MARIT. POL. MGMT.

, OCTOBER–DECEMBER 2003
VOL. 30, NO. 4, 305–320

The changing role of ports in supply-chain

management: an empirical analysis

VALENTINA CARBONE
INRETS—The French National Institute for Transport and
Safety Research, 2, av. Du Général Malleret Joinville, F94114,
Arcueil Cedex, France

and MARCELLA DE MARTINO

CNR-IRAT, National Research Council, Institute for Service Industry
Research, Via M.Schipa 115, 80122, Naples, Italy

As integrated supply-chain management (SCM) is now at the epicentre of

business transformation, firms are breaking down boundaries between internal
functions, as well as between the enterprise itself and key partners in the value
chain (e.g. customers, distributors, suppliers and carriers). One of the main goals
of such new management approach is to get everyone in the supply chain into
a common platform of logistics transactions and information systems.
Against such background, the aim of this work is to analyse how and if port
operators can face the challenge of higher integration, on the assumption that
the higher the integration between the actors the higher the competitiveness of the
whole supply chain.
Accordingly, we adopted an SCM approach in the analysis of the port of
Le Havre in Renault’s supply chain. More specifically, we referred to the
Lambert tri-dimensional model based on supply chain’s structure (actors), key
business processes and links between actors. The field work—which mainly
consisted of semi-structured interviews to Renault, logistics and port operators,
and, finally, to the Le Havre Port Authority—was crucial to gather the needed
information.

1. Introduction
Ports have been natural sites for transhipment in order to transfer goods from one
mode of transport to another. They have historically provided the link between
maritime and inland transport, and the interface between the sea and rivers and
roads and railways.
At present, ports play an important role in the management and co-ordination of
materials and information flows, as the transport is an integral part of the entire
supply chain. The objectives thus become to create synergies, as well as converging
interests, between the players of port community in order to guarantee reliability,
continuous service and a good productivity level. It is a fact that in the area of
maritime transport, reliability and productivity are collective concepts stemming
from a multiplicity of contributors.

Maritime Policy & Management ISSN 0308–8839 print/ISSN 1464–5254 online # 2003 Taylor & Francis Ltd
http://www.tandf.co.uk/journals
DOI: 10.1080/0308883032000145618
306 V. Carbone and M. De Martino

In order to develop themselves as logistics platforms, ports have to simultaneously

work in several directions, by also taking into account the requirements of the
senders and receivers of goods as they become their business partners in addition
to the traditional ones such as the shipping companies, terminal operators, forward-
ing companies, etc. The requirements for seaport services are growing accordingly:
physical accessibility from land and systematic organization of the information flow
are decisive factors for the industry with regard to the choice of a seaport [1].
Subsequently, the competitive position of a port is not only determined by its
internal strengths (efficient cargo handling and hinterland connections) but it is also
affected by its links in a given supply chain. As a consequence, the risk for ports of
losing important customers can derive not only from deficiencies in port infrastruc-
tures, terminal operations and inland connections, but also from the customer’s
service network reorganization and its entry into new partnerships with logistics
services providers, which may be using a different hub. In other words, port
competitiveness is becoming increasingly dependent on external co-ordination and
control of the whole supply chain.
We can, therefore, interpret a port as a member of a supply chain. In this purpose,
the port is considered as a cluster of organizations in which different logistics and
transport operators are involved in bringing value to the final consumers. This value
comes into play when a port operator or, in general, a logistics supplier goes
beyond the mere transport of merchandise, which could be defined as a basic
service, and provides a package of logistics services differentiated on the basis of
customer’ requirements. A value adding activity is, therefore, an activity along the
chain that adds value to the product or service and which the final customer is willing
to pay for.
In a wide sense, ports are complex entities supporting the procurement of raw
materials, the manufacturing and the distribution of finished goods. They are poten-
tial members of different supply chains. Their contribution to the satisfaction of
specific customer’s requirements (and therefore their potential role in a given supply
chain) will depend on:
(1) The availability of efficient infrastructures and inland connections, as part of
a global transport system.
(2) The ability of logistics and transport operators to contribute to the value
creation and to accomplish also the qualitative attributes of demand (reli-
ability, punctuality, frequency, availability of information, and security).
This paper deals with (2) i.e. the providers’ behaviour for the satisfaction of
customer needs, leaving aside the role of the port authority (1) in shaping port
features through investment decisions and land management and subsequently in
making it attractive for specific supply chains.
In particular the aim of this work is to analyse how port operators are involved in
a given supply chain. The adopted methodology is based on a supply-chain manage-
ment (SCM) approach.
We describe the integration process undertaken by different port operators in
relation to the focal firm of the automotive chain, taking into consideration
(among other variables) the kind of services offered by port operators, namely
their belonging to the cargo handling system, the more extended transport system
or the logistics system.
 The changing role of ports in supply-chain management 307

