Success Story
EPCOS AG
Optimized transport management for global
network of 23 shipping centers
Software, consultancy and services for global trade and supply chain management
Annual metric tonnage worldwide: 45,000
Up to 60,000 consignments/month worldwide
Figure 1: Diagram of the EPCOS global flow of goods (simplified)
Optimized transport management for global
network of 23 shipping centers
EPCOS Sales launched an
ambitious project in recent
years to restructure its global
transport logistics. At the
heart of the project was
the introduction of a new,
standardized transport
management system for 23
shipping centers around the
world. The solution from
German software developer
AEB now ensures that customers and transport service
providers are seamlessly integrated into the EPCOS logistics
processes. The result: shorter
lead times and enhanced
supply chain performance at
significantly lower cost.
They’re found in nearly every electrical
manufacturing, consumer goods, IT
and electronic device: components
and communications, and mechanical
such as capacitors and sensors. An
engineering – which EPCOS supplies
automobile may contain nearly 10,000
either directly or through wholesalers
such components, and our mobile
and distributors that resell a wide
phones, fluorescent light ballasts,
selection of EPCOS products.
notebooks, and wind turbines couldn’t
processing electrical signals, protecting
Growing customer demands and
rising cost pressures
electronic circuits, and ensuring energy
“Our customers have very complex
supply.
logistical needs,” notes Gerhard
run without them. They are critical to
Hofmann, Manager for Information
EPCOS, a leading supplier of such
Technology and Logistics at EPCOS.
components, boasts a portfolio with
“From packing and labeling to docu-
over 100,000 different types.
ments and EDI messages, the logistics
The company, with some 25,500
processes must be configured to mesh
employees working in a close-knit
seamlessly with those of the customer.”
network of over 20 development
Strict contract language governs some
and production sites, generated
of the specific requirements. EPCOS
revenues of roughly €1.8 billion in
also faces intense competition, so there
fiscal 2013.
is tremendous pressure to cut the costs
of its global logistics operations while
Global logistics plays a key role in the
still satisfying high performance
AEB Success Story
success of EPCOS. EPCOS supplies
expectations.
EPCOS AG
some 20,000 customers around the
globe – including many leading global
Demands on the speed and flexibility
players in the sectors of automotive
of logistics are also growing – in
part because the company ties its
from 10,000 units to 100,000 units of
a logistics network that can make
manufacturing very closely to customer
capacitor A, otherwise we may have to
up the difference through short lead
orders and keeps its inventory as low
stop our production lines.” Coping with
times.
as possible in order to minimize fixed
this scenario generally means reallo-
capital and inventory costs. But
cating volumes from less urgent orders
Facing these growing demands and
EPCOS logistics must still be capable
in order to fulfill the urgent customer
challenges, EPCOS launched an
of satisfying customer needs if, for
request as quickly as possible –
ambitious project to reorganize its
example, there are last-minute
naturally with the appropriate level
transport logistics and supply chain
changes.
of quality and in keeping with the
processes. The heart of the project
customer’s specifications. This often
was the implementation of ASSIST4, a
That might happen if a customer calls
means bringing in the goods from
transport management system (TMS)
up and says “Please increase the order
more distant sites, so EPCOS needs
from German software developer AEB
that is used today to manage both
operational and administrative aspects
of transports.
The reorganization of the transport
logistics was broken down into
numerous smaller projects that EPCOS
and AEB worked on together for years,
mostly in succession but sometimes in
parallel. The key phases:
■
■
■
■
■
Reorganize shipping logistics
operations, extending integration
into customer processes
Introduce track & trace system
Consolidate number of transport
partners, tightly integrate carriers
Introduce global, enterprise-wide
freight cost management with
self-billing procedure
Merge shipping and freight
management with track & trace
processes into a single new TMS
Logistics structure of EPCOS
The global transport logistics of EPCOS
is closely aligned with its global production processes. The company currently
maintains more than 20 production
sites around the world, with a regional
AEB Success Story
EPCOS AG
emphasis on Asia and Europe. Each site
run smoothly to meet tight delivery
and, once approved by the customer,
focuses on the production of specific
deadlines and satisfy specific customer
centrally distributed to all sites
around the world.
segments of the EPCOS portfolio, though
demands,” explains Gerhard Hofmann.
there is some overlap to accommodate
“That’s why we decided over a decade
special requirements such as physical
ago to begin replacing the old in-house
The packing station is also where the
proximity to the customer.
system and optimizing our shipping
goods are packed into the shipping
processes with the AEB solution.”
packaging. This is where ASSIST4
EPCOS uses EDI to manage orders and
shines, automatically consolidating
confirmations with its key accounts.
