Transportation Management: How to Optimise Multimodal Freight Transport

Written by Jim Lodwick, Curated by Silvia Ricciardi

Explore how SAP TM can solve challenges and add benefits in multimodal transport, allowing businesses to reduce operational expenses and improve profitability within supply chain management.

Efficient transportation management is a critical component of successful supply chain operations when working in today's globalised world. Multimodal transport is defined as the transportation of goods under a single contract, but performed with at least two different transportation modes, such as road, rail, sea, and air.

For companies dealing with multimodal freight transport, the complexity increases significantly. This is where SAP Transportation Management (SAP TM) comes into play, offering a comprehensive solution to streamline and optimise multimodal freight logistics.

Seamless Coordination in Multimodal Transport

Multimodal transport requirements need to seamlessly coordinate all the various transportation modes to streamline the movement of goods. A correct and comprehensive approach to multimodal transport is necessary to drive maximum efficiency, improving cost, speed, and reliability while accommodating various supply chain needs.

It is vital to possess a thorough grasp of the key challenges involved in overseeing multimodal freight transport and how the ground-breaking benefits of SAP TM and its features can help solve them.

Navigating the Challenges of Multimodal Transportation Management

How to obtain real-time visibility of transport events as they unfold?

Real-time tracking and monitoring of shipments across all transportation modes is key. This end-to-end visibility enables logistics teams to track the location of goods, identify potential delays, and proactively address issues. It also allows for better communication with customers, improving transparency and customer satisfaction.

SAP Business Network for Logistics - SAP Business Network for Logistics is one of the best practice platforms connecting businesses and their trading partners to facilitate real-time collaborative exchange of logistics and supply chain information, facilitating proactive and preventative decision making.

Key features and capabilities of SAP Business Network for Logistics include:

• Connectivity with various trading partners, including carriers, suppliers, and customers.
• Collaborative logistics processes, such as purchase order collaboration and transportation charge management/invoicing.
• Real-time visibility into logistics and supply chain operations.
• Integration with other SAP solutions, like SAP S/4HANA and SAP TM.

Detailed Route Plans – The use of maps helps in visualisation of freight activity as it unfolds, geocoding assists with precise mapping and route optimisation, in addition to activating location-based events, such as what the latest position of the vehicle is and if a geofence has been broken, triggering an arrival alert in a location

With wider IOT connectivity, more detailed events can be captured, such as if the doors on the vehicle or container have been opened, if there is a temperature movement for the cargo in transit, and proof of delivery.

How to synchronise schedules and upload/download processes across different transportation modes?

In multimodal transport, the various modes are integrated and coordinated to ensure a smooth flow of goods from the point of origin to the final destination. This often requires the involvement of multiple transportation providers and operators working together.

SAP Transportation Management (SAP TM) considers sea and air freight schedules, just to mention a few, and includes such documents as part of the automated, optimised transport planning process.

How to streamline the complex process of international border crossings?

Multimodal transport often involves crossing international borders, which requires compliance with various regulations and documentation, including customs procedures and import/export documentation.

SAP TM can assist with the effective management of these aspects ensuring the smooth flow of goods into their destination location. SAP TM can also be integrated with wider compliance systems, such as the Global Trade System or even third-party solutions, facilitating more detailed document handling processes.

How to get a comprehensive view of all transportation costs and operations?

The costs associated with freight can include freight charges, handling fees, customs duties, and many other expenses related to transportation.

SAP TM can integrate with other SAP systems and external data sources to provide a holistic view of transportation costs and operations. The latest versions of SAP TM can accommodate charges from multiple providers within freight orders, in addition to initiating the automatic invoice verification and settlement process.

How to accommodate load complexity driven by different transport media?

Managing multimodal freight transport can be challenging due to the diversity of transport options and the need for real-time visibility and compliance.

Multimodal transport relies on interconnected infrastructure, such as container terminals, ports, logistics hubs/transit warehouses, and transfer points, where cargo can be efficiently transferred from one mode to another. Standardised containers and handling processes are often used to facilitate these transitions and these can differ by mode of transport.

SAP TM’s integrated load management process can provide detailed and efficient loading plans automatically for each stage of the journey. For instance, products are packaged and palletised or containerised respecting a vast array of rules, including weight, cube, fragility, loading sequence, that may need to be considered.

Unlocking the Benefits of SAP TM in Multimodal Transportation Optimisation

Environmental Benefits - The use of multiple modes of transport can lead to environmental benefits, as it allows for the selection of transportation modes that are more energy-efficient and have lower carbon emissions. For example, shifting from road transport to rail or water transport for long-distance hauls can reduce the carbon footprint.

SAP can assist with the reporting of Scope 1, 2 and 3 emissions, allowing the business to monitor accurately carbon emissions and report on the impact at a granular level:

• Scope 1 – Emissions coming from sources controlled by the company (Company Vehicles)
• Scope 2 – Indirect items, such as power sourced by the company (Electricity)
• Scope 3 – Emissions released due to operations outside of a company’s control (Emissions generated by vehicles not owned by a company)

End-to-End Visibility - SAP TM offers a centralised platform for tracking and monitoring shipments in real-time across all transportation modes. This comprehensive visibility empowers logistics teams to monitor goods' locations, anticipate delays, and take proactive measures to resolve issues. Furthermore, it enhances communication with customers, fostering transparency and boosting satisfaction levels.

Compliance - SAP TM helps organisations stay compliant with customs and regulatory procedures by automating document creation, validation, and submission. This reduces the risk of delays and fines due to non-compliance.

Cost Control - Multimodal transport offers flexibility in automatically choosing the most efficient and cost-effective modes for different segments of a shipment's journey. This can help optimise the use of resources, reduce transit times, and lower overall transportation costs.

Route Optimisation - Efficient route planning is essential for multimodal freight management. SAP Transportation Management uses advanced algorithms to optimise transportation routes, taking into account various factors, such as transport costs, service levels, and delivery windows. This leads to cost savings and a more environmentally friendly supply chain in turn driving maximum customer satisfaction.

Overall, multimodal transport is a logistics strategy that aims to make the transportation of goods more efficient, cost-effective, and environmentally sustainable by seamlessly integrating different modes of transport into a single, well-coordinated supply chain. This approach is particularly valuable for companies involved in global trade and supply chain management.

SAP TM offers robust cost management features, allowing organisations to analyse transportation costs in detail. By identifying cost drivers and areas for optimisation, businesses can reduce operational expenses and improve profitability.

Rocket can help companies implement SAP Transportation Management (SAP TM), getting the most out of its capabilities. Get in touch today for a demonstration of how SAP TM can concretely optimise multimodal freight transport.

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