Case 9.2 Business Case: MAHLE GmbH Partners with SAP and MHP to Digitalize Its Logistics and Product Development Processes If you drive a car, odds are your engine system and components were made by MAHLE GmbHa leading international development partner and supplier to the passenger and commercial automotive industry and a mobility pioneer. MAHLE's products are installed in at last every second vehicle worldwide. MAHLE components and systems are also used in rail transport and marine applications and stationary applications like mobile machinery. Headquartered in Stuttgart, Germany, MAHLE currently has 79,000 employees in over 30 countries at 160 production locations. It also has 16 major research and development centers in Germany, Great Britain, Luxembourg, Spain, Slovenia, USA, Brazil, Japan, China, and India where more than 6,000 development engineers and technicians work on innovative solutions for the mobility of the future. In 2018, MAHLE reported annual revenues of $14 billion (12.8 billion). As a company it is committed to making transportation more efficient, more environmentally friendly, and more comfortable. It is continuously optimizing the combustion engine, driving forward the use of alternative fuels, and laying the foundation for the widespread acceptance and worldwide introduction of e-mobility.

The Problem In 2018, MAHLE was faced with a real dilemmait was a transportation-based company with a major logistics problem! MAHLE didn't have a good sense of how efficient its shipping processes were and how much they were spending to ship goods. As a result, its use of resources was well below optimal levels and planning horizons were too short to let them manage their logistics proactively. To deal with these issues MAHLE needed a cost-effective, repeatable, and fully transparent method for distributing its components for combustion engine and electric vehicles. Simply put, MAHLE's logistics processes needed a major digital transformation.

The Solution To remedy their logistics dilemma, top management at MAHLE chose to work with consultants from MHP Management. They turned to SAP and MHP because both had a well-grounded understanding of the global automotive industry with an emphasis on logistics. SAP and MHP were also experts in end-to-end integrated processes and scalable solutions and were leaders in digital transformation innovations and had lots of highly satisfied customers. With their help, MAHLE implemented SAP's Transportation Management software (SAP TM) to get much the needed visibility into its logistics processes. SAP TM is a stand-alone app that enables organizations to manage all inbound and outbound domestic and international freight in the same environment and provides traceability and visibility of orders, shipments, items, and logistics processes. The implementation of SAP Transportation Management is allowing MAHLE to reduce costs, make better use of resources, improve overall operational performance, improve communications with carriers, and get the full transparent transport network it needed to enable productions and operations managers to better plan, control, and optimize it. Specific value-driven results MAHLE achieved include:

A new transport cockpit for quick access to an up-to-date overview for logistics planners Reduce planning horizon to six weeks Almost doubled inbound load capacity use Significantly decreased inbound transfer costs Since SAP Transportation Manager was put in place, Dr. Markus Lohrey, Head of Logistics Europe at MAHLE claims, "We were able to lower transportation costs by proactively planning transfers and managing load capacity - with full transparency at every step of the shipping process." He further commented that, "Our ability to plan for optimal resource use increased exponentially and we significantly lowered costs for shipping Europe with SAP Transportation Management."

1Q .What processes does the second phase of MAHLE's digital transformation project involve?