OTM Value for International Logistics including Ocean Vessel Transport

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In the less harmonized International and European Supply Chain industry, this paper will outline the strategic value of OTM (Oracle Transportation Management). The paper will outline real solutions and real benefits from implemented OTM case studies in Europe. Highlighting some of the additional considerations when designing OTM solutions for International logistics.
Presented by Barry Hayes at MavenWire.

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OTM Value for International Logistics including Ocean Vessel Transport

  1. 1. International OTM Value Paul Bage - Electrolux Barry Hayes – MavenWire (Europe) OTM SIG June 2009
  2. 2. Agenda TMS for International Logistics European / International Case Study Ocean Inbound Outbound Benefits Lessons Learned
  3. 3. TMS for International Logistics • Comprehensive: One system supporting all freight, all modes, anywhere in the world – Multi Currency, Multi Language, Multi UoM • Supply Chain Centric: Multi and Cross-enterprise, collaborative planning and execution solution • Flexible: Operate multiple logistics process within a single code base • Centralised: logistics operations – Reductions in administrative costs – Improvements in productivity • Consolidation Improvements – Regional vs local models – Expanding the order pools for consolidation to regional or national levels – Improvements in utilisation / fill rates • Integrated Transportation – Integrate Inbound, Primary and Secondary – Flexible and comprehensive Freight Rating ability – Further reductions in freight spend
  4. 4. Agenda TMS for International Logistics European / International Case Study Ocean Inbound Outbound Benefits Lessons Learned
  5. 5. Electrolux Profile • Company – Electrolux is the world’s second largest white goods manufacturing company with revenues of more than €17 billion. Electrolux has 72,000 employees and operations in 60 countries worldwide, headquartered in Stockholm, SE. – Project Location: Europe, Brussels and Stockholm. US, Augusta GA. • Logistics Organisation – Ship 50 000 containers (75 000 TEU) worldwide – airfreight 12000 tons – courier freight 19000 tons – EMA US has 33000 FTL’s and 21000 LTL’s – EMA Europe has 36000 trucks and 19000 rail wagons Electrolux serves • 3000+ Ocean freight lanes • 100+ countries
  6. 6. Within and across the geography only fragmented systems to manage transportation……… • due to low-cost country sourcing strategy and new distribution dynamics there is an increased need for: – Coordination of shipments from different regions and locations – Coordination of purchasing of transports. • no possibility to control, track & trace transportation activities and supply. • transportation planning and execution is manual or controlled by suppliers • sub-processes are today outsourced to numerous 3PL partners. This results in higher cost and less control capabilities • lack visibility of the logistics activity in the Group (i.e. compliance to group agreements)
  7. 7. New System Drivers • Enable easy access to Group transportation contracts to secure best freight rates • Support transportation planning, both domestic and international • Track and trace all transports, give visibility for the customers, factories and planners • Better visibility will increase higher efficiency in the supply chain • Provide information for better inventory management • Provide financial control over the transportation flows • Follow up all activities with regards to movement of goods
  8. 8. Global OTM solution for Electrolux  Integrated global solution OTM European Inbound OTM European Transports Outbound Transports Vendors FDC & OEM Customers RDC OTM Global Ocean & Air Transports OTM NA Outbound Transports
  9. 9. Electrolux  International Logistics Ownership and Control Supplier Electrolux Supplier Electrolux
  10. 10. Containerised International Inbound Typically FF takes ownership here UK DC India Supplier Port of Tuticoran Port of Felixstowe (INTUT) (GBFXT)
  11. 11. International Inbound Process Destination Purchase Carrier In Goods Port Order Booking Transit Receipt Receipt • To manage the process effectively: – a consistent process needs to be applied, and – a single version of the truth should be visible to all parties
  12. 12. OTM interfacing with Ocean Portals •Integration using EDI broker with added on xml capabilities. •We integrated with INTTRA, GT Nexus and CargoSmart; the three of them cover all the major shipping lines •The number of carriers used is between 15 and 20 •The messages used are: •IFTMBF •IFTMBC •IFTMIN •IFTSTA •CONTRL •APERAK •OTM Document Repository – Seaway Bill •Standard xml API’s: •TenderOffer, TenderResponse, PlannedShipment, ShipmentGroup, ShipmentStatus, GenericStatus
  13. 13. Ocean Rates Setup • A relation can be – Port to Port (Shanghai to Bremerhaven) – Port to Door (Shanghai Port to Jaszbereny Factory via Bremerhaven Port) – Door to Door (all inclusive rate from Shanghai region factory to Electrolux Factory in Jaszbereny) – Bullet (Rate only applicable from point to Point) – Source or Destination ’Haulages’ are covered by arbitrary rates – Costs Cover • Base: Ocean freight for each container type • BAF • Terminal handling charges • Use of Inco term exclusions
