In transportation management, organizations walk the fine line between balancing customer service and managing internal costs. How quickly and efficiently you can move product through your network while meeting your customer’s ever increasing requirements is the name of the game. Especially with view to today’s customer demands, every aspect of a business process from the moment an order is placed must be treated as a core competency.
From ship to shore, tools for today
The increased demand for customized shipping options places added pressure on the global shipping industry. Companies must find more effective ways to receive and distribute their products, and often times this agility determines who rises to the top and who lumbers along. Some of the new features which affect the transportation management space are related to the sea and some to the land, but all of them assist in moving product where it needs to be, when it needs to be there and leave more in the bank than before.
- Ocean carrier booking
The ocean carrier booking functionality, new in 2006, is a composite application that can work stand-alone or in conjunction with SAP SCM, SAP ERP, and SAP EM. This functionality assists companies with business process collaboration, enabling shipping details and booking orders to be sent and received automatically from manufacturers to customers. With this improvement, “Where is my shipment?” phone calls can now be preceded by an online notification. Utilizing SAP NetWeaver, reservations on ocean carriers are available with a pre-booking feature. And improvements in the event management functions now allow customers to receive status updates by container rather than by the entire shipment.
This new functionality addresses the needs of oil and gas, chemical, retail and consumer products industries through enhanced planning capabilities, vehicle scheduling, routing, regulatory compliance and customs processes. For example, with off shore manufacturing, companies must be able to manage the increase in lead-time and additional complexity of international transportation. SAP’s recent enhancements further support their customer’s abilities to ship internationally through the connectivity with ocean carrier e-commerce solutions such as INTTRA, and GTNexus, who share their multiple carrier shipment information throughout a shipments cycle.
This recent release used in conjunction with SAP SCM represents the first SCM functionality, to be fully Enterprise SOA enabled. Using services and object structures as building blocks for developing SAP solutions, customers can now communicate and represent their transportation environment based on common standards.
- Truck/Trailer Improvements
Business objects are also used by SAP in another new feature in transportation planning and vehicle scheduling, which expands its truck and trailer scenarios on many fronts. Customers now have the ability to separate trucks from trailers in their transportation planning; and represent multiple compartments on a single vehicle. In real world scenarios, one truck may have multiple trailers attached behind it, or may have one trailer for half a trip and pick up a second trailer for another leg of a trip. In previous releases, the truck and the trailer were treated as one object and did not allow customers this enhanced planning and tracking capability.
- Compartment Improvements
In less-than-truckload scenarios, especially in the European market, just-in-time delivery scenarios create demands for shipping smaller quantities of multiple products, whereas American markets usually require companies to ship utilizing multiple compartments in a single trailer.
“Chemical companies for example may have three different chemicals being shipped in one order, because often specialty chemicals are needed in smaller quantities. So they need the ability to manage more than one compartment in a tank truck, in order to maximize a shipment,” says Tim Motter, SAP Supply Chain Management, and Fulfilment.
Back in the office, customers now have the ability to pre-assign specific compartments within a trailer. This allows for the designation for hazardous materials to be in specific containers, saving valuable time on the loading dock, as well as strategic placement of order drop- offs.
- Capacity decrease
Working in concert with SAP SCM this new feature in transportation planning and vehicle scheduling better plans the capacity available on a shipment. In situations where dividers are used in trailers or containers, or in the case of sensitive cargo, stacking to the maximum height of the compartment is not an option. In these cases the capacity decrease feature helps companies better organize and plan shipments.
Delivering solutions all along
Since its original release in 2001, SAP’s transportation planning and vehicle scheduling functionality has been providing leading edge supply chain management tools to the transportation management field. The new transportation planning and vehicle scheduling features have the distinction of being built atop some of the best in class transportation management tools most recently updated in with SAP SCM 5.0 release in 2005. This existing solution has been providing solid value to its customers across the globe.
For example, TP/VS utilized by a global plumbing company to assess the customized delivery options they offered to their customers; enabling them to indicate, the first stop for delivery, or the ability to pool or not pool a delivery with other orders.
TP/VS was able to show the client that the cost incurred with these types of delivery options didn’t make financial sense for their customers, and wasn’t fiscally viable for the client, either. A program director at the organization says, “When you are shipping a few hundred trucks a day with up to twelve million products, every decision you can optimize saves time and money.”
Freight costing assists organizations with the ability to ship one order containing multiple products with different weights, volumes and handling methods. This improvement allows companies to accurately calculate the cost of transportation by line item. Motter cites one global flooring and ceiling product company as an example. “They make ceiling tiles and they make flooring; two very different products from a transportation perspective. They want to know, ‘What is my profitability, including transportation cost, when I ship these products?’ And they can’t do that without the ability to associate transportation costs at the line item level. So if they ship, on the same order, a very heavy product such as flooring, and a very light product such as ceiling tiles, it is very difficult to allocate transportation costs to those two different line items from an outside system. With SAP SCM, all that information is readily available.”
The shortest route to efficiency
The final cost of transportation is affected by many factors such as geography, type of product, quantity of product shipped, energy costs, and infrastructure and can account for up to 20 percent of a product’s final cost. With the most recent updates to transportation planning and vehicle scheduling functionality within SAP SCM, companies can more capably organize and optimize the transportation side of supply chain management. The answers to the question, “How do I gain more efficiency out of my ability to execute – both within the warehouse and on the transportation side?” are delivered by SAP.
Motter says, “What we are seeing is a greater amount of interest from our customers to plan and execute their transportation processes more effectively.” There is an additional expense they are incurring because of fuel surcharges, there is an additional expense of the need to move offshore, there is an additional expense from the need to move products more frequently and in smaller quantities to meet the complex nature of their customer’s supply chain.”
Companies are taking a hard look at their supply chain and realizing that though they may have a point solution, that point solution is not integrated into their overall fulfillment process. Any place where efficiency can be identified is an opportunity to save time and money. With TP/VS and SAP SCM, the needs of today’s shippers are all under one interconnected umbrella. “Because every time you have to throw that data over the wall to another system, you have a disconnect in your business processes,” says Motter.