6/3/2015

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INSPIRING VALUE CHAIN ADVANTAGE ®

A new path to TMS ROICloud-Based Transportation Management Systems

Shauna Hillier, CCS, CCLP

June 3, 2015

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Agenda

• Introduction

• Transportation Management Systems

• Cloud-Based Solutions

• Cloud Approach vs. Traditional On-Premise Approach

• Evaluating Potential Cloud Solutions

• Evaluating Implementation Partners

• General Best Practices

• Q&A

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• As CCLP’s we’re expected to manage a wide variety of operational

scenarios while keeping an eye on costs and KPIs.

• ‘If you can’t measure it, you can’t manage it.’

• A CCLP is not usually an Information Technology specialist. However, the information technology platform for managing operations and freight spend is and will continue to be an ever more critical part of executing and improving operations.

• If you do have a TMS, you’re probably wondering if it could be better.

• If you don’t have a TMS, you’re probably wondering if you should have one.

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Introduction

• ‘Cloud’ and ‘Cloud Computing’ are the

new information technology buzzwords

• They’re seen everywhere, on all kinds

of platforms

• You start to wonder:

– Is there something to this Cloud concept?

– Is there a business benefit I should be

aware of?

• This webinar is going to give you some

tools for evaluating those questions in

the context of a Transportation

Management System

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Introduction

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Who am I, and why am I giving a webinar on Cloud Based Transportation

Management Systems?

• Worked in operational logistics for over 9 years

– Sherritt International (Metals Refinery)

– Air Liquide (Bulk Gases and Liquids)

– RONA (Retail Hardware and Housewares)

• All modes – intermodal, ocean, rail, road (TL/LTL), air, some pipeline

• At each company, I either worked with, implemented, or managed a TMS

– Was a logistics coordinator that had to transition to a new TMS my company implemented

– Managed, trained and hired personnel to work as TMS planners or dispatchers

– Worked with carriers to develop rates for TMS planning and onboarded them as TMS partners

– Managed reporting, system configuration, rates loading and ongoing development

• Moved to consulting in 2014, specializing in Oracle Transportation Management and Oracle Global Trade Management

– Inspirage is an implementation partner – we help companies implement software

– Lead for development and configuration of our Rapid Start Solutions for the Oracle Cloud

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Introduction

Transportation Management

Systems Overview

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Why implement a TMS?

• 5 – 20% rate improvements from carrier bid optimization

• 5-10% reduction in current administrative costs

• 5 – 25% expedited shipment reductions

• 5 – 15% capacity increase

• 5 – 20% reduction in freight cost due to consolidation

• 5 – 30% productivity improvements (reduced errors,

increased loads per hour, automation)

• 1 – 3% decrease in transportation costs

• 2 – 5% reduction in inventory

• Lower transportation costs due to better analytics

• Better supplier and customer relationships

• 10 – 100% reduction in administrative costs

• 2 – 5% reduction in freight expense through correct

invoicing and application of accessorials

Shipment Planning &

Optimization

Shipment Execution (Booking/Tendering and En Route Planning)

Supply Chain(Visibility & Analytics)

Freight Payment and Billing

Transportation Sourcing

and/or Contract Management

Core • Contract Management

• Order Management• Shipment Creation

• Shipment Execution• Order / Shipment

Visibility• Reporting

• Workflow

Operational Planning

• Algorithmic Planning• Order Consolidation

• Shipment Optimization• Load Configuration

• Dock Scheduling

Freight Payment, Billing, & Claims

• Freight Invoice Creation• Freight Audit

• Match-and-Pay / Auto-Pay

• Payment Voucher

Creation• Customer Billing

• Claims

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Typical ModulesIntelligence / Analytics• KPIs

• Ad hoc Reporting• Score Carding

• Benchmarking

Fleet Management• Fleet Planning

• Dispatching• Driver Assignment• Asset Mgt. / Tracking

• Driver Payroll / HR

Carrier Sourcing• Carrier Bid Mgt.

