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Building a World-Class Transportation LogisticsNetwork
Sunil Wahi,
Senior Solutions Manager, Supply Chain
Oracle Asia Pacific Product Solutions
Harry Cao,
Solution Architect, Supply Chain
Oracle Application Global Sales Support
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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 berelied upon in making purchasing decisions.
The development, release, and timing of any
features or functionality described for Oracles
products remains at the sole discretion of Oracle.
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Agenda
Key Challenges faced within a Global Logistics Network
Characteristics of a World-Class Logistics Network
What are the Leaders doing?
How can Oracle Help
Oracle Supply Chain Logistics Solutions
Oracle Strategic Network Optimization (SNO)
Oracle Transportation Management (OTM)
Customer Case Study Case New Holland
Value Proposition - Conclusions
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Globalization is happening..
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And a Global Transportation LogisticsNetwork is the Mandate..
Warehousing& Storage
Carriers
Customers
Shippers
Consolidators
Cargo HandlersLogistics ServiceProviders
Freight Forwarders
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Source: Research Article on Supplychaindigest.com
Survey of Western Companies importinggoods from China
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Key Challenges faced within a GlobalLogistics Network
Lengthening of the Supply Chain
Difficulty & Cost Inefficiencies in Transportation Execution
Lost Sales/Mismatch in Supply & Demand
Import/Export Compliance Procedures Disconnect between International and Domestic
Transportation
Lack of Strong Technology support
Lack of Experience and Skill Sets
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Characteristics of a World-ClassTransportation Logistics Network
Optimal Design of Global Supply Chain Integrated Planning and Execution Processes
Integrated International and Domestic Logistics
Global Logistics Visibility
Dynamic Logistics Routes
Logistics Process Automation
Collaboration with Supply Chain Partners
Compliance to Changing Regulations
Making the Financial-Supply Chain Connection
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What are the Leaders doing?
Laggards are taking the full
brunt of rate increases andcapacity/performanceshortfalls
Leaders are taking action toavoid these problems by:
Trying to Improve overall serviceand financial performance
Investing in the right place
Focusing on Value
Thinking End to End
Leverage Technology (Network
Design, Logistics, Visibility,Analytical Solutions, etc..)
Tapping local Talent
Manage Risk
RevenueRevenue
CostsCosts
Work ingCapi ta l
Work ingCapi ta l
Fixed
Capi ta l
Fixed
Capi ta l
Shareholder Value
Shareholder Value
Profitabil i tyProfitabil i ty
InvestedCapi ta l
InvestedCapi ta l
Laggards SiloView
Leader sHolistic
Approach
Lower raw mater ials and f in ished goodsinventory without sacri f ic ing customersatisfaction or raising logistics costs
Shor ter order-to-$$$ cyc les
Greater custo mer satisfaction (i .e . ,higher market share, greater grossmargins )
mo re com peti t ive del ivery avai labi l i ty
Lower cost of goods sold- lowfreight rates at each bus iness unit
Few er physical assets ( i .e . , trucks,trai lers, and mu ch higher asset
utilization
In other wordsLeaders act as
internal XPLs or even as profit
centersand every transport move
has a buy-side and a sell-side
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Introduction to Oracle Supply ChainLogistics Solutions
Domestic
International
Strategic(3-18 months)
Tactical(1-3 months)
CarrierSelection,Contracts
&Rates
Operational / Transactional(NOW 60 days)
SupplyNetworkDesign
InventoryOptimization
LoadPlanning &
Optimization
LoadTendering
Freight Forwarders
Visibility of Events and Charges
Key Performance Indicator Trends & Action Plans
Freight Bill
Settlement &Payment
CarrierPerformanceMonitoring
Freight Claims
Handling
Private FleetOperations
Global Trade Planning,Customs Compliance& Charges
Execution
Oracle Transportation Management (OTM)Oracle Strategic NetworkOptimization (SNO)
Oracle InventoryOptimization (IO)
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Leverage resiliency in your supply chain for tactical responses
Oracle Strategic Network OptimizationDesign Resilient Supply Networks
Network modeling and alternates
Sourcing strategy
Cost modeling
Asset rationalization
Safety stock strategy
What-if simulations
Risk related to unplanned events
Design supply chains that are resilient
Strategic Network Optimization (SNO) Network modeling and alternates
What-if simulations
Cost modeling Asset rationalization
Risk related to
unplanned events
Inventory Optimization (IO)
Model distribution of variability(demand, supply, lead time)
Budget and capacity constraints
Time-phased min,
max, and target
service levels
Inventory policies
Target inventory levels
Identification of point of postponement
Network structure
Sourcing rules
Suppliers and CMs
Mfg and Dis facilities
Shipment methods
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Pillsbury Foods Project to rationalize distribution centers during
merger of Pet Foods and Pillsbury Foods
Reduced warehouses from 23 to 9
Held service levels constant despite reduction infacilities
Significantly reduced transportation costs
Alcoa Primary Metals Profit optimized mix of products to produce on
bottleneck equipment
Significant reductions in transportation costs
Improved management of risks due tocommodity market price fluctuations
Increased profitability of products produced insmelters
Agilent Technologies Deployed for one product family (700 products, 5000 items)
since May 2006
Multi-echelon supply chain network (14 levels deep)
Improved forward visibility and understanding of impact ofinventory on service level
Part of S&OP process: quantitative understanding of
inventory investment to achieve sales upside
20-30% improvement in service level for the sameinventory investment
Panduit Plans inventory at warehouses to meet service level
commitments to customers (48 hour fulfillment lead time)
Multi-echelon inventory planning reduces overall inventory
investment, improved visibility of buffer inventory in thesupply chain
Anticipates further reduction in inventory when includingmanufacturing facilities to leverage opportunities topostpone inventory holding to shared raw materials andsub-assemblies
Live on Strategic Network Optimization, Inventory Opt.
