Billing on the Right Track

Feature Article | May 7, 2008 by Stefan Graf, Dr. Andreas Jud

Companies that are in the business of transporting goods appreciate flexible time windows. Railway freight transport companies can offer their customers a special service that is not available with road transportation. Road freight companies load or unload their trucks and trailers immediately on arrival at the customer’s site before getting right back on the road again.

Railway transport companies on the other hand, such as the cargo division of Schweizerische Bundesbahnen (SBB Cargo), offer their customers the option of delaying the unloading or loading process by up to 24 hours after arrival. Freight cars often remain on the sender’s or recipient’s tracks beyond this timeframe, serving as temporary storage facilities and thus improving the flexibility of the customer’s logistics processes. For this reason, customers are usually willing to pay demurrage charges for the extra time.

SBB Cargo in Fribourg deals with around 5,000 freight car deliveries a day and, of these, the customer service center processes up to 6,000 invoices a year for demurrage charges. In the day-to-day running of things, service center employees are always on-hand to provide information as and when required. They process domestic and international transport and service orders, draw up contracts, and invoice for services provided.

And it’s not just the time subject to demurrage charges that the employees have to take into account. Individual customer agreements, special freight car types, and seasonal scarcity of freight cars – for example refrigerated cars in summer – create complex price structures that have to be factored into the invoices.

Harmonize and integrate

In the past, SBB Cargo used a logistics solution to bill for demurrage charges. Mid-2006, SBB Cargo decided to switch from its existing application to the SAP R/3 solution. The demurrage charges management system was to be integrated in SAP R/3 as the existing strategic ERP platform of SBB. The aim was to map the freight car rental “product” with standard SAP R/3 processes as far as possible and to integrate it into the data flow of SBB – thus delivering greater transparency in the billing processes. In addition, SBB wanted to push ahead with the harmonization of its heterogeneous IT environment and cut IT operating costs.

The migration project was begun in August 2006. SBB Informatik implemented the process for demurrage charges in SAP R/3 with assistance from business consultants ESPRiT Consulting. The pressure to succeed was high because several previous attempts to port the billing process for demurrage charges to a new system had failed. These past failures were due to the high complexity of the billing rules and the correspondingly high implementation costs. The migration to SAP R/3 was structured by means of thorough project planning.

The users were carefully prepared for the new solution through specially designed SAP training courses held in both German and French and a professional Change Management process. The success of the project was due in no small part to the high level of commitment shown by a number of key users at the customer service center. Although the company’s day-to-day operations still had top priority and kept them fully occupied, these employees still managed to do the additional work required for the project.

Prototypes ensure success

The project team first developed a concept to transfer the processes from the existing application to SAP R/3. While doing so, they discovered that the price determination for the demurrage charges was the biggest challenge for the SAP standard software due to the large number of influencing factors. Therefore, the team developed a prototype to check whether this price determination – including the definition and maintenance of complex pricing conditions – could be mapped in SAP R/3.

A further key aspect was the transfer of master data from the existing application to SAP R/3, with particular focus once again on the existing pricing conditions. Several trial runs were performed to test the transfer of master data from the legacy system to SAP R/3. During the actual migration to SAP R/3 at the start of August 2007, the data transfer ran automatically and smoothly.

Direct pricing

Today, around 35 employees in the customer service center of SBB Cargo use the SAP application. Eight months after the successful go-live, the company is benefiting considerably from the improved workflows.

The billing process has been completely overhauled by SAP R/3. In the old application, orders were billed as part of a “dossier management” system. Information on customers, freight car types, and effective demurrage times were collected in these dossiers. The employees used this data as the basis for calculating the exact prices and amounts that individual customers had to pay each month before drawing up invoices. SAP R/3 does not use dossiers – with each case of demurrage costs, a customer order is drawn up and a price is assigned directly.

This means that the SAP application calculates the price at the time the orders are generated. “This provides us with greater transparency in terms of the amounts included in the monthly billing process that follows”, explains Roland Egger from the customer service center. Additionally, Egger and his colleagues can choose between provisional and final invoices. Invoices for customers granted special demurrage conditions by SBB Cargo are first drawn up provisionally, checked before being sent out, and then confirmed as a final invoice.

Fewer complaints

The new application has also improved the process of verifying invoices at SBB Cargo and simplified invoice corrections. Thanks to the billing process, which is fully integrated into SAP R/3, fewer steps are required to make corrections. At the same time, there are also fewer complaints. Demurrage times, which often have to be changed later on consultation with customers, are now easier to process. In SAP R/3, users have a clear overview of all the data and changes relevant to invoice creation.

The layout of the invoices is also clearer thanks to SAP R/3. “In this way, the solution improves the brand recognition of SBB Cargo with customers,” says Egger. It goes without saying that the SAP application supports multi-lingual invoice creation – a must for companies, particularly those in Switzerland. Preparing invoices in German, French, and Italian is part of the company’s day-to-day business. It is fair to say that the SAP application is an all-round success. Roland Egger is delighted with the results: “SAP R/3 has greatly improved all aspects of the processes relating to freight demurrage charges.”

Schweizerische Bundesbahnen (SBB) is the biggest transportation company in Switzerland. With some 4,400 employees, the SBB Cargo division is the leader in rail freight transportation. SBB Cargo offers its customers end-to-end solutions and takes on full responsibility for the entire transportation route. Last year, SBB Cargo covered 12,34 billion net ton kilometers and transported a total of 56 million net tons.

SBB Informatik is the internal contractor for all SBB IT services and helps the company’s business units, corporate departments, and external customers implement their business strategies. It defines the IT landscape of SBB and ensures a high level of system availability. The department develops many of the company’s business applications itself – from technical project management to programming in its in-house software center. As part of the group-wide system consolidation process, the importance of the ERP (Enterprise Resource Planning) department, which includes a certified SAP Customer Competence Center, has increased significantly in the last few years, providing support for SBB with some 180 employees.

Tags: ,

Leave a Reply