An Italian transportation company finds a green route to business growth

From its roots as a family business, this Italian transportation company has grown to become an international transportation and logistics provider, moving freight by road, rail, and sea to clients throughout Europe and handling more than 700,000 shipments every month.

During its international expansion, this transportation and logistics company has frequently reengineered and optimized its business processes. To support recent growth, the company is focusing on its transportation and warehouse management methods, to maximize efficiency and enhance customer service levels.

The company’s growth is driven both by attracting new business and building volumes from existing customers. Alongside operational efficiency, the company also wanted to fine-tune its customer service by developing better customer relationships, generating targeted promotional campaigns, and structuring new customer acquisition programs.

Fuel for change
The company’s legacy Hitachi Data Systems and Sun hardware, running Oracle databases, was unable to handle its growing transportation volumes or accommodate increasing requests for specialist, custom-designed logistics services.

The objective was to standardize processes that would allow the company to manage larger workload from its existing resources. At the same time, this company wanted to offer customized transportation services, which attract higher margins, and manage them as efficiently as the rest of its business.

This transportation company looked for a solution that would fit well with current work volumes and be able to scale up rapidly with minimal change. Additionally, the company wanted to integrate the solution with its existing SAP ERP and SAP warehouse management software. To meet its needs, the company chose SAP Transportation Management and SAP Extended Warehouse Management applications.

This company uses SAP ERP software to run its core business management and financial processes, and was confident that the specialized SAP components would fit well into the existing landscape as well as integrate with line of business software.

Additionally, the company chose to implement SAP Customer Relationship Management software to support its marketing efforts, which would help the company continue on its growth path.

The company’s IT Technical Manager comments, “We chose SAP solutions because they integrate seamlessly with our existing SAP general business management and financial software.

The SAP for Transportation application component meets our core needs with no modification, which greatly accelerated the implementation and enabled us to enjoy the benefits sooner.”

Choosing the best infrastructure
Having chosen SAP software as its strategic business environment, this transportation company turned to the selection of a suitable IT landscape. With data volumes growing around 400 GB each month and a complex network of remote and mobile users, not to mention some 15,000 customers with direct access to shipping details, the company team wanted to find a high-performance solution at a commercially acceptable price-point, and one that could scale significantly to meet its ambitions for growth.

This transportation company selected the IBM Power Systems platform as its strategic hardware infrastructure, and IBM DB2 software as the core database architecture. The company chose to replace its Sun servers running Solaris with two IBM Power 770 servers running IBM AIX, each with 48 POWER7 processors. It also migrated from Oracle to IBM DB2. The IBM Power 770 servers support the production SAP applications, accessed by 450 internal users. A further 1,200 palmtops used by distribution truck drivers provide on-the-road access to collection and delivery data, and the system also supports up to 15,000 customers via SAP NetWeaver Portal.

By replacing two Sun servers running Solaris with two IBM Power 770 servers, the company has saved 25 percent in energy and floor space costs, and cut related server administration and maintenance costs by 10 percent. The data storage infrastructure was also refreshed: the company replaced its Hitachi Data Systems disk array with an IBM System Storage DS8300.

During the data migration, the company took advantage of the data compression features in IBM DB2 for Linux, UNIX and Windows. The original 3.8 TB of data in the Oracle database supporting the SAP ERP applications was reduced to 1.2 TB in IBM DB2, a saving 68 percent in the total amount of data stored.

The reduction in database size helps to increase application performance and, in turn, serve customers more efficiently. Data backups, managed and automated by IBM Tivoli Storage Manager, complete more quickly with less impact on production systems, and backup storage expenses have been cut.

System planning, configuration and tuning services were provided by the IBM Montpellier team, which showed this transportation company how to exploit the combination of the advanced POWER7 processors in the IBM Power 770 servers, using techniques such as Active Memory Expansion (AME) and Live Partition Mobility (LPM). AME enhances system efficiency and scalability by allowing more data to be stored in the available main memory by using on-the-fly memory pages compression. This unique POWER7 technology can be combined with DB2 compression to increase system performance and reduce memory requirements.

