SAP TM is one of the world's leading systems for transportation management. SAP TM is often associated with very large, internationally active companies. Functions for handling multi-stage transportation on all modes of transport, modal or multimodal, with own or external fleets are features that are associated with SAP TM.
If, on the other hand, you think about which system can best map requirements in “last mile delivery”, SAP TM is not the first system that comes to mind. Wrongly, in our opinion. In this article, we show the optimization potential that lies in last-mile delivery processing and why SAP TM is a real option.
What are the benefits of optimizing last mile delivery processes?
Optimizations in last-mile delivery processes hold great potential for improvement - for example, manual effort in scheduling can be reduced by 20%, the use of algorithms and AI can reduce the number of kilometers driven by 20%, customer satisfaction can be increased by 12% through greater transparency and shipping costs can be reduced by 13% through bundling effects. How reliable are these figures, you may rightly ask. As the saying goes, a strong claim is better than poor evidence.
The reality is that the savings potential depends on various factors. For example, the degree of digitization already implemented, the current system architecture, the extent of system transitions and the scope and complexity of operational processes. It is not possible to make a reliable statement without knowing the starting conditions. However, it is true that transportation very often accounts for most of the costs in logistics. If improvements can be achieved here, this can lead to a noticeable increase in efficiency and cost reductions. An indication of the type and amount of potential to be expected can be obtained by asking the following questions, for example:
- How high is the degree of digitization in the current shipping process?
- What digitization options are available?
- Are there system breaks and what do they mean for the process?
- What process inefficiencies are evident in the applications?
- Can the inefficiencies be overcome systemically or are they of an organizational nature?
- Where does the greatest added value arise (qualitatively and quantitatively)?
Technical classification and challenges
The technical classification of last-mile delivery is relatively simple. In principle, all transport movements up to the last stage in the logistics network, the warehouse from which the customer receives the goods, are not part of last-mile delivery. Conversely, goods movements from the last warehouse to the end customer are part of last-mile delivery. In comparison, the transports upstream of last-mile delivery are often larger in volume, less dynamic and have fewer planning restrictions.
In last-mile delivery, scheduling has to contend with various challenges. These include fluctuating order volumes, last-minute order changes, time windows to be taken into account, the intelligent combination of various customer stops into tours, driver deployment times, availability of resources including their equipment features, etc. Finally, deliveries may be refused, damaged, over- or under-delivered, delivery bills may not be signed and empty or returnable goods provided or exchanged may not be recorded.
Systemic requirements
Do you remember the 6-R rule in logistics? It describes the task of logistics, which are:
The customer
- receives the right goods,
- in the right quality,
- in the right quantity,
- in the right place,
- at the right time,
- at the right cost.
If one establishes a relationship between these points and the challenges in last-mile delivery, it quickly becomes clear that the systemic requirements for a target system are high and differ from the requirements found, for example, in the planning of inter-company or freight transportation.
A system that supports the last-mile delivery process is good if it supports all the aforementioned 6-R points and also
- can seamlessly exchange information with adjacent processes,
- can be flexibly adapted to new requirements,
- data from the delivery process can be processed in real time,
- can point out deviations and can be kept available to react dynamically to deviations,
- employees enjoy working with the application.
In the future, it can also be assumed that systems will be self-learningand support employees in the processing of routine tasks and in planning.
This is all very ambitious. The aim is therefore not to introduce everything perfectly at once, but to select a system that enables development in this direction.
SAP TM as the target system
With SAP Transportation Management (SAP TM), SAP offers a world-leading system for handling all transportation-related tasks. As mentioned at the beginning, SAP TM is known for everything, but is not wrongly mentioned first when it comes to last-mile delivery. The power of SAP TM becomes clear when some of the aforementioned requirements are considered against the background of SAP TM's performance features.
The customer receives goods at the right place at the planned time: In order to fulfill this requirement, all requirements specified by the customer must be taken into account during planning. SAP TM offers the option of taking customer requirements/restrictions into account. In addition, rules are available that indicate deviations, such as a violation of time windows, and even trigger follow-up processes if necessary. With VSR (Vehicle Scheduling and Routing), SAP TM also has a powerful, integrated optimizer.
Information can be exchanged seamlessly with adjacent processes: The first question to ask here is which systems are adjacent to Transportation Management? In fact, Transportation Management is a subject area to which many processes of other systems are linked. Examples include ERP systems, warehouse management systems, yard management systems, fleet management systems, etc. A seamless exchange of information requires coordinated interfaces.
Interfaces are always well coordinated if they come from the same manufacturer. SAP is a suite provider and provides applications for all of the areas mentioned. In addition to the continuous further development of SAP TM, among others, SAP has invested a lot of energy in the topics of integrative processes and harmonized information flow. Even more than for Warehouse Management, SAP TM users are well advised to implement transportation processes with SAP TM and not with third-party products.
Flexible adaptation to new requirements: SAP TM is a powerful application built on complex data structures and technologies. On the one hand, this means that a certain amount of customizing effort is required; on the other hand, however, this complexity ensures enormous flexibility when it comes to implementing new functionalities. SAP TM can be used on its own and in conjunction with SAP Digital Supply Chain products to map all common use cases in transportation management. The BTP (Business Technology Platform) options can also be used to implement technology-heavy innovations, collaborative scenarios and individual requirements.
Processing data from the delivery process in real time: The biggest challenge here is the provision of data from the delivery process. The most common variant for providing real-time data in last-mile delivery processes is the use of applications that are operated on mobile data terminals. Apps such as K.Motion S/POD are used to provide information on items, delivery times, delivery status, photos, signatures, etc. The data is made available to the “backend system”, in this case SAP TM. In SAP TM, the information is displayed, forwarded, stored or, depending on the event, follow-up processes are initiated. Of course, it is also possible to obtain information from the delivery process via BN4L (Business Network for Logistics). However, as a platform for collaboration with partners, BN4L is aimed more at the transportation process and less at customer delivery. Using Bn4L on its own does not necessarily lead to the desired result.
Employees enjoy working with the application: The usability of an application is always relevant when employees use the application extensively to process their activities, for example in the context of scheduling. The days of the good old SAP GUI are over. In the modern age, SAP TM offers all the features required for user-friendly working. In addition to dialogs that can be set up individually, it is also possible to set up checks to be carried out that are tailored to the respective use cases. Graphical elements such as Gantt charts, symbols and colors can be used to indicate statuses. Of course, it is also possible to integrate and use maps.
Conclusion
The conclusion can be brief: Last mile delivery processes contain optimization potential and SAP TM is a real option for implementing your last mile delivery processes!
Körber as a competent partner: At Körber, we have years of experience in implementing SAP-based transportation management solutions. Take advantage of our experience for a potential analysis, end-2-end process consulting to replace your third-party system with SAP TM, to migrate from SAP LE-TRA to SAP TM or to introduce a completely new transportation management system in your company.
