Martin Etlis BDM, Post, Express & LogisticsEurope, Middle East & AfricaOracle Corporation

Jasper van SchelvenSales ConsultantDCS Transport and Logistics Solutions

The Transformation of Logistics Companies:

Oracle's & DCS’ SCM & eFulfillment solution

Agenda

Market trends: Why is the transformation necessary?

IT enables the transformation Case studies

General trends in the Logistics market

Cost reduction– Need to improve margins

Low levels of differentiation (traditional services) Low margins (traditional services)

A to B transport, Warehousing– Shippers focus on cost reduction

Shipper’s primary focus tends to be cost not performance (throughput)

Shippers are inexperienced in contracting advanced logistics services

– Low levels of automation and integration Processes and Technology

Consolidation– High level of fragmentation in all segments– Customers require global capabilities– Comprehensive logistics services requires economies of scale

Source: Seventh annual study on Third Party Logistics 2002 by Georgia Institute of technology, Ryder Systems and Cap Gemini Ernst & Young.

General trends in the Logistics market Globalisation

– Customers (shippers)– Competition between global players (DHL vs UPS)– Mergers & Acquisitions into larger entities (across segments) to

create economies of scale

Extended customer service– In order to differentiate from competitors

Demand for high level services– Taking over customer’s logistics operations– Integration with customer’s business processes– Shippers are Centralizing and Outsourcing Logistics Operations

Larger portion of shipper’s logistics operations are being outsourced to LSPs

– Integration into Customer’s (shipper’s) & supplier’s Value Chains Increased need for collaboration capabilities From Supply Chain to Supply Network

Source: Seventh annual study on Third Party Logistics 2002 by Georgia Institute of technology, Ryder Systems and Cap Gemini Ernst & Young.

General trends in the Logistics market

Time to Market of logistic services (Shippers demand a faster T2M of 3PL/4PL)

– Implementation of outsourcing contract lengthy and costly Necessary resources demands long contracts

Contracts based on Service Level Agreements– Complex contract structures for comprehensive logistics services

IT enables the transformation into added value service providers– High reliance on bespoke systems– Best of breed strategies

Multiple vendors and complex IT infrastructure with high integration costs

– Replacement of Legacy Systems Legacy systems are becoming obsolete, trend is to replace with

standard packages

Source: Seventh annual study on Third Party Logistics 2002 by Georgia Institute of technology, Ryder Systems and Cap Gemini Ernst & Young.

Logistics Drivers

Global PromisingIncreased Velocity/Visibility

Global PromisingIncreased Velocity/Visibility

CustomerExpectations

CustomerExpectations

Internet Selling/Higher VolumeMass CustomizationInternet Selling/Higher VolumeMass Customization

VariableDemandVariableDemand

Increased CompetitionCommoditizationIncreased CompetitionCommoditization

MarginPressureMargin

Pressure

Product ProliferationGlobal Supply & Demand

Product ProliferationGlobal Supply & Demand

IncreasedComplexityIncreased

Complexity

Lower CostReduce Inventory and Carrying Costs

Streamline Movement and Storage Operations

Lower CostReduce Inventory and Carrying Costs

Streamline Movement and Storage Operations

Seamless IntegrationProvide Real-Time Information Access

Integrated Planning and Execution

Seamless IntegrationProvide Real-Time Information Access

Integrated Planning and Execution

Improve Customer SatisfactionIncrease Delivery Promise Accuracy

Provide Real-Time Delivery Adjustments

Improve Customer SatisfactionIncrease Delivery Promise Accuracy

Provide Real-Time Delivery Adjustments

Logistics Goals

Logistics Opportunities

On-Time DeliveriesOn-Time Deliveries 10-10-20%20%

Improved Capacity UtilizationImproved Capacity Utilization 5-10%5-10%

Lilly, Intermec, eSync, Tompkins, Meta Group, Telia NetworksLilly, Intermec, eSync, Tompkins, Meta Group, Telia Networks

