Date post: | 10-May-2015 |
Category: |
Business |
Upload: | san-diego-center-for-international-trade-development |
View: | 203 times |
Download: | 0 times |
Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Financial Returns in Global Trade: ROI of Compliance & Logistics
Ty Bordner VP, Solutions Consulting July 17, 2014
2 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
The Evolution of Supply Chain Management
Logistics Management
Themes & Processes
Solutions
Lean Six Sigma
Integrated SCM Suites
Transportation Management
Systems
Demand Planning /
Forecasting
Enterprise Resource Planning
Optimization Algorithms
Supply Chain Orchestration
Manufacturing Planning & Execution
Vendor Managed Inventory
1980s 1990s 2000s
3 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Major Investment in Supply Chain Automation
Over the past 25 years companies have spent a lot of money implementing systems to automate and optimize their supply chains.
The problem is, these traditional supply chain solutions are all domestically focused.
- Manufacturing Planning & Scheduling - Warehouse Management - Demand Planning & Forecasting - Domestic Transportation Management - Inventory Management
Source: Gartner, Supply Chain Software Market Share Study
4 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Transportation Management Systems Load building Dock scheduling Route optimization Fleet management Freight audit
Over the Road - Domestic
5 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Manufacturing Systems Capacity planning Materials planning Manufacturing planning Line scheduling Changeover optimization
Four Wall - Domestic
6 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Warehouse Management Systems Receiving Slotting Pick and pack Yard and dock management Labor management
Four Wall - Domestic
7 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
• Low cost country sourcing
• Emerging global markets
• Proliferation of trade agreements
Key Drivers:
$0
$5
$10
$15
$20
$25
$30
$35
$40
1973 1983 1993 2003 2012
World Merchandise Trade ($ Trillions)
Source: World Trade Organization Statistics, 2013
The Landscape has Changed Organizations have become more dependent on foreign markets.
8 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
SCM World Member Companies are Emblematic of Globalization Trend
48% of companies now do business in more than 50 countries, and 32% do business in more than 100 countries.
41% of companies now import over half of their products / materials from foreign suppliers.
35% of companies now realize more than half of their total sales from customers located in foreign markets.
Source: Managing Global Trade – Rising Importance But Lagging Execution, SCM World, July 2013
9 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Source: Managing Global Trade – Rising Importance But Lagging Execution, SCM World, July 2013
23% 41% 33% 3%
36% 34% 26% 4%
43% 34% 22% 1
Automation of export compliance
Automation of supply chain visibility
Mostly manual / spreadsheets
Some automation / homegrown systems
Some automation / point solutions
Full automation / GTM Suite
Automation of global transportation management
International Supply Chain Execution Still Lags
10 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
International vs. Domestic SCM Investment
Source: Logistics Management Magazine Survey, May 2014
*Among respondent companies with more than $100,000 in international shipments per year.
How much have you invested in international supply chain solutions vs. domestic supply chain solutions ?
About Equal 1/2 1/3 1/5 1/10 <1/10
36%
22%
19%
5% 13%
Representative Supply Chain Solutions
Domestic - Manufacturing - Warehouse management - Demand planning - Domestic transportation - Inventory management
International - Export management - Import management - International transportation - Supply chain visibility - Free Trade Agreements
vs.
5%
11 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
This Investment Disparity is Counter Intuitive
Average Total Landed Cost of a Shipment $ 1,618 $ 3,085 Average Cycle Time of a Shipment 4.3 + 1.3 days variability 21.6 + 6.3 days variability Average Cost to Expedite a Shipment $ 345 $ 459
Domestic International
Source: Logistics Management Magazine Survey, May 2014
A 1% improvement in international supply chain efficiency yields a far greater return than a 1% improvement in
domestic supply chain efficiency.
12 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Leaders are Capitalizing on Opportunity Question: What capabilities do you currently use in the management of
your international supply chain operations?
*Among respondent companies with more than $100,000 in international freight spend per year.
Source: Logistics Management Magazine Survey, May 2014
Export management Import management International transportation Supply chain visibility Free Trade Agreements
Highly Automated No Automation
26% 20% 25% 22% 10%
41% 46% 40% 42% 65%
Limited Automation
33% 34% 35% 36% 25%
Determined to be the companies that highly automate 3 or more international supply chain functions, (n = 30 companies)
Leaders
Determined to be companies that do not automate 3 or more international supply chain functions, (n = 49 companies)
Laggards
13 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
A typical $2.5B company, making 100,000 shipments per year…
Impact of Being a Laggard – Transportation Costs
Source: Logistics Management Magazine Survey, May 2014
$17 million / year
14 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Source: Managing Global Trade – Rising Importance But Lagging Execution, SCM World, July 2013
Impact of Being a Laggard – Business Operations
Inability to control global transportation costs is costing us a material amount today.
