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Advancements in Supply Chain Management Presenter.

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Presentation on theme: "Advancements in Supply Chain Management Presenter."— Presentation transcript:

1 Advancements in Supply Chain Management Presenter

2 The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decision. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle. Safe Harbor Statement

3 Achieving excellence in a Global Logistics Network is key.. Warehousing & Storage Carriers Customers Shippers Consolidators Cargo Handlers Logistics Service Providers Freight Forwarders

4 Top Pressures for Transportation Source: Aberdeen Group, 2004 Customer-centric pressures Changing supply chain pressures

5 Source: Values extrapolated from the Establish-Davis Benchmarking Study as presented at 2005 CSCMP Annual Conference Total Logistics Cost as % of Revenue 5

6 Source: Values extrapolated from the Establish-Davis Benchmarking Study as presented at 2005 CSCMP Annual Conference Transportation Cost as % of Revenue 6

7 Source—AMR 2005 TMS Worldwide Outlook Forecast Transportation Spend by Region 7

8 Forecast Transportation Spend by Vertical Source—AMR 2005 TMS Worldwide Outlook

9 Key Challenges faced within a Global Logistics Network Lengthening of the Supply Chain Difficulty & Cost Inefficiencies in Transportation Execution Lost Sales/Mismatch in Supply & Demand Import/Export Compliance Procedures Disconnect between International and Domestic Transportation Lack of Strong Technology support Lack of Experience and Skill Sets …

10 Characteristics of a World Class Transportation Logistics Network Optimal Design of Global Supply Chain Integrated Planning and Execution Processes Integrated International and Domestic Logistics Global Logistics Visibility Dynamic Logistics Routes Logistics Process Automation Collaboration with Supply Chain Partners Compliance to Changing Regulations Making the Financial-Supply Chain Connection

11 What are the Leaders doing? Laggards are taking the full brunt of rate increases and capacity/performance shortfalls Leaders are taking action to avoid these problems by: Trying to Improve overall service and financial performance Investing in the right place Focusing on Value Thinking End to End Leverage Technology (Network Design, Logistics, Visibility, Analytical Solutions, etc..) Tapping local Talent Manage Risk In other words…Leaders act as internal “XPL’s” or even as profit centers…and every transport move has a “buy-side” and a “sell-side”

12 Answer the tough questions: What impact do changing costs have on my sourcing strategy? What is the real total cost of outsourcing including the impact on working capital and cash flow? Where should my point of postponement be? Where should I hold how much inventory, when? How could I react to a disruption in supply due to unforeseen events? Should I multi-source? What are my most profitable channels or products to invest in? What is the impact of mergers and acquisitions on my supply network and capital asset budget? Strategic Network Optimisation

13 Network Optimization – Proven Value

14 Pillsbury Foods Project to rationalize distribution centers during merger of Pet Foods and Pillsbury Foods Reduced warehouses from 23 to 9 Held service levels constant despite reduction in facilities Significantly reduced transportation costs Alcoa Primary Metals Profit optimized mix of products to produce on bottleneck equipment Significant reductions in transportation costs Improved management of risks due to commodity market price fluctuations Increased profitability of products produced in smelters Agilent Technologies Deployed for one product family (700 products, 5000 items) since May 2006 Multi-echelon supply chain network (14 levels deep) Improved forward visibility and understanding of impact of inventory on service level Part of S&OP process: quantitative understanding of inventory investment to achieve sales upside 20-30% improvement in service level for the same inventory investment Panduit Plans inventory at warehouses to meet service level commitments to customers (48 hour fulfillment lead time) Multi-echelon inventory planning reduces overall inventory investment, improved visibility of buffer inventory in the supply chain Anticipates further reduction in inventory when including manufacturing facilities to leverage opportunities to postpone inventory holding to shared raw materials and sub-assemblies Strategic Network Optimisation Case Studies

15 Copyright ©2006, Oracle. All rights reserved. Oracle & Skope Industries Confidential Largest dairy co-operative in NZ Over 25 Sites in NZ 7 Sites in Australia Approximate 20,000 employees Increasing presence worldwide SNO Case Study – Milk Processing

16 Copyright ©2006, Oracle. All rights reserved. Oracle & Skope Industries Confidential Milk Processing - The Problem… One raw input Multiple manufacturing sites Multiple products By-products Multiple demand markets Supply chain ‘push’

17 Copyright ©2006, Oracle. All rights reserved. Oracle & Skope Industries Confidential The Fonterra model… Over 30 sites modeled 110+ final planning products 2 Markets (domestic + export) 1.4M Variables 0.9 Million constraints Build time of 12 mins Average Solve time of 10 minutes Peak memory usage of 1.5G Solved model size - 250M+ Reporting time – 25 Mins

18 Copyright ©2006, Oracle. All rights reserved. Oracle & Skope Industries Confidential User Comments Significant Benefits Shorter planning Cycles Ability to do what if analysis Reliable product with known history Support & development available

