Part-2: Minimizing per unit transportation cost by automotive industry with SAP TM

By: Krypt Team - June 28th, 2019

Authored by: Vijendra Kargudri & Ashish Malik

In Part-1 of the blog, we saw that in today’s globalized market the core challenge manufacturers face is to stay competitive and profitable. They must persistently ensure service excellence by extending their inbound & outbound supply chain network while reducing logistic cost owing to the complexity of the transportation network.

In this Part-2 of the blog, we shall explore how as Krypt as an SAP TM preferred partner can help your business to maximize your operational efficiency & service excellence while minimizing and minimize per unit transportation cost by implementing SAP TM to ―

Manage Transportation logistic network in a holistic manner
Minimize Risk Factors across the entire supply chain
Reduce operational costs
Maximize Assets Utilisation
always meet the customer service levels expectations while remaining flexible & responsive about the unexpected events.
Ensure compliance with all regulations and policies

Most of the businesses from automotive industry employee technologies that are often the key inhibitor to their success with the following challenges:

Half-understood functionality that always leads to manual processes and workarounds
Process Gaps, short-term solution, low visibility that makes the system cumbersome and unable to utilize its full functionality.
Disparate technologies having separate support teams and users for each mode of transport
Stand-alone solutions with little or no integration with areas like compliance & warehouse management and finance system.

As seen in Figure 1, SAP offers a fully integrated, end-to-end Transportation Management Process that can even reach back into your legacy ERP or other third-party systems. It lets you overcome the above challenges easily.

Figure 1: SAP Transportation Management Process

Strategic freight management and Capacity Procurement helps―

Optimize freight procurement using advanced analytics, forecasting, and simulation
Streamline the quote-to-contract process & automate rate determination
Evaluate & prepare bids using predictive, insight-driven quotation rounds
Exchange information efficiently with logistics service providers

Whether you are buying or selling freight services, you need a solution that optimizes capacity for all transportation modes for both common and remote shipping lanes. That’s why SAP Transportation Management offers strategic freight management features that help you forecast freight needs, collaboratively manage the process of buying and selling freight capacity, and efficiently create freight agreements. The software supports the entire freight capacity management process for all transportation modes using one integrated solution

SAP Transportation Management supports the entire freight capacity management process for all transportation modes using one integrated solution as depicted in Figure 2 below.

Figure 2: Support for Multimodal Transportation

Through freight contract negotiations and automated electronic capacity reservations that include shipping instructions, Krypt can allow you to have flexible and effective procurement of freight. Using simple modeling of complex scenarios and powerful “what-if” simulations we will help you choose strategies most likely to enhance profitability, cost efficiency, and customer satisfaction. With real-time reporting, you can measure compliance against carrier & customer agreements and identify opportunities for cost savings.

This solution offers:

Strategic freight procurement, including advanced analysis, forecasting, and simulation features that help you develop optimal freight agreements with carriers.
Strategic freight selling, enabling a closed-loop, streamlined quote-to-contract process and automatic determination of the best rates for various services in response to customer requests
Predictive, insight-driven Prebid evaluation and bid preparation using industry templates and a one-click contract creation feature to optimize the evaluation and response process – even through multiple quotation rounds
Ocean and air schedule and capacity management, with advanced business-to-business (B2B) connectivity features that let you send booking requests to the carrier, receive confirmations, cancel bookings, and add execution messages to the carrier through electronic air waybill or shipping instructions
Collaboration feature that helps you efficiently communicate and exchange information with carriers and other logistics service providers and receive alerts when preestablished transit time or cost thresholds are exceeded
Integration with industry logistics networks for inter-enterprise electronic data and document exchange, which helps enhance transportation management connectivity, collaboration, and regulatory compliance

Figure 3: SAP Transportation Management Collaboration Portal

Order management helps ―

Create dynamic & optimal routing proposals for rules-based orders
Handle changes in transportation demand with real-time order-to-cash and procure-to-pay processes
Co-ordinate sales & order scheduling to support customer delivery commitments
Consolidate order & delivery data in SAP ERP