Today, the shipping data is drawn
orders and creating sub-packages to
EPCOS receives delivery schedules from
from the SAP® host system into the
save shipping costs. Multiple orders
its customers, and the ERP system at
ASSIST4 shipping solution via IDocs.
by the same customer are linked at the
EPCOS runs an available-to-promise
ASSIST4 generates the picking lists, and
delivery note level whenever possible,
check with a shipping date that generally
the goods are transported according to
so the packer has the option to pack
matches the date requested by the
the person-to-goods principle to the
them together in a single box.
customer.
heart of the EPCOS shipping system:
Products are shipped around the world
the packing station. This is where the
“ASSIST4 also takes care of many packing
from the production sites in a two-phase
packing takes place – and where the
station tasks that would otherwise fall
transport chain (air/road transport
groundwork is laid for seamless inter-
to the dispatch office, such as printing
or ocean/road transport). The global
action of the logistics processes of
delivery notes and packing lists. This
flows of goods pass through four central
EPCOS and the customer.
saves trips and time,” says Sebastian
transfer points in Hong Kong, Singapore,
ASSIST4 guides the packing station
Japan, and Brazil. Here the goods are
worker from the product packaging
consolidated. European-bound ship-
level. A customer who orders 1,000 type
ments are then brought through the
A capacitors, for example, may plan
three import gates of Hamburg, Frank-
on using these articles for different
Simply faster:
integrated global trade
and logistics
furt, and Munich, where the customs
products and thus different production
In some countries, EPCOS has used
assessment processes are controlled.
processes. “This means that the ship-
ASSIST4 to integrate customs and export
Distribution to European customers
ping item may consist of ten different
management into its shipping processes.
is handled from these three points by
product packages, each with 100 units
This includes using the ATLAS system
channeling the goods directly into the
of the same capacitor,” explains AEB
in Germany or e-Zoll in Austria to auto-
networks of domestic transporters.
project manager Sebastian Zilm. “And
matically generate export declarations.
ASSIST4 assigns each of these ten
By integrating customs process
Shipping logistics extending to
the customer processes
product packages a different label, each
management, EPCOS accelerates its
with its own specific customer serial
supply chain and avoids the risk of
The basis for the EPCOS transport
number. This way, EPCOS customers
shipping delays caused by incomplete
logistics is the numerous logistics
can channel the capacitors directly
or inaccurate customs declarations.
centers that EPCOS maintains around
into their production processes.”
the world, generally where it has its
ASSIST4 also ensures that EPCOS
production sites. “The picking and
EPCOS has defined up to 900 different
logistics are always in compliance with
packing processes there need to
labels in ASSIST4 to accommodate this
all export restrictions and anti-terrorism
type of customer demand. A complex
regulations. The transport management
rulebase developed to accommodate this
system from AEB features a Compliance
automatically calculates which labels
& Risk module that provides automatic
AEB Success Story
are printed how often in which process
background screening and a data service
EPCOS AG
and where they need to be affixed.
with daily updates for export control
New customer-specific labels can
regulations under German, European,
be created within just a few hours
and US law.
Zilm. The ultimate goal of EPCOS is to
and the number of packages. This
partners – primarily global players,
achieve the highest possible quality and
means customers are in the loop from
but also some regional providers. Each
minimize the error rate throughout the
an early stage, so they can plan with
site was given discretion to choose
packaging processes.
greater certainty: another aspect in
the transport service provider for a
which EPCOS integrates its customers
particular consignment.
When packaging is complete, loading
into its own logistics processes.
lists are created. This means consoli-
EPCOS decided to set up a “preferred
Next step: forwarder consolidation
and integration
forwarder pool” of selected providers.
forwarder, container, or truck in a
loading list and assigning a cargo
After optimizing its shipping processes,
trative overhead associated with contract
number. The loading list is sent via
EPCOS began reorganizing the way it
EDI to the relevant transport partner.
collaborates with its transport partners.
