otm: fuel surge calculation and configuration in an automobile oem company and its benefits
TRANSCRIPT
Fuel Surge Calculation andConfiguration in an Automobile OEMCompany and its Benefits
Authors:
William HieSathish Kumar Thiagarajan
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Agenda
• OTM implementation Overview
• Fuel Surcharge Overview
• Fuel Surcharge Configuration in OTM , a Step by Step Overview.
• Benefits
OTM Implementation overview
• 8 Plants & 5 Vessel Ports
• 8233 Delivery Points
• 355 Active Itineraries and 1089 Active Rates
• 3 Modes ( Truck , Rail & Vessel)
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6421
11 378
Average Daily Shipments Per day6810 Shipments Per day.
3 Modes (Truck, Vessel & Rail)
TRUCKVESSELRAIL
OTM Implementation Overview
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What is Fuel Surcharge and it’sImportance
Fuel Surcharge (FSC) is the Cost which Service Providers add on top of the normalFreight Charge with an offset of constantly fluctuating cost of the fuel.
Fuel Surcharge (FSC) accounts to at-most 10-15% of the total Transportation Cost The most common Index used for FSC calculation is the DOE (Department of
Energy ) Index . Some of the other index's are HDF ( Highway Diesel Fuel) andWTI ( West Texas Index). (http://www.eia.gov/petroleum/gasdiesel/ )
As per the carrier contract index frequency is determined Weekly or monthly.
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Types of Fuel Surcharge
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Unit Based Charge based on the cost per mile driven (FSC dollar/ mile) Most common in the Truck Carriers , Even Rail carriers uses this approach
nowadays. e.g. :- for every $0.10 increase in fuel price above agreed base cost ,apply a
cost increase of $0.05
Unit Based Charge based on the cost per mile driven (FSC dollar/ mile) Most common in the Truck Carriers , Even Rail carriers uses this approach
nowadays. e.g. :- for every $0.10 increase in fuel price above agreed base cost ,apply a
cost increase of $0.05
Percent BasedCost Determines as the percentage of the Total shipment cost
E.g. For every $0.05 increase in Rate, apply a cost increase by 0.5% onshipment base cost.
Most common in Rail Industry.
Percent BasedCost Determines as the percentage of the Total shipment cost
E.g. For every $0.05 increase in Rate, apply a cost increase by 0.5% onshipment base cost.
Most common in Rail Industry.
FSC Calculation - Overview
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Fuel Surcharge Configuration in OTM
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Fuel Surcharge Configuration in OTM
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Step 1 – Rate Factor Setup
Contract and Rate Management /Power Data / General / Rate FactorCreate the New Rate Factor Source
Contract and Rate Management /Power Data / General / Rate FactorCreate the New Rate Factor Source
Factor Value ( 4.0 , Entered monthly orweekly based on DOE provided average
rate)
Factor Value ( 4.0 , Entered monthly orweekly based on DOE provided average
rate)Processed will be initially blank ,
Perform Actions->Process Rate Factorto process and create the new
Accessorial Cost.
Processed will be initially blank ,Perform Actions->Process Rate Factor
to process and create the newAccessorial Cost.
Fuel Surcharge Configuration in OTM
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Step 2 – Create a Accessorial Code ID , Accessorial Template andAccessorial Default
Fuel Surcharge Configuration in OTM
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Rate Factor RuleID
Rate Factor RuleID
Step 3 - Rate Factor Rule SetupSource Rate
Factor IDSource Rate
Factor IDAccessorial Code
IDAccessorial Code
IDAccessorialTemplate
AccessorialTemplate
Enter the new Rate Factor ( FactorIncrease and Cost Increase)
Enter the new Rate Factor ( FactorIncrease and Cost Increase)
Carrier BaselinePrice
Carrier BaselinePrice
Fuel Surcharge Configuration in OTM
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Step 4 – Process Rate Factor
Perform Action ProcessRate Factor after entering .
Perform Action ProcessRate Factor after entering .
