SAP Solution in Detail SAP Supply Chain Management

SAP TrAnSPorTATion MAnAgeMenT

IMProve TrAnSPorTATIon reAdIneSS, FlexIbIlITy, And AgIlITy

The SAP Transportation Management (SAP TM) application helps organiza tions achieve superior cus tomer satisfaction levels by delivering the perfect order, reduce transporta tion costs, and improve logistics readiness, flexibility, and efficiency. SAP TM supports integrated storage, fulfillment, and transporta tion processes with no data redundancy and reduced integration risk. SAP TM enables you to manage all inbound and outbound domestic and international freight in the same environ ment and provides trace ability and visibility of orders, shipments, items, and logis tics processes.

ConTenT

4 5 5 6 8 9 12 13 16 17 18 18 18 18 18 19 19 20 20 21 22 23 23 24

Increasingly Complex Transportation Issues A Robust, Flexible Application for Transportation Management Process overview Managing Transportation requirements and Forwarding orders Managing Freight and bookings Planning Freight and Selecting Carriers Tendering Freight executing and Monitoring Freight Settling Freight orders and Forwarding orders Transportation Management Scenarios domestic outbound Freight Management outsourced Transportation domestic Inbound Transportation International Inbound logistics International outbound logistics The Working Environment SAP netWeaver business Client Serviceoriented Architecture enterprise Services: The Foundation for Process Integration business object Structure Simplification of the business object Model Optimize Your Transportation Operations Find out More Quick Facts

inCreASingly CoMPlex TrAnSPorTATion iSSueS

Tougher ThAn ever To MAnAge All The MovIng PArTS

Commercial transportation has become an extremely complex process involving worldwide networks of shippers and logistics service providers (lSPs) moving raw materials, parts, and finished goods along global supply chains. This, combined with ever increasing demands from customers for greater transportation efficiency, requires greater accuracy, speed, and flexibility to manage all the moving parts. your supply chain network should be tightly integrated to support transparent global and domestic processes: Managing transportation requirements and forwarding orders Managing the order receipt or inquiry from multiple sources of demand; supporting the complete lifecycle through completion of transportation requirements Managing freight and bookings reserving and booking capacity and freight with ocean and air carriers Planning freight and selecting carriers optimally planning sales, purchases, stock transfers, deliveries, and order returns (including route and lSP optimization and tendering) while continuously improving simple to complex routing and lSP selection decisions Tendering freight Planning equip ment and resource capacities with carriers and other lSPs Executing and monitoring freight getting the shipment picked up, loaded, and on the road through a transparent yet controlled process

Settling freight orders and forwarding orders determining and accounting for freightrelated billing to customers, expenses for accruals, and payments to lSPs In addition, you should have support in the following areas: Process integration Integrating the supply chain network to support complete visibility and transparency for both global and domestic shipping while measuring important process metrics Regulatory compliance validating and complying with international legal regulations as well as requirements for dangerous goods Analytics Integrating with reporting and analytics tools for performance evaluation, analysis, and interpretation of transportation data Technology Supporting growth and stability with a futureproof platform based on worldwide standards such as serviceoriented architecture As we show in the following sections, the SAP Transportation Management (SAP TM) application delivers on all these dimensions. SAP TM enables you to manage all inbound and outbound domestic and international freight in an integrated environment that provides visibility into business and logistics processes, offers tools for reporting and analysis, and supports regulatory compliance.

With SAP TM, you can plan the transpor tation of shipments for many common order types such as sales and purchase orders, returns, and stock transfers. you can use the order manage ment functionality in SAP TM to create, edit, and confirm the freight orders from your various ordering parties.

SAP Solution in Detail SAP Transportation Management

A robuST, Flexible APPliCATion For TrAnSPorTATion MAnAgeMenT

Key FunCTIonS

From the time an order is received, you have to efficiently plan, execute, and manage your logistics operations to meet customer expectations. SAP Transportation Management simplifies and enhances your transportation pro cesses by enabling you to automatically route and rate orders, collaborate with carriers, generate documentation, coordinate with the warehouse, and track every step. SAP TM also provides flexibility to man age crossorganization and company transportation processes according to your companys needs. Figure 1 shows how information can flow internally and to partners to support transparency and control. The application supports predefined scenarios based on best practices in transportation for specific industries and regions. This lets you simplify implementation steps and reduce time, effort, and cost for implementation.

Freight forwarder goods delivery

Collaboration

Shipper

Customer

Carriers

Figure 1: Planning, Orchestration, and Execution of the Physical Movement of Goods

SAP Transportation Management

Transportation planner Specialist Transportation dispatcher Transportation charge clerk

order management

Freight planning and tendering Analytics and reporting event management

Freight execution and monitoring

Freight settlement

Import and export, dangerous goods, and compliance document and output management Integration and connectivity
Figure 2: Overview of SAP Transportation Management

Process Overview
SAP TM simplifies and enhances your transportation processes by providing a robust and integrated order manage ment environment (see Figure 2). you can automatically route orders, collabo rate with carriers, generate documenta tion, coordinate with the warehouse, ship product, and track every step. your organization receives orders throughout the day quite possibly from multiple order management appli cations. SAP TM treats these orders

as transportation requirements. From these requirements, freight units are created and used to consolidate or split transportation requirements so they are sized properly for transportation resources such as trailers, containers, vessels, and rail cars. Freight units are used to create freight orders through either manual or auto matic planning, which includes routing,

scheduling, and selecting the lSP. Freight orders can either be processed internally or used to order transportation services from an lSP via a tender. Freight orders are then used as the basis for the costing, with contracts and rates used as the basis for calcu lating costs. different rate structures, accessorials, and surcharges are repre sented by charge elements, and those

SAP Solution in Detail SAP Transportation Management

charge elements are grouped together in a charge calculation sheet to deter mine the freight order costs. A settlement document is generated from the freight order. The settlement document is then integrated with mate rials management functionality in the SAP erP application to create the pur chase order and service entry sheet. Freight match, auditing, and payment are then managed from SAP erP. Throughout the process, each step retains a status, and each business partner can be notified through standard confirmation messages of the current status. The following sections outline in more detail all the core processes supported in SAP TM (see Figure 3) with the rele vant features and functionality.

