Freight cost optimization at Winkler+Dünnebier

For many companies, logistics costs run at ten percent of revenues. There means there is a great deal of unused optimization potential, for instance when choosing the correct shipping type or the automated invoice clearance. IT-supported solutions for freight cost optimization quickly pay for themselves, as evidenced by the new Mercoline SAP M.ShippingRates add-on. 

Winkler+Dünnebier GmbH from Neuwied, Germany, a mail and hygiene solutions specialist company, ships several hundred packages every week to customers all over the world. The company uses the Mercoline SAP add-on M.TransportCommunicator for shipping. Six months ago, it also began using M.ShippingRates, a new application for freight cost optimization that makes it possible to precisely calculate freight costs in advance. M.ShippingRates automatically checks the rates of a variety of different transport service providers (TSP). It bases its calculation on the size and weight of the shipment, as well as the individual terms the shipper has agreed with its TSP. Naturally, the  application also helps in the choice of the most suitable TSP. Winkler+Dünnebier Logistics Manager Uwe Peine reports, “This way we already know the actual freight costs when the shipment goes out. And we also save a great deal of time later on invoice clearance”. Before this, employees had to manually check dozens of invoices every month. Now invoices are scanned into the SAP system as CSV files and compared with the M.ShippingRates costs calculated in advance. If there are deviations, a traffic light signal warns employees about individual cases where a manual check is needed. All other invoices are automatically forwarded by the system to the accounting department as orders. Mr. Peine tells us, “We save six man-days per month. As a result, the investment in the add-on is recouped within only eight months. We are very satisfied with it, and I must say, I haven’t heard of anything comparable”.

Winkler+Dünnebier could teach other companies a thing or two. Many other businesses are currently struggling with a lack of transparency and administrative work overloads in their freight costs. With no help from IT, they’re fighting a losing battle; the different shipping rates among various TSPs are difficult to comprehend. “The result is that many shipments aren’t sent out in the ideal way”, says Jan-Willem Jansen, a logistics processes optimization consultant from the Dutch consultancy firm ProQim. He continues, “For example, replacement parts are often shipped express, even though they’re not urgent. In many cases, it would be enough to send out shippings via a truck once a week, one that the company has already booked anyway”. This is precisely where Mr. Jansen sees the greatest savings potential in logistics. “It’s not really effective to try to reduce prices only through renegotiation. The margins for TSPs today are simply too low”, he explains. Mr. Jansen is always looking for at least 15 percent efficiency gains in his consultancy projects. He continues, “There’s much greater potential in the right choice of shipper and shipping type”. M.ShippingRates can truly help employees in shipping departments to reduce their workloads, as the add-on supports them with the right choice of shipper and shipping type every time. Unnecessary Express or Overnight costs can usually be avoided this way.

Dominik Langefeld from Mercoline declares, “The user only has to enter the recipient along with the size and weight of the shipment on the input screen. He or she can then immediately see how much each TSP charges”. In combination with the M.TransportCommunicator the system can even use the tracking data later to determine whether or not the TSP actually kept its promises, i.e., whether a package genuinely arrived with the recipient at the agreed time. Mr. Langefeld elaborates, “All of this is automatically entered into a table. This information can then be used by our customers, for instance in renegotiations with their TSPs”. Optimized shipping costs, automatic quality inspection and complete invoice clearance with a minimum of effort: these are only a few of the benefits of Mercoline's solution. It also helps with regular freight cost analyses, providing information on how many shipments are sent to which countries. The add-on is fully integrated into SAP and can be effectively combined with other Mercoline solutions such as M.TransportCommunicator (connection to TSPs), M.PackingStation (creation of Handling Units in SAP) and M.SecureTrade Entry Certificate (Entry Certificate management in SAP). In any case, Uwe Peine is convinced: “Whoever uses M.TransportCommunicator should also get M.ShippingRates”.