SAP ERP transportation planning and shipment costing offers extensive functionality to manage freight- and transportation-related expenses. It enables companies to control and track freight expenses within their own SAP ERP system rather than through legacy systems or third-party services that many companies have used to manage and keep track of transportation cost and expenses.

SAP ERP shipment costing functionality with the appropriate shipment costing types and procedures can calculate and capture the freight expenses of your company. These freight expenses can then be passed on to your customers or built into your base freight charge calculations. Shipment cost expenses can be settled via the materials management (MM) purchasing process. The system can automatically generate a purchase order for the service performed by your freight vendor and then post the receipt of the service against the purchase order, generating an accrual of the expenses.

I primarily focus on shipment costing during the sales and shipping process to show how you can manage and track these expenses within your own SAP ERP system. The use of this functionality not only offers more control, but also presents access to real-time data about your transportation costs. Additionally, the fact that more detailed freight expenses are available within the SAP system can provide your organization the option to analyze and evaluate these expenses as well as improve profitability analysis.

Figure 1 shows the standard outbound flow including transportation planning and shipment costing. Note that once everything is set up correctly, you can get a shipment cost estimate during order entry. You can also run a shipment simulation with different scenarios in parallel, meaning that you can group multiple variants of report RV56TRGN (transaction code VT04) with different selection criteria within one shipment cost information profile.

Figure 1

Standard outbound shipment costing process

Key Customizing Functionality

First I will go over the key customizing functionality you need to perform to use transportation planning and shipment costing functionality. At this point, I assume you have customized route determination and transportation planning as prerequisites.

• Define shipment cost types and item categories 

• Define shipment cost Relevance and Default for shipment cost type  
• Define shipment cost conditions and shipment cost pricing procedure
  
• Define shipment cost settlement process 

Find these activities via IMG menu path Logistics Execution > Transportation > Shipment Costs > Define Profiles for Shipment Cost information. All these customizing steps have to be performed with your specific cost and freight charge component requirements. For example, if your carrier has a standard stop-off charge, make sure that this charge is determined and applied at the right level and time during the shipment processing and shipment cost document creation.

Define Shipment Cost Types and Item Categories

Shipment cost types are the different document types you can use during the creation of a shipment costing document. The shipment cost types, like most SAP documents, consist of a header segment containing document header-related information and item-level information, such as shipment item categories. Shipment cost item categories are essentially shipment cost elements. They represent unique cost categories associated with a shipment. For example, you may need to create shipment item category insurance as this may be a significant expense item of your shipments. If a separate shipment item category for insurance is defined, you can assign a different accrual account. Define a shipment cost item category, such as 0001 Transportation costs, by following IMG menu path Logistics Execution > Transportation > Shipment Costs > Shipment Cost Document > Shipment Cost Types and Item Categories (Figure 2).

Figure 2

Standard cost distribution levels

Double-click Transportation costs in the Define item categories folder to define its shipment cost item category (Figure 3). For each shipment cost item category, you need to define the calculation rule and the settlement process as shown in Figure 3.

Figure 3

Standard settlement indicators

Item Calculation Settings  

In the Calculation sub-section of the shipment cost Item category, as shown in Figure 3, you specify within the Item det. group field to what level of the shipment document (Transportation Document) the item category is associated — 0001 in my example. This assignment then determines how the cost is set and applied. Here you can control the pricing date and partner function you want to use to determine a valid condition record for the shipment item category. The item determination group indicates at what level the item category (shipment cost component) should apply. Table 1 shows a list of standard item determination groups available

Table 1

Common item determination groups

Shipment Cost Item Settlement Settings

When defining the settlement of the cost associated with the shipment cost item, consider the following:

• How and at what level to distribute the cost to managerial accounting (CO). Table 2 shows the different levels of cost distributions.

Table 2

Standard cost distribution levels

• What G/L account should be used for this particular shipment cost item.

• Whether this shipment cost item is relevant for settlement with the service agent. Table 3 shows the valid indicators for settlement.

