WWL extends its horizons

Enhancing long-term planning with IBM Business Analytics software

Published on 19-Aug-2011

Validated on 02 Dec 2013

"Real-time analysis helps us make contingency plans for different situations – for example, a sudden rise in oil prices, or a closure of a major port – enabling us to adapt our shipping schedules accordingly." - Donal Duggan, Head of Trade Strategy and Performance Management, WWL

Customer:
Wallenius Wilhelmsen Logistics (WWL)

Industry:
Travel & Transportation

Deployment country:
Norway

Solution:
BA - Business Analytics, Business Integration, Business Performance Transformation, Enabling Business Flexibility, Information Integration, BA - Performance Management, Operational Management

IBM Business Partner:
Cognizant

Overview

Wallenius Wilhelmsen Logistics (WWL) is a leading independent provider of global logistics solutions for the automotive, agricultural and construction equipment industries. With offices throughout the Americas, Asia, Europe and Oceania, WWL’s core business revolves around the ocean transportation of vehicles, equipment and break bulk cargo. The company has 3,500 employees and a fleet of more than 60 vessels that serve 18 different trade routes on a fixed schedule.

Business need:
Transporting valuable cargos around the globe is a complex business: it can take weeks and cost millions of dollars to move a vessel across the world, so it is critical to ensure that available shipping capacity is utilised efficiently. To support effective operational planning, WWL needed an accurate long-term forecasting solution.

Solution:
WWL implemented IBM® Cognos® Planning, which captures data from the company’s data warehouse and integrates it with information gathered from local experts throughout the business to create six-week and six-month forecasts each month. The company subsequently expanded the solution with IBM Cognos TM1®, which enables the company to plan for different scenarios and extends the horizon with rolling 12-month and five-year forecasts.

Benefits:
The solution enables planning for best- and worst-case scenarios as well as the standard forecast, enabling the company to respond more effectively to normal demand fluctuation as well as emerging situations such as the 2011 Japanese tsunami. A six-month forecast helps to plan routes for individual vessels, and the 12-month and five-year forecasts help with capacity planning (for example, whether to charter or build new vessels). Cognos also increases flexibility for meeting new business requirements: for example, the company was recently able to move to a rolling forecast with minimal effort.

Case Study

Wallenius Wilhelmsen Logistics (WWL) is a leading independent provider of global logistics solutions for the automotive, agricultural and construction equipment industries. With offices throughout the Americas, Asia, Europe and Oceania, WWL’s core business revolves around the ocean transportation of vehicles, equipment and break bulk cargo.

The company has 3,500 employees and a fleet of more than 60 vessels that serve 18 different trade routes on a fixed schedule. It also operates 11 terminals, 50 processing centres, and an inland transportation network that helps to transport more than three million vehicles per year from factories to point of sale.

The need for long-term planning
“At heart, we are a shipping company – and more than that, a shipping line,” says Donal Duggan, Head of Trade Strategy and Performance Management at WWL. “This means that we commit to regular sailings on defined routes, according to a published schedule, and we offer guaranteed transit times for our customers. This means we need to plan our routes meticulously to ensure that we are getting the best possible utilization out of our vessels and maintaining profitability on each voyage.

“If we don’t have the right ship in the right place at the right time, the penalties can be severe – and since it can take up to a month and millions of dollars worth of fuel to move an empty vessel half-way across the world, we can’t afford to make mistakes. As a result, the ability to forecast demand patterns and schedule routes accordingly is vital to our business.”

The foundation: IBM Cognos Planning
For several years, WWL has relied on IBM Cognos Planning software to support its planning and forecasting processes.

“Originally, we used a spreadsheet-based process, which was complicated and error-prone,” says Donal Duggan. “We had to ask local commercial teams from across the business to send in their forecast data and actuals via email, and then add them to our spreadsheets. IBM Cognos Planning was a major step forward because it solved all the data collection headaches – taking information from our data warehouse and providing a simple interface that enables business users to input additional data.”

Cognos Planning combines the user-submitted data with information on standard costs from the data warehouse, creates schedules with cost and volume analyses, and performs top- and bottom-line calculations. It creates an annual budget and generates forecasts on a monthly basis, giving the company insight into the likely demand patterns over the coming months.

Real-time analysis with IBM Cognos TM1
More recently, the company took a further step forward by integrating IBM Cognos TM1 and enabling more real-time analysis.

“Cognos TM1 is an extraordinary tool – I haven’t seen anything else quite like it,” says Donal Duggan. “It has a very powerful real-time analytics engine which works in memory, rather than from disk, and delivers amazing performance. At the same time, it has a very simple and intuitive interface: if you can use Microsoft® Excel®, you can use TM1. Some of the other products we considered had either a good engine or a good front-end; TM1 was the only one that offered both.”

The addition of IBM Cognos TM1 brings two major advantages to WWL. First, it enables the company to analyse multiple scenarios very rapidly; second, it enables the creation of longer-range forecasts, extending the company’s horizon to one year or even five years in the future.

