The Lehman Wave
Investigating what is happening in the Financial Crisis
By Robert Peels
LogiChem 2011 will be the event's tenth anniversary and an opportunity for the most senior chemical supply chain & global logistics directors from the European chemicals community to come together once again share experiences, make new contacts and benchmark the latest chemical supply chain initiatives.
Not only will LogiChem 2011 be a chance for the chemical industry to reminisce about the last ten years but an opportunity to shape the next decade. To celebrate a decade of LogiChem, there will be an exciting three day programme filled with networking opportunities in our new location, Antwerp.
Call Girls in Dwarka Mor Delhi Contact Us 9654467111
Chemical Supply Chain
1. 0
The Lehman Wave
Investigating what is happening in the Financial Crisis
Robert Peels, April 2010
Logichem
Presentation Clearing the Fog Robert Peels
2. Observations in Quarter 4, 2008 1
Normal retail sales levels.
GDP forecast -/- few %
Construction continuing
2007
2008
2009
Sales went down very deep
Media, Banks, Cars, Stock
markets
Consumer confidence
Commodity prices
Presentation Clearing the Fog Robert Peels
3. Hypothesis in December 2008 2
The strong dip in demand for industrial products
in Q4 is caused by de-stocking, triggered by
bankruptcy Lehman brothers mid September.
Resin Paint Parts OEM Retail
If a value chain is 250 days long and de-stocking is 12%, a whole month
is taken out of the chain, thus causing a 30% dip during three months.
Presentation Clearing the Fog Robert Peels
4. Checking 3
• Telephone interviews of 50 value chain partners (Jan 09).
• Quarterly reports companies.
• Survey Newspaper under 500 companies (Oct 09).
• US Census info.
Presentation Clearing the Fog Robert Peels
5. Retail vs Manufacturing
(US Census Bureau)
Normal 10 4
5
End-market 0
-8 oem
d elta% vs 2007
-5
v
ju l
ju l
ja n
ja n
p
ar
ar
ay
ay
no
se
m
m
m
m
-15 parts -10
-15
-20 paint
-20
-30 resin -25
-30
Jan 2008 - July 2009
retail manufacturers
A telephone survey under 50 value chain partners in In the USA the dip for manufacturing is much deeper than
JanuaryTurnover development of 125 companies depends on their
was the first confirmation that cumulative de- for retail Philips
stocking caused the dip from the end-market
distance without seasonal effect
(Newspaper survey)
20%
0
pre-crisis Dip Now
-5 10%
( d e lta v s 2 0 0 6 )/Q 1 0 8
-10 0%
C h a n g e w ith p re -c ris is %
Q1'07 Q1'08 Q1'09
-15
-10%
-20 1 step
2 step -20%
-25 2 step
4 step -30%
-30
-35 -40%
-40 -50%
-45 Philips sales to retail Supplier sales to Philips
Presentation Clearing the Fog Robert Peels
6. 5
RE-ACTIVE
ACTIVE
DE-STOCKING
re
sin RE-ACTIVE
Presentation Clearing the Fog Robert Peels
7. 6
The “Lehman Wave”
Presentation Clearing the Fog Robert Peels
8. 7
Resin Paint Parts OEM Retail
Presentation Clearing the Fog Robert Peels
9. Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
8
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Resin Paint Parts OEM
Paint Parts OEM Retail Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Resin Paint Parts OEM Retail
Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Resin Paint Parts OEM Retail
Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Resin PartsRetail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Presentation Clearing the Fog Robert Peels
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Resin Parts Retail
Resin Paint Parts Retail Paint OEM Retail
Resin Paint OEM Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
Resin Paint Parts OEM Retail
10. Retail Data US Census Manufacturing Data US Census
110 125 9
120
105
115
100 110
105
95 100
95
90
90
85 85
80
80
8
9
08
8
09
9
08
09
l-0
l-0
t-0
t-0
n-
n-
r-
r-
ju
ju
ok
ok
ap
ap
ja
ja
8
9
8
9
08
8
09
9
r-0
r-0
t- 0
t- 0
l-0
l-0
n-
n-
ju
ju
ap
ap
ok
ok
ja
ja
Retail Shipments Manufacturing Shipments
Retail Inventory Manufacturing Inventory
Inventory/Shipments Inventory/Shipments 9
Presentation Clearing the Fog Robert Peels
12. One of the echelons in value chain 11
.
Presentation Clearing the Fog Robert Peels
13. Dynamic modeling 12
.
