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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.

13 Comments
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  • Hi Mrinal,

     

    thank you for this blog, very helpful.

    Your example is based on IM managed storage location, will billing freight cost to customer work for EWM managed storage location.

    regards,

    Hetal Parikh

    • Hi Hetal,

      Thanks .

      Yes, this blog is based on test result with IM Storgae location. Will test with EWM storage location and update .

      With regards,

      Mrinal

      • Hi Hetal,

        I tested with EWM managed storage location and this billing functionality also works for delivery with EWM warehouse (storage location).

        Regards,

        Mrinal

  • Hello Mrinal,

    Thanks for this again.

    I have done the configuration for new condition type and included it in the Billing price determination.

    I have also done the VTFL setting as mentioned. The freight cost is calculated and saved in the Freight order

    I wanted to know ,is the Freight cost calculated in the Freight order is automatically transferred when the billing document is generated? or any other setting is required besides the one I mention above to map the freight cost to the freight condition type assigned in the pricing procedure?

    Regards

    Amrita

    • hi Mrinal,

      Just to add to the above,

      I have created the special pricing condition, assigned it to the pricing procedure for billing.While billing this condition is determined, but with no value.

      I have done the config for VTFL. Freight order has the charge calculated, but when I try to invoice the delivery related to the freight order, the pricing condition does not pull value from the freight order.

      Am I missing something?

      Regards

      Amrita

      • Hi Amrita,

        Condition type should have the condition function as FCTM . I have updated the blog with the screenshot of the condition type.

        Regards,

        Mrinal

  • Many Thanks Mrinal.

    I had already set this up. I had not set the condition type as manual condition in the pricing procedure.I set it up now and the freight cost was copied to the billing document.

    Many thanks for such good documentation on the 1909 special feature.

     

    Regards

    Amrita

    • Hi Karthi,

      Freight cost (from TM) is transferred to billing document as per present 1909 release. Generally, freights are planned in sales order based certain parameters through condition record.

      Regards,

      Mrinal

  • Hi Mrinal,

     

    “depending on the weight as a distribution parameter considered for the relevant deliveries”–Where do we define the distribution parameter for deliveries? By default, I think the distribution parameter considered is weight in the order. If say, for example, we need to change the parameter to volume in the order, where do we set that?

    Thanks for the explanation.

    Akshat

    • Hi Akshat,

      Distribution parameter (or rule) is defined in Cost distribution profile as in below image. Volume can also be defined as Distrubution rule , if required.

      With regards,

      Mrinal

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