Logistics operations are undergoing a digital transformation driven by the integration of enterprise systems with Artificial Intelligence (AI) and the Internet of Things (IoT). This article explores an end-to-end logistics optimization framework centered on SAP’s digital logistics solutions (e.g., SAP S/4HANA and SAP Supply Chain modules) enhanced by AI algorithms and IoT sensor networks. We discuss how real-time IoT data from smart sensors (GPS trackers, RFID tags, telematics devices, etc.) can feed into SAP systems to enable predictive analytics and intelligent decision-making across the supply chain. AI techniques such as machine learning-based forecasting and route optimization complement SAP’s robust transaction processing to improve visibility, efficiency, and responsiveness in logistics. An integrated system architecture is presented, along with industry use cases in manufacturing, retail, and transportation that demonstrate significant gains from smarter warehouses and predictive fleet maintenance to dynamic routing and demand forecasting. Results from both real-world implementations and simulated scenarios show improvements in on-time delivery, inventory management, and cost reductions. We also address the technical framework required to achieve these benefits, including IoT-SAP integration architecture and AI model deployment within SAP environments. Finally, the article discusses challenges like data silos, integration complexity, and security, and outlines future research directions toward fully autonomous, intelligent supply chains.