Migrating 3rd-
Party Warehouse
& Carrier
Integration
Systems to SAP
Software

Bruce Rishel, CSCP




May 13, 2009
        ...
Agenda


•   3rd party logistics scope
•   Key strategy drivers
•   Why use a 3PL?
•   SAP software logistics benefits
•  ...
3rd Party Logistics Scope


• Warehousing
  - Receiving
  - Storage
  - Picking
  - Packing
• Shipping
  - Domestic
  - In...
Key Strategy Drivers


•   Cost
    -    Reduce interface costs in supply chain
    -    Reduce 3rd party software costs
 ...
Why Use A 3PL


•   Focus on core business
•   Free up capital  move from fixed to variable cost model
    -   Warehouses...
3PL Disadvantages – IT Focus


• Interfaces to 3PLs
    - Interface setup and maintenance
    - Multiple points of potenti...
3PL Architecture
                                                                      Material Master
                   ...
SAP Software Logistics Benefits

•   One common platform
•   Simplify the supply chain
•   Rapid deployment
•   Cost avoid...
3PL Architecture with SAP Software




Carriers                                                      SAP
 (FedEx          ...
3PL




      © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their r...
SAP Software




               © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the p...
3PLs with SAP Software




             © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks a...
Early Concerns


•   Capability
    -   Is SAP software appropriate for a 3PL environment
    -   Can we run operations on...
Capability




© 2009 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their ...
Capability Review – External Analysis
              Gartner Magic Quadrant Comparison




                                ...
Capability Review – External Analysis


• Gartner “Magic Quadrant” key findings
   -   WMS is the most modified part of th...
Systems Deployment Comparison


3PL Systems                                                           SAP Software Logisti...
SWOT Analysis – SAP Software Logistics

                 Strengths                                                        ...
Deployment




© 2009 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their ...
Deployment Scope




                         Belfast               London
                                               ...
3PL Site Volumes


                                                           Pilot Sites                  Post- Pilot Sit...
Footprint



- 100% standard SAP EWM…except for:
   •   Forms
        -   Putaway label, pick list, pack list, pack label,...
Footprint – Newer SAP Software Functionalities



- Dynamic cycle counting
   •   Required new OSS Note: 1162196
- Pre-pic...
Realization & 3PL Impact




© 2009 Perot Systems Corporation. All rights reserved. All registered trademarks are the prop...
SAP Software Logistics Pilot Review

  BACKGROUND
  • Two sites deployed
  • Approximately 29% of shipping volume transfer...
Cost Reductions

• IT
       -   Hardware savings - no need for hardware to support 3PL WMS
       -   3PL WMS software li...
Client Operations View

• Minimal disruption during transition
• Stock balances accurate; no reconciliation required
• Pic...
Warehouse Operations View

• Transition of warehouse staff to SAP software process using RF
  terminals was issue free; tr...
Take Home Thoughts




   • Combining 3PL logistics with SAP software can
     provide the benefits of each solution to an...
Thank you.

          Contact Information:
          Bruce Rishel
          (214) 215-5743
          bruce.rishel@ps.net

...
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SAPPHIRE - SAP WM and XSI with 3rd Party Logistics Providers

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Learn how one company implemented SAP WM/LE and XSI with their 3rd party logistics providers

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  • <number>
  • CostAlong with Customer delivery accuracy and delivery quality, cost will always be a key driver. Benchmarking shows costs at a good % or revenue, but year on year double digit savings are the realistic target. Flexible footprint costThe drive is to increase the % of Logistics costs that are variable and a key element of this is the Warehouse footprint which is fixed and variable. New operating requirements in developing CountriesExtension of the supply chain to new countries (Asia, Eastern Europe, Africa and South America)New regulations, partners and conditions in developing countries (WEEE, EUED for example)Business transformation goalsSupplier partnership on value engineering projects underway with CM’s which will included the full delivered cost.Extension of a Global supply chain, with the drive to source global supply from low cost regions.More business moving on to SAP
  • One common platformSAP upgrades easier as have removed the interfaces that needed testingRemove a 30 of the SAP interfaces and costs to maintain themReduce the 14 plus applications used to support LogisticsReduce the points of failureNo system dependencies Remove 3rd party dependencies and associated costsSimplify the supply chainAll data is in one systems and consistentMore accessible to a larger number of peopleProvide a solution that can be quickly deployed any where in the globe for any type of warehouseFor project warehouse 4 months down to 4 weeksFor LOCs 6 months down to 6 to 8 weeksCost avoidanceFuture solutionmonitoring SAP and 3PL WMS to insure 2 systems are in sync Reduction in number of SOX monitoring places (27 reports daily for 4800 – SAP, Dispatcher) – produced and looked at dailyCurrently certain products can only be handled be certain 3PL tools – thus dictates location -> this will allow us to flexibility as this one tool will handle all productsStronger negotiating position with 3PL’s – cost reduction if they can reduce their IT support
  • Plus some that didn’t even make the list
  • Nortel Corporate Presentation
  • Nortel Corporate Presentation
  • 1162196 -
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  • <number>
  • SAPPHIRE - SAP WM and XSI with 3rd Party Logistics Providers

