<Insert Picture Here>

How to Cut Cost and Reduce Risk in
Transportation and Global Trade
p
Dominic Regan – Senior Directo...
Integrated Logistics Platform
Oracle Supply Chain Execution

Distributed
Warehouse
Management
Labour and
Space Utilisation...
Supply Chain Execution Market Share
Based on Total Software Revenue*

* Gartner defines total software revenue as revenue ...
The Challenges We’re Hearing
! Control the Costs of Increasingly Complex Supply Chains:
How do I set up my extended supply...
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<I
t Pi t
H
>

Reducing Supply Chain Cost
g
pp y
Why Logistics Costs are Important
– Logistics Cost Components

– Logistics Cost By Industry

Source: Capgemini 2005 Third-...
Transportation Management Opportunity
50%
% of Companies Research
C
s
hed

42.1%

Transportation Mgmt
Solutions can Save M...
What is a Transport Management System?

Source: “The Forrester Wave™: Transportation Management Solutions Q1 2008” January...
Oracle Transport Management
Customer Advisory Board
Logistics Service Providers

Manufacturing

Retail
Top Areas of Cost Concern in Transport
Lower Logistics Costs
L
L i ti C t
Challenge

Cost of ‘rush’ or
expedited transport...
Top Areas of Cost Concern in Transport
Lower Logistics Costs
L
L i ti C t
Challenge

Benefit

Inefficient mode,
carrier an...
Achieving Benefits Quickly and Incrementally
Focus on the Most Important Problem First
F
th M t I
t t P bl
Fi t
PAIN POINT...
<Insert Picture Here>
<I
t Pi t
H
>

Reducing Supply Chain Risk
g
pp y
What is Supply Chain Risk?

Environmental Risk Sources (Earthquake, Flood, Disease, etc.)
Network Risk Sources ( Border Cl...
What is Supply Chain Risk?

Air Freight: 2% by volume, 35% by value
10,000
10 000 tons of goods airfreighted daily between...
What is Supply Chain Risk?

Ports handling as much as 7% of the country’s industrial output damaged,
costing $3.4bn i l t ...
The Supply Chain Risk Spiral

LACK OF 
VISIBILITY

LONG 
PIPELINES

LACK OF 
CONFIDENCE

INCREASE 
BUFFER 
STOCK

Source: ...
The Impact of Supply Chain Risk
Physical

Informational

Financial
Risk through Globalisation

Component
Manufacturing

Suppliers

Final
Assembly

The “Manufacturing” Corporation

Distribut...
Visibility and Risk – Automotive
Moving a vehicle from plant to dealer involves the coordination of
several service provid...
Visibility and Risk – Industrial Mfg
Visibility and Risk – Oil & Gas

23
Visibility and Risk – FMCG

Origin

Destination
Visibility and Risk – Retail
- Ready To Ship
- Packing

$ 1,800

968.43

- Container stuffing

BAF – per TEU

$ 296

318.2...
<Insert Picture Here>
<I
t Pi t
H
>

Reducing Supply Chain CO2
g
pp y
Sustainability in Grocery – Collaboration

Source: IGD, Feb 2001
Sustainability in Grocery – Collaboration

Source: TDG, Kellogg’s, Kimberley-Clark, 2008
Sustainability in FMCG
Transport Optimisation
T
t O ti i ti
By using optimization technology to minimize empty
miles, Kraf...
<Insert Picture Here>
<I
t Pi t
H
>

Controlling Global Trade
g
Typical Global Trade Transaction
3 Export U.S. to EU

2 Import Mexico to USA

Product Classification
Embargo Check/ SPL Sc...
GTM Impacts Many Processes

Global Trade
Management
Oracle Global Trade Management
Base Module
Key Features

Key Business Benefits

• Master Trade Data Repository

• Centrall...
Oracle Trade Compliance
Add-on Component
Key Features

Key Business Benefits

• Compliance Rule & Policy
Management
• Trad...
Oracle GTM Business Drivers
Trade Finance:

Compliance & Customs:

• Post-Entry reconciliation & Audit

• Risk mitigation ...
Oracle GTM Value Proposition
Value proposition
– Automate and orchestrate cross-border transactions by
enabling companies ...
Oracle Trade Compliance
Pain Points
x Lack of transactionbased visibility and
control

GTM Provides
Trade Transactions
Man...
Summary
Business B
B i
Benefits & E bl
fit
Enablers

Companies with best in class platforms…
C
i
ith b t i l
l tf
• Spend ...
Where is the payback on our project?
Increase volume
Increase
revenues
Increase
profit