The kind of supplied services determines in which measure a port creates value in
a supply chain and, in perspective, if it could offer more value, for example investing
in a certain activity more than in another one.
Section 2 deals with SCM definition and the Lambert tri-dimensional model.
Section 3 provides an overview of both the major trends taking place in the
automotive industry and the ‘make or buy’ strategies undertaken by auto-makers
in managing logistics. In section 4, we describe the potential role of ports in the
automotive supply chain, whereas in sections 5 and 6, after illustrating the Lambert
model which has been adapted according to the research aim, we present the main
finding of the empirical analysis.

2. SCM definition and the Lambert tri-dimensional model

One of the most important changes in modern business management is that indi-
vidual firms no longer compete as solely autonomous entities, but rather as supply
chains. Martin Christopher [2] suggests that the supply chain is a network of organi-
zations that are involved, through upstream and downstream linkages, in the
different processes and activities that produce value in the form of products and
services in the hands of the ultimate consumer.
The management of multiple relationships across the supply chain is being
referred to as SCM; strictly speaking, the supply chain is not a chain of businesses
with one-to-one, business-to-business relationships but a network of multiple busi-
nesses and relationships.
A comprehensive definition of SCM is proposed by the Global Supply Chain
Forum. It clearly highlights the importance of the integration process in supply
chains: ‘. . . the integration of key business process from end user through original
suppliers that provides products, services, and information that add value for
customer and other stakeholders’ [3].
A conceptual framework to deal with the complexity of SCM issues has been
defined by Lambert [4] and consists of three inter-related elements of the supply
chain:
(1) the structure, i.e. the member firms and their links;
(2) the business processes, i.e. the activities that produce value to the customer;
(3) the management components, i.e. the variables by which the integration can
be realized.
The SCM network structure describes the system of relationships between
suppliers and customers at each level of the supply chain. Not all the links through
the supply chain are relevant for the focal firm and, in the choice of partners,
the management has to determine which members are critical to the success of the
company and therefore have a crucial role in bringing value to the customer. The
focal firm of the supply chain will choose companies who carry out value-adding
activities (primary members to differentiate from supporting members) as they affect
directly the final value delivered to a specific customer or market [5].
SCM involves the co-ordination of activities within the firm and between
members of the supply chain through a set of business processes. The members of
The Global Supply Chain Forum identified eight business processes that should be
implemented within a firm and then linked up, as appropriate, with key supply-chain
members: customer relationship management, customer service management,
demand management, customer order fulfilment, manufacturing flow management,
308 V. Carbone and M. De Martino

procurement, product development and commercialization, and returns. Anyway,

business processes that are critical or beneficial to integrate and manage between
companies will likely vary. In any case, all functions affecting the product and
providing information must work together. As a consequence of the choice of
outsourcing rather than managing in-house specific activities (or business processes)
the need to co-ordinate supply-chain processes increases since the focal firm becomes
more dependent on suppliers’ behaviour.
Finally SCM management components are the managerial variables by which the
business processes are integrated and managed across the supply chain. Lambert
divides management components into two groups: the first group, physical and
technical, includes the tangible, measurable components, such as the management
of product and information flows and the related activities [6]. The second group is
composed of the managerial and behavioural components such as organizational
culture, the network of relationships between the firm and the other actors of the
supply chain, the connected information sharing, etc.

