Issue

When freight is being organised, certain shipments can be consolidated into a single container, truck, vessel, etc. When this is from a single company code then standard SAP TM can handle this. To be able to support this process from multiple company codes then enhancements need to be built.

Recommendation

Extend SAP standard Transportation Management with a customised solution to allow cross-company consolidations, including invoice differences distributed.

Glossary

Freight Order - Order for which transportation services are ordered with a carrier and execution is tracked. The content of the transportation order is filled with materials from the outbound or inbound delivery. 

Cost Distribution - In the freight order the charges can be distributed among the cargo items. Higher utilisation of a freight order by a delivery, the higher percentage of the transportation costs are attributed to this delivery. This distribution will be reflected into the accounting.

Freight PO - A Freight PO is a purchase order that is generated to cater for invoice verification process. The charges calculated on the freight order are posted and represented on this type of service purchase order.

Settlement Management Documents (SMD) - Accounting document that contains the result of the cost distribution as calculated in the freight order. The SMD contains the currency value, it contains the reference to the original documents and materials, it determines the G/L account where charges need to be posted to.

Intercompany Settlement - Transaction between companies to resolve unequal balances. It will create and post intercompany balancing entries to ensure each company's net balance equals zero.

Background & Context

In consolidation scenario's multiple deliveries can be combined to optimise transportation capacity. There can be many scenario's where cargo can be combined into one order, e.g. multiple deliveries into one container, milkrun scenarios, multi containers combined into one freight booking, etc. To make this possible for multiple company codes then this function need to be custom built.

Description of a scenario:

Lets consider a simple scenario where cargo for one customer is combined into one container.

1. Cargo is picked up at plant for company code 1100.
2. Additional cargo is loaded into the same container at plant for company code 1200.
3. Additional cargo is loaded into the same container at plant for company code 1300.
4. Truck delivers container at port.
5. One Freight Order is created for transportation of the entire shipment
6. Transportation charges are calculated on the Freight Order.
7. Cost Distribution (standard SAP) is distributing the costs based on cargo weight.
8. Freight charges are posted in a Freight PO for invoice verification. This is on company code 1100 only.
9. At the same time when the Freight PO is posted, the system is posting Settlement Management Documents (SMD) which assign a proportion of the transportation charges to each company code. This is based on the Cost Distribution. (standard SAP).
10. For the SMD documents for company code 1200 and 1300, the system will create an Intercompany Settlement (custom built) to compensate company code 1100 for the freight costs to be paid to carrier.
11. When the invoice is received, then this is verified and posted against the Freight PO in Company Code 1100.
12. Invoice differences are posted against price differences account or additional SMD documents are generated to distribute the invoice differences.

Assumptions

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Constraints

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Impacts

To make this function available, this would be custom built.

Business Rules

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Options considered

Evaluation

Consolidated transport across multiple company codes is an opportunity to fulfil with the use of SAP TM. It gives greater flexibility to transportation planners to optimise the use of transportation capacity and to save costs.

With invoice differences distributed across freight, it gives the most accurate accounting result. And each company will pay their full share of the transport.

Option 3 is likely the most desirable solution.

See also

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Change log

Workflow history