Freight consolidation and distribution from logistics service providers’ point of view

SAP TM solutions for logistics service providers

With their customers’ increasing internationalization, today logistics service providers are increasingly under pressure to assert themselves successfully on the market in a narrow, highly competitive service environment.

Bearded men working on packaging and online delivery in home office business. He talking on phone with customer

At the same time, customers are increasingly demanding a full-service provider who can take on other tasks in addition to traditional transport and logistics services. These include transport planning services, coordination with their customers partners and the handling of complete procurement and distribution tenders.

Classic examples are complex ocean freight scenarios where the logistics service provider plans and executes all processes on behalf of one or several customers, from pick-up from various suppliers in a third country to detailed distribution domestically. The service provider organizes the entire hinterland traffic, takes care of freight bookings and the complete shipment as well as customs clearance and compliance with trade regulations.

Graphic about freight consolidation and distribution processes in SAP TM in valantic design

Challenges for logistics service providers

This trend towards full-service providers poses massive challenges for logistics service providers and is forcing them to adjust their organization and processes as well as to implement more flexible and modular template solutions. SAP TM supports logistics service providers in meeting the increasing requirements of a modern full-service provider in a holistic and standardized way.

Traditional service concepts are often customer-specific, individual solutions, which are usually not adaptable and are characterized by the following challenges:

  • Cross-customer synergy and economies of scale often cannot be realized
  • IT-landscape characterized by system and media disruptions
  • Time-consuming manual planning, sometimes still with MS Excel
  • High effort for manual coordination with process partners outside the TMS system
  • High personnel costs due to fragmented processes and lack of automation
  • Time-consuming handling of schedule and quantity adjustments
  • Customer and project-specific requirements require cost and time-consuming, special developments or the purchase of additional systems (e.g. load space optimization)
  • High manual billing effort for multi-level, multi-modal transports and value-added services (e.g. kit-to-order)

Transit warehouse as component of integrated logistics and transport solutions

In combination with SAP EWM, the transit warehouse functionality for logistics service providers closes an important gap in comprehensive warehouse and logistics solutions. Specifically, in addition to the transport processes, all relevant logistics processes in the area of warehousing can thus be covered on a single platform (SAP Supply Chain Execution). Examples are cross-customer consolidation and deconsolidation processes and the efficient operation of multi-customer centers.

The increasing demand for comprehensive contract logistics solutions is forcing service providers to be able to master logistics and warehousing as well as traditional transport services. Integrated holistic solutions are no longer a unique selling point of a few large players. Rather, these are a basic prerequisite for being successful in the market.

System landscapes that have grown over the years are often very heterogeneous and therefore complex and still have functional weaknesses:

  • Transport and logistics processing in different systems
  • Integrated customer processing is personnel-intensive and prone to error
  • Lack of consolidation possibilities in transport and logistics (pooling)
  • No holistic management of warehouse and shipping units (pallets, freight units)

As a fully integrated Supply Chain Execution (SCE) platform, SAP TM and EWM helps shippers, freight operators, and logistics service providers optimally in the daily provision of services for their customers. The close interconnection of both systems efficiently supports operative planning and execution activities, avoids redundant data storage, and thus facilitates focusing on customer needs. In concrete terms, the SAP SCE platform with its transit warehouse functionality offers service providers the following added value:

  • Tracing of handling and freight units across complex logistics networks
  • Mapping of transit warehouses to consolidate freight in the LTL business (cost savings due to increased resource utilization)
  • Comply with air transport safety and seal management regulations
  • Freight goods handling on package unit level, not on the product level
  • Comprehensive use of planning data (planned deliveries, etc.) and business documents (transport orders, etc.)

The operation of complex hub structures and the associated requirements on operators require integrated solutions. With SAP TM and EWM, logistics service providers have a high-performance system platform for fulfilling current and future customer requirements quickly and efficiently.

Graphic about transit storage, SAP TM solutions for logistics service providers

Flexible template solutions with SAP Transportation Management

SAP TM is a modular software solution for shippers, freight forwarders and logistics service providers that optimally supports all transport logistics processes from central order entry, optimizer-based planning to freight charge calculation, cost distribution and settlement. Intelligent template solutions are characterized by:

Automation of standard processes (such as repetitive FTL shipments with automatic selection of sub-carriers)

Improved pick-up and delivery performance thanks to multi-modal planning and high process transparency

Improved cost efficiency due to (automated) selection of efficient means of transport and routes

Constantly high customer service levels, even in case of unforeseen events

Reduced personnel costs thanks to transparent cost structures

Minimization of financial risks due to automatic transport cost calculation and accruals posting

Higher margins due to optimal carrier selection and freight space usage

Increased utilization of resources due to smart consolidation of transport requirements

System-supported communication with process partners (carrier collaboration)

Our SAP TM consulting services

SAP TM provides all components of an integrated transportation management system. Thanks to its modular and highly configurable design, SAP TM ideally meets the requirements of modern logistics service providers.

valantic will support you during all project phases:

  • Process analyses and SAP TM readiness checks
  • Feasibility studies and target process design
  • Definition of solution architectures
  • End-to-end implementations
  • Roll-out and deployment strategies
  • Application maintenance support

Your Contact

Picture of Thomas Pongratz, Managing Consultant at valantic Supply Chain Excellence

Thomas Pongratz

Managing Consultant
Supply Chain Excellence