• Automated Rate

Upload

• TL, LTL, and Air

Routing Analysis• Continuous Move

Analysis• Asset Planning• Automated Route

Upload

Freight Forwarding & Brokerage

• Consolidation. Mgmt.

What-If Modeling / Simulation

Global Compliance

Management• Customs

Management

• Trade Compliance

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Typical TMS Integration

Item

Location

Purchase Order

Sales Order

Planned Shipment

Shipment Actuals

Payment Voucher

Tender Offer

Tender Response

Shipment Event

Tender Offer (email)

Tender Response (Web Portal)

Shipment Event (Web Portal)

PCM or RM (Distance Calc.)

SMC / LTL Tariffs (LTL Rating)

Transfer Order

ER

P / W

MS

ER

P / W

MS

Carrie

rs

External External

SystemsSystems

Order Order

ManagementManagement

Shipment Shipment

PlanningPlanning

Shipment Shipment

ExecutionExecution

VisibilityVisibility

Freight Freight

SettlementSettlement

Master DataMaster Data

Re

po

rtin

gR

ep

ort

ing

Wo

rkfl

ow

Wo

rkfl

ow

TMSTMS

Freight Invoice

Notification

Cloud-Based Solutions

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There are challenges facing any IT project today:

– Shrinking budgets

– Mobile Applications

– Security Challenges

– System Upgrades

– System Integrations

– Resource Constraints

– Process Changes (Innovation and Improvements)

– Learning Curve on New Technology

– 1 – 2 Year ROI Expectation for a New IT Project Approval

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Business Drivers Behind Cloud

Cloud-based systems propose to answer those business challenges.

• Key difference: You’re not buying Software – you’re buying a Software Solution. This includes:

– SaaS (Software as a Service) – You are buying configured software

– BPS (Business Process as a Service) – You are buying processes

• In order to do configuration you need to have defined the processes, which are the events that will occur in a certain sequence

– In Transportation, there is enough process commonality to allow pre-configuration to be useful

– E.g. Get a sales order → Plan a shipment for the order → Tender the shipment to a carrier → Pick

and Ship the goods → Monitor the shipment to destination → Pay the Invoice for the shipment →

Analyze and Report on KPIs

• Analogy: Traditional system vs. Cloud system is like the difference between building a house and buying a house

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The Cloud Business Proposition

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• Build (Traditional Implementation) – Take your processes:

– Build the floor plan exactly the way you want it to be (Integration)

– Put in the appliance package you want (Configured Data Elements)

– Choose flooring – carpet vs. hardwood vs. linoleum (User Interface)

– Price = ?, Timeline = ?

• Buy (Cloud Implementation) – Based on best practice processes:

– Floor plan is what it is – the walls are built

– Appliances and flooring are already there

– Price = X, Timeline = X + ?

– You can renovate / upgrade if you want

• Adjust Price and Timeline accordingly

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The Cloud Business Proposition

With a Cloud Implementation, you gain on:

• Speed

– Rapid implementation = Rapid time to realized value

– Pre-configured system based on a pre-defined process flow

– Less uncertainty on timeline

• Cost

– Rapid deployment reduces your project cost

– Subscription based costing – pay as you go, pay for what you need

– Less uncertainty on cost

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The Cloud Business Proposition

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• Resources

– Certified implementation partners manage implementation and ongoing support

– Rapid deployment decreases the demand on your IT and operational resources

• You focus on your core business, not on managing IT systems

– Less learning curve required

• Other Benefits

– Scheduled upgrades keep you current and compatible with all systems / devices

– See pre-configuration in advance – know what you are buying

– Pre-configured security profiles with appropriate user access

– Flexibility to change as processes change / your business grows

– Lower risk, less uncertainty

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The Cloud Business Proposition

• Support your business with pre-configured process flows based on:

– Best practices in Transportation Management, AND

– Best practices in utilization and design within selected software platform

• Reduced stress and uncertainty = Better change management.

– Begin with a Conference Room Pilot and see exactly what you’re implementing

– Personnel begin to train immediately in a configured environment

• Cloud allows Rapid ROI and a phased approach

– First, implement the standard process flows to achieve rapid ROI

– Next, take time to Adjust, Learn, and Target your next systems needs

– Then Customize / Develop / Add – with the confidence that you are truly addressing your most important business requirements, and much more certainty that you are using your money wisely. Live in the house, then start to renovate.

