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© Mahindra Satyam 2012 © Mahindra Satyam 2009
Best Practices & Learning from Implementing
OTM in LATAM Presented by
Sudheer Pamighantam On behalf of Amlendu Sekhar and Kamal Gupta
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© Mahindra Satyam 2012
Context
Country Customer / Prospect Nature of Engagement
Brazil LSP OTM Implementation
Brazil Retailer OTM Enhancements
Brazil Online Retailer OTM Support
Brazil Aircraft Manufacturing GTM Implementation
Argentina CPG OTM Implementation
Mexico LSP (NA) OTM Implementation
Mexico LSP (NA) OTM Enhancements
Several Several (LSP, Retail, Mfg, Energy) Presales consulting
This paper is not intended to be comprehensive coverage of all things in LATAM, but to share experience from OTM engagements
Basis of Experience
3
© Mahindra Satyam 2012
Contents
Opportunities in LATAM & Impact on Logistics
Challenges in LATAM Region
OTM for LATAM
Implementation Approach
Q & A
1 Section
2 Section
3 Section
4 Section
Section 5
4
© Mahindra Satyam 2012
LATAM is Growing Domestic Consumption & International Trade
Source: The Institute of International Finance, Inc.
Latin America on a Growth path
Rapid Recovery from 2009
downturn
Continued Capital Inflows
Strong Domestic Demand
Continued political stability
Free trade agreements
Challenges include tax laws, political and regulatory obstacles and logistics infrastructure
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© Mahindra Satyam 2012
Impact of Growth on Logistics Shipper Perspective
Growth in Manufacturing and Consumer Goods
Consumer, Food, Beverage and Retail industries
Manufacturing -Near-shoring at Mexico:
- Competitive labor rates
- Logistics Advantages
- Lead time & Risk management
Petrochemical / Chemical and Cosmetics
Infrastructure
Why OTM?
- Visibility across supply chain and related event management
- Transportation cost optimization
- Performance Improvement & monitoring
- Process Automation
- Compliance to Government Regulations
Leading to need for new process / technology
Re-design process and deploy technology to
support growth:
- Products / Channels
- Volumes
Leverage opportunity to integrate LATAM
with global process and systems
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© Mahindra Satyam 2012
Significant Opportunities for LSPs How can OTM Help?
LATAM Logistics Market Size Market Opportunities
• Logistics market growth
from 272 B in 2008 to
333 B by 2013
• 3PL Market size: $33 B
• Road segment as% of
the LATAM logistics
market: 88.4% (2008)
• In addition to
International Logistics,
domestic logistics
services is growing
Why OTM?
Capture opportunities in emerging markets
Drive growth from new / integrated services
Create LSP IT Platform to drive this growth
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© Mahindra Satyam 2012
Contents
Opportunities in LATAM & Impact on Logistics
Challenges in LATAM Region
OTM for LATAM
Implementation Approach
Q & A
1 Section
2 Section
3 Section
4 Section
Section 5
8
© Mahindra Satyam 2012
Challenges in LATAM
Fiscal & Related Changes • Complex Fiscal Rules • Constant Changes in
regulations that need to be met
Financial processes • Local financial processes
related to logistics transactions
• Meeting Regulatory Requirements
Operational Differences • How logistics business is
conducted • Impact of Fiscal and
Financial processes
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© Mahindra Satyam 2012
Challenges in LATAM
Key challenges specific to LATAM:
1) Fiscal &
Regulatory Requirements
2) Financial Processes
3) Operational Differences
1. Fiscal & Regulatory Requirements (Brazil)
Municipal B
Municipal A
CTe
NFS
Municipal A
Federal Federal Taxes: PIS – COFINS
State State Specific Rules for ICMS
Municipality (Local City Administration)
Municipal Specific Rules for ISS
Mexico: IVA and Retention
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© Mahindra Satyam 2012
Brazil Fiscal – Sample Scenarios
1. Normal CT-e can be cancelled, voided and substituted.
2. Multiple Complementary CTes can be created. Complementary CT-e must refer to a Original CT-e
3. Every CT-e should have CT-e number /series
4. User cannot generate a complementary for a complementary CTe
5. Cancellation of CT-e is allowed only if the shipment is not in transit
6. CT-e cannot be cancelled if the CT-e is already sent for Authorization and Authorization Response is
not received back
7. Complementary CT-e can be generated only when the CT-e of origin is approved by SEFAZ
8. Cancelled CT-e numbers should not be reused further
CTe NFS Inter-Municipal scenario Intra-Municipal scenario
Generated before transportation execution Generated after transportation execution
Requires govt. sanction Doesn’t require govt. sanctions
ICMS Tax applicable ICMS not applicable
ISS Tax not applicable ISS Tax applicable
Each CTE corresponds to unique sell shipment Multiple sell shipments can be grouped in 1 NFS
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© Mahindra Satyam 2012
Challenges in LATAM
2. Financial Processing
Payment Matching Process based in Fiscal Document (CT-e/CTRC/NFS/NFS-e)
Events need to be considered in Billing and Payment Process.
