A day in the life of implementing Transportation Management
In the first two blogs (Part 1, TechnoVision and the Business Suite 7 and Part 2, Leveraging the services of the Business Suite 7) we had an overview of the drivers behind change in the enterprise. The question, in our current state of affairs is, how can we have a quick view of the organization to pinpoint areas for improving performance, cutting slack, leveraging collaborations to reduce strain on resources. This is quite a feat, so the next question is, how can we engage in a fast-track approach of change?
This blog dives into the question, how to start organizing this. There is more to change than meets the eyes.
I the previous blog we read how Pino Melis envisioned the future with the new SAP TM solution. Let’s have a look at how this evolved.
His client is a company called Global Trade (GT). It is a trading company that is active multinational, in fact it is one of the ‘old companies’ of which the roots go back to the 18th century as a trading company to the East Indies, with a supply line of spices and other merchandising. Nowadays it has supply lines of amongst others, kitchen appliances. Global Trade is exposed to the current downturn, and the CEO has initiated a crash program on cutting costs.
In the mean time, in the past year, the subsidiary Global Transport has realigned their IT, by using a strategy session that incorporated the TechnoVision insights for the industry, a project in which Pino was involved. This has led to a successful realignment and a decision to implement the new SAP TM 7.0, the new module for Business Suite 7.0, what is missing? solution of SAP. In the mean time they have been able to land a few contracts, because it was now all at once simple to configure the contract environment for the special order processing for client who had to be left to other logistics providers because it was much too complicated and costly to make for instance a special order confirmation as part of the logistics handling.
A quick meeting with the customer
Let’s follow Pino in his project with his customer Harry Wunderkind, CIO of Global Transport. They have a crash meeting to discuss the developments. To have a make-shift meeting, they agreed to meet in a local coffee shop, the hotspot for business people. Harry sees Pino coming in and waives him to his table. As Pino puts down his backpack, he gives it a few taps with his right hand and seats himself.
‘Great you could come’.
‘No problem Harry, I could fit it in my meetings. You know we are in a busy stage right now with our go-life planned next week. So we are reviewing all activities on a daily basis. A lot of details and briefings. ‘
‘Not really. We are now discussing the way of working for the new Business Governance Team, that will manage the new business technology – such as making processes on the fly for special orders – by managing the module configuration for mainly marketing and sales. You know almost 80% of contracts have something special to them. There is co-located IT staff that do the IT modeling with amongst others, tools like Visual Composer. It is quite a change for the IT staff with their work alongside the ITIL guidelines. The test of the procedures actually started this morning and the way they handle the scenario’s shows me they understand the new collaboration patterns very good.’
‘Great performance overall, I hear. Actually, what we are doing over here and the way we showed how this fits the business strategy has caught the attention of our parent company, Global Trade. Their CEO, John Ivory, is faced with quite some downturn in trading volumes, and I might have to go over and make some suggestions of change that pay off. You know, they are ‘old school’ over there, running the firm with reports, looking at short term margins etcetera and now he is first looking at where to do cost-cutting.’
‘Recognizable. That’s the traditional model of the firm. Control and panic’, Pino remarks dryly.
‘But let’s kick off on our subject then. I had a call from our long time customer, Spare Parts, to discuss a new collaboration in logistics. I need to discuss it tomorrow.’
‘From your invitation I understood we would have a talk about leveraging our new business infrastructure, so I asked Archie the architect, you know him don’t you, to come along an discuss with us. So if we could wait a few moments, he’ll be here right along.’ At that moment the waiter comes along and takes the order- a macchiato for Harry and a brutto gusto for Harry.
‘That’s good to hear, he was a strategic in our transformation, by spanning the business changes and IT implications.’
‘You know, just gossiping until Archie comes, I think they at Global Trade should not just cut costs across the border of the whole organization. We here at Global Transportation have been able ourselves to polish up the performance of the ordering department quite a lot, thanks to you guys and the new SAP TM, we can now swiftly add new logistics contracts.
As I mentioned last week to John Ivory, while last year we had a turn-around time to implement new logistics contracts of two months in general, we now often do it in two weeks.
It even showed up in their dashboards as improved sales, even more pleasing up there in the towers of headquarters. What thrilled him, when I explained it, is that we can change our collaboration with clients, and fit with local logistics habits, while the services structure we have been making in our pilot environment helps us to fulfill the order delivery directly – what your architect called straight through processing’.
As they are talking Archie comes in and takes a seat next to them. ‘Welcome Archie,’ says Harry, ‘glad you can have a chat here too. By the way, how did you find us in the crowd?’
‘Finding you was easy’, Archie says, while he makes a swift move on his iPhone. ‘You know, I just connect to Twitter. I have a mash-up that plots his Twitter location data on my Google Map. I could sort of home in right on you two here!, he grins.
You know, this café has a special arrangement with a wireless locator company; just like they collaborate with the iTunes Store – actually I just asked for a download of the music we are hearing, these guys are great. I can even place my order wirelessly as I walk in – they know I am in for a Caffe Mocha!’
As he says that, the waiter brings their coffees and they all take a sip. Archie looks attentively to Harry.
‘That’s just like my brother Hugo, who also always has some hot new gadgets and widgets with him. The great thing is, they allowed him – as I always say – move his company Vorpal right out of a downturn by making mesh into a lifestyle. I sometimes wonder, what that would mean for our company. You know, this brother of mine once remarked why I don’t Mash up your application as a style to integrate to clients. But come on, I’m daydreaming.’ He pauses a moment and looks at an imaginary scene behind his two guests.
