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Author's profile photo Mrinal Kanti Roy

Capability of Reduced freight cost with Grouping Rule for collective settlement in SAP Transportation Management (TM)

Freight cost is increasing in recent past and most of the Transportation planners are trying their best to reduce the ‘Freight Spend’ with smart ideas. Recently, I worked on a requirement for a Retail customer to provide a system solution in SAP Transportation Management (TM) so that the Collective Rate (say for example Freight spend for a week) is less than the total freight costs for seven shipments in that week for a particular destination. A truck (or shipment) goes daily to particular customers and the shipper pays to the carrier on weekly basis. Requirement is to pay less than 7X euro for 7 shipments each with freight cost of X Euro.

SAP TM has a functionality of ‘Grouping Rule’ in collective settlement. Prototyped to demo the solution to the customer and the solution has subsequently been accepted. My present blog is to describe SAP TM’s functionality of ‘Grouping Rule’ in collective settlement.

Prototyped with 2 freight orders as below for the sake of simplicity. Freight cost for 1st freight order with 6.2 Ton is 80.60 Euro and for 2nd freight order with 9.3 Ton is 111.60 Euro considering the below rate scale on gross weight.

Individual Freight orders with 6.2 Ton and 9.3 Ton have been shown in below image .

Now, collective settlement has been done for these 2 freight orders and the system has grouped the two freight orders with the reduced rate (10 Euro/Ton) for the higher weight scale on cumulated weight (6.2+9.3=15.5 Ton) for the week as in below image.

There are 2 main configurations for this Grouping rule functionality.

  1. Grouping Rule is to be defined in transaction /SCMTMS/TCM_RULES. Freight orders are being grouped by Destination location in this case as required by the customer. There are other parameters (Calculation base) also possible.

 

2. Above configured Grouping Rule is to be assigned in Grouping rule for the relevant charge type in Calculation sheet as in below image.

 

Also note that this Grouping Rule works only with calculation at Header level (i.e not at item or stage level) in calculation profile.

This Grouping rule functionality enables the optimization of freight cost (obviously it also depends on the freight agreement or contract with the carrier). And it works for both LTL and FTL scenarios.

This Grouping functionality is available in both SCM TM and embedded TM in S/4HANA. This blog is based on my personal insights, observation and test in SAP S/4HANA 2021 release. Will appreciate your views / comment and feedback.

 

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      Author's profile photo Balaji Singh Lal
      Balaji Singh Lal

      Thanks for sharing your knowledge

      Author's profile photo Amudhan Arokiasamy
      Amudhan Arokiasamy

      Hello Mrinal,

      Thank you for sharing this.

      Could you please confirm how the 2 FOs stay consistent with the one FSD? What happens to their invoicing status? Since the rates on the individual FOs (are 12 & 13 Euros) and the collective FSD (is 10 Euros) are different. Will both FOs be updated with rates as per FSD?

      Author's profile photo Mrinal Kanti Roy
      Mrinal Kanti Roy
      Blog Post Author

      Hi Amudhan,

      Good question. FOs' are NOT updated with reduced rate from FSD. It is a limitation with standard SAP.

      With regards,

      Mrinal

      Author's profile photo Amudhan Arokiasamy
      Amudhan Arokiasamy

      Got it. thank you for your response!

      Author's profile photo Indraneel Maganti
      Indraneel Maganti

      Following

      Author's profile photo Jerome BARALIS
      Jerome BARALIS

      Thank you for your post !

      I have a question please -  In the calculation profile you define the level -

      in this case "1 calculation at header level"

      my problem is the calculation profile is assigned at purchasing organisation level in PPOCE by using the charge profile ID but sometimes in the same calculation sheet we need to have calculation at header level for one condition type and calculation at stage level for another. How can you manage this example ? in this case there is only one purchasing organisation (and one charge profile ID and one calculation profile).

      Thank you

       

      Author's profile photo Aleksandra Radys
      Aleksandra Radys

      Thank you for your answer.

      Unfortunately, the system still calculates with higher rates.

      I defined new Grouping Rule for Charge Calculation Resolution Base/ Grouped by: DESTLOC and for Calculation Sheet I set: Calculation Resolution Base: PRODUCT.

      I set also Calculation level: 1 Calculation at Header level

      Any reason, why system calculate it not correctly?

      Author's profile photo Kalyan Barla
      Kalyan Barla

      Hello Mrinal,

      Thanks for this blog.  have tried to use grouping rule for a business case and I tried to use the conditon in it with type, TCM_GROUP however it is limited for only TRQ Objects.  I am not sure why the conditon type is limited to TRQ while the logic of grouping rule can be used at a Freght order level.  Could ypu please check this and let me know if I have to raise a ticket for it?

       

      Thanks and Regards

      Kalyan