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Cloud Value-Added Features

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User interface configuration can make or break system success

• If the system is cumbersome or non-intuitive, users can resist adopting the

new system

• If they work outside the system, or short-circuit difficult process steps, you lose the clean data needed for good reporting and analytics

• User interface configuration is time consuming, and is often one of the first

things that gets limited in a project that is over time or budget or both

• In a Cloud-based solution, user interfaces are pre-developed with best practices in mind, leveraging system bells and whistles

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Cloud Value-Added Configuration

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Out of the Box Screen

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Configured Screen

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Enhanced Configured Screen

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What is included in a Cloud-Based Solution?

• Hardware (physical database, webservers, etc.)

• Hosting

• Subscription licensing

• Maintenance (Technical Upgrades and Support)

The software company (e.g. SAP,

MercuryGate, Oracle) provides:

• Configured Solution

• Implementation services

• Managed services

• Other optional components as needed (Integration, Reporting, etc.).

The implementation partner (e.g. Deloitte, Inspirage) provides:

• 3rd party solutions such as:

• Distance Engines (e.g. PC Miler)

• Carrier Connectivity (e.g. SPS Commerce, Transporeon)

• Parcel Management (e.g. Kewill, Skipjack)

Third Parties provide:

• Common misconception:

– “A TMS is built to handle Transportation Management. So I should just be able to hook it up to my

ERP, learn the system, and I’ll be up in running in no time. Right?”

• In fact:

– A TMS isn’t like Windows, or like a new Smart Phone – when you turn it on, it won’t do anything

without extensive configuration and integration.

– A Cloud solution can speed this up with pre-configuration and pre-designed integration, but does

not eliminate the need for it.

• For example, we can’t eliminate the time it takes to load your rates into the system and test them. We can

speed this up with Cloud accelerators, but it still needs to happen.

• An implementation partner is necessary for both a Traditional and Cloud approach.

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Why do I need an implementation partner?

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Cloud Approach vs. Traditional

On-Premise Approach

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Implementation Project ComparisonCloud Implementation Project

• CRP to view pre-configured solution

• Analyze how to adopt the business processes contained within the pre-configured solution

• Copy pre-configured solution into domain provided by software company. Create integration from templates.

• Load rates and data from library templates

• Training phase based on solution library materials

• Some modifications / additions to address gaps between your business needs and the pre-configured solution

Traditional Implementation Project

• Extensive requirement gathering and solution development phases

• Install application, databases, etc.

• Develop custom solution. Extensive build phase. Create user interface, security, users, etc.

• Create custom integration

• Create templates to load rates and data

• CRP to determine if solution meets business needs. Revise solution if it does not.

• Create training materials

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Pros of Cloud vs. TraditionalPros of Cloud Approach

• Lower upfront costs for application licenses, hardware and technology (spread out monthly instead of all upfront)

• Quicker ROI

• Expensed vs. Capitalized

• Provides a catalyst to start the project

• No need for DBA/Sys Admin resources

• Good for companies who don’t have strong systems expertise

• Can enable a quicker and less expensive implementation

Pros of Traditional Approach

• Potentially lower longer term costs (buy vs. lease analogy)

• Retain control of system (system re-starts, database copies, new database columns/tables, stored procedures, etc.)

• Enable database connections for data extraction tools for data warehouses and BI tools for reporting

• ERP / Integration / TMS all in same locale

• Adhere to customer IT standards

• Customer takes “Ownership” of TMS

• With Cloud, you could have three or more different providers – three sets of

ongoing expenses, three relationships to manage.

– Will this save me money in the long term?

– Assess TCO (Total Cost of Ownership) for at least 3 years out

• Can you truly adapt your business processes to the Cloud Solution rather

than expecting the solution to be adapted to your business process?

– Do I want a turn key solution or a custom solution?

• A pre-configured solution will probably not meet all your needs.