Table 3

Standard settlement indicators

• Whether this shipment cost item should generate a purchase order (PO) for settlement with the service agent if none exists. Further, this setting determines the validity period of a PO. Table 4 shows the valid indicators for PO generation.

Table 4

Standard PO generation indicators

Define Shipment Cost Relevance and Default for Shipment Cost Type

Next you define the shipment cost types. In this customizing task, define when a shipment cost document can be created and group all shipment item categories you want to associate with the shipment cost type. Shipment cost types enable you to group the different types of charges that could apply to a shipment type. Follow IMG menu path Logistics Execution > Transportation > Shipment Costs > Shipment Cost Document > Shipment Cost Types and Item Categories to see a sample list of shipment cost types (Figure 4).

Figure 4

Shipment cost type list

Figure 5 shows the details of my example shipment cost type ZFR1. This shipment cost type contains seven item categories. Each item category has a specific assignment for what “level” of the shipment the item category is valid. This screen also contains:

• Whether the item category is automatically determined or is added manually during the shipment cost document creations
• The valuation class to which this shipment cost item is assigned
• The indicator Rate of Automatic Processing, which determines whether the settlement of the shipment cost is processed automatically. Automatic processing is achieved by setting the indicator to Release shipment cost item, as set for shipment cost item category ZFR1.

Figure 5

Assign shipment cost types and item categories

Assign Shipment Cost Type and Define Shipment Cost Relevance 

Now assign the defined shipment cost type to a shipment type. This creates the relationship between a transportation planning shipment document type and a shipment cost type with the possible shipment cost items associated with the type of shipment. Follow IMG menu path Logistics Execution > Transportation > Shipment Costs > Shipment Cost Document > Shipment Cost Relevance and Default for Shipment Cost Type to get to the screen shown in Figure 6, which shows how a simple link between these two documents is established.

Figure 6

Assign shipment cost type in the shipment type view

The next step after assigning the correct shipment cost type to the appropriate shipment type documents is to determine at what level the shipment type is shipment cost relevant (i.e., what stages of a shipment to consider during shipment costing). A shipment type can be relevant for costing at the following stages:

• Shipment header
• Shipment leg
• Load transfer
• Border crossing

Figure 7 shows how the different cost relevance indicators by shipment type can be set (activated). This assignment is critical for determining the right cost at the right level for a shipment. For example, if the shipment cost type assigned to a shipment type contains a delivery level cost distributions item category, you need to ensure that the Shipment Leg is relevant for costing, as reviewed earlier in the setup of the item category section. Costing at the leg level allows delivery level- or ship-to level-specific costing.

Figure 7

Shipment cost relevance for shipment types

I have reviewed the key steps required to set up a shipment cost document for use during shipment costing. The next major component is to create your pricing procedures for use during the shipment cost document creation and for the individual relevant shipment cost types.

Define Shipment Cost Conditions and Shipment Cost Pricing Procedure

In this section, I highlight a few key pricing functions available for shipment costing. Further information specific to pricing can be obtained in SAP’s online help at help.sap.com.

The first point to highlight is that you can define shipment cost condition types with multi-dimensional calculation types. Multi-dimensional calculation types allow you to maintain more than one criterion for a condition record. This type of calculation type accommodates some of the unique quoting freight carriers offer their customers. To define and maintain a multi-dimensional condition type, you need to assign an appropriate scale type to the condition type. The scale type defines the basis to be used for the sale (e.g., distance, travel time, or volume). You can assign up to three different scale types to a condition type with multi-dimensional calculation type, essentially combining up to three dimensions within one condition type. Figures 8 and 9 show an example of condition type ZB01 with one dimensional scale type for distance. To get to these screens, follow IMG menu paths Logistics Execution > Transportation > Shipment Costs > Pricing > Shipment Cost Pricing Control > Define Condition Types, and Logistics Execution > Master Data > Transportation > Shipment Costs > Scales, respectively. Table 5 shows a list of the different calculation basis indicators allowed.

