Planning Transportation

Transportation Management (TM) supports a company in all activities connected with the physical transportation of goods from one location to another.

SAP S/4HANA introduced an additional deployment option for SAP Transportation Management (TM) where TM functionality runs on the same S/4HANA instance as the SAP ERP functionality: this is known as embedded TM.

The goal of SAP TM is to provide customers with the ability to either manually or automatically plan and optimize their transportation requests. This includes the ability to perform order consolidation. This means that a company can group orders with the same ship-from and/or ship-to locations for planning and managing transportation quantities more efficiently. For example, if multiple sales orders are being shipped to a predefined transportation zone, your company can try to efficiently schedule, route and combine these multiple orders, and choose an appropriate carrier. Planning and carrier selection can be done to try and find the most cost effective and timely route from source to destination while considering real-world constraints, costs, and penalties. The TM optimizer is capable of making multi-modal decisions regarding transportation by sea, air, truck, train, and/or any combination thereof. The SAP TM planning function can also deal with multi-pickup and stop options.

Business Scenarios in SAP Transportation Management:

SAP Transportation Management supports the following scenarios for shippers and logistic service providers (LSPs):

• Domestic inbound transportation

• Domestic outbound transportation

• International inbound logistics

• International outbound logistics

• Ocean freight

• Air freight

• Intermodal rail freight

• Courier express parcel

The initial event that triggers a transportation management process is a transportation requirement. This document may be created from a sales order, a purchase order, a stock transport order (STO), or a scheduling agreement. It might also be an outbound or an inbound delivery. All of these transportation requirements request the movement of a material from one location to another. This movement may be to a customer (external) or to another facility within the same company.

Each of these transportation requirements creates one or more freight units.

A transportation proposal defines how a freight unit can be transported through a transportation network (which is defined by locations, transshipment locations, transportation zones, transportation lanes, vehicle resources, schedules and bookings). For a given transportation demand (freight unit), the system determines a set of alternative transportation proposals.

The first purpose of a transportation proposal is to help the user identify the different transportation options for a freight unit. In a complex network, in which end-to-end transportation requires several stages, transportation proposals are an easy way to make the different options transparent. Transportation proposals can differ from one another with respect to the chosen routing, the selected means of transportation, and/or the time required. Each of these variables can increase or reduce costs, and the proposals thus provide the planner responsible with the necessary information to make an appropriate choice.

Transportation proposals can be displayed in a tabular format or they can be visualized on a map.

Freight orders represent a single shipment or load departing from one of your facilities (outbound scenario) or arriving in one of your facilities (inbound scenario). A freight order can be created manually or automatically (for example, by using the Vehicle Scheduling and Route (VSR) optimizer). Freight orders are the basis for carrier selection, tendering, and freight settlement processes.

A freight booking can also be created as one of the results of transportation planning, similar to a freight order. You use freight orders mostly for land transportation and you use freight bookings mostly for sea and air transportation.

In a freight order, freight units from different transportation requests can be consolidated. The VSR optimizer aims at finding the lowest cost solution based on the freight units to be planned, the transportation network (as defined in master data) and, for example, the costs defined in the relevant planning profile for the VSR optimizer.

Carrier selection is used to assign a suitable carrier to your freight orders, either manually or automatically. The aim is to find a carrier that can provide transportation against the lowest possible costs while considering all of the defined constraints.

During manual carrier selection, you manually assign the required carrier to your business documents. If you have configured a check against transportation allocations, the system takes this into account and checks transportation capacities (transportation allocations) that you have defined for the individual carriers. If, during the allocation, the system finds relevant transportation allocations without capacity or that certain rules are violated by the current allocation, warning messages appear.

A separate optimization run is available for automatic carrier selection. It takes selected optimization options into account when determining the most cost-effective carrier for all business documents that you have selected. If none of the carriers are available, the system does not assign any carrier to the relevant business documents.

The Order Tendering Process:

When carrier selection has taken place, communication with the selected carrier needs to be initiated. This process is referred to as order tendering. Different tendering processes can be deployed depending upon the technology used by the carrier. You use this process to tender (offer) a freight order to one or more potential carriers. Tendering is a bidding process, in which you request one or multiple carriers to submit a quote for a transportation service that is defined in a freight order. You can select the carrier that you want to execute the transportation service by evaluating the quotes. The main characteristics of the tendering process are flexible configuration and the reduction of required manual interaction to support ease of use and lower total cost of ownership (TCO).