Parcel, LTL, FTL Processing with Advanced Shipping & Receiving in SAP Transportation Management

[AtulGokhale]

This blog post explains how companies (like OEMs) can process their outbound freight from their distribution centers where the Warehouse and Transportation functions are well integrated allowing a possibility to automate the Transportation Planning and Warehouse execution function.

During Transportation Planning, focus is high on standard Vs. express shipping conditions agreed with the customer and in turn deciding when and what to be shipped as Parcel or LTL/FTL. As we know, each of this impacts the delivery SLAs and Costs incurred.

With Advanced Shipping and Receiving (ASR) functionality warehousing and transportation, functions together seamlessly, to achieve key benefits like:

• Facilitate and prioritize the Pick, Pack, Stage and Load operations for Express shipments
• Avoid a situation where pallets prematurely occupy and block staging area space waiting for the transport to arrive.

What is Advanced Shipping and Receiving (ASR) 

Let us understand this process from the perspective of an OEM selling Machines, Tools, Equipments and Spare parts.

Dealers of this OEM places orders of different kinds, some are to replenish inventory which means large number of order lines for equipments, urgent orders with very few line items for spares and some orders which are mix of equipments and spares. 

OEM wants to keep the transportation cost as minimum as possible and normally negotiates rates with Parcel Companies and LTL/FTL Carriers. Thing to note here is LTL/FTL is palletized cargo where as Parcels are just loose cartons.

Shipping conditions are enforced by the Dealers while placing the order, normally Standard Shipping or Express Shipping (in case of urgency).

Parcel has its own definition on "Shipment Size and Weight threshold" as published by different service providers like FedEx, UPS, DPD, Postal companies etc. Which also means, not every Express Shipment is a Parcel Shipment.

OEM decides the best way to ship the order lines making sure that delivery is on time as also the cost is kept minimum.

Shipping Condition	Qualifies for Parcel	Shipping Possibility 1	Shipping Possibility 2	ASR-Type
Express	Yes	Parcel		Warehouse Driven
Express	No	LTL	FTL	Transport Driven
Standard	Yes	LTL	Parcel	Transport Driven
Standard	No	LTL	FTL	Transport Driven

Technical Implementation:

1. As demonstrated in the "process flow" below, Sales Order information is fed into the SAP TM Freight Unit Builder (FUB) to decide what can be shipped "Parcel" and what can go LTL/FTL. Invoking a BRF+ decision table Parcel related "Shipment Size and Weight Threshold" can be checked. (FUB) spits out Parcel and Non-Parcel Freight Units
2. Parcel Carrier determination for the Parcel Freight Units is done based on the available Parcel Rate Contracts stored in the SAP TM.
3. Express Parcels need immediate warehouse execution, such Freight Units are so identified as Warehouse Driven ASR scenario. Functionality of Delivery initiation for Unplanned Freight Units is used to initiate the Warehouse activitiesParcel & Non Parcel Process Flow
4. Using automated consolidation jobs Non-Express Parcels and Non-Parcel Freight Units can be consolidated into LTL/FTL shipments and follow the Transport Driven ASR process. This avoids premature warehouse execution, which could block the warehouse capacity.
5. Non-Express Parcel Freight Units which could not be shipped under consolidated LTL load can still be pushed as Parcel Warehouse driven process.
6. Parcel Shipping Labels can be printed from the Packing Station in the Warehouse

Such end-to-end automated process running daily has a potential to increase the efficiency of the Distribution Center.