Fuel Surcharge Configuration in OTM
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Step 5 – Verify the new Accessorial Cost created after processing.
FSC Accessorial cost is created, with the effectiveand Expiration date
FSC Accessorial cost is created, with the effectiveand Expiration date
FSC Cost Per Mile is Created.FSC Cost Per Mile is Created.
Fuel Surcharge Configuration in OTM
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Step 6 – Verify by Route Enquiry / Verify to see if the cost is applied onthe shipment
Perform a simple RouteEnquiry to Validate
Perform a simple RouteEnquiry to Validate
FSC Applied on theshipment cost
FSC Applied on theshipment cost
Fuel Surcharge Configuration in OTM
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1 - FSC Calculation need not be always Linear and OTM supports the sameconfiguration.
In this example there is change in Cost Increase from 0.00 to 0.05for 1st two rows. We need to manually enter these values in theRules as shown below. Once the Factor Increase and Cost Increasevalues follow the same increments we don’t need to enter thosevalues manually, FSC rule will calculate the cost accordingly.
In this example there is change in Cost Increase from 0.00 to 0.05for 1st two rows. We need to manually enter these values in theRules as shown below. Once the Factor Increase and Cost Increasevalues follow the same increments we don’t need to enter thosevalues manually, FSC rule will calculate the cost accordingly.
Baseline is for 2.29990(2.3) ,for 2.3 to 2.3999 the factor
increase is 0.05$ and furtherlinear increase will be taken
care by the
Baseline is for 2.29990(2.3) ,for 2.3 to 2.3999 the factor
increase is 0.05$ and furtherlinear increase will be taken
care by the
Fuel Surcharge Configuration in OTM
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One example for the % based
For every 0.05$ increase charge me 0.5%of the shipment cost applied.
For every 0.05$ increase charge me 0.5%of the shipment cost applied.
Fuel Surcharge Configuration in OTM
It is a very easy setup Remember to Process Rate factor once
setup is complete. Have a Monthly/Weekly alert to user
group for setting up Rate factor in OTM.
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Watch Out / Lessons Learned
Application Development Application Support OTM Testing/QA Specific Product Trainings (In
Premise/web based)
Cognizant ‘sOTM/GTM
Practice
Solutions and CapabilitiesSolutions from Cognizant Process Harmonization a Structured logistics Best
Practice Framework – Questionnaire/ Process Flows/solution fitment OTM Fast Tool Kit
• Master Data Upload Utility• Pre Built Agents OTM Upgrade Framework Test case repository
• 1000 test cases for base product• Agent Monitoring Tool Structured E mail Notifications OTM Cloud Implementation Pre-packaged solution for OTM cloud
Key OTM Capabilities OTM implementation on Cloud with pre-packaged
solution Manage, Build a Complex and Composite Logistics
Landscape• 10 + Applications with OTM• 200 + Interfaces• 150 + Agents Configured• Build Central Logistics Hub for Data Publishing• Automation Testing – 1000 person hours time
reduction• Build 50 + Custom Screens• Mobile Comms Integration OTM Upgrade
• Customized Standard Migration to reduce Migrationtime by 40 %
ProcessHarmonization
Multi-country Logistics AcrossEurope, Asia & Africa
OTM Cloud Implementationfor a US Logistics Service
Provider
UpgradeOTM 5.5 to 6.2.x forUS Automotive Giant
Application Supportfor US manufacturing &Entertainment Company
Key Experiences
Advisory/Solutioning Process Harmonization Global Design Customer Centric Labs
• OTM Solution Fitment/Demos• Health Check
Detailed process design Solution Blueprint System Configuration OTM Implementation - Business
Readiness and Data Strategy OTM Cloud Implementation
Implementations / Upgrade / Support OTM Implementation / Roll outs Offshore Delivery Center Factory OTM Upgrade - Functional / Technical Application Development
Application Support OTM Testing/QA Specific Product Trainings (In
Premise/web based)
Value Offerings
OTM Practice Overview
Our Oracle Transportation Management practice implements end to end solutions on premise and in the cloud