Kuehne + Nagel Pty Ltd

BACKGROUND

Introduce your business and what you do there.

I’m the supply chain managing director for an automotive company. I cover supply quality, development, sourcing, procurement, and logistics. 

OPPORTUNITY / CHALLENGE

What challenge were you trying to address with Kuehne + Nagel Pty Ltd?

I worked with Kuehne + Nagel for a special project in which we had to transport a heavy key component. We needed to import this component part from Germany to our plants in China. The most important aspect of this project was adhering to our estimated delivery time. 

SOLUTION

What was the scope of their involvement?

We had an agreement with the component manufacturer, and our team had to handle the delivery of the component from their doors to ours. To do this, we asked Kuehne + Nagel to help us. Their team picked the parts up from the supplier in Germany, and then they shipped those parts to our plant. We didn’t spend many resources on warehousing. They simply picked up and shipped the component by truck. 

What is the team composition?

We mainly worked with their logistical team, which included a material planner who also served as our main point of contact. 

How did you come to work with Kuehne + Nagel Pty Ltd?

When we were planning to launch our project in 2016, we searched for a solid partner that could help us ship around Europe. My German boss recommended Kuehne + Nagel to me. To be honest, I didn’t like them at first, but my boss insisted that it was the right decision to hire them. From there, we gave them our requirements. Then, they gave us their quote. While they had a highly detailed website, we still had to discuss many things face to face or via telephone. After such discussions, we finally set an agreement and started the collaboration. 

How much have you invested with them?

In 2016, we spent around €1.5 million (approximately $1.7 million USD) for the air fleet, and this represented 20% of our total expenses. The remaining 80% was done through the sea fleet. For that year, our total spend was around €3 million (approximately $3.4 million USD). In 2017 and 2018, about 10% of the transportation was done by air freight for €600,000–€700,000 (approximately $700,000–$800,000 USD) per year. Our overall cost was around €2.5 million–€3 million (approximately $2.8 million–$3.4 million USD) per year.

What is the status of this engagement?

Our engagement lasted from January 2016–January 2020. 

RESULTS & FEEDBACK

What evidence can you share that demonstrates the impact of the engagement? 

My boss made the right decision in hiring Kuehne + Nagel. Their service levels were on par with industry benchmarks. In fact, they had a quicker lead time than their competitors. The typical time ranged between 1–2 weeks and 3–4 weeks, including customs clearance. However, Kuehne + Nagel could do shipments in 3–4 days.  

Moreover, they had a global network of facilities. They also had a professional team with a great experience. On top of that, the team had many digitization tools that let them deliver faster than their competitors; they used big data to support their work. Their average lead time by sea was one week and a half shorter than competitors, while their air fleet lead time was half a week to one week.

Further, their on-time to request delivery record (OTTR) rate was 93%, while their air freight rate was 95% — both higher than competitors. Meanwhile, damages happened many times to the goods, but Kuehne + Nagel’s quotation included insurance. When such damage happened, they sent experienced people to investigate on-site. They’d go to the supplier if the fault was on them; otherwise, they went to the insurer. 

How did Kuehne + Nagel Pty Ltd perform from a project management standpoint?

They had a great electronic data interchange system, which we could access using a username and password. It was a user-friendly project management system that was convenient to use. 

What did you find most impressive about them?

Their lead time and accuracy were impressive. If something happened, they reacted quickly. They’d come up with solutions and get us back on track. 

Are there any areas they could improve?

It would be perfect if Kuehne + Nagel could reduce their price; their price was 5%–10% higher than the market average. 

Moreover, they had great standard processes but they could be inflexible at times. For instance, if we wanted something beyond their standard processes, it could be difficult for them to adjust, especially if we weren’t a large customer. 

On top of that, their terms and conditions seemed unfair, which was the reason I didn’t like them at first. They said we had to sign a document if we wanted to do business with them, but many of the clauses within that document seemed unfair to me.