Billing process is based on Financial and Fiscal Documents (CTRC/CT-e/NFS/NFS-e/Pre-Invoice/Invoice)
Workflow to approval differences (Adjustments) and Payments (release Invoice to ERP)
Break Billing Invoice based on Customer Rules (Eg : Amount Limit , Quantity CT-e per Invoice, Region, Modal, Type of
Products, etc) Cost Allocation Rules: Multiple Allocation rules with specific
sub rules
Argentina: Carrier updates the taxes applicable based on which tax calculation for Invoicing was done
Key challenges specific to LATAM:
1) Fiscal &
Regulatory Requirements
2) Financial Processes
3) Operational Differences
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© Mahindra Satyam 2012
Financial Processing – Carrier Payment - High Level Flow
LSP/ Shipper
C A R R I E R S
NOTFIS
PREFAT (Pre-Invoice)
DOCCOB (Invoice)
CONEMB (CT-/NFS)
OCOREN (Events)
Multi transaction Payment process
Transportation
requires specific documentation, triggered by pre-defined events
13
© Mahindra Satyam 2012
Financial Processing– Customer Billing - High Level Flow
C U S T O M E R S
NOTFIS (Order Release)
PREFAT (Pre-Invoice)
DOCCOB (Invoice)
CONEMB (CT-e/NFS)
OCOREN (Events)
Multi transaction Invoicing process
Transportation
requires specific documentation, triggered by pre-defined events
LSP/ Shipper
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© Mahindra Satyam 2012
Challenges in LATAM
3. Operational Difference
• Cte/Sell shipment Grouping Rule
• Integration with Last Mile Routing Application
• OTD/FIDEP Concept
• Dedicated fleet
• RMP
• OCCOREN file upload to send events
• Redelivery/Return shipments
• Proximity scenario
• Refuse scenario
• Beeper Interface Design
• Reserve Dock/Appointment Scheduling by Carriers
Key challenges specific to LATAM:
1) Fiscal &
Regulatory Requirements
2) Financial Processes
3) Operational Differences
15
© Mahindra Satyam 2012
Operational Difference
CTe /Sell Shipment Grouping
The grouping of CTes is governed by parameters like Plan from / Plan to location, Customer Name / Division and other Grouping rules Based on the grouping rules associated with CTe, a fixed number of sell shipments are created and a corresponding CTE fee has to added on the buy shipment.
Integration with Last Mile Routing Application
For logistics within the Metro, local last mile routing applications are used. Based on the need for stop by stop plan, OTM is integrated.
OTM sends orders (optional) and receives actual shipment back from Last mile routing application. Then OTM rates, executes, monitors and settles.
OTD/FIDEP Calculations
OTD – On time Delivery FIDEP - Frequency of Deliveries Informed on time Delivery lead time KPIs are a function of Actual Lead time, Cut-off time for
the day, Saturday / Sunday working and holidays during transit.
Dedicated Fleet
Dedicated fleet: Contract created for each equipment. A budgetary / estimated value is assigned to each shipment on that equipment. Reconciliation: Cost for respective Shipments have to be updated (as accessorial) with additional costs to meet the original CTe amount.
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© Mahindra Satyam 2012
Operational Difference
OCCOREN file upload to send
events
In emerging economies, Service Provider may not have capability to automate the events update.
Carrier sends flat files that system accepts to create the XML and upload into the system.
Reserve Dock/Appointment
Scheduling by Carriers
Requirement was to reserve some dock doors by Carriers for specific shipments. Handled in OTM by constraining appointment with contact profiles.
Beeper Interface Interface with a Beeper system to interact with Drivers waiting at Yard for loads ready for dispatch at Warehouse.
Risk Management Plan
Each shipment’s total declared value is monitored under Risk Management Plan and evaluated for escort/GPS requirement.
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© Mahindra Satyam 2012
Operational Difference
Refuse scenario Requirement was to have under one shipment number for both forward and refuse order. Accordingly, proper rating can be done by OTM.
Redelivery/Return shipments
New shipment needs to be created as original shipment is already approved by Govt. authorities (SEFAZ).
Costing is done for only those ship units that are needed for return / Re-delivery.