    1. 1. Migrating 3rd- Party Warehouse & Carrier Integration Systems to SAP Software Bruce Rishel, CSCP May 13, 2009 © 2009 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 1
    2. 2. Agenda • 3rd party logistics scope • Key strategy drivers • Why use a 3PL? • SAP software logistics benefits • Concerns of using SAP software with 3PLs - Capability - Deployment strategy - Realization & 3PL impact • SAP software with 3PLs analysis • Overall assessment • Take home thoughts © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 2
    3. 3. 3rd Party Logistics Scope • Warehousing - Receiving - Storage - Picking - Packing • Shipping - Domestic - International • Reverse logistics - Returns from customers - Returns to vendors © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 3
    4. 4. Key Strategy Drivers • Cost - Reduce interface costs in supply chain - Reduce 3rd party software costs - Common processes and tools, one logistics system, one set of processes across sites • Flexibility - New operating requirements in developing countries - Quickly meet business transformation goals - Rapid rollout of new or closure of unneeded warehouses • Visibility - Reduce balance on hand discrepancies - “See” inventory across the supply chain • Vendor independence - Ability to change 3PL providers with relative ease © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 4
    5. 5. Why Use A 3PL • Focus on core business • Free up capital  move from fixed to variable cost model - Warehouses - Material handling equipment - IT infrastructure • Specialized logistics knowledge • Negotiating leverage with suppliers/bulk discounts • Administration shared across clients • Market presence – easier access to emerging markets © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 5
    6. 6. 3PL Disadvantages – IT Focus • Interfaces to 3PLs - Interface setup and maintenance - Multiple points of potential failure / balance on hand discrepancies - Overhead means it is difficult to react quickly to changing market conditions • Lack of visibility – information stored in different systems / updates not instantaneous • Dependency - “Locked-in” to the 3PL provider because of difficulty interfacing to a new provider © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 6
    7. 7. 3PL Architecture Material Master Sales Order Sales Order Changes Production Order Production Order Goods Issue Production Order Goods Receipt Material Move Material Move Update Carriers 3PL Purchase Order SAP -FedEx Purchase Order Change -UPS PO Goods Receipt Soft- Delivery Document -TNT Goods Issue ware Shipment Information Material Moves – 3PL Generated Return Delivery Return Delivery Goods Issue Shipment Number Schedule Agreement Schedule Agreement Receipt Balance on Hand © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 7
    8. 8. SAP Software Logistics Benefits • One common platform • Simplify the supply chain • Rapid deployment • Cost avoidance • Reduce number of SOX monitoring places vs. 3PL WMS • Stronger negotiating position with 3PL’s – cost reduction if they can reduce their IT support costs • No more 3PL “lock in” © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 8
    9. 9. 3PL Architecture with SAP Software Carriers SAP (FedEx Soft- UPS TNT) ware Shipment (via XSI) * Tracking performed through web access on parcel tracking Shipment Number* tab of the delivery header © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 9
    10. 10. 3PL © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 10
    11. 11. SAP Software © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 11
    12. 12. 3PLs with SAP Software © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 12
    13. 13. Early Concerns • Capability - Is SAP software appropriate for a 3PL environment - Can we run operations on “standard” SAP software – how much customization? • Deployment strategy - How long will it take, resource requirements / cost • 3PL impact - Will dictating the WMS be a deterrent to 3PLs doing business with us in the future • Realization - Will we realize the savings and benefits projected © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 13
    14. 14. Capability © 2009 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 14
    15. 15. Capability Review – External Analysis Gartner Magic Quadrant Comparison SAP Extended Warehouse Management (SAP EWM) Current 3PL WMS Tools © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 15
    16. 16. Capability Review – External Analysis • Gartner “Magic Quadrant” key findings - WMS is the most modified part of the supply chain - WMS market is going through consolidation - SAP EWM application has a strong track record - SAP software has a strong integration to overall supply chain © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 16
    17. 17. Systems Deployment Comparison 3PL Systems SAP Software Logistics • Activities to deploy • Activities to deploy - Creation of storage location within plant - Creation of warehouse within plant - Deployment of 3PL WMS - Minor configuration changes from - Configure interfaces copied warehouse - Minor testing of SAP software changes - User ID’s set up and role allocation - Major testing of interfaces - Minor testing of SAP software changes - 3PL support - Interfaces to Carriers - SAP software to 3PL reconciliation processes and resources - Infrastructure - Interfaces to Carriers • Ongoing running costs for 3PL • Time to deploy 2-3 months • Time to deploy 2 weeks to 1 month © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 17
