Panalpina Annual Report 2006

Supply Chain Management
Logistics revenues boosted
by attractive solutions
The net revenue growth of 4.7% to CHF 1,196 million, is proof that
Panalpina’s logistics services enjoy great popularity among customers.
And thanks to new and innovative approaches, the Group still sees
considerable potential for the future.
The unbroken trend towards outsourcing is making
production and supply chains ever more complex.
Against this backdrop, net forwarding revenue
in supply chain management has surged forward
again in the year under review thanks to a large
number of new contracts (see Reporting Regions).
Broad range of logistics services from
a single source
Panalpina offers comprehensive solutions in the
field of logistics and supply chain management,
but only in conjunction with air freight and ocean
freight. This interlinking of its three core activities
is a central element in Panalpina’s strategy. Experience
has shown that this approach promotes
customer loyalty, generates synergies and taps
into new sources of potential for all three areas
of activity. The logistics services offered comprise
warehousing, secondary distribution, just­in­time
and just­in­sequence delivery, along with addedvalue
services such as order management, re­
packaging, order picking, labelling and reverse
logistics.
Innovative direct­to­market solutions
In 2006, Panalpina scored resounding successes
with a number of new approaches, offering clients
more flexible freight distribution while reducing
their working capital. With this “direct­to­market”
concept, clients can dispense with high­risk warehousing
because Panalpina looks after the delivery
of the products right through to the end­customer
while “storing” and controlling stocks “on the way”,
i.e. during the transportation flow. This approach
is proving to be highly popular in the hi­tech and
retail and fashion sectors in particular. For example,
the Group delivers a computer manufacturer’s
products right to the consumer’s front door in
Europe, and ships bulky hospital scanners weighing
several tons each straight to American and
Australian hospitals, where it also supervises the
laborious task of installation.
IT backed monitoring of the entire supply chain
Nowadays, real­time monitoring of freight across
the whole supply chain is essential, not only in
complex direct­to­market contracts but also in more
straightforward logistics operations. This is why
Panalpina’s sophisticated IT systems are responsible
for roughly half of customer contracts being
clinched. The Group offers Internet­based consignment
tracking, reporting and logistics management
software plus integrated applications for order
and warehouse management. Any discrepancy
in the transport chain, however slight, causes the
event management system to send an automatic
message to the client. Transparency is enhanced
by stock control and supply chain management
visibility applications.
Lead logistics provider vs. contract logistics
Asset­light flexibility rather than
high­risk infrastructure
Unlike its chief competitors, who use their own
infrastructure to provide most of their contract logistics
and are often forced into risky investments,
Panalpina consciously minimizes the amount of
resources tied up by its supply chain management
operations. As lead logistics provider, it focuses on
the service aspects of these complex contracts,
delegating subtasks, wherever possible, to a select
group of first­class supply partners. In successfully
implementing this strategy, the Company draws on
many years of experience in subcontractor management
across all geographical regions. Not only does
this flexible approach minimize capital­intensive
investments in warehouses, truck fleets etc., it also
affords Panalpina a competitive edge by enabling the
Company to respond swiftly to market­driven shifts
in demand.
www.panalpina.com/logistics
Core Activities
Panalpina Annual Report 2006 4