Managing Transportation requirements and Forwarding orders your ability to manage orders affects your entire business. orders must be managed in concert with other opera tions such as customer service, manu facturing, warehousing, and export and import activities. SAP TM supports your transportation processes based on sales orders, stock transfer orders, purchase orders, and delivery orders. Called orderbased or deliverybased transportation requirements in SAP TM, these orders are integrated and synchronized with the SAP erP appli cation. Transportation requirements can originate from SAP erP or from an external order management application. This integration makes it possible to plan and schedule loads, tender ship ments to carriers, trigger execution,

and calculate and compare freight costs. because you have earlier visibility into requirements, the entire process is more agile. you can plan more cost effective modes of transport, defer hard commitments of inventory, and improve efficiencies. Its important to have the ability to dynamically manage changes to orders, which can occur frequently. SAP TM supports change management based on your business rules, even up to the loading time frame. If SAP TM is used as a standalone transportation management solution, forwarding orders are used to repre sent the transportation requirements entered directly into SAP TM. orders can be received as businesstobusiness (b2b) messages or created manually in SAP TM. orders can be communicated to and from SAP TM using regional or interna tional standards, such as those devel oped and promoted by ASC x12 and the united nations,1 which streamline the communication and interchange of business transactions. SAP TM supports order integration through: Standard open interfaces that allow any backend system to get connected Standard content from the SAP netWeaver Process Integration (SAP netWeaver PI) offering for incoming transportation requirements Standard integration with SAP appli cations, including SAP erP, for sup port of orders and deliveries

Managing transportation requirements Settling forwarding orders Managing forwarding orders

Settling freight orders

Managing freight and booking Planning freight and selecting carriers Tendering freight

executing and monitoring freight

Figure 3: Business Processes Supported by SAP Transportation Management

1. The Accredited Standards Committee (ASC) x12 is chartered by the American national Standards Institute (AnSI) to develop, maintain, and promote electronic data interchange (edI) standards. united nations/electronic data Interchange for Administration, Commerce and Transport (un/edIFACT) is the international edI standard developed under the united nations. 6 SAP Solution in Detail SAP Transportation Management

 direct pointtopoint communication between SAP erP and SAP TM using Web services reliable messaging (WSrM) Communication with warehouse management functionality in SAP erP during execution to automatically generate delivery and shipment docu ments at the time you need them There are many levels to the transpor tation request that help you maintain information regarding products, partners, document references and attachments, freight costs, status, and tracking, as well as any important notes or legal informa tion. The transportation request is also used to provide quotations for trans portation charges and booking orders to reserve and book carrier capacity. during sales order processing in SAP erP, transportation conditions in SAP TM, such as transit time, are taken into account when calculating feasible dates and quantities for order items. using uptodate information, you can reduce both time buffers and safetystock buffers, and when critical availableto promise situations occur, you are better able to use the resources available. As a result, you can serve more custom ers and increase delivery reliability. In addition, the resulting dates and quanti ties are a sound basis for subsequent activities, such as material requirements planning (MrP). The benefits of sales order scheduling are: realtime (synchronous) integration of SAP TM constraints

better and more profitable decisions better customer service Managing Order Changes order changes can dramatically impact your current operations. In SAP TM, these changes are managed through business rules and alerts and are visi ble throughout the process. SAP TM uses sophisticated logic to help you manage unexpected changes to your daily operations by automatically check ing equipment or space availability or by notifying you of sudden shipment scheduling changes. This is managed by the change controller.

The change controller in SAP TM checks important fields such as locations, order dates, quantities, and stage information. The action the controller takes with respect to the new changes depends on the strategies defined for those spe cific fields. based on those conditions, the change controller selects and uses one of several strategies to manage the change. Strategies are used to determine if changes impact existing documents and associated plans, if alerts should be sent, and if any existing business objects, such as the freight order,

Transportation Proposals
Customers and business partners may request routing information at the time of transportation requirement creation. The transportation proposal helps you quickly generate feasible shipment plans for your order by determining the best possible routes, carriers, and costs. on an orderby order basis you can view all possible routes based on carriers, capacities, freight costs, and lead times and then choose the best option. you can also take advantage of predefined strategies that allow the automatic selection of options that best fit your needs. you can also automatically trigger transportation proposal functionality when you create or change orders. This is especially useful for rush orders. For rush or lastminute orders, the ability to automatically create shipments from orders helps reduce total cycle time from the moment a customer enters an order until you load the product onto a vehicle (see Figure 4).

After determining an effective method to deliver your orders by using the transportation proposal, you can later take advantage of the functionality of the SAP Transportation Management application to optimize routes even further. you decide how best to serve your customers while saving on freight costs.

