A client had a cumbersome multistep process for freight management with their 3rd party logistics company. Per existing process, the client calculated $1.6MM in yearly losses due to inaccurate freight charges between themselves, 3PL and customers.
Solution
DigIT team developed a targeted solution to correct data discrepancies and enhance operations. We established a streamlined approach that aligned business data with accurate freight calculations. The solution was carefully crafted to address the complexities of the client’s freight management processes within the SAP Order to Cash (OTC) module.
1. Initial Assessment and Planning
First, we conducted an in-depth assessment of the current state process. We engaged with the business, analyzed their SAP processes and right away identified that client’s business data that was used to calculate costs and charges to their customers was not aligned to what 3PL was charging our client for the same shipments. Just by assisting our client on fixing that data and aligning with 3PL we already helped to cut losses by 25%($400K)
After the current state process was analyzed our team worked on a new design proposal to ensure that flight costs are accurately communicated to the 3PL. There were 2 options that we proposed and evaluated with the client.
Option #1 was based on actual costs based on every shipment dimensions, route, carrier rates and option #2 that was optimized to create shipment modes with ranges for parcel and pallet size shipments.
These modes helped to simplify the required freight data creation and maintenance without compromising the requested by the business savings in yearly freight losses, so option #2 was confirmed by the client and implemented by the DIGIT team.
1.1.2 Functional In Scope
- Automatic Freight calculation
- Automatic Route Determination
- Collect Accounts – Collect Accounts determination
- Shipment document weights and dims for freight calculation
- Freight surcharge
1.1.3 Activities In Scope
- Project Planning and Management
- Functional and Technical specifications documentation
- Unit Test and SIT Execution for enhancements identified in Functional scope
- Informal Dry Run Testing – FUT
