Transparency in freight cost management with SAP TM in the passenger car segment

Efficiency through standardization

_ProducTs & soluTions _sAP APPlicATions

Transparency in freight

cost management with

SAP TM in the passenger

car segment

For the optimization of freight cost management with more than 6 million passenger car transports BMW Group implemented sAP Transportation Management and took a step forward to standardization and cost reduction.

rE-AlignMEnT And rE-dEsign oF FrEighT billing

Problem today: Inconsistent end-to-end processes

and lack of data quality results: High degree of manual validation efforts, no transparency of current billing volume Additional risks: Outdated technologies, dying know-how of technical and functional

support

objectives

“Number ONE” is the branding of the corporate strategy BMW Group established to lead business areas to efficiency and long term value add . Logistics, being a crucial business area, and freight cost management as a part of it, is using this strategy for the management of 80 suppliers who transport vehicles from production site to distribution centers – either by land, by air or sea.

In 2011, 1.7 million passenger cars were routed to their final destination – plus special freight transports for special vehicles like preproduction prototypes.

BMW Group regarded the adaption of new logistic concepts in freight cost management as a challenge. The former IT solu-tion, an inhouse development, did not have the functionalities to meet all requirements. End-to-end processes for freight cost billing were not fully covered. software technologies and hard-ware were outdated and important know-how of technical and functional support slowly disappeared. A new IT solution was stringently required as BMW planned to expand its busi-ness – with freight cost billing volume to further extend. CAMELOT ITLAB CusTOMEr suCCEss sTOry

Transparency in freight cost

management with SAP TM in the

passenger car segment

Figure 1:

situation at project start

The solution

BMW’s choice of sAP Transportation Management as its favoured platform for freight cost management is fully inte-grated into an existing sAP solution landscape for planning, purchase, billing and transport services.

To minimize efforts in invoice verification, services are billed via credit item procedure. In certain cases invoices are pub-lished to suppliers via platform for download and further financial processing.

Early Product Experience

Being one of the first roll-outs, go-live for sAP TM 8.1 was in June 2012. BMW was looking for an implementation partner who had combined expertise in products, end-to-end processes in supply chain and freight cost management. CAMELOT is a process-oriented IT consultancy with proven track in sAP sCM and sAP TM.

CAMELOT supported sAP AG during the implementation of sAP TM 6.0, sAP TM 7.0 and sAP TM 8.0 prototypes. CAMELOT’s expertise was also requested by sAP AG for the implementation blueprint of sAP TM at BMW in 2011. BMW chose CAMELOT as its implementation partner and the established project teams cooperated closely – from blue-print phase to final business concept. Two main challenges had to be mastered: new technologies which bases sAP TM and a close time frame given.

Due to a strict project management approach, with progress and milestones to be monitored every two weeks, the new solution for freight cost management was implemented within 7 months. BMW’s and CAMELOT’s team consistingly exchanged for setting up testsystems and live demonstra-tions to eventually co-create the final solution design.

Figure 2:

sAP standard and BMW's implementation requirements

sAP TM includes all functionalities of an integrated transport management solution

The consistent document flow concept follows a stringent end-to-end process

state of the art technologies meet customer's requirements

sAP Ecc _sAP TM concEPT Bid for transportation 3 Order handling 1 Transportation 4 Transport planning 2 Freight cost billing 5

Most TM functionalities stay in existing systems

Possibility of a consistent document flow concept through high degree of interfaces

Freight order the central object of freight cost management _bMW scEnArio Tbb/EXTKoM Freight cost billing 5 6 AsTrAs 3 GPs/THP/ MDBB 1 FAIs/ spetros 2 FAIs/ spetros 4

results

BMW was able to implement a standardized, transparent passenger car freight billing process – without technical or functional disruptions, clear responsibilities and less manual validation efforts.

Costs were reduced while dataquality increased. Through enhanced evaluation methods, decision makers quickly gain an overview of a suppliers’ services and billing volume. Mapping of freight contracts and according price combinations were simplified. Tax calculations for passenger car transports and transport sections in various countries are now available at the push of a button.

The biggest benefit for BMW’s IT department is the fall back on internal know-how for administration and support of sAP TM and regular functional software updates.

