Evaluating Transportation Management

The following examples are issues that key executives face:

• How can I manage my logistics network in a holistic fashion?
• How can I minimize the risk factors throughout my supply chain?
• How can I reduce my operational costs and better understand transportation costs at the customer level?
• How can I ensure the best possible usage of my assets? How do I ensure high customer service levels and responsiveness to unexpected supply chain events?
• How do I ensure I am compliant with all of the varying regulations and compliance policies?

Transportation management is never an isolated process. Rather, it is always integrated into other business processes. If transportation management is poorly organized, it may have a negative impact on related business processes, for example, manufacturing or distribution.

SAP Transportation Management (TM) 6.0 and 7.0 evolved from the SAP Transportation Planning/Vehicle Scheduling (TPVS) solution. With SAP TM 8.0, the architecture was redesigned and the execution was improved.

As time went on, customer feedback and lessons learned from the early implementations were used as a basis for improving the solution further. As society and business make the move to mobile, SAP TM is evolving accordingly and now includes several mobile-friendly elements. For example, drivers can input updates using mobile devices and this information can be used to update customers of possible delays. While previous iterations included integration with Global Trade Services (GTS) and facilitated compliance, the focus more recently has been on improving the shipper and freight forwarder elements of SAP TM.

SAP Transportation Management as part of SAP S/4HANA is optimized for the processing of system internal transportation demand, with regards to data footprint and TCO:

• No replication of master data and customizing
• No replication of transactional data (for example, the freight unit is directly integrated in system internal predecessor documents without the need of the TM business object TRQ in between, which stores replicated order data)
• Direct integration of predecessor and successor documents without web service messages and monitoring of corresponding queues

As of SAP S/4HANA 1709, SAP Transportation Management as part of SAP S/4HANA also supports side-by-side scenarios, which means that transportation demand can also be received from other SAP ERP or SAP S/4HANA instances to process the necessary steps for planning and execution and send back the needed information to the source system of the demand. In this case, replication of data is needed and the mentioned advantages for system internal processing do not apply.

From a system perspective, an SAP S/4HANA system has to be installed and Transportation Management capabilities can be used for the following different scenarios:

1. System internal integration of SAP Transportation Management with SAP S/4HANA Enterprise Management applications in the same system instance ("Embedded")
2. System external integration of SAP Transportation Management with SAP S/4HANA Enterprise Management or ERP applications in other system instances ("Side-by-Side")

The benefits derived from using SAP TM include the following:

• Reduced costs and improved operational performance
• Improved carrier collaboration and resource utilization
• Efficient end-to-end order and process management
• Efficient logistics and fulfillment processes
• Improved execution visibility and responsiveness

In many cases, responsibility does not end by executing the shipment. Often, strategic contracts require that the shipments are traced, to provide visibility so that you can recognize and react to potential delays that could jeopardize customer service. This information is not often made available to ERP systems, whose concern is more finance-driven than service-driven. Depending on the type of products that are being transported to different countries, compliance with regional regulations regarding dangerous goods must be reviewed and adhered to.

With SAP TM, existing SAP ERP customers can achieve integrated order processing and management. SAP TM is delivered with out-of-the-box integration, with order-to-cash and procure-to-pay scenarios to support timely execution updates. In addition, integrated freight settlement with SAP ERP billing and invoicing is available for customers who want to increase the speed at which business process cycles are executed. More planning features are available to support comprehensive order management. This includes forwarding, freight (land), and booking (sea and air) order, and intermodal scenarios. This integrated environment provides full document flow and order lifecycle management, as well as a centralized order data management tool for planning, tendering, and so on.

A typical transportation process starts with order management. Order management is the process of creating a transportation requirement. Transportation requirements can be sales orders, purchase orders, deliveries, and so on. In a second step, these transportation requirements are planned. SAP TM offers manual planning functions, optimizer planning, and semiautomated processes (transportation proposal creation). Different aspects of planning supported by SAP TM are means-of-transport selection (for example, rail versus road), carrier selection based on real carrier rates, load optimization (3D-planning of container/truck utilization). Once the planning process is finished, SAP TM also supports the execution of transports. Execution includes delivery creation, document creation (print or electronic, like waybills), event management integration (track and trace), and warehouse integration (EWM integration). If you do not operate your own fleet, you must make sure that the external carrier is paid for their services. SAP TM allows you to maintain freight agreements, calculation sheets, and rate tables to accurately define real carrier costs, which can be used for charge calculation (already in the planning phase, carrier selection), but also for settlement processes after the transport has been executed. Analytics and reporting functionalities complete the available functions of SAP TM.

