Good news in managing logistics. The tremendous investment into SAP’s Transportation and Execution Solutions is showing impact in the market. Besides the fact, that SAP is listed as the leading solution vendor in Supply Chains now a few years by GARTNER, also ARC is ranking in Supply Chain solutions SAP consistently as number 1 in general, with specific insights in various industry segments. Well, Supply Chain Execution has been somewhat a seperate area to dive into and we saw that in the past specialized niche vendors without significant market share had been successful in providing niche solutions to Tier 1 – Tier 3 customers across all industry segments.
In it’s recently published Global Market Research Study on Transportation Management Systems ARC (Authors: Steve Banker, Clint Reiser, Neelam Singh) rated SAP also as number 1 for Transportation Management Solutions. Interesting enough to say, that ARC raised it’s forecast for revenue opportunities for the next years even because two of the top solution vendors grew significantly faster than other (average) product vendors in the solution market, SAP being the leading provider now. These are significant signals, since it shows the dynamics in the solution space and the demand growing for strong end to end solutions in transportation management, especially in the Tier 1 segment.
In the past, even SAP customers had been looking for functionality being provided by niche vendors or best of breed suppliers in that space. That is changing drastically. SAP’s solution strategy is three (plus one) fold:
1 – Offer a highly integrated, scenario driven solution for the classical enterprise functions like Sales, Distribution/Replenishment and Procurement addressing enhanced process support, higher flexibility without actually having the need to re-implement current ERP based processes. That promise from SAP is so strong – it sometimes can even become a thread from a business process re-engineering perspective, regarding innovation via software implementation projects, since it sometimes seems to be too simply, to just stay where you are today (as is), instead of challenging existing responsibilities and execution principles when it comes to change in general (to be).
2 – Offer an open, well-connected networking solution for logistics and transportation management. In SAP TM, information exchange and collaboration is purely based on open web services, following SAP’s Enterprise Service Repository (ESR) concept, in publishing and generalizing “interfaces” beyond traditional data exchange. The service architecture is always bi-directional, expecting not just only a technical confirmation, but – like you would expect in a good conversation with your business partner – expecting a response with added value.. (“can you do the shipment for me?” – “oh yes, I will bring you these containers….”)
3 – Last, but not least verticalization. This has different aspects, and for sure it is the industry focus, most companies would look at immediately. Looking at SAP’s references in the logistics industries (global forwarding, ocean liner business, regional logistics and carrier services) is high-lighting again the solution’s capabilities, not just to process ERP-driven requirements out of the box, but in fact operate global logistics operations, much more focusing on logistical activities, than only on sales orders or deliveries. Besides that, the more than 20 years of experience in shipping and receiving goods through supply chains in Consumer goods, Retail, Automotive and Chemicals, just to name a few, shows how deep the process design has been driven to provide a really sustainable platform.
4 – Finally, not to ignore, as it is always the key element for any solution decision: how deep is the functional depth of it’s individual components!? Financial aspects, optimization capabilities on routing, scheduling, loading, prices, carrier constraints, visibility in execution, cost distribution across multiple deliveries/orders, sales org being consolidated in one container, truck load or sub-contracted shipments are key requirements, where SAP has great examples already active and running productively.
So it is even more important to analyze and design future state scenarios before looking at the product details. To define the future state means to manage a lot of change from a process, user and education perspective, all the way from implementation to go live and is a critical success factor to measure the success of an implementation project. But all of that needs to be directly related to the key business drivers and aligned with the companies vision for logistics.
What we get analyzed by ARC’s team is a great source of detailed market insights and comparison on where niche vendors work, compete and how far the mentioned areas are addressed by SAP out of the box. The growth of SAP in that space shows the positive and strong investment by SAP to target all these goals, with a continued strong roadmap for the upcoming years. I am already interested what beyond the current TM 9.0 will come in the upcoming release TM 9.1 this fall, as it will address all 4 segments again.
We will see deeper and more sophisticated scenarios for order management and procurement, sophisticated features in planning and load design and more details from a financial and contract management perspective. Already at ASUG SAP presented again an updated roadmap of the overall supply chain execution solution, showing Contract Procurement, Parcel details, Dock Appointment Scheduling collaboration capabilities and a heavy investment into Rail needs for shippers and for logistics service providers. I like what I’ve been told by one expert on the SAP team: “Best of breed? SAP is best of breed!”
Congratulations SAP team!