Tecumseh Peete, PhD

Regional Transportation Manager

Oracle Transportation Management (OTM)
Freight
g Payment
y And Visibility
y
 Who We Are
Business Objective
TMS Super User Set Up
Carrier Connectivity To OTM
Logistics Volume
Project Scope
Lessons Learned
Future Plans For OTM
 Wh A
Who Are We
W
Avon Products
• Found in 1886, David H. McConnell.
• Avon Products American personal care manufacturer and seller company in over 140
countries
• Sales of $11.2 billion worldwide in 2011
• Fifth
Fifth--largest Beauty Company
• The largest direct selling enterprise in the world
• With 6.4 million representatives.
p
A
Avon NA Logistics
L i ti
Business Objective
• To create a web based OTM/Freight Payment System (FPS) that can:
• Consolidate freight payment functions
• Create a database repository
p y
• Replace 3PL vendors
• Provide
i end to end visibility,
i i i i off iinbound and outbound shipments
i
• Establish consistent payment process

• Transportation costs will be reduced by automation, consolidation, and

enhanced Supply Chain decision making.
making
TMS Super User Set Up

Atlanta
Pasadena
Super User
Super User
Rate Loader

Analyst / IT
Support

Canada
Zanesville
Super User
Super User
Rate loader

• Created a US & Canadian Domain

• Easy
y data accessibility
y
• Knowledge Transfer
• OTM Users
 80 between US & Canada
Implementation/Location
p e e a o / oca o S Sites
es
Avon DC NA Location

Atlanta GA
Pasadena CA

Zanesville OH
Montreal Canada
** Rye, NY – NA Office

Warehouse
Manufactures
LDC Terminals
UPS Hubs
Weekly Logistics Volume
• Air
Ai Shipments
Shi t

• International – 40 to 50

• Domestic – 60 to 70

• Truck Load Shipments

• Full Loads - 50 to 60

• Less than Full Loads – 90 to 100

• Ocean Shipments

• Full Containers – 30 to 40

• Less than Container Load – 2 to 4

• Small
S ll Parcel
P l Shipments
Shi t

• 385,000K to 390,000K Parcel Packages

Original
g Project
j Scope
p
Freight Payment and Shipment Visibility for the following logistics network…

Domestic Suppliers
Avon Sales
• TL LDC’s Representatives
• LTL Parcel and Local
Line Haul Delivery
• Air
• Ocean
Parcel and Local Delivery
• Rail Branches:
• Atlanta, GA
• Creating database repository
Off Shore Suppliers • Replaced 3PL vendors
• Pasadena, CA
• Replacing 3PL audit vendor
• Zanesville, OH
• Providing
g end-to-end visibility
y of in/outbound shipments,
p all modes
• Montreal, Quebec
• No customization; no compensation for upstream deficiencies
• 3 Additional Warehouses • Integrating with all US & Canadian in/outbound carriers
• Integrating with all 3PL providers (non warehouse cost)
• TMS implementation cost savings
• Replacing
p g lost order p
process with OTM claim pprocess
• Consolidate freight payment functions
Carrier Connectivity
y To OTM via ELN ((e2Open)
p )

3PL Logistics Carriers Carriers 3PL Logistics Customer/

Supplier Customs Shipper Provider
Provider Channel

Shipment Invoice Shipment Shipment

Tender Transport Status
Status Create
Tender Order Invoice
Response Shipping ASN Tender Packing Slips
Documents & Labels

Cust Shipment Transport Cust

T d
Tenders T d
Tenders I
Invoices
i
Docs Tracking Orders Docs

e2Open

Avon NA
A
(OTM)
"The
The difference between school and
life?
lif ? IIn school
h l you’re
’ taught
t ht a lesson
l
and
a d then e given
g e a test.
es . In life
e you’re
you e
given a test that teaches you a
lesson."
l "
Tom Bodett