But it isn’t only forwarders who are
The initial objective was to greatly
notified by EDI. Customers also receive
reduce the number of transport service
AEB Success Story
EDI messages about their consignments
providers and streamline this link of
EPCOS AG
– including a qualified packing list with
the supply chain. EPCOS has been
information on products, quantities,
working with some 100 transport
dating the daily volume for a particular
This not only minimized the adminis-
tions are also issued when delays are
volume with each preferred forwarder,
Track & trace: proactive
shipping notices raises
customer satisfaction
making it possible to negotiate better
The close-knit IT integration of the
opportunity to warn the customer and
prices and reduce transport costs.
transport partners made it possible for
seek workarounds to ensure successful
Above all, EPCOS pushed IT integration
EPCOS to tackle the next big phase of
delivery.”
with its forwarders to further automate
the project: introducing a global track
and streamline the processes from
& trace system based on ASSIST4. The
Some key accounts also have direct
placing orders to invoicing.
aim here was to be able to track all
access to information from the track
consignments around the world through
& trace through the EPCOS website.
a central platform from the time they
They can track all their shipments
wish to be accepted into the pool must
are picked up at the logistics center until
across all transport legs or call up the
meet not only our pricing guidelines
they are delivered to the end customer.
dates and contents of all shipments
but also the technical requirements
All preferred forwarders and all EPCOS
linked to their customer number,
for integration into our supply chain
sites are integrated into the track &
for example – including the current
processes,” explains Michael Rühl,
trace solution. The system consolidates
status. Access to this data – directly
Head of the Global Shipping Commit-
consignment data from ASSIST4
through the online platform or indirectly
tee at EPCOS. “What this means, for
Despatch with status updates (IFTSTA)
through Sales or Customer Service –
example, is that data is not exchanged
from the forwarders and presents this
has led to much higher customer
in the proprietary formats of the trans-
detailed status data for each delivery
satisfaction.
port service providers, as is normally
note. “ASSIST4 functions here as
the case. Instead, we’ve defined our own
the event-tracking system,” explains
negotiations, quote management, and
monitoring, it also meant a greater
“All transport service providers that
registered at certain milestones,” notes
Gerhard Hofmann. “This gives us the
global IFTMIN for electronic forwarding
Sebastian Zilm. “The software logs
How well are transport partners
performing?
orders, for example, which all transport
both the expected and actual occurrence
In addition to improved customer
partners must use.” Status updates
of events such as loading, arrival at
service, EPCOS is also using the data
must also be submitted in a defined
hubs, or final delivery for trackable
from the track & trace system to
format, even though the AEB TMS has
objects such as the delivery note,
monitor its transport partners. Are
the flexibility to handle all formats.
consignment, or package.”
consignments arriving on time? Are
The heaviest users of the centralized
service level agreements being upheld?
Not all the former transport partners
track & trace system at EPCOS today
ASSIST4 provides answers to these
were willing or able to comply with
are Customer Service and Sales. In the
questions and more. The solution
these technical requirements. Today, the
past, these departments had to call the
also lets you define and monitor key
preferred forwarder pool comprises
appropriate shipping point whenever a
performance indicators. Powerful
18 transport partners that handle the
customer wanted to know the current
statistics make it possible to produce
entire spectrum of logistical transport
status of an order. Often, the shipping
and distribute very detailed vulnerability
services from surface, air, and ocean
point was in a different time zone and
analyses.
freight to parcel services and together
no one could be reached. And even if
account for 80 to 90 percent of the
someone at the shipping point was
“Such analyses are an important
transport volume of EPCOS.
available, the information still had
argument when negotiating new terms
to be requested from the forwarder
with carriers, for example, since they
– a complicated, time-consuming
document the actual level of perfor-
process.
mance,” says Michael Rühl. “They help
us strengthen our negotiating position
AEB Success Story
Today, thanks to ASSIST4, Customer
and achieve fair and appropriate
EPCOS AG
Service and Sales have round-the-clock
conditions. This also makes it easy
access to all status information through
to identify which partners are
an online platform. “Proactive notifica-
especially strong and reliable, then
ASSIST4
Shipping point 1
ASSIST4
Shipping point 2
Consignment data
IFTSTA
Credit
Payment
SAP®
FI/CO
Consignment data
IFTMIN
Service provider
Bank
account
ASSIST4
Shipping point …
ASSIST4
Communication
Management
System
Consignment
Transport
Statistics
pool
Calculation
Credit data
Credit
Credit data
ASSIST4 Self-billing
Figure 2: Design and process chain of self-billing at EPCOS
give preference to such partners –
preferred forwarder pool and uniform
“This freight invoice audit was very
thereby further optimizing the
data format, maintaining a high quality
time-consuming, leading some sites to
logistics processes.”
