
This blog post will help readers, customers, and SAP TM users familiarize themselves with the SAP Transportation Management’s Charge management functionality for Additional payments in S/4 HANA 2023.
In this blog post I will be shedding light only on a peculiar process related to a Rail Journey of carrying out additional payments to parties apart from the carriers who execute the journey. The process may vary on the business needs and processes.
You can read more about SAP S/4HANA Transportation Management -Settlement in the Application Help for SAP S/4HANA
Settlement | SAP Help Portal
Note: I have carried out the demonstration based on my personal tests, observations, insights in S/4HANA 2023 release with relevant screen shot from an internal system for ease of understanding. There’s no relevance or relation to any external source.
Use Case
Use case is for both the customers in Transportation & Logistics Industry (T&L) as well as shippers from Retail, CPG, manufactures etc. operating via rail and have to pay Additional fees to Reload/Train junctions/Diversion fees etc. over and above the contracted charges to more than one Rail carrier incurred as part of Rule 11 pricing.
Assumption:
The customer is a Manufacturing company and has implemented SAP S/4HANA 2023 and uses embedded SAP Transportation Management.
They have yearly contracts with the multiple rail carriers to move certain capacities on a given corridor/ route. Alternatively, they also have to pay fixed charges to reload location as the reloads are managed by external parties and incurs sundry expenses as part of handling fees. Contract in the SAP TM world should be referred as FRA (Freight Agreement).
Challenge:
Solution:
SAP TM now has an out of the box solution to enable charge calculation and settlement for Additional agreement parties as of part of BP in the freight order where in stage level charge calculation is activated for rail scenarios. This eliminates the need to create an additional document i.e. the service order. (*Depending on the scenarios, Service orders can be leveraged and its significance should be evaluated on a case-by-case basis)
Note: There are multiple ways in which the additional agreement party can be determined be it via std partner determination profile config or via an available BADI, and purely based on the business rule.
Scenario:
A manufacturer is moving goods from its facility to a customer and routed via Reload location where in the Reload location is operated by an external party. The manufacturer is entitled to pay a fixed amount to the Reload location for the services offered by the reload and consumed by the manufacturer.
Let’s move directly at an instance in time where a rail FRO is created and we have the default route determined with 2 active stages and associated stage level carriers along with Reload BP as the Additional agreement party.
We have valid default routes, Freight agreement i.e. 2 for rail carriers and 1 for reload party.
We start with an assumption that Order management, planning, Charge management and settlement configs are in place as the focus is not on setting up the system but on functionality walk-through.
Pictorial representation of the demonstrated scenario:
Basic rail process flow (Representation purpose only)
Step 1: Rail FRO is created with stage level carrier.
Step 2 : Reload party BP added as Additional agreement party.
As mentioned earlier there are multiple ways to determine a BP for Additional agreement party. For demonstration purpose I have added the BP manually and executing/invoicing carriers are determined from the route.
Step 3: Once the charge calculation is successful, you can observe that system has fetched the agreements successfully for the two invoicing carriers and reload BP.
Note: Charge structure and associated charges are for representation purpose and are fictitious in nature.
Step 4: Let us create freight settlement document for each of the Carrier and Additional agreement party.
The screenshot above demonstrates that system was able to initiate FSD creation for all of the three applicable payable parties. The screenshot above demonstrates that no errors were observed during freight settlement document creation process and we can proceed with posting for accruals.
Step 5: Let us observe that all of the three freight settlement documents were posted successfully with visibly no errors observed from an end-to-end process execution stand point.
Note:
With the introduction of this functionality we can eliminate the introduction of service order which is an additional object and try to keep the process simple and reduce enhancement where were applicable. Some exceptions may apply based on business scenarios and should be evaluated accordingly.
The demonstration in this blog post doesn’t focus on the configs to setup the system nor does it highlight all of the business rules associated with different industry sectors for the carrier payments.
Hope this article helps all of us understand and simplify the payment process associated within the Rail industry in the SAP S/4HANA Transportation Management world. There may be multiple different ways in which a contract may be negotiated between two parties, in this demonstration, I chose to keep it generic and simple.
Thank you for taking out time and effort to read this.
Feedback/comments in any form will be highly appreciated.
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