Best Practices & Learning from Implementing OTM in Latin America

© Mahindra Satyam 2012 © Mahindra Satyam 2009

Best Practices & Learning from Implementing

OTM in LATAM Presented by

Sudheer Pamighantam On behalf of Amlendu Sekhar and Kamal Gupta

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© Mahindra Satyam 2012

Context

Country Customer / Prospect Nature of Engagement

Brazil LSP OTM Implementation

Brazil Retailer OTM Enhancements

Brazil Online Retailer OTM Support

Brazil Aircraft Manufacturing GTM Implementation

Argentina CPG OTM Implementation

Mexico LSP (NA) OTM Implementation

Mexico LSP (NA) OTM Enhancements

Several Several (LSP, Retail, Mfg, Energy) Presales consulting

This paper is not intended to be comprehensive coverage of all things in LATAM, but to share experience from OTM engagements

Basis of Experience

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Contents

Opportunities in LATAM & Impact on Logistics

Challenges in LATAM Region

OTM for LATAM

Implementation Approach

Q & A

1 Section

2 Section

3 Section

4 Section

Section 5

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LATAM is Growing Domestic Consumption & International Trade

Source: The Institute of International Finance, Inc.

Latin America on a Growth path

Rapid Recovery from 2009

downturn

Continued Capital Inflows

Strong Domestic Demand

Continued political stability

Free trade agreements

Challenges include tax laws, political and regulatory obstacles and logistics infrastructure

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Impact of Growth on Logistics Shipper Perspective

Growth in Manufacturing and Consumer Goods

Consumer, Food, Beverage and Retail industries

Manufacturing -Near-shoring at Mexico:

- Competitive labor rates

- Logistics Advantages

- Lead time & Risk management

Petrochemical / Chemical and Cosmetics

Infrastructure

Why OTM?

- Visibility across supply chain and related event management

- Transportation cost optimization

- Performance Improvement & monitoring

- Process Automation

- Compliance to Government Regulations

Leading to need for new process / technology

Re-design process and deploy technology to

support growth:

- Products / Channels

- Volumes

Leverage opportunity to integrate LATAM

with global process and systems

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Significant Opportunities for LSPs How can OTM Help?

LATAM Logistics Market Size Market Opportunities

• Logistics market growth

from 272 B in 2008 to

333 B by 2013

• 3PL Market size: $33 B

• Road segment as% of

the LATAM logistics

market: 88.4% (2008)

• In addition to

International Logistics,

domestic logistics

services is growing

Why OTM?

Capture opportunities in emerging markets

Drive growth from new / integrated services

Create LSP IT Platform to drive this growth

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Contents



OTM for LATAM


Q & A

1 Section

2 Section

3 Section

4 Section

Section 5

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Challenges in LATAM

Fiscal & Related Changes • Complex Fiscal Rules • Constant Changes in

regulations that need to be met

Financial processes • Local financial processes

related to logistics transactions

• Meeting Regulatory Requirements

Operational Differences • How logistics business is

conducted • Impact of Fiscal and

Financial processes

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Challenges in LATAM

Key challenges specific to LATAM:

1) Fiscal &

Regulatory Requirements

2) Financial Processes

3) Operational Differences

1. Fiscal & Regulatory Requirements (Brazil)

Municipal B

Municipal A

CTe

NFS

Municipal A

Federal Federal Taxes: PIS – COFINS

State State Specific Rules for ICMS

Municipality (Local City Administration)

Municipal Specific Rules for ISS

Mexico: IVA and Retention

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Brazil Fiscal – Sample Scenarios

1. Normal CT-e can be cancelled, voided and substituted.

2. Multiple Complementary CTes can be created. Complementary CT-e must refer to a Original CT-e

3. Every CT-e should have CT-e number /series

4. User cannot generate a complementary for a complementary CTe

5. Cancellation of CT-e is allowed only if the shipment is not in transit

6. CT-e cannot be cancelled if the CT-e is already sent for Authorization and Authorization Response is

not received back

7. Complementary CT-e can be generated only when the CT-e of origin is approved by SEFAZ

8. Cancelled CT-e numbers should not be reused further

CTe NFS Inter-Municipal scenario Intra-Municipal scenario

Generated before transportation execution Generated after transportation execution

Requires govt. sanction Doesn’t require govt. sanctions

ICMS Tax applicable ICMS not applicable

ISS Tax not applicable ISS Tax applicable

Each CTE corresponds to unique sell shipment Multiple sell shipments can be grouped in 1 NFS

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Challenges in LATAM

2. Financial Processing

Payment Matching Process based in Fiscal Document (CT-e/CTRC/NFS/NFS-e)

Events need to be considered in Billing and Payment Process.