A potential solution upgrade in the future is not an obstacle anymore: Even though a high degree of individual processes in passenger car freight cost management was maintained sAP TM releases are installed easily.

outlook

After the successful project phase for passenger car distribu-tion, BMW will conclude the upcoming project phase with CAMELOT. Objective is the optimization of freight manage-ment for billing scenarios “Factory supply Production Mate-rial” and “spare Parts Transport” based on the latest release.

Figure 3:

Functional extension of freight cost management in sAP TM

_inTErFAcEs _TEchnology

subsequent modification of freight order

Port services

Progressive freight order handling Generation of final freight order

Taxation attribute Cost allocation Destination-dependent freight payer up-/Download of pricetables Performance enhancement Tiered volume Dieselfloater

Freight cost calculation

Packaged freight cost documents Explicit calculation for containers and passenger car positions

_businEss ProcEss

interview

dr. Kirsten commer

BMW Group, Process-IT Order to Delivery

What is the relevance of passenger car freight cost management within bMW’s supply chain ?

It is crucial as a supply chain only works as long as delivered services are compensated accordingly.

After the blue print phase sAP TM went productive in less than 7 months. What were the drivers for such a fast implementation ?

Main driver was certainly the close cooperation of responsi-bles from planning, purchase, transport logistics, accounts payable and IT working with CAMELOT. CAMELOT’s process consultants and sAP TM solution architects had a deep under-standing for our business needs. so at all times a high quality was delivered and given time lines kept.

Which challenges did bMW face with the implementation of sAP TM ?

At that specific time the software was brandnew and still in ramp-up phase. The challenge was to find an implementation partner who had already expertise in the field.

Transport management is not as widely spread as other clas-sic ErP solutions – so there are less resources with profound know-how to be found.

CAMELOT met all our expectations: deep expertise in prod-ucts, methodology and close relation to sAP AG. That relation is an important criteria for problem solving if consultation of the software manufacturer is needed.

PrinciPlEs

Projectmanagement needs to support core activities during implementation (supplier of specialists) Less, but efficient reporting documents and project

monitoring

Clear milestones and activities Exact role definition

stakeholder and management communication riskmanagement via projectsponsor and project

office (no additional ressources needed)

bEnEFiTs

reduced administration

Prioritization of activities by management _ succEss FAcTor 1:

lEAn ProjEcT MAnAgEMEnT

PrinciPlEs

step by step development (2-3 weeks cycle), individual workpackages

- Early involvement of and validation by customer Clearly defined and short term development results

bEnEFiTs

Visible progress – in systems, not only slides _succEss FAcTor 2:

CAMELOT ITLAB CusTOMEr suCCEss sTOry

your contacts

bMW group

BMW Group and brands BMW, MINI, Husqvarna Motorcycles and rolls-royce is the most successful manufacturer of pas-senger cars and motorcycles. As a global player BMW Group is represented in 140 countries by its own distribution net-work and has production sites in 14 countries.

At the end of 2011 earnings before interest were 7.38 bil-lion E, sales revenues 68.82 bilbil-lion E and approx. 100.000 employees worked for BMW Group.

www.bmwgroup.com

cAMEloT iTlab

CAMELOT ITLab is a process-oriented IT consultancy with strong focus on sAP modules MDG, srM, sCM, CrM, TM and BI. Established partnerships with leading IT providers like sAP, IBM, Oracle and Microsoft in conjunction with customer focused solutions and innovative blueprints make CAMELOT ITLab the consultancy of choice for end-to-end-processes. CAMELOT provides in addition to sAP standards independ-ent solutions like the Add-On supplier Managemindepend-ent Camelot Csx. As part of CAMELOT International Group we provide combined strategy-, organizational- and IT-consultancy services. Headquarters are based in Mannheim.

cAMEloT iTlab gmbh

Mario Baldi · Managing Partner

Theodor-Heuss-Anlage 12 · 68165 Mannheim Phone +49 621 86298-800 · [email protected] www.camelot-itlab.com • Consistent automation of freight cost management • More transparency • Increased data quality • Improved analysis • Less manual validation • Less manual data entry (Dieselfloater calculation/ up-/Download) • Cost- and time-saving • Improved mapping of freight contracts • Variety of price combinations in standard solution • Releaseability despite high degree of BMW specific processes

_ FrEighT cosT MAnAgEMEnT bAsEd on sAP TM AT A glAncE: