Blog Series: SAP S/4 HANA 1709 Supply Chain for Transportation Management – 01 Introduction, Supply Chain Execution Convergence and Functionalities
Transportation, a critical link in the supply chain, is costly, time-consuming, and sometimes difficult to manage. Hence, transportation management systems (TMS) are used to streamline the transportation component of the supply chain. Transportation may have been an isolated business process in the past, but it is now increasingly considered within the context of overall supply chain and logistics processes.
There are significant changes going on in supply chain offering of SAP and the most important changes are the movement of Extended Warehouse Management (eWM) and Transportation Management (TM) into the S/4 HANA box. eWM moved into S/4 HANA box as part of the 1610 release whereas TM moved as part of the 1709 release. During this transition phase, most of us are in a state of ambiguity as both the options (Business Suite SAP TM 9.5 and SAP S/4HANA Supply Chain for Transportation Management a.k.a embedded TM) are available in the market. Before explaining the differences and analyzing the functionalities (inclusions and exclusions) of embedded TM, it is imperative to understand the concept of ‘Supply Chain Execution convergence’.
In 2009, Gartner released a report – ‘Supply Chain Execution Convergence: Delivering on the End-to-End Process Promise’. It defines SCE convergence as the need for supply chain organizations to do a better job in orchestrating and synchronizing processes, sub-processes and activities across warehousing, transportation and manufacturing functional domains.
For example, warehousing and transportation are historically independent application silos and used to solve separate problems individually. Warehouse Management Systems (WMS) optimize the movement of products within the warehouse and have tools to improve the efficiency. Similarly, Transportation Management Systems (TMS) optimize the movement of products outside the warehouse and have tools to streamline various transportation processes. Organizations defined these two as separate departments and have individual key performance indicators (KPIs).
However, end-to-end fulfillment process spans across customer service, warehouse and transportation areas; and as functional silos, it is impractical to coordinate activities across all areas without the support from application systems. Additionally, the process steps reside in separate applications – ERP, CRM, WMS & TMS. Hence there is a growing need to converge these functionalities into one application for improved optimization of end-to-end operations. Moreover, Gartner has given significant weightage to the SCE convergence strategy for its yearly magic quadrant report of supply chain products of various vendors (SAP, oracle, JDA, Manhattan etc.).
So, it makes lot of sense for SAP to move TM and eWM to S/4 HANA box and we can expect a powerful product with significant improvements in optimization for an end to end scenario. For example, in an embedded setup, GATP can use inputs from TM & eWM, TM optimizer may be able to improve the process efficiency using eWM parameters, MRP/IBP can improve the results with constraints from eWM and TM etc… Even though these functionalities are not currently available in the 1709 release, it is technically possible to have these advanced functionalities in future releases.
Hence, embedded TM or S/4 HANA supply chain looks very promising at least from the architecture and the road map perspective. This makes it a very pressing business case for new implementations. I expect with subsequent releases in S/4 HANA Supply Chain, SAP will surely improve its position (already a leader) in Gartner magic quadrant. Considering these parameters, in software selection process and technical architecture design, S/4 HANA embedded TM should be the default option for shippers. If there are gaps and other business/technical reasons, only then a stand-alone TM (Business Suite SAP TM 9.5) should be considered. A similar recommendation is present in the 2018 Gartner report – ‘Best Practices for Navigating SAP’s Evolving Supply Chain Management Portfolio’.
Functionality summary (Embedded Vs Standalone)
SAP released a note “2514203 – SAP S/4HANA Supply Chain for Transportation Management -1709 – Release information” to detail the functionalities and omissions of embedded TM. This blog is based on the latest version 5 (release don 16th May 2018) of this note and have inputs from the SAP Expert session on S/4 HANA TM 1709.
Even though S/4HANA Transportation Management 1709 and Business Suite SAP TM 9.5 share a common set of functions, they support the same business scenarios & processes with some exceptions:
A. Simplified integration
- In S/4 HANA TM 1709, there is no need to transfer master data such as plants, shipping points, Business Partners etc… to TM system. Embedded TM can directly use the data created in S/4 HANA.
- In addition to this org data such as Purchasing Organization of S/4 HANA can be used in TM.