Billing process is based on Financial and Fiscal Documents (CTRC/CT-e/NFS/NFS-e/Pre-Invoice/Invoice)

Workflow to approval differences (Adjustments) and Payments (release Invoice to ERP)

Break Billing Invoice based on Customer Rules (Eg : Amount Limit , Quantity CT-e per Invoice, Region, Modal, Type of

Products, etc) Cost Allocation Rules: Multiple Allocation rules with specific

sub rules

Argentina: Carrier updates the taxes applicable based on which tax calculation for Invoicing was done


1) Fiscal &




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Financial Processing – Carrier Payment - High Level Flow

LSP/ Shipper

C A R R I E R S

NOTFIS

PREFAT (Pre-Invoice)

DOCCOB (Invoice)

CONEMB (CT-/NFS)

OCOREN (Events)

Multi transaction Payment process

Transportation

requires specific documentation, triggered by pre-defined events

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Financial Processing– Customer Billing - High Level Flow

C U S T O M E R S

NOTFIS (Order Release)

PREFAT (Pre-Invoice)

DOCCOB (Invoice)

CONEMB (CT-e/NFS)

OCOREN (Events)

Multi transaction Invoicing process

Transportation

requires specific documentation, triggered by pre-defined events

LSP/ Shipper

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Challenges in LATAM

3. Operational Difference

• Cte/Sell shipment Grouping Rule

• Integration with Last Mile Routing Application

• OTD/FIDEP Concept

• Dedicated fleet

• RMP

• OCCOREN file upload to send events

• Redelivery/Return shipments

• Proximity scenario

• Refuse scenario

• Beeper Interface Design

• Reserve Dock/Appointment Scheduling by Carriers


1) Fiscal &




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Operational Difference

CTe /Sell Shipment Grouping

The grouping of CTes is governed by parameters like Plan from / Plan to location, Customer Name / Division and other Grouping rules Based on the grouping rules associated with CTe, a fixed number of sell shipments are created and a corresponding CTE fee has to added on the buy shipment.

Integration with Last Mile Routing Application

For logistics within the Metro, local last mile routing applications are used. Based on the need for stop by stop plan, OTM is integrated.

OTM sends orders (optional) and receives actual shipment back from Last mile routing application. Then OTM rates, executes, monitors and settles.

OTD/FIDEP Calculations

OTD – On time Delivery FIDEP - Frequency of Deliveries Informed on time Delivery lead time KPIs are a function of Actual Lead time, Cut-off time for

the day, Saturday / Sunday working and holidays during transit.

Dedicated Fleet

Dedicated fleet: Contract created for each equipment. A budgetary / estimated value is assigned to each shipment on that equipment. Reconciliation: Cost for respective Shipments have to be updated (as accessorial) with additional costs to meet the original CTe amount.

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OCCOREN file upload to send

events

In emerging economies, Service Provider may not have capability to automate the events update.

Carrier sends flat files that system accepts to create the XML and upload into the system.

Reserve Dock/Appointment

Scheduling by Carriers

Requirement was to reserve some dock doors by Carriers for specific shipments. Handled in OTM by constraining appointment with contact profiles.

Beeper Interface Interface with a Beeper system to interact with Drivers waiting at Yard for loads ready for dispatch at Warehouse.

Risk Management Plan

Each shipment’s total declared value is monitored under Risk Management Plan and evaluated for escort/GPS requirement.

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Refuse scenario Requirement was to have under one shipment number for both forward and refuse order. Accordingly, proper rating can be done by OTM.

Redelivery/Return shipments

New shipment needs to be created as original shipment is already approved by Govt. authorities (SEFAZ).

Costing is done for only those ship units that are needed for return / Re-delivery.

