Spot Tender in SAP S/4HANA Transportation Management

This blog post will help readers, customers, and SAP TM users familiarize themselves with the SAP Transportation Management’s Spot procurement functionality.

SAP Transportation Management’s spot procurement is a subset of the Tendering process.

In this blog post I will be shedding light only on one of many ways in which we can carry out spot tender. The process may vary on the business needs and processes.

You can read more about SAP S/4HANA Transportation Management -Tendering in the Application Help for SAP S/4HANA

https://help.sap.com/viewer/e3dc5400c1cc41d1bc0ae0e7fd9aa5a2/2020.latest/en-US/c336c907db3742eeb97e9138dd419970.html

Note: I have carried out the demonstration with relevant screen shot from an internal system for ease of understanding. There’s no relevance or relation to any external source.

Use Case

Use case is for both the customers in Transportation & Logistics Industry (T&L) as well as shippers from Retail, CPG, manufactures etc. who procure services to move their loads or are in business of providing transportation services.

Assumption: 

The customer is a CPG company and implemented SAP S/4HANA 2020 and uses SAP Transportation Management.

They have yearly contracts with the carriers to move certain capacities on a given corridor/ route. Alternatively, they may also reach out to carriers who don’t have a contract. Contract in the SAP TM world should be referred as FRA (Freight Agreement).

Challenge:

During certain festive seasons the demand on a particular corridor may outweigh the capacity already procured during the start of the year. In this situation, it becomes really very important to meet the increasing demand and ship the goods to our esteemed customers within the stipulated time frame.

In an ideal world, in the absence of SAP TM spot tendering, the procurement team may reach out to the carriers through different mediums like offline mode e.g. phone call and/or emails. In the end, business may find a carrier with lots of hassle and by paying more premium. For the leadership as well, this seems to be a non-transparent process where there’s no opportunity to weigh all the carriers at a single glance and view the amount quoted by each carrier. As this may be a post facto process for some of the businesses but may have a very devastating long term effect eating into the bottom line.

Solution:

SAP TM has an out of the box solution to streamline spot tender process which provides step-by-step visibility and more opportunity to drive the tender process. It also has a provision to receive responses from the different carriers through different mediums eg emails, portals, EDI etc. It’s not necessary for the carrier to use SAP TM.

Scenario:

Let’s move directly at the stage where a FRO is created. During carrier assignment either the carrier rejects, capacity is exhausted, or we don’t have a carrier contract for a given corridor.

We start with an assumption that all Tender relevant configs are in place as the focus is not on setting up the system but on functionality walk-through.

Pictorial representation of the demonstrated functionality:

Basic Tender flow ( Representation purpose )

Step 1: Select a FRO to initiate Spot tender.

FRO Subcontracting tab

Click on the ‘New’ button under Tendering Execution in the Subcontracting tab.

Initiate new tender by clicking NEW

Step 2: You have below 3 options to select a tender profile. I have selected ‘Determine and load’

Select any option based on your process setup

Once the tender profile is successfully loaded you can enter the price limit, add/delete carrier and modify the Maximum response time.

Tender profile loaded and can be modified

Step 3:  Upon finalization of the tender, we need to click on ‘Publish and Save’. System will display below message stating the Tender plan was consistent and RFQs were published successfully.

The above button is greyed out because I took the screenshot after clicking on ‘Publish and save’.

You will observe system has generated RFQs and are now published to the respective carriers depending on the medium we opt for. In this demonstration, I’m not including the process of capturing carrier’s response. We will directly jump to the step where system has recorded the carrier responses.

Step 4: At this stage, we can analyze the recorded the response from the carrier along with submitted price.

Analyze the Response and Award Status

Note: Let us now consider two scenarios in the case of Award quotation:

1. Awarding a carrier with whom we don’t have a Freight Agreement.
2. Awarding a carrier with whom we have a Freight Agreement.

In the below steps we will see how system calculates the spot tender charges in the above two scenarios.

Step 5:  Awarding a carrier with whom we don’t have a Freight Agreement. We can see Carrier B has submitted amount as 1800 EUR.

We will go ahead and award carrier B.

Awarding Carrier B with no FRA

Post awarding the carrier since system couldn’t determine a FRA , it displayed below message which is an acceptable message and nothing to worry about.

Warning message post carrier award

When we observe the Charges tab, system has assigned the entire spot tender amount to the Adjusted/Quoted Amount charge type.

Analyze the Adjusted/Quoted amount

Step 6 : On the other hand, if we would have awarded carrier A who submitted a price of 1900 EUR and has an existing agreement then below would be the charge calculation. System subtracts agreement charges from the submitted charges i.e. giving a clear picture of the individual charges incurred.

Awarding Carrier A with submitted price as 1900 EUR.

Awarding carrier A with a active FRA

Post awarding, system will display a successful charge calculation message.

Charge calculation successful

When we observe the Charges tab, system has assigned the spot tender amount to the Adjusted/Quoted Amount charge type and respective FRA charge types based on the contractual agreed amount.

Analyze Adjusted/Quoted amount and respective FRA charge types

The demonstration in this blog post doesn’t focus on the configs to setup the system nor does it highlight the further freight settlement process.

Hope this article helps all of us understand a basic flow of the spot tender process in the SAP S/4HANA Transportation Management world. There may be multiple different ways to carry out the tendering process but, in this demonstration, I chose to keep it generic and simple.

Thank you for taking time and effort to read this.

Feedback/comments in any form will be highly appreciated.