Quotations
Quotations can be created and stored to provide your internal and external customers the potential costs and route for an expected transportation request. For example, if you have been asked to quote the freight costs prior to receiving the purchase order for a material, a quotation provides a record of what you had confirmed initially to your customer. you can generate a transportation request directly from the quotation, providing a complete document history of the order.

should be rebuilt based on the changes. For example, if the new change does not exceed the capacity of the vehicle, no rebuilding or alerts are required. however, if the change causes the vehicle to be over capacity, then the strategy would determine how to rebuild the freight order. Managing Freight and bookings Managing freight and bookings is a process by which the transportation planner creates, changes, and updates bookings. booking steps can include checking the current transportation demands, checking schedules provided by carriers, reserving capacity, and receiving the booking confirmation. The transportation planner may check transportation requirements and assign them to bookings that may exist already or that can subsequently be created. This process also includes steps for
Figure 4: Transportation Proposals

Freight Bookings
Freight booking functionality allows you to obtain a commitment of trans portation services from a logistics service provider prior to the actual order receipt. you can use this func tion to book two kinds of transporta tion services: for freight space or for a resource. With a booking order for freight space, you can book capacity. For example, you can book container space aboard an ocean vessel or aircraft in advance of the actual shipment. With a booking order for a resource, you can book a vehicle resource, for example, reserving a truck for a defined time period.

triggering deliveries, sending and receiving confirmations from carriers, and archiving completed bookings. Booking Ocean Carriers globalization and outsourcing of manu facturing processes to lowcost countries has increased the demand for interna tional transportation. ocean transport of an international multimodal shipment presents a bottleneck because container vessels operate under fixed sailing schedules. Missing the cutoff time in a port can have a significant impact on delivery dates promised to customers or on production facilities that depend on timely replenishment of raw materi als or components.

The ocean lSP industry has grown over time; however, even today com munication to these carriers is often not standardized and depends on man ual or outdated processes (fax or phone, for example). Automating booking and streamlining documentation processes with ocean lSPs can increase business productivity and lead to faster interaction and better service by carriers. It is more important than ever to control supply chain activities and have endto end visibility of events influencing your logistics performance. Tracking ship ments on a container level and tying events to your core enterprise resource

SAP Solution in Detail SAP Transportation Management

planning (erP) logistics processes enable you to guarantee servicelevel agreements and help you prepare for unexpected events such as port closures and severe weather delays. SAP TM helps you streamline ocean shipment processing by supporting the following activities: booking Transfer of shipping instructions documentation (ocean bill of lading) Tracking and tracing of freight orders The booking process supports booking of capacity as well as eventdriven booking of orders and deliveries, and it includes container planning. This helps align container space, departure and arrival dates and schedules, and details about transportation services provided by the carrier. Shipping instructions can be transferred to billoflading docu ments, thus streamlining document exchange with the carrier. The messagebased integration to multiple ocean carriers can be simplified by taking advantage of SAP partner ships with multilSP ecommerce plat forms, also known as ocean portals. ocean portals were formed for multi lSP access and cover a majority of the global container capacity being shipped internationally. besides stream lining electronic communication with one standardized message format, shippers can take advantage of quality assurance measures for data and performance metrics provided by these ocean portals. by considering sched ules, existing bookings, and carrier rates

From the time an order is received, you have to efficiently plan, execute, and manage your logistics operations to meet cus tomer expectations. SAP Transportation Management simplifies and enhances your transportation processes by enabling you to automat ically route and rate orders, collaborate with carriers, generate documentation, coordinate with the ware house, and track every step.
and enabled by highly flexible interac tions, this functionality improves con tainer utilization and helps you manage cost and operations more efficiently. Planning Freight and Selecting Carriers SAP TM takes advantage of bestinclass usability for interactive planning. At the same time, it offers highly sophisticated optimizerbased planning that increases efficiency, reduces costs, improves margins, increases vehicle utilization, and improves ontime delivery of ship ments. It involves routing and scheduling vehicles, selecting carriers, and tender ing shipments to carriers. It allows you to manage simple to complex intermodal and multimodal scenarios.

you can: Search for feasible solutions using sophisticated optimization techniques that factor in costs and penalties Manage hard and soft constraints Simultaneously view schedules, pick up and delivery routes, load consoli dations, and vehicle assignments Assign carriers based on equipment constraints, allocations, business share, and continuousmove options Plan for inbound and outbound orders With SAP TM functionality you can reduce the total cost of all shipments while maximizing customer service. The various engines help you simultaneously plan single or multimodal shipments manually or automatically, consolidate orders, identify transportation modes, determine delivery and pickup sequence, and schedule planned shipments. Meet Customer Satisfaction Goals and Minimize Costs SAP TM determines the most effective transportation modes and routes, including the sequence of pickups and deliveries. The vehicle scheduling and routing optimizer automatically selects the mode and carrier, depending on your customer satisfaction goals such as ontime delivery, lowest cost, and highest utilization. With SAP TM, you can minimize costs while managing realworld hard constraints such as: vehicle capacities based on different units of measure such as weight and volume Transportation lead times

SAP Solution in Detail SAP Transportation Management

 vehicle compartments Transportation modes compatible with the customers shipping and receiving facilities Predefined hubs for specific kinds of transport Product compatibility restrictions Source and destination delivery windows and appointment times hours of operation for delivery locations Some constraints are subjective, and SAP TM takes into account these soft constraints by using penalties. Penalties comprise a scoring system that assigns a value to logistics contin gencies, such as delivering shipments too early or too late or considering customer priority when modeling opti mization decisions.

having the ability to incorporate both masterdata and transactionaldata constraints is an important aspect of integrating your order management processes. you can use customer master records or order information to factor the proper constraints into your planning efforts. Such constraints may include product incompatibilities (chemicals cant be shipped with food products), space limitations at a cus tomers location (the customer has a loading or unloading restriction based on vehicle length), and scheduling stip ulations (seafood must be delivered before 8 a.m. on Friday). There are also direct cost factors, which are based on distance, weight, volume, or time. These cost factors include vari ables such as the number of stopovers

and the equipment used. Such cost factors help you determine which route and schedule to use, and whether to employ commercial transportation, a company vehicle, or another mode.

