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Regain Control of Your Transportation

Switching from a 3PL to an In-House Solution Using OTM


Amy Donovan, Manager of Business Applications

Overview of PQ
Privately Owned by The Carlyle Group What we make:
PQ > silicate, zeolite, catalysts, and other performance chemicals serving the detergent, pulp and paper, chemical, petroleum, catalyst, water treatment, construction, and beverage markets Potters > engineered glass materials serving the highway safety, polymer additive, metal finishing, and conductive particle markets.

Annual Sales over $1 billion ~2700 employees worldwide Operations in ~20 countries worldwide Customers range from governments/munis to Fortune 500 companies to small contractors

Overview of US/CA Operations


27 Plants across US and CA, with ~40 unique shipping points Approx. 55,000 shipments a year:
66% prepaid, 34% collect 44% Bulk Truck, 22% Package Truck, 13% LTL/Courier, 11% Flatbed, 7% Rail, 3% Other (Barge, Pipeline, Intermodal, Export)

175 Service Providers plus small private fleet ~ $38 million/yr in freight spend ($33 million in OTM scope) Each Plant has a Customer Service Rep / Admin who does all order entry and planning Corporate Logistics is responsible for all contract/rate management Customer Invoicing is dependent on the freight rating process

PQs Transportation Solution History


1990s thru 2007 Mainframe Rating System called TCS 2006 2007 2008 2009 2010

February 2007 Selection of 3PL Rollout 3Q/4Q 2007 & 1Q 2008

October 2009 Selection of OTM Rollout 1Q/2Q 2010

How the 3PL was Sold


Two Parallel Projects started in late 2006 Carrier Re-bid of all Truck Lanes Rating System Replacement 3PL selected as the Rating System Replacement; a System only solution was not considered Savings from the Re-bid attributed to the 3PL 3PLs system would enforce and ensure that the least expensive carrier was used for each lane, thus ensuring that the cost savings associated with the Re-bid project were obtained

Business Reaction to 3PL


Skepticism about the Business Case Concern and pessimism from Plant C/S about having a 3PL tender the loads. Many non-standard scenarios were identified.

Confusion on role of Corporate Logistics in the new process (e.g. Rate Maintenance, Exception Handling, etc.). Concern about the 3PL fees whose budget?

Process Flow using the 3PL


SAP
SALES ORDER

3PL
DELIVERY

VL01N L01N VL02N VL02N VL10B

New Deliveries

2 Tender Notice 3
Carriers eMail

(& any Delivery Changes prior to shipment) Accept Tender Tender Confirmation w/ Confirmed Carrier 4 Tender Confirmation w/ Confirmed Carrier
Plant C/Ss eMail

Post Goods Issue

5 Notification of Completed Shipment (PGI)

6 Rating Information for each Shipment

Key Points
7

BoL Match File Upload of Paid Shipment Info to Acctg FREIGHT PAYMENT PROVIDER

Rates were maintained in the 3PLs system by 3PL personnel and in Freight Payment Providers (FPP) system by FPPs personnel. 3PLs system automatically generated a tender email to least expensive carrier

Services Provided by the 3PL


Rate Maintenance (including FSC) Load Tendering (for Truckload and LTL Shipments) Rate Assignment to Prepaid Shipments (all modes) Manual/Exception Handling (data corrections, rush
shipments, multi-stop shipments, spot quote assignments, manual rating, etc.)

Brokered Loads (in cases where our contracted carrier


couldnt take the load)

Brokered arrangement with 3rd party carrier payment provider

Issues with the 3PL Process


3 Rate Databases
PQ Corporate Logistics 3PL 3rd Party Payment Provider

Plants with Dedicated Carriers


For them 3PL tendering didnt make sense

3PL couldnt handle Rail FSC Confusion on who should talk to the carrier
PQ Customer Service Planners vs. 3PL

Auto-email tendering process issues


Inability to review assigned carrier before tender email was sent Cost basis did not take into account accessorial charges Short lead-time orders required special handling at a higher fee Order changes triggered automatic (and sometimes misleading) emails to carriers

High Fees

The OTM Business Case

Overview of our OTM Project


Oracle Consulting was contracted to support the project Phase 1 Rating Only All Sites
Shipment Rating done by OTM Load Tendering Done Outside of System by Plant C/S October 2009 February 2010

Phase 2 Load Tendering by OTM 2 Sites


1 PQ and 1 Potters Plant February 2010 May 2010

Overview of our OTM Project (cont.)