of data requires ongoing efforts – such
outsource the task. This in turn yielded
But the success of such track & trace
as joint workshops with transport
significant external costs each year,”
systems depends entirely on the quality
partners” concedes Gerhard Hofmann.
explains Sebastian Zilm. This led EPCOS
of the information they are fed – above
It’s not always easy to convince
to introduce self-billing wherever possible
all, the status updates from the trans-
transport partners how important
and feasible (see Figure 2). Self-billing
port partners. The poorer the quality
this is. Exclusion from the preferred
means that EPCOS uses ASSIST4 to
of the data, the less acceptance from
forwarder pool is the only means of
calculate the freight charges itself, then
users. Customers who encounter
exercising pressure.
issues the forwarder a credit for the
amount. This makes it the responsibility
misinformation or no information
shipment end up picking up the
Self-billing replaces costly
invoice verification
phone again when they need reliable
The final phase in the reorganization of
information.
EPCOS transport logistics was freight
Today, the consignment data for the
cost management – above all, how
self-billing of all 23 EPCOS shipping
One problem with the quality of data
transport service provider services were
centers around the world – consignor
is that the regional variances among
settled. One of the greatest challenges
and consignee data, dimensions, weight,
transport partners can be extreme.
had been auditing incoming forwarder
package type, etc. – pass through the
Here it becomes obvious that many
invoices. The 23 shipping centers received
ASSIST4 Communication Management
global transport service providers are
stacks of paper invoices from the trans-
System to the central ASSIST4 self-
highly diversified enterprises with
port partners, and each site checked
billing system. The software checks
largely autonomous national entities.
its own invoices in a two-step process
which forwarder was used, what the
This leads to errors when data is
that addressed two primary questions:
service type was, and whether it was a
missing or the wrong data is sent – an
1. Content check: Is the consignment
in-house number from the forwarder
from EPCOS and was the merchandise
instead of the EPCOS delivery note
/ delivery note actually sent with the
number, for example.
transport service provider?
AEB Success Story
2. Price check: Does the invoiced rate
EPCOS AG
whatsoever when checking on a
“Even though EPCOS has established
a very good foundation through the
match the negotiated rate?
of the forwarder to check the accuracy
of the credited amount.
The challenge of freight
cost management
One provider might calculate the price of
a consignment according to weight and
zones, for example, while another might
Freight cost management is a challenge
apply volume weight and distance. In
many companies face. The price patchwork
practice, they often combine a whole range
among transport service providers turns
of parameters for even more complex price
simple freight cost calculation into a
structures. What’s more, each transporter
complex task in many companies. Rates
can add on or factor in fuel surcharges,
and cost models differ from carrier to
tolls, handling, extra packaging, load
carrier. Freight tariffs might be based on
devices, or hazardous goods. There is
volume, weight, or distance, for example.
almost no limit to the complexity.
Charges can be negotiated per transaction
or as a flat rate for a given period.
EPCOS has some 150 quotes in the
ASSIST4 Freight module, most from
The unit of billing might be the package,
transport service providers in the
individual consignment, container, or
preferred forwarder pool. These quotes
truckload. Other key factors affecting
cover nearly every transport scenario at
freight costs and thus critical to price
EPCOS – whether air freight from Asia
models include the size of the consign-
to Europe or road transport between
ment, number of transfer points, freight
two sites in Germany.
volume, transport distance, package size,
freight network structure, and selection of
the transport chain.
multi-stage transport. ASSIST4 then
consignments to different customers
TMS also gives EPCOS an excellent
checks this information against the
are sent out on the same aircraft, for
source of data for consignments –
quotes and rates stored in the system
example, the software combines all
package weight and dimensions, for
for the forwarder in question and
the transport items with the same
example – and quotes.
calculates the transport costs –
route and airway bill number when
And EPCOS goes one step further with
including those for each leg of multi-stage
calculating freight charges,” explains
ASSIST4: The integrated track & trace
transports. When the calculation is
Alexander Neuhäuser, Supply Chain
system lets EPCOS synchronize issued
complete, the software then issues the
Management / Project Manager for
credits with the successful consignment
credit and reports it to the SAP FI/CO
Freight Cost Management at EPCOS.
deliveries. This means that payment is
finance system.
