Overview
Building a connected logistics organization with Oracle Transportation Management (OTM) and Oracle CPQ Cloud integration to drive seamless freight forwarding operations
Our client is a $1bn+ logistics conglomerate with 26 privately owned and managed entities distributed globally. It is a 43-year-old organization operating across four key verticals in global logistics – i.e., warehousing and transportation in contract logistics, freight forwarding, and container & vessel operations. Their import-export services span coastal services, buyer consolidation, import-export haulage, and origin and destination handling. Their organization was lagging in technology adoption, resulting in numerous operational and financial challenges. They realized the need for a targeted digital transformation initiative to help them overcome these challenges and set them up for success in a contracting and increasingly competitive global freight forwarding market.
The client engaged Birlasoft to lead this digital transformation initiative. This case study traces the transformation journey of a siloed organization operating with fragmented technology solutions to an integrated logistics organization with better cost control and 80% more efficient processes.
The Challenge
1. Issuing accurate quotations with quick turnaround while ensuring consistent profit margins
In freight forwarding, issuing accurate and competitive quotations to shippers proves difficult because of the intricacies involved in carriers' handling costs and pricing structures. Multiple variables must be accounted for before a quotation can be provided. These variables include shipment attributes (weight and volume), transit specifics, transport modes involved, and specialized handling requirements of the shippers. Achieving consistent pricing requires complex rate definitions, and rapid turnaround requires meaningful collaboration between the sales, commercial, and operations functions.
Due to siloed processes and fragmented technology, our client needed help to drive collaborative processes between these functions. As a result, sales teams took a long time to issue quotations to shippers, whereas commerce teams could not ensure consistent profitability across jobs.
2. Managing multiple transit modes and handling complex multi-leg scenarios
Freight forwarding operations involve transit across diverse transport modes such as sea, air, road, and rail. Each mode involves unique complexities, regulations, and lead times across geographies. Moreover, multi-leg scenarios require teams to make complex decisions regarding the selection of first or third-party services, network routes, container, or vessel schedules, etc. These decisions have a marked impact on the overall profitability. However, freight forwarders typically lack visibility into carrier rates and profit margins for each job. As a result, gauging the effectiveness of operations and assessing decision quality becomes difficult.
Our client was grappling with these challenges and saw the need for a robust operational logic to drive these decisions. They required an end-to-end platform to drive the order-to-delivery process. This would also require each persona to be able to access key data within a simple and intuitive interface – which was currently missing at the client's organization.
3. Inability to meet customer expectations and maintain profitability in long-term contracts
Long-term contracts typically comprise 60-70% of the contract volume in freight forwarding. Freight forwarders usually source bulk capacity from carriers at fixed rates to achieve profitability. However, the profitability across such contracts can fluctuate due to market shifts, supply chain disruptions, and demand fluctuations. As a result, committing to fixed rates and terms over extended periods limits the ability of freight forwarders to adapt to these evolving factors, which affects their overall profitability and margins.
Due to shifting market dynamics, our client needed help managing long-term contracts. Moreover, rising customer expectations also impacted client retention, as shippers now require shipment visibility, more predictability in shipping times, and better turnaround. Therefore, our client needed shipment-level visibility, cost transparency, and better cost control to maintain profitability and retain long-term contracts with shippers.
4. Difficulty in harnessing enterprise-grade solutions like OTM for operational effectiveness
Despite the availability of powerful tools like Oracle Transportation Management (OTM), freight forwarders struggle to exploit them to optimize operations in key areas such as route planning, carrier selection, and shipment tracking. Moreover, some key data may reside in a different system and must be retrieved manually. This slows down processes and ultimately impacts the quality of service delivered to the customer.
Our client faced challenges, particularly in order creation and planning in OTM, due to the above factors. Moreover, the lack of effective collaboration across operations teams also degraded the speed and quality of decisions.
5. Integration for End-to-End Efficiency
Finally, our client needed help to streamline the order-to-delivery process despite the availability of enterprise-grade tools like OTM and CPQ Cloud. This is because integrating OTM and CPQ Cloud required alignment of complex pricing logic with transportation planning and execution. Only then would it be possible to ensure precision in the execution of jobs and ensure consistent profitability across each job. In addition, manually retrieving and entering data across systems contributed to manual errors and wasted valuable time of high-expertise resources.
Ultimately, our client wanted to transition to a digitally enabled operating model based on an integrated technology foundation.
