Map´s Applications
Human Resources
implementation Improvement Process
Roll out of Six-Sigma LEAN
Complete supply chains
Bonus mechanism based on Methode
KPI-Performance solutions including business
FLEX development, tender
Knowledge Management Workflow Management
management, implementations
PM Training for contract Standardized logistic process and business monitoring
logistics .reporting tools
Knowledge Management
Vertical Market Training Workflow Management
Implementation support tools
Process standardization for Establishment of project control,
BD,tender management, Risk-Management mitigation
contracts & implementaiton.

20. Flexibility as an evolution
Market Trends Worldwide for LSP

21. Thank you!