19 Execute Locally… Using multiple languages and currencies -English, Spanish, German, French, Chinese (simplified) -Support for all currencies, including in-system conversions -Screen customization by region / country, user groups Accommodate region-specific rules and regulations Control Globally… All inbound POs and outbound customer deliveries Transfers between facilities, in different countries -Distribution centers – mfg- Intermediary nodes Visibility into in-transit & at-rest inventory throughout network Manage Centrally… All operational information in one location -Increase leverage for procurement -Apply best practices across regions -Evaluate processes holistically -Perform network analysis Cleanse data for single source of true rates & routes Single IT infrastructure to cut support & maintenance costs Transportation Management Manage All Transportation Needs in One System

20 World leader in agricultural and construction equipment businesses 2006 annual revenue of $13 billion, with 30 manufacturing plants and 25,335 employees globally Sales in 160 countries through more than 11,500 dealers and distributors Ships over 300,000 pieces of outbound whole goods and 1 million inbound shipments to support the global manufacturing Case New Holland - Case Study

21 Case New Holland - CNH is Global Brazil Belo Horizonte Crawler excavators, tractor loader backhoes, crawler dozers, wheel loaders, graders Curitiba Tractors, combines Piracicaba Sugar cane harvesters, coffee harvesters, planters Canada Saskatoon, SK Planting, seeding equipment Mexico *Queretaro Tractors, components *Guanajuato Tractors United States Belleville, PA Hay, forage equipment Benson, MN Sprayers, floaters, cotton pickers Burlington, IA Tractor loader backhoes, forklifts Calhoun, GA Crawler excavators, dozers Dublin, GA Compact tractors Fargo, ND Tractors, wheel loaders Goodfield, IL Soil management (tillage) equipment Grand Island, NE Combines New Holland, PA Hay and forage equipment Racine, WI Tractors, components *Rocky Mount, NC Engines Wichita, KS Skid-steer loaders Manufacturing Locations * Unconsolidated Joint Venture

22 Case New Holland - CNH is Global Austria St. Valentin Tractors Belgium Antwerp Components Zedelgem Combines, forage harvesters, large rectangular balers China Harbin Tractors Shanghai Tractors France Coex Grape harvesters Croix Components Tracy-Le-Mont Components Germany Berlin Wheeled excavators, wheel loaders, graders India New Delhi Tractors *Pithampur Tractor loader backhoes Italy Imola Tractor loader backhoes, mini- excavators Jesi Tractors San Mauro Crawler excavators, wheeled excavators Pakistan *Dera Ghazi Khan Tractors Poland Plock Combines, balers Turkey *Ankara Tractors United Kingdom **Basildon Tractors, engines Uzbekistan Tashkent Tractors, cotton pickers Lecce Midi wheeled excavators, telehandlers, dozers, wheel loaders Modena Components Manufacturing Locations ** It includes both CNH and Unconsolidated Joint Venture Plants * Unconsolidated Joint Venture

23 Background - US was outsourced to 3PL, Europe was running in-house on legacy systems, little control over inbound transportation Objective - Wanted to reduce freight costs and increase visibility by streamlining and controlling logistics operations inhouse Technology - Selected Oracle Transportation Management for global transportation platform Results - Went live in US in Nov 06 and Europe in Jan 07…six months after vendor selection complete Case New Holland - Project Overview

24 Case New Holland - Vendor Selection Process Dec 2005Nov 2005 Recommendation Began with a list of 42 possible TMS Vendors Lean Logistics Manhattan Assoc. Manugistics Meridian IQ Nistevo Corp QLogitek Red Prairie SAP Transplace CTSI Oracle/G-Log Logility* Descartes* Oracle/G-Log Manhattan SAP Red Prairie CTSI Oracle/G-Log Manhattan SAP ** Oracle/G-Log Recipients of CNH TMS RFI Semi-finalists chosen after demos Chosen to demonstrate their product to CNH Jan 2006 Feb 2006 * Logility and Descartes chose not to respond ** SAP has chosen not to participate in the post demo activities

25 Global development/implementation Oracle OTM system was designed as a global system, not a domestic system adapted for global use Rated at or near the top in all of the CNH RFI and Demo scoring categories Strong client site references Integration experience with SAP Oracle’s On-demand option allowed for quick installation Innovation leadership to drive continued transformation Case New Holland - Why Oracle?

