Business Logistics as a concept is probably only about fifty years old. Yet in most countries logistics costs are well over 10% of GDP. And for most companies that ship products, transportation is their highest operational expense. This cost of shipping directly impacts consumer prices and company profitability, and it’s rising by about 6.5% annually, as fuel prices go up and as firms expand inefficiently. Companies need a solution that curbs these creeping costs.

That’s where SAP’s Transportation Management solution comes in. SAP TM is not just a Best of Breed solution, though it has that depth of functionality; it’s a holistic solution too. It’s the fastest growing market player, used across at least 21 countries and 20 industries. And it’s used by customers from the smallest to the largest; from those who used mixed legacy to those who replaced Best of Breed solutions. Indeed, the question I’m often asked when presenting it is “Is there anything TM doesn’t do?”

Optionally green.

The answer, pretty much, is ‘no’. As an example, transport is responsible for well over 20% of global carbon emissions. For a third-party logistics firm, where margins are tight because competition is fierce, comprehensiveness and differentiation of service is key. So, included in our software is the ability to select for more environmentally-friendly routes, allowing third-party logistics firms using our solution to claim that feature too.

Savings large or small

Integration is also key when it comes to cost savings. SAP TM seamlessly integrates SAP ERP, EWM, EM and much more to enable an end-to-end logistics process. I was recently at a global manufacturing customer that’s still using spreadsheet software and an array of legacy systems to plan both their internal and outbound logistics across many countries. For them, TM could revolutionize their business if integrated completely, or just reduce costs if it’s only implemented for a section of their supply chain.

One of our shipper customers is a good example of this. By closely integrating one global TM with several ERP and warehouse solutions into a common logistics execution platform, they are already achieving reduced freight spend and improved operational efficiency. They’re estimating that TM will save them around 5-10% on their transportation costs, which comes to about €250 million savings. Another firm we work with is claiming even higher savings. And, given that SAP TM is an integral part of SAP’s Supply Chain Execution Platform, the efficiencies don’t stop there.

Our Transportation Management product integrates order management, compliance checks, costs and revenue flows, enables process automation, acts as an end-to-end solution and can handle implementations of any scale. That’s the way to curb these creeping costs – a focus on using effective transportation management that creates efficiencies across the board.

To learn more about how we can help you with your business challenges, please have a look at SAP’s Solution Explorer for Transportation Management.

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2 Comments

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  1. Nishant Choudhry

    Great piece of information Elinor!!!. Way to go.

    It is so true when you said let us look for cost savings across the supply chain and not just within the organization.

    Transportation Management is surely the game changer for our Global economy and nobody should underestimate the cost savings IT as well as business resulting from tight integration between different software components.

    There are lot of trade deals done now across the Globe: US-South Korea ( couple of years ago), Canada-South Korea, even revisiting NAFTA which is already 20 years old !!!.

    There is surely going to lots of goods flowing across the globe, not just as finished products but also as components as we reduce trade tariffs resulting into new supply chains.

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