Lessons Learned
Lessons Learned
• Have a firm vision on the desired OTM outcome
• Adhering to industry standards; little/no customization
• Avoid recreating your current processes “Lipstick on a Pig”
• Simplify complex contracts / rates, thus reducing OTM system configuration
complexity
• Understanding current organizational capabilities:
• “Are you a spreadsheet or an EDI organization?” (i.e.: are you still working with
archaic p
processes/systems)
y )
• Knowing where your data is located
• Identify purest single source of master data (e.g.
( OD pair / miles / SCAC codes /
cube / etc.)
e c.)
• Understanding carriers, manufacturers & suppliers, IT limitations (e.g. EDI, status
updates,
d t ship
hi confirmation,
fi ti etc)
t )
Lessons Learned,, Cont.
• Internal controls impact on business process
• Understanding OTM volume metrics implication
• Status messages on Small Parcel (e.g.
(e g invoicing
invoicing, auditing
auditing, & tracking of 50
50--70,000
70 000
shipments/day)
• Vouchers (Avg. 4/5 lines of info)
• GL codes
• Using
g a Cumulative Archive Instance (CAI)
( ) data base
• Upstream systems deficiencies cannot be solved by OTM
• Change Management: understanding how upstream deficiencies impact OTM
Dedicated
D di t d OTM TTeam
• Strong cross
cross--functional involvement
involvement, mainly IT resources; learning OTM system &
configuration from the start.
• Must have business and IT participants who understand their business requirements;
with the intellectual curiosity to learn OTM
Lessons Learned,, Cont.
• Cumulative Archive Instance (CAI) Data base
• An OTM Cumulative Archive Instance (CAI) is a separate OTM instance
• Purpose is to retain on-
on-line access to data which would become inaccessible
• Data is p
purged
g every
y 90th day
y

Web Data Web Data

Web Data
/ App

OTM
Application

All D
Data
t iis
Stored

3M
Monthsth
of live
Data
Lessons Learned,, Cont.
Issue1: Integration TRANSMISSIONs are getting trapped in FRESH status
Issue:
• Inbound transmissions trapped in FRESH status
• Application server required a restart and transmissions reprocessed manually
Fi di
Findings:
• AWR and ADDM pointed to Physical Memory configuration issue
• EventDiagServlet
g showed Application
pp Server threads not backlogged
gg and performing
p g
Corrective Actions Taken:
• System Administrator made changes to Database Server Setup
• DB Patch was installed and SGA size changed
O t
Outcome:
• The system has been stable after the DB changes were made
Lessons Learned, Cont.
Issue2: Invoice consolidation is time-
time-consuming
Issue:
•C
Creating
ea g a Saved
Sa ed Query
Que y to
o filter
e invoices
o ces for
o consolidation
co so da o
• Invoice consolidation was time-
time-consuming; completing in 30 -120 min, or incomplete
Findings:
• QA environment logs pointed to a full table scan based on the query generated
• Indexes
I d created
t d iin QA improved
i d performance
f with
ith no iimprovementt iin Prod
P d
Corrective Actions :
• Created new indexes for INVOICE and INVOICE_REFNUM
_ table
• Completed OTM Gather stats job; in addition to raising an SR to identify other potential issues
Outcome:
• Gather stats job completed, performance has improved
“Nothing g will ever be attempted
p if
all possible objections must first be
overcome ”
overcome.”

S
Samuel
l JJohnson
h
Original
g Project
j Results
Freight Payment and Shipment Visibility for the following logistics network…

Domestic Suppliers
Avon Sales
• TL LDC’s Representatives
• LTL Parcel and Local
Line Haul Delivery
• Air
• Ocean
Parcel and Local Delivery
• Rail Branches:
• Atlanta, GA  Creating Database Repository
Off Shore Suppliers  Replacing 3PL Providers
• Pasadena, CA
 Providing end
end-to-end
to end visibility of inbound and outbound shipments, all modes
• Zanesville, OH
 No customization; for upstream deficiencies
• Montreal, Quebec  Integrating with all US & Canadian in/outbound carriers via e2Open
• 3 Additional Warehouses  I t
Integrating
ti allll providers
id with ith e2Open
2O (non
( warehouse
h cost)
t)
 TMS Implementation Cost Savings
 Consolidate Freight Payment Functions
 Replacing Lost Order Process with OTM Claim Process

 Complete
 In progress
Project
j Results
Shipment Tracking and Visibility into Avon logistics network

PO Ack (ASN) to Avon (Demand Planning / ERP Systems)

AVON
Foreign Suppliers Supplier / CM Shipment
Purchase Orders (ERP System)
• CY Port / Dryage
Shipper BOL (Parent to DHL)

(315) to Demandd

BOL (Children)
Shipper

ated ETA /

on PO) Via
Tie Shipment
• CFS
BOL to DHL LCL or FCL

ETD
Third Party Shipper BOL (Parent)