order changes can dramati cally impact your current operations. In SAP TM, these changes are managed through business rules and alerts and are visible through out the process. SAP TM uses sophisticated logic to help you manage these unexpected changes to your daily operations by automat ically checking equipment or space availability or by notify ing you of sudden shipment scheduling changes.
The transportation cockpit (see Figure 5) provides a single interactive interface for planning and other activities. For example, the transportation planner can initiate manual or automatic planning, carrier selection, delivery creation, and tendering. usability in the cockpit is enhanced by support for mouseless planning with commandline prompting as well as draganddrop features. In

Figure 5: Transportation Cockpit

10

SAP Solution in Detail SAP Transportation Management

addition to planning, the cockpit supports the planner with full visibility into trans portation execution status, transporta tion order changes, and document flow. The map integration feature (see Figure 6) allows you to visualize freight order routes on a geographical map. you can search for and identify all your locations, zones, and lanes in a specific geography. Partners in the marketplace provide standardized content such as rates, distances, and geographic information system (gIS) information pertinent to transportation planning and operations. Through standard Web service interfaces, SAP TM supports integration with third

party content providers to receive and retrieve carrier rates, transit times and distances, and location information, such as location longitude and latitude. Dangerous Goods dangerous goods are a key factor in todays logistics. Shippers, carriers, and lSP companies are exchanging sensitive information about goods that are clustered into different dangerous goods classes. SAP TM supports automatic creation of dangerous goodscompliant freight units and freight orders during planning and freightunit building by using busi ness rules. SAP TM enables inclusion

of relevant dangerous goods informa tion in printed documents using phrase functionality provided by the SAP envi ronment, health, and Safety Management (SAP ehS Management) application. Subcontracting during planning, a transportation plan is created based on transportation requirements. In addition, freight units are created from the transportation requirements, either manually or auto matically. during this process, various constraints are taken into account, for example, the requested delivery dates and times. based on the transportation plan, SAP TM generates freight orders. In SAP TM, freight orders represent the outcome of your planning efforts. using freight orders, SAP TM helps you monitor and manage each step of the transportation process loading, unloading, transit, customs, placing seals, and so forth. The goals of the subcontracting process are lower prices and better service. Subcontracting functionality helps you determine the carriers you will use to deliver materials from their origins to their destinations. Carrier selection can be based on multiple strategies, priorities, geographies, incompatibili ties, and goals. The functionality takes into account constraints such as carrier capacity allocations, equipment avail ability, customerspecific conditions, and continuous moves.

Figure 6: Map Integration in the Transportation Cockpit

SAP Solution in Detail SAP Transportation Management

11

In addition, it considers the following: Freight costs. Select carriers based on carrier tariff and contract data stored in SAP erP or from external rate providers. business share. Allocate freight orders based on the business share your company has assigned to that carrier. Incompatibilities. Consider carrier or orderorder incompatibilities. Equipment Allocation you may need to manage your ship ments based on the availability of your carriers equipment or your own equip ment. SAP TM can help you manage this process through allocations, which help your carriers communicate their

freight capacities and availabilities for specific time periods across geographical areas. equipment allocation describes both minimum and maximum capacity constraints used during carrier selection. For example, you can use this informa tion to determine the maximum and minimum volume of shipments for each carrier considering various levels, such as per shipping and delivery location, per transportation lane, per time frame (day, week, month, and year), and by transport mode or service level. When you assign a carrier to a freight order, the software tracks the existing equipment allocation availability. For example, a carrier has 10 pieces of equipment available. If you select the carrier for 10 freight orders and the carrier accepts all 10, the allocation logic recognizes that no additional equip ment is available from that carrier in that time period. The logic can be driven by source, source and destination, lanes, and regions (zones). you can then manage where the carrier is willing to send those shipments as well. For example, the carrier may be willing to accept a limited number of shipments to an undesirable location but can still pro vide remaining capacities elsewhere. Managing Customs and Global Trade Services Managing international customs and trade activities is commonplace in transportation today. Whether you are screening for sanctioned parties or approved geographical routings, check

ing for the necessary licenses, or creating legal documentation such as export declarations or customs invoices, the SAP businessobjects global Trade Services application plays an integral role. This application makes automatic checks based on invoice and shipment data. SAP TM groups items for cus toms declaration and triggers SAP businessobjects global Trade Services to create an export declaration to request customs clearance. once the customs status is released, the SAP TM shipment status is changed so that execution is possible. The customs invoice is an extended form of commercial invoice required by customs (often in a specified format). For the purpose of determining customs import value at the port of destination, the exporter states the description; quan tity and selling price; freight, insurance, and packing costs; terms of delivery and payment; weight; and volume of the goods in the customs invoice. Tendering Freight Planning your tendering strategies in collaboration with your carriers helps you both streamline your work processes and benefit from reduced handling costs, greater transparency, and enhanced efficiency. Communicating through electronic data interchange (edI), email, fax, or the Web, you can inform your carriers about your shipment plans, and your carriers can accept, reject, or suggest transportation alter natives. For example, your carrier may suggest alternate pickup or delivery dates and times.

Planning your tendering strategies in collaboration with your carriers helps you both streamline your work processes and benefit from reduced handling costs, greater transparency, and enhanced efficiency. Com municating through edI, email, fax, or the Web, you can inform your carriers about your shipment plans, and your carriers can accept, reject, or change transpor tation requirements.

12

SAP Solution in Detail SAP Transportation Management

The main characteristics of the SAP TM tendering functionality flexible config uration and the reduction of required manual interactions support ease of use and lower total cost of ownership. There are two methods of tendering (see Figure 7): Peer to peer sequential tendering to preselected carriers broadcast simultaneous tendering to preselected carriers SAP TM supports cascade tendering, which means that the application goes through peertopeer tendering and then through broadcast tendering (or vice versa) until an acceptable match is found that meets your customers needs.

