The Blog talks about how SAP Transportation Management (SAP TM) solution can address shipper’s requirements. Also, the select processes are described at high level.
SAP TM solution is designed to address transportation requirements of Shippers (Who want to ship their goods e.g. Manufacturers/ Distributors) as well as LSPs (Logistic Service Providers). Let’s see SAP TM from shippers’ perspective.
From shippers’ perspective, the key requirements include (a) planning of deliveries, sales orders, purchase orders, etc and give transportation order or shipment order to carriers/ LSPs (who are responsible for physical movement of goods and associated services) for execution (b) select carriers for shipment order and pay to them for transportation (c) receive tracking and tracing information from carriers and take appropriate actions (d) perform transportation capacity planning and forecasting to do contracting and advance booking with carriers (e) evaluate performance and KPIs related to transportation
How SAP TM addresses the above requirements –
The following figure shows example flow of information and transportation processes in SAP TM 7.0 –
Shipment Requests (Transportation Requests) are created in SAP TM based on Deliveries (inbound/ outbound). Deliveries from ERP are sent via core interface via iDoc message to SAP TM and Shipment Requests are created in SAP TM. This feature is standard in TM 7.0. Integration of sales orders, purchase orders and stock transfer orders is planned in TM 8.0. From shipment request, freight units (FU -represents goods information) are created. FU is a logical entity representing good items which can be planned. Planning can include route determination, load consolidation, optimization, etc.
As outcome of planning, shipment order (SO) can be created. SO is like a purchase order to for transportation.
2. Carrier Selection and Freight Payment
For the SO created above, carrier can be selected based on cost, priority, combination of cost and priority, allocation (quota), business share, etc. System proposes available carriers and one can choose carrier as per chosen criteria. System can assign carriers automatically as well. SO can be sent to carrier electronically
Freight payment – agreements (FA – Freight Agreements) with carriers can be maintained. FA contain charge calculation sheets and possible charge elements (charge types e.g. haulage, custom clearance, toll, etc). Charges can be derived based on variety of parameters such as item weight, volume, transportation distance, types of services, locations, zones, incoterms, etc. A settlement document containing charges(SFIR – Supplier Freight Invoice Request) is created and sent to ERP. In ERP, automatically a Purchase Order (PO) is created. Invoice verification or self billing on this basis of this PO can be done
Accounting functions like G/L accounts, specific accounting transactions of invoice matching, vendor advances etc. are not part of SAP TM solution. SAP ERP (ECC 6.0) provides all these as standard functionality and SAP also provides standard integration between SAP TM & ECC.
3. Event Management Tracking and Tracing
SAP TM uses SAP Event Management for Tracking and Tracing. A shipment object (Shipment) contains possible events and their planned date and times. This can be integrated with carrier systems. Carrier tracking data is can be updated in shipment via direct interface/ web/ mobile device, etc. Alerts can be generated for exceptions (e.g. delay in occurrence of event)
4. Capacity Planning
Capacity planning for transportation volume (transportation units) between any transportation points (or locations) can be done. APO DP data and historical data from SAP TM can be sent to SAP Business Intelligence (BI) system. In BI, forecast reports can be generated. The capacity planning data can be used to set contracts with carriers and advance booking for transportation
5. Reporting and KPI
Performance and KPI can be monitored using Business Intelligence reports. BI reports could include Carrier performance, utilization of contract, delayed events, etc.
Overall, SAP TM 7.0 is good fit for the business requirements of Shippers and is capable of handling complex transportation processes as well.
References/ more information