High Tech Industry’s Logistics Woes: Oracle Transportation Management may be the answer
High Tech Industry works in a way where the bulk of the manufacturing is outsourced to the Contract Manufacturer. Typically there is a rate negotiation on a quarterly basis. The procurement of components is done by the Contract Manufacturer though the OEM negotiates the rates with these Level 2 suppliers (Level 1 supplier is the Contract Manufacturer). Once the Sales Order is booked, a build notification is sent to the Contract Manufacturer who after the assembly ships the assembled product to the OEM’s Order Consolidation Centre. The distribution of the products from the OEMs Consolidation Centre is handled by the Third Party Logistics Provider who in turn after delivering the goods sends a notification to the OEM. Our Primary focus here is on the ‘Place’ aspect of Philip Kotler’s 4 Ps of marketing.
Some of the challenges faced by the High Tech Industry in the logistics function are Track and Trace, real time integration among the OEM, Contract Manufacturer and Third Party Logistics Provider in terms of data flow, Generation of Shipping documents, freight settlement and Cost allocation to line items. Because of lack of a standard ERP solution in this space, most of the High Tech companies have built custom solutions around these functionalities. This becomes difficult to maintain as the volume of data increases and becomes an overhead. The biggest challenge comes when the ERP system has to be upgraded as these have to be upgraded manually.Oracle’s acquisition of G-Log, the Transportation Management solution may finally end the Logistics woes of the High Tech Industry. This product rechristened Oracle Transportation Management has robust BPEL integration capabilities. All disparate systems (Contract Manufacturer, Third Party Logistics Provider) can be integrated with the central Oracle E-Business Suite addressing the data synchronization issues within various systems. In fact integration with FBAP provider’s system eliminates the additional task of sending the activity report to OEM for Verification and Payment purposes.
Currently the product is loosely coupled with other modules of the core ERP application but we foresee more and more tight coupling in near future.So if you have built a heavily customized solution for the Logistics function and want to get rid of it, this is a product to watch out for!
Do post your comments and/or send me an e-mail at Sandeep_chatterjee@infosys.com
Comments
When you map the Hi Tech Industry logistics requirements to Oracle Transport Management, the functional fit is great
With its integration features, the cost of maintenance of customizations in the legacy system can be brought down
Good article that gives an functional and product insight
Posted by: Pradeep Kotagar | August 12, 2008 02:14 PM
"Gone is the era when customers would queue to your factory gate to buy the goods produced by you" Yes this is true! and logistics industry is making it possible.
Posted by: logistics spain | August 6, 2009 09:18 AM