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The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.
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Outsource to In-house: Taking Back Control of
Transportation
Carl RossiDirector, Global TransportationAPC
Kerry WiggintonDirector, Logistics SolutionsOracle
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Agenda
• Topic Overview
• APC: Carl Rossi
•Q&A
Current State of the 3PL Market
Most Customers are Satisfied, But Improvement Opportunities Continue to Exist
5
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2002 2003 2004 2005 2006 2007 2008
IT Capabilities
Necessary
Element of 3PL
Expertise
Satisfied With
3PL IT
Capabilities
Source: 2008 13th Annual Third Party Logistics Study:Views from the Customers: Georgia Tech, CapGemini, Oracle, DHL
Transportation Management:Outsource or In House?
• Logistics Excellence
– Is it a commodity vs. competitive advantage?
• Control vs. “Easy button”
– Are you maintaining control of your network operations?
• Visibility vs. IT Investment
– Is it sufficient, or do you make do with what you get?
• Logistics Expertise
– Do you have experts in-house?
• Cost vs. Value
– Are you getting what you pay for?
Different Models Available
In HouseIn HouseAll In House
All Outsourced
Hybrid
Hybrid
OutsourceOutsource
In HouseOutsource
OutsourceIn House
People/
ProcessTechnologies
Note: Different regions and divisions can have different approaches
8
Logistics Order
Management
-Order capture
-Change order management
-Requirements forecasting
Carrier and Rate
Management
-Rate procurement
-Rate maintenance
-Carrier scorecarding
-Contract and insurance monitoring
Shipment Execution
-Carrier communication
-Shipment booking and tendering
-Re-Planning
-Appointment Scheduling
Visibility and Event
Management
-Proactive Exception Management
-Shipment, Order, SKU visibility
-Track and Trace
-Analytics and Reporting
TransportationPlanning and Optimization
-Shipment Planning
-Dock appointment scheduling
-Container Requirements Optimization
-Load Configuration
-Cooperative Routing
Financial Settlement
-Freight bill audits
-Cost allocation
-Accruals
-Customer billing
End-to-End Comprehensive Transportation Management Solution
How Does Oracle Help?A World Class TMS called Oracle Transportation Management
Functional InnovationOTM roadmap to additional value
• Fleet & Asset Management
– Manage transportation assets (drivers, trucks, trailers, containers, totes, etc)
• Global Trade Management
– Manage all aspects of cross-border transactions
– Visibility, regulatory compliance, chain of custody, documentation
• Environmental Sustainability
– Measurement and minimization of impacts
Reduced Freight Costs
• Inbound and outbound transaction costs
• Lower headcount
• Lower cost carrier selection
• Payment based on actual shipped weight
Increased Visibility
• Supplier communications
• Shipment data
• Rates, freight payment and damage claims
Increased Control
• Carrier KPIs: Service level, cost, quality
• Supplier compliance to core carriers
Results
• US was outsourced to 3PL, little control over inbound transportation
• Wanted to reduce freight costs and increase visibilityby streamlining and controlling logistics operations in-house
• Needed a TMS to support this strategy
Scenario
Proof Point: Global Heavy Equipment Manufacturer
Where You Should See Value
Shipment Planning
& Optimization
Shipment Execution:Booking/Tendering,
En Route Planning
Freight Payment/Billing
• 3 –20% Transportation Cost Savings
• 5 – 25% Expedited shipment reductions • 5 – 15% Capacity increase
• 5-30% Productivity Improvements
• Reduced errors, increased loads per hour
• 10 – 100% Reduction of transaction costs
• 2-5% Reduction of Freight Expense
TransportationSourcing
• 5 – 20% Rate Improvements from Carrier Bid Optimization• Increased payment, auditing and claims effectiveness
Supply ChainVisibility/Analytics
• 2-5% reduction in inventory• Lower transportation costs, better supplier and customer relationships
Status Updates,
• 1 – 3 % decrease in transportation costs
• 5 – 15% Reduction in overall freight cost
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Carl Rossi
Director, Global Transportation
APC
COMPANY OVERVIEW
• American Power Conversion (APC) is $3.5B provider of adaptable network-critical physical infrastructure to the information technology industry.
• Founded in 1981, the company's alternating and direct current power products include surge suppressors, uninterruptible power supplies, power conditioning equipment, power management software and direct current power systems, as well as precision cooling equipment and network consulting services.
• Headquartered in West Kingston, R.I., and maintains sales offices worldwide.
