How a tech company saved $ 100 million on freight during COVID

Just as COVID was starting to emerge as a global threat, a high-tech multinational was able to identify freight trends, change the way it sources transportation, and save money. This company saved over $ 100 million in its last fiscal year! If you’ve been following the news about supply chain disruptions, you know this isn’t the norm. Most shippers have seen their transportation costs skyrocket due to capacity issues. What this company has achieved is remarkable.

The main manufacturing activities of this company are located in Asia. The company has four factories in China and Southeast Asia. The company is a big shipper, it has over half a million shipments a year. Modes of transportation include rail, ocean, full loads, part loads, and packages.

There are complex flows of components and raw materials from suppliers to their factories, and from their factories to their main finished product factory in Southeast Asia. There are also complex flows on the go. Outbound shipments of finished products can go direct to customers, pass through more than 10 global warehouses, or even pass through multiple warehouses before reaching the customer.

The journey to logistics excellence

The senior director of transport for this company explained how far the company has come to improve its transport capacities.

The high-tech giant had grown thanks to two major acquisitions. The acquired companies had used different business and transportation applications. The resulting IT clutter meant the company couldn’t even run consolidated reports on these three entities. In logistics, they couldn’t get precise data, data that everyone would agree, about their transportation expenses. In terms of personnel, the level of logistics maturity of the three companies varied.

“We had to start from scratch,” said the executive. A common transport management system (TMS) would allow them to generate reports based on common data. Meanwhile, the supply chain organization has created a transportation center of excellence to help with the transition.

Computer problems were also encountered by other functions of the company. The company had decided that the different entities should also use a joint enterprise resource planning solution. The company has opted for a cloud solution from Oracle

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Unsurprisingly, in logistics, they ended up choosing the cloud version of Oracle Transportation Management (OTM). The logistics team had started looking at TMS solutions in 2017. They switched to OTM and then implemented the solution in 2018. OTM was considered a feature rich solution and it was thought to be a Cloud version of the solution, a solution they wouldn’t customize. , would allow them to implement very quickly. Speed ​​to value was a key selling point for OTM.

The Transportation Division was the first division in the company to implement an Oracle application. Their assumption that the cloud solution would be implemented quickly was born. They built the first instance – at their largest manufacturing site – in just six months! Historically, on-premise TMS implementations for a large shipper lasted 12 months or more. A rapid succession of sites was then set up over the next 10 months.

The Center of Excellence (COE) has been a key player in the implementation and training of staff. Once the TMS was installed, the WCC focused on identifying best practices and monitoring those processes.

OTM is a global solution. They use all the modules with the exception of supply and fleet management. OTM is part of the same solution – same common database and master data – as Oracle’s Global Trade Management (GTM) solution. The company is also in the process of implementing GTM.

Join the Foundation, then save money

“Before the pandemic,” this director told me, “we saved a few million dollars here and there. Then the pandemic arrived and shipping costs started to climb. But like other multinational companies operating in China, the company was able to sense, before much of the rest of the world, how severe this pandemic could be.

As COVID began to spread outside of China, the transport team began to sense changes in air shipping trends. At this point, the TMS was in place. The basis was solid.

OTM provides visibility into shipments based on integration with carrier tracking systems. The high-tech maker also had near real-time data on a subset of shipments based on sensors added to about 10% of palletized shipments. These sensors could determine if shipments were likely to arrive on time and identify pinch points that have served as the basis for continuous improvement projects. These sensors could also detect humidity, humidity, vibration and other attributes. When the company identified that a shipment was most likely damaged, it could ship undamaged goods to the customer even before the damaged goods arrived at the customer’s site.

The manufacturer’s data science now had good data to work with. The data science team extracted the data from OTM, the tracking data, and combined it with external market data. External data included flight frequencies to and from major markets. This data was fed into a data lake. They used Tableau to visualize models. Once the data was visualized, it became evident that the flight patterns changed with the dramatic changes in demand. Transportation costs were increasing rapidly. The company sensed an opportunity.

“We went to bid straight away,” explained the director. “We went from offer to award in just two weeks. We saved 40% on transportation costs, over $ 100 million in savings, based on that. A particular focus of this round of supply was shipments to and from their main manufacturing facility in Southeast Asia. This factory was an important logistics cost center for the multinational.

Without Oracle Transportation Management as a basis, this could not have been achieved. In addition, the two week supply cycle was also much faster due to the automation of the OTM solution.

And after?

The company now wants to integrate the data from the tracking sensor into the backbone of the Oracle application using Oracle’s IoT solution.

This high-tech company also wants to start saving money by managing global trade. They started GTM with an emphasis on screening restricted parties, making sure they weren’t negotiating with clients and suppliers that governments have on restricted negotiating lists.

The multinational also recently completed a pilot project with Oracle digital assistant technology to make compliance information more widely available among participants in their supply chain operations, while freeing up customs and enforcement teams. compliance so that they can focus on higher value-added work. Oracle’s digital assistant can automatically answer questions such as: the export compliance status of a sales order; or the export compliance codes associated with a given item; or even the shipment status for a given order (eg location, expected ETA, confirmed delivery time). The use of Digital Assistant technology significantly reduces the cost of answering these questions.

The manufacturer has also recently started to implement the Oracle GTM customs management module to save time and money on the preparation and filing of customs declarations. Case preparation time should drop from 3 to 4 hours per day to a few minutes thanks to process automation. In addition, by preparing consolidated declarations (for example, one declaration per month), they expect to pay much less in customs brokerage fees.

Longer term, OTM and GTM will be key pillars of a strong supply chain control tower the company intends to build.