Implementing a TMS in

Mexico is not the same

as in the US

Jonathan Flores -Tsol

Introduction

Implementing a TMS in Mexico is not the same as in the US

• There are a lot of challenges for the implementation teams to implement OTM outside the

US

• The most remarkable challenges are Change Management, Cultural customs, Invoicing

process, Tax management, Rate management, language barriers, operational bad habits,

service providers communication among others

• This topic is focused to share some experiences that our team has faced through several

different industry models implementations in Mexico

• OTM is high adaptable to work with international scenarios

• Even tough that does not mean that implementing OTM outside the US is easy

• Today, OTM is being implemented successfully in countries throughout Europe, Asia, and

Latin America. 30% to 40% of OTM implementations are outside the US

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Panel

Jonathan Flores

Transportation Services Manager

Tsolco

Mexico City, Mexico

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Tsol: at a Glance

We optimize supply chain performance. Focused on logistics and technology solutions to improve services and lower overall costs.

– TMS

– Routing

– WMS

– Sourcing

Senior consultants with broad expertise in the selection and implementation of logistic technology applications, as well as with strategic and operational consulting

Tsol is a company based in the United States and Mexico. Initiated operations in 2002. Has served clients in the US, Mexico, Colombia, Peru and Brazil

Tsol: In the Mayan language means: “to organize or to fix”

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Tsol: OTM References (non-US)

• For the largest paint manufacturer and distributors in Mexico and worldwide, implementing a comprehensive OTM 6.3.5 solution and its integration into Oracle E-Business Suite (EBS), GPS, truck scale and legacy systems

• For one of the largest soft drink bottler in Mexico and worldwide, implementing the first OTM 6.3.4 in “the cloud” solution in Mexico and its integration into Oracle E-Business Suite (EBS), GPS, and legacy systems

• For a leading 3PL in Mexicoconducted a Quality Assurance review of an OTM implementation. The 3PL needs to review the implementation done by a third party to obtain a diagnostic of its current OTM implementation, in order to identify potential gaps in OTM functionality.

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Tsol: OTM References (non-US)

• For the largest parcel carrier in Colombia implementing OTM 6.0 for intercity transportation and integrating with ORC (Oracle Real Time Scheduler) to manage PU & D as well as quoting

• For a large chemical trucking company in Mexico implementing OTM 6.0 (Fleet Mgt) and integrating with EBS in On-Demand environment to for a complete operating and admin solution

• For the largest paint manufacturers and distributors in latinamerica, developed a Proof Of Concept to examine the value and feasibility of implementing OTM within its complex distribution model

• For an important multi-modal logistics services providers in Mexico, helped transform a traditional asset-based carrier into a value-added service provider with the help of OTM to support a strategy of asset optimization, shipment visibility and replicable processes

• For one of Brazil’s largest retailers worked with Oracle Brazil to build a demo to prove the value of the tool

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Agenda

• Change Management and Cultural Customs

• Language Barriers

• Rate Management

• Distances and Maps

• Invoicing Process / Tax Management

• Outsourcing / Consulting Services

• Equipment Upgrade and Maintenance

• Service Provider Communication

• Conclusions

• Q & A

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Change Management and Cultural Customs

• Change Management

• Is your team ready for the change that entails?

• It is important to consider the human factor, because in the end are the ones who operate the technology solution

• There are multiple factors that can trigger this attitude of rejection of technological innovation, among them are:

– Fear

– Lack of information

– Threat of change

– Lack of training

– Without involving leaders

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Change Management and Cultural Customs

• Cultural Customs

• Just like working with mid-eastern , Asian or African clients, working with Mexican clients can be a tricky proposition for external consultants.

• Knowing what to expect from a Mexican implementation can and will help you avoid potentially expensive situations and sure enough a good deal of headaches.

• Working with LATAM is not better or worst, it’s just different, and if you can accommodate your thinking process to expect and anticipate all the peculiarities that come with it you can be headed for a successful implementation and a pleasant surprise

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Language Barriers

Issue

• There are practically no English native speakers in Mexico. 12.9% of its population speaks English as an additional language.

Implications

• Implementing consultants must speak Spanish

• User interface must be in Spanish

• Support should be in Spanish, but it isn’t

• Emphasize to the client the importance of having English speaking super-users.

• This holds true for the IT crew as well

• IT crew should ideally speak both Spanish and English

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• Broader set of languages available in 6.2 / 6.3

• Logistics vernacular will vary across countries that speak the same language

• Translations are for the field users. Super user and technical users must work in English

- Translated: User Interface, E-mail, Reports, Error Messages

- Not Translated: Online Help, Documentation, Training Materials

• The language preference does not change text on the help content

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Language Barriers

- English - Spanish (Europe & LatAm)

- German - French (Europe & LatAm)

- Italian - Chinese (Simplified & Traditional)

- Korean - Portuguese (Brazilian)

Rate Management

• Probably the most complex issue.

• Fewer large transportation companies, more owner operations– Greater use of spot rates

• No use of standard rates such as SMC3– Greater use of private fleets

• Higher likelihood of requiring Fleet– Greater complexity

– Very little use of LTL equivalent

• Are there rate modeling tools?

• How do we define rate distance outside the US?

• What “rateware” exists outside the US?

• How different? Can they be represented in OTM?

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Distances and Maps

• What are options for obtaining, calculating, loading distances?

• External Distance Engines are not as precise – Street level data available in select regions

– Lookup tables must be built identifying all possible distance combinations

– Tables could be tens of thousands records over

• Even though from OTM 6.3 it is possible to secondary routing, most customers doesn't know where the “locations are located”

• Experienced planners prefer to plan routes based on their “sixth sense”

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• Transit times are highly variable on secondary roads

– Transit times depend not just on type of road, and vehicle but season of the year, time of day and regional calendar

• OTM 6.3 driving directions are not always useful

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Distances and Maps

Invoicing Process

and Tax Management

Electronic Invoice

XML, PDF

1. Client Information

2. Certificate, approval number

3. Serial number, hour and date

4. Digital stamp

5. Original link

6. “This document is a printed

tax receipt”

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Invoicing Process and Tax Management

• VAT in Mexico, 16%

• VAT in Mexico, 0%

• Imports tax (VAT), 15%

• Border Tax (VAT), 11% (recently updated to 16%)

• Special products and services tax (IEPS)

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Outsourcing / Consulting Services

• Mexican companies have a culture of resistance to change. By keeping the traditional systems operational costs stay high

• In Mexico outsourcing is frequently criticized because many companies use this model to evade taxes and labor liabilities

• Some people want to execute their own tasks, which means that they are “jealous” and don’t want to share them

• People don’t trust external resources

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Equipment Upgrade

• USA heavy truck average age ≈ 9 years

• Mexico heavy truck average age ≈ 18 years

• For every new truck sold in Mexico five old trucks where imported through the US border.

• New truck sales decreased 4% during 2013, meanwhile old truck imports incresed 70%

• Old trucks have high maintaince costs and are involved in 20% of highway accidents.

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Service Provider Communication

• What is your email?

• Tender model is not the best option to get in touch with Serv Prov

• Lack of technical infrastructure of the Serv Prov

• Serv Prov tends to resisit tech change

• No internet access everywhere

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Q & A

Questions?

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Thanks!

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