This yields a greater volume or weight
issued only after the transport service
®
for each transport, which in turn yields
provider has transmitted the delivery
One major benefit: “ASSIST4 automat-
much better price scales or volume
status to confirm completion of the order.
ically consolidates multiple transports
discounts.
Currently, EPCOS uses freight selfbilling to manage a total volume of some
from one transport partner when
Good data is a good foundation
€10 million annually. But so far, the
By establishing the preferred forwarder
process is used primarily with logistics
pool, reducing the number of transport
partners in Europe – and even then,
service providers, and integrating the
only in countries where the laws make
AEB Success Story
TSPs seamlessly into its own IT systems,
it possible and feasible. An internal
EPCOS AG
EPCOS had already created the ideal
cost-effectiveness study has shown
preconditions for introducing the freight
that the process still pays for itself,
self-billing procedure. The ASSIST4
however. In addition to the strict cost
calculating freight charges. If two
benefits, there are also many quality-
Critical success factor
Achievement of objectives
related aspects that speak for freight
self-billing (see Table 2).
Time
Fast, automated billing in fixed billing periods
Direct and centralized cost information
Quality
Error-free, self-generated credits
Maximum consolidation effects
EDI communication with service providers
Automated, standardized issuing of credits
Flexibility
Fast response to rate changes
Use of various cost types
Ongoing monitoring of consolidation options
Expertise
Up-to-date, reliable freight cost information
(real-time cost transparency)
Centralization, transparency
User-friendliness
Integration of all freight cost information into a single system
Status information linked to the issuing of credits
Analyses and simulations
“The global consignment data gathered
through freight cost management also
give EPCOS a powerful foundation for
strategic and tactical transport planning
– especially since ASSIST4 can organize
this data for analytical purposes virtually
at the click of a mouse,” notes Alexander
Neuhäuser, highlighting another benefit
the solution offers. “The software can
aggregate the data by nearly all relevant
criteria.” This makes it possible to identify
the cost drivers in one’s supply chain,
Table 2: Overview of the quality benefits of freight cost management and freight
self-billing with ASSIST4 at EPCOS
for example, and answer the following
questions:
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How high are the transport costs for
supplying key accounts?
Which route accounts for the largest
share of costs?
How high are the freight costs by
shipping point or profit center?
seamless communication of the various
process through a standardized self-
applications and providing end-to-end
billing procedure, and in the track &
support of the transport processes, from
trace system through standardized
the placement of the order to invoicing,”
status updates.
notes Sebastian Zilm, summarizing
the project from AEB’s perspective.
“The optimization of transport logistics,
“The benefit to EPCOS stems from the
the implementation of a new AEB TMS,
Analyses of the trend over time are also
individual components of the solution,
and the increased integration of
important: How have the quantities
but the optimal effect is achieved only
customers and transport service
for specific routes evolved? And for
when they all work together.”
providers have paid off,” agree
specific forwarders? The consignment
Gerhard Hofmann and Michael Rühl.
data also provides the ideal basis for
And thanks to the new IT platform,
“We succeeded in drastically cutting
preparing requests for proposals. You
the transport partners and customers
transport management costs while
can analyze the flow of goods down to
are also integrated into the logistics
improving performance. Flexibility,
the package structure and identify
processes. Specific instructions for
availability, and on-time deliveries
which packages with which weight and
shipping labels and documents make
also improved – and our customers
dimensions make up the flow of goods.
it possible for customers to channel
have taken notice.” Siemens, one of the
This information helps transport service
EPCOS shipments into their own
biggest customers, recently awarded
providers submit precise bids, often at
processes and update their own
EPCOS Brazil the Diamond Prize for
lower cost, since it potentially eliminates
logistics to the latest status through
outstanding quality, service, and
uncertainty buffers.
shipping information from the track
logistics. LG, the Korean manufacturer
& trace system.
