Optimizing Supply Chain Visibility with SAP Transportation Management

Obtaining transparency across today’s rapidly evolving and highly complex supply chain is essential in establishing a streamlined, cooperative, well-oiled supply chain machine. However, there are many organizational challenges to overcome, such as a persistent reliance on manual tendering processes, inability to ensure timely interactions with carriers due to a lack of an effective collaboration platform, and an absence of the adequate tools necessary to apply proper business rules.

Logistics and SCM, Manufacturing, Procurement, and PLM 2017 speaker Yanpeng Tan shared advice on driving improvements in the carrier management and tendering processes to enable more effective goods tracking and tracing, and management of your end-to-end freight orders. Yangpeng answered questions on getting the most out of SAP TM tools to support decision making and optimize carrier selection.

Meet the panelist: 

Yanpeng Tan, Senior SAP TM Consultant, Novigo

Yanpeng Tan is an SAP-Certified Transportation Management consultant and PMI-certified Project Management Professional with over 3 years of consulting experience in the logistic and transportation area and over 2 years of project experience for end-to-end SAP TM implementations. Yanpeng has extensive hands-on experience in major SAP TM functionality areas such as Master Data Management, Order Management, Freight Planning, Subcontracting, Charge Management, Settlement, and Financial Integration.

Matthew Shea: Welcome to today’s live Q&A. I am pleased to be joined by Yanpeng Tan, Senior SAP TM Consultant at Novigo. He will be answering your questions today on optimizing supply chain visibility with SAP Transportation Management.

Comment From ANTOGO: What do think is the biggest challenge to position SAP TM in the market?

Yanpeng Tan: I would say that SAP TM already holds a very strong position in the market, and is accelerating each year. In an SAP ERP-based environment, there is minimal challenge. SAP has built streamlined integration between SAP TM and other SAP products such as ERP, EWM, GTS, EHS, and so on.

In a non-SAP environment, competitors are out there in the marketplace, and some do have strong offerings, but SAP TM remains a strong competitor and leader. The biggest challenge is probably regarding the interface with non-SAP systems, as a bi-directional interface may need to be built to enable information inflow and outflow. But I do know customers invest to have SAP TM interfaced to legacy systems to take advantage of beneficial features from SAP TM. One of the features is the Carrier Collaboration Portal, which I will demonstrate in my presentation at Logistics & SCM, PLM, Manufacturing, and Procurement 2017.

Comment From Christian: It’s possible to integrate SAP TM with WM?

Yanpeng Tan: There is standard integration between SAP ERP and SAP TM. I believe the WM module can be integrated via delivery. If you refer to EWM, there is direct integration for SAP TM and SAP EWM.

Comment From Ed: We are using SAP logistics execution for our shipping and transportation processes. What process should we follow to find out whether SAP TM would be beneficial for us?

Yanpeng Tan: We would recommend the following process to evaluate whether SAP TM is a good solution for you:

1)      Identify the pain points and bottlenecks with current solution

2)      Outline wish-to-improve points and turn them into a requirement list

3)      Understand what functionalities SAP TM can provide and how the functional requirements can be satisfied

4)      Conduct an SAP TM workshop and we strongly recommend a proof-of-concept approach to view how SAP TM works and get an idea of how the implementation will be executed

5)      Draw a high-level solution by incorporating inputs from different stockholders

I think SAP provides some material to compare SAP TM and ECC LES module. I will check whether I have it on my end and I can share it with you. Please send me your email.

Comment From Vas: In the North American markets, planning without the use of actual cost to choose the means of transport (MoT) is a big flaw. Do you also face it? If so, how do you get around this flaw?

Yanpeng Tan: In terms of planning functionality in SAP TM, there is functionality called the direct shipment option that can leverage real cost to quickly determine the cost of a non-consolidation scenario. If the requirements for planning get complicated, a VSR optimizer may help to determine proper transportation options. An optimizer VSR to pick up means of transport takes into account so-called planning cost parameters. Those parameters can be configured to incorporate various factors such as distance, weight, volume, time, and so on. By wisely setting up the planning cost parameter, it is possible to build a sophisticated data model to implement SAP TM in coverage of LTL / TL optimization scenarios.

Another optimizer VSTS does take into account real transportation charge master data to generate optimal carrier selection results. This functionality will be demonstrated in my presentation. Please join me at Logistics & SCM, PLM, Manufacturing, and Procurement 2017 if you are interested in knowing more about carrier selection logic.

Comment From Stefan: What do you think are the highest cost saving potentials of SAP TM compared to a SAP LE-TRA-solution?

