Shell brochure - July 2017

STOP. THINK. TRANSFORM.

PROJECT SPONSOR

STOP. THINK. TRANSFORM. Written by Wedaeli Chibelushi Produced by Charlotte Clarke

WE REACH BACK TO 2005, WHEN SHELL BEGAN A HUGE SUPPLY CHAIN TRANSFORMATION. HOW FAR HAS THE COMPANY COME? 80

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More upstream, profitable downstream”. In 2005, Shell used this mantra to distil its new strategy. With upstream initiatives, the energy and petrochemicals group searches and recovers oil and gas. Shell develops the way it refines and delivers products to customers via its downstream initiative. In short, Shell’s mantra means that if it boosts production, its income from refining will also go up.

A supply chain transformation was key to realising this strategy. As a result, Shell restructured its supply chain, with various end goals. These include standardising practises and technologies, generating stable cash flows and putting demand-driven best practices front and centre of operations.

12 years on from the new strategy launch, and Shell considers the supply chain transformation a success. It’s ready for the next step, i.e. transferring the new strategy to its operations in emerging markets, namely Asia. Shell’s transformation journey has been long, but it can be broken down into distinct parts:

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‘IMPROVING RELATIONSHIPS WITH SUPPLIERS WAS A KEY ASPECT OF SHELL’S TRANSFORMATION PLAN’

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3PL TO 4PL Before 2005, Shell was using third party logistics (3PL) to buy products. However, this meant that it lacked command of the procurement process.

Shell collaborated with Accenture to build a fourth party logistics operation (4PL), which Shell calls Logistics Management Services (LMS).

LMS supports Shell’s upstream operations, covering production, wells and projects. It is also a single-client platform, which provides a Shell-tailored solution. Furthermore, Shell is able

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Patrick Steppe, born in 1967, is chairman of the Board of Management of Lekkerland AG & Co. KG. In the position as Chief Executive Officer (CEO) he is responsible for sales and marketing, purchasing, category management of all product groups, strategy, business development, human resources (HR) and communications as well as the management of all national companies in the Lekkerland Group.

For more information please go to: www.lekkerland.com +49 2234 1821-0 | +49 2234 1821-445 | info@lekkerland.com

Changing together.

Growing together.

Shell and Lekkerland have been partners on an international level for more than 30 years. We talked to Patrick Steppe, Chief Executive Officer of Lekkerland AG & Co. KG, about the secret of successful cooperation like this.

What distinguishes the relationship between Shell and Lekkerland?

We both really want this cooperation to be successful and everybody involved does everything necessary to make it happen. One example are the international quality standards we set. We committed on these common standards and every Lekkerland employee in every country performs them precisely.

Change is normal.

To Lekkerland it is also important to continuously improve.

Change is normal. We therefore develop new solutions and services in order to support our customers even better. One example is multitemperature logistics that we introduced from 2012 on. Today, we are able to deliver all products – ambient, fresh and frozen – to Shell filling stations in just one stop. This reduces not only the kilometres driven, it also saves time and temporal expenditure for the shops.

Which additional services do you offer – to Shell and other customers?

Lekkerland is much more than just a wholesale and logistics partner. We offer solutions along the whole supply chain (order to cash process), including e.g. inventory management, purchasing, storage, reception and picking orders, distribution, service level monitoring and information flow. Of course, comprehensive consulting, optimising shops – e.g. through category management, shelf or range optimisation – or developing holistic shop concepts are also part of our services.

All services are tailored to meet the needs of our customers. As a 360 degree service partner we are able to offer Shell all product categories from a single source: tobacco, food, non-food, beverages, oils and lubricants and so on.

Depending on the needs of the Shell shops, we also deliver their own brands, e.g. oil. In addition, in some countries we support Shell with customised category management or the further development of food service offerings. And we are always there to consult with our long-term experience in the convenience segment.

Are there any new projects or services you currently develop for customers throughout Europe?

There always are. Lekkerland wants to offer solutions that allow

its customers to stay ahead of the competition. The aim is to make shops even more appealing for end consumers and thus successful.

We offer solutions along the whole supply chain.

One example are our new holistic shop concepts that we currently test in different countries.

The “Frischwerk” concept e.g. is a solution for filling station shops in Germany. The shops have a very attractive atmosphere and a design that is totally new for filling stations. We integrated a complete bakery and a broad range of fresh products as smoothies or salads.