S
Upda

(Avo
Suppliers
S li • Inbound
I b d to
t Child BOL A
DHL Child BOL B
DHL Consolidation 315 to Avon (Parent & Children)
Centers 315 Creates Order in AVON TMS
Updates ETA/ETD
Contract
Manufacturers 315 Status Messages updating
ETA / ETD sent to Avon ERP
Planned ETA / ETD included Systems
in ASN to Avon Alert!
Shipment is 12
hours behind
sched le
schedule

Shipment China Shipment to HK Shipment Shipment Arrived Shipment Shipment

Vessel Carrier
Departed China at US / CAN Port U l d d
Unloaded Dispatched to
Factory Shipment in transit
Alert: Port warehouse/ branch
Shipment
arrived late at
HK Port
 OTM Benefits
• Enhanced understanding of network performance • Ability to track shipments on all modes
• Improved understanding i off upstream process • Knowledge transfer/
f data sharing
i
impact (e.g. ability to mitigate UPS PNPB cost)
• Establishing disciplined processes
• Central location for shipment data
• Enhanced Internal Controls (IC)
• Improved
p financial/GL
/ accuracy
y ((Base Rate,, Fuel,, &
Accessorial)

Old Auditing Processes New Auditing Processes

• Carriers submitted paper invoices: manually • Elimination of paper invoices/using EDI
audited/spot--checking invoices
audited/spot where applicable
• 3PL Ocean pprovider: y
yearly
y audit and
submitted charge-
charge-back to carriers.
• 100% audit of Ocean shipments
• Manuallyy reviewing
g 30% of invoices throughout
g
the year
• NO audit was p
performed - “Pay
y as Present” • 100% audit of Domestic Air
invoice payment for Domestic Air
• 3PL Line Haul provider audited invoices: using • 100% audit of Line Haul In/Outbound ,
a MAX rate audit. Lane by Lane, by carrier, by contractual
• Submitted invoice does not exceed the MAX $ rates
a es (flat
( a rate
a e or
o PC
C Miller
e /cost
/cos per
pe mile)
e)
for a lane No MAX
 Implementation Timeline
2010 2011 2012
Nov Nov Dec May Jun Jul

OT M
Project
St art ed

**
Canada
Small Ocean &
Parcel A ir
( I nbound
carriers)
LH
C
Carriers
i
Ocean A ir
Carriers Carriers

** Continuing
C ti i to
t implement
i l t Canada
C d outbound
tb d carriers
i for
f visibility
i ibilit and
d payments
t
“Unless you try to do something
beyond
y what yyou have already
y
mastered you will never grow
mastered, grow.”

Ralph
p Waldo Emerson
 Opportunities For the Future
• New Territory
• Avon and OCS are breaking new ground in OTM in small parcel rating and auditing.
• OCS did not have a substantial knowledge base of large parcel volume customers to leverage best
practices.

• Data is
i King
i
• Need to be aware of data availability,
y, access and q
quality.
y
• (e.g. Authorization #, Country of origin, Incoterms , Origin/Destination Pair etc.)
• Understanding
d di organizational
i i l challenges
h ll early
l would
ld iimpact project
j timeline
i li

• Volume Awareness
• Transactional volume of small shipments presented some obstacles in OTM
• Need to be very performance conscious with UI functions and reporting
• Must anticipate
p archiving
g and purge
p g needs
• Parcel carriers need to be engaged early to better coordinate invoice and messaging changes
• Standard
St d d out-
outt-of
of-
f-the
th -box
the- b reports
t and
d metrics
t i may nott apply
l for
f Parcell
 Avon Required Data Points for OTM

1. Authorization number 10. Number of Carton

2. Commodity Code /classification 11. Number Pieces per carton
3. Country of origin 12. Origin/destination
4. Dimensions of carton (i.e. cube) 13. PO/work order #
5. Gross weight of carton 14. Product description
6
6. HazMat
H M t classification
l ifi ti 15
15. SCAC code/Carrier
d /C i name
7. Incoterms (FOB, COD, etc.) 16. Service level (next air, ground,
8
8. LOT number etc)
9. Manufacturing date 17. SKU #
18. Vendor number

• Easier to export products from the US

• Simplify duty drawback (if applicable)
• Improved customs clearance
• Implement vendor ship confirmation

* Data should not reside in multiple systems*

 Future Plans For OTM

 Replacing
R l i lost
l t order
d process with
ith OTM claim
l i process
 Using OTM visibility for ATP (Available To Promise)
 Implement carrier milestones
 Use shipping data for future RFP
 Improved network reporting
 Add on additional
dditi l modules
d l ((e.g. planning/customs)
l i / t )
Q&A