SAP Transportation Management: A Comprehensive Guide

Optimize your transportation with SAP TM. This guide provides the knowledge you need to implement and leverage SAP Transportation Management effectively.

SAP Transportation Management: A Comprehensive Guide

Summary

SAP software streamlines various aspects of the business. It simplifies and automates everyday tasks, allowing organizations to focus on their core operations. 

SAP also plays a crucial role in combining and automating essential operations within the transportation industry, allowing firms to perform more efficiently and effectively. It has also helped to enhance and streamline transportation management for numerous firms. 

Therefore, this blog will help us better understand SAP's role in transportation management. Continue reading as we understand the basics in the following sections. 

Transport Management in SAP S/4HANA

TM (Transport Management) began as a stand-alone SAP Business Suite program with one or more distinct SAP ERP systems. It was the primary tool for coordinating transportation procedures centered on shippers and LSPs. 

With the introduction of SAP S/4HANA, TM capability was incorporated into the program to more thoroughly connect with the digital core, logistical and financial procedures, and master data. Since SAP S/4HANA is the company's long-term strategic enterprise software, all components must be accessible as integrated products or embedded portions of the suite to adhere to maintenance guidelines.

One of SAP Transportation Management's most significant benefits is its public cloud application. However, the software is limited compared to the on-premise version of S/4HANA, released in 2022. The main scope of TM in SAP S/4HANA Cloud, public edition, includes creating freight orders, planning those orders in an external instance, and bringing the planning results back into TM for further settlement, tendering, and execution. 

Different Levels of Shipping in Transportation

SAP ERP's shipper transportation management module must be synchronized with TM, as it was transferred to SAP S/4HANA. Although LE-TRA usage has been extended to the end of 2030, a two-level scope for TM capabilities was decided upon.

Transportation Management (Formerly Known as Basic Shipping)

All semantic functions that were a part of LE-TRA are now available in a comparable manner as part of TM in SAP S/4HANA, and they are all included in the base edition of TM. The SAP S/4HANA license includes the TM basic shipping scope. However, its scope does not include upgraded or engine-based features.

Advanced Transportation Management (Formerly Known as Advanced Shipping)

Advanced TM refers to TM's full potential, whether it be for shippers' prolonged use or end-to-end LSP operations. The basic SAP S/4HANA license does not cover it and calls for a separate license.

Steps to Mastering Transport Management in SAP S/4HANA

Transportation Scenarios for Freight Unit Creation 

Freight units may be formed based on various items or documents, depending on whether the fundamental process is an outward, inbound, or stock transport operation. 

The following procedures can produce freight units: 

  • Inbound from Supplier

  • Advanced Intercompany Sales 

  • Lean Customer Return, 

  • Sales Scheduling Agreements

  • Advanced Intercompany Stock Transfer

Streamlined manual transportation planning across all modes 

The four-step manual transportation planning process supports every transportation organization.

  • Manual planning is the initial phase in which freight units are allocated to freight orders or reservations.

  • The next phase is subcontracting, in which you designate a carrier for your freight reservations or orders.

  • The third step is to obtain the carrier's confirmation. EDI may be used to transmit the subcontracting request and receive the confirmation.

  • The last stage is to trigger the creation of the delivery. This can be done manually or through a background task for one or more freight orders or reservations.

Optimized external transportation planning with seamless integration 

The four-step external transportation planning process is independent of the base process and the form of transportation you employ, and it supports both road and rail transportation.

  • Reviewing freight unit details is the first phase; at this point in the process, a dispatcher could wish to concentrate exclusively on blocked freight units. The freight units are transferred to the external system after they are in good condition.

  • The second stage in the external system involves arranging the freight units, creating freight orders, assigning freight units, and subcontracting them. After being marked as "ready for transportation execution" in the external system, the scheduled freight orders are returned to SAP S/4HANA Public Cloud.

  • Step four is creating deliveries, and step three is keeping an eye on the freight orders made in the external planning system.

Accurate transportation charge calculation and rate management 

You may determine the costs for shipping items in freight orders based on the rates you keep in a rate table or locally in a freight agreement. The foundation for determining the transportation costs your carrier will bill you is a released freight agreement, a contract between you (the purchasing organization) and the carrier.

You may utilize a charges template when there is no genuine released agreement between the carrier and the purchasing organization. After charges are computed accurately and successfully, you proceed with the freight order's subsequent cost distribution tasks.

Adequate freight settlement for financial accuracy 

The freight expenses computed for the freight documents (freight orders and bookings) must be recorded in financial accounting as accruals to pay the carriers or freight forwarders. 

The freight expenses can be recorded in financial accounting as soon as the freight papers are in a state where the transportation has begun or been finished. The anticipated expenses determined in the freight document are compared to the invoice from the carrier or freight forwarder. The expected costs in the freight document are compared to the invoice from the carrier or freight forwarder.

Precise cost distribution for consolidated freight orders

Usually, a freight order combines freight to many consumers. This raises the issue of dividing the freight charges that the carrier has billed for the freight order among the delivery items that have been shipped with it. The whole freight cost of the freight order must thus be broken down to the level of a delivery item.

SAP S/4HANA = Solid Choice for Transportation Management

With all the characteristics above, SAP S/4HANA Public Cloud is a good option for successfully and efficiently managing transportation activities, particularly for basic transportation requirements. However, if your business needs more sophisticated automation and optimization in transport planning, you can integrate an external planning tool or consider SAP's Cloud for TM or the private version.

Want to optimize your transport operations with the power of SAP? Connect with our experts for MDSaptech SAP TM integration solutions today!

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