Transportation management (TM) refers to the business processes involved in managing the transfer of goods from suppliers or vendors to customers. As a leading ERP company, SAP provides multiple solutions for companies looking to perform TM tasks.
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SAP TM plays a key role in the logistics landscape of a business. It is involved in numerous areas of business, such as shipping logistics; freight handling and forwarding; carrier, cargo, and procurement management; and logistics service provider management. The figure below provides a scope overview of the SAP TM solution.
SAP TM organizes its functionality into seven key components.
Requirements management comprises all functions involving TM integration with the shipper’s logistics processes, such as sales orders, purchase orders, stock transfer orders, and deliveries.
The main component of logistics service providers, order management is the starting point for sales to a customer.
Internal processing refers to all of the activities involved in moving stock within a warehouse. This is limited to replenishment, ad hoc movements, posting changes, and stock transfer.
Subcontracting provides order objects representing the relationship with service vendors or carriers. Tendering is when a quote is requested for shipping costs.
Transportation charge management focuses on cost, revenue, and profitability in transportation.
The settlement component aims to help users draft invoices in the SAP S/4HANA system so providers can get paid.
Strategic freight management provides tools to work out and implement commercial agreements between customers and subcontractors.
SAP currently maintains two expansive ERPs (oftentimes referred to as “business suites”) for its customers. Both SAP ERP and SAP S/4HANA give users the ability to perform TM tasks.
A robust, standalone SAP Transportation Management component was created to run alongside SAP ERP in past development cycles. However, SAP ERP will only be maintained by SAP through 2027, with some additional, extended maintenance planned through 2030.
SAP S/4HANA is SAP’s current enterprise application suite. First released in 2015, it drastically simplifies processes compared to SAP ERP, and consists of numerous lines of business (LoBs) that also cover a host of business processes. The SAP TM component has been embedded directly into SAP S/4HANA and falls under the umbrella of the SAP S/4HANA Supply Chain LoB. Basic shipping functionality is included in the standard SAP S/4HANA license, while advanced shipping options are available for an additional fee.
Additionally, SAP offers customers the ability to run TM in a decentralized model, where a separate SAP S/4HANA instance runs TM alongside a main instance that runs a business’ remaining ERP areas.
In addition to SAP ERP and SAP S/4HANA, SAP has a few other solutions released that relate to TM.
TM functionality is only one part of logistics, and it fits in alongside other SAP S/4HANA LoBs to fulfill its main goal of getting products from conception to customer. Below is an overview of key integrations.
Product-based businesses own fixed, manufacturing assets such as machines, buildings, and tools. Through the Asset Management LoB of SAP S/4HANA, SAP assists users in taking care of those in-house items from a maintenance perspective to manage the wear and tear of these assets through preventive maintenance.
For all products, and especially for dangerous products such as chemicals, oil and gas, and explosives, it’s important to handle them safely. Environment, health, and safety management tools help users track and manage safe handling data.
Whenever a key step in the logistics process is performed, a configured event in the SAP system is marked as complete. Event management focuses on setting up and maintaining these events in the back end.
Payment must be received when a product is sold and shipped to a customer. Finance operations, although not a logistics topic per se, is tangentially related to TM as this is the area of the business that requests, records, and remedies payment-related aspects of a sale.
Companies need to stay abreast of regulations, tariffs, documentation, and related security measures when transporting goods across country lines. Global trade management helps users manage those rules and procedures.
Materials management helps meet market demand by performing activities such as planning stock levels, minimizing work-in-process inventory, fulfilling customer orders, and collaborating with suppliers and other vendor partners.
Once a product has been created and is awaiting dispatch, orders need to be formally acquired from customers before it can be shipped out. Sales and distribution operations focus on generating orders and getting the product out the door and to its final destination.
Once a product is created, inventory levels and locations need to be managed. With warehouse management operations, businesses manage day-to-day warehousing operations, focused largely on stock. This includes picking and packing items when orders come in, and moving goods into, out of, and around the warehouse.
While we’ve laid out much of the important terminology you’ll run into when performing transportation management with SAP, there are a handful more concepts that will be helpful to you.
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