Peertopeer tendering allows you to tender to your preferred carriers one at a time. you can configure SAP TM to register an acceptance automatically for each tender or to wait until the carrier responds with an acceptance, rejection, or change. The carrier may change the tender, at which time the tendering manager would accept or decline the change. In the case of a rejection by a carrier, the next acceptable carrier receives a tender and a cancellation is sent to the previous carrier. If no carrier accepts under the peertopeer method, the next method broadcast tendering can be started. With broadcast tendering, rules on timing and costs can be set to select

either the carrier that responds first or the one that responds with the lowest bid after a specified period of time. each tender can also be given a time period during which the tender is valid. SAP TM functionality creates tendering announcements from your shipment plans. you can provide your carriers access to tendering data via a Web based portal and use other methods of communication such as edI, fax, and email. you can control and man age the information shared with the carriers in the Webbased portal, while carriers can see and respond to rFQs for tenders in the portal. They can add free text and attachments in rFQs and quote prices in different currencies. you can also propose a price limit to the carrier, either manually specified or automatically proposed by the appli cation based on a freight agreement. executing and Monitoring Freight Transportation operations are critical to putting your transportation plans into action. Key to these activities is mana ging the communication with your carri ers, dispatching and tracking freight orders, maintaining documentation, and reporting. Freight Orders A freight order (referred to as a shipment document and transportation order) describes a request to an internal ship ping department or to a transportation service provider to ship goods from a shipper to a consignee with agreed terms and conditions. The corresponding

Figure 7: Tendering in SAP Transportation Management

SAP Solution in Detail SAP Transportation Management

13

confirmation from the transportation service provider is also part of this business object. you can store all the information in SAP TM and print that information on transportation documents. The table below shows examples of the types of transportation documents that use the information in SAP TM. Managing the unexpected, such as late arrivals, missed appointments, missing inventory, and equipment problems, is critical to transportation operations. SAP TM provides dock operations a work list that is personalized to the employee or role. This list helps dock employees manage these exceptions, alert affected parties, and control the problem to min imize the impact on your daily operations. Integration with Warehouse Operations With SAP erP, you can streamline your warehouse operations and take advan
Business Object Freight order Document

tage of logistics execution functionality to support shipment execution. SAP erP helps you prepare freight orders for dispatch to customers, include picking, packing, staging, loading the shipments, and posting goods issue. At checkin (when trucks arrive on your premises), you can record information about the means of transport such as driver details, truck weight, and arrival time. Event Management visibility processes for SAP TM offer preconfigured content, such as planned events with milestones for transportation operations, supporting you in tracking relevant activities inside and outside your company walls. you can monitor different processes and business docu ments, such as freight units, freight orders, and freight bookings, and gain a comprehensive and easytounderstand view of your transportation operations.

SAP event Management, a cross platform and crossnetwork application, enables internal and external business partners to track, monitor, and report actual events. It receives information about supply chain events from your partners through a variety of channels and systems, including radio frequency identification (rFId) terminals and edI messages. event management supports

house sea bill of lading house air waybill road waybill (with your own trucks, europe) road waybill (with your own trucks, united States) Transportation labels FIATA2 forwarding instructions Shipping manifest

Forwarding order

Forwarding order Confirmation of forwarding order Forwarding quotation Pro forma supplier freight invoice request Pro forma customer freight invoice request

Freight settlement document Forwarding settlement document

Transportation does not occur in a vacuum. It is almost always part of a larger business process for example, an orderto cash or procuretopay process or simply inte grated with your warehouse operations. Frequently, applications from SAP and other software vendors support these processes. With serviceoriented archi tecture, communication across a disparate system landscape is managed through predefined services working in conjunction with SAP netWeaver PI technology.

2. International Federation of Freight Forwarders Associations, Fdration Internationale des Associations de Transitaires et Assimils, Internationale Fderation der Spediteurorganisationen. 14 SAP Solution in Detail SAP Transportation Management

management by exception. When there is an event, such as a delay in transit or a late pickup, alerts are generated to inform stakeholders about the potential impacts.3 Analytics Analyzing the vast amount of transpor tation and logistics data from a strategic to operational level is a critical require ment for continuous enhancement of transportation operations. Integration of SAP TM with the SAP netWeaver business Warehouse (SAP netWeaver bW) component supports the creation of management reports and the evaluation of cost and revenue by business partners and trans portation data over a period of time (see example in Figure 8). The reports evaluate carriers, costs, customers, transport means, or destinations. Analytics built in to SAP TM offer further insight for decision making by providing contextual information to enable rela tive comparisons and simulations. For example, during the tendering process an employee can investigate carrier performance, as shown in Figure 9.