‘OK. Let’s go to our topic then.
Yesterday I had a call with one of our manufacturers – Spare Parts – who asked if it would be possible for us to take over their whole in-house logistics capability. It’s not their core focus evidently, and they are losing money on it. The whole lot of freight contracting, tendering, and booking is getting too complicated, they just can’t keep up with the market. He has to cut costs. So he asked if we could take over their whole logistics services within three months. With those volatile fuel prices they are forced to make more efficient use of their transport resources, but they can’t. They expect savings on that.
For us this means connecting to their clients’ supplier relationship portals and their own warehouse systems. And in that way, without a brake or a wake, transparently take over the shipping and fulfillment. I think it can be done, but it will need quite some effort. Specifically, the change is important, as everyone at Spare Parts needs to be involved. It is not just hooking into the It systems. What are your suggestions. What you have done here up till now is great from what I have seen, so if we could leverage your learnings, I’d be happy.’
Leveraging the framework
After pondering a moment, Archie starts off.
‘Looking at the embedded capabilities for business model support of the Transportation Management Solution we are now rolling out, it contains the possibility to implement the model of a Logistics Service Provider. This is a set of business services that we definitely can use. Then of course, we need alignment of all involved staff and management at Spare Parts. To do this I’d suggest a two day conference in which all change areas are discussed, both here and at your partner. Such conference can take place in our Accelerated Solution Environment, the by now famous ASE, in which a complete roadmap is created.
Then, as we go into helping all understand the new business model on the operations side, I’d suggest some Rapid Design and Visualization workshops in which we give staff a hands-on experience in SAP TM. This important, because your partner will be integrated into the system – it’s their logistics that you are executing on their behalf. So they need access to all your dashboards as well.
Just their own orders though of course,’ he adds smiling.
‘And then, because Spare Parts is a multinational, you will be having many points of integration. To manage development quickly, we should involve key-users in Rapid Development Workshops in every country. In this era of networking, such sessions will be virtual, and will be hosted by the same team of our Transportation Management business process experts.’
‘Sounds good’, Harry responds. ‘it looks like a comprehensive change plan. However, can that be done in three months, with all our current change activities?’
‘That’s a good point’, Pino jumps in. ‘You know what, we might ourselves help out on the short term, by providing some kind of sourcing capabilities at first, and then migrate it back to you when you are ready. We in fact at Capgemini have an offering like that, to execute all the hosting and business technology governance based on the SAP Transportation Management solution. We can now offer a state-of-the-art transportation management solution based on SAP, with partly preconfigured scenarios that accelerate implementation time and reduce implementation costs. We run SAP TM in a hosted IBM environment that includes a service-center staffed around the clock by certified consultants. And we can supply the required run-time maintenance for you. It is only through the hidden assets of TM – you know we were involved in developing it – that we can offer consulting on this scale, even on a global scale. And just thinking, this might fit in SAP’s Best-Run Now initiative that can give some savings in for instance financial packaging.’
‘It is a good fit. With TM, you can now plan and control the movement of goods with decision support based on compatibilities and capacity restraints, and use a routing guide to develop rule-based planning. This hidden secret inside TM can help to get benefits from comprehensive freight contracting, tendering, and booking functions. And the extensive loading function answers the need to track fuel surcharges and additional costs. So this will deliver the benefits visibly to Spare parts immediately.
If we look at the bullets for your meeting’, and he points at his fingers one by one,
- There is transport efficiency that will lead to significant transport savings. From talks to clients I understand that a few percent of loading efficiency will give savings of millions of dollars year by year. Global parts can not just saven money by having a professional partner, but somewhere along the line there are tangible savings too.
- Spare Parts adds to the volume you already have, so good planning will lead to bettter tariffs and reduced costs.
- Though not something one thinks about, but Carbon Foot Print en Green Logistics still are topics to have on the agenda, and TM has special reporting for that.
These are good business benefits that make a compelling story too. The key is that you can leverage the whole framework.’
‘And’, Archie adds, ‘regarding those mash-ups, we could check for instance if we can connect the shipment information to Visual Composer demo – Customer and Google API for your customers to see. In TM we have full shipment visibility including shipment status, alerts and it updates to Estimated Time of Arrival – based on actual events; so we could have them trace that too right on their own desk. Now you might think that data starts flying all over. Yes, indeed, but the concept of the integrated services of Business suite 7 is that in this case Identity Management keeps track of all roles and rights; while the GRC solution tracks the compliance to help you see any liabilities that you can have because if the SLA’s.
The advantage we have with the new platform is that these components are all sort of plugged in – creating what I describe as the Standards Layer’, you know the services that connect the Front Office with the Back Office. It is because of that interconnectedness out-of-the-box that we can be so versatile. That is why I look at it as a Business Technology layer, a layer that is more versatile than the AEI/brokers of the past decade.’
Harry sits back, grinning. ‘I knew you were great, but I hadn’t expected this. It stretches my imagination. It is a real value network with collaboration as you drive for it. This really is above my expectations. We should have a chat too with John Ivory. There may be value in it for him to in changing his business model capabilities now. And reduce his cash needs.
Let’s work this out so I can discuss this. Thanks.’
Albert Kuiper, Business Consultant, Capgemini The Netherlands
Pino Melis, Transportation Management lead for the SAP Serviceline at Capgemini, The Netherlands, has contributed to this blog.