Multiple shipments can be created for the same scenario, which need to be linked to the order release automatically
POD at Order Level Some Shippers pay based on POD at Order level Hence capturing POD at Order level becomes key
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© Mahindra Satyam 2012
Contents
Opportunities in LATAM & Impact on Logistics
Challenges in LATAM Region
OTM for LATAM
Implementation Approach
Q & A
1 Section
2 Section
3 Section
4 Section
Section 5
19
© Mahindra Satyam 2012
OTM for LATAM
Quote Order Plan Execute Monitor Financial
Automate and Integrate Quoting and Order
Management Optimize Planning & Execution Automate
Monitoring Fiscal, Finance
Process & Regulatory
ERP/OMS/CRM Tool OTM
Custom Built FORCE Solution
Shipper Perspective Tax Calculation Carrier Payment Cost Allocation Control of Documents Integration with external systems/ERPs
LSP Perspective Tax Calculation Cost Allocation Control of Documents Integration with external systems/ERPs Customer Billing Carrier Payment Operational differences as Extensions
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© Mahindra Satyam 2012
Leverage OTM Extensions- FORCE
Solution Objective • Enables expanding
Transportation Platform for doing business in an emerging economies
• Robust Framework which can be used for building extensions for whitespace / gaps in OTM
Solution Overview
Financial, Operational & Regulatory Compliance in Emerging Economies
FORCE compliments TMS/WMS/ERP for fiscal, operational and regulatory compliance in emerging economies
Can be Integrated with TMS/WMS/ERP using the standard interfaces / APIs
The current solution is built and integrated as part of Oracle Transport Management (OTM) – Tax calculations, carrier payment, customer billing and others
Solution also integrates with Financial system and with systems that feed the regulatory agencies. Ex: External agencies like MasterSAF for Brazil, SEFAZ, SUFRAMA.
FORCE Modules Tax Calculation Freight and Tax Components Allocation Control of Fiscal and Operational Documents of Transport Operation Freight Payments Management. Freight Billing Management Integration with external systems/ERPs User Management
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© Mahindra Satyam 2012
Contents
Opportunities in LATAM & Impact on Logistics
Challenges in LATAM Region
OTM for LATAM
Implementation Approach
Q & A
1 Section
2 Section
3 Section
4 Section
Section 5
22
© Mahindra Satyam 2012
Learning on Project and Implementation Approach
Global Template Approach
Consider Template approach for countries with less regulations
Brazil will typically not fall into global template or even LATAM template, depending on
type of operations
Knowledge of OTM in other countries is useful, could offer limited re-usability of
configuration for Brazil
Resourcing Strategy
Important to include Local resources for Understanding of Local knowledge, including
fiscal and regulatory experience
Bring in consultants with Global OTM Experience. There is limited local OTM talent
Look for Bilingual Resources / Translators
Plan for visa timeframes & associated challenges.
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© Mahindra Satyam 2012
Learning on Project and Implementation Approach
Project Planning
Be realistic in Brazil timeframes – implementation or rollout
Create time for proof of concept and interim validation during development phase
Learn from previous OTM experience in that geography
Engage with partner and Oracle
Project Approach
Scenario based approach. Complexity is in the exceptions.
Need to create flexibility to change fiscal rules / operation processes based on the
regulations
Don’t underestimate operational processes. Fiscal rules have huge impact on
operational workflow and exceptions
24
© Mahindra Satyam 2012
Contents
Opportunities in LATAM & Impact on Logistics
Challenges in LATAM Region
OTM for LATAM
Implementation Approach
Q & A
1 Section
2 Section
3 Section
4 Section
Section 5
26
© Mahindra Satyam 2012
mahindrasatyam.com Safe Harbor
This document contains forward-looking statements within the meaning of section 27A of Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Satyam undertakes no duty to update any forward-looking statements. For a discussion of the risks associated with our business, please see the discussions under the heading “Risk Factors” in our report on Form 6-K concerning the quarter ended September 30, 2008, furnished to the Securities and Exchange Commission on 07 November, 2008, and the other reports filed with the Securities and Exchange Commission from time to time. These filings are available at http://www.sec.gov
Thank You
28
© Mahindra Satyam 2012
mahindrasatyam.com Safe Harbor
This document contains forward-looking statements within the meaning of section 27A of Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Satyam undertakes no duty to update any forward-looking statements. For a discussion of the risks associated with our business, please see the discussions under the heading “Risk Factors” in our report on Form 6-K concerning the quarter ended September 30, 2008, furnished to the Securities and Exchange Commission on 07 November, 2008, and the other reports filed with the Securities and Exchange Commission from time to time. These filings are available at http://www.sec.gov
Thank You