Yanpeng Tan:

1)      Cost saving for carrier selection

2)      Optimization for route planning and load planning/trailer utilization

The above lists two cost saving areas, but there are a lot of more benefits that SAP TM can provide.

Comment From Jamie: What challenges do you come across in the carrier collaboration space?

Yanpeng Tan:

1)      Manual carrier enquiry process

2)      Limited information for carrier determination

3)      Lag of carrier communication

4)      No central platform for carrier collaboration

5)      EDI communication

Above are some pain points we used to resolve by implementing SAP TM.

Comment From Henry: Is SAP TM bundled with the ECC package? If we have implemented SD/MM/PP/FI/CO, how much will the expense be for SAP TM implementation?

Yanpeng Tan: I do not have an exact answer for this question. It may depend on the package you have purchased. I recommend contacting your SAP representative for pricing options.

Comment From Stefan: Do you have any information about SAP TM content that will be embedded in S4HANA directly?

Yanpeng Tan: As far as I know, SAP TM will be incorporated in SAP HANA from the SAP roadmap, but there is no exact timeline for that. SAP TM 9.4 is still a separate product. Please contact SAP if you need further information.

Comment From Guest: Is SAP TM installed on a separate server?

Yanpeng Tan: Typically SAP TM is run on a separate server from the ERP server, but there are different deployment options to explore.

Comment From Andrew: What do you recommend as the best-practice approach to managing freight contracts and also the day-to-day operations with carriers?

Yanpeng Tan: SAP TM provides sophisticated functionality to manage contract information for each individual carrier in the SAP TM space, and it will be used to calculate cost for each freight shipment. SAP TM supports interactive tendering for daily operation via a collaboration portal.

Comment From Stefan: How is communication to suppliers, customers, and carriers solved concerning tendering and updating pricelists? Is it only via iDoc or is there an online platform available (web shop)?

Yanpeng Tan: Tendering can be communicated via email, text message, EDI, and the collaboration portal (a web portal that SAP TM provides out of the box).

Comment From Stefan: Does SAP TM offer a higher number of parameters to calculate freight costs properly, compared to SAP-LE TRA (for example, is the pain point “loading meter” as freight basis solved?)

Yanpeng Tan: In general, the SAP TM pricing feature is more robust than LE-TRA module. There is a calculation method called dimensional weight which can be used to calculate charge based on volume/weight conversion. I am not sure whether it resolves “loading meter.”

If you can share more information about this pain point, I can look up for more information for you.

Comment From Stefan: What size company can afford SAP TM licenses and an SAP TM implementation project? How many days do you plan for an average SAP TM project?

Yanpeng Tan: Freight spend and use case are the driving factors for SAP TM decisions. This can influence the duration of an SAP TM implementation project. We have implemented SAP TM within 6 months.

Comment From Freedaja: While using SAP TM, from a shipper’s perspective, how would you advise the use of multiple internal ERP systems to CIF master data? The use of suffix and prefix is not only confusing for users, but also difficult to manage/maintain when communicating outbound/inbound of SAP TM and other non-SAP systems. How might you advise we retrieve master data from multiple ERP systems without the use of suffix and prefix?

Yanpeng Tan: I think prefix and suffix is optional for master data CIF, but a duplicate name is not allowed. If multiple ERP systems are involved, it may be possible to turn off prefix/suffix if there is no overlapping number range

Comment From Primoz: The service order does not have the option to distribute costs. What do you propose we do to enable proper posting of costs (freight accounts) in ERP?

Yanpeng Tan: Cost distribution should be enabled for service order from SAP TM 9.3. Please consider an upgrade if you have a lower version.

Comment From Eddy: How does SAP TM handle the return of empty pallets owned by the shipper or LSP? What is the solution when the pallets are returned either damaged or the quantity of return pallets does not match the quantity of sent pallets?

Yanpeng Tan: SAP TM can plan the empty return freight shipment and pallets ID can be tracked via the event management system. SAP TM can track the number of pallets in each shipment, and discrepancies can be recorded as part of the event. Manual charges can be added to the freight cost calculated in SAP TM.

Comment From Alfons: According to my information, SAP intends to enable SAP TM functionality into S4HANA. In case you run a LE-TRA for years in ECC with a lot of enhancements, how should you move forward: start from scratch with an SAP TM pilot or convert existing LE-TRA as much as possible into S4HANA?

Yanpeng Tan: I would suggest initiating SAP TM with the assumption that many LE-TRA enhancements may be standard in the SAP TM space.

