Submitting and Evaluating Quotations and Award Process

Objectives

After completing this lesson, you will be able to:

Submitting an RFQ.
Evaluate Responses and Generate Agreements.

RFQ Carrier Definition

Carriers are maintained on the header level of the freight agreement master RFQ. However, the exact carriers for each item can be defined again on the item level by deleting specific carriers from an item. All of the carriers taking part in the strategic freight procurement (SFP) process must be first maintained on the header level. A carrier cannot be added on a separate item. The defined carriers are depicted in the following figure.

If a master RFQ is created from an existing freight agreement, the carriers assigned to the agreement are flagged as Incumbent. It is preferable to use incumbent carriers in a response evaluation by the optimizer at a later point.

In the Fiori Launchpad, go to Contract Management→Create Freight Agreement RFQ Master. This graphic shows the RFQ Carrier Definition.

Trade Lane

In SAP TM, the available geographical locations and relations are called trade lanes.

There are several differences between transportation lanes and trade lanes. While transportation lanes are crucial for optimizer planning and carrier selection, trade lanes do not influence optimizer planning. Trade lanes are master data that are used in Trade and Commodity Management (TCM), and sometimes as restrictions for carrier selections (in the case of allocations). Trade lanes are also important to analytics.

Trade lanes describe a geographical area or relation. Trade Lanes can include a defined source and destination (along) or only one defined source or destination (from or to). The source and destination are exact locations or zones.

Target Business Shares and Individual RFQs

You can request capacities for each item required. The requested capacities must represent the total capacities for the item. The capacities can be maintained in the most common units. Therefore, the requested capacity of the item already resembles the allocation information, as shown in the figure. At the end of the SFP process, agreement allocations are created for the items.

Contract Management→Create/ Edit Freight Agreement RFQ Master. This image shows the Target Business Shares.

Individual RFQ

Once the freight agreement master RFQ is created and finalized, the agent responsible for creating the RFQ sends the freight agreement master RFQ to the supervisor of the purchasing organization for approval. The standard SAP approval workflow is triggered and the approval task is shown in the supervisor’s SAP Inbox. Once approval is given, the agent creates individual freight agreement RFQs, as shown in the figure.

Individual freight agreement RFQs contain information from the master RFQ, but only the information designed for the individual carrier. Therefore, if a carrier is removed from a response item, the item will not be shown in the individual RFQ.

The agent can review the individual RFQs, which are also visible in the document flow of the master RFQ. Once the individual RFQs are reviewed, they are published or sent to the carrier.

If no further review of the individual RFQs is required, they are created and published in one step. This function is enabled by setting the indicator Create & Publish in the configuration of the RFQ type.

In the Fiori Launchpad, go to Contract Management→Create/ Edit Freight Agreement RFQ Master. This graphic shows the creation of an Individual RFQ.

Responses to RFQs and Agreement Creation

The carrier can access all the request for quotations (RFQs) submitted by the shipper in the SAP LBN (Logistics Business Network) if they are provided with an individual user. The RFQ shows all of the required information in the portal.

The most important part of the RFQ, an Excel sheet, can be shown in the portal. The Excel workbook contains the following: RFQ header, item, capacity, commodity, calculation sheet, and rate table information. For every rate table, there is a separate worksheet for rate table details. The carrier can download the Excel sheet and fill it with rates. Once this is completed, the Excel sheet can be uploaded to the LBN again, where SAP TM interprets it and creates the relevant TCM master data.

Evaluation and Freight Agreement Creation

Once the carriers have responded to the RFQ, the responses can be evaluated and compared. The SAP TM system supports the comparison by creating ranking lists and suggesting the optimal business shares. Negotiation rounds with carriers can also be started from here.

Carrier responses are shown in the freight agreement master RFQ as response items under the request items, as shown in the following figure.

In the Fiori Launchpad, go to Contract Management→Create/ Edit Freight Agreement RFQ Master. This graphic shows the received Carrier Responses.

In the Comparison Cockpit, the response for an individual RFQ or several RFQ items are compared. You can select the relevant items before navigating to the Comparison Cockpit, or add more items once the comparison of the initially selected RFQ items is completed.

There are two possible types of comparisons supported by two sections in the Comparison Cockpit:

The transportation manager can use manual response comparison if the following criteria are met:
- The only objective is rate minimization without any other constraints.
- The scenario is simple, for example, the number of carriers responding to the requirement is much less.
The transportation manager uses the automated comparison for the objective to minimize rates with constraints, such as the following:
- Minimum or maximum number of carriers
- Carrier-specific minimum or maximum target shares
- Incumbents’ minimum or maximum target shares
- Risk-related constraints
- Bonus/Malus, historical carrier performance linked to carrier selection:
  The automated comparison uses the carrier selection optimizer, which proposes the target business shares that are spread across carriers, bearing in mind the given constraints.

Response Comparison and Ranking

The rates defined by the carriers are compared and a ranking is shown in the Comparison Cockpit, as shown in the following figure.

The Response Comparison section of the Comparison Cockpit offers the following selection options:

Select all items: Every item in the column "Select for Comparison is selected.
Select matching items: Select a certain item type (for example, pick up charges) and choose Select Matching Items all pick up charges are selected.

This figure shows the Comparison Cockpit for the Response Comparison and Ranking.

Agreement Generation

Once the optimal business shares and carriers are selected for the next period, they can be awarded. Awarding the carriers in the SFP process means that freight agreements are generated for them. Freight agreements act as the contract between shipper and carrier.

As previously mentioned, agreement allocations are created per carrier while freight agreements are generated. The generation is based on the requested capacities in the request item of the master RFQ and the target business share defined for the carrier.

Upon completing the request for quotation (RFQ) and finalization of the evaluation, choose Create/Update Agreement in the RFQ master.
For each carrier, you can choose to have a new agreement or to update an existing agreement. Also, you can decide if you want to convert each RFQ item into a separate agreement.
Upon saving, the freight agreement is shown as a successive Business Document within the RFQ document flow.

This figure shows the generation of the Agreement.

FA RFQ Assignments

A shipper gets a response to a request for quotation from a carrier, which includes the request for rates in many different segments. Since the responsibilities for those segments are spread among different purchase organizations or departments, the freight agreement request for quotation (RFQ) must be distributed to different users, who should be able to work on the request for quotation at the same time.

The shipper wants to distribute the work on an RFQ to the responsible persons or departments. The responsible persons or departments want to work on the preparation and comparisons of the freight agreement RFQ responses at the same time.

This images shows the RFQ Distribution of the Freight Agreement.

The freight agreement RFQ serves as the master document, consolidating all requested transportation services (that is, items) of the request. After approving and publishing the master RFQ, the shipper can distribute the items to different users or organizations by creating an RFQ assignment document for one item of the freight agreement RFQ master.

To create an RFQ assignment document, you proceed as follows:

Within a freight agreement RFQ master, in the Items section, you choose Create/Update RFQ Assignment.
For the chosen RFQ item, a separate freight agreement RFQ master assignment is created with one transportation requirement item (based on trade lanes) inside, including a copy of previous responses, as shown in the figure.

Freight Agreement RFQ Master Assignment Creation

This figure shows the creation of the Freight Agreement RFQ Master Assignment.

When finishing the work in the RFQ master assignment, the user can transfer the information to the freight agreement RFQ master document, with a follow-up action on the RFQ assignment item. The prerequisite for merging an assignment item to the freight agreement RFQ master is that the item is already approved in the RFQ master assignment document.

Note

RFQ assignment documents have the same capabilities as freight agreement RFQ master documents. However, the publication to the carrier is only possible in the freight agreement RFQ master document.

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