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SAP Transportation Management for T&L for SAP S/4HANA: Services Sale and Procurement

This blog post will help readers to understand how Services can be Sold and Procured using SAP Transportation Management for T&L for SAP S/4HANA.

Primary use case is for the customers in Transportation & Logistics Industry (T&L) who are actively “selling” add-on services on top of the normal Freight Transport service and at the same time “procuring” some of those services from external business partners.

Conventional manufacturers (producer of goods or Shippers as we call them) also has a use case in the form of “Service Procurement”.

We approach this functionality in following way:

  1. Terminology
    • Value Added Service (VAS)
    • Service Items
    • Service Types
    • Instruction and Instruction Set
  2. Master Data
    • Carrier’s Services Offering
  3. Usage of Service Item and Service Type in Forwarding Order
    • Calculation of billing charges based on Service Types
    • Automatic derivation of Instruction Set and Instructions based on Service Type
    • Instruction POWL for monitoring execution
  4. Usage of Service Item and Service Type in Freight Order
    • Restricting Service Types by Freight Order Type
    • Validation of Service Types w.r.t. Carrier’s offering
    • Calculation of Service Cost for Service Type
    • Automatic Transmission of Service Types to Carrier
  5. Business Expectations

Note: I have demonstrated the functionality in this blog post using system screen images with relevant data for ease of understanding for the readers. It should be noted that these screens and the data is from SAP’s internal test systems and has no relation to any external source.

TERMINOLOGY

Value Added Service (VAS): This is the business term used to describe any additional service on top of Transport Service, either sold and/or purchased. VAS is not a functionality name in SAP Transportation Management. In SAP Extended Warehouse Management there is dedicated functionality of VAS but not in SAP Transportation Management.

Service Items: Service Items are represented as “Order” items similar to a Package or Container. “Order” here refers to Forwarding and Freight Order. Note that technically Service Items are separately defined for Forwarding Order and Freight Order Types. There is no direct link between Forwarding Order and Freight Order Service Items.

Below you see the Forwarding Order side of Service Item.

Service Items for Forwarding Order are configured via below customisation menu

 

Service Item Type is then assigned to the Forwarding Order Type, to make it usable in the Forwarding Order.

Below you see the Freight Order side of Service Item.

Service Items for Freight Order are defined separately in the below Configuration menu.

Service Types: Service Types are precise services you wish to perform (fumigation, customs clearance etc.) These can be flexibly defined as per needs. Service Types are unique definitions in the system setup, which means one set of Service Types can be defined and used both on Forwarding and Freight side.

Below you see the view of the Service Type from a Forwarding Order Items tab.

Below you see the view of Service Type from the Freight Order Items tab.

Service Type unique definition can be done as per following configuration menu.

Important: As mentioned in the “Service Item” section for the Freight Order (on the image), there exist a sub node for restricting only the required Service Types. This means that a specific “Item Type of Item Category = Service” can hold specific Service Types.

Freight Order Type has the final linkage to the allowed Item Types

 

Instruction and Instruction Set: This functionality can be used in the situation where certain follow-up tasks are required for the Customer Order (Forwarding Order Only!). Example: For a certain customer order, the customer service agent must check shipping documents carefully or should confirm that Packing List, Commercial Invoice is received. Or in case of additional service sold (Transport Insurance) to the customer, the customer service agent has to follow-up on getting the insurance from the Insurance Company.

Such features are enabled by Instructions. Instructions also provide special POWLs for monitoring and follow-up process.

I will not elaborate more on the Instructions as it is a topic in itself. What is important to know is that, while selling the Service in the Forwarding Order, specific instruction set can be automatically determined and the included instructions can be used as follow-up tasks.