The Solution
Birlasoft saw the opportunity to build connected freight forwarding operations through an OTM and CPQ Cloud-integrated solution. Moreover, a role-specific dashboard with an intuitive menu enabled each individual in the organization to navigate crucial aspects of their jobs seamlessly.
The solution helped the client automate critical processes, like quote generation, quote approval, order and contract creation, and pricing management. It also helped them achieve better cost control with more efficient operations.
1. Faster quote issuance with OTM-CPQ integration and automated quote approval
Through the RIQ module, Birlasoft developed an integrated solution to fetch the rates for multiple transit modes and carrier networks. This data was fetched into CPQ and leveraged to help the sales teams issue detailed quotes for all shipper requirements – including origin and destination handling, shipping speeds, special requirements, and shipment attributes like volume and weight. CPQ can now provide cost estimates based on different shipping methods, and OTM validates these estimates against actual transit rates and costs.
This helped in providing accurate cost breakdowns to customers through quotations. Moreover, the quote approval process was automated by ensuring each quotation met the determined gross profit threshold. This mitigated lengthy exchanges between sales, operations, and commerce teams and ensured that spot contracts and jobs were profitable by default.
2. Optimal route and mode selection and booking consolidation for maximal resource utilization
The integrated solution can automatically select the most optimal route for each job based on factors like distance, transit times, carrier rates, and any special customer requirements using OTM. For this, OTM handles the logistics and transportation planning to meet customer-specific requirements like delivery time, packaging preference, and operating instructions.
Moreover, through the integration, operations teams can now consider the available space and capacity on different vessels and containers in OTM, along with the dimensions and requirements of the products being shipped. This facilitates the consolidation of bookings from different shippers to ensure that containers are efficiently loaded, minimizing wasted transit space and reducing shipping costs.
3. Reduced manual overheads with automated order creation in OTM
With the integrated solution, we could exploit the CPQ Cloud API to ingest critical data points against accepted quotations to automate the order creation process in OTM. The solution automatically fetches the order status, movement type, origin, destination, rate structure, codes, and movement type into OTM. This eliminated the need to retrieve and input this data manually.
As a result, this saved considerable manual effort and eliminated the room for error, resulting in faster and highly precise operations.
4. Improved profit margin control with job-level visibility into revenues and costs
Finally, using OTM for the order-to-cash process and CPQ for quotation enabled us to build a comprehensive reporting feature, which offered three-dimensional margin visibility at the job level. The integrated solution uses CPQ to fetch revenue and sales data and infers cost factors like carrier rates, fuel costs, tolls, customs duties, handling charges, and real-time cost updates from OTM.
The client's commercial teams could now track the planned, provisional, and actual costs against each job, which helped them make more targeted cost optimization decisions and identify more profitable jobs. Ultimately, these insights can be shared with the operations teams to identify optimization opportunities.
The Impact
The integrated solution provided an end-to-end, fully integrated cloud-based solution for managing each aspect of freight forwarding – from quoting and booking to execution and tracking. This eliminated data silos, reduced manual overheads, and brought improvements across vital operational metrics.
1. Improved profit margin control with job-level margin visibility
The three-dimensional margin visibility at the job level (i.e., planned, provisional, and actual) provided our client with a holistic and granular view of profit margins. This resulted in a 70% improvement in profit margin control and enabled the teams to make better decisions across each stage of operations.
2. Reduced cost deviations and fewer standalone bookings
The ability to compare planned and actual costs incurred in transportation enabled the organization to reduce cost deviations across jobs by 50%. Moreover, booking consolidation reduced the number of standalone bookings, resulting in cost savings from optimal container and vessel utilization.
3. Faster quote issuance and transport order booking
With precise rate structures and pricing management data, the sales teams could issue accurate quotes 50% faster to clients. Automated quote approval based on profit margin threshold also contributed to an 80% efficiency gain in the quotation execution cycle. In addition, automated order creation accelerated the order booking process by 70%.
4. Cost savings through self-service supplier onboarding
The client now operates with a self-service platform that streamlines the supplier onboarding and tender acceptance process. 100% of the suppliers were onboarded through this platform, resulting in 20% cost savings.
5. Improved tax compliance for GST and VAT
The integration of tax compliance into operations reduced the risk of financial penalties. The client now achieves 100% tax compliance and has improved the efficiency of tax compliance processes by 90%.