Comment From Bob: Can you give us an estimate of how many companies are using SAP TM now for rail in the US and length of time to implement this solution?

Yanpeng Tan: I will be honest that I do not have an exact number. But we have been involved in at least three SAP TM implementation in the rail-shipper space

Comment From Stefan: The loading meter is a type of basis for the calculation of freight in Europe. This type of measurement is not available in SAP ERP R3. As a result, the pain point is SAP ERP does not have an out-of-the-box solution.

Yanpeng Tan: I can check whether it comes as standard calculation basis in SAP TM, and if SAP TM has enough flexibility to address it via enhancements at least. Send me your contact information and I can circle back on it.

Comment From Eddy: I also have some questions about rail transport. How is tracking and tracing of empty rail cars managed? How can we see if a rail car is in maintenance and cannot be used for the time being?

Yanpeng Tan: Event management supports standard resource tracking scenarios to track assets including rail cars. There is an indicator and downtime that can be maintained for railcar resource so that the user has visibility into whether or not the railcar is active for use.

Comment From Primoz: Is SAP TM designed to include tax determination in charge calculation process?

Yanpeng Tan: It can be enabled as a charge item in SAP TM. In general, tax can be modeled as charge item in charge calculation result.

Comment From Dinesh Rawat: How can we reduce the number of SAP Notes used in SAP TM project implementation? For enabling a small functionality, implementing hundreds of SAP Notes is a weird situation for consultants to tell a client.

Yanpeng Tan: I would recommend considering a later release or an upgrade if this is not a showstopper for production.

Mr. E. Emery: As we come to the end of today’s Q&A, I’d like to thank you all for joining us. Thank you Yanpeng Tan for all your answers and thank you to everyone who participated in the today’s chat.

You can review the Q&A chat replay at any time, and we will alert you by email when the transcript of today’s discussion is posted. I hope to see you at our upcoming Logistics & SCM, PLM, Manufacturing, and Procurement 2017 conference next month in Orlando, FL!

Yanpeng Tan: Thank you all for participating the Q&A session. Hope I addressed your questions appropriately. If you have further questions or require detailed information, please feel free to contact me at yanpeng.tan@novigo.com. I look forward to meeting you at the SAPinsider event. Have a good afternoon.

Obtaining transparency across today’s rapidly evolving and highly complex supply chain is essential in establishing a streamlined, cooperative, well-oiled supply chain machine. However, there are many organizational challenges to overcome, such as a persistent reliance on manual tendering processes, inability to ensure timely interactions with carriers due to a lack of an effective collaboration platform, and an absence of the adequate tools necessary to apply proper business rules.

Logistics and SCM, Manufacturing, Procurement, and PLM 2017 speaker Yanpeng Tan shared advice on driving improvements in the carrier management and tendering processes to enable more effective goods tracking and tracing, and management of your end-to-end freight orders. Yangpeng answered questions on getting the most out of SAP TM tools to support decision making and optimize carrier selection.

Meet the panelist: 

Yanpeng Tan, Senior SAP TM Consultant, Novigo

Yanpeng Tan is an SAP-Certified Transportation Management consultant and PMI-certified Project Management Professional with over 3 years of consulting experience in the logistic and transportation area and over 2 years of project experience for end-to-end SAP TM implementations. Yanpeng has extensive hands-on experience in major SAP TM functionality areas such as Master Data Management, Order Management, Freight Planning, Subcontracting, Charge Management, Settlement, and Financial Integration.

Matthew Shea: Welcome to today’s live Q&A. I am pleased to be joined by Yanpeng Tan, Senior SAP TM Consultant at Novigo. He will be answering your questions today on optimizing supply chain visibility with SAP Transportation Management.

Comment From ANTOGO: What do think is the biggest challenge to position SAP TM in the market?

Yanpeng Tan: I would say that SAP TM already holds a very strong position in the market, and is accelerating each year. In an SAP ERP-based environment, there is minimal challenge. SAP has built streamlined integration between SAP TM and other SAP products such as ERP, EWM, GTS, EHS, and so on.

In a non-SAP environment, competitors are out there in the marketplace, and some do have strong offerings, but SAP TM remains a strong competitor and leader. The biggest challenge is probably regarding the interface with non-SAP systems, as a bi-directional interface may need to be built to enable information inflow and outflow. But I do know customers invest to have SAP TM interfaced to legacy systems to take advantage of beneficial features from SAP TM. One of the features is the Carrier Collaboration Portal, which I will demonstrate in my presentation at Logistics & SCM, PLM, Manufacturing, and Procurement 2017.