Figure 8

In the field Calculation type, T represents the function of multi-dimensional calculation, and the field Calculation basis determines the origin of data to be used for the calculation of the condition value

Figure 9

The calculation base determines what source is used during pricing as the basis for the condition type

Table 5

List of allowed calculation basis indicators for freight cost conditions

The condition scale type defines the reference elements for the scale (i.e., distance, weight, and volume). A scale type can also have specific formulas (requirements) for the scale or condition base value use, as shown in Figure 9. For example, you may need to apply a conversion of duration in the format HH:MM:SS into seconds.

The next area within the shipment pricing to highlight is pricing procedure determinations. You need to perform a number of activities to determine the correct shipment cost pricing procedure for the shipment cost item. Define procedure groups for the following elements:

• Define and assign shipping type procedure group
• Define and assign item procedure group
• Define service agent procedure group
• Define pricing procedure determination for shipment costs

These settings drive the system to determine the desired pricing procedure during shipment costing. Follow IMG menu path Logistics Execution > Transportation > Shipment Costs > Pricing > Shipment Cost Pricing Control > Define And Assign Pricing Procedures in each procedure group to get to the screens shown in Figures 10 and 11.

Figure 10

Assign shipping type and shipping type procedure group

Figure 11

Assign shipment item category and item category procedure group

The use of shipping type and shipment item category procedure groups allows the assignments of different pricing procedures. This customizing step provides more flexibility to define very specific pricing procedures by category. This also keeps pricing procedures simple by allowing you to include all shipment costing requirements into one pricing procedure. However it’s not required that you use one pricing procedure for all your shipment cost calculations.

For the shipment costing pricing procedure determination group, follow IMG menu path Logistics Execution > Transportation > Shipment Costs > Pricing > Shipment Cost Pricing Control > Define And Assign Pricing Procedures (Figure 12). Here you assign the shipment cost pricing procedure and the conditions taken into consideration to determine a pricing procedure.

Figure 12

Example of shipment costing pricing procedure determination

Define the Shipment Cost Settlement Process  

Since the shipment cost item category ZFR1 I have been using is marked to create an automatic PO as shown in Figure 3 within the settlement sub-screen, you must assign the default purchasing data for the automatic PO creation, as shown in Figure 13. Follow IMG menu path Logistics Execution > Transportation > Shipment Costs > Settlement > Assign Purchasing Data. When settlement is initiated for a shipment cost document, this reference data is used for the generation of the PO.

Figure 13

Assign default purchasing data to determine the default purchasing organizational data used during automatic shipment cost settlement PO creation

I will not go into further details of the purchasing account assignment category and automatic G/L account determination and CO assignments that take place during the PO processing, as they are beyond the scope of this article. For questions, refer to the online help (help.sap.com, search for “shipment cost settlement with service agent”) or consult your MM or FI experts. However, each shipment cost that should be settled via the purchasing process will require an account assignment item category, an origin reference for the CO processing, and the indicator defining the duration of the PO that is being generated as part of the settlement process. See Figure 3 to view the setting of my example item category ZFR1.

Define the Shipment Cost Information Profile 

You use shipment cost information profiles during the shipment cost simulation process within the sales order to get a shipment cost estimate. Setting up multiple profiles allows for simulating shipment costing with a number of different variants. To define shipment cost profiles, follow IMG menu path Logistics Execution > Transportation > Shipment Costs > Settlement > Define Profiles for Shipment Cost Information (Figure 14). Double-click a profile to get to Figure 15. Here you specify the default values, such as what transportation planning points are more important and what shipment type and shipment pricing procedure is supposed to be used with this profile during the simulation of shipment cost estimate.

Figure 14

Location of the shipping cost information profile

Figure 15

The detail settings for the shipping cost information profile

Figure 16 shows what planning profiles are assigned to a shipment cost information profile. Here you assign the planning profile variants to be used via this profile. The planning profile is a selection variant report RV56TRGN (transaction code VT04). These variants can be used during the shipment cost simulation to determine the estimated total shipment cost of a sales order.