Improve mix
Reduce production cost...
For more about Oracle’s VCE Solutions:
dominic.regan@oracle.com
ernst.stegwee@oracle.com
ernst stegwee@oracle com
OTM - How to Cut Costs and Reduce Risk in Transportation and Global Trade - By, Dominic Regan
OTM - How to Cut Costs and Reduce Risk in Transportation and Global Trade - By, Dominic Regan
OTM - How to Cut Costs and Reduce Risk in Transportation and Global Trade - By, Dominic Regan
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OTM - How to Cut Costs and Reduce Risk in Transportation and Global Trade - By, Dominic Regan

  1. 1. <Insert Picture Here> How to Cut Cost and Reduce Risk in Transportation and Global Trade p Dominic Regan – Senior Director, Oracle Transportation Management
  2. 2. Integrated Logistics Platform Oracle Supply Chain Execution Distributed Warehouse Management Labour and Space Utilisation Oracle Transportation Management Cost Control Inventory Control I t C t l Process Automation Customer Service Visibility Global Trade Management Landed Cost Management Regulatory Compliance Accounting Accuracy Shorten Cycle S C Time Financial Visibility Visibility Sourcing
  3. 3. Supply Chain Execution Market Share Based on Total Software Revenue* * Gartner defines total software revenue as revenue generated from new licences, updates, upgrades, subscriptions and hosting, technical support, and maintenance. Professional services training and certification and hardware revenue is not included in total software revenue services, certification, revenue. Gartner, Inc., “Market Share, All Software Markets Worldwide 2010,” March 30, 2011, By Colleen Graham, Joanne Correia, Fabrizio Biscotti, Matthew Cheung, Ruggero Contu, Alan Dayley, Yanna Dharmasthira, Tom Eid, Chad Eschinger, Bianca Granetto, Hai Hong Swinehart, Teresa Jones, Sharon Mertz, Rene Millman, Chris Pang, Asheesh Raina, Dan Sommer, Bhavish Sood and Laurie Wurster.
  4. 4. The Challenges We’re Hearing ! Control the Costs of Increasingly Complex Supply Chains: How do I set up my extended supply chain to support high volumes given the many, geographically dispersed, suppliers and partners? “Companies that manage their global ecosystems most effectively are as much as 73% more profitable than companies with less capable value chains.” – Deloitte Consulting ! Aligning with Corporate Sustainability Objectives: How can I balance my extended supply chain with my corporate goal of reducing carbon usage? “Sustainability should be automatically and fully integrated into supply chain management, used both as a standard performance measure and a means of driving performance improvement throughout the value chain. ” – Gartner ! Regulatory Compliance: How do I ensure my products meet compliance guidelines to avoid any impact on my supply chain? “The EU has adopted several Directives which restrict the use of certain substances and specifies collection, recycling and disposal requirements. Compliance could create shortages or impact the continuity of our supply.” – Lexmark Annual Report
  5. 5. <Insert Picture Here> <I t Pi t H > Reducing Supply Chain Cost g pp y
  6. 6. Why Logistics Costs are Important – Logistics Cost Components – Logistics Cost By Industry Source: Capgemini 2005 Third-Party Logistics Study, A T Kearney
  7. 7. Transportation Management Opportunity 50% % of Companies Research C s hed 42.1% Transportation Mgmt Solutions can Save Most Companies 5%-25% 40% 28.9% 30% 20% 13.2% 13.2% Source: The Logistics Institute at Georgia Tech (companies with annual transportation spend > $10M) 10% 2.6% 0% 1-5% 6-10% 11-20% 21-30% x > 30% Savings Opportunity Company with € 500,000,000 in annual sales Spends on average € 37,500,000 on logistics Of which € 20,625,000 is spent on transportation At 8% savings € 1,650,000 saved annually by investing in a TMS
  8. 8. What is a Transport Management System? Source: “The Forrester Wave™: Transportation Management Solutions Q1 2008” January 2008 Solutions, 2008”,
  9. 9. Oracle Transport Management Customer Advisory Board Logistics Service Providers Manufacturing Retail
  10. 10. Top Areas of Cost Concern in Transport Lower Logistics Costs L L i ti C t Challenge Cost of ‘rush’ or expedited transport p p Benefit • Reduced cost through better planning and exception management Cost of poorly consolidated loads • Reduced cost through Cost of resolving freight invoice disputes • Reduced cost / improved Cost of manual planning, execution escalation & analysis • Improved productivity via increased asset utilisation i d t tili ti cashflow via automated audit and invoice reconciliation automated tendering, planning and event mngmt
