The Bosch Group is a leading global provider of technology and services operating as part of a worldwide network focusing on research and development, manufacturing, and sales with 270 plants, as well as offices and regional subsidiaries in 50+ countries. The equally sophisticated transportation network includes inbound transportation from suppliers to locations as well as outbound transportation to supply customers and its own subsidiaries. Each year, Bosch incurs transportation costs of roughly one billion euros, with road transportation making up 60%. This enormous sum promises a significant amount of potential savings.
4flow and Bosch use standardized transportation management system for global planning and operations
Bosch then decided to set up universal integrated transportation management and incorporate all 4 business sectors with a total of 19 divisions and many locations worldwide. This posed a big challenge since Bosch has a very broad spectrum of goods that need to be transported – from parts and systems for the automotive industry to wind turbines. This variety requires a lot from transportation management processes. As a provider of consulting, software and 4PL services, 4flow supported Bosch not only with the as-is analysis but the development and implementation of the new strategy as well. The focus was on continuous planning and optimization of transportation and routes to reduce costs sustainably.
Planning ahead and improving continuously
Internationally, a TMC is being set up in each region enabling supply chain experts at Bosch to continuously optimize the transportation network in each region by relying on the integrated transportation management system (iTMS) from 4flow. The tasks range from planning and implementing new routes to daily execution and transportation coordination along with freight invoicing, including auditing and reporting. The Bosch team is supported on site by specialists from 4flow. By implementing the iTMS, the efficiency of organizational structures, processes, and service providers can be measured by using key performance indicators. As a result, the transportation network is optimized dynamically on a continuous basis and adjustments to fluctuations are flexible. The new setup also enables better identification and use of transportation consolidation effects. Previously, for example, milk runs were only used by some of the plants. The consolidation of shipments promises the largest optimization potential for plant to plant transportation. The standardized system also simplifies the invoicing process. "The success factor for integrated transportation management is that routes are optimized on a daily basis. The best transportation concept for each shipment is selected and demand can be adjusted on short notice. Let’s say a particular shipment takes up only 20% of a truck’s capacity. If possible, we would add other materials to the shipment earlier than planned or would transport the materials as less than truckload or a milk run,” Rainer Schmitz, project manager at 4flow, said.
Projects in Europe, China, India, and South America
The individual plants and locations are all linked by interface to an EDI manager that passes the data to the iTMS. One advantage of this is that any ERP system can be integrated at a low cost using a universal interface. In order to increase the overall acceptance of the new organizational setup and the processes including the new IT system around the world and cover many transportation modes early on, Bosch and 4flow implemented a pilot project with 3 European locations, parallel to a pilot project with 4 locations in China, prior to the roll-out. The logistics markets vary considerably: In Europe, there is a broad spectrum of mid-sized to large service providers, while in China there are many small carriers that typically operate as subcontractors for large logistics service providers. The analysis of the transportation network in China showed that out of 14 different scenarios, a setup consisting of 8 cross-docks in 4 regions including North, East, South and Middle/West proved to be the optimal network with the highest potential cost savings. Despite different market conditions, the partners were able to implement the new strategy with one common process and IT standard in those regions in just a few months. During this time in Europe, 4flow integrated 3 plants, 1,200 origin-destination pairs along with 4 large logistics service providers and 16 smaller ones. In China, a total of 4 plants, 3,500 distribution partners, and 3 logistics service providers were implemented successfully. The objective of optimizing transportation networks and thereby reducing costs can only be achieved through the transparency provided by a globally integrated system. “A common critique concerns higher inventory costs when we consolidate capacity and have suppliers deliver once a week instead of daily. Inventory costs and transportation costs, however, are factored into the total cost of ownership in equal parts. Aside from this, inventories on the whole can be lowered thanks to exact planning since less safety stock and replenishment time need to be allowed for,” explains Rainer Schmitz.
Achieving success with change management
One of the keys to the quick and successful implementation was change management geared to specific target groups. Due to the cross-functional requirements and the effects of the necessary changes, project team members from various functions had to be integrated and trained. To ensure quick acceptance, individual users are trained only on the modules and processes that they require. The optimization of the network and the implementation of new processes along with inbound and outbound routes in just 6 months set a new benchmark. In achieving this together with 4flow, Bosch is now benefiting from the project experience and has already met its cost-savings objectives. Bosch and 4flow continued the implementation in Brazil and India in addition to other European and Chinese plants. Air and sea transportation is also being integrated into the TMC. A global network is built.
At a glance
Customer: Bosch Group
- Manufacturer and supplier
- 270 plants, along with offices, and regional subsidiaries in 50+
- Develop and implement an iTMS
- Integrate all 4 business sectors and 19 divisions and implement multiple TMC globally
- Transportation cost savings > 10%
- Increased transparency about structures, processes, service providers, and costs
- Successfully onboarded 7 plants, 1,200 transportation lanes, 23 logistics service providers and3,500 sales partners in Europe and China in just a few months
Success story Bosch