Few SNO Customers
I t d ti t O l S l Ch i
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Introduction to Oracle Supply ChainLogistics Solutions
Domestic
International
Strategic(3-18 months)
Tactical(1-3 months)
CarrierSelection,Contracts
&Rates
Operational / Transactional(NOW 60 days)
SupplyNetworkDesign
InventoryOptimization
LoadPlanning &
Optimization
LoadTendering
Freight Forwarders
Visibility of Events and Charges
Key Performance Indicator Trends & Action Plans
Freight Bill
Settlement &Payment
CarrierPerformanceMonitoring
Freight Claims
Handling
Private FleetOperations
Global Trade Planning,Customs Compliance& Charges
Execution
Oracle Transportation Management (OTM)Oracle Strategic NetworkOptimization (SNO)
Oracle InventoryOptimization (IO)
O l T i M
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Oracle Transportation ManagementManage All Your Transportation Needs in One System
TransportationOrder Capture
Global Visibility
Supply Chain Event Management
Business Intelligence (Analytics & Reporting)
Freight Forwarding and Brokerage
TransportationPlanning
TransportationExecution
Ca
rrierandAs
set
Managem
ent
C
ooper a
tiveR
outePlannin
g
Transportatio n
Sour c
ing
FreightPayment,
Billing andClaims
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Execute Locally Using multiple languages and currencies-
English, Spanish, German, French, Chinese (simplified)- Support for all currencies, including in-system conversions
- Screen customization by region / country, user groups
Accommodate region-specific rules and regulations
Control Globally All inbound POs and outbound customer deliveries
Transfers between facilities, in different countries
- Distribution centers mfg - Intermediary nodes
Visibility into in-transit & at-rest inventory throughout network
Manage Centrally All operational information in one location- Increase leverage for procurement- Apply best practices across regions
- Evaluate processes holistically
- Perform network analysis
Cleanse data to achieve single source of true rates and routes
Single IT infrastructure to reduce support and maintenance costs
Oracle Transportation ManagementManage All Your Transportation Needs in One System
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A Few Customers...