Figure 8: Reporting and Analysis

Figure 9: Built-In Analytics

3. For a detailed explanation about event management, see the solution in detail for the SAP event Management application at www.sap.com/solutions/autoid/brochures/index.epx. SAP Solution in Detail SAP Transportation Management 15

Settling Freight orders and Forwarding orders SAP TM is designed for companies that buy transportation services. Shippers can buy transportation services from carriers or intermediaries to move their products to market. you use transpor tation charge management (TCM) func tionality in SAP TM for calculating accruals and creating settlement documents for invoicing transportation charges. The settlement document triggers the invoice verification process for invoices received from suppliers or carriers for transportation charges (see Figure 10). SAP TM is also designed for companies (shippers and lSPs) that sell transpor tation services. here you use TCM to

calculate transportation billing charges to trigger the customer invoicing. In this business process (depicted in Figure 11), you calculate and evaluate the transportation charges for the bill to party. The calculation of the charges for the billto party is based on forward ing orders. The forwarding settlement document holds the data for transpor tation invoicing. Transportation Charge Management Transportation charge management functionality supports complex ratings based on the shippers freight agree ments (contractual agreements). For example, a shipper can buy transporta tion services from multiple service pro viders, including carriers, consolidators

and deconsolidators, freight forwarders, and so on. In turn, service providers invoice the shipper for the services they provided based on those contrac tual agreements. SAP TM calculates a freight settlement document for each service provider. The costs are then used to set up the accruals to be paid by the shippers when they receive the service providers invoice. SAP TM and SAP erP are tightly inte grated so you can tie freight costs back to financial accounts and aggregate those costs via cost centers. This lets you determine the full cost of an order and helps ensure that the correct representation for each freightcost item appears in the general ledger.

Customer

SAP Transportation Management

SAP ERP

Subcontractor

Create request for transportation services (for example, order, delivery, or return)

Process transportation request

Take planning steps

Create Po

Create service entry sheet

PI/WSrM

Create freight order

Invoice verification

Selfbilling (evaluated receipt settlement)

Credit note Invoice

Create freight settlement document

PI = SAP netWeaver Process Integration WSrM = Web services reliable messaging

Figure 10: Forwarding Settlement Process

16

SAP Solution in Detail SAP Transportation Management

Freight Cost Calculations Transportation involves complex legal agreements requiring dynamic support to properly evaluate the cost of trans portation services. Shippers in many countries derive freight costs from freight rates they negotiate with their carriers. With hundreds of forms and methods of calculating rates, the ability to calculate freight costs precisely is mandatory. SAP TM separates the contractual terms of the agreements from the actu al tariffs of the service providers to support flexible yet simple methods for determining the correct values. The freight agreement is used to represent the contract between the various parties involved, the payment terms of the agreement, and services provided.

Transportation charge management functionality is responsible for deter mining the expected cost for a given transportation scenario. The cost cal culation request can come from the following: order entry including quotation Transportation planning Shipment processing Invoicing As the first step in the cost calculation process, this functionality determines the freight agreement to get informa tion about the contract with the service provider (carrier). based on the deter mined freight agreement, the calculation sheets are determined using the logis tics input parameters, such as weight, distance, and mode of transport.

The software uses the charge calculation sheet as an instruction for determining which transportation charges to calcu late and how to calculate them in order to pay for services. The calculation sheet points to TCM types, each of which can result in a calculated amount. For example, line haul, detention or demur rage, and fuel surcharges can all be calculated separately. Standard rates, discounts, surcharges, and accessorial charges can all be determined with different charge types. Furthermore, rates can also be determined based on multiple dimensions and scales. rates can be loaded into SAP TM manually, uploaded through Microsoft excel, or retrieved from external rate services, such as Czarlite lTl rates. Invoicing you can use transportation charge management functionality to calculate, evaluate, and distribute the transportation charges for the supplying party, such as a service provider or a carrier. The information is then stored within the freight order. This information is trans ferred to the freight settlement document for creation of the purchase order and service entry sheet in SAP erP. you can verify that the supplier has received invoices. Alternatively, the transferred transportation charges enable you to create credit memos by a selfbilling procedure (evaluated receipt settlement) and release them to the supplier.

Customer

SAP Transportation Management

SAP ERP

Create request for transportation services (for example, order, delivery, or return)

Process transportation request

PI/WSrM

Create forwarding settlement document

Create billing document (invoice)

PI = SAP netWeaver Process Integration WSrM = Web services reliable messaging

Figure 11: Freight Settlement Process

Transportation Management Scenarios

The latest release of SAP TM provides support for transportation scenarios.

SAP Solution in Detail SAP Transportation Management

17

The release also includes predefined configurations based on industry best practices and process component lists for the scenarios. In addition, all scenarios benefit from preconfigured content for event management. This support can substantially reduce implementation effort, time, and costs, and it also enables your organization to realize higher value through more efficient, lower cost operations. The following section provides a description of the scenarios that are supported. domestic outbound Freight Management This is a commonly used scenario for shippers in north America and europe who want to manage their domestic outbound freight through their network of plants, distribution centers, and thirdparty warehouse operations. This endtoend transportation process can use multiple planningoptimization vari ants like truckload planning, intermodal (truck and rail) planning, and lessthan truckload (lTl) planning followed by carrier selection, tendering, dispatching, document generation, costing, and invoicing. This scenario includes capa bilities to model carrier and equipment restrictions and incompatibilities, handling instructions, and schedules on rail lines. outsourced Transportation This is a typical scenario for shippers who send full truckload orders to cus tomers from their warehouse or distri bution centers. These orders do not require any further consolidation and can be sent directly for carrier selection and subcontracting while bypassing the planning process. SAP TM and SAP erP support a fully automated process for

truckload transportation with functional ity to automatically create a freight order that is sent to a supplier directly from a sales order. This scenario focuses on the complexities in carrier selection and tendering. Carrier selection takes place automatically and can be based on different strategies, such as cost minimization, equipment availability, pri ority, or businessshare goals. you can perform peertopeer and broadcast tendering. Carrier selection is followed by execution and monitoring, settling of freight orders, grouping and splitting of invoices, and final settlement in SAP erP. domestic Inbound Transportation Common for the automotive industry, this scenario focuses on inbound ship ment processing for goods purchased from domestic suppliers with integrated consignee transportation planning and logistics execution. In this scenario, manufacturers are interested in opti mized transportation to achieve higher utilization of vehicles and lower costs. A typical scenario includes landbased carriage via truck with multiple pickups for full truckload transportation and multiple drops to consignee plants. Typical process flow steps include purchase order creation based on purchasing contracts with suppliers and automatic creation of freight units based on rules. The primary focus of the scenario is on freight planning optimized planning of different stages for pickups and dropoffs of freight units, automatic selection of carriers, and transmission of documents to car riers. delivery creation is triggered in SAP erP based on advanced shipping notices (ASns) received from suppliers.