  11. 11. Top Areas of Cost Concern in Transport Lower Logistics Costs L L i ti C t Challenge Benefit Inefficient mode, carrier and/or rate selection • Lower costs through single Inefficient rate negotiation with carriers • Accurate analysis of actual Inability to measure ‘cost to serve’ and contract profitability Opportunity cost of unrealised new business models point of logistics data and best-in-class best in class optimisation freight volumes and rates rates, improving rate negotiation • Accurate transportation costs allowing identification of profitable business • Flexible and configurable solution enabling deployment of new supply chain models
  12. 12. Achieving Benefits Quickly and Incrementally Focus on the Most Important Problem First F th M t I t t P bl Fi t PAIN POINTS Reducing Maverick Spend LOW HANGING FRUIT Reduced Transport Costs Effective Modal/Carrier Selection Identifying Best Carrier Rate STRATEGIC SOLUTION Strategic Transportation ‘Control Tower’ Effective Carrier Rate/Bid Management • S Start with the bi i h h biggest opportunities and plug-in additional solutions i ii d l i ddi i l l i incrementally ll • Try to make the project self-funding by realising the value from each phase • ‘Good enough’ is often good enough, so replace legacy systems only where justified 13
  13. 13. <Insert Picture Here> <I t Pi t H > Reducing Supply Chain Risk g pp y
  14. 14. What is Supply Chain Risk? Environmental Risk Sources (Earthquake, Flood, Disease, etc.) Network Risk Sources ( Border Closures, Embargo, War, etc.) Organisational Risk Sources (Strikes, Fire, Regulatory Violations, etc.) Source: Uta Jüttner, Helen Peck, Martin Christopher, 2003
  15. 15. What is Supply Chain Risk? Air Freight: 2% by volume, 35% by value 10,000 10 000 tons of goods airfreighted daily between Asia and Europe Industries affected most: High-Tech, Retail, Automotive US$ 8m worth of perishable blooms destroyed Source: Economist & NPR, 2010
  16. 16. What is Supply Chain Risk? Ports handling as much as 7% of the country’s industrial output damaged, costing $3.4bn i l t seaborne trade per day ti $3 4b in lost b t d d Industries affected most: Consumer Electronics, Automotive Technology supply chain likely to be disrupted for 1 3 months 1-3 Source: Economist, Citi, Lloyds List, BBC, NPR, 2011
  17. 17. The Supply Chain Risk Spiral LACK OF  VISIBILITY LONG  PIPELINES LACK OF  CONFIDENCE INCREASE  BUFFER  STOCK Source: Lee & Christopher, IJPDLM, 2004
  18. 18. The Impact of Supply Chain Risk Physical Informational Financial
  19. 19. Risk through Globalisation Component Manufacturing Suppliers Final Assembly The “Manufacturing” Corporation Distribution Customers Transportation Then Supply Chain Planning & Execution Now Value Chain Planning & Execution Component Manufacturing Final Assembly The Manufacturing Corporation Distributors Customers 3PL’s Suppliers 3PL s 3PL’s Suppliers Retail St R t il Store
  20. 20. Visibility and Risk – Automotive Moving a vehicle from plant to dealer involves the coordination of several service providers, systems and transportation modes Order – 1 VIN Assembly Plant Pl t Plant Hand Over Dealer ExGate Loading Compound p German Staging Area VSC Port of Exit Dealer BodyBuilder
  21. 21. Visibility and Risk – Industrial Mfg
  22. 22. Visibility and Risk – Oil & Gas 23
  23. 23. Visibility and Risk – FMCG Origin Destination
  24. 24. Visibility and Risk – Retail - Ready To Ship - Packing $ 1,800 968.43 - Container stuffing BAF – per TEU $ 296 318.25 - Stevedoring Zhejiang Supplier 40’ standard container CAF 7.80% 100.36 at Aug ‘06 at Aug ‘06 Terminal handling Documentation D t ti £ 20 20.00 20 00 £ 35 35.00 £ 10.50 10.50 Demurrage ((WK 2; 3-4 * ; 5-1 * ) *2 *4) £ 16 00 16.00 0.00 0 00 Inland delivery £ 265 265.00 £ Port of Ningbo 69.00 Port Authority security fee TL 69 Clearance INCOTERMS: FOB £ 1,788.54 PO to Receipt Ocean 29 days 6-12 weeks Port of Felixstowe TL UK DC
  25. 25. <Insert Picture Here> <I t Pi t H > Reducing Supply Chain CO2 g pp y
  26. 26. Sustainability in Grocery – Collaboration Source: IGD, Feb 2001
  27. 27. Sustainability in Grocery – Collaboration Source: TDG, Kellogg’s, Kimberley-Clark, 2008
  28. 28. Sustainability in FMCG Transport Optimisation T t O ti i ti By using optimization technology to minimize empty miles, Kraft eliminated more than 500,000 miles (800,000 km) last year. The company also removed the equivalent of 1 500 1,500 trucks off the road and more than a million miles (1.6 million km) off the highway system by maximizing product per truckload. Source: ARC Advisory Group, Logistics Viewpoint, 1 Dec 2009
  29. 29. <Insert Picture Here> <I t Pi t H > Controlling Global Trade g