Inability to take advantage of free trade agreements is costing us a material amount today.
25% 39% 28% 4% 4%
22% 60% 14% 2%
Strongly agree Agree Neutral Disagree Strongly disagree
Unpredictable lead times on international shipments has a material adverse impact on our production and / or distribution plans.
34% 57% 9%
15 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
What Can Companies Do About It?
16 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Investment is increasing in Global Trade Management (GTM) technology
• Automating supply chains across borders:
• Import, Export and Trade Agreements
• On-demand Delivery is Key Capability
• Addresses Global Supply Network Challenges
Supply Network
Component Domestic Global Cycle Time 5-7 days 25-40 days
Touchpoints ~4 5-20
Regulation Minimal Significant
Time Zones 1 - 3 8+
Modes 1 - 3 3+
Costs Low High
Languages 1 Multiple
Documentation Low Significant Source: AMR Research
Supply Chain 2.0
Requirements Develop Trade Strategies Manage Suppliers via Portals Optimize Global Transportation Automate Trade Compliance Monitor with Supply Chain Execution Integrate Financial Supply Chain
SP
SP
SP
SP SP
DC
ST DC
AS
ST
ST
ST ST ST
ST
ST
ST
GW
GW
GW
SP
SP SP
IM
SP SUPPLIER
DC DECONSOLIDATION
AS ASSEMBLY
ST STORE
GW GATEWAY
IM IMPORTER FC FACTORY
GTM Pay
Make
Export
Transport Import
Procure
17 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
1. Develop Trade Strategy “Amber Road is the first to built a sourcing calculator on top of its trade compliance capabilities, which enables side-by-side comparison of sourcing alternatives.”
• Develop optimal sourcing strategies
• Use scenarios to compare landed cost
• Evaluate impact of regulatory controls
• Take advantage of duty deferral and minimization regimes (FTAs, FTZs, etc.) SP
SP
SP
SP
IM
Gartner Group
SP SUPPLIER
DC DECONSOLIDATION
AS ASSEMBLY
ST STORE
GW GATEWAY
IM IMPORTER FC FACTORY
US US US US
18 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
2. Manage Suppliers with Portals
69% survey respondents say their companies’ emphasis on supplier enablement has increased over the past three years
• Integrate suppliers with global supply chain
• Improve ‘downstream’ visibility and control
• Manage suppliers with scorecards
Supplier Portal 1. Manage orders
2. Monitor production
3. Coordinate booking
4. Prepare documents
5. Measure performance
SP
SP
SP
SP
SUPPLIER PORTAL
REDUCE ORDER CYCLE TIME
IMPROVE COMPLIANCE
IM
SP SUPPLIER
DC DECONSOLIDATION
AS ASSEMBLY
ST STORE
GW GATEWAY
IM IMPORTER FC FACTORY
Aberdeen Research
19 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
3. Optimize Global Transportation “Amber Road improves how we manage our ocean transportation and allows us to realize targeted customer satisfaction gains in our export business.”
• Manage higher transportation budgets (6 – 11% of revenue)
• Optimize carrier selection and reduce costs
• Implement stronger financial controls
Global TMS 1. Manage contracts
2. Evaluate routings
3. Select carriers
4. Audit freight bills
5. Measure performance
SP
SP
SP
SP
GLOBAL TMS
GW
GW
GW GW
Optimize Routes
Reduce Costs DC
DC
ocean route
air freight
SP SUPPLIER
DC DECONSOLIDATION
AS ASSEMBLY
ST STORE
GW GATEWAY
IM IMPORTER FC FACTORY
Control Spend
Engelhard
20 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
4. Automate Trade Compliance “With Amber Road we’ve automated documentation and trade party screening and have been able to pre-clear 90% of all of our international shipments through Customs.”