- There is also a new location type for BP, as we can maintain a customer and vendor as the same BP in S/4 HANA. In S/4 HANA, a customer and a vendor can be represented as a BP with different roles. In S/4HANA TM 1709, there will be just one location (for both vendor and customer) with type “Business Partner”, that is linked to the business partner (details around this is detailed in SAP Note 2505727)
- Replication of dangerous goods, hazardous substances and phrases to TM is not required as the embedded TM can use the data from S/4 HANA directly
- OTR and DTR documents for inbound and outbound process are not present in embedded TM. Freight units can be created directly from Sales Order, Purchase Order and STOs
B. Fiori UI look & feel (UI Theme “Belize”)
Entry point into the TM system is via a FIORI Launchpad in embedded TM where as it used to be NWBC in SAP TM 9.5. This is a much better UI compared to NWBC. The screens are device agnostic and can be used in any devices (tablets, Desktops, mobile devices, laptops etc.). Moreover, in S/4 HANA projects the users get one single UI. Typically, a cross functional user generally uses a CRM UI for sales related activities, GUI for backed operations, NWBC for TM tasks and may be some custom portal for other needs. Now there is a possibility to integrate all these into one single user theme/experience.
C. Embedded analytics functionality
Based on Core Data Services of S/4 architecture, new analytical reports and transactional apps using data from multiple functional areas can be developed. The performance and technical restrictions of cross module analytical reports are reduced significantly. We can expect more and more advanced and integrated standard apps in future.
D. Data aging functionality and archiving
With Feature Pack 01 release data ageing functionality is a standard functionality. Additionally, archiving is also available with S/4 HANA TM 1709 feature pack 01. There were not present in the initial 1709 release.
E. Collaboration Portal and Logistics Business Network
The TM Collaboration Portal is not available in S/4HANA. It is planned to be replaced by the cloud product ‘Logistics Business Network’. It is a public cloud offering subscribed by shippers, who then invite their carrier ecosystem to the service.
This is a welcome move from SAP. Previously in collaboration portal, shipper used to manage infrastructure, on-boarding, user management and B2B/EDI integration. This is too much of an IT investment for shippers who subcontracts most of the actual product movement. In LBN, SAP manages infrastructure, on-boarding, and support. SAP & partners together manage applications, content and operations, whereas carriers manage user management. In LBN, carriers can see the Freight orders of multiple shipper companies. For now, freight tendering and subcontracting for road transportation is supported, with a tight integration into SAP Transportation Management (SAP TM).
F. Some functions are discontinued and may not be available even in future releases
Integration with CRM & integration of TM resources to enterprise asset management are discontinued. Since CRM as product is getting discontinued it is quite logical to discontinue the TM integration with SAP CRM. In addition to this, some selected planning functionality such as condition-based filtering, loading and unloading duration determination per requirement document, transportation proposal for multiple freight units at once etc.… are not available. Even though some of these are commonly used in regular TM projects, these functionalities can be achieved with smartly designing of the scenarios and with minor enhancements. Hence unavailability of these functions should not deter from implementing S/4 HANA 1709.
G. TM 1709 integrates only into the embedded logistics applications in S/4 HANA
As per the current version of the SAP Note, S/4 HANA embedded TM cannot receive and process transportation requirements from other ERP or S/4HANA instances (side by side). This is one of the important parameter to decide between standalone SAP TM 9.5 and S/4 HANA embedded TM. If the technical architecture requires the integration of multiple SAP systems with one single TM instance, then standalone TM 9.5 may be the ideal choice. However, the integration of S/4 HANA embedded TM with another S/4 HANA cores is planned for future releases. In ‘SAP help’ documentation for 1709 FPS02, the details of External TM system integration are specified.
H. Some functions are not yet released
Some of the functions are not yet released in the current version of S/4 HANA release. Unlike discontinued functions, in future, these functions will be released as it is in TM 9.5 or with some modifications. For example, sales order scheduling is not released yet. This may be because of the plan to integrate SAP TM scheduling with GATP. Forwarding order functionalities, group logistics, internal settlement, scheduling agreement integration, delivery update process etc.… are not yet available in S/4 HANA 1709. If these functionalities are required, then it is advisable to either wait for next release or work with SAP as a ramp-up client. However, transit warehouse functionality along with warehouse billing is released as part of S/4HANA TM 1709 FPS02.
I. Features in S/4 HANA TM 1709 which are not using single-system integration qualities
Integration of embedded TM 1709 and embedded EWM 1709 still used A2A services (like inter system communication). These may be simplified in future releases.
J. Process simplification
In addition to the points mentioned in SAP note 2514203, the most important difference between embedded TM and standalone TM is the simplification in process flow. Below flow chart can provide a summarized view of some basic shipper scenarios.
It is amazing to see the pace at which SAP is adding various functionalities to S/4 HANA 1709 TM. It shows the the investment and commitment from SAP. As a consultant, I am confident and optimistic about the prospects of S/4 HANA 1709 Supply Chain for Transportation Management.
Most of the content in the blog are based on FPS 01 release. However in SAP help, we already have documentation of FPS 02. So please refer to the SAP note and ‘SAP help’ for more updated information. This blog may get outdated with time.
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