There are also digital focus walls with advertising that changes depending on the time of day.

However, it is not only outer appearance that counts: The concept comprises all aspects that are important for the business, e.g. all hard and software, digital solutions to manage the shop, training sessions for employees, recipes for bistro products, marketing plans, category management, quality manuals and so on.

Your success is our motivation Lekkerland supplies about 90.000 filling stations, kiosks, convenience shops and quick service restaurants in Europe. We not only deliver the products but also develop tailor-made solutions - from holistic shop concepts to individual logistics services.

Our vision is to become the preferred 360 degree concept provider for all channels of on-the-go consumption and all aspects of the convenience business. The success of our customers is our motivation.

About 4,800 Employees

About 90,000 Points of sale in 6 countries

â‚Ź13 billion Revenues in 2016

For more information please go to: www.lekkerland.com

to maintain close control of the outsource provider. It is able to build long-term strategic relationships with the provider, granting access to the provider’s best people, technology and innovation. Ultimately, by losing its old practice and negotiating with Accenture, Shell was able to take back control of the business.

LEKKERLAND Lekkerland had been the supplier of many Shell filling station shops in the past already. As a result of the transformation, in 2007 Shell closed a framework contract with the German-based company as their wholesale and logistics partner in several European countries.. Almost ten years later, Shell and Lekkerland have now signed a new international framework agreement for six countries that includes supplying more than 2,500 filling stations across Europe.

Lekkerland delivers food, tobacco, and non-food products to Shell’s stores with the same quality standards throughout Europe. Depending on the country, Lekkerland also

provides support on matters such as category management and the further development of the food service offering.

“We are very delighted that our long-term partner Shell continues to place its absolute trust in us,” said Patrick Steppe, Chief Executive Officer of Lekkerland AG & Co. KG. On an international level, Shell is one of the largest customers of the 360-degree full-service concept providers for on-the-go consumption.

TECHNOLOGY Shell adopted an SAP and APO sales system as its single platform for supply chain planning. For its lubricants business, Shell worked with supply chain company E2open. E2open provided Shell with Demand Sensing (DS) and Multi-Enterprise Inventory Optimisation (MIO), the former able to adapt to shifts in consumer behaviour and market influences. From this, it produces the most likely prediction of future short-term demand.

On the other hand, MIO uses advanced mathematics and daily

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‘SHELL WORKS WITH A WIDE VARIETY OF SUPPLIERS, FROM HOUSEHOLD NAMES SUCH AS MARS TO LOCAL SUPPLIERS’

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granularity to produce more informed inventory targets. These targets mirror real-world market conditions, even in volatile markets. Combined, the solutions allow Shell to improve forecast accuracy.

Excess inventory has been reduced, which has in turn improved working capital use and free cash flow.

By using a single-instance ERP system, Shell was able to globally implement DS and MIO relatively quickly. This change had significant results. The majority of Shell’s finished product portfolio is now demand sense, while users can go about their daily and weekly planning tasks without disruption.

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SUPPLIER COLLABORATION Improving relationships with suppliers was a key aspect of Shell’s transformation plan. Shell works with a wide variety of suppliers, from household names such as Mars to local suppliers. In order to get the most out of relationships with these firms, Shell now holds comprehensive internal reviews on how to improve current situations. Additionally, the company developed the Shell Diverse Supplier Pipeline Management System in 2014. The programme aims to make sourcing easier and more transparent for ethnic minority and female-owned businesses and smaller potential suppliers. If a supplier meets Shell’s procurement needs, the system records basic details about the supplier into the Supplier Pipeline database and sends the potential vendor a link to add more information.

This technology also tracks the progress made by diverse businesses introduced to Shell stakeholders.

Prelude FLNG, a floating liquefied natural gas platform in Australia, provides a modern example of Shell building effective relations with suppliers.

Shell built effective bonds with main contractors to design and build this ground-breaking project.

Through its transformation, Shell has proven how important supply chain is to wider company changes. By restructuring its supply chain, it has been able to demonstrate “more upstream, profitable downstream” in action. The company has modified its supply chain in several key areas, and thus primed it to make huge strides in Asia and beyond.

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SHELL Carel van Bylandtlaan 16, 2596 HR, The Hague, Netherlands Tel: +31 70 377 9111 www.shell.com