The lSP sends event messages of loading, unloading, arrival, departure, and unplanned events. Charge calcula tion is based on weight and distance. The final process steps include settle ment based on the freight agreement with the carrier. International Inbound logistics This business scenario is used in the chemical, retail, and wholesale industries to manage international inbound logis tics. As an ordering party, you procure material from vendors outside your country of operation. The process flow involves integrated and automated purchaseorderbased planning and booking; distributed multimodal plan ning for the individual stages, including nomination of vessel for the ocean shipment; arranging inbound shipment for certain stages based on incoterms (international commerce terms); and visibility of shipments at all times. International outbound logistics This scenario covers the processes involved in transporting full container loads between international locations. Typical process steps cover the pro cessing of forwarding orders; ocean carrier booking, including the booking of container space on container ships; and freight planning. other steps involved are delivery and receipt of containers at the warehouse as well as execution and tracking of events at all stages of the transportation process using SAP event Management. Charge calculation is based on the forwarding order and covers the invoice split between the shipper and consignee based on incoterms.

18

SAP Solution in Detail SAP Transportation Management

The Working environMenT

SIMPlIFyIng ACCeSS To ProCeSSeS And InForMATIon

Transportation is a broad area of practice. It spans industries and roles as well as strategic and operational decision making. SAP Transportation Management is designed to work across all areas to make processes more efficient and conse quently more productive (Figure 12).

SAP NetWeaver Business Client

The latest release of SAP TM has a newly built user interface that uses leadingedge, desktopbased SAP netWeaver business Client software along with a new technology compo nent called floor plan manager (FPM). SAP netWeaver business Client is designed to provide a smooth integra tion of portalbased transactions, classic SAP guIbased transactions,

and new applications developed in the Web dynpro development environ ment (AbAP programming language and Java). existing browserbased SAP applications can also be integrated. This simplifies access to processes and information according to the needs of business users in their own familiar work environment. The floor plan manager enables you to configure the layout of the user inter face (uI) based on your individual needs. It increases adaptation possibilities, enabling you to easily adapt new uIs and reconfigure existing uIs. With this new front end, existing uI portal services, such as roles and navi gation, can be reused. The exchange

of data between SAP netWeaver business Client and the server of the SAP netWeaver technology platform is based on international standards and open services. SAP TM is delivered with the following predefined industryspecific roles: booking agent Carrier settlement specialist Customer service agent Customer settlement specialist dispatcher Freight contract specialist Planner Process administrator Service provider Transportation manager

SAP ERP Enterprise resource management:

Purchasing Sales Materials management Inventory management Human resource planning Invoice processing Customer billing Cost settlement

SAP Event Management event notification, tracking, and management

SAP Transportation Management 8.0 SAP Supply Chain Management 7.0, enhancement package 1

SAP Environment, Health, and Safety Management dangerous goods management

Mobile devices

SAP Business Suite 7.02

Geographical information systems and maps

SAP BusinessObjects Global Trade Services Customs management Compliance management

SAP NetWeaver 7.02

SAP netWeaver

Figure 12: Architecture Supporting Complete Process Integration

SAP Solution in Detail SAP Transportation Management

19

Service-Oriented Architecture
Serviceoriented architecture (SoA) is an adaptable, flexible, and open IT architecture, where functionality is grouped around business processes and packaged as interoperable services. SoA affords you many new opportuni ties to automate existing business pro cesses and implement new business processes more easily. SAP makes the adoption of SoA more affordable and mitigates risk by delivering SoAenabled applications, the SAP netWeaver technology plat form, and enterprise services that your IT organization can use to integrate existing processes or compose new ones. by adopting serviceoriented architecture, your IT organizations can provision, compose, and manage SoAenabled applications. With this architecture, you can improve the reuse of software components and respond more quickly to change.

predefined services working in conjunc tion with SAP netWeaver PI technology. Additional business processes, such as warehouse operations, event manage ment, and global trade management, complement SAP TM and help you provide an endtoend business process. SAP helps you adopt SoA by delivering SoAenabled business applications and enterprise services, with SAP netWeaver as the enabling technical foundation for SoA. unlike generic Web services, enterprise services conform to the SAP data model and process model, helping ensure efficient operations of core business processes. A large number of enterprise services for typical business processes are already available in SAP business Suite applications. you can implement these services so that they communicate directly with other applications, client programs, user interfaces, and so on. examples of these services include order receipt and confirmation, order transportation services from lSPs, invoice communications with your customers and partners systems, response to requirements for freight quotes, and transmittal of bills of lading. Alternatively, you can use enterprise services from SAP using SAP netWeaver PI. In this case, communi cation occurs using SAP netWeaver PI, which contains additional functions for creating and processing messages. enterprise services are standardized interfaces for specific functions within

Enterprise Services: The Foundation for Process Integration

Transportation does not occur in a vacuum. It is almost always part of a larger business process for example, an ordertocash or procuretopay process or simply integrated with your warehouse operations. Frequently, applications from SAP and other soft ware vendors support these processes. With serviceoriented architecture, communication across a disparate system landscape is managed through

SAP TM and SAP erP are tightly integrated so you can tie freight costs back to financial accounts and aggre gate those costs via cost centers. This lets you determine the full cost of an order and helps ensure that the correct representation for each freightcost item appears in the general ledger.
an application for example, for a func tion that reads the business partners address or that updates reports.