Planning for different scenarios
“Let’s take scenarios first,” suggests Donal Duggan. “Previously, we only had enough time and resources to create a single scenario for each forecast – this was based on the best estimates our commercial teams could provide for each area of our business. Asking them to provide a range of values for different scenarios would have taken up too much of their time and distracted them from more important tasks. Even if we could have collected the information, it would have been difficult to process all the different versions in our existing solution: there was just too much data.

“With Cognos TM1, we can take a different approach. Once we have collected the best estimates from the commercial teams, knowing that our customers will give us one single six-month forecast, we apply market intelligence data centrally, and use this to generate a range of values from the best-case to the worst-case scenario.

“Since the TM1 engine is so powerful, we can easily generate as many different scenarios as we like, and we can change values in real time to reflect different situations and answer ‘what-if’ questions. It becomes a two-way process – as well as modifying the input values and seeing what happens to the results, we can also change the results and look at the effect on the inputs. This makes it easy for us to respond to new demand.

“This real-time analysis capability also helps us make contingency plans for different situations – for example, a sudden rise in oil prices, or a closure of a major port – enabling us to adapt our shipping schedules accordingly.”

The IBM Cognos TM1 solution proved its value almost immediately during the 2011 Japanese tsunami crisis, which led to the closure of several ports and a severe disruption of Japanese trade. As information came in from the affected area, WWL was able to remodel its forecasts in TM1 and take mitigating action to minimize the impact on its results.

Extending the planning horizon
“The second big advantage of TM1 is that it enables us to extend the horizon for forecasting,” comments Donal Duggan. “As well as our standard six-month view, which we use to make scheduling decisions and analyse the volume and profitability of individual routes, we can now generate one-year and five-year forecasts. These help us plan for the longer term: for example, do we need more capacity? If so, should we charter additional vessels from another company, or build more ships for ourselves? The lead time for building a ship is several years, so having an idea of what the business will need in five years’ time is a vital guide for these types of decisions.”

Increasing business agility
The solution also adds flexibility, making it easier for the planning team to develop new views and analyses. Recently, the company’s senior management decided to move from the existing planning model to a 12-month rolling forecast. With IBM Cognos TM1, making this change was relatively simple, and the new model was rolled out to the senior management team within just a couple of weeks.

“Rolling forecasts would be a nightmare in a spreadsheet-based system, but with our Cognos solution, they are easy to implement,” comments Donal Duggan. “We are able to give business users the data they need in the format they want, and when a new request comes in, we are able to react quickly. The technical limitations are minimal, so if a user can think of a type of analysis that they would find useful, we can generally provide it.”

Developing new trade routes
As an example, WWL is about to launch a new Cognos TM1 module that will support the development of new trade routes. By creating different scenarios based on different routes, the WWL team will be able to use current, historical and forecast data to assess the probable volumes, costs and time constraints of each route, and measure their profitability. When more profitable routes are discovered, the company will be able to offer them to customers, delivering a better, faster and more cost-effective service.

Donal Duggan concludes: “We are excited about the potential of this new module, and the opportunities offered by Cognos Planning and TM1 for further development projects in the future. We are also planning to upgrade to IBM Cognos 10 soon, which we hope will deliver even closer integration in our analytics environment.”

About IBM Business Analytics
IBM Business Analytics software delivers actionable insights decision-makers need to achieve better business performance. IBM offers a comprehensive, unified portfolio of business intelligence, predictive and advanced analytics, financial performance and strategy management, governance, risk and compliance and analytic applications.

With IBM software, companies can spot trends, patterns and anomalies, compare “what if” scenarios, predict potential threats and opportunities, identify and manage key business risks and plan, budget and forecast resources. With these deep analytic capabilities our customers around the world can better understand, anticipate and shape business outcomes.

For more information
For further information or to reach a representative please visit ibm.com/analytics.

Products and services used

IBM products and services that were used in this case study.

Software:
Cognos Planning, Cognos TM1

Legal Information

© Copyright IBM Corporation 2011. IBM AS, GSC, Postboks 500, 1411 Kolbotn, Norway. Produced in Norway. August 2011. All Rights Reserved. IBM, the IBM logo, ibm.com, Cognos and TM1 are trademarks of International Business Machines Corporation, registered in many jurisdictions worldwide. A current list of other IBM trademarks is available on the Web at “Copyright and trademark information” at http://www.ibm.com/legal/copytrade.shtml. Microsoft, Windows, Windows NT, and the Windows logo are trademarks of Microsoft Corporation in the United States, other countries, or both. Other company, product or service names may be trademarks, or service marks of others. References in this publication to IBM products, programs or services do not imply that IBM intends to make these available in all countries in which IBM operates. Any reference to an IBM product, program or service is not intended to imply that only IBM’s product, program or service may be used. Any functionally equivalent product, program or service may be used instead. All customer examples cited represent how some customers have used IBM products and the results they may have achieved. Actual environmental costs and performance characteristics will vary depending on individual customer configurations and conditions. IBM hardware products are manufactured from new parts, or new and used parts. In some cases, the hardware product may not be new and may have been previously installed. Regardless, IBM warranty terms apply. This publication is for general guidance only. Photographs may show design models.