Figure 16

Assign Planning profiles to a Shipment Cost Info Profile

Shipment Cost Calculation Simulations at the Sales Order Level

I am now able to estimate shipment cost during the sales order processing. I can also create shipment cost documents for a shipment and settle the freight expenses of the carrier via an automatically created purchase order with a service item.

First look at the shipment cost estimate during the sales order process. You can simulate the shipment cost estimate from the menu option Extras > Shipment Cost Information. This option brings you to the initial shipment cost estimate screen. It also pulls the Shipment Cost Information Profile assigned to the order type.

The system defaults to the shipment costing profile ZSTANDARD defined in Figure 15, as shown below in Figure 17. These are default settings, but you can change them if desired. The system will always have a shipment cost information profile on the initial line represented by the planning profile labeled <FROM ORDER>.

Figure 17

Initial shipment cost information overview screen with the default values from the order and/or from the applicable shipment cost info profiles

After executing the shipment cost simulation, an estimate value is displayed per planning profile if the system can fully simulate the costing process (Figure 18). If the system can’t fully simulate the costing process (e.g., due to an incorrect shipment type or carrier used for the simulation), a zero value message is displayed for the profile.

Figure 18

Shipment cost simulation overview after execution with an estimated value

You can further analyze the simulation from the Results tab as my example shows in Figure 19. Here you can see further details about the shipment cost document, the details costing, and pricing processing by selecting the appropriate magnifying glass icon. Figure 20 shows the overview of the freight cost item generated during the shipment cost simulation.

Figure 19

Click the Ship. Costs Details magnifying glass in the Shipment Cost Information results overview

Figure 20

The shipment cost type detail view shows the freight cost items applicable for the shipment being simulated and the value determination

Figure 20 shows the details of the freight cost item ZFR1. It shows what service agent and pricing procedure were used to determine the estimated shipment cost value for this order. You can select the item and display the item detail view to get further information regarding this shipment cost item category as shown in Figure 21.

Figure 21

Shipment cost item detail view of freight cost item ZFR1

Next, I create a shipment document (Shipment 1328) via transaction code VT01N. Refer to the online help at help.sap.com (search for “creating shipments”) if you are not familiar with the shipment document creation process. Based on my customizing settings, the shipment is relevant for shipment header and shipment leg costing as shown in Figure 7. This setup indicates that my shipment is relevant for shipment costing and enables the creation of a shipment cost document (Figure 22).

Figure 22

Select the shipment cost relevance indicator at both the header and stage level to ensure your shipment is relevant for costing

Next, I create the shipment cost document via transaction VI01 or by following menu path Logistics Execution > Transportation > Shipment Costs > Create for the shipment document 1328 created earlier. Once the shipment document is created, the system automatically creates a settlement purchase order for the shipment cost item as shown in Figure 23. Automatic settlement and PO creation are controlled at the shipment cost item as shown in the settings of item category ZFR1 in Figure 3. The sub-screen settlement in Figure 3 shows that in the field Settlement Rel., indicator X = relevant for settlement (G/L account) and in the field Generate PO indicator, C = Generate purchase order for validity period of one month.

Figure 23

Create a purchasing document for the shipment cost document by selecting the Transfer check box

Figure 24 shows an overview of the PO automatically created for the settlement of the shipment cost document 1083. You can view the purchasing document from the freight cost item by double-clicking its hyperlink or by using transaction code ME23N.

Figure 24

Overview of shipment cost settlement purchase order

Hasan Yakisan

Hasan Yakisan is a senior SAP LES consultant with more than 17 years of SAP implementation experience. During his career, he has focused on helping his customers optimize their logistics business processes by designing SAP solutions for highly complex logistics business requirements to maximize and enhance the functionality of the SAP R/3 product, and has been providing new solutions within the logistics area.

You may contact the author at hasan.yakisan@enowa.com.

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