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1 INSPIRING VALUE CHAIN ADVANTAGE A new path to TMS ROI Cloud-Based Transportation Management Systems Shauna Hillier, CCS, CCLP June 3, 2015 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 2 1

2 Introduction 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. 3 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 4 2

3 Introduction 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 5 Transportation Management Systems Overview 3

4 Why implement a TMS? Transportation Sourcing and/or Contract Management Shipment Planning & Optimization Shipment Execution (Booking/Tendering and En Route Planning) Supply Chain (Visibility & Analytics) Freight Payment and Billing 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 % reduction in administrative costs 2 5% reduction in freight expense through correct invoicing and application of accessorials 7 Typical Modules 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 Intelligence / 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 8 Freight Forwarding & Brokerage Consolidation. Mgmt. What-If Modeling / Simulation Global Compliance Management Customs Management Trade Compliance 4

5 Typical TMS Integration ERP / WMS Item Location Purchase Order Sales Order Transfer Order Shipment Actuals Planned Shipment Payment Voucher Workflow TMS Order Management Shipment Planning Shipment Execution Visibility Reporting Tender Offer Notification Tender Response Shipment Event Freight Invoice Carriers External Systems PCM or RM (Distance Calc.) SMC / LTL Tariffs (LTL Rating) Freight Settlement Master Data Tender Offer ( ) Tender Response (Web Portal) Shipment Event (Web Portal) 9 Cloud-Based Solutions 5

6 Business Drivers Behind Cloud 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 11 The Cloud Business Proposition 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 12 6

7 The Cloud Business Proposition 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 13 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 14 7

8 The Cloud Business Proposition 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 15 Cloud Value-Added Features 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. 16 8

9 Cloud Value-Added Configuration 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 17 Out of the Box Screen 18 9

10 Configured Screen 19 Enhanced Configured Screen 20 10

11 What is included in a Cloud-Based Solution? The software company (e.g. SAP, MercuryGate, Oracle) provides: Hardware (physical database, webservers, etc.) Hosting Subscription licensing Maintenance (Technical Upgrades and Support) The implementation partner (e.g. Deloitte, Inspirage) provides: Configured Solution Implementation services Managed services Other optional components as needed (Integration, Reporting, etc.). Third Parties provide: 3rd party solutions such as: Distance Engines (e.g. PC Miler) Carrier Connectivity (e.g. SPS Commerce, Transporeon) Parcel Management (e.g. Kewill, Skipjack) 21 Why do I need an implementation partner? 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

12 Cloud Approach vs. Traditional On-Premise Approach Implementation Project Comparison Cloud Implementation Project CRP to view pre-configured solution Analyze how to adopt the business processes contained within the preconfigured 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 24 12

13 Pros of Cloud vs. Traditional Pros 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 25 Points to Ponder 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 26 13

14 Points to Ponder 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 27 Who is Cloud a best fit for? 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 28 14

15 Evaluating a Potential Solution 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? 30 15

16 Evaluating A Potential Solution 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? 31 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? 32 16

17 Evaluating A Potential Solution 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 33 Solution Library Components Unique Unique New New Extended Component Library Specific Project What is already in the library? Can components be customized, extended or added as necessary? 34 17

18 General Best Practices 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! 35 Thank You! Any Questions? Shauna Hillier, CCS, CCLP Principal Consultant, Inspirage 36 18

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