by Hari Sivvala

Logistics Industry Challenges

Logistics management can be tricky and time-consuming in the transportation industry because of internal and external system integration constraints. This industry is also experiencing rapid technological changes, thus necessitating the shippers to be prepared. As many companies face significant challenges in 2023, they will have to face them head-on to avoid losing demand.

Strategic IT planning is crucial in preparing for the near future - and the next significant disruption. They could implement resilient policies as a first step, but their practical implications are unclear. Businesses with Large or Mid-size supply chain organizations were more likely to report the following impacts:

• Moving Towards the New Digital Era
• Industry Digital Transformation.
• Integrating the supply chain
• The rise of automation
• Improving the need for high flexibility
• Customer Expectations
• Shorter Lead times
• Freight Cost increases
• Customer Order delays
• Unreliable Order fulfillment
• Product discontinuations

What SAP Offers to Complete the Logistics Industry Challenges?

The SAP offers a Transportation Management application that integrates transportation demand (External and Internal requirements) with fleet and logistics management throughout internal and external carrier networks, helping you reduce transportation complexity dramatically by meeting the supply chain constraints.

As part of SAP's Transportation Management application, you can manage logistics planning, execution, and freight settlement throughout an internal and external network by integrating transportation demand (External and Internal requirements), considering supply chain constraints, and thus reducing transportation complexity.

It is imperative that companies optimize logistics processes, improve service, and increase visibility and control in response to the increasing complexity and volatility of global logistics. SAP® Transportation Management streamlines the process of moving goods across various modes of transportation, which improves operational efficiency and reduces costs across the value chain.

Additionally, you require a solution that optimizes your end-to-end transportation management processes and supports your supply chain execution goals.

As a result of SAP Transportation Management, you can optimize transport costs by managing transportation demand, consolidating orders, tracking shipments, and managing all the demand (for both customer orders and inter-plant shipments) in one place.

Build a Digital Transportation Strategy for Supply Chain Execution

One should not view the transportation function as a functional silo solely responsible for moving goods from one location to another. An integrated, comprehensive logistics solution is necessary to manage your logistics processes smoothly, respond quickly to changes, and gain an overview of your logistics operations. With SAP solutions, you can run your business more efficiently by integrating dynamic platform strategies with your business processes. The SAP Extended Warehouse Management (SAP EWM) application, SAP Transportation Management, and SAP Business Network for Logistics come integrated with intelligent technologies such as the Internet of Things, machine learning, and blockchain. 

These applications thus assist you in orchestrating your logistics to achieve a compelling and executable vision. One can create a digital logistics platform with a combination of these applications, allowing you to align your logistics processes and thus enabling fast and efficient fulfillment services for your customers. Besides optimizing logistics functions, you can also provide integrated analytics, cost visibility, and support growth and scalability to reduce your total cost of ownership. Digital logistics platforms help provide a single and consistent view of your systems, partners, and processes by synchronizing logistics operations with the rest of your organization.

Model the Strategic Freight Procurement 

The key to purchasing freight services is to find a solution that optimizes the capacity of transportation modes on both common and dedicated carriers. Therefore, SAP Transportation Management provides strategic freight procurement features that enable you to identify freight requirements, collaborate on buying the freight capacity, and thus efficiently create freight agreements. Using an integrated application, SAP Transportation Management supports the complete process of managing freight capacity. By negotiating freight contracts, you can enable flexible and efficient procurement of freight capacity. You can utilize powerful what-if simulations and simple modeling to select the strategies that will most likely increase profitability, cost efficiency, and customer satisfaction. As well as facilitating compliance with carrier agreements, real-time reporting assists in identifying cost-saving opportunities.

End-to-End Process Overview:

Orchestrate Freight Order Management

For the logistics business, it is of paramount importance to receive orders accurately and process them efficiently. SAP Transportation Management enables you to receive order-based or delivery-based transportation requirements from multiple order management systems. The ability to confirm, plan, and execute orders, coordinate delivery with the warehouse, and communicate order status with business partners is available. 

This application comes equipped with the following features:

• Optimized routing proposals based on business rules, which eliminate extra freight costs and improve customer service.
• Integrating transportation demand with order-to-cash and procure-to-pay processes and managing change in real-time based on business rules to ensure closed-loop communication.
• Integration with SAP S/4HANA order and delivery data, including cross-system order access and visibility into order status.

Optimize Transportation Planning

Achieving on-time, low-cost freight delivery requires sophisticated transportation planning. SAP Transportation Management helps you optimize your transportation plans while improving resource utilization and reducing freight spend. You can consolidate domestic or international shipments using single or multimodal transportation. The application also helps you achieve the right degree of centralized or decentralized planning to meet your delivery goals. 

• There are several planning features included in the application, including:
• The ability to plan and replan dynamically based on constraints and aided by big-data insights to optimize freight planning and tendering.
• Load planning to the pallet level allows you to visualize vehicle space and optimize load based on various attributes (dimensions and weights), axle constraints, stacking rules, and delivery-stop sequences.
• Costs and penalties while determining modes, routes, resources, and carriers.
• The freight tendering system supports multivariate tendering, enabling multiple channels of communication.
  