LogisticsService
Providers
Manufacturing
Retail
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World leader in agricultural and construction equipment businesses
2006 annual revenue of $13 billion, with 30 manufacturing plants and25,335 employees globally
Sales in 160 countries through more than 11,500 dealers and
distributors
Ships over 300,000 pieces of outbound whole goods and 1 million
inbound shipments to support the global manufacturing
Case New Holland- Case Study
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Case New Holland- CNH is Global
BrazilBelo Horizonte
Crawler excavators,
tractor loader backhoes,
crawler dozers, wheel
loaders, graders
Curitiba
Tractors, combines
Piracicaba
Sugar cane harvesters,
coffee harvesters,
planters
CanadaSaskatoon, SK
Planting, seeding
equipment
Mexico* Queretaro
Tractors, components
* Guanajuato
Tractors
United States
Belleville, PAHay, forage equipment
Benson, MN
Sprayers, floaters,
cotton pickers
Burlington, IA
Tractor loader backhoes,
forklifts
Calhoun, GA
Crawler excavators,
dozers
Dublin, GA
Compact tractors
Fargo, ND
Tractors, wheel loaders
Goodfield, IL
Soil management
(tillage) equipment
Grand Island, NE
Combines
New Holland, PA
Hay and forage
equipment
Racine, WITractors, components
* Rocky Mount, NC
Engines
Wichita, KS
Skid-steer loaders
Manufacturing Locations
* Unconsolidated Joint Venture
C N H ll d
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Case New Holland- CNH is Global
AustriaSt. ValentinTractors
BelgiumAntwerp
Components
Zedelgem
Combines, forage
harvesters, largerectangular balers
ChinaHarbin
Tractors
Shanghai
Tractors
FranceCoex
Grape harvesters
CroixComponents
Tracy-Le-Mont
Components
GermanyBerlin
Wheeled
excavators,
wheel loaders,graders
IndiaNew Delhi
Tractors
* Pithampur
Tractor loader
backhoes
ItalyImola
Tractor loader
backhoes, mini-
excavators
Jesi
Tractors
San Mauro
Crawler excavators,
wheeled excavators
Pakistan* Dera Ghazi Khan
Tractors
PolandPlock
Combines, balers
Turkey* Ankara
Tractors
United Kingdom**Basildon
Tractors, engines
UzbekistanTashkent
Tractors, cotton pickers
Lecce
Midi wheeled
excavators,
telehandlers,dozers, wheel
loaders
Modena
Components
Manufacturing Locations
** It includes both CNH and Unconsolidated Joint Venture Plants
* Unconsolidated Joint Venture
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Background - US was outsourced to 3PL, Europe was running in-houseon legacy systems, little control over inbound transportation
Objective - Wanted to reduce freight costs and increase visibility by
streamlining and controlling logistics operations inhouse
Technology- Selected Oracle Transportation Management for global
transportation platform
Results - Went live in US in Nov 06 and Europe in Jan 07six months
after vendor selection complete
Case New Holland- Project Overview
C N H ll d
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Case New Holland- Vendor Selection Process
Dec 2005Nov 2005
Recommendation
Began with a
list of 42possible TMS
Vendors
Lean Logistics
Manhattan Assoc.
Manugistics
Meridian IQ
Nistevo Corp
QLogitek
Red PrairieSAP
Transplace
CTSI
Oracle/G-Log
Logility*
Descartes*
Oracle/G-Log
Manhattan
SAP
Red Prairie
CTSI
Oracle/G-Log
Manhattan
SAP **Oracle/G-Log
Recipients of
CNH TMS RFI
Semi-finalists chosen
after demos
Chosen to
demonstrate theirproduct to CNH
Jan 2006 Jan 2006 Feb 2006
* Logility and Descartes chose not to
respond
** SAP has chosen not to
participate in the post
demo activities
C
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Global development/implementation
Oracle OTM system was designed as a global system, not a domestic system
adapted for global use
Rated at or near the top in all of the CNH RFI and Demo scoring
categories
Strong client site references in North America
Integration experience with SAP
Oracles On-demand option allowed for quick installation
Innovation leadership to drive continued transformation
Case New Holland- Why OTM?
C N H ll d
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Ph
ases
Case New Holland- Implementation Phases
North American Logistics European Logistics
NA Phase II NA Inbound from NA SuppliersMaterial - NA Suppliers to NA PlantsMaterial - NA Suppliers to Non-NA Plants (Port)Material - NA Supplier to NA SupplierService Parts - NA Suppliers to NA Depots
NA Phase IV - Outbound Service PartsNA Depot to NA DealerNA Depot to Non-NA DealerNon-NA Depot (Port) to NA DepotNA Suppliers to Non-NA DealerNon-NA Suppliers (Port) to NA DepotNA Depot to NA Depot
NA Phase I NA Plant Outbound and Direct ShipWholegoods - NA Plant to NA DealerWholegoods - NA Plant to Non-NA Dealer (Port)Wholegoods - NA Supplier to NA DealerService Parts - NA Suppliers to NA Dealer
EU Phase I - Inbound MaterialEU Suppliers to EU PlantsEU Suppliers to Non-EU PlantsNon-EU Suppliers (Port) to EU PlantsEU Plant to EU PlantEU Supplier to EU Supplier
EU Phase II - Inbound Service PartsEU Suppliers to EU DepotsNon-EU Suppliers (Port) to EU DepotsEU Depot to EU DepotNon-EU Depot (Port) to EU DepotEU Dealer to EU DepotDealer to EU Suppliers
EU Phase IV - Outbound WholegoodsDealer to DealerEU Plant to EU DealerNon-EU Plant (Port) to EU DealerEU Plant to Non-EU Dealer