Comment From Christian: It’s possible to integrate SAP TM with WM?

Yanpeng Tan: There is standard integration between SAP ERP and SAP TM. I believe the WM module can be integrated via delivery. If you refer to EWM, there is direct integration for SAP TM and SAP EWM.

Comment From Ed: We are using SAP logistics execution for our shipping and transportation processes. What process should we follow to find out whether SAP TM would be beneficial for us?

Yanpeng Tan: We would recommend the following process to evaluate whether SAP TM is a good solution for you:

1)      Identify the pain points and bottlenecks with current solution

2)      Outline wish-to-improve points and turn them into a requirement list

3)      Understand what functionalities SAP TM can provide and how the functional requirements can be satisfied

4)      Conduct an SAP TM workshop and we strongly recommend a proof-of-concept approach to view how SAP TM works and get an idea of how the implementation will be executed

5)      Draw a high-level solution by incorporating inputs from different stockholders

I think SAP provides some material to compare SAP TM and ECC LES module. I will check whether I have it on my end and I can share it with you. Please send me your email.

Comment From Vas: In the North American markets, planning without the use of actual cost to choose the means of transport (MoT) is a big flaw. Do you also face it? If so, how do you get around this flaw?

Yanpeng Tan: In terms of planning functionality in SAP TM, there is functionality called the direct shipment option that can leverage real cost to quickly determine the cost of a non-consolidation scenario. If the requirements for planning get complicated, a VSR optimizer may help to determine proper transportation options. An optimizer VSR to pick up means of transport takes into account so-called planning cost parameters. Those parameters can be configured to incorporate various factors such as distance, weight, volume, time, and so on. By wisely setting up the planning cost parameter, it is possible to build a sophisticated data model to implement SAP TM in coverage of LTL / TL optimization scenarios.

Another optimizer VSTS does take into account real transportation charge master data to generate optimal carrier selection results. This functionality will be demonstrated in my presentation. Please join me at Logistics & SCM, PLM, Manufacturing, and Procurement 2017 if you are interested in knowing more about carrier selection logic.

Comment From Stefan: What do you think are the highest cost saving potentials of SAP TM compared to a SAP LE-TRA-solution?

Yanpeng Tan:

1)      Cost saving for carrier selection

2)      Optimization for route planning and load planning/trailer utilization

The above lists two cost saving areas, but there are a lot of more benefits that SAP TM can provide.

Comment From Jamie: What challenges do you come across in the carrier collaboration space?

Yanpeng Tan:

1)      Manual carrier enquiry process

2)      Limited information for carrier determination

3)      Lag of carrier communication

4)      No central platform for carrier collaboration

5)      EDI communication

Above are some pain points we used to resolve by implementing SAP TM.

Comment From Henry: Is SAP TM bundled with the ECC package? If we have implemented SD/MM/PP/FI/CO, how much will the expense be for SAP TM implementation?

Yanpeng Tan: I do not have an exact answer for this question. It may depend on the package you have purchased. I recommend contacting your SAP representative for pricing options.

Comment From Stefan: Do you have any information about SAP TM content that will be embedded in S4HANA directly?

Yanpeng Tan: As far as I know, SAP TM will be incorporated in SAP HANA from the SAP roadmap, but there is no exact timeline for that. SAP TM 9.4 is still a separate product. Please contact SAP if you need further information.

Comment From Guest: Is SAP TM installed on a separate server?

Yanpeng Tan: Typically SAP TM is run on a separate server from the ERP server, but there are different deployment options to explore.

Comment From Andrew: What do you recommend as the best-practice approach to managing freight contracts and also the day-to-day operations with carriers?

Yanpeng Tan: SAP TM provides sophisticated functionality to manage contract information for each individual carrier in the SAP TM space, and it will be used to calculate cost for each freight shipment. SAP TM supports interactive tendering for daily operation via a collaboration portal.

Comment From Stefan: How is communication to suppliers, customers, and carriers solved concerning tendering and updating pricelists? Is it only via iDoc or is there an online platform available (web shop)?

Yanpeng Tan: Tendering can be communicated via email, text message, EDI, and the collaboration portal (a web portal that SAP TM provides out of the box).

Comment From Stefan: Does SAP TM offer a higher number of parameters to calculate freight costs properly, compared to SAP-LE TRA (for example, is the pain point “loading meter” as freight basis solved?)