Happy customers,
excellent logistics
The TMS also allows transport service
“Shipping, track & trace, freight man-
providers to be highly integrated into
AEB Success Story
agement: EPCOS has implemented a
the workflow – in the shipping process
EPCOS AG
comprehensive transport management
through the transmission of forwarding
system with AEB ASSIST4, facilitating
order, in the freight management
of household appliances, also honored
EPCOS as an outstanding supplier,
Success through
collaboration
with special mention for extraordinary
on-time performance. Two of many
by close cooperation and mutual trust.
EPCOS also built up a high level of in-house
expertise with ASSIST4 to the extent that
A project of the magnitude of reorganizing
two of its employees have become true
customers that have benefited along
global transport processes and implementing
experts in the use of the AEB solution.
with EPCOS from the reorganized,
a TMS at all worldwide sites can succeed
high-performance transport logistics
only if the collaboration of the participating
These EPCOS-internal experts also organized
and integrated supply chain processes.
parties is organized professionally and the
the TMS implementation at many smaller
parties can rely on one another. To date,
sites, supported by AEB employees on remote
But reorganizing transport logistics
some 25 AEB employees have been involved
standby. For the initial installations and
is an ongoing process, of course, so
with the project. At EPCOS, the number of
at the larger sites, AEB colleagues were
EPCOS is already planning the next
employees impacted by the implementation
personally present, sometimes weeks
phase with AEB and ASSIST4. EPCOS
of the software – including the current
at a time, to help set up processes and
will work with its parent company to
end-users – has reached nearly 300.
implement the solution.
system to a logistics cost management
Both partners – EPCOS and AEB – were able
The accumulation of in-house expertise
system that will encompass incoming
to draw upon their many years of project
also proved useful to EPCOS for training
freight shipments and other logistics
management experience. AEB has its own
and support. The training sessions for the
costs as well as all invoice processing
project management guide and standards
EPCOS workforce followed the “train the
and auditing.
that establish the principles for successful
trainer” principle. The experts trained key
projects and define elements such as pro-
users and super users at each site, who
ject roles, tasks, objectives, coordination,
then trained the remaining users. The
and communication.
key users and super users work with
expand the freight cost management
the experts today to provide first-level
Both partners had already worked together
support, with AEB stepping in only for
with success on smaller projects for many
larger problems.
years, so the relationship was characterized
AEB Success Story
EPCOS AG
Overview of benefits from various phases
of EPCOS transport logistics reorganization
Shipping
Preferred forwarder pool
Track & trace
Freight management
Automatic fulfillment of specific
customer requests such as labels
and documents
Better rates and lower costs
through higher volumes with
selected TSPs
Faster information on shipping
statuses
Centralized, global request for
proposals
Lower costs through consignment
consolidation and sub-packaging
Lower administrative costs
for managing and supporting
transport partners
Proactive notification of delays
Central management and
maintenance of freight agreements, minimal maintenance
Data interchange with freight
system for automatic freight
cost calculation
Smooth and sophisticated IT
integration, standardized data
format
Monitoring of data quality and
transport partner performance
Cost reductions through transport
consolidation
Process acceleration through
integrated customs and export
management
Better customer service and
customer satisfaction
Automatic freight cost calculation,
less error-prone, simpler
Direct integration of shipments
into customer logistics/production
Invoice credits generated in freight
system
Cost transparency and
reallocation to profit center level
System for rating transport service providers by supply chain performance
AEB Success Story
EPCOS AG
V 1.2 | © AEB GmbH
AEB Success Story
EPCOS AG
At a glance
Customer
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Background
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Solution
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Result
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w w w.aeb.com
Name: EPCOS AG
Industry: Electronic components
Employees: About 25,500 worldwide
Up to 60,000 consignments/month
worldwide
Growing customer demands from
logistics
Too many different transport partners
Transport partners not closely
integrated with internal processes
Decentralized freight management
No IT support for consignment
tracking
Need for comprehensive transport
management solution for 23 sites
Number of transport partners and
IT links reduced
Freight management centralized
ASSIST4 Transport & Freight
Management introduced
ASSIST4 Visibility & Collaboration
Platform introduced
Cost savings through better rates,
transport consolidation, etc.
Smooth communication with
transport partners through IT
integration
Greater customer satisfaction as
specific customer requests are
fulfilled and proactive shipping
information is provided
Cost transparency