3. The automotive industry: trends and characteristics

In the last decades, rapid changes and developments have marked the automotive
industry at different levels: consumer expectations, legislation, and business models.
Consumers have developed particular expectations in what concerns vehicle
features, performance and safety. In addition to the basic models, there is a myriad
of features that can be added to each of the models, in order to satisfy the increasing
customers’ needs for diverse cars.
Government trade, safety, and environmental regulations establish incentives and
requirements for modernization and change in design or production. Competitive
rivalries and corporate strategies provide equally important impetus for research,
design innovations, and changes in the manufacturing process. Moreover, in any of
the Triad regions (Western Europe, Japan, and USA) auto-makers have been facing
a mature market for the past 10 years, with stagnant demand, product proliferation,
and hard price competition [7].
In this environment, IT (information technology) and telecommunications are
having a great impact on the structure of the industry. On the supply side, they
are speeding up the manufacturing process, increasing the amount of product
customization which the manufacturer is prepared to offer, reducing product life
cycles and expanding the area from which materials can be sourced. The need for
systems compatibility is also reducing the number of viable manufacturer–supplier
partnerships, and leading to closer long-term relationships. On the demand side, the
main effect is the raising of consumer awareness for price and service quality [8].
Despite increase in product variety and advance in technology, the industry focus
on lowering costs has never been as acute as today. In fact, for an increase in car
sales, it is required to meet all marketing and innovation challenges, while keeping
costs down. All automakers are constantly under pressure to identify consumer
preferences, national biases, and new market segments where they can sell vehicles
and gain market share.

3.1. Automotive logistics: make or buy strategies

Traditionally, the automotive supply chain was organized in tiers. Auto-makers
designed and assembled the car. First tiers manufactured and supplied components
directly to the auto-maker. Second tier produced some of the simpler individual
 The changing role of ports in supply-chain management 309

parts to be then included in a component manufactured by a first tier and, finally,

third and fourth tiers mostly supplied raw materials.
The logistics function was directly controlled by the auto-makers; therefore they
developed expertise and logistics know-how in support of their industrial and
commercial activities. As these tasks became more and more complex and distinct
from auto-makers’ core business, some subsidiaries have been created inside the
groups in order to re-organize and manage the logistics. For example, Renault
created CAT (Compagnie d’Affrètment et de Transport) in 1957, in order to trans-
port its vehicles on an international scale.
The latest developments in the automotive industry revolving around critical key
elements such as globalization, concentration on core competencies, competitive
pressures, as well as alliances and acquisitions, have redefined the strategic impor-
tance of SCM.
At present, European auto-makers vary in their attitude towards the outsourcing
of logistics. Some companies, such as Renault and Ford, have made a large commit-
ment to the use of third-party logistics managers [9], but for other companies, such
as Toyota or VW, logistics is a strategic know-how that affects the productivity of
the assembly process and the reliability and security of deliveries. It is, therefore,
imperative to keep logistics functions largely in house.
As a result, the choice to outsource or manage in-house the logistics activities has
led to four different strategies [10]:
. The internal solution: a subsidiary is created, that regroups the set of the
logistical tasks and arrange logistics services by using its own means
(warehouses, containers, and fleets of trucks and wagons). By this way, the
auto-maker prefers to manage logistics in house (e.g. VAG or PSA [11]).
. The subcontract of the execution tasks: the auto-maker defines logistics
solutions while subcontracting the transportation outside the group (e.g.
Toyota).
. The outsourcing to a privileged supplier: the auto-maker develops with an
independent logistics provider a long-term relationship for transport and
other specific logistics services (e.g. Renault).
. The turn to a logistics integrator: the auto-maker contracts with a logistics
provider the organization and management of logistics (e.g. Ford).
These four strategies imply a growing degree of integration between the auto-
maker and a third party logistics providers [12]. Generally, no auto-makers enrol
completely in one only of these strategies, they often combine two or three of them,
but with a dominant strategy [13].
Moreover, auto-makers still tend to split the supply chain in two halves (inbound
flow of components and outbound flows of finished vehicles) for outsourcing
purposes.
So far, attempts to reduce production costs have concentrated on the ‘upstream’
processes before the car rolls off the assembly line, as this is where two-thirds of
the delivered cost is incurred [14].
To be able to focus more on car-related services and to cope with the huge costs
associated with an ever growing number of new modules and systems, auto-makers
are becoming less involved in manufacturing and assembly, passing the responsibility
of developing, manufacturing and assembling important section of the car to a few
first-tier suppliers [15].
310 V. Carbone and M. De Martino

In this process, first-tier suppliers organize the flow of components from lower
level suppliers, taking, effectively, an important logistics management role in the
supply chain. As a result, first-tier suppliers are gradually becoming system integra-
tors [16], blurring the boundary between the manufacturing of parts and the
marshalling of components.
Concerning ‘downstream’ logistics—the distribution of the finished car to the
customer—it presents a more differentiated organization, in part because of the
existing regulatory framework [17] which gives auto-makers less power over their
dealers than over their suppliers. This has brought auto-makers to have different
degrees of control over the distribution of their vehicles, according to the type of
distribution channel: quite a low degree of control over independent franchised
dealers, the highest degree of control is in the case of direct ownership of retail
outlets.