Improve Visibility with Efficient Transportation Execution

Having efficient and effective transportation processes lies in the ability to execute a plan and then accord it to real-life events.

By integrating planning and execution, you can reduce costs while reducing delays, spotting risks, and preventing disruptions while delivering goods when and where customers expect them to arrive.

SAP Transportation Management includes the following execution features:

• The SAP EWM application is directly integrated with the application to share truck arrivals and departure information and to synchronize freight documents in real time as the freight is received or loaded.
• Collaboration with logistics partners through SAP Business Network for Logistics integration
• A comprehensive collection of road, sea, and air shipment documents
• The SAP Global Trade Services application is integrated with the SAP Global Trade Services application for trade-regulation compliance functions such as export declarations, import declarations, transit filings, and security filings.

Streamline logistics processes and minimize disruptions with instant, comprehensive summaries.

Manage Financials Through Freight Settlement     

Accurately manage transportation charges and cost settlement with carriers to optimize freight costs. SAP Transportation Management offers freight cost management functionality for costing, auditing, settlement, and reporting. 

The following are key features:

• Calculation of advanced transport charge calculation function and mode-specific rates for trucks, rails, oceans, and planes
• Analyzing and valuing materials accurately with accurate freight cost distribution
• The freight settlement features include accrual posting, carrier self-invoicing, invoice verification & payment, credit memo processing, and invoice verification and payment.
• Supported by tolerance settings and workflows, SAP Business Network for Logistics provides invoice dispute management.
• Integrated with SAP S/4HANA for freight settlements, invoicing, material valuation, and profit analysis of orders.
• A Transportation cost dashboard that allows for interactive reporting.

Power Intelligent Transportation with Analytics and Reporting

As we enter the era of data-driven logistics, one must manage transportation operations effectively. Using real-time analytics, you can gain insight into critical strategic and operational performance parameters in real-time so that you can focus on areas for improvement with reduced data complexity. 

Real-time operational insights from multiple data sources enable you to closely monitor the shipments and limit the number of expedited ones. You can thus stay informed, get in-depth business insights, and make faster and more informed business decisions with SAP Transportation Management's comprehensive, flexible decision support tools. SAP Transportation Management includes dashboards for SAP S/4 HANA, overview pages with KPIs for managing your day-to-day business, flexible reporting, and real-time data-based reporting to help spot risks earlier and avoid disruptions.

Realize the Benefits of SAP Transportation Management

SAP Transportation Management enables more informed decision-making and real-time insights to give companies deeper visibility into logistics processes. The robust functionalities can help you to configure flexible, scalable systems and processes. In addition to the application, SAP software comes integrated with a unique enterprise-wide ecosystem. A robust ecosystem that continuously innovates and reinvents is available to assist you throughout your implementation journey and beyond. 

Business efficiency and productivity can be improved through automated processes, electronic collaboration, and reduced redundancies, whereas improved service responsiveness with enhanced visibility throughout the value chain. With the help of consolidation, optimal carrier selection, and better asset utilization, many companies have achieved significant freight savings. Furthermore, you will save time and money by reducing your freight-costing workload with more accurate costing and settlement. Faster freight cost analysis and better business decisions are made possible by detailed reports, real-time analytics, and drill-down functionality.

Summary 

SAP Transportation Management helps you manage your transportation operations efficiently and effectively and creates standardized processes to reduce transportation costs and improve customer satisfaction. It simplifies order consolidation and optimizes transportation planning, execution, freight cost settlement, and data analysis. In addition, it provides tools for managing risk and helping to meet sustainability goals.

Objectives:

• Operate transportation with sales, procurement warehousing, global trade, and finances.
• Accelerate fulfillment and reduce risks while optimizing resources.
• Your logistics processes can be analyzed instantly, providing comprehensive insights into risks and disruptions.
• Develop a risk-resilient transportation process.
• Solution 
• A comprehensive solution to transportation problems
• With advanced features, it can be integrated into multiple ERPs.
• Deployment is centralized or decentralized.
• Benefits 
• Lower freight spending.
• Out-of-the-box functionalities to meet the industry challenges.
• Decreased expediting costs. 
• Shorter average trailer turn.
• Robust Planning functionality to automate the fright planning.
• Better communication channels with business partners 
• Fewer invoice errors. 
• Enhanced customer satisfaction and loyalty thanks to improved service effectiveness and on-time delivery rates

Bibliography:

SAP. “SAP Transportation Management.” Accessed May 1, 2023. https://www.sap.com/products/scm/transportation-logistics.html?campaigncode=crm-ya22-int-1517076&source=ppc-1na-google_ads-search-71700000092432543-58700008209876991-dsc_xsolutionarea-x-x-x&dfa=1&gad=1&gclid=EAIaIQobChMIrMD7w7fF_gIVYB6tBh12UAbbEAAYASAAEgLIoPD_BwE&gclsrc=aw.ds.

SAP. “SAP Help Portal SAP Transportation Management.” Accessed May 1, 2023. https://help.sap.com/docs/SAP_TRANSPORTATION_MANAGEMENT.