SAP S/4HANA Supply Chain Transportation Management: Evaluated Receipt Settlement (ERS) based Carrier Settlement
This blog post will help readers to understand how concept of Evaluated Receipt Settlement (ERS) can be used to automate Carrier Settlement Process.
Primary use case is for the customers in using SAP Transportation Management in SAP S/4HANA to procure Truck Transport Services from service providers during their Inbound and Outbound Logistics processes.
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.
Definition of ERS
Procedure for settling goods receipts automatically. When you use Evaluated Receipt Settlement (ERS), you agree with the vendor that the latter will not submit an invoice in respect of a purchase order transaction. Instead, the system posts the invoice document automatically on the basis of the data in the purchase order and goods receipts. This eliminates invoice variances.
More information can be found in the online help documentation
Readers familiar with the SAP Transportation Management process would be aware that Carrier’s (Trucking Service Provider) Invoice Settlement is a separate process to the Goods Supplier’s Invoice Settlement process.
Freight Order > Freight Settlement Posting > Purchase Order > Service Entry Sheet Auto Acceptance > Incoming Invoice Verification
Further information can be found via the link to the help documentation below.
Another important aspect I would like to address is the Tax determination. Tax code determination for purchase transaction is optional (as the Vendor Invoice will carry the Taxes) and postings can be done during the Invoice Verification step.
But when you don’t receive an Invoice, as in case of ERS process, it becomes mandatory to have the correct Tax Code derived upfront.
Also it is likely that Carrier Invoice have services having different Tax treatments (Trucking service has different Tax % than Documentation or Fuel Surcharge). The purchase order which is created as a result of the Freight Settlement process combines all the services under one PO Item. Thus the Tax Code derivation for PO Item does not make much sense and so Tax code has to be derived at the Service Entry Sheet item level.
This is explained in my other Blog Post below.
Also I searched and found a very good Blog Post on Evaluated Receipt Settlement process which would be helpful to understand the process and required setup. Though it focuses on Material Procurement, it helps to understand the aspect of ERS.
So with this much background lets understand how the SAP Transportation Management Freight Order Settlement Process works with ERS Settlement Process.
As already explained in the ERS Blog Post, the Carrier BP has to be flagged for ERS. As shown below
Handling the Error at the time of Freight Settlement Document (FSD) Posting: You will receive below failure during the FSD Posting.
Application Log in the FSD will show the reason.
Note that this message comes from the Materials Management module and not from SAP Transportation Management. ERS run expects the PO item to have Tax code derived.
Since we discussed already that it may not make much sense to have 1 unique tax code derived in the PO item, we need to handle this message via message settings in the MM module.
Make the following changes
With above setup you will be able to successfully post the FSD and create the Purchase Order and Service Entry Sheet as shown below
As specified in the ERS Blog Post it is expected that you have set-up the ERS related configuration so that Invoice document can be posted.
Handling the ERS Run using MRRL Transaction:
In the report for ERS Transaction Code MRRL, make sure that you run the report for your Carrier BP by setting the SAP Transportation Management relevant flag
Also note that if you have not done the ERS output message setup properly you will get an error message during the MRRL run. You can also avoid this by the message steering as shown below
MRRL successful run will then show the below screen where the Invoice document is created and posted by system resulting into the FI document
Happy reading and feedback appreciated !!!