Explaining the Transportation Management Features and Functions

In this video, we explore transportation logistics in a global economy and the challenges of managing global supply chains. In particular, some of the business challenges executives and their teams face are:

• How can I holistically manage my logistics network?
• 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. Instead, it's permanently integrated into other business processes. SAP TM seeks to provide a full suite of tools built for managing the various operational stages of transportation management and integrations to ensure seamless function and transparency across your business.

SAP Transportation Management (SAP TM) provides comprehensive support for a wide variety of complex scenarios relevant to shippers and logistic service providers around the world. Supported scenarios include the following examples:

• Scenario Types: Inbound, outbound, domestic, and international.

• Goods/Cargo: General, bulk, fluid, packaged, and loose.

• Shipping Types: Less than Truck Load (LTL), Full Truck Load (FTL), Less than Container Load (LCL), Full Container Load (FCL), and Courier Express Parcel (CEP).

• Movement Types: Direct shipment, uni-modal, multimodal, port-to-port, door-to-door, and export shipment

• Stage Types: Pickup, precarriage, main carriage, on-carriage, delivery, drayage, and haulage.

• Parties and Roles: Ordering party, shipper or sender, consignee or recipient, invoicing party, payment party, notifying party, agreement party, importer or exporter, and forwarder or carrier.

• Legal Documentation: House Bill of Lading (HBL), House Air Waybills (HAWB), manifests, and delivery notes.

The processes covered by transportation management fall under these five stages:

1. Requirements and Order Management
2. Transportation Planning
3. Transportation Execution
4. Freight Costing and Settlement
5. Analytics and Collaboration

The following video briefly summarizes each of these transportation management stages.

The transportation process starts with the management of transportation requirements derived from orders. For shippers, the creation of these requirements can occur in two distinct scenarios:

• Integrated Sales Order and Delivery Process: Sales order and delivery processes and transportation management are handled inside the same instance/system, often referred to as "Embedded". 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 deliveries are handled in one instance/system, and transportation management is done in a separate instance/system. Order-based transportation requests (OTR) or delivery-based transportation requests (DTR) represent a transportation demand based on an order/delivery created in an SAP S/4HANA ERP system. In this scenario, order- or delivery-based transportation requirements are the source of transportation requirements and planning.

All the documents mentioned here are sources for transportation requirements and planning. The data from these source documents is used to create one or multiple freight units. The business document data, along with freight unit building rules, form the basis for building a freight unit. A freight unit is the smallest planning unit used in transportation planning and represents a collection of goods that can be transported together 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 aims to maximize container or truck space utilization 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 can tailor its interface to suit the specific planning scenario. 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 done 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 constraints such as costs, priorities, incompatibilities, and business allocations. The tendering process can function as an integral part of carrier selection or 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 managing and documenting shipments during 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 between the initial order capture and planning phases and the physical verification and handling are systematically recorded. Furthermore, 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 and 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 between purchasing organizations and suppliers through freight agreements. These agreements explicitly reference 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 transportation charges. The outcomes of these calculations are recorded in the freight order for supplier invoices.

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

The following table provides a list of transportation objects and their corresponding definitions:

Customers can access detailed instructions and guidance for running SAP Best Practices for SAP S/4HANA Supply Chain for Transportation Management. By following the guidance in the following notes, you will be able to successfully implement these best practices:

The following books cluster several simulations by topic.

Master Data and Configuration

Transportation Requirements

Transportation Planning

Transportation Execution

Freight Costs and Settlements