OTM Modules Used
Core Oracle Transportation Management Transportation Planning

Team Structure
PQ (Corporate Logistics 3 FT, 2 PT and IT 1 FT, 3 PT) Oracle Consulting (1 Functional/PM, 1 Technical)

Aggressive Timeline Attributed to:


Previous 3PL implementation experience (XML integration, leveraging existing interfaces, FSC standardization) Corporate Logistics had selected the software and therefore was really dedicated to the project Had the right mix of PQ and Oracle Consulting Resources

OTM Phase 1 Process Flow


SAP
SALES ORDER

1-4

DELIVERY

VL01N VL02N VL10B

Customer Service arranges carrier via email or phone

OTM

Order Releas e

Key Points Customer Service does all load tendering outside of a system

Buy Shipment Post Goods Issue

OTM does not receive the Delivery from SAP until it is PGId Customer Service uses actual carrier code when setting up the SAP Order/Delivery

5 Notification of Completed Shipment (PGI) (specified carrier)


6 7

Rate File BoL Match File Upload of Paid Shipment Info to Acctg FREIGHT PAYMENT PROVIDER

OTM Phase 2 Process Flow


SAP
SALES ORDER

Key Points

OTM

Customer Service creates SAP Order/Delivery w/ Carrier = ZOTM OTM receives the Delivery info as soon as the Delivery is created in SAP

DELIVERY

VL01N VL02N VL10B

New Deliveries (& any Delivery Changes prior to shipment)

Order Releas e

Customer Service uses OTM to tender the loads

Customer Service uses OTM to assist with load tendering 2 4 Post Goods Issue Tender Confirmation w/ Confirmed Carrier 5 Notification of Completed Shipment (PGI)
6 7
8

Tender Notice 3

Buy Shipment
CARRIER

Accept Tender 4 Tender Confirmation w/ Confirmed Carrier

Rate File BoL Match File Upload of Paid Shipment Info to Acctg

Plant C/Ss eMail

FREIGHT PAYMENT PROVIDER

PQ Customer Service Cockpit

LEGEND (SECURE RESOURCES_xxx)

NOT STARTED / WITHDRAWN TENDERED

ACCEPTED / PICKUP NOTIFICATION DECLINED / NO RESOURCES / MAX RETENDERS

3PL vs. In-House OTM Solution


PQ Corporate Logistics:
Responsible for rate maintenance, assistance getting carriers and data integrity issues

PQ Plant Customer Service:


Can view contracted rates for each lane (better decision making) Can review the carrier assignment before tendering a load Can tender via phone rather than email in cases where that makes more sense (e.g. short lead time orders) Responsible for all carrier communication (directions, scheduling changes, etc.)

PQ IT:
Owns the Maintenance of the OTM System Controls the end to end process (SAP-OTM-SAP)

OTM Functionality Implemented


UI/Security
5 User Menus 8 Screen Sets 13 Manager Layouts 7 Business Monitors

Interfaces
SAP to OTM Item Master XML Location Master XML Order Release XML OTM to SAP Confirm_Carrier XML Order Release Rate Allocation (Flat File)

Workflow
13 Automation Agents 5 Auto Assignment Rules

Stylesheet Customization
RIQ Screen Tender Emails

Other
DispatchLocation-Based Shipment Tendering

Benefits of our OTM Implementation


Cost Savings Cost Savings associated with elimination of 3PL fees Calculation of Accessorial Charges that can be passed on to customer

Other Benefits Improved Management of Rates (accuracy and time savings associated with migration to 1 database vs. 3) Much Improved On-Line Rate Inquiry Quicker Time to Customer Invoicing Elimination of Dummy SCAC codes Carrier Selection Review via Planned vs. Actual Cost Analysis (better visibility to missed opportunities) A Tendering System that our Plant C/S Planners actually want to use

Next Steps
Remainder of 2010 Additional Plant Rollouts for OTM Tendering Functionality 2011 Assess interest in PQ Canada utilizing OTM (currently only Potters Canada utilizes OTM) OTM Upgrade?