4. The potential role of ports in the automotive supply chain

In this section, we consider the inter-relation between the cargo handling system,
transport system and logistics systems, in order to define to which extent a port
creates value in a supply chain.
Figure 1 has to be interpreted starting from the lower part (cargo handling
system, part of the transport system) which shows the traditional function and
role played by ports. The second step, at the upper level, that is the logistics system,
is the area where the added value services can display their effectiveness, thus giving
a port a prominent role in a given supply chain.
The cargo handling system consists of all the activities, such as pilotage, towing
and stevedoring, that facilitate the loading and unloading of cargoes. Cargo han-
dling is strongly linked to the transport system and is also part of the logistics
system, since logistics encompasses transport.
The necessity of temporary storage in ports and the presence of efficient transport
services (shipping and intermodality) make ports potentially attractive locations for
logistics activities.

Components VAS Storage Assembling Customer

Logistics system

Transport system

Shipping Cargo handling Delivery

Cargo handling system

Pilotage Towing Unloading Storage Loading

Figure 1. The relation between cargo handling, transport and logistics [18].
 The changing role of ports in supply-chain management 311

As a result, the transport chain can become more and more integrated within the
production system and, as far as international trade is concerned, within the trading
pattern itself. This is a concept under which the transportation and distribution
activities are considered as a sub-system of the whole production system. Indeed,
ports are more and more turning into integrated transport centres and logistic
platforms for international trade.
Once depicted general trends for ports, meant as logistics platforms the logistics
features and constraints of our attention is now turned to the automotive supply
chain.
There are principally two types of cargo in automotive supply chains: individual
parts or components on the one hand and finished cars on the other hand. Parts or
components are mainly shipped in standardized transport equipment such as con-
tainers or swapbodies. Until recently, finished cars have rarely been transported in
containers. In most of the cases they are handled with special land and sea transport
equipment such as carrier vessels or specially designed trucks or railway wagons.
With regard to these two types of cargo, it is important to underline that ports
have mainly a decisive role in the movement of finished vehicles. This is due to the
fact that most of the value added services in port operations depend on the need for
storage of imported vehicles in the port area. These services are generally related to
damage inspections, waxing and dewaxing, polishing, up to customization and body
conversion [19].
Procurement and pre-assembly stages, however, are becoming of considerable
significance and may well shape the future development of ports. For example,
at Seaport Terminals/Katoen Natie, in Antwerp, the value added services go
further back down the supply line and include pre-assembly for car dashboards
and wiring [20].
As an additional example of the increasing role of ports in the automotive trade,
seaports will even dissemble imported cars for special export markets, in order to
avoid high-tariff barriers, and reassemble them later.
With increasing modularization, port operators will benefit from being involved
in several stages of overseas or short sea supply chains. The same imported
components or parts are shipped out as larger components and then back again as
a complete module or as finished cars (see [1]).
As far as auto-makers are concerned, they will continue to find ports attractive
until new value added services can be conveniently supplied without any increase in
delivery times.
All these considerations lead us to argue that the improvement of operational
efficiency of the port is not enough to satisfy both the port users and the final client
of the supply chain. A comprehensive approach is needed to highlight the contribu-
tion of both the operational system and the managerial organization within the
entire supply chain.

5. The empirical analysis

This work is an attempt to analyse how port operators [21] are involved in a given
supply chain according to a SCM approach. The revised Lambert model will be
presented, adapted to better analyse the contribution of the port of Le Havre to
the value creation within the Renault supply chain passing through it. Focus will
primarily be on managerial components encouraging the integration process between
the actors of the supply chain.
312 V. Carbone and M. De Martino

