SEPTEMBER 2018CIOAPPLICATIONS.COM 19success factors for its supply chain transformation: thinking globally and acting locally, creating a single global vision, collaborating and building partnerships, and prototyping, validating and growing innovations.4flow as collaborative neutral partnerStarting in 2012, AGCO sought alternative cooperation arrangements with logistics partners within the scope of its innovation roadmap: the company wanted to create a hybrid team of AGCO representatives and an embedded, best-in-class, fully neutral 4PL that would act as an internal, service-oriented partner in the context of the Smart Logistics endeavor. In 2013, AGCO selected 4flow as its primary collaboration partner in this endeavor and tasked them with building a hybrid operating model, the objective of which was to increase transparency, improve supply chain performance, and further reduce costs by means of an integrated transportation management system (iTMS) and network consolidation. 4flow's overall concept for cost reduction and performance improvement required no additional IT investment on AGCO's part, and 4flow also assured quick implementation of its proprietary iTMS.From process pilot to global rolloutAGCO and 4flow's objective was clear: digitize and optimize global material flows in order to increase transparency and drive significant network performance improvements, while reducing transportation costs and inventories.In Q3 of 2013 the implementation of AGCO Smart Logistics began. This included the rollout of a completely new process, organization, and integrated transportation management system across all of AGCO's European operations, including 1,500+ supplier shipping sites and 18 AGCO destinations. The pilot's results were extremely positive through the rapid implementation of the integrated transportation management and optimization of the global network in parallel, and AGCO successfully reduced transportation costs by more than 25 percent, reduced on hand and in transit inventories, and reduced external warehousing costs. AGCO, also, significantly reduced CO2 emissions through optimized transportation utilization. On time delivery performance levels increased by 22 percent while at the same time enabling a significant improvement in the receiving dock productivity levels resulting from the balanced inbound workload.AGCO and 4flow's rollout of the Smart Logistics initiative in Europe was completed in mid-2015, with China following in 2017, North America in early 2018, and South America scheduled for completion in late 2018. The AGCO network now leverages big data to handle monthly volumes of over 20,000 transportation orders by connecting more than 185+ carriers, 3,000+ supplier locations, and 38 AGCO locations. The effort has, also, resulted in the implementation of 755+ cost reduction initiatives.One key additional process innovation that was realized as part of the iTMS implementation was the convergence of the supplier forecasting & ordering process (SAP Supplier Network Collaboration, aka SNC) data and the packaging details (dimensional and weight) into the iTMS. This enables AGCO to provide a forward-looking forecast of our freight requirement with its carries on a lane by-lane basis. Reaping what you sowAs a result of the initial 5-year Logistics Strategy and cooperation with 4flow, AGCO is positioned to operate complex networks much more efficiently and cost-effectively, while further promoting supply chain convergence. The results of the Smart Logistics concept speak for themselves: AGCO and 4flow's efforts have reduced AGCO's total inbound transportation costs by 28 percent, reduced inventories by 24 percent, and improved network performance by 25 percent. In 2016, AGCO's European region won the prestigious German BVL award for supply chain innovation and, then, in 2017 won the European Logistics award for supply chain innovation. Only the beginning The Smart Logistics concept is more than the sum of its parts; in an increasingly competitive business environment, AGCO's global supply chain integration initiative is a sustainable strategic advantage in the global market place. Digitize and optimize global material flows in order to increase transparency and drive significant network performance improvements, while reducing transportation costs and inventoriesGreg Toornman
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