Warehouse Labor HoursWarehouse Labor Hours 10-10-30%30%

Direct Transportation Spend Direct Transportation Spend 5-25%5-25%

Total Inventory Total Inventory 5%5%

Shipping ErrorsShipping Errors 80-100%80-100%

Traditional Logistics

Your Company Carriers CustomerWarehouses

ExecutionPlanning

Expediting andMissed Shipmentsx

Multiple,Non-Integrated

Systems

Manual Processes

Logistics Value ChainMRP

Adv Planning & Scheduling

Supply Chain Planning

Demand Planning

Distribution OrderManagment

Supply ChainSupplier Procurement Production Distribution Customer

Warehouse Management

YardManagement

FreightForwarding

TransportManagement

Supply Chain Execution

Supply Chain Managment

The need for Agility in the Supply Chain

Manufacturers need the ability to provide customized products with economies of scale To achieve this you

need:• Co-development• Modularization• Sequencing centres• Postponement• Collaboration

A happycustomer

Logistics plays a vital role to

getting:

The “new” role of the Logistics Service Provider

Source DestinationStorage

OutboundInbound

Supply Chain Conductor

Source DestinationStorage

OutboundInbound

Moving up the value chain!

A Better WayA Better Way

Oracle: Complete E-Business Suite

ProcureProcureProcureProcure

ManufactureManufactureManufactureManufacture

Service /Service / Maintain MaintainService /Service /

Maintain Maintain

DevelopDevelopDevelopDevelop

FulfillFulfillFulfillFulfill

PlanPlanPlanPlan

MarketMarket

SellSell

FinanceFinance

Human ResourcesHuman Resources

ProjectsProjects

Global Customers

CustomerCustomerSatisfactionSatisfaction

Continuous ImprovementContinuous

ImprovementCarrierCarrierAnalysisAnalysis

On-TimeOn-TimePerformancePerformance

Integrated Planning & Execution

PlanPlan Book /Tender Book /Tender

Pick,Pack,Ship

Pick,Pack,Ship

TrackTrack Replan Replan Rate Rate Settle Settle

Carriers / 3PLs

Collaboration

InboundSupplySource

OutboundDemandDestination

Oracle & DCS Logistics Solution

Oracle & DCS Logistics SolutionDimensional Considerations

Dynamic

Operational

Tactical

Strategic

Dynamic

Operational

Tactical

Strategic

TimeTime

Facility

Local Area

Domestic

International

Facility

Local Area

Domestic

International

PlacePlace

Truck

Rail

Air

Ocean

Truck

Rail

Air

Ocean

ModeMode

Outbound

Inbound

Intra-Org.

Returns

Outbound

Inbound

Intra-Org.

Returns

FunctionFunction

Oracle & DCS Logistics Solution

Enables you to:

Integrate Planning and Execution

Collaborate With All Trading Partners

Streamline Global Shipments

Drive Continuous Improvement

Integrate Planning and Execution Seamless Flow of Information

Warehouse Management

Minutes Hours/Days Weeks/Months Quarters Years

Network Design

Supply & DemandPlanning

Transportation Planning

Transportation Execution

Event Management

Strategic

Operational

e.g. Distribution Network

e.g. Planned Shipments

e.g. Performance

e.g. Shipment Schedule

e.g. Actual Shipments

e.g. Load Plans

e.g. Shipment Exceptions

e.g. Delivery Confirmation

e.g. Load Confirmation

e.g. Dock Scheduling

Minimize Inventory Provide Single, Consolidated View of All Inventory

Provide inventory visibility– In-transit inventory– At trading partners

Enable postponement– Optimize inventory location

(manufacturing, distribution centers, central warehouses)

Plan for demand and supply variability

Warehouse

In-Transit

WIP / Planned

Production

ConsolidatedInventory

Status

Maximize Service Levels Improve Customer Satisfaction

More Accurate Promise Dates– Promise orders based on material availability, supplier,

manufacturing and transportation capacity– Allocate supply & capacity by channel, customer or product– Enable Capable to Deliver

Increase Delivery Efficiency– Minimize expediting charges– Eliminate manual transfer processes– Improve warehouse pick and carrier delivery accuracy

Proactively Respond to Exceptions

Optimize Asset Usage Leverage All Assets to Reduce Operating Costs

People

Warehouse Space Vehicles

Capital

What percentage of shipments are delivered on-time?

How to increase customer service levels?

What the average cost per shipment is?

How to expedite fewer shipments?

What carriers are providing the best service?