– If it covers 80% of your requirements it is considered a good fit

– Phase 1 of a traditional project is also going to aim for 80% as well

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Points to Ponder

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• Do I genuinely need highly customized integration?

– It is legitimate to say the answer is ‘yes’ if that is your situation

• Implementation time on a Cloud project could be as fast as 12 weeks,

compared to a minimum of a year for a traditional project. But:

– Can my organization adapt to change that quickly?

– Can my carriers adapt to change that quickly?

– Are my rates already documented in a format that can be converted to automated rating by a system?

– Is my ERP data clean?

• To a TMS, ‘Fort St. John’ is not the same thing as ‘Ft. St. John’

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Points to Ponder

• Medium sized enterprises

• Larger enterprises with straightforward logistics (e.g. Single-leg

shipments from A to B. A to B to C adds more complexity.)

• Standardized logistics processes with limited exceptions

• Centralized operational planning

• Companies with limited IT department funding and resources

• Current access to transportation data for metrics and analytics is limited

• Current logistics management is largely manual

(e.g. spreadsheet based)

• Companies wanting to fill a specific gap e.g. if you need more visibility –do not have to replace all existing processes necessarily

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Who is Cloud a best fit for?

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Evaluating a Potential Solution

• Pricing

– What is included in the subscription cost?

• Software? Support? Provision and set up of the install?

– Is there a one-size-fits all cost? Or is the cost adjusted to reflect

the size and scale of your operations?

– Can you select only modules you want and need?

– What is included in the implementation cost?

– What is included in any ongoing managed services pricing?

• Level 1 Support? Level 2 Support? Regression testing for

upgrades? Ongoing development or just maintaining status quo?

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Evaluating A Potential Solution

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• System

– Is the system scalable? Are there limits to how much functionality you can adopt over time?

– How many environments are provided?

• Development Environment and Production Environment at minimum

– Redundancy and Contingency Planning

• What happens if there are system or network problems?

– Where is my data stored?

• What laws might have jurisdiction?

– How long will my data be stored in the production environment?

• What happens next? I need access to my data for X years for analytics.

– Could I convert to an on-premise solution if necessary?

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Evaluating A Potential Solution

• Updates

– How often are upgrades and patches rolled out?

• Can I control the updating process or am I bound to a particular schedule?

• Software

– How is the software rated within the industry?

– Can the functionality in the system handle different transportation and logistics scenarios as my business grows?

• Scope

– What is the actual scope of the pre-configured solution?

• Does this scope fit within my business needs? Can this scope be adjusted?

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Evaluating A Potential Solution

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• Implementation Partner

– Have they done this before?

• Implemented this solution? Worked with my ERP?

– What do they specialize in?

• One type of software? Different types of software?

– What’s included in the integration templates?

• Integration is the long pole in the tent – it takes time to build and if it fails, nothing is going to work.

– Can they support operational change management?

– What’s included in the library for the solution? Look for accelerators:

• Documentation & Project Management

• Pre-Configuration/Process Flow

• Master Data Management

• Deployment & Migration solutions, Training Material

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Evaluating A Potential Solution

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Solution Library Components

What is already in the library? Can components be customized, extended or added as necessary?

New

Component Library Specific Project

Extended

New

UniqueU

niq

ue

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• Hire a business analyst and give them time to learn your business

– Making a TMS successful means translating Operations Speak into IT Speak. These are two

different languages. Your business analyst is your translator.

• Know your requirements

– Best practice: Document requirements first, then shop for a solution. Requirements are not

the same thing as a solution.

• Involve Shipping and Compliance from the beginning

– Everything comes to fruition on the shipping floor

– Don’t design processes that aren’t compliant from the beginning

• Involve an implementation partner early on in the design process

• Get your data clean

• Get your rates documented in Excel (no PDF), specify execution constraints

• Do not underestimate the need for Change Management and for Supporting your People, especially post go-live!

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General Best Practices

Thank You! Any Questions?

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Shauna Hillier, CCS, CCLP

Principal Consultant, Inspirage

shauna.hillier@inspirage.com