5.1. Lambert revised model: a process approach

The first step of the research was the definition of key port operators involved in
the Renault supply chain. In this purpose, the car manufacturer was directly
interviewed, through a semi-structured questionnaire, in order to define the charac-
teristics of the specific supply chain and to distinguish port operators with whom
the focal firm (car manufacturer) shares business processes.
The second step was the identification of key business processes to develop the
analysis. Basically, we adapted the processes identified by the members of the Global
Supply Chain Forum, focusing on: procurement, inventory management, manu-
facturing management, physical distribution and commercial practices (customer
services and marketing).
Once the automotive supply chain under the car manufacturer perspective had
been traced and key business processes identified, another questionnaire was set up
in order to analyse the level of integration achieved for each business process (SCM
components). The literature suggests different indicators for the analysis of the level
of integration. To the aim of this paper, the most suitable variables to investigate
port operators’ behaviour in the Renault supply chain were chosen with the support
of industry experts:
. Relationships: which kind of relationship exists between the port operators and
the focal firm?
. Supplied services: what services are supplied in order to satisfy customer
requirements?
. Information and communication technologies (ICTs): which kind of informa-
tion and communication technologies are used for the integration among the
actors?
. Performance measurement: which key performance indicators (KPI) are shared
by the actors of the supply chain?
As is evident from the choice of the variables, focus was on the managerial and
behavioural rather than on the physical and technical components proposed by
Lambert. This is due to the fact that this analysis was centred on companies’ behav-
iours and strategies for the service provision.
In particular, the questionnaire was administered to the following port operators:
shipping companies, terminal operators and other logistics providers.
All the information was subsequently used to fulfil an SCM matrix which describes
port operators’ responses to customer needs, through key supply-chain business
processes. It allowed us to have insights on port operators’ strategic behaviours.

6. Main findings of the survey

Taking into account the competitive pressures affecting the automotive industry, we
present the results of the empirical analysis concerning the Renault supply chain [22]
and the Le Havre port operators. First, we describe the Renault network structure
(the key members), giving particular attention to port operators. Second, we analyse
how Renault manages key business processes along the supply chain (make or buy
strategy). Finally, as our assumption is that the higher the level of integration among
the actors of a supply chain the higher the performance for the entire chain, in the
third paragraph an analysis of the integration level undertaken by port operators is
presented through specific supply-chain management components.
 The changing role of ports in supply-chain management 313

6.1. Renault network structure

To the aim of this research and in coherence with the underlined auto-makers’
strategies in managing the supply chain, we split the supply chain into two halves:
inflow of components (including internal flows between plants located in different
countries) and outflow of finished vehicles.
Spare parts and after-sales services have been left out of the research because they
are generally provided by different actors in competition: auto-makers and their
franchised dealers, independent garages, repair centres, components suppliers,
service stations and hypermarkets, such as Carrefour, and ‘fast-fit’ service chains
such as Kwik Fit.
Moreover, consumer needs in terms of quality service and timing seem to call for
different critical success factors to be competitive in such a part of the supply chain.
A specific analysis would be needed.

6.2. Renault business processes

In this section, the features of Renault’s business processes are analysed and their
governance structures intended, within this context, as make or buy strategies.
In particular, the aim is to describe how Renault manages logistics activities along
the supply chain and what kind of relationships have been set up with the other
actors in order to bring the highest customer satisfaction.
All the information were gathered by direct interviews with Renault managers
and suppliers and then organized in a way to describe the main features of Renault
key business processes.
The matrix presented is not an exhaustive description of Renault’s activity;
it rather supplies a basic description of Renault requirements for each process (see
table 1). It has then been used for screening port operators’ contribution to the
management of the supply chain.
Procurement of assembling plants follows different logistics schemes depending
on the constraints and the specific characteristics of the car components and parts.
The need to respond to a sophisticated customer demand while keeping down logis-
tics costs has led Renault to:
. the set-up of direct relationships with first-tier suppliers; these are in charge of
the quality of the components and of deliveries to the logistics platforms;
. the creation of Grand Couronne logistics platform for the delivery of car
parts and components and assembly, to the European and international
plants.
The inventory management deals with the minimization of the stock level and
relating costs of car components in the production process. It also deals with the
storage of new vehicles. As far as car components are concerned, slow movers (like
optional, air condition and ABS) are important for the customization and differen-
tiation of cars, and for the enlargement of the number of items in some car produc-
tion lines. In order to overcome the tension between the need for car differentiation/
customization and the related higher inventory cost (due to the slow rotation),
Renault has adopted the following solution which reshapes procurement manage-
ment: the use of a logistics platform that allows the optimization of the transporta-
tion capacity (by the achievement of economy of scale) and an efficient scheduling of
the transport services. In relation to fast movers (standardized components such as
wheels, pneumatics, glasses, etc. necessary for the realization of ‘lean manufacturing’
314 V. Carbone and M. De Martino

