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Tips for Understanding and Estimating External Integration Requirements for SAP Transportation Management (SAP TM) Projects

The integration of external systems and logistics services providers (LSPs) with SAP TM is a huge value driver for customers having diverse transportation business requirements. It enables customers to eliminate expensive manual processes as well as to improve collaboration with key business partners. It also turns out to be one of the larger efforts in terms of cost and time during SAP TM implementation projects.

Of course, SAP TM is natively integrated within SAP S/4HANA for order and delivery management as well as settlement. However, regardless of the customer industry, there are many other types of integration requirements to be considered and potentially fulfilled as needed during an SAP TM project implementation.

My experience as a platinum SAP TM consultant across multiple large-scale, global SAP TM implementations has shown me that the number and complexity of these integration efforts is often under scoped and, therefore, underestimated during project planning. This leads to change requests and project delays, reducing the customer’s projected ROI.

The purpose of this post is to help you who plan SAP TM project implementations understand and consider the key drivers for estimating integration efforts, helping to deliver these projects within expected time and budget.

There are several integration topics to consider and document with a customer and implementation partner (if applicable) when planning an SAP TM project.

Business Functional Scope of Integration

Decisions stemming from this first topic, Business Functional Scope of Integration, will determine which integration points are necessary for each transportation functional area to be implemented. Once the functional integration points have been considered for each “in scope” process area, then you must consider which of these integrations is required 1.) by transportation mode and 2.) by each of the geographic regions and/or countries that are in scope for the SAP TM rollout.

Business functional scope areas may include (but are not necessarily limited to) the below representative list of typical transportation mega process areas. Each mega process can have several potential integration points.

Transportation Order Management is the capture and initial processing of transportation demand requirements, planned or firm, from various sources. Integration requirements for this process area may include:

  1. Forecasted transportation requirements imported from external demand forecasting or supply chain planning systems
  2. Firm transportation requirements imported from external order management systems
  3. Advance ship notices (ASNs) from external vendors for inbound or customer direct shipments

Transportation Planning represents the process by which transportation requirements are turned into actual shipments including determination of the transportation mode(s), planned schedule or routing, shipping time window, and carrier(s) and/or LSP(s) who have been engaged to execute the shipment. Integration requirements for this process area may include:

  1. Master or transactional data residing externally from SAP TM that is necessary for planning and/or execution
    • Geographic Information System (GIS) for distance and duration determination (e.g., truck or rail ground transportation), geo positioning and/or map display
    • Real time freight rate determination from external rate engines, e.g., SMC3 for LTL, parcel carriers
    • Equipment master data for defining resources and their capacities, e.g., rail cars
    • Routes and schedules published by external sources, such as rail and ocean carriers
    • Driver information exchanged between SAP TM and external fleet management systems
  2. Collaborative communication of requirements between business partners (e.g., shippers, consignees, carriers, LSPs) within and outside of the SAP ecosystem
    • Booking and tendering processes – truck and rail tenders; ocean nominations and bookings; airline bookings
    • Pickup and delivery appointments
    • Communication of order and/or shipment details with external planning and/or routing systems
    • Shipment details exported from SAP TM to external fleet management systems

Transportation Execution is the physical process of transporting the goods from the shipping location to the end consignee location. Integration requirements for this process area may include:

  1. Shipment status updates to and from LSPs, e.g., revised shipment information, proof of pickup, shipped on board, in transit, proof of delivery
  2. Shipment status updates to customers/consignees, e.g., departure, ETA, arrival
  3. Shipment details exported from TM to external Warehouse Management Systems (WMS) for picking and shipping

International Trade Management involves the communication of international shipping requirements with international trade intermediaries in order to produce the required export and import documentation and notifications. Integration requirements for this process area may include:

  1. Export documentation to or from freight forwarders, government entities or other intermediaries
  2. Import documentation and customs filings to or from freight forwarders, customs brokers, government entities or other intermediaries

Transportation Procurement includes both strategic and operational processes to source transportation rates and equipment capacities from carriers and LSPs to fulfill the customer’s operational transportation requirements. Integration requirements for this process area may include:

  1. Freight contract master data for rating and routing, e.g., rates and capacity commitments, from various sources
  2. Spot market proposals from various sources, such as brokers, portals or load boards

Freight Settlement represents the end of the operational transportation process where freight costs are calculated, accrued, allocated to the proper cost accounting entities and paid to carriers and LSPs based upon their freight invoices. Integration requirements for this process area may include:

  1. Invoices for transportation services from carriers and other LSPs
  2. Invoices from government entities for customs duties, value-added taxes or toll charges
  3. Communication of shipment information to external freight audit and payment providers
  4. Communication of freight charges due from customers to external invoicing entities
  5. Communication of shipment information to external tax calculation engines

Technical Scope of Integration

Once all business functional integration requirements have been documented and the number of required integrations has been ascertained, addressing the second integration topic, Technical Scope of Integration, can help determine the final metrics to be used in estimating the overall integration effort.

  1. How many business partners are to be connected for each integration point?
  2. What is the complexity of each integration point?
  3. Will an integration hub (e.g., external service or portal) be used to limit the number of business partner touch points? Or does each partner require a separate integration?
  4. What integration middleware will be leveraged to implement each integration touchpoint? Consider the time and effort to deploy this middleware as well.
  5. Are there standard integration formats that will be leveraged (such as EDI/EDIFACT)? Are custom formats required?

In conclusion, the scope of the SAP TM implementation, including integration requirements, needs to be ascertained and documented with the customer and, if applicable, implementation partner during the initial project planning and estimation phase in order to achieve the desired result. Addressing the above functional and technical considerations will go a long way toward more precisely determining the number of integration points and the time and effort required to deploy each integration and, therefore, the customer’s overall SAP TM solution. Following this process will help you avoid common pitfalls and surprises that lead to critical delays, cost overruns and change requests, resulting in a more successful implementation project for the customer.

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