Important: Functionality of Instruction Sets and Instructions is only available on the Forwarding Order. The Instructions could related to Forwarding Order or Freight Unit. Instructions functionality is not available for direct use on the Freight Order (TOR Objects in general)

Below you can assign the Instruction Set to a Service Type

 

MASTER DATA

Lets assume you are Company XYZ and have installed SAP Transportation Management solution and have to procure transportation services from various “Carriers” (Trucking, Rail transportation service providers) then it is very much important for Company XYZ to have a clear view on which Trucking company provides what type of services. This is achieved by storing the Carrier’s Services into the business partner master data of the Company’s XYZ SAP TM solution.

Also note that different Carriers may have different names gives to the same service.

Below you can see an example of services offered by such logistics company and how it is stored into the Business Partner master data.

Source: United Parcel Service

https://www.shipengine.com/docs/carriers/ups/

Business Partner stores the Carriers’ Service Offerings:

Above you notice that Company XYZ’s Service Types can be mapped against the Carrier’s Service Code.

Later this setup is used to maintain Rates/Costs associated to those services w.r.t. the Carrier’s Contract (Freight Agreement)

USAGE OF SERVICE ITEM AND SERVICE TYPE IN FORWARDING ORDER

In this section we will cover:

    • Calculation of billing charges based on Service Types
    • Automatic derivation of Instruction Set and Instructions based on Service Type
    • Instruction POWL for monitoring execution

Once the Service Items (with the Service Type) is added to the FWO item, system can automatically determine the billing charges (provided the necessary setup of Forwarding Agreement is done). At the same time the corresponding Instruction Set and Instruction is also determined.

Important: Service Types must be assigned to the Charge Types so that during the Charge Calculation process, if the agreement is determined, the correct charge can be determined based on the service type in the Forwarding Order.

Below you see the Forwarding Order Items, Charges and Instructions.

 

USAGE OF SERVICE ITEM AND SERVICE TYPE IN FREIGHT ORDER

In this section we will cover:

    • Restricting Service Types by Freight Order Type
    • Validation of Service Types w.r.t. Carrier’s offering
    • Calculation of Service Cost for Service Type
    • Automatic Transmission of Service Types to Carrier via EDI

Important: Just as Service Items and Service Types are manually entered as items in Forwarding Order, on the Freight Order you need to add the Service Items and Service Types manually. SAP Transportation Management in standard does not take over the Service Items of the Forwarding Order into Freight Order. This is due to many reasons:

  • Additional Services Sold via Forwarding Order my not always be procured externally
  • Additional Service Sold via Forwarding Order may not always apply to all the legs of transport the cargo is transported.
  • Additional Service Sold via Forwarding Order may not always be procured from the same carrier who is physically transporting the goods. The additional service could be procured from another vendor. For this Service Order functionality is available on the Freight Order.

Customers based on their own logic could automatically take over the Forwarding Order Service Item and Service Type into Freight Order. This needs enhancements.

Below you see how Services can be searched in the FRO. How they are restricted based on the FRO Type and what happens if a specific service which is available for the FRO Type is added but is not offered by the Carrier.

Below you see the charges automatically calculated based on the Service Types used in the Freight Order (Provided the correct setup of the Freight Agreement is done)

Important: Freight Agreement with Service Items can only have the Service Types provided the Carrier Business Partner has the link to the Service Types via Carrier Service Code. Below you see the setup

Using the Service Interface TransportationOrderRequest_Out which is normally triggered by action Send to Carrier the Service items are also sent out.

Below you see that Service Type codes ZMUL and ZVGM are part of the TransportationOrderRequest_Out message.

 

BUSINESS EXPECTATIONS

It is seen that Customers implementing SAP Transportation Management may only use the feature of Service Procurement. Some customers may use only the feature of Service Sale. Some also want to use it end-to-end where the service sold has also to be procured from supplier. Customers expect the end-to-end process to work 100% automated, which is only possible by enhancing the available functionality. In general the available functionality blocks are sufficient for the customers to baseline and do further automation. Service Order on top of this functionality give additional freedom for usage.

I hope you have now a good overview of this functionality..!!!

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