    18. 18. SWOT Analysis – SAP Software Logistics Strengths Weakness  Fully integrated with SAP software  Enhancements may be limited to SAP software release schedule  Reduced interface costs & simpler architecture  Requires secure access to client’s network from  Reduced 3PL costs warehouses  Single IT support team  Testing for non-logistics upgrades  Drive standard security policies  Logistics supply chain, order & shipment status information integral part of toolset  Removes 3PL dependency for operations & IT  3rd party staff transacting on SAP software services  Warehouses down during SAP software  Numerous SAP user groups to understand how maintenance other SAP users manage inventory in 3PL environment  New warehouse could be deployed in 2 – 4 weeks  Easier to drive common process & standards  Easier to change 3PL providers Opportunities Threats © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 18
    19. 19. Deployment © 2009 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 19
    20. 20. Deployment Scope Belfast London Switzerland Beijing Toronto Paris Nashville Tokyo Israel Raleigh Shanghai Mexico Miami Hong Kong Singapore Australia New Zealand © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 20
    21. 21. 3PL Site Volumes Pilot Sites Post- Pilot Sites 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Nashville Belfast 1 London 2 London 1 Mexico (Greenfield) Paris Switzerland Belfast 2 Raleigh Israel New Shanghai Zealand Tokyo Hong Kong Beijing Miami Singapore Australia Toronto Based on # of outbound deliveries for 3PL sites May to July 2008 © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 21
    22. 22. Footprint - 100% standard SAP EWM…except for: • Forms - Putaway label, pick list, pack list, pack label, manifest • Custom RF transactions - Storage unit bin relocate - Material staging area scanner - RF capabilities • WebSAPConsole • Integrate existing RF hardware with SAP software © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 22
    23. 23. Footprint – Newer SAP Software Functionalities - Dynamic cycle counting • Required new OSS Note: 1162196 - Pre-picked handling units • Handling unit storage after packing - Does not require extensive handling unit configuration - Facilitates receiving by package in downstream sites • Required new OSS Note: 1287760 - XSI for carrier integrations • Two way interface for FedEx and UPS • Single outbound interface to TNT © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 23
    24. 24. Realization & 3PL Impact © 2009 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 24
    25. 25. SAP Software Logistics Pilot Review BACKGROUND • Two sites deployed • Approximately 29% of shipping volume transferred to SAP software as part of pilot Pilot Goals Pilot Results Reduced implementation costs ~100K reduction per site Reduced time/resources to implement No interface testing/3PL testing resources not required Improved visibility to warehouse info by whole supply Visibility to pick/pack status as well as packing details chain Shorten transaction time Min of 30 minutes cycle time removed (interfaces) Removal of interfaces Interfaces removed No impact to warehouse operations Pilot sites had no service impact © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 25
    26. 26. Cost Reductions • IT - Hardware savings - no need for hardware to support 3PL WMS - 3PL WMS software license fees - B2B integration maintenance cost • Future deployments - Smaller team - Less testing since no interface testing required - Less time on site (lower travel expenses) • Personnel reductions - IT support - Failed flow/balance on hand reconciliation © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 26
    27. 27. Client Operations View • Minimal disruption during transition • Stock balances accurate; no reconciliation required • Picking and shipment requests are triggered from SAP software dates directly. No additional emails. • Warehouse visibility to order managers eliminates many potential questions • Forms processing and re-processing simple to perform • Access to SAP software (for both terminals and RF) uses managed access through the firewall; authentication which is secure, robust and easy to install © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 27
    28. 28. Warehouse Operations View • Transition of warehouse staff to SAP software process using RF terminals was issue free; training and ongoing support was ‘at the right’ level. • The SAP logistics tools are seen as having the same level of functionality, and implementation did not reduce warehouse efficiency. • Operations is intuitive. • Response time and issue resolution is good. • Dates are triggered from SAP software dates directly. No additional manual instructions or emails are required. © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 28
    29. 29. Take Home Thoughts • Combining 3PL logistics with SAP software can provide the benefits of each solution to an organization • Template methodology speeds implementations and standardizes processes • Significant cost reductions can be realized by using SAP software at your 3PLs • Supply chain integration and visibility are both improved using a single system (SAP software) for ERP and logistics © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. 29
    30. 30. Thank you. Contact Information: Bruce Rishel (214) 215-5743 bruce.rishel@ps.net Proprietary and confidential. © 2006 Perot Systems Corporation. All rights reserved. All registered trademarks are the property Perot Systems Corporation. All rights reserved. All registered trademarks are the property of their respective owners. © 2006 of their respective owners. 30

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