Internship Hewlett Packard Barcelona
Report 2000.LT.5379, Transport Technology, Logistic Engineering.
Supply Chain Development Transport Project
The first objective of this transport project, for the supply chain
development department of Hewlett Packard Division of Barcelona, was to
analyze if there is a need for negotiations for new and more competitive
transport rates. The second objective was to investigate if there is a
need to look for new forwarders that can provide a service that fits with
the needs of Hewlett Packard Barcelona. Other input of this project was to
structure the information about transport rates and analyze the evolutions
of costs and volumes.
First objective of this project was to clarify all the information about
transport rates. For every printer a lot of parts need to be imported. The
costs for the transport of these parts to Barcelona are called the inbound
freight costs. Every printer needs to be transported to the customer and
will normally be transported to a distribution center. The costs for the
transport of the printers to the distribution center are called the
outbound freight costs. Forwarders arrange the actual transport. Hewlett
Packard Barcelona has negotiated special transport rates with the
forwarders for the transport for Hewlett Packard Barcelona. The transport
rates can be divided into inbound freight rates and outbound freight
rates. The inbound freight rates can be divided into three origins. Every
origin has its main forwarder. Outbound freight rates can be divided into
the same regions and also has for every destination a specific forwarder.
For shipments, which are more urgent and can not be planned in advance a
special forwarder is used that is more specialized in urgent shipments.
The three main origins for inbound transport rates are: USA, ASIA and
Europe. The main forwarder for USA and ASIA is Panalpina and for Europe
the forwarder is Kühne&Nagel. The transport rates can be divided
into different cost drivers such as inland cost, air/ocean freight costs,
fuel surcharge costs, forwarder fee, handling costs and costs for
documents. The evolution of transport rates shows that since this year
there has been an increase in fuel surcharge for all origins. For Asia the
conclusion of evolution of transport rates is that there has been an
increase in ocean freight for almost every origin.
The main destination for outbound freight is to the distribution center in
Germany. There are as well shipments to the USA and Asia but this is only
a small amount and these are mostly shipments from the production line 30
(PL30). PL30 consists of the big plotters. The main forwarder in Europe is
Kühne&Nagel and for the rest of the world AEI. The same cost
drivers as for inbound freight transport rates can be found.
Evolution of volumes
An analysis of volumes and costs divided into origins/destinations and
transport modes has been made. The volumes are taken in shipped kilograms.
Most of the shipped kg for inbound freight is coming from the USA and Asia
by Ocean. Most transport costs are paid as well in Asia and the USA but
for the air shipments. This is because air shipments are far more
expensive than ocean shipments.
For outbound the conclusion of this analysis is that most of the shipped
kg has been in Europe by truck. This is logical with the fact that 80% of
the shipments go to the distribution center in Germany.
A comparison between the evolution of the past with the forecast for the
product of production line PL83 resulted in the knowledge that more costs
are in air shipments instead of the preferred ocean. The regions of most
volumes are similar in the study of the past and the forecast. Most of the
shipments will come by Ocean from Asia and USA and from Europe by
The forecast of volumes of PL83 shows as well the amount of volumes in
2001. This forecast shows that most shipments will come from the USA but
most payments will be done in Asia. Therefore it is interesting to focus
on both markets.
For the USA the result of better rates is higher because
of the bigger volumes and in Asia it is important to get better rates
because they are high compared to USA rates.
A first comparison of rates has been made with the rates of the Contract
Manufacturers (CM) in Hungary. The conclusion of this comparison is that
20% could have been saved in transport costs in 1999 (only those origins
were taken account from where we had the transport rates to compare) if
Hewlett Packard had negotiated the best rates from the CM's.
Request for Information (RFI)
After this first comparison a Request for Information had to result in a
better view of the current market situation. The purpose of this Request
for information was to analyze if the current transport rates by Hewlett
Packard are competitive or not. A cost calculation of the product Aladdin
has been made to show the differences of the rates.
The results of the RFI are that the transport rates for inbound freight
from the origins in Asia are competitive for ocean shipments. For air
shipments Kühne&Nagel can offer better transport rates for the
origins China, Philippines, Singapore and Taiwan. For the Less than
Container Load shipments Kühne&Nagel offers for all origins
better transport rates.
For inbound freight from the origins in the USA Kühne&Nagel
offers better rates for air shipments and Less than Container Load
shipments. Hellmann offers better transport rates for ocean shipments with
20' and 40' containers.
The cost saving calculation show that for only USA shipments 20-25% cost
savings can be realized. Combining Asia and the USA would result only in a
cost saving of 2-3 %.
The conclusions show that especially the transport rates in the USA are
not competitive. It would be interesting to do an Request For Quotation
for the USA only. The announcement of Panalpina of increasing the
transport rates for shipments of Asia makes it even more interesting to
explore this market as well.
Reports on Logistic Engineering (in Dutch)
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