Transportation planning helps ―

Use manual, map-based, or automated planning and dynamic re-planning functions
Build pallets with flexible, rules-based optimization
Visualize load planning of vehicle space and loading
Track & manage driver resources with default assignments in an interactive cockpit or Gantt chart

Achieving on-time, low-cost freight delivery requires sophisticated transportation planning. SAP Transportation Management helps you optimize your transportation plan down to the level of individual shipments and containers – improving resource utilization and reducing transportation costs. You can consolidate domestic or international shipments, as well as shipments that use single or multimodal transportation. The software helps you achieve the right level of centralized or decentralized planning so you can identify synergies and meet your delivery goals.

As highlighted in Figure 4, load planning for manual, map-based, or automated planning and dynamic re-planning functions constraints, utilizing real-time location information, and offer insights to optimize freight planning and tendering.

Figure 4: Load Planning

Following Planning Features can be used:

Manual, map-based, or automated planning and dynamic Re-planning functions that consider constraints, utilize real-time location information and offer insights from huge volumes of data to optimize freight planning and tendering
Improved pallet building, using flexible rules-based optimization of products and mixed packages while considering constraints such as package attributes, product stacking rules, height requirements, and customer-specific requirements
Visual load planning, helping you visualize vehicle space and optimized loading based on vehicle attributes (such as dimensions and weights), axle weight constraints, stacking rules, and delivery stop sequences
Driver management, helping you track and interactively manage driver resources while assigning drivers to specific freight loads using default assignments in a planning cockpit or a Gantt chart view
Determination of the most efficient combination of modes, routes, resources, and optimal carrier selection by factoring in costs and penalties
Freight tendering, which supports multivariant tendering and enables communication through B2B, Web-based user interfaces, collaboration portals, e-mail, and SMS channels

Transportation Execution helps ―

Automate regular updates in freight documents & share truck information
Real-time event management through capacity monitoring, management, and tracking
Flexible communication with business partners using collaborative tools
Leverage comprehensive templates for multi-modal carriers

Well-coordinated planning and execution can help you cost-effectively deliver goods when and where customers expect them while handling delays and disruptions.

With SAP TM, you can take advantage of:

Direct real-time integration with SAP Extended Warehouse Management, which automatically notes changes in freight documents until the freight has been received or loaded, and shares truck arrival and departure information between the two applications
Freight execution and capacity monitoring, management, and tracking, with real-time event management features, such as map-based geographical tracking, alerts, and notifications, and a reporting dashboard
Flexible communication among Business partners using B2B messaging, collaboration portals, mobile apps, Web interfaces, file upload, and download, print documents, e-mail, facsimile, and SMS messages
Comprehensive templates for road, sea, and air to print documents as well as settle freight
Integration with the SAP Global Trade Services application, which includes trade regulation compliance features for handling export declaration, import declaration, and transit and security filing

Freight costing and settlement help ―

Calculate advance freight charge and manage mode-specific charges & tariffs
Allocate freight cost accurately across orders and materials
Settle freight with capabilities such as accruals posting and carrier self-invoicing
Handle invoice disputes using tolerance settings & workflows

Analytics and reporting helps ―

Real-time, data-driven decision-making, utilizing graphical dashboards running on SAP HANA
Deliver flexible reports across transportation areas
Assess freight costs using an interactive dashboard
Establish optimal rates and combinations of modes, routes, resources, and carriers

SAP Transportation Management implementation helps you create efficient and responsive transportation operations and standardized processes that allow you to increase asset utilization, reduce transportation cost, and improve customer satisfaction. The software helps you accurately forecast demand and shipment volumes, consolidate and plan orders, and maximize return on spend by fine-tuning your transportation planning, execution, freight cost settlement, and data analysis processes.

Companies can realize significant freight spend savings through consolidation, optimal carrier selection, negotiation, higher asset utilization, and reduction in expedited shipments and overhead.

According to SAP performance benchmarking, companies using our transportation management software typically realize the following benefits: