Supply chain expert VW: Shipping 1.6 million consignments

No matter what material, AEB’s Shipping does it all. Volkswagen also uses the Shipping and Transport System to control the movement of its containers around the world. The company needs to have empty containers such as crates and plastic bins available in its own plants and those of its suppliers so that they can be filled with parts and sent to assembly lines. Once the production workers have removed the materials, they return the empties to circulation. The AEB software also generates the appropriate shipping documents – not only CMR waybills but also export declarations for shipping empty containers to Switzerland or Turkey, for example. AEB’s Shipping draws all the information about the empties from the container management system.

Once the delivery note data has been entered there, it is shared with AEB’s Shipping. Afterwards, the user generates the necessary waybills to ship the materials. The loaded trucks or railcars with the empty containers are then sent on their way. “The plant-to-plant shipments through which our sites supply one another with the materials they need work in a similar way,” says Hanitsch. The stamping plant in Wolfsburg, for example, which manufactures shells for the Golf, functions as a supplier for the plant in Zwickau, where VW Saxony also builds the company’s top-selling model. Transport management is largely automated, and once the data has been captured, it can be used and re-used without the danger of errors being introduced. “The upstream logistics system transmits the delivery note data through an interface to the Shipping and Transport System,” Hanitsch adds.

VW also uses shipping data to bill its carriers – with AEB’s Freight Cost Management. One of the tools VW has at its disposal here is the self-billing procedure. What this means is that instead of the logistics service provider calculating the costs of the shipments and issuing an invoice, VW calculates the freight costs and issues a credit to the carrier. Then it is the responsibility of the carrier to check the accuracy of the credit.

The benefit to VW: much lower administrative overhead for its freight billing. AEB’s Freight Cost Management provides support for this process as well, supplying the necessary delivery note and consignment data to the company’s “computerized transport data evaluation” billing system in the form of a customer record. This record is compared to the carrier’s electronic transport record in VW’s billing system: If the contents of both records match, a credit can be issued.

Volkswagen mostly relies on the standard functionality of AEB’s Transport & Freight Management software. Only three percent of the Shipping and Transport System has been customized. The reason: This makes it easier to install updates at any time. But if an individualized solution does prove necessary now and then, VW first checks for potential conflicts with other systems or current features before implementing any customization. “There are certain areas we don’t even want to touch, such as hazardous goods or export law, which are subject to strict regulations,” says Hanitsch. In 2009, for example, Germany made it obligatory to submit customs declarations electronically by connecting through an interface to the government’s internal customs processing system.

If the standard software does not address a particular need, AEB gets to work creating a solution. “AEB’s Transport & Freight Management suite does not have an option to handle railcars the way we currently use them to dispose of scrap from our plants,” Hanitsch explains. The conversion required a major adjustment, “but AEB implemented the change without a hitch,” he recalls. Today, VW uses AEB’s Shipping at its Wolfsburg headquarters to send steel scrap by train to steel plants or dealers: up to 900 metric tons in 30 railcars a day. What sounds like a secondary process is a critical factor in day-today operations. Space is precious in the plants, and only very limited storage capacities are set aside for scrap, so if the scrap disposal process runs into problems, it can bring production to a standstill. That’s why disposal cycles are tied closely to production cycles and must run smoothly.

VW’s procurement department, which sells the scrap, is the start of the scrap shipping chain. The next step is a contract created in SAP^® and specifying, for example, that a buyer has purchased 40,000 tons. SAP^® sends this information to the AEB solution. One practical feature is that before the shipment goes out, AEB’s Shipping first checks whether the customer can actually pay for the goods from the credit it has with VW. If not, the order is stopped. If so, the loaded and weighed trucks or railcars are cleared. The weight receipts serve as an order to generate a shipment in AEB’s Shipping and book the goods issue. Once that is complete, Shipping returns the data to the SAP^® system, which uses it to generate the invoice. “We simply have fewer errors thanks to these automated processes,” says Hanitsch with satisfaction.

And the role of the Shipping and Transport System continues to expand. In 2014, the solution replaced a legacy air freight system and now handles all such shipments. One major advantage is that AEB’s Transport & Freight Management can map entire transport chains. The system can be used to define not only the consignee but also intermediate consignees such as the departure or arrival airport. The solution also automatically assembles the various freight documents, so the relevant documents are sent to every service provider involved in the supply chain. Sometimes VW has relatively small requirements to expand the functionality of AEB’s Transport & Freight Management, such as adding a new field to the truck data sheet to accommodate a transport ID.

AEB does not always need to develop completely new solutions in such situations. It can also fall back on modifications already developed for other customers. “We’re glad we have such a good relationship with our project developer in Soest,” says Hanitsch. “He knows what makes VW tick.” Meanwhile, AEB also benefits from developments at VW. The list of tasks is expanding not only functionally but regionally as well. VW is currently looking to connect a new Audi plant in Mexico. “We need all the interfaces in Spanish, which is not yet available in the standard package,” explains Hanitsch. AEB will provide this as well.

In addition to the comprehensive functionality, Hanitsch praises the communication features of AEB’s Transport & Freight Management, which recognizes all standard formats such as SAP^® IDocs and EDIFACT, making it easy to set up new interfaces. “This makes data import simple,” he says. All key documents for exports or hazardous goods are stored in the Shipping and Transport System. The tool can even be used to compose a yearly hazardous goods report, and VW uses it to manage its Intrastat reports – a feature supported in the AEB Shipping standard software.

The nerve center of the Shipping and Transport System is in the Wolfsburg data center. It provides data to all the plants in Europe, and will soon do so worldwide, and checks whether a specific change will have any impact on other sites. The system is generally very stable, and AEB and VW work as a team to implement regular improvements. The solution is also well integrated into the automaker’s complex IT environment. A large enterprise like VW, where many processes have evolved over the years into a tapestry of different systems, is a world unto itself. Old systems are still in use – that’s a reality that must be dealt with.

“AEB is very good at that,” says Hanitsch in conclusion.