Controlling transportation costs

Manufacturers and logistics providers can now enter the cyber-age by leveraging the Internet and collaborating on forecasting, replenishment, and transportation requirements, for reduced logistics costs.

World leading provider of inter-enterprise software solutions, SAP AG has announced the development of Transportation Planning and Vehicle Scheduling functionality within the SAP Advanced Planner and Optimiser (SAP APO) solution, with pilot shipment due in February 2000.

According to Doug Hunter, product manager: APO at SAP Southern Africa, SAP recognised the importance of transportation within supply chain management, and the two new features will enable the transportation planner to optimise freight consolidation, as well as mode and carrier selection, resulting in reduced logistics costs.

"The Transportation Planning and Vehicle Scheduling functionality within SAP APO allows customers to simultaneously consider transportation constraints and to optimise and plan transportation. This would include inbound, outbound, intra-company, and inter-company through their own carriers or independents," says Hunter.

"As global competition intensifies and the complexity of supply networks increases, efficient transportation management helps to significantly reduce supply chain costs and provides companies a competitive advantage," says Prof. Dr. Claus Heinrich, SAP Member of the Executive Board.

"The SAP APO Transportation Planning and Vehicle Scheduling functionality, integrated with SAP Logistics Executions System, addresses these issues by providing a complete transportation management solution."

From a local perspective, Hunter maintains this further development in the SAP APO planning and optimisation capabilities is of particular importance in South Africa. "The great distances between main centres and the wide spread of smaller or rural communities present manufacturers and distributors with a significant logistics challenge.

"Local companies must balance the combination of long-haul, (Full Truck Load) distribution with 'milk run' fine distribution for a wide range of products, many with relatively low volumes. SAP APO Transportation Planning and Vehicle Scheduling will ensure this trade-off is optimally planned and managed," he explains.

SAP Supply Chain Optimisation

The SAP Supply Chain Solution provides enterprise-wide capabilities and inter-operation within the entire supply chain management suite, including SAP APO, SAP Logistics Execution System (SAP LES) and SAP Business Information Warehouse (SAP BW).

SAP APO consists of a number of integrated applications using state of the art constraint-based planning and optimisation concepts. These are the Supply Chain Cockpit, Demand Planning, Supply Network Planning & Deployment, Production Planning & Detailed Scheduling, and Global Available-to-Promise.

SAP LES offers advanced warehouse management and transportation management functionality. It enables a company to improve customer service and to gain a more consistent view of its logistics operations.

SAP BW is a pre-configured data warehouse ideal for SAP environments providing access to internal and external information from multiple sources, along with sophisticated tools for reporting and analysis.

Says Hunter: "With the Transportation Planning feature, customers have full visibility of all freight movements, including inbound, outbound and inter-facility shipments. This helps to avoid the trap of optimising only one aspect of the supply chain, or attempting to improve each aspect separately, thereby reducing costs and cycle times."

Hunter explains that the seamless integration to SAP LES leads to efficient execution of transportation plans. "For example, it would allow companies to pay freight bills based on the close collaboration of the transportation requirements between manufacturer and carrier." For reporting purposes, SAP BW allows for the creation of customised reports and analysis on historical transportation data.

SAP Transportation Planning and Vehicle Scheduling Functionality

The global optimisation and execution of the SAP APO Transportation Planning and Vehicle Scheduling functionality gives customers the capability of running the entire transportation organisation within a single application. It provides:

Shipment planning and freight consolidation;

• Transport mode and carrier selection;

• Negotiation of contracts, volumes, quotas, schedules and features of the supply network;

• Static or dynamic organisation of routes;

• Multi-pick and multi-drop capabilities;

• Round trip capabilities; and

• Fleet sizing and management.

"The new functionality provides optimal customer service at the lowest cost, while maximising resources," says Hunter. "Because customer service requirements drive every decision, companies can increase customer satisfaction through on-time deliveries of the intended product to the intended destination."