Freight Settlement and Event Driven Charge Calculation

In previous blogs, different versions of SAP Transportation Management (TM) were analysed. S/4 HANA Supply Chain for TM (embedded TM) is the future of TMS (Transportation Management Systems) for SAP. LE-TRA (Logistics Execution -Transportation) and Business Suite for SAP TM (standalone TM) will be phased out soon. Basic shipping process, which was earlier designed through LE-TRA, should be realized via basic shipping functionality of embedded TM. Since professional shipping requires additional license cost, customers usually would like to understand the additional business processes in transportation, that can be designed using professional shipping functionality of embedded TM. Next few blogs will be detailing few business problems/issues in transportation process and its resolution/design using SAP TM.

Freight Settlement Process:

Shippers are usually in the business of designing and manufacturing the product and may not have enough resources and expertise in transportation of these products to customers. Hence, the shippers generally sub-contract most of the transportation to external carriers. To have a sustainable and stable transportation process, shippers usually have agreements with the carriers. They regularly negotiate the terms and rates with carriers and update the agreements as per the requirement.

Once the carrier completes a shipment, an invoice will be sent by the carrier to the shipper for payment of transportation services. The value in the invoice is verified against the calculated amount (based on the agreement), and the payment is processed. In case there is any variation between the calculated amount and the carrier invoice amount, a dispute process will be initiated. This entire process is called freight settlement process. There are other variations of this basic process such as Electronic Receipt Settlement (ERS) etc….