practice) the minimization of the inventory costs is realized by the use of logistics
platforms, when suppliers are multi-clients and have a large size. On the contrary,
when suppliers have a small size, they are generally located close to the plant. As far
as finished vehicles are concerned, storage in the port of Le Havre is not directly
managed by Renault, being outsourced to an external logistics service provider.
Regarding manufacturing management, Renault has been pursuing a reorganiza-
tion of its vehicle portfolio around product platforms and car modules and systems.
By focusing on common platforms and interchangeable modules, Renault tries to
deploy new solutions across the whole product range in a faster and less expensive
way [24]. Moreover, to be able to focus more on car-related services and to cope with
the huge costs associated with a great number of new modules and systems, Renault
is becoming less involved in manufacturing and assembling, passing the responsibil-
ity of developing, manufacturing, and assembling important sections of the car on to
its first-tier suppliers (long-term partnerships with each major module supplier).
In relation to the physical distribution, in 2001 Renault stepped up its efforts to
take costs out of distribution by restructuring the network and making the existing
system more efficient. Cutting distribution costs by enhancing the network’s compe-
titiveness is a major strategic imperative to adjust to the emergence of new channels
of distribution such as e-commerce, and to prepare for changes in the current
distribution system. It is possible to consider two strategic solutions for vehicles
distribution, depending on the final markets:
. In Europe, Renault has a long-term, exclusive contract with CAT.
. Outside Europe, alliances with local auto-makers are being developed. In
particular, Dacia supports the development of Renault in Romania, Samsung
Motors in Korea and Nissan in Mexico, Central America, Japan and Asia
Pacific.
Finally, in relation to the commercial practices (customer services and sales),
Renault’s objective is to reduce the time needed to develop a new vehicle while
improving quality and accelerating innovation. This is of cardinal importance, not
only financially but also commercially, since shorter development times enable the
producer to respond more quickly to shifts in demand. To achieve this objective,
Renault has defined a programme (The New Distribution Project, deployed in 1999),
aimed at securing and shortening the time between the day the customer places an
order (except for a new model during the launch period) and the delivery date. At the
same time, the programme is intended to improve the assortment and promote the
diversity of the Renault product range.

6.3. Port operators response: the SCM components

Taking into consideration the Renault business processes features, we investigated
port operators’ response to such requirements through specific variables: relation-
ships, supplied services, information and communication technologies (ICT) and key
performance indicators (KPIs).
In this purpose, we administered a questionnaire to the following operators:
. CMA-CGM, a liner shipping company, in the procurement process of car
components and for the export of Completely Knocked Down (CKDs);
. CKD Grand Couronne logistics platform for the collection and assembling of
car components (CKD) and for their export via the port of Le Havre;
 The changing role of ports in supply-chain management 315

. CAT, a logistics operator, for the distribution of new vehicles in Europe;

. HUAL-Cetam, a shipping company, specializing in the maritime transport of
new vehicles;
. SETH, a terminal operator, for the storage of new cars in the port of Le Havre.
All the information was complemented by direct meetings with industry experts
and managers of the port of Le Havre. The final output has been the realization of
an SCM matrix, providing the needed information to test the Lambert revised model
(Table 2).
The matrix shows Renault’s supply-chain structure, the type of relationships
among the actors of the chain, the supplied services for each business process, the
ICT solutions set up for each interface and the set of key performance indicators
adopted by each of the actors.
Each box has to be interpreted in the light of the main characteristics presented in
Table 1, in order to evaluate the contribution of port operators to the management
of Renault key processes. The matrix can be read per lines, except for the final cells—
the column KPI—which will be commented on in the end of this section, as they are
better understandable via a vertical reading. The matching of the focal firm require-
ments with the operator response, in terms of services, relations and ICT solutions
allows us to perceive the port operators’ contribution to the business management.

Table 1. Renault’s business processes: main features.

SCM approach
Key supply-chain business processes
Renault features

Car components: direct relationships with first-tier suppliers.