20

SAP Solution in Detail SAP Transportation Management

With the help of enterprise services from SAP, you can trigger automated processes, enter and process data, and exchange data with other systems and applications. In contrast to simple

Web services, enterprise services from SAP are generally logical steps of a business process and can thus be used to support crossapplication and cross departmental business processes.

Business Object Structure

To provide the greatest flexibility for supporting your business processes, SAP TM uses business objects. business

Request management

FWo/oTr/dTr

request to transport goods

request management

Freight unit building Freight unit

Dispatching and execution

Freight unit

Freight unit

units of freight to be moved (basic planning element)

Transportation planning

Capacity booking order

optimizer/planning

Manual or optimizersupported load building and planning (intermodal) result of planning, consolidation of freight units on a vehicle, booked capacity, or scheduled means of transport Tendering of subcontracted load: peertopeer, broadcast, open tenders Invoice for subcontracted or internal transportation services

Subcontracting Tendering execution

Transportation charge management

Freight order

Freight agreement TCCS billing rate Scale

FWo oTr dTr TCCS = Forwarding order = orderbased transportation request = deliverybased transportation request = Transportation charge calculation sheet

Freight settlement document

Forwarding settlement document

Customer invoice for transportation services Financial/controlling, internal settlement

Accounting document

Figure 13: SAP Transportation Management Business Objects and Engines

SAP Solution in Detail SAP Transportation Management

21

objects are addressable through Web services and allow you to customize SAP TM to more fully meet your busi ness process needs; for example, you only need to perform tendering or transportation charge management without performing planning or other operations. Figure 13 illustrates some of the business objects within SAP TM.

Simplification of the Business Object Model

The business object model for the latest release of SAP TM has been significantly improved and simplified with a reduction in the total number of business objects used. Multiple func tional views of the same business object support the same functionality so that process improvements can be achieved through a simplified model. benefits of a simplified business object model include the following: Significantly improved performance and greater ability to process high volume transactions better memory consumption Improved maintainability and supportability Fewer manual steps Support for the same business processes with much less data greater flexibility and less effort needed for implementation and enhancement

22

SAP Solution in Detail SAP Transportation Management

oPTiMize your TrAnSPorTATion oPerATionS

exPAndIng your TrAnSPorTATIon CAPAbIlITIeS

SAP solutions help you optimize your transportation management processes, make better business decisions, and significantly enhance your transporta tion management operations. you can create holistic ordertocash, transpor tation management, and supply chain management processes as you expand your global trade, event management, and inventory collaboration capabilities. Additional benefits include: enhanced ability to provide accurate status and cost information online expanded visibility into shipments and orders Closer collaboration with carriers, suppliers, and customers to create more economical and efficient trans portation processes greater ability to optimize advanced shipments better process alignment with other departments to create delivery efficiencies

Find Out More

To learn more about how SAP Trans portation Management can help your organization transform and integrate its IT landscape for flexible, streamlined transportation processes, call your SAP representative today or visit us on the Web at www.sap.com/solutions /businesssuite/scm.

SAP Solution in Detail SAP Transportation Management

23

QuiCk FACTS

www.sap.com /contactsap

Summary The SAP Transportation Management application simplifies and enhances your trans portation processes by providing a robust and integrated order management environment. you can automatically route orders, collaborate with carriers, generate documentation, coordinate with the warehouse, ship product, and track every step. Business Challenges Complexity of commercial transportation difficulty in managing a worldwide network of partners and logistics service providers (lSPs) need for greater accuracy, speed, and flexibility Key Features Order integration Automatically synchronize order changes in the SAP erP application and trigger downstream processes Planning and carrier selection Select and evaluate lSPs Freight order receipt receive any type of requirements for transportation services Freight subcontracting, tendering, and booking order transportation services and reserve freight capacity Freight cost management determine selling and buying costs and calculate profitability Event management handle activities for track, trace, pickup, and delivery processes Freight-cost settlement Settle accounts; pay and bill freight costs Analytics Analyze transportationrelated key performance indicators and strategic freight management data Business Benefits Achieve superior customer satisfaction levels by delivering the perfect order

greater transparency into cost information and delivery status; higher rate of ontime
delivery

Ability to meet the unique delivery requirements of your customers while achieving
profitability Manage and reduce transportation costs better carrier management and selection of the right service Closer collaboration with carriers, suppliers, and customers Improve logistics readiness, flexibility, and efficiency Advanced transportation optimization Costeffective deliveries due to the ability to align processes with other departments Faster, betterinformed decisions with support from analytics For More Information

50 093 133 (11/03) 2011 SAP Ag. All rights reserved. SAP, r/3, SAP netWeaver, duet, Partneredge, bydesign, SAP businessobjects explorer, StreamWork, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP Ag in germany and other countries. business objects and the business objects logo, businessobjects, Crystal reports, Crystal decisions, Web Intelligence, xcelsius, and other business objects products and services mentioned herein as well as their respective logos are trademarks or registered trade marks of business objects Software ltd. business objects is an SAP company. Sybase and Adaptive Server, iAnywhere, Sybase 365, SQl Anywhere, and other Sybase products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Sybase, Inc. Sybase is an SAP company. All other product and service names mentioned are the trademarks of their respective companies. data contained in this document serves informational purposes only. national product specifications may vary. These materials are subject to change without notice. These materials are provided by SAP Ag and its affiliated companies (SAP group) for informational purposes only, without representation or warranty of any kind, and SAP group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. nothing herein should be construed as constituting an additional warranty.

Call your SAP representative, or visit www.sap.com/solutions/businesssuite/scm.