26 PhasesPhases Case New Holland - Implementation Phases and Status North American LogisticsEuropean Logistics NA Phase II – NA Inbound from NA Suppliers Material - NA Suppliers to NA Plants Material - NA Suppliers to Non-NA Plants (Port) Material - NA Supplier to NA Supplier Service Parts - NA Suppliers to NA Depots NA Phase IV - Outbound Service Parts NA Depot to NA Dealer NA Depot to Non-NA Dealer Non-NA Depot (Port) to NA Depot NA Suppliers to Non-NA Dealer Non-NA Suppliers (Port) to NA Depot NA Depot to NA Depot NA Phase I – NA Plant Outbound and Direct Ship Wholegoods - NA Plant to NA Dealer Wholegoods - NA Plant to Non-NA Dealer (Port) Wholegoods - NA Supplier to NA Dealer Service Parts - NA Suppliers to NA Dealer EU Phase I - Inbound Material EU Suppliers to EU Plants EU Suppliers to Non-EU Plants Non-EU Suppliers (Port) to EU Plants EU Plant to EU Plant EU Supplier to EU Supplier EU Phase II - Inbound Service Parts EU Suppliers to EU Depots Non-EU Suppliers (Port) to EU Depots EU Depot to EU Depot Non-EU Depot (Port) to EU Depot EU Dealer to EU Depot Dealer to EU Suppliers EU Phase IV - Outbound Wholegoods Dealer to Dealer EU Plant to EU Dealer Non-EU Plant (Port) to EU Dealer EU Plant to Non-EU Dealer EU Phase III - Outbound Service Parts EU Depot to EU Dealer EU Depot to Non-EU Dealer Non-EU Depot (Port) to EU Dealer EU Suppliers to EU Dealer EU Suppliers to Non-EU Dealer (Port) Non-EU Suppliers (Port) to EU Dealer NA Phase III – NA Import, NA Intracompany, NA Returns Wholegoods - NA Dealer to NA Dealer Wholegoods - Non-NA Plant (Port) to NA Dealer Material - Non-NA Suppliers (Port) to NA Plants Material - NA Plant to NA Plant Service Parts - Non-NA Suppliers (Port) to NA Depots Service Parts - NA Depot to NA Depot Service Parts - Non-NA Depot (Port) to NA Depot Service Parts - NA Dealer to NA Depot Service Parts - NA Dealer to NA Suppliers

27 Oracle’s OTM *One Global Domain CNH Wholegoods Plants Carriers Request for Pick-up Planned Shipment w/ OTM Shipment Id Tender Response via EDI, Portal or email Invoice w/ OTM Shipment Id Planned Shipment w/ OTM Shipment ID Master Data Interfaces Item Master Location Master Freight Payment Payment made when Invoice matches Planned Shipment, unless Routing Guide Shipment RIQ (Sell Rates) Case New Holland - Outbound Integration

28 CNH Supplier Leveraged CNH Supplier Portal Carriers Request for Pick-up Planned Shipment w/ OTM Shipment Id Invoice w/ OTM Shipment Id Planned Shipment (NA) or Actual Shipment (EU) w/ OTM Shipment Id Oracle’s OTM One Global Domain Routing Guide (NA Only) CNH Receiving Actual Shipment (EU only) w/ OTM Shipment Id Tender Offer via EDI, Portal or email Tender Response via EDI, Portal or email Freight Payment Payment made when Invoice matches Planned Shipment, unless Routing Guide Shipment Master Data Interface Location Master Case New Holland - Inbound Integration

29 Case New Holland - Project Results and Benefits Reduced Freight Costs Inbound and outbound transaction costs Lower headcount Lower cost carrier selection Payment based on actual shipped weight Increased Visibility Supplier communications (know when something is shipped) Shipment data (weight, supplier, carrier selection) Freight rates, freight payment and damage claims Dealer destination charges Increased Control Carrier KPIs: Service level, cost, quality Supplier compliance to core carriers RESULTS Reduced headcount from 20 to 12 Reduced expense $365k (Nov ’06 – March ’07) CNH anticipates OTM to lower the cost of transportation and planning activities by approximately $72MM

30 Value Proposition Optimal Design of Global Supply Chain - Design Resilient Supply Networks Integrated Planning and Execution Processes - Robust multi mode/Multi leg transportation planning; advanced inventory management Global Logistics Visibility - Single global view of all logistics information; seamless ERP, SCM, and device integration Increase Logistics Operations Efficiency - Automated warehouse operations, RFID support, synchronized shipping and transportation Collaborate with Supply Chain Partners - Seamless execution flows, Carrier Sourcing, Automated settlements, transaction-centric collaboration Drive Continuous Improvement and Best Practices - Closed-loop Business Intelligence, Advanced analytics and reporting, integrated event management

31 Oracle Supply Chain Logistics Solutions Domestic International Strategic (3-18 months) Tactical (1-3 months) Carrier Selection, Contracts & Rates Operational / Transactional (NOW – 60 days) Supply Network Design Inventory Optimization Load Planning & Optimization Load Tendering Freight Forwarders Visibility of Events and Charges Key Performance Indicator Trends & Action Plans Freight Bill Settlement & Payment Carrier Performance Monitoring Freight Claims Handling Private Fleet Operations Global Trade Planning, Customs Compliance & Charges Execution Oracle Transportation Management (OTM) Oracle Strategic Network Optimization (SNO) Oracle Inventory Optimization (IO)

32 Oracle SNO Customers…

33 Oracle Transportation Management Customers… Logistic Service Providers Manufacturin g Retail

34 A Q & Q U E S T I O N S A N S W E R S

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