These are in charge of the quality of the components and of
Procurement delivery times to the logistics platforms
CKD: Grand Couronne logistics platform for the delivery of car
parts, components and its assembling to the European and
international plants
Inventory Minimization of stock level and related costs:
management – slow movers: logistics platform;
(components – fast movers: logistics platform, when the supplier is of a large
and parts) size; location close to the assembling plant, when the supplier is
of a small size
Long-term partnerships with module suppliers
Manufacturing Use of common plants for the minimisation of the production
management costs (for example Nissan assembling plant in Mexico)
Postponement [23]: deferred car customization close to the final
market
Inventory management Minimisation of stock level and related costs through storage
(vehicles) decentralisation downstream, in the supply chain (e.g. in the
port of Le Havre)
Physical distribution Outsourcing to few logistics providers
Privileged logistics supplier for the European distribution, in
charge of transport organization: different relationships with
ocean carriers and other logistics and transport providers
Commercial practices Reduction of lead-time
Improvement of quality
 316
Table 2. Port operators’ response to Renault requirements: the SCM matrix.
SCM approach
Key supply-chain business processes
Actor Supply-chain management components
interviewed
Relationship Supplied services ICT KPI

Procurement CMA-CGM Spot (slot Maritime EDI Transport and

agreements) Transport handling costs;

V. Carbone and M. De Martino

transit time
Inventory Grand Couronne Fully integrated Collection and Inventory mgm Reliability;
management logistics platform in Renault Group assembling system; EDI and total logistics
(components of car components; intranet costs
and parts) Export of CKD
through the port
of Le Havre
Manufacturing No current involvement of port operators (except Axial for Nissan vehicles)
management
Inventory SETH Long-term contract New car storage EDI; tracing Transit time;
management through CAT and tracking Consignment
(vehicles) security
CAT Long-term Door-to-door EDI; tracing and Transport and
contract services; storage; tracking; Custom handling costs;
Physical stock control; mgmt system Availability of
distribution damage inspection real time
information.
HUAL-Cetam Short-term (1 year) Maritime transport; EDI; tracing and Transport and
contract through inland transportation tracking handling costs;
CAT Long reliability
relationship
Commercial No current involvement of port operators
practices
 The changing role of ports in supply-chain management 317

Procurement is managed in-house (vertical integration) and only the maritime

transport is committed to different liner shipping companies. In fact, there are no
long-term relationships with the shipping companies but spot contract (generally slot
agreements for 1 year) directly managed and controlled by Renault’s deep-sea and
short-sea operation departments. As a response to this vertically integrated struc-
ture, shipping lines concentrate on port-to-port services by the supply of transport
services in specific maritime routes [25]. Moreover, the high Renault contractual
power has led liner shipping companies to keep down the freight rates while respect-
ing quality attributes of the services.
In the inventory management, there are two main operators: CKD Grand
Couronne logistics platform, for the car components and CKDs; CAT, for the
finished vehicles. In relation to the car components and CKDs, Renault keeps the
co-ordination of the import and export flows in-house, through the logistics plat-
form. Only the execution of transport is outsourced to specialized providers. Grand
Couronne logistics platform organizes the procurement flows of Asian, Mercosur
(mainly Brazil and Argentina) and Mexican assembling plants by scheduling their
orders and production processes on the basis of delivery times for the car compon-
ents and parts.
With reference to finished vehicles, CAT is in charge of the storage and European
distribution on the basis of an exclusive long-term contract. SETH, a company
belonging to CAT, performs the management of the interface between the maritime
and the inland transport at the port of Le Havre.
In the manufacturing process, there is no direct involvement of the interviewed
port operators, whereas component and part suppliers show a high level of integra-
tion with Renault, concerning such a process. This seems to be a consequence of
the position of the port of Le Havre with respect to the final destination market.
In particular, vehicles produced in France for the national market are delivered by
road and railway transportation, bypassing the port of Le Havre, whereas vehicles
produced in France for other final markets are exported through the port of
Le Havre. As the need to defer vehicle’s customization close to the final market
leads to development opportunities for arrival ports, referring to the current flow
of finished vehicles through the port (export rather than import flows), Le Havre is
not in the position to profit from such opportunities.
Concerning the physical distribution, CAT will have a predominant role until the
expiry of its exclusive contract. CAT is in charge of the Renault vehicles distribution,
by organizing the final delivery to the dealers. Concerning the maritime transport
within the delivery flow, it is realized by a network of relationships with shipping
companies and other transport providers. HUAL-Cetam supplies the maritime
transportation between European and Mediterranean countries and overseas.
CAT is the main customer of HUAL, which is strengthening its expertise in the
automotive supply chain, by setting up strategic alliances with specialized providers.
These two operators work together for the satisfaction of Renault’s requirements,
even if CAT still has a monopolistic position in the management of the physical
distribution.
Finally, we develop some considerations on the key performance indicators,
reported in the last column of the matrix, as they allow the reader to understand
if there is a mutual sharing of a system of KPI, eventually conceived jointly by two or
more organizations, or if, on the contrary, a segmented and individual fixation of
indicators characterizes the supply chain.
318 V. Carbone and M. De Martino

