Overview of SAP TM, a business perspective - SAP ERP Tutorial

- [Instructor] This part of the course is a quick overview of transportation from a business perspective. The idea is to go through the transportation in terms of a business process or cycle. That cycle will guide the rest of the course. If you think of transportation in terms of an order, followed by planning, followed by shipping, followed by maybe a track and trace aspect, and settlement. We'll go through each one of these steps. I will emphasize one thing and that is, this course is being done from a, what we'll call, a shipper perspective. The consumer of transportation services, an industrial company, as opposed to what we'll call the logistics service provider perspective, a trucking company, an airline, a railroad company. This course really is being done from the shipper perspective. If we think in terms of the cycle, the order, of course, is the demand to actually ship something, and that can be based in SAP typically on a sales order, though the use of the plant-to-plant transfer, stock transport order is also very common. Also, I have to keep reverse logistics in mind here, that's pretty important. This is the order, and then that's followed by planning. Planning really is the guts of TM. There are hundreds of questions to be dealt with to really do your job as a transportation planner. Ever present one is, is the product really ready to ship? How's it need to go? When does it need to get there? And SAP, as many of you may know, does not understand ASAP, or yesterday, or whenever. You have to be more specific. You need to know about what it is that's being shipped. Capturing all this master data in terms of weights, dimensions, cubes, it can be very important from a transportation aspect. And of course, the ever present question for a good transportation manager is, how do we get those economies scale, those freight costs per pound savings through consolidation? How can we consolidate? And of course, there are other aspects. Is there hazardous material involved? Does the product need to go in some sort of temperature-controlled environment? What modes? Are we talking rail? Are we talking parcel? Is the order that you're shipping for, does it predetermine which mode it's going or is this up to the transportation manger to decide? TM can work either way. And I also included the mode of donkey. I didn't make that up. That is a real-life implementation of SAP TM in Peru. Actually worked pretty well. Then comes who can actually take the product? Who is the carrier? And then, when you communicate with that one or many carriers, who's actually going to take it under what terms? When do they show up? What are the legal aspects? How much does it cost? Who is it that's paying the bills? And other, of course, are many other customer service considerations? There are lots of trade-offs of customer service versus transporting something efficiently. This really is the guts of what TM is all about. Other aspects, of course, TM has to work very closely with the warehouse. Eventually, once the planning aspect is done, the truck will show up at the warehouse to pick up the goods. They may go through a check-in process. There may be pick, pack, and load process to get the product actually ready for shipping. And there may be a checkout process. And a truck may depart and there is the question of when is it appropriate to do the, so-called, Post Goods Issue, the actual document of inventory in SAP terms, where typically, title might pass from the shipper to the customer, which may then initiate billing to the customer. All this really is part of shipping. And heads up, most of this functionality is not actually part of TM. This is where TM has to work very closely with warehouse personnel via through SAP packages to determine how best to accomplish the shipping. Track and trace. Where is my order? Sometimes, that will come out in terms of an EDI transaction called an Advance Ship Notice 856 that is issued when the product maybe leaves the premises. Other tracking aspects include maybe parcel tracking numbers or PRO numbers, more commonly, bills of lading. All of this depends on the mode that's used. And in the course of determining where your stuff is, there may be delays, and how does one know about those delays. Does the carrier give you updates, and so, how do you get your hands on those updates? Eventually, the goods will arrive at a destination. There may even be a proof of delivery aspect to ensure that the customer got their goods. Again, a heads up, this functionality really isn't TM as well. It's event manager. That manager has many, many integration points into TM, but the focus of track and trace really is through SAP's product event manager. And then, finally, there's the aspect of settlement. SAP TM may recalculate the freight cost if necessary, taking into account the actual freight rates used, the actual mileage, the actual weight, and it will gather all that up and send the cost data to the SAP ECC or S4 system, which is typically the financial and inventory system of record. There may be an aspect of sending the settlement data to some kind of a third-party that may perform your freight audit process. In all of this, there are accounting accruals and entries and cost center records that are all done in S4. This is not something that TM does. TM really is just the driver for settlement. The actual settlement process takes place in the S4 SAP ECC system. And same goes for the invoice payment, the freight match/pay process that actually would take place in ECC. And again, heads up, TM really is the driver of settlement, but the core functionality of settlement really takes place in the SAP S4 or ECC system.