SAP Implementation for Transportation & Logistics Industry (Case Study #20-053017)

Consolidation, globalization and ever increasing service level requirements have encouraged smart companies to streamline operations. Earlier, client was fighting tight timelines with non uniform processes, and multiple customer service channels. More than 100 legacy systems led to high maintenance costs as well. Then Client decided to do away with disparate systems to have uniform business processes, streamlined financial processes and single customer service window.

As SAP Consultant I worked with client to implement SAP across the group. The first phase covered the Order to Cash Implementation, followed by Financials and Strategic Enterprise Management.

For client to continue as the supplier of choice of internationally competitive, high quality transportation and logistics services, uniform processes across the enterprise was a prerequisite. This involved reducing the number of legacy systems, replacing spreadsheets, integrating financials & accounting processes and deploying a common platform that could speed up enterprise-wide operations. While lesser number of systems would mean decreased maintenance costs, streamlined processes would lower transaction costs as well.

Customer Profile

Client is a leading transportation and logistics company in the Europe and a key international player in temperature-controlled cargo. The client believes in building long term relationships with its customers and is committed to offering high quality, value-added services tailored to their customer’s requirements. Clients employ more than 3,000 people, two thirds of whom work in other countries than Europe.

Solution

As a SAP Consultant I had adopted a phased approach for implementation to minimize risks associated with a business that is spread across 15 countries. My project approach methodology coupled with robust system integration capabilities, I have provide support to entire landscape; while fine tuning the performance of the existing SAP systems. The Order 2 Cash cycle have incorporate all the end to end transportation services of this organization from ‘Pre-carriage’, ‘Sea freight’ to ‘On carriage’, ‘warehousing’ ‘ocean freight’ also covered in the first phase, and second phase incorporated ‘inland transport’, ‘airfreight’ and ‘general forwarding business’.

Need to Battle Dissimilar Systems, Increasing Costs

Client has meteoric growth from being a shipping line to a total transportation and logistics company, expanding its presence in refrigerated cargo trades as well. Its mission has been to grow shareholders’ value through developing internationally competitive business in industries critical to their future, especially in the field of transport and other selected industries. With 50 offices in 15 countries, the client has rapidly metamorphosed into a huge company. While business growth brought in numerous systems and processes, along with it came non-uniform processes across the enterprise. By using spreadsheets, the staff spent considerable time and effort in financial consolidation of 55 legal entities. Manual processes led to delays in monthly, quarterly and yearly closing. There was no proper treasury system either. The logistics service provider was reeling under escalating costs of maintaining around 130 legacy systems. Lack of centre wise cost and profit figures and information system left the managers to struggle through their decision making processes. Besides, there was no mechanism to measure corporate performance through KPIs.

Lack of a common data repository led to redundant customer and vendor master data. Client was concerned over the inability of having a single window for customer services involving different legal entities. Moreover, the organization had to battle the performance issues of existing systems.

As a SAP Consultant, Facilitated the Complete Business Restructuring

As SAP, consultant I have been providing enterprises with services across the SAP solution space, helping enterprises across industries to gain significant efficiencies and achieve enhanced profitability. So when client decided to replace multiple systems with a common platform, it relied on my deep industry expertise, operational excellence and technical depth to build the right solution that would address its business objectives.

As SAP, consultant I have adopted a phased approach for the SAP implementation to minimize risks associated with an implementation of this scope for a business that was spread across 15 countries. While the first phase will cover Order 2 Cash processes and Financials implementation, followed by Strategic Enterprise management (SEM) to take care of financial consolidation (BCS) as well as HR analytics (CPM), the next phase will see the rollouts across the group.

The Order 2 Cash cycle incorporated end to end transportation services from ‘Pre-carriage’, ‘Sea freight’ to ‘On carriage’, ‘warehousing’, ‘ocean freight’ has been covered in the first phase, ‘inland transport’, ‘airfreight’ and ‘general forwarding business’ have been incorporated in the second phase. Defining single chart of accounts and profit / cost center hierarchy has played the foundation for uniform processes. A common master data on customer and vendor information has imparted the management with more control of the information. The business consolidation exercise is slated to cover all 55 legal entities of the group. The first phase of this exercise has used all data uploaded through spreadsheets while the next phase has extracted data from the SAP systems. Using SAP’s Solution Manager, we have centralized the solution management platform, standardizing processes across locations more easily.

Streamlined Processes, Reduced Overheads

Integration of invoice approval system with SAP has ensured better control of invoice payments. The new system is expected to bring down the high cost of maintaining the present setup from 1.2 % to 0.85%. Now client was able to achieve the target of monthly closing of financial accounts within 10 days instead of the current 25 days cycle. Standardized processes across the group have provided the management with a group wide view of information system, which has aided quick and accurate decision-making. Timely closure of books of accounts and preparation of financial statement for onward timely submission to tax authorities etc, are achieved. With easy-to-use interfaces, the integrated solution has ensured better information sharing. Implementation of cash management of treasury, liquidity forecast and cash concentration has been automated. The existing SAP system has also be upgraded to the latest version eliminating system performance issues.

With technologically superior systems in place, the client have succeed in aligning better with its mission of providing customers with high quality, value-added service.

Implementation benefits

• Decreasing maintenance costs of the present set up from 1.2 % to 0.85%

• Reducing the overhead cost about 20%

• Achieving monthly closing of financial accounts within 10 days instead of the earlier 25 days

• Eliminating data entry duplication

• Reducing administrative overhead, enabling staff to focus on analytical issues rather than transactions

• Ensuring better decision supports

• Streamlining processes and reducing waste