What is evident from our survey is that Renault presents two different governance
structures in the management of the supply chain: vertically integrated in the
inbound logistics while more flexible in the outbound. This has different implications
on performance indicators adopted by the operators involved in each business
process:
. In the procurement, the need to keep down the freight rate and reduce the
transit time is the main competitive factor in the supply of transport services.
This is a consequence of the low outsourcing degree of Renault.
. In the car components and parts’ inventory management, reliability and mini-
mization of the total logistics costs are two factors of crucial importance. As a
consequence, Renault decentralized the inventory management to Grand
Couronne logistics platform, also in charge of the flow synchronization
between overseas assembling plants and first tier suppliers. As far as finished
vehicles are concerned, the responsibility for the inventory management is in
the hands of CAT. Transit time constraints and consignment security affect
storage activity (SETH), as they can compromise just in time delivery to
dealers.
Finally, in the physical distribution it is possible to highlight two different situa-
tions: one related to CAT, and the other related to HUAL-Cetam, as main CAT
transport providers. For both operators, the minimization of the transport and
handling costs is of fundamental importance but CAT’s performance is also based
on the availability of real-time information due to its responsibility in organizing and
managing the physical distribution.

7. Conclusion
The innovative aspect of the present work is of a methodological nature, as it was
attempted to assess the SCM assumption on a specific case. An analytical model was
adapted for the study of the actors’ behaviour in supply-chain management to the
specific context of the Renault automotive supply chain involving the port of Le
Havre. Due to the complex nature of a port, from a managerial and an entrepre-
neurial point of view, we analysed the role of each of the operators in the very supply
chain.
Accordingly, the main results of the research consist in some theoretical premises
for an innovative analysis of ports in supply chains, on the basis of the organiza-
tional and managerial approaches. The current state of knowledge on maritime
transport and ports appears to be modest as far as business economics research is
concerned. In particular, scientific publications and available techniques refer sub-
stantially to transports and to industrial economics, while most of the empirical
analysis have been developed at macro-economic level. Conversely, the business–
organizational insight is poor.
The chosen methodology was also consistent with the current evolution of inter-
national maritime trade patterns, which is giving rise to the ‘third generation port’, a
dynamic node in international production and distribution network. The claim that
a port has gained the status of a crossroad between the production and the distri-
bution spheres calls for higher integration with the main customers, both port direct
users and final clients.
Nevertheless, the present contribution is still lacking in both further theoretical
validation and wider field testing.
 The changing role of ports in supply-chain management 319

Concerning the theoretical issue, our research is exclusively focused on the supply-
chain actors and their behaviours, in terms of supplied services, mutual relationships,
ICT systems and types of performance measurements. The further step should be the
definition of an economic evaluation, via some performance indicators for the whole
supply chain. Without ‘quantification’ no comparison is possible between ‘inte-
grated’ and ‘fragmented’ supply chains. In the same way, a port cannot appreciate
in a thorough manner the interest in investing and developing a given supply chain,
if a cost analysis for each elementary activity within the port is not developed,
according to a comparative approach with other substitutable supply chains.
With regard to the field test, the area of investigation was limited to some specific
segments of a supply chain. A wider analysis, extended to the rest of the supply chain
could allow a better understanding of the dynamics of relationships, of the integra-
tion levels, and of the performance indicator, for a general optimization of the entire
chain, instead of a partial one. Subsequently, a comparative analysis of two different
supply chains passing through the same port could permit a profitable benchmarking
aimed at the identification of the proper managerial model. Such a benchmarking
could also be useful for the Port Authority in the decisions relating to infrastructure
investments, their hinterland connections and land management.

Acknowledgements
This study was only made possible through the co-operation of many industry
experts practitioners and researchers, all of whom we would like to thank for their
time and support in assisting our research.

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320 The changing role of ports in supply-chain management

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