– Objective: Set corporate and personal targets – Fact: Provide performance-based metrics– Exception: Continuously evaluate performance

– Objective: Set corporate and personal targets – Fact: Provide performance-based metrics– Exception: Continuously evaluate performance

Manage By…

…For Better Decision Making

Daily Business IntelligenceDrive Continuous Process Improvement

Drive Continuous Improvement Improve Performance Through Integrated Intelligence

EstablishEstablishTargetsTargets

PerformPerformTransactionsTransactions

MeasureMeasureResultsResults

Out ofOut ofToleranceToleranceNotificationsNotificationsAdjust PlanAdjust Plan

ExceptionsExceptionsLogistics

Plan

Oracle Logistics Solution

Integrate Planning and ExecutionIntegrated supply, demand, and transportation planning withtransportation and warehouse execution

Collaborate with All Trading PartnersReal-time information sharing, event management

Streamline Global ShipmentsSingle global instance, international trade management

Drive Continuous ImprovementIntegrated performance measurement and analysis

• Define all characteristics of the distribution network• Specify details such as lanes, distribution centers, etc.

• Supply and demand planning across network• Transportation planning including load planning,

mode/carrier optimization, load configuration

• Freight rating, automated mode/carrier selection• Load tendering, shipment pickup requests• Global track and trace, settlement

• Automated, tailorable warehouse functions (e.g. pick, pack)• RF barcoding support• Advanced inventory management capabilities

• Monitor shipments• Handle exceptions and notify all trading partners

NetworkDesign

Supply ChainPlanning

TransportationExecution

WarehouseManagement

EventManagement

Oracle Logistics SolutionKey Capabilities

Oracle’s & DCS’ Value Proposition

CustomDeveloped

P S FTH R M S Custom

DevelopedI2

CustomDeveloped

Ariba

SAPFIN

Busobjects

9iWeb-sphere

Mercator

G -log

Procurem ent

HRM S

FINAPPS

9i + 9 iAS

DCS TMS

O M + SC M + APS

Which one would you chose?

UPS enables global commerce through the use of Oracle e-Business Suite

"The E-Business Suite allows us to do the types of things I just talked about [enabling global commerce]. It transparently takes orders and puts them into fulfillment, replaces them from inventory and moves them through shipping, and touches the accounts-receivable lines and the financial lines. It's an awfully powerful thing that really transforms our customers' businesses and our business. Between what, together, we do, those kinds of alliances like we've made with Oracle have been big wins for our customers."

Mike Eskew, CEO, United Parcel ServiceInterview in Profit Magazine

APL Logistics chooses first class IT solutions for world class excellence“Our selection of DCS followed a rigorous evaluation process during

which time we found that the core attributes of both DCS and their product, DCSi.Logistics, exactly matched exactly the requirements of APLL.”

“We are committed to develop developing long termlong-term relationships with our customers and suppliers, and we are of the firm opinion that by linking up with DCS, we can achieve a partnership that will benefit both our organisations.

In today’s global economy, we require first class IT solutions which together with our logistics professionals, allow APLL to offer proven solutions that provide world class operational excellence to manage the supply chain.”

Ian Robinson, Director of Technology and Implementation Services, APL Logistics

Kühne and Nagel – Streamlining Scania’s transatlantic supply chain Belgium DC managing and receiving European deliveries from

450 suppliers ANR and BRU hub to Brazil and Argentina

“For Scania, we have provided a stable and reliable system, with the lead time reduced dramatically and errors down almost zero. For KN DCSi.Logistics gave us easy handling, fast stock overview and simple EDI exchange with the customer.

The major benefits were error-free pallet handling, no paperwork in the warehouse, and complete visibility of the goods at every stage.”

Mr. Udo Bauersachs, Worldwide IT vice president for KN Contract Logistics

Moving up the value chain

Maersk Logistics for Lego

TMS Operation Lego Delivery Chain

Cost reduction through job costing visibility

Value add through KPI monitoring

Carrier selection and monitoring

DHL Danzas for IBM

Decentral to Central Spare Parts Ops

AMS EMEA DC Dramatic increase of volume Retain and improve Service

Levels Reduce overall transaction

costs Carrier selection and

monitoring

Moving up the value chain

De Rijke for the chemical industry

TMS and WMS operation turning into SCM operation

Carrier selection and management

Resource management Adding value by

managing costs and offering visibility

Noy Logistics for HD

tapestria.com: shortening the fabrics supply chain

EDI for speed and accuracy

Value added WMS ops UPS deliveries for

speed