EU Phase III - Outbound Service PartsEU Depot to EU DealerEU Depot to Non-EU DealerNon-EU Depot (Port) to EU DealerEU Suppliers to EU DealerEU Suppliers to Non-EU Dealer (Port)Non-EU Suppliers (Port) to EU Dealer
NA Phase III NA Import, NA Intracompany, NA ReturnsWholegoods - NA Dealer to NA DealerWholegoods - Non-NA Plant (Port) to NA DealerMaterial - Non-NA Suppliers (Port) to NA PlantsMaterial - NA Plant to NA PlantService Parts - Non-NA Suppliers (Port) to NA DepotsService Parts - NA Depot to NA DepotService Parts - Non-NA Depot (Port) to NA DepotService Parts - NA Dealer to NA DepotService Parts - NA Dealer to NA Suppliers
C N H ll d
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Oracles
OTM
*One Global Domain
CNHWholegoods
Plants
Carriers
Request for Pick-up
Planned Shipment
w/ OTM Shipment Id
Tender Responsevia EDI, Portal or email
Invoice
w/ OTM Shipment Id
PlannedShipment
w/ OTM ShipmentID
Master Data Interfaces
Item Master
Location Master
Freight PaymentPayment made when Invoice matches Planned
Shipment, unless Routing Guide Shipment
RIQ(Sell Rates)
Case New Holland- Outbound Integration
C N H ll d
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CNH Supplier
LeveragedCNH Supplier Portal
Carriers
Request for Pick-up
Planned Shipment
w/ OTM Shipment Id
Invoicew/ OTM Shipment Id
PlannedShipment (NA)
or ActualShipment (EU)
w/ OTM Shipment Id
Oracles
OTM
One Global Domain
Routing Guide(NA Only)
CNH Receiving
ActualShipment(EU only)
w/ OTMShipment Id
Tender Offervia EDI, Portal or email
Tender Responsevia EDI, Portal or email
Freight PaymentPayment made when Invoice matches Planned
Shipment, unless Routing Guide Shipment
Master Data Interface
Location Master
Case New Holland- Inbound Integration
C N H ll d
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Case New Holland- Project Results and Benefits
Reduced Freight Costs
Inbound and outbound transaction costs Lower headcount
Lower cost carrier selection
Payment based on actual shipped weight
Increased Visibility Supplier communications (know when something is shipped)
Shipment data (weight, supplier, carrier selection)
Freight rates, freight payment and damage claims
Dealer destination charges
Increased Control Carrier KPIs: Service level, cost, quality
Supplier compliance to core carriers
TMS B i B fit
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TMS Business Benefits
What business benefits have you achieved through the
use of Transportation Management Software?% of Responses
83%
76%
66%
63%
56%
53%
50%
50%
49%
16%
Streamlined
operations/productivity
Reduce transportation and
shipping-related costs
Improved customer satisfaction
Improved ease of use
Improve visibility into logistics-
related activities
Improved use of / relationship
with carrier
Reduction in headcount
Improved collaboration withexternal business partners
Created competitive advantage
Lowered supply chain
inventories
Source: AMR, 2006
The emphasis is less onjustifying an investmentbased on Return onInvestment (ROI) and moreabout fixing a very obviousproblemLogisticsprocesses both efficientand inefficient impactrevenues, bottom lineprofits, the balance sheet,production schedules,human resourceproductivity, and thetechnology that drives non-logistics parts of theorganization.
V l P iti
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Value Proposition
Optimal Design of Global Supply Chain - Design Resilient Supply
Networks
Integrated Planning and Execution Processes -Robust multimode/Multi leg transportation planning; advanced inventory
management
Global Logistics Visibility -Single global view of all logistics
information; seamless ERP, SCM, and device integration
Increase Logistics Operations Efficiency -Automated warehouse
operations, RFID support, synchronized shipping and transportation
Collaborate with Supply Chain Partners -Seamless execution
flows, Carrier Sourcing, Automated settlements, transaction-centric
collaboration
Drive Continuous Improvement and Best Practices -Closed-loop
Business Intelligence, Advanced analytics and reporting, integrated
event management
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St t i t Ad t TMS S l ti
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Strategies to Adopt a TMS Solution
Purchased TMS Software: Purchase, Implement and Configure a TMS Software as per your business needs
Centralize/Decentralize based on Corporate Mandate
Software, Services, Hardware, Support Costs involved
Streamline Implementation Timeframes
Outsource to a 3PL/4PL: Outsource Transportation Function to a company focusing on this market as their core
business. And focus on your own Core Competency
Less Control over Decision Making
Major Concerns: Transition process, depth of 3PLs management team, security andsafety issues, trust and costs
Can also be a hybrid where logistics control is retained while a transportation function likeassets and operations are outsourced
Software as a Service (SaaS): Leverage Application Providers capability in hosting the Solution for you
Make your own Transportation decisions
Need not maintain Hardware, Software and Upgrades
Service Contract/Subscription based Model