Yanpeng Tan: In general, the SAP TM pricing feature is more robust than LE-TRA module. There is a calculation method called dimensional weight which can be used to calculate charge based on volume/weight conversion. I am not sure whether it resolves “loading meter.”

If you can share more information about this pain point, I can look up for more information for you.

Comment From Stefan: What size company can afford SAP TM licenses and an SAP TM implementation project? How many days do you plan for an average SAP TM project?

Yanpeng Tan: Freight spend and use case are the driving factors for SAP TM decisions. This can influence the duration of an SAP TM implementation project. We have implemented SAP TM within 6 months.

Comment From Freedaja: While using SAP TM, from a shipper’s perspective, how would you advise the use of multiple internal ERP systems to CIF master data? The use of suffix and prefix is not only confusing for users, but also difficult to manage/maintain when communicating outbound/inbound of SAP TM and other non-SAP systems. How might you advise we retrieve master data from multiple ERP systems without the use of suffix and prefix?

Yanpeng Tan: I think prefix and suffix is optional for master data CIF, but a duplicate name is not allowed. If multiple ERP systems are involved, it may be possible to turn off prefix/suffix if there is no overlapping number range

Comment From Primoz: The service order does not have the option to distribute costs. What do you propose we do to enable proper posting of costs (freight accounts) in ERP?

Yanpeng Tan: Cost distribution should be enabled for service order from SAP TM 9.3. Please consider an upgrade if you have a lower version.

Comment From Eddy: How does SAP TM handle the return of empty pallets owned by the shipper or LSP? What is the solution when the pallets are returned either damaged or the quantity of return pallets does not match the quantity of sent pallets?

Yanpeng Tan: SAP TM can plan the empty return freight shipment and pallets ID can be tracked via the event management system. SAP TM can track the number of pallets in each shipment, and discrepancies can be recorded as part of the event. Manual charges can be added to the freight cost calculated in SAP TM.

Comment From Alfons: According to my information, SAP intends to enable SAP TM functionality into S4HANA. In case you run a LE-TRA for years in ECC with a lot of enhancements, how should you move forward: start from scratch with an SAP TM pilot or convert existing LE-TRA as much as possible into S4HANA?

Yanpeng Tan: I would suggest initiating SAP TM with the assumption that many LE-TRA enhancements may be standard in the SAP TM space.

Comment From Bob: Can you give us an estimate of how many companies are using SAP TM now for rail in the US and length of time to implement this solution?

Yanpeng Tan: I will be honest that I do not have an exact number. But we have been involved in at least three SAP TM implementation in the rail-shipper space

Comment From Stefan: The loading meter is a type of basis for the calculation of freight in Europe. This type of measurement is not available in SAP ERP R3. As a result, the pain point is SAP ERP does not have an out-of-the-box solution.

Yanpeng Tan: I can check whether it comes as standard calculation basis in SAP TM, and if SAP TM has enough flexibility to address it via enhancements at least. Send me your contact information and I can circle back on it.

Comment From Eddy: I also have some questions about rail transport. How is tracking and tracing of empty rail cars managed? How can we see if a rail car is in maintenance and cannot be used for the time being?

Yanpeng Tan: Event management supports standard resource tracking scenarios to track assets including rail cars. There is an indicator and downtime that can be maintained for railcar resource so that the user has visibility into whether or not the railcar is active for use.

Comment From Primoz: Is SAP TM designed to include tax determination in charge calculation process?

Yanpeng Tan: It can be enabled as a charge item in SAP TM. In general, tax can be modeled as charge item in charge calculation result.

Comment From Dinesh Rawat: How can we reduce the number of SAP Notes used in SAP TM project implementation? For enabling a small functionality, implementing hundreds of SAP Notes is a weird situation for consultants to tell a client.

Yanpeng Tan: I would recommend considering a later release or an upgrade if this is not a showstopper for production.

Mr. E. Emery: As we come to the end of today’s Q&A, I’d like to thank you all for joining us. Thank you Yanpeng Tan for all your answers and thank you to everyone who participated in the today’s chat.

You can review the Q&A chat replay at any time, and we will alert you by email when the transcript of today’s discussion is posted. I hope to see you at our upcoming Logistics & SCM, PLM, Manufacturing, and Procurement 2017 conference next month in Orlando, FL!

Yanpeng Tan: Thank you all for participating the Q&A session. Hope I addressed your questions appropriately. If you have further questions or require detailed information, please feel free to contact me at yanpeng.tan@novigo.com. I look forward to meeting you at the SAPinsider event. Have a good afternoon.