OTM Value for International Logistics including Ocean Vessel Transport

International

OTM Value

Paul Bage - Electrolux

Barry Hayes – MavenWire (Europe)

OTM SIG June 2009

Agenda

TMS for International Logistics

European / International Case StudyOcean

Inbound

Outbound

Benefits

Lessons Learned


• 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

Agenda



Inbound

Outbound

Benefits

Lessons Learned

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

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)

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

Global OTM solution for Electrolux

Integrated global solution

OTM European

Outbound Transports

OTM European

Inbound

Transports

OTM Global Ocean & Air Transports

OTM NA Outbound Transports

RDC

CustomersVendors FDC & OEM

Supplier Electrolux

Supplier Electrolux

Electrolux International Logistics Ownership

and Control

Containerised International Inbound

India

Supplier

Port of Tuticoran

(INTUT)Port of Felixstowe

(GBFXT)

UK DCTypically FF takes ownership here

Goods

Receipt

International Inbound Process

• 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

Destination

Port

Receipt

In

Transit

Carrier

Booking

Purchase

Order

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

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

A Port to Door IRIQ

Ocean Booking

Here’s the booking in OTM….

….and here’s the proof on carriers web-site

Business Monitor

Agenda



Inbound

Outbound

Benefits

Lessons Learned



OTM European

Outbound Transports

OTM European

Inbound

Transports



RDC


Project Scope

Customers

Direct deliveries

Direct deliveries

Replenishment

FDC

OEM

RDC

Customers

Deployed or Danish market since Feb 09UK, Ireland and Sweden by end of 09

Agenda



Inbound

Outbound

Benefits

Lessons Learned



OTM European

Outbound Transports

OTM European

Inbound

Transports



RDC


Typical Inbound Routes

TL

Merged

LTL

Consol

Centre

TL

MergedLTL

LTL

TL

Direct

LTL

Factory

Supplier

2

• 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

OTM Design for Inbound

2

• 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

OTM Drivers for Inbound

2

• 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

OTM Control for Inbound

Agenda



Inbound

Outbound

Benefits

Lessons Learned

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.

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

Agenda



Inbound

Outbound

Benefits

Lessons Learned

Lessons Learned

Program Management - Single TMSSingle code baseNo customisationSingle global domain design

DeploymentIdentify organisational structure for strategic benefits and value from first deployment

International Portal IntegrationInvolve from early stage – risk averse / service drivenNotice for change / approvals gatekeeper

Mileage packagePCMiler Worldwide, Map&Guide (6.1 Integration)

CurrencySystem base currencyImpact on ratesMultiple views – entered, viewed, paid6.0 enhancements

LanguageAlong with supported languages from Oracle, applying additional language translations can be done through editing of custom language files and uploading

[email protected] [email protected]

www.MavenWire.com www.Electrolux.com

Thank-You!