• Improve compliance with export and import regulations
• Demonstrate Reasonable Care for Customs
• Streamline export and import processes
• Optimize duties paid and clear Customs faster
Global Compliance 1. Classify goods
2. Screen restricted parties
3. Manage licensing
4. Generate documents
5. Measure performance
SP
SP
SP
SP
IM
GLOBAL COMPLIANCE
GW
GW
GW GW
Fairchild Semiconductor
SP SUPPLIER
DC DECONSOLIDATION
AS ASSEMBLY
ST STORE
GW GATEWAY
IM IMPORTER FC FACTORY
Export Import Global Transactions
21 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
5. Supply Chain Execution • Measure and monitor
end-to-end global logistics process
• Improve coordination and manage by exception
• Create scorecards for each global trading partner (Carriers, Freight Forwarders, Customs Brokers)
Supply Chain Execution 1. Manage the execution of global
orders and shipments
2. Manage with dynamic alerts
3. Measure global logistics performance
SP
SP
SP
SP
IM
SUPPLY CHAIN EXECUTION
ORDER PICKED UP BOOKING
CONFIRMED DEPARTED DOCUMENTS COMPLETE ARRIVED CLEARED
CUSTOMS DELIVERED
GW
GW
GW GW
SP SUPPLIER
DC DECONSOLIDATION
AS ASSEMBLY
ST STORE
GW GATEWAY
IM IMPORTER FC FACTORY
DC
ST
“Amber Road’s solution provided Levi’s with more complete and accurate data regarding finished goods and has reduced tracking and tracing of inbound shipments by 98%.”
Levi Strauss & Company
22 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
6. Integrate Financial Supply Chain 90% of enterprises report their global supply chain technology is inadequate to provide the corporate finance organization with the timely information it requires.
• Leverage core physical supply chain processes
• Eliminate inefficiencies with global trade finance
• Create new financial vehicles and value
Financial Supply Chain 1. Automate letters of credit
2. Provide pre-shipment financing
3. Improve risk management
SP
SP
SP
SP
IM
FINANCIAL SUPPLY CHAIN
DOCUMENTS DOCUMENTS
SUPPLY CHAIN PERFORMANCE
SUPPLY CHAIN TRIGGERS
Aberdeen Research
23 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Case Study – Duty Minimization
Global Food Company
24 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Company Metrics
• Scope: 100+ countries on 6 continents
• > 30,000 employees
• > $15B in revenue
25 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Global View
The content of this slide is not comprehensive, not every country is marked. The goal of this slide is to show the direction and complexity of the global structure
26 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Global Supply Chain Environment
Export to over 70 Countries
Import from over 25 Countries
10 Free Trade Agreements
Complex Document Requirements
27 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
2013 Benefit Metrics (North America Only)
• FTAs US: NAFTA, US-Chile, US-Peru, GSP CA & MX: NAFTA
• $41M in net reduction in duty payments through participation in Free Trade Agreements
• Additional savings due to reduction in customs delays
related to robust and accurate customs documentation
28 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Case Study – Supply Chain Visibility
Glaxo Smith Kline
29 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
About GlaxoSmithKline
About GSK
• Science-led global healthcare company focused in three primary areas of Pharmaceuticals, Vaccines and Consumer Healthcare.
• Global presence with commercial operations in more than 150 countries, a network of 86 manufacturing sites in 36 countries and large R&D centers in the UK, USA, Spain, Belgium and China
30 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Supply Chain Visibility Journey
2001 • Discovered visibility concerns • Where are shipments? • Are shipments disrupted? • Can we meet customer and
consumer commitments?
2002-2003 • Identified SCV benefits • Solution requirements
included: – Integration with
multiple ERP systems – Integration with 3rd
party warehouses – Visibility across all
carriers
2004-2013 • Rationalized 35 LSPs down
to 3 • Leveraged improved data
quality into better shipping and supply chain decisions
31 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
The Journey Continues 2014 SCV Project Focus
How do we move towards end-to-end visibility? –Link inventory info from all nodes –Better tracking of inbound supply and outbound deliveries –Ensure trade compliance –Identify changing trade regulations –Drive to enhance S & OP decisions –Incorporate duties, taxes, freight and other costs of service in
supply chain decisions
32 Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Supply Chain Visibility - Benefits
• Saved $100M in working capital in the first two years of operation
• On-going annual cost savings of $15-$20 • Improved supply chain data quality from 40-50%
to above 90% • Enhanced supplier performance • Improved supply chain network decisions • Improved supply chain credibility and
importance throughout the organization • “Filled the void” of ERP and MFG systems
Proprietary and Confidential © Copyright Amber Road, Inc., 2014. All rights reserved.
Questions and Answers