Academy of Better Business

FM Logistic: SAP at an international logistics service provider

More than a corporate template

Huge diversity of the used IT tools is a characteristic feature of the freight forwarding and warehousing industry. The implementation of the SAP system in such enterprises as FM Logistic is due to the need to integrate all solutions in order that SAP becomes a consistent reporting and management platform for the whole company.

From transportation to co-manufacturing

Majority of the large logistics and freight forwarding companies that operate today have long ago gone beyond mere transportation services from which they usually started their operation. It was in the same way in FM Logistic that now offers many additional services connected with a broadly defined supply chain.

In Poland, FM Logistic has nine modern logistics platforms with the warehousing area of 450 thousand square meters with 500 thousand pallet places. Apart from typical warehousing services, the company provides many additional and specialized distribution services.
Domestic and international transportation is provided via a fleet of 1200 vehicles, among which, beside tarpaulin-covered vehicles, there are also thermal-insulated and refrigerator trucks.

Additionally, transportation services include deliveries in a controlled temperature and specific services (e.g. transport of pharmaceutical products, shuttle transportation, cross-docking).

The demanding market expects flexibility and support in many aspects of a broadly defined supply chain from the logistics service provider. Therefore, co-packing, i.e. execution of orders for packing, re-packing and preparing the promotional packaging sets, in the FM Logistic’s offer gains more and more popularity.

As the first logistics company in Poland, FM Logistic also provides a co-manufacturing service, i.e. assembling of goods (e.g. computers) from parts sent from different manufacturers exactly to specific orders.

In the service provision, the company applies the latest achievements in work organization and the most modern equipment and technologies. They include many IT solutions. FM Logistic designs and develops multiple IT tools supporting the logistics process management. It also uses specialist supply chain applications.

The company uses e.g. its own real-time warehouse management and goods flow tracking system, the tool for guiding and controlling the supply chain allowing to locate a specific product, determine the order execution stage, predict the disruptions in transactions in real time, etc. and the application for planning and organizing the transportation operations.
 

Difficult decision

Since 2007, at the company’s French headquarters, the SAP system is a consistent financial platform embracing the whole business and is used as a source of the reliable management information.

Less than a year after the system launch in France, already at the beginning of 2008, it was decided to roll out the SAP corporate model to FM Logistic Poland.

In the first stage – in spring 2008 – the employees of FM Logistic and BCC consultants performed a gap analysis of the corporate model and the needs of the Polish company, and worked out a blueprint concept of the target solution.

However, the analysis showed that the adopted speed of works was too fast. The French system template did not stabilized, and some business processes were not consistent enough for the whole corporation. Additionally, the whole documentation of the original implemented solutions was missing.

In that situation, it was decided that the risk of a possible failure of the rollout to such a large company as the Polish branch of FM Logistic was too big. After the preparation of the blueprint concept, project works were suspended for nearly half a year.

Research carried out in 90s in the USA showed that every second frozen IT project terminated definitively. Statistics for Europe showed the same. The market practice shows that such “freezing” of big IT projects often ends up with the abandonment of works. Usually, the deadlines for restarting the project are postponed several times until eventually there is nothing left but to admit the failure and either to resign from the project or to start it from the beginning.

However, in case of the implementation in FM Logistic it was different and after several months, according to the plan, the implementation works were restarted.

Why was it that way? The great determination of the French owner and the management of the Polish company to continue the project, the efficient and fast reconstruction of work teams (almost entire project personnel has changed) and first of all the business need were the reason for resuming the SAP implementation.

Project organization

After restarting the project, the implementation works were executed in a slightly different way than assumed at the beginning. The system template worked out in France, which turned out not to entirely meet the business expectations of the Polish company, was changed and adjusted to its requirements, e.g. in the area of taxation, and to the local legal and business requirements. Within works, SAP solutions for the business area that is not supported in France at all were prepared.

Rollout projects usually involve many parties, different communication languages and different experience of participants that should be taken into account. It was in a similar way also in that case.

The SAP implementation in FM Logistic in Poland includes four engaged parties: company’s IT department from France supporting the system every day, the headquarters’ implementation partner as well as FM Logistic Poland and BCC holding the function of a local partner.

Three project managers watched over the project organization and coordination. It was decided that in such diverse environment English will be the project communication and documentation language – a foreign language for all project participants.
Experience of BCC in the execution of rollout projects, great engagement and motivation of all participants have to a large extent contributed to the project success.

SAP – one reporting platform

The implementation included SAP tools in the areas of materials management (MM), controlling (CO), asset accounting (AA), financial accounting (FI), and sales and distribution (SD). It is worth underlining that one of the first implementations of the new General Ledger in Poland took place within that project.

As mentioned already, the company uses many supply chain solutions. Integration of these tools with SAP was one of the biggest project challenges.

Within the implementation works, more than ten big and technically complex interfaces have been prepared, enabling the exchange of information between SAP and the supply chain management tools (among others the Oxygene system supporting the warehouse management with the Chainware application for transportation planning and optimization, etc.). An interface to the external HR and payroll system was also prepared.

Therefore, SAP FI and CO tools constitute one consistent financial reporting platform in which all relevant information on costs of services and company’s operational costs is available.

The integration of the supply chain management tools with SAP was also used as an excellent occasion for the inspection and refreshment of the whole IT infrastructure. Logistics applications were upgraded and adjusted to the technological requirements of the integration with SAP.

Alongside the SAP implementation, all business processes were inspected and optimized, which prepared the organization for a further dynamic development without the necessity to increase costs in the future.

A consistent reporting platform, combining all applications, allows to close the accounting period faster through a significant reduction of laboriousness of transferring the data between the systems.

The direct benefit of the implementation is also the alignment of the financial-accounting processes which allowed to gradually decrease the employment in the accounting department by about 20%, despite a constantly growing business scale.

Several solutions in the areas not covered by the corporate system template were also prepared within the project. These are for example SAP connections to the own gas station management system or the application for managing the own repair station.

FM Poland coordinates the work of several hundred transportation subcontractors. Connection of SAP to the systems for planning and settling their routes, managing of their fleet, managing of gas stations and registering the costs and payments resulted in a radical growth of effectiveness of FM operations and increase of the development potential in the future.

Launched in April 2009, the SAP system in FM Logistic Poland is currently a comprehensive solution combining all business processes of the company within one superior platform. A huge effort put in enrichment of the corporate template and its adjustment to the company’s requirements so that it met all business and functional expectations contained in the concept resulted in the system which currently may constitute the template for rollout to other countries. This is good news for other branches of FM Logistic in Europe.