Multiple shipments can be created for the same scenario, which need to be linked to the order release automatically

POD at Order Level Some Shippers pay based on POD at Order level Hence capturing POD at Order level becomes key

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Contents



OTM for LATAM


Q & A

1 Section

2 Section

3 Section

4 Section

Section 5

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OTM for LATAM

Quote Order Plan Execute Monitor Financial

Automate and Integrate Quoting and Order

Management Optimize Planning & Execution Automate

Monitoring Fiscal, Finance

Process & Regulatory

ERP/OMS/CRM Tool OTM

Custom Built FORCE Solution

Shipper Perspective Tax Calculation Carrier Payment Cost Allocation Control of Documents Integration with external systems/ERPs

LSP Perspective Tax Calculation Cost Allocation Control of Documents Integration with external systems/ERPs Customer Billing Carrier Payment Operational differences as Extensions

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Leverage OTM Extensions- FORCE

Solution Objective • Enables expanding

Transportation Platform for doing business in an emerging economies

• Robust Framework which can be used for building extensions for whitespace / gaps in OTM

Solution Overview

Financial, Operational & Regulatory Compliance in Emerging Economies

FORCE compliments TMS/WMS/ERP for fiscal, operational and regulatory compliance in emerging economies

Can be Integrated with TMS/WMS/ERP using the standard interfaces / APIs

The current solution is built and integrated as part of Oracle Transport Management (OTM) – Tax calculations, carrier payment, customer billing and others

Solution also integrates with Financial system and with systems that feed the regulatory agencies. Ex: External agencies like MasterSAF for Brazil, SEFAZ, SUFRAMA.

FORCE Modules Tax Calculation Freight and Tax Components Allocation Control of Fiscal and Operational Documents of Transport Operation Freight Payments Management. Freight Billing Management Integration with external systems/ERPs User Management

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Contents



OTM for LATAM


Q & A

1 Section

2 Section

3 Section

4 Section

Section 5

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Learning on Project and Implementation Approach

Global Template Approach

Consider Template approach for countries with less regulations

Brazil will typically not fall into global template or even LATAM template, depending on

type of operations

Knowledge of OTM in other countries is useful, could offer limited re-usability of

configuration for Brazil

Resourcing Strategy

Important to include Local resources for Understanding of Local knowledge, including

fiscal and regulatory experience

Bring in consultants with Global OTM Experience. There is limited local OTM talent

Look for Bilingual Resources / Translators

Plan for visa timeframes & associated challenges.

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Learning on Project and Implementation Approach

Project Planning

Be realistic in Brazil timeframes – implementation or rollout

Create time for proof of concept and interim validation during development phase

Learn from previous OTM experience in that geography

Engage with partner and Oracle

Project Approach

Scenario based approach. Complexity is in the exceptions.

Need to create flexibility to change fiscal rules / operation processes based on the

regulations

Don’t underestimate operational processes. Fiscal rules have huge impact on

operational workflow and exceptions

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Contents



OTM for LATAM


Q & A

1 Section

2 Section

3 Section

4 Section

Section 5


Q&A

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mahindrasatyam.com Safe Harbor

This document contains forward-looking statements within the meaning of section 27A of Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Satyam undertakes no duty to update any forward-looking statements. For a discussion of the risks associated with our business, please see the discussions under the heading “Risk Factors” in our report on Form 6-K concerning the quarter ended September 30, 2008, furnished to the Securities and Exchange Commission on 07 November, 2008, and the other reports filed with the Securities and Exchange Commission from time to time. These filings are available at http://www.sec.gov

Thank You


Q&A

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mahindrasatyam.com Safe Harbor

This document contains forward-looking statements within the meaning of section 27A of Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Satyam undertakes no duty to update any forward-looking statements. For a discussion of the risks associated with our business, please see the discussions under the heading “Risk Factors” in our report on Form 6-K concerning the quarter ended September 30, 2008, furnished to the Securities and Exchange Commission on 07 November, 2008, and the other reports filed with the Securities and Exchange Commission from time to time. These filings are available at http://www.sec.gov

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Best Practices & Learning from Implementing OTM in Latin America

Technology

Transcript of Best Practices & Learning from Implementing OTM in Latin America