The company runs its SAP applications and DB2 in separate logical partitions (LPARs) on the IBM Power 770 servers using IBM PowerVM as the inherent virtualization layer. The POWER7 systems support LPM functionality, which permits LPARs containing active SAP applications to be moved across different physical machines even during continuous operation. In the business of international transportation where clients want shipping information to be available 24 hours a day, seven days a week, 52 weeks a year, the company can use LPM to ensure customers continue to be served even if one of the two servers is planned to be unavailable during, for example, system maintenance.

This company also implemented IBM BladeCenter technology, deploying a mix of IBM PS702 Express blades featuring POWER7 processors, IBM HS22 blades powered by Intel® Xeon® 4800 series processors, and IBM HX5 blade servers powered by Intel Xeon E7 processors. The different servers are configured to handle different workloads of different SAP applications, to operate the company’s SAP system as efficiently as possible.

The Intel Xeon processor 5600 series automatically regulates power consumption and intelligently adjusts server performance according to your application needs, maximizing both energy efficiency and performance. The Intel Xeon processor E7 delivers performance designed for the most data-demanding workloads with improved scalability, and increased memory and I/O capacity. The series helps adapt to changes in short-term business demands, and at the same time address requirements for longer-term business growth. Advanced reliability and security features help to maintain data integrity, accelerate encrypted transactions, and maximize the availability of mission-critical applications.

The PS702 blade servers running IBM AIX provide test, development and quality assurance environments for the core SAP applications. The HS22 and HX5 blade servers support SAP NetWeaver Business Warehouse and SAP NetWeaver Portal applications in a VMware virtualization environment. As demand increases, the company will be able to add more blade servers to the chassis to provide almost linear scalability for interactive and web-based users. The IBM Power 770 servers deliver the high-capacity database processing and interactive SAP application performance for the 450 users. This two-tier arrangement allocates processing workload to the platform most suited to the task, optimizing the company’s investments in IT infrastructure.

Smooth implementation
With the support of its implementation partners, this transportation company deployed the new software on time and within budget. An essential step in this process was planning and optimizing the key business processes prior to the implementation, to ensure that the software configuration matched the company’s requirements.

The company team cut project execution time and reduced the project risk by using best practices supported by the ASAP methodology, the PRINCE2 project management method, and the COBIT IT governance framework and tool set. The new logistics processes based on the SAP applications were operational in just five months. The SAP warehouse management solution was integrated with the automated warehouse system within four months.

The group used SAP NetWeaver Portal to communicate project progress across the implementation team and through the company, and to collaborate with the SAP development team on the transportation and warehouse management solutions. Users were trained by deploying the SAP Productivity Pak application by ANCILE.

Move to the future
With a newly optimized and simplified application landscape based on the integrated SAP software, this company has realized dramatic business benefits. The company uses SAP Transportation Management to optimize transportation routes, and as a result has reduced CO2 emissions by approximately 375 tonnes annually, a reduction of 25 percent a year. The company team is exceptionally pleased with the benefits gained from using SAP applications. Closer integration between the logistics and transportation processes is improving operational efficiencies and reducing costs. For example, the volume of goods moved per hour by the same infrastructure has increased by 30 percent, and the cost of transporting goods has been cut by 10 percent. On the warehousing side, optimized processes based on SAP Extended Warehouse Management software have cut storage space required for goods to be transported by 20 percent.

The company’s Organization and IT Director, says, “For example, warehouse worker productivity increased by 30 percent, as measured in hours spent per 100 kg transported.”

Similarly, by using the integrated campaign management and customer data provided by SAP Customer Relationship Management, marketing effectiveness also improved. Campaign execution is faster, and with enhanced timeliness and clarity of communications, the conversion rate for marketing leads is up 26 percent.

The Organization and IT Director concludes, “In such a widespread, complex business transformation process, having the right methodology, organizational structure, and communication is fundamental to project success. With the help of our SAP software, and IBM technology, we will continue optimizing our processes and adding new services to enhance customer satisfaction and support our ongoing growth.”