Capability of billing freight cost to customer in Embedded Transportation management in S/4HANA 1909 release
Freight is an important cost component in today’s supply chain and in most cases seller (or manufacturer) wants to bill the freight cost to the customer. SAP ECC Shipment cost functionality supports the inclusion of freight cost in customer billing document, however there was no such functionality with freight cost calculated in embedded Transportation Management ( TM ) till S/4HANA 1909 release. SAP has now provided the functionality of including freight cost in customer (SD) billing document in embedded TM in S/4HANA 1909 release, thereby eliminating the complex custom development to achieve the same.My present blog is to describe this new feature in embedded TM and the important configuration to achieve this functionality.
A typical Order to cash flow with embedded TM in S/4HANA is shown in below image. Freight charge is calculated in Freight order (FO) based the Freight agreement with carrier and relevant cost parameters.
Now from S/4HANA 1909 release, it is possible to include the freight cost (say for example 125 Euro) in the customer billing document . Below images (1) shows that a FO 6100001003 is created from an outbound delivery 80001147, image (2) shows the freight cost of 125 Euro has been calculated in FO 6100001003 and the same appears in billing document 90000033 in image (3).
The above scenario shows that the FO has a single delivery which may not be a practical scenario. A freight order generally has multiple deliveries and the industry wants the freight cost from FO to be distributed to the individual billing documents based on the distribution parameters (like weight, volume etc). Standard SAP S/4HANA 1909 release also supports the same. Below image (4) shows the Freight order has 2 deliveries with freight cost as 360 Euro.
Below images (5) and (6) show that the freight cost of 360 Euro has been distributed to the relevant billing documents into 120 Euro and 240 Euro (depending on the weight as a distribution parameter considered for the relevant deliveries).
Now, the most important configurations for billing of TM freight cost to customer billing document have been captured in below images
- Freight cost condition type with Condition function FCTM (Freight costs from TM)
A freight cost condition type with Condition function as FCM is required to capture the freight cost from TM and that condition type should be assigned to the relevant pricing procedure.
- Freight order as pricing source in copy control
The ‘Price source’ in copy control from delivery document to billing document shall be I (Order / Freight order) in VTFL.
Some sellers / manufacturer’s also may want to add some margin on freight cost in the billing document which is also very much possible with SAP standard SD customizing with pricing procedure.
In my view, this possibility of billing freight cost from TM to customer billing document is one of the most wanted capability in most of the customers and a great step towards feature parity in embedded TM with SAP ECC LE-TRA.
This blog is based on my personal tests / observations. Will appreciate your views / comments / feedback.