by Tara Swords, May 2015
The world is moving faster, but it’s not getting any smaller. According to statistics from the US Patent and Trademark Office, the total number of annual patent applications has increased every year since 2009—and has doubled in less than 15 years. Companies are innovating and bringing more new products to market faster—presumably to keep pace with expanding consumer demand and fend off pressure from the competition.
But the raw materials needed to make those products must be shipped from multiple source locations to manufacturing plants, often with multiple stops along the way. The finished products are often manufactured in locations such as China, Mexico, or South Asia, far from the retail markets they will ultimately serve.
So despite the increasing rate of innovation—and regardless of how fast data and communications can travel around the world—one thing remains constant: a widget can move only as fast as the vehicle that’s carrying it.
The pressures of speed and the limitations of distance are felt acutely by the shipping and logistics industry. Globalization has made supply chains infinitely more complex. Risk and uncertainty on a global scale can affect the availability of resources and the time it takes to bring products to market. Wars, hurricanes, floods, trade sanctions, labor and political unrest, acts of terrorism, and even epidemics can disrupt air and seaport operations, shipping routes, and schedules, preventing products from arriving at their destinations and causing companies to lose money and market advantage.
According to May Chew, head of technology services at APL Logistics, the companies that operate well in this climate will come out on top. “Business performance is all about how well you react—it’s about being fast enough to address rapid changes in both supply and demand,” says Chew.
To remain an industry leader in this intense environment, in 2009 APL Logistics deployed Oracle Transportation Management and in 2010 created ShipmentOptimizer—a customer-facing automated shipment planning system that helped improve margins, reduce customer freight costs, and get shipments to their destinations faster by automating the complex planning phase. The success of ShipmentOptimizer set the stage for extending Oracle Transportation Management to help improve other transportation management systems that deliver outsourced transportation services for clients across the globe.
APL Logistics is an end-to-end worldwide supply chain management company that expedites shipping for customers in the automotive, consumer, industrials, and retail industries. The company manages 200 logistics facilities in more than 60 countries and employs 5,600 people to serve more than 4,000 customers.
Managing shipments across oceans and continents—and coordinating planes, ships, trains, and trucks—is a massive undertaking that APL Logistics’ planners must tackle multiple times every day. Specialists analyze thousands of possible containers, vessels, and routes to come up with the best option for the customer and their business needs.
Managing the journey of a customer’s shipment is one of the core services APL Logistics provides its customers. APL Logistics staff is intimately involved with each customer shipment—planning routes, checking status of shipments, dealing with authorizations from customers, and interacting with vendors. Prior to 2009, the manual planning processes got the job done well enough but it was labor intensive, took hours or even days, and could not be quickly updated or revised when there were changes.
We are looking for a future-generation platform, where we can see the big picture. . . . we are all moving in the same direction, when it comes to IT.
This manual process left customers waiting for status updates and delayed the departure of the freight. And with global freight volume expected to quadruple by 2050 (according to the International Transport Forum), this process was not going to be sustainable over time. “There are very severe capacity crunches for both rail and trucking,” says Bill Villalon, senior vice president and global vertical leader for automotive at APL Logistics, of the kinds of market pressures that complicate the planning process. “This led us to think of a new solution—how do we optimize, and make best use of capacity in the marketplace?”
But with the growth in freight volumes and increase in transportation costs, APL Logistics staff needed to be able to make optimal use of available carrier capacity. Tony Zasimovich, senior vice president and global vertical leader for retail at APL Logistics, suggested that optimizing those actions according to business rules, automating where possible, and giving customers access to information and actions related to their orders would eliminate much of APL Logistics’ manual work. “We needed to become more efficient, but also create something our customers would benefit from,” says Zasimovich. “So we came up with a unique piece of technology that turned out to be a competitive differentiator.”
In 2009, APL Logistics’ technology leaders turned to Oracle Transportation Management as the foundation for efforts to optimize and drive innovation in supply chains. By configuring Oracle Transportation Management and developing additional Java-based extensions, the APL Logistics IT team could connect the solution with APL Logistics’ universe of suppliers—the carriers that move customers’ freight over land, air, and sea. Shipment details and billing could be handled via electronic data transfer, populating APL Logistics’ customer system of record with near-real-time information on the shipment route, booking, and status.
The resulting web-based decision tool, named ShipmentOptimizer, was launched to customers in Asia and Europe in 2010. The portal allowed customers to reconfigure their business rules to set parameters for automated actions. The ability to balance all the contending complexities of load and container utilization—ever-changing shipping rates, lead ties, trade lanes, multimodal combinations, and more—helped customers control the cost and timing of shipping.