Transportation Management Main Areas:

• Requirements and Order Management
• Transportation Planning
• Transportation Execution
• Freight Costing and Settlement
• Analytics and Collaboration

Requirements Management & Order Management: The transportation process initiates with the management of transportation requirements and order processing.

For shippers, the creation of these requirements can occur in two distinct scenarios:

• Integrated Sales Order and Delivery Process: Sales order and delivery processes as well as transportation management are handled inside the same instance/system. Logistics business documents derived from Sales and Distribution (SD), Materials Management (MM), or those generated in Logistics Execution (LE) serve as the source for transportation requirements and planning.
• Decentralized Sales Order and Delivery Process: Sales orders and delivery are handled in one instance/system and transportation management is done in a separate instance/system. Order-based transportation requests (OTR)/delivery-based transportation (DTR) request represents a transportation demand based on an order/delivery that was created in an SAP S/4HANA ERP system. In this scenario, the order-based transportation requirements or delivery-based transportation requirements serve as the source for transportation requirements and planning.

For LSPs, forwarding order/forwarding quotations serve as the source for transportation requirements and planning.

All the above-mentioned documents serve as the source for transportation requirements and planning. The data from these source documents is used to generate the Freight unit. The business document data, with the freight unit building rules from the basis for the building freight unit. A freight unit represents a collection of goods that can be transported throughout the complete transportation process chain.

During planning, freight units are assigned to means of transport to create freight orders. SAP TM offers choices for manual planning, optimization-driven planning, and semiautomated procedures such as generating transportation proposals, creating unified packaging hierarchies, and optimizing loads. Load optimization specifically aims to maximize the utilization of container or truck space within a three-dimensional framework. In the planning process, various attributes (including those associated with time and geography), capacities (encompassing vehicle resources, types, and schedules), and elements related to the transportation network (involving locations, zones, and lanes) are considered. Also, the planning process addresses constraints, such as capacity, time, routing, scheduling, and incompatibilities.

Planning is conducted within the transportation cockpit user interface (UI). The transportation cockpit is able to tailor its interface to suit the specific planning scenario being undertaken. This includes options like map-based planning, Gantt chart planning, drag-and-drop functionality, load planning, and command-based planning, all of which can be executed seamlessly within the transportation cockpit.

Carrier selection can be undertaken either during the planning process or afterward. Carrier selection can be executed through multiple methods. It can be carried out manually, utilizing optimization algorithms, or via a tendering process. The primary aim of carrier selection is to establish a ranked list of carriers eligible to fulfill a planned freight order. This selection process considers various constraints such as costs, priorities, incompatibilities, and business allocations. The tendering process can function as an integral part of carrier selection or operate as a distinct and separate process. Within the tendering process, freight orders are proffered to eligible carriers through a tendering or auction procedure.

Transportation execution encompasses a comprehensive range of activities related to the management and documentation of shipments during their transit. The freight order serves as the foundation of the execution process, providing precise details and actual quantities of the cargo being transported. Any discrepancies arising between the initial order capture and planning phases, and the physical verification and handling, are systematically recorded. Furthermore, the process of moving cargo triggers updates to both the order and cargo status. This includes actions like manual entry of loading status into the transportation management system or automatic updates facilitated through SAP Event Management & Global Track and Trace, ensuring real-time visibility and traceability of the shipment's progress.

Charge management delivers comprehensive financial insights by supplying precise details concerning costs, revenue, and profitability within the transportation domain. Within this framework, agreements play a central role, serving as contractual instruments that represent both customers through forwarding agreements and suppliers through freight agreements. These agreements make explicit reference to calculation sheets that encompass an exhaustive list of charge elements used in the computation of fees for customers or suppliers. The calculation engine analyzes these charge elements within the calculation sheet and calculates the correct fees for customers or suppliers. The outcomes of these calculations are recorded in either the forwarding order for customer invoices or the freight order, for supplier invoices.

From the forwarding order and freight order, draft invoices can be created for settlement integration to the SAP S/4HANA ERP. To create customer invoices, forwarding settlement documents are created from the forwarding order and then are sent to ERP to create a billing document. For supplier invoice settlement, freight settlement documents are created from the freight order and transferred to ERP to create accruals and later to create a purchase order and service entry sheet (SES) for invoice verification or self-billing.

Within the SAP S/4HANA TM system, a range of overview pages, reports, and KPI dashboards have been created that are relevant for shippers and logistic service providers. These overview pages provide a consolidate view of all data from day-to-day activities and help in real time decision-making. These pages can be tailored to business roles, users who supervise transportation execution can start their day by navigating to the freight order execution overview.