• The company has manufacturing facilities in Philippines, India and China
• Schneider Electric acquired APC on Feb. 14, 2007
CHALLENGES/OPPORTUNITIES• Moving from outsourced transportation and warehousing to in-house
• Integration to EBS
• Ability to manage both inbound vessel from Asia and outbound small package
• Visibility & Event Management
Who Are We and What Do We Do?
APC Operating Environment
• Being a global manufacturer with most plants in Asia means spanning a wide range of capabilities:
– Complete visibility from order entry through carrier payment
– Visibility to finished product shipping from Asia
– Container tracking en-route
– Optimized outbound transportation while considering constraints of the distribution centers
– All modes of transportation
– Many languages and currencies
Global Footprint
The Business Challenge – Why In-sourcing?
• The decision to outsource was made based on forecast savings;
• Savings never materialized, the opposite occurred – costs increased
• Service provider did not understand business = higher rates
• Freight under management fees exorbitant
• Efficiencies never delivered
• Service provider had poor carrier selection, evaluation process
• Delivery quality and customer satisfaction declined
• Challenges included selecting and implementing a new operating system within 3 months;
• Rebuilding processes and procedures that were lost when function was outsourced;
• Team concluded best solution was integration to Oracle E-Business Suite
How did we start?
• First Phase:
– Start in Western Distribution Region
– Bring up a new building
• Hire and train staff
• Transfer inventory
– Install new TMS and WMS
– Need to be done in 3 months
– Outbound was priority
• Parcel, LTL, TL, Specialized Delivery
• Ability to manage all transport modes including –– Ocean vessels
– Small package
– Less than truckload
– Full truckload
• Visibility & Event Management
• Transportation Management
• Transportation Planning
• Freight Settlement
• Business Intelligence
Why OTM?Tech Enabler for In-Sourcing Transportation Management
Transportation Scope - Interface Diagram –Outbound Process
Shipment
Execution
Accounts
Payable
Order
Management
Master
Data
Shipment
Planning
Visibility
Freight
Settlement
Order
Management
Shipment
Execution
Pick/Pack
OTMOTM EBSEBS WMSWMS
Track & Trace
Invoices
CarriersCarriers
Load
Tenders
Manifest /
Documentation
ManifestManifest
Items
Locations
Service Providers
Master
Data
Planned Shipment
Deliveries
Actuals
Shipment Actuals
Payment Voucher
Actual
ShipmentLoad Tenders
Tender Response
Shipment Status
Shipment Invoice
Pro #’s
Etc.
Deliveries (includes
Items and Locs)
EBS to WMS
interfaces do not
need to be built.
They are already
part of the pre-
built integration.
Project Teams
Project
Lead
(75%)
Project
Sponsor(s) /
Program Mgt
(10%)
APCAPC
Project
Lead
(100%)
OTM
Leadership /
Program Mgt
(10%)
OracleOracle
Program
Office
Application
Lead
(100%)
Technical
Lead
(60%)
OTM Install
Consultant
(15%)
1-2 Super
Users
(100%)
Sys Admin
(25%)DBA
(25%)
Note: These represent project roles. The same person may be responsible for multiple roles.
Application
Consultant
(80%)
Integration
Developer
(30%)
BPEL
Consultant
(20%)
IT/EBS
Analyst
(50%)
IT Various
(50%)
•Complete visibility from order entry through carrier payment
• ASN’s planned 2009
• Implement Business Reporting 2009
• FBAP project planned to begin late 2009
• During 2009 EDI from carriers for shipment status
•Planned implementations
• Philippines go-live January 15, 2009 with new Distribution Center
• International container management
• Europe project planned to kick off first week of March
•India implementation projected to begin late Q4
APC Implementation - Future Plans/Vision
Another busy year for the implementation team !
Results to date on target
• January statistics -
• In-sourcing produced significantly lower rates across all modes;
• OTM consolidated shipments and selected lowest cost carrier;
• Middletown start-up issues which were process and staffing related are now resolved
• Improved capacity weight utilization by 12 – 25% based on mode
• Gained additional control over logistics processes by bringing them in house
• Improved shipment & order visibility
LocationPicking Tasks
LTL Shipments Parcels Full TruckloadsWeight per Shipment
Cost per LB
Chino 13,054 1,058 8,942 18 21% -19%
Middletown 23,759 804 11,558 34 6% -29%
Questions And Comments
Thank you!