  30. 30. Typical Global Trade Transaction 3 Export U.S. to EU 2 Import Mexico to USA Product Classification Embargo Check/ SPL Screening Export License Management Printing of Export Documents Electronic Communication (AES) Product Classification Embargo Check SPL Screening S i Import License Management NAFTA 1 3 2 1 Import China to USA Product Classification Embargo Check SPL Screening Import License Management Printing of Import Documents 4 Import EU from U.S. 5 4 5 Export Europe to other countries Product Classification Embargo Check SPL Screening Export License Management Printing of Export Documents g p Electronic Communication (NCTS, ATLAS, etc.) Trade Preference Processing Restitution Handling Product Classification Embargo Check SPL Screening Import License Management Free Circulation Transit Procedures Duty & VAT Calculations Printing of Import Documents Electronic Communication (NCTS, ATLAS, etc.)
  31. 31. GTM Impacts Many Processes Global Trade Management
  32. 32. Oracle Global Trade Management Base Module Key Features Key Business Benefits • Master Trade Data Repository • Centrally manage all trade related data worldwide • Reduce redundant business processes • Provide visibility and collaboration to trading partners • Mitigate compliance risk – Trade Party Master – Trade Item Master • Product Classification • Restricted Party & Sanction Screening • Content Management
  33. 33. Oracle Trade Compliance Add-on Component Key Features Key Business Benefits • Compliance Rule & Policy Management • Trade Transaction Management • Trade Control Determination • Model own unique trade compliance globally • Centralize trade compliance screening on one platform • Anticipate transactional compliance milestones • Mitigate compliance risk – Licensing – Documents – Other Controls
  34. 34. Oracle GTM Business Drivers Trade Finance: Compliance & Customs: • Post-Entry reconciliation & Audit • Risk mitigation & penalty avoidance Trade Finance • Trade settlement • Optimize use of strategic financial instruments (Letters of Credit, Open Accounts) Landed Cost • Efficiency & process automation • Achieve best practices Global Trade Management Compliance & Customs Landed Cost Management: Security: • Visibility to profitability • Secure supply chain strategies for Customs preferences • Optimize margins • Strategic sourcing decisions Security • Maintain compliance with Security initiatives • Supply chain risk mitigation
  35. 35. Oracle GTM Value Proposition Value proposition – Automate and orchestrate cross-border transactions by enabling companies to manage and control their trade compliance activities related to imports exports and other imports, types of regulatory, legal or company-mandated policies Benefits – Accelerate supply chain and increase working capital utilization – Miti t supply chain and compliance risk worldwide b Mitigate l h i d li i k ld id by centrally managing trade compliance – Collaborate with trading p g partners – Maintain oversight, visibility and control of cross-border transactions
  36. 36. Oracle Trade Compliance Pain Points x Lack of transactionbased visibility and control GTM Provides Trade Transactions Management x Risk exposure due to p lack of system control x Inefficiency due to manual processes Trade Control Determination x Lack of system control & flexibility to support global trade processes worldwide Compliance Rule & Policy Management Benefits Improve supply chain through proactively anticipating and executing compliance milestone requirements Reduce exposure to government audit, fines, audit fines penalties, or the loss of import/export privileges. Mitigate global compliance risks Easily adapt to changing business models
  37. 37. Summary Business B B i Benefits & E bl fit Enablers Companies with best in class platforms… C i ith b t i l l tf • Spend less on supply chain • Deliver higher levels of service • Have better information to make decisions – measure performance on daily/weekly basis •A t Automate processes for efficiency and scalability t f ffi i d l bilit • Collaborate – integrate supply chain with internal processes and with trading partners
  38. 38. Where is the payback on our project? Increase volume Increase revenues Increase profit Improve mix Reduce production costs Reduce costs t Increase ROCE Increase price Reduce distribution costs Reduce R&D costs & Reduce marketing costs Reduce admin costs Reduce capital employed Reduce fixed assets Reduce working capital
  39. 39. For more about Oracle’s VCE Solutions: dominic.regan@oracle.com ernst.stegwee@oracle.com ernst stegwee@oracle com

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