Resin Paint Parts OEM Retail
Output = sales curves Input= end market curve
Presentation Clearing the Fog Robert Peels
14. Demand according to echelon
105
13
100
percentage sales vs 2007
95
90
0 15 30 45 60 75 90 105 120 135 150 165 180 195 210 225 240 255 270 285 300
Time (Week)
DSM demand OEM demand
Paint producer demand End market demand
Coater demand
Presentation Clearing the Fog Robert Peels
15. Demand according to echelon
105
14
70
percentage sales vs 2007
35
0
0 15 30 45 60 75 90 105 120 135 150 165 180 195 210 225 240 255 270 285 300
Time (Week)
DSM demand OEM demand
Paint producer demand End market demand
Coater demand
Presentation Clearing the Fog Robert Peels
16. Sales and Stocks 15
120,00
110,00
100,00
90,00
80,00
70,00
60,00
jan-07 jun-07 nov-07 apr-08 sep-08 feb-09 jul-09 dec-09 mei-10 sep-10 feb-11 jul-11
End market demand
langzaam dalende consumentenvraag Stocks in 4th echelon
Stocks in 4e echelon
Sales in 4th echelon
Sales in 4e echelon Total Stocks
Total Stocks
Presentation Clearing the Fog Robert Peels
17. In d e x Index
ja n
90,00%
95,00%
100,00%
105,00%
110,00%
80,00%
85,00%
90,00%
95,00%
100,00%
105,00%
110,00%
jan
-0 -0
5 5
ap ap
r -0 r-0
5 5
jul ju
-0 l-0
5
ok 5 ok
t- 0 t- 0
5
jan 5 ja n
-0 -0
6
ap 6 ap
r -0 r-0
6 6
j ul
jul
-0 -0
6
ok 6 ok
t- 0
t- 0 6
jan 6 ja n
-0
-0 7
ap 7 ap
New car registration
r-0
r -0 7
7
Presentation Clearing the Fog Robert Peels
j ul
jul -0
-0 7
Month
Month
ok 7 ok
t- 0
t- 0 7
ja n
jan 7 -0
-0 8
Automobile indexes (2007=100%)
ap
ap 8 r-0
8
Retail food turnover index (2007=100%)
r -0
8 j ul
jul -0
-0 8
ok
ok 8 t- 0
8
Motor vehicle turnover index
t- 0
ja n
jan 8 -0
-0 9
ap
ap 9 r-0
r -0 9
9 j ul
jul -0
-0 9
9 ok
t- 0
9
In d e x Index
40,00
50,00
60,00
70,00
80,00
90,00
100,00
110,00
120,00
ja n
ja
84,00%
86,00%
88,00%
90,00%
92,00%
94,00%
96,00%
98,00%
100,00%
102,00%
104,00%
n-
05
a p r -0 5
-0 ap
j u l- 5 r-0
5
okt 05 ju
- l-0
5
ja n 0 5 ok
t- 0
5
ja
a p r -0 6
-0 n-
06
j u l- 6 ap
r-0
6
okt 06
- ju
ja n 0 6 l-0
6
ok
a p r -0 7 t- 0
-0 6
ja
j u l- 7 n-
07
Month
okt 07 ap
- r-0
ja n 0 7 7
- ju
l-0
Month
apr 0 8 7
-0 ok
t- 0
j u l- 8 7
ja
Production Index US (2005=100%)
n-
okt 08 08
- ap
ja n 0 8 r-0
8
a p r -0 9 ju
-0 l-0
8
Household goods retail trade index (2007=100%)
j u l- 9 ok
t- 0
8
ja
okt 09
-0 9 n-
09
ap
r-0
9
ju
l-0
16
Food
9
Metal
Glass
Paper
Automotive
Construction
20. Segment 4, without seasonality 19
MS gain
2006 2007 2008 2009 2010 2011
Seas Corr Model 3mma & seas corr
Presentation Clearing the Fog Robert Peels
22. 21
Customer info Historic
Sales S&OP
Forecasting Strategy
Model Pipeline
Presentation Clearing the Fog Robert Peels
23. Do’s and Don’ts for companies in a Lehman Wave 22
Don’t: Do:
• Overreact • Flexibilize
• Close factories • Communicate over the chain
• Cut innovation • Communicate internally
• Fire crucial people • Make plans based on scenarios
• Stop marketing communication • Cut cost
• Continue M&A
Presentation Clearing the Fog Robert Peels
24. Conclusions 23
Macro A lot is to be learnt and understood about these phenomena at the macro-
economic level; Little research is available; Poor quality or absence of inventory
statistics; Governments should collect and publish detailed stock data. Economic
planning systems should take stocks into account.
Stock Moves can have a strong influence on world economy. They help
explain why some industries have wider fluctuations in the economic cycle. At echelon 4
de-stocking can be >75% of the dip. For Europe we estimate the Lehman Wave effect
to be at least 1,5% of GDP in 2009.
Markets Each company should know its supply chain and end markets. It should
follow downstream branch organizations and statistical market info.
Model can help distinguish between real market growth and stock piling. It can give
an early warning if market share changes. The model predicts a second, more shallow
dip in 2010. The timing of peaks and dips was predicted very accurate. It can help
companies translate end-market growth and stock changes into sales forecasts.
Presentation Clearing the Fog Robert Peels
25. 24
Thank you
Presentation Clearing the Fog Robert Peels