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.
SAP TRANSPORTATION
MANAGEMENT
IMPROVE TRANSPORTATION READINESS,
FLEXIBILITY, AND AGILITY
SAP Solution in Detail
SAP Supply Chain Management
4 Increasingly Complex
Transportation Issues
5 A Robust, Flexible Application
for Transportation Management
5 Process Overview
6 Managing Transportation
Requirements and Forwarding
Orders
8 Managing Freight and Bookings
9 Planning Freight and Selecting
Carriers
12 Tendering Freight
13 Executing and Monitoring
Freight
16 Settling Freight Orders and
Forwarding Orders
17 Transportation Management
Scenarios
18 Domestic Outbound Freight
Management
18 Outsourced Transportation
18 Domestic Inbound Transportation
18 International Inbound Logistics
18 International Outbound Logistics
19 The Working Environment
19 SAP NetWeaver Business Client
20 Service-Oriented Architecture
20 Enterprise Services:
The Foundation for Process
Integration
21 Business Object Structure
22 Simplification of the Business
Object Model
23 Optimize Your Transportation
Operations
23 Find Out More
24 Quick Facts
CONTENT
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 freight-related 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 future-proof platform
based on worldwide standards such
as service-oriented 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.
INCREASINGLY COMPLEX
TRANSPORTATION ISSUES
TOUGHER THAN EVER TO MANAGE
ALL THE MOVING PARTS
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.
4 SAP Solution in Detail SAP Transportation Management
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 cross-organization 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.
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
A ROBUST, FLEXIBLE APPLICATION FOR
TRANSPORTATION MANAGEMENT
KEY FUNCTIONS
Figure 1: Planning, Orchestration, and Execution of the Physical Movement of Goods
Freight
forwarder
Carriers
Customer Shipper
Goods delivery
Collaboration
Figure 2: Overview of SAP Transportation Management
SAP Transportation Management
Transportation
planner
Specialist Transportation
dispatcher
Transportation
charge clerk
Freight execution
and monitoring
Freight
settlement
Freight planning
and tendering
Order
management
Analytics and reporting
Event management
Import and export, dangerous goods, and compliance
Document and output management
Integration and connectivity
5 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 order-based or delivery-based
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 stand-alone
transportation management solution,
forwarding orders are used to repre-
sent the transportation requirements
entered directly into SAP TM. Orders
can be received as business-to-business
(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 back-end 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
Planning freight
and selecting
carriers
Executing and
monitoring freight
Tendering freight
Settling
forwarding orders
Managing
forwarding orders
Settling
freight orders
Managing freight
and booking
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 point-to-point 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 up-to-date information, you can
reduce both time buffers and safety-stock
buffers, and when critical available-to-
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:
Real-time (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 order-by-
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 last-minute 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
triggering deliveries, sending and
receiving confirmations from carriers,
and archiving completed bookings.
Booking Ocean Carriers
Globalization and outsourcing of manu-
facturing processes to low-cost 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 end-to-
end visibility of events influencing your
logistics performance. Tracking ship-
ments on a container level and tying
events to your core enterprise resource
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.
8 SAP Solution in Detail SAP Transportation Management
planning (ERP) logistics processes
enable you to guarantee service-level
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 event-driven
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 bill-of-lading docu-
ments, thus streamlining document
exchange with the carrier.
The message-based integration to
multiple ocean carriers can be simplified
by taking advantage of SAP partner-
ships with multi-LSP e-commerce 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
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 best-in-class
usability for interactive planning. At the
same time, it offers highly sophisticated
optimizer-based planning that increases
efficiency, reduces costs, improves
margins, increases vehicle utilization,
and improves on-time 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 continuous-move 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 on-time delivery, lowest cost, and
highest utilization.
With SAP TM, you can minimize costs
while managing real-world hard
constraints such as:
Vehicle capacities based on different
units of measure such as weight and
volume
Transportation lead times
From the time an order
is received, you have to
efficiently plan, execute,
and manage your logistics
operations to meet cus -
to mer expectations. SAP
Transportation Management
simplifies and enhances your
transportation processes
by enabling you to automa t-
ically route and rate orders,
collaborate with carriers,
generate documentation,
coordinate with the ware-
house, and track every step.
9 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
master-data and transactional-data
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.
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 command-line prompting
as well as drag-and-drop features. In
Figure 5: Transportation Cockpit
Order changes can dramati-
cally impact your current
operations. In SAP TM,
these changes are managed
through business rules and
alerts and are visible throug h-
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.
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 freight-unit building by using busi-
ness rules. SAP TM enables inclusion
Figure 6: Map Integration in the Transportation Cockpit
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, customer-specific conditions,
and continuous moves.
11 SAP Solution in Detail SAP Transportation Management
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
order-order 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),
e-mail, 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,
e-mail, 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 12
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 peer-to-peer tendering and
then through broadcast tendering (or
vice versa) until an acceptable match is
found that meets your customers needs.
Peer-to-peer 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 peer-to-peer 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 e-mail. You can control and man-
age the information shared with the
carriers in the Web-based 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
13 SAP Solution in Detail SAP Transportation Management
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-
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 check-in
(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 easy-to-understand
view of your transportation operations.
SAP Event Management, a cross-
platform and cross-network 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
2. International Federation of Freight Forwarders Associations, Fdration Internationale des Associations de Transitaires et Assimils, Internationale
Fderation der Spediteurorganisationen.
Transportation does not
occur in a vacuum. It is
almost always part of a
larger business process
for example, an order-to-
cash or procure-to-pay
process or simply inte-
grated with your warehouse
operations. Frequently,
applications from SAP and
other software vendors
support these processes.
With service-oriented archi-
tecture, communication
across a disparate system
landscape is managed
through predefined services
working in conjunction
with SAP NetWeaver
PI technology.
Business Object Document
Freight order 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
FIATA
2
forwarding instructions
Shipping manifest
Forwarding order Forwarding order
Confirmation of forwarding order
Forwarding quotation
Freight settlement
document
Pro forma supplier freight invoice request
Forwarding settlement
document
Pro forma customer freight invoice request
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.
3. For a detailed explanation about event management, see the solution in detail for the SAP Event Management application at
www.sap.com/solutions/auto-id/brochures/index.epx.
Figure 8: Reporting
and Analysis
Figure 9: Built-In
Analytics
15 SAP Solution in Detail SAP Transportation Management
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 bill-to 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 freight-cost
item appears in the general ledger.
Figure 10: Forwarding Settlement Process