  14. 14. A Port to Door IRIQ
  15. 15. Ocean Booking Here’s the booking in OTM…. ….and here’s the proof on carriers web-site
  16. 16. Business Monitor
  17. 17. Agenda TMS for International Logistics European / International Case Study Ocean Inbound Outbound Benefits Lessons Learned
  18. 18. Global OTM solution for Electrolux  Integrated global solution OTM European Inbound OTM European Transports Outbound Transports Vendors FDC & OEM Customers RDC OTM Global Ocean & Air Transports OTM NA Outbound Transports
  19. 19. Project Scope Customers FDC Customers Direct deliveries RDC Replenishment OEM Direct deliveries Deployed or Danish market since Feb 09 UK, Ireland and Sweden by end of 09
  20. 20. Agenda TMS for International Logistics European / International Case Study Ocean Inbound Outbound Benefits Lessons Learned
  21. 21. Global OTM solution for Electrolux  Integrated global solution OTM European Inbound OTM European Transports Outbound Transports Vendors FDC & OEM Customers RDC OTM Global Ocean & Air Transports OTM NA Outbound Transports
  22. 22. Typical Inbound Routes Supplier LTL TL Merged LTL TL Direct Factory TL LTL Merged LTL Consol Centre
  23. 23. OTM Design for Inbound • Process Automation – Exception management – Automated mainline flows – Integrated data flows – Low cost carrier communication • Operational Scalability – Reduced staffing for automated process – Operation centralised vs local • Regional vs National vs Global – Faster roll-out of new process and functionality to suppliers • Return savings sooner
  24. 24. OTM Drivers for Inbound • Operational Efficiency – Improved service and delivery • KPI improvements – POT (Pick up On-Time) – DOT (Delivery On-Time) – FTA (Fail to Arrive) • Reduce stock outs • Measure internal efficiency – Turnaround time at Factory – Reduce demurrage costs • Cost Visibility – Carrier rates – Invoicing / accrual – Cost allocation of inbound costs
  25. 25. OTM Control for Inbound • Central data repository – Entity relations Orders into Shipments • One to many, many to one • Key data entity for transacting with logistic organisations – Single point of visibility • ASN’s • Event Management • Costs • Accruals
  26. 26. Agenda TMS for International Logistics European / International Case Study Ocean Inbound Outbound Benefits Lessons Learned
  27. 27. Business Benefits & Opportunities • Shipping orders – Automate creation of shipping orders – Automate allocation of stock and production plan to orders • Load planning – Automate shipment/load planning in OTM. – Allow multi-pick and multi-drop across warehouses. – Enable more flexible supply chain, e.g. more frequent smaller deliveries. – Enable transport forecasting based on ”soft orders” i.e. production plan • Users – Share European best practices. – Define clear European roles and responsibilities. – Allow users to focus on managing exceptions and on improving quality. – Better visibility and control over transports e.g. through automatic alerts in OTM. • Carriers – Automate transport booking to allocated carriers from OTM. – Enable bidding of ad-hoc transports to spot-market from OTM. – Select optimal carriers and rates: better utilization and control in OTM. – Carriers confirm bookings and update shipments in OTM.
  28. 28. Savings The area of savings and also the quantity of savings all depends on the status of the local business. Some are in better shape or have better tools than others, but the basic areas for savings were: • Contract management and compliance with best rate agreements • Reduction of 3party fees • Financial control of invoices • Outbound load planning and routing • Operational control and performance measuring • Track and Trace of inventory and Alert Management for transportation enable smaller safety stock So far we have seen 3-5% savings on the transportation cost within the group and as said it all depends on the state of the local business. If we look outside the group other organizations see up to 10% savings which match what we start to see within EMA-NA
  29. 29. Agenda TMS for International Logistics European / International Case Study Ocean Inbound Outbound Benefits Lessons Learned
  30. 30. Lessons Learned Program Management - Single TMS Single code base No customisation Single global domain design Deployment Identify organisational structure for strategic benefits and value from first deployment International Portal Integration Involve from early stage – risk averse / service driven Notice for change / approvals gatekeeper Mileage package PCMiler Worldwide, Map&Guide (6.1 Integration) Currency System base currency Impact on rates Multiple views – entered, viewed, paid 6.0 enhancements Language Along with supported languages from Oracle, applying additional language translations can be done through editing of custom language files and uploading
  31. 31. Thank-You! Barry.Hayes@MavenWire.com Paul.Bage@Electrolux.com www.MavenWire.com www.Electrolux.com

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