#S4HANA 1709 use case series: 5a – Transportation Management (biz view)
Welcome back to our use case series. It is designed to offer a closer look at business value acceleration – driven by the design principles of SAP S/4HANA. The technology-induced implications of the digital economy are huge, though the technology itself is only a catalyst to achieve a fundamentally different business outcome.
The selected use cases, related to SAP S/4HANA Release 1709, are designed to emphasize and visualize the value behind this technological shift that can be activated by you.
In my previous blogs, I talked about the “Unit of one”. With the unit of one, the number of orders increase while the size of the orders decrease. The expectation of the consumer has also gone up. The contribution of multiple boutique vendors who provide personalized products is significant. This not only puts pressure on the marketing and sales team, but also on the follow-on supply chain. With globalization trends combined with unit of one, the pressure on the shipper to deliver on time at the service level expected is even higher.
In addition, supply chain decisions impact the financial health of a company strongly through the contribution to inventory days including holding costs. Typically you need to ensure efficiency in both domestic and international transportation from planning through execution processes to achieve optimal inventory days. The shipper will need to manage end-to-end logistics and order fulfilment processes with complete visibility and improved compliance and flexibility, while maximizing available resources and decreasing logistics costs.
Let us take a deeper look at what we deliver with the SAP S/4HANA for Transportation Management.
With the Embedded Transportation Management Solution in SAP S/4HANA 1709, we provide basic shipping with embedded Transportation Management ™ on harmonized master data and customizing, replacing LE-TRA and manual planning and optimization & real-time embedded analytics via CDS (Core Data services). This provides functionality for Picking, Packing & Shipping. Leverage embedded Transportation Management to handle freight agreements and delivery based charges as well as basic bookings, plan and execute your transports, use functionality for basic agency billing and subcontracting as well as dangerous goods management.
With Transportation Management (TM) in SAP S/4HANA 1709, you can make use of central master data setup that is consistent across all transportation related process including transportation specific information.
With the embedding of Transportation Management (TM) in SAP S/4HANA, we bring together the ability to maintain, view and react on the same information – real information through the principle of one. Thus, the entire supply chain starting with order management or sales orders, purchase orders and stock transport orders, result in deliveries that form the basis for freights, TM operations, charge management and freight settlement before the invoice is handled.
You can create and monitor an efficient transportation plan that fulfils the relevant constraints (for example, service level, costs, and resource availability). You can determine options to save costs and to optimize the use of available resources. Negotiated terms and conditions can be combined with constraints to optimize your selection of the best partner to execute your transportation. You can react to transportation events and find solutions to possible deviations from the original transportation plan.
Automation and visibility are two of the key ways to streamline business processes. Transportation Management in SAP S/4HANA 1709 makes it easy for you to exactly see the impact and optimize the assignment of capacities in a cost-effective and compliant manner. The interactive visual planning capabilities or the automatic optimization capabilities make visible to you, the best solution at the lowest cost. It considers the pre-set-up constraints or shows alternative transportation proposals from which the ideal one can be chosen. Similarly, best cost effective carrier, based on selective optimization options, is also proposed by the system – this makes it so much easier for you to take a decision.
The strategic freight management helps with the freight agreement negotiations to decide on the rates – this forms the basis for the planning decisions to find the most cost-effective carrier. The contracts agreed on as part of agreement management forms the basis for calculating transportation charges.
With the integrated logistics process, you can execute on the plan very transparently and real time. For e.g. sales orders, purchase orders, returns, stock transfers and inbound or outbound deliveries are used by TM to create the freight units. This integration helps to react to changes of original documents easily and immediately reducing the time to hold inventory. With the order based planning, TM can even create deliveries based on the planning.
The cost distribution records delivery cost on the material for inbound scenarios to capitalize transport cost and increase the material value. You can also record transport expenses on root cause, e.g. sales order for outbound scenario and distribute the costs for the transport to the appropriate transaction “responsible” for the transportation request. The costs can then be distributed directly or hierarchically. This is then transparent through the freight settlements or settlement management.
With the ability to handle both domestic and international freight through planning, execution and settlement process, transportation managers can now get to see the issues and correct them in time to ensure the freight order keeps moving and to ensure optimum cost. This, with one set of data used by all business units, we can reduce data redundancy or inconsistency, effort of maintenance and cost from synergies. This will ensure optimal asset utilization leading to overall lower TCO, improved service irrespective of the size or variations in orders, and be still in line with sustainability through ability to transport safely dangerous goods in accordance with regulations.
With our Transportation Management capabilities in SAP S/4HANA 1709, we are now able to increase efficiency and effectiveness.
- Increased efficiency: Through the automation capabilities in both planning and execution phases, as well as through using real-time information consistent from order management through freight handling, we can accelerate execution at optimal cost, ensure higher business productivity.
- Increase effectiveness: With the centralized transportation operations and standardization, increased transparency to trigger appropriate actions, you can now increase the spend savings and improve cash flow through accurate costing and settlements by tackling the right issues at the right time.
Ensure end to end delivery on promise at the expected service levels by keeping costs down and improving your inventory days considerably with the embedded transportation management and basic shipping in SAP S/4HANA 1709.
Stay tuned for the detailed technical aspects of focus areas of the Transportation Management and the rest of our use cases over the next few weeks.
All blog posts of this series can be found here.
For more information on SAP S/4HANA, check out the following links:
SAP S/4HANA release info: www.sap.com/s4hana