Customer SAP ERP SAP Transportation
Management
Create request for
transportation services
(for example, order,
delivery, or return)
Subcontractor
Credit note
Invoice
Create PO
Create service entry sheet
Invoice
verification
Self-billing
(evaluated receipt
settlement)
Process trans portation
request
Take planning steps
Create freight order
Create freight
settlement document
P
I
/
W
S
R
M
PI = SAP NetWeaver Process Integration
WSRM = Web services reliable messaging
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 self-billing
procedure (evaluated receipt settlement)
and release them to the supplier.
Transportation Management
Scenarios
The latest release of SAP TM provides
support for transportation scenarios. Figure 11: Freight Settlement Process

SAP Transportation
Management
SAP ERP
Create billing document
(invoice)
Customer
Create request for
transportation services
(for example, order,
delivery, or return)
Process trans portation
request
Create forwarding
settlement document
P
I
/
W
S
R
M
PI = SAP NetWeaver Process Integration
WSRM = Web services reliable messaging
17 SAP Solution in Detail SAP Transportation Management
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
third-party warehouse operations. This
end-to-end transportation process can
use multiple planning-optimization vari-
ants like truckload planning, intermodal
(truck and rail) planning, and less-than-
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 business-share goals. You can
perform peer-to-peer 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 land-based
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 drop-offs 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
purchase-order-based 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
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
leading-edge, desktop-based 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 portal-based transactions,
classic SAP GUIbased transactions,
and new applications developed in
the Web Dynpro development environ-
ment (ABAP programming language
and Java). Existing browser-based 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 industry-specific roles:
Booking agent
Carrier settlement specialist
Customer service agent
Customer settlement specialist
Dispatcher
Freight contract specialist
Planner
Process administrator
Service provider
Transportation manager
THE WORKING ENVIRONMENT
SIMPLIFYING ACCESS TO PROCESSES
AND INFORMATION

SAP Event Management
Event notification, tracking,
and management
Mobile devices
Geographical information
systems and maps
SAP Environment, Health, and
Safety Management
Dangerous goods management
SAP BusinessObjects Global
Trade Services
Customs management
Compliance management
SAP ERP
Enterprise resource management:
Purchasing
Sales
Materials management
Inventory management
Human resource planning
Invoice processing
Customer billing
Cost settlement
SAP NetWeaver
SAP Transportation Management 8.0
SAP Supply Chain Management 7.0,
enhancement package 1
SAP Business Suite 7.02
SAP NetWeaver 7.02
Figure 12: Architecture Supporting Complete Process Integration
19 SAP Solution in Detail SAP Transportation Management
Service-Oriented Architecture
Service-oriented 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 SOA-enabled 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 service-oriented
architecture, your IT organizations can
provision, compose, and manage
SOA-enabled applications. With this
architecture, you can improve the reuse
of software components and respond
more quickly to change.
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 order-to-cash or procure-to-pay
process or simply integrated with
your warehouse operations. Frequently,
applications from SAP and other soft-
ware vendors support these processes.
With service-oriented architecture,
communication across a disparate
system landscape is managed through
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 end-to-end business process.
SAP helps you adopt SOA by delivering
SOA-enabled 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
an application for example, for a func-
tion that reads the business partners
address or that updates reports.
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 freight-cost
item appears in the
general ledger.
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 cross-application and cross-
departmental business processes.
Business Object Structure
To provide the greatest flexibility for
supporting your business processes,
SAP TM uses business objects. Business
Figure 13: SAP Transportation Management Business Objects and Engines
Request
management
Transportation
planning
Subcontracting
Execution
Billing
Freight unit building
Request management
Dispatching and execution
Transportation charge management
Capacity
Booking order
Scale
Rate
TCCS
Freight agreement
Request to transport goods
Units of freight to be moved
(basic planning element)
Manual or optimizer-supported
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: peer-to-peer, broadcast,
open tenders
Invoice for subcontracted or
internal transportation services
Customer invoice for
transportation services
Financial/controlling,
internal settlement
FWO/OTR/DTR
Forwarding settlement
document
Accounting document
Freight settlement
document
Freight unit Freight unit Freight unit
Optimizer/planning
Tendering
Freight order
FWO = Forwarding order
OTR = Order-based transportation request
DTR = Delivery-based transportation request
TCCS = Transportation charge calculation sheet
21 SAP Solution in Detail SAP Transportation Management
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
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 order-to-cash, 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
/business-suite/scm.
OPTIMIZE YOUR TRANSPORTATION OPERATIONS
EXPANDING YOUR TRANSPORTATION CAPABILITIES
23 SAP Solution in Detail SAP Transportation Management
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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 transportation-related key performance indicators and strategic
freight management data
Business Benets
Achieve superior customer satisfaction levels by delivering the perfect order
Greater transparency into cost information and delivery status; higher rate of on-time
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
Cost-effective deliveries due to the ability to align processes with other departments
Faster, better-informed decisions with support from analytics
For More Information
Call your SAP representative, or visit www.sap.com/solutions/business-suite/scm.