M.Video optimized work with logistic partners due to updating of SAP TM

2019: Planning more than 2 thousand routes a day

According to information for May 30, 2019, the large-scale management system for logistics implemented in "M. by Video Eldorado" based on SAP Transportation Management helps the company to plan more than 2 thousand routes a day.

2017: Updating of a management system for transport based on SAP TM

The M.Video company in February, 2018 announced updating of a management system for transport on the SAP TM platform (Transportation Management) to version 9.3 and completion of the procedure of its stabilization.

According to M.Video, the company is the largest Russian retail partner of SAP applying transport module to planning and the organization of transportations. So, in 2017 transportations on replenishment of objects of the retailer, warehouses and shops made more than 1.5 million m3. Besides, more than 2.5 million client deliveries were executed.

Effect of application of SAP TM

Within SAP TM when settlings with suppliers the retailer passed to an automated system of approval of carrier cost and acoount reconciliation, using functionality of the portal of carrier. With its help it is possible to create the list of routes and to approve cost on a scale of charges. After reporting period the partner confirms the amount of payment. Such approach allows to make the procedure of calculations exact, transparent and to reduce terms of payment confirmation of logistic accounts by a third, specified in the retailer.

Services of client delivery also received a number of updates. There was an opportunity to draw on online maps of a zone and to load them into a management system for transport that simplified process of determination of wage rates for work with contractors. Moreover, the module allows to control quality of client delivery — the special software in real time defines the location of the forwarding agent and traces an order status. By estimates of the company, for 2017 client deliveries of M.Video became for 20% more exact on time.

Updating results

As a result of updating of a system the retailer optimized planning processes and executions of delivery routes of goods to end users and also settlings with partners.

In particular, on a withdrawal of M.Video, the updated solution based on SAP allowed to reduce terms of the organization of transportations by one and a half times. In particular, 9.3 module SAP Transportation Management updated to the latest version are responsible for planning, coordination and payment as trunk transportations (replenishment of warehouses and shops of the company), and client delivery.

M.Video also implemented additional service which creates routes on the basis of data on starting and endpoints, available transport and different restrictions. As a result, the most rational routes of trunk logistic transportations between the central and regional warehouses of the company in terms of costs and also shops are formed.

The updated module SAP TM will allow the company to make transparent process of pricing of transport services, to increase efficiency of expenditure of means and control of process of delivery and also to optimize work with suppliers — Dmitry Krasyukov, the deputy CEO of SAP CIS noted.

2014: Control automation by transport logistics

On June 17, 2014 the NOVARDIS company announced control automation by transport logistics of M.Video by means of SAP implementation of TM.

Project Tasks

Earlier for planning of transportations in M.Video the functionality on the SAP ERP platform was used. However, in connection with active development of online sales and high growth rates of retail network, the existing solution ceased to correspond to business needs.

"Because of restriction of the old solution on a total quantity of the processed orders for delivery we were forced in the period of "a high season" of sales to involve third-party contractors in routing. It inevitably attracted decrease in the service level of clients and increase in costs, – Irina Dementieva, the director of supply management by distribution and logistics of M.Video noted. – The new schedule system and managements of client deliveries based on SAP TM already a month of commercial operation later passed test "a high season". The company passed it with increase in a share of the satisfied clients and growth of indicators of timeliness of delivery across the city of Moscow".

Project Results

The quality of routing of client delivery grew including thanks to transition from planning to the address to planning on geographical coordinates using specialized services. During the project experts of NOVARDIS analyzed possibilities of several external GIS-applications on a precision rate of assessment of coordinates for Moscow and other regions of Russia. The solution implemented in M.Video optimum combines advantages of different GIS services. Besides, in SAP TM dynamic work with the card, interactive distribution by waves of loading and automatic control of observance of temporary parameters of delivery is implemented.

Transition to work to SAP TM considerably changed business planning process and controls of transport. In a new system automatic optimal planning of regional transportation is implemented. The principle of cost minimization with observance of requirements to utilization of machines in the conditions of restrictions of a transport network is the basis. It also allowed to reduce influence of a human factor on such processes as the competitive choice of carriers on routes, calculation and control of freight costs, claim activity. Only due to automation the quantity of at the same time analyzed routes according to contracts with carriers – more than 2 thousand options increased five times. Introduction of transport zones increased quality of planning, and use of freight zones gave the chance to manage more effectively expenses of the company.

In SAP TM selection process of partners on the basis of KPI is regulated. Among others such parameters as timeliness of arrival on loading and unloading, a share of shortages and defects, execution of guarantees and a share of runs with commodity violations are considered. Similar automatic evaluation of quality of transport services of suppliers provides transparency and economic feasibility of the choice.

Information exchange with partners is implemented via the web portal and managers of the company can interact with suppliers of transport services and couriers more effectively. In the SAP TM system control and calculation of guarantees of partners is conducted: from planning of guarantees and confirmation of carrier before processing of answers and formation of documents. As a result of high extent of automation the general time of calculation of guarantees was reduced by 6 times, and the term of their statement – by 4 times.

For increase in effective management of regional transportation and client delivery within the project the specialized module on tracking of events of business processes – SAP EM (SAP Event Management) is implemented. The staff of M.Video can control the statuses of transportation and processes of a warehouse, to quickly obtain information and to react to events within planning and accomplishment of transportations. It allows to increase significantly the accuracy of calculation of a freight, to control penalties, idle times, to provide fast reaction to breakdowns, violations in work of warehouses of 3PL-operators and delays of machines on routes.

"With implementing solution the M.Video company received easily scalable information platform for process automation of transport logistics having sufficient power reserve for support of growth of the company. Thanks to the automated jobs for our employees and partners we shifted all processes in a system that allowed not only to accelerate them, but also to make is more transparent and it is more clear for all participants", - Anton Korneev, the project manager of SAP implementation of TM in M.Video noted.

"The management system for transport belongs to the category business and critical for M.Video company: any failures in its work could entail significant losses of profit. To minimize risks, at a stage of trial operation SAP TM parallel operation on the "new" and "old" solution was carried out. At the same time the permanent assessment of the received results in both systems and their comparison was carried out. Only after results of operation of the "new" solution reached target indicators, the "old" solution was replaced", – Konstantin Frolov, the chief executive of NOVARDIS told.

"The project in M.Video company – strategic for our company. This first SAP implementation of TM in Russia of such scale. The solution implemented by NOVARDIS allowed to receive powerful results for business of retail network even for the small period of use - to reduce transportation costs and to increase quality of service", – Mark Roytenberg, the head of the Moscow office NOVARDIS emphasized.