The success of ShipmentOptimizer set the stage for APL Logistics to move from innovating the shipment planning process to streamlining transportation execution—the actual movement of freight based on the established plan—to reduce IT costs and improve IT agility.
The execution part of APL Logistics’ business is as critical as it is complex. Execution includes all of the paperwork, data collection, and resource management required to move a box from Shenzhen, China, to Austin, Texas. Before freight is even picked up from a shipper to the time it is unloaded at an APL Logistics facility, IT systems are tracking details about how the freight is packed, booked for transit, and received.
The legacy transportation management systems and the IT infrastructure APL Logistics used to support transportation management were built on multiple platforms, including a core AS400 system used globally. These systems were not performing to modern standards, and were deployed all over the world to support regional languages, currencies, and regulations. Management at APL Logistics required more-flexible and more-configurable IT solutions that optimized transportation management, were easier to deploy and maintain, and enhanced the customer experience.
|Number of logistics facilities APL Logistics operates worldwide|
|Number of purchase orders APL Logistics processes annually|
Chew wanted to extend the benefits APL Logistics gained with ShipmentOptimizer into the execution business, particularly through the use of automation on the company’s domestic network. APL Logistics deployed Oracle Transportation Management to manage domestic transportation for key manufacturing and retail clients in China, Mexico, and North America. Oracle Transportation Management is used to consolidate orders into shipments, rate, route, assign carriers, tender, track, and settle. Carrier payments are generated based on rates and accessorial charges managed in Oracle Transportation Management. Performance reports in Oracle Transportation Management provide insights on shipment and carrier performance. The deployments are multitenant, which means that multiple shippers are managed out of a single Oracle Transportation Management instance.
As a leading provider of international logistics services, APL Logistics transports shipments with a number of freight carriers over land, air, and sea. Members of the finance team used to receive paper invoices from carriers, scan them, and match them to existing shipment records. With the launch of Oracle Transportation Management, these invoices can now be received electronically, reducing the number of manual paper transactions for participating carriers by 90 percent.
“How do you make sure the shipment will be on time? How do you make sure the financial billing is done? How do you make sure the carriers are happy?” asks Chew. “Now, we upload documents related to transit to the right APL Logistics team, and we get the information right there. Fast, quick, and accurate.”
Connecting the Oracle Transportation Management system to APL Logistics’ financial management system delivered additional benefits. Invoice aging has improved. Prior to deployment of Oracle Transportation Management and the deployment of invoices on the carrier portal, the average invoice was 14 days old. Today, it’s down to two or three days at the most—in most cases, one day. APL Logistics is also processing payments faster. In the past, carriers might estimate an invoice before receiving it, and even a US$1 difference between the estimate and the actual invoice amount would put an invoice into dispute.
This improvement in data exchange with carriers has helped with the accuracy of shipper invoices as well. “By reducing disputes with the carriers, we’re able to pay them quicker,” says Doug Kindrick, director of IT at APL Logistics. “That results in us billing our own customers quicker and getting paid faster.”
The APL Logistics technology team piloted the deployment of Oracle Transportation Management for transportation management with a large chemical company in North America. By starting with a key long-term customer, the team was able to solicit feedback on the new system and adjust the platform before rolling it out to more customers. After deploying with a customer in North America and a large chemical company with operations in Asia and Mexico, the system was ready for general release.
According to Kindrick, integrations of Oracle Transportation Management with existing enterprise systems at APL Logistics were seamless. The biggest challenge was change management—and even that wasn’t as big a challenge as it can be. “Standardizing the workflow across multiple operations allowed us to standardize the onboarding process, making it faster and reducing onboarding costs,” Kindrick says. “It was that challenge of convincing employees that, although you are now using a process flow that perhaps you’re unaccustomed to, your next customer that you onboard will happen in half the time, for half the cost.”
As of 2015, APL Logistics has deployed Oracle Transportation Management for transportation management in more than 200 locations across five continents.
As the global economy heats up but supply chain threats show no sign of abating, Chew and the team at APL Logistics have built a system that they have confidence in—and will be able to adjust to new developments in the marketplace (see Ideas into Action: Collaborative Shipping sidebar).
“We are looking for a future-generation platform, where we can see the big picture,” says Chew. “The whole company is in agreement and we are all moving in the same direction, when it comes to IT.”
On the horizon, Chew sees real potential for big data to play a role in further optimizing the planning and execution processes. But the key will be retaining a mind-set that adjusts with the market, and knowing how to capture an opportunity.
“We have to leverage technology, but we have to make sure that we have a flexible solution. It’s essential that we are able to improve the business as we go along,” says Chew.
Tara Swords is a freelance writer based in Chicago, Illinois.
Read the Sidebar: Ideas into Action: Collaborative Shipping