shipment costing

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R/ 3 System ®

CalculationandSettlementof FreightCosts

intheR/ 3System



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Contents

Calculation and Settlement of Freight Costs in the R/3 System ...................... ....................... .........3

Aims........................................................................................................................................................3

Overview of Transportation.....................................................................................................................4

Shipment Costs Calculation....................................................................................................................6

Further Functions....................................................................................................................................8

Freight Cost Document...........................................................................................................................8

Shipment Costs Settlement ..................................................................................................................10

Limitations.............................................................................................................................................11

Glossary................................................................................................................................................13

Calculation and Settlement of Freight Costs in the R/3 System September 1997



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Calculation and Settlement ofShipment Costs in the R/3 System

Aims

The aim of this document is to present the new developments that areplanned for Release 4.0 of the R/3 System in the area Calculation andSettlement of Shipment Costs. This document also provides a short previewof the development items that have not yet been realized for Release 4.0. Thispreview enables customers and interested parties to find out moreinformation about the functions that are already available for Release 4.0 inthe shipment cost area, and which functions are planned for futureavailability.

The information contained in this document addresses:

Decision-makers who judge how far the planned shipment costs functionsin the R/3 System fulfill the business requirements of their company

Managers and company staff that are responsible for theimplementation of the software

Interested parties and customers who require information on thecalculation and settlement of shipment costs in the R/3 System.



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Overview of Transportation

Transportation is an important and integral part of the supply chain. Quickand efficient organization of transportation activities is important to be ableto achieve a high degree of customer satisfaction and, at the same time, keepcosts in logistics at a low level.

Release 3.0 contains the basic functions for transportation processing in theR/3 System. These functions include:

Planning and executing shipments

Defining means of transport

Creating transportation documents / executing electronic data exchange(EDI)

Monitoring transportation activities

Information system for shipment

In Release 3.1, we have expanded the functions in the communication area(IDOC, EDI). Also, we have created an interface that enables you to createshipments through a subsystem.

The following functions for shipment costs calculation and settlement areplanned for Release 4.0:

Entry and management of master data for freight agreements, rates, andother shipment costs

Calculation of shipment costs for each stage of shipment

Settlement of costs for each service agent

Transfer of shipment costs to Financial Accounting and Controlling



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The following graphic shows which functions will be incorporated inRelease 4.0 for shipment calculation and settlement. The functions listed inthe gray fields will not be offered for Release 4.0. These are functions that areplanned for further developments.

Fig. 1: Calculation and settlement of shipment costs in and beyond Release 4.0



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Shipment Costs Calculation

You calculate shipment costs using the SAP condition technique for pricing.This technique has proved successful in the areas Sales and Distribution, andPurchasing. Release 4.0 supports, in particular, freight-related conditions (forexample, conditions based on freight classes).

Since shipment costs calculation uses the SAP condition technique forpricing, the most important control instrument for shipment costs calculationis the pricing procedure. It contains a list of all the condition types that are to be used for shipment costs calculation. You can also specify requirements forindividual conditions. Whether or not a freight condition is relevant for aparticular transaction depends on whether the respective condition type is inthe pricing procedure and on whether the respective condition record exists.The pricing procedure enables you to have any number of intermediate totalsfor the gross and net values.

Fig. 2: Pricing procedure

The freight rates are the basis for shipment costs calculation. The totals of thedifferent freight rates that are used for a particular transaction give theshipment costs. Freight rates are stored in the system in the form of condition rates that can be created at an arbitrary level. For example, you cancreate condition rates for certain freight classes, means of transport, postalcodes, or tariff zones. The combination of different criteria (for example,freight class and carrier) is supported in the system and can be used whererequired.

Each freight condition record has a condition type in which you can definethe most important control criteria. For example, you can define whether theamount is a fixed amount or a percentage rate, how the amount is to be

rounded off, or whether manual changes are possible. Also, you can store

Freight conditions



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default values for maintaining freight conditions in the condition type.Within a freight condition record you define, in particular, which criteria areused for determining the freight rate.

It is possible to automatically determine freight codes and freight code sets thatare used, among other things, for communication with service agents. Freightcodes, on the other hand, can be grouped together to freight classes that thesystem can use as a basis for calculating freight rates.

All freight conditions have a particular validity period. Freight rates that arevalid at different time periods are managed in parallel in the system. Thisenables you to follow up the history of the freight rates, and to enter thefreight rates at an early time, should there be changes in the tariffs.

The system determines the freight rate for each condition type from thepricing procedure, and it calculates the value of the freight condition inaccordance with the scale basis. The freight rates in a freight condition can bestored as a fixed amount or in a single-dimensional scale. This scale containsa ”From” value and a ”To” value.

Fig. 3: Pricing in the shipment costs calculation process

As soon as the system has determined the pricing procedure that defines thevalid condition types and their sequence in the shipment cost document, thesystem takes the first condition type (in the above example, this is the basicfreight FR00) and searches for a valid condition record.

The access sequence FR00 that is assigned to condition type FR00 definesthat the system first searches for condition records that were created for aparticular combination of freight class and carrier. This search isunsuccessful. So the system searches for condition records that applygenerally for the carrier. It finds a condition record with a weight-dependentscale.

Using the information that is stored in the condition record, the system

determines the basic freight. The system repeats this procedure for eachcondition type of the pricing procedure.

Freight classes

Validity periods

Determining condition value

Example



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Further Functions

In Release 4.0, the following functions are planned for the calculation of shipment costs.

When you determine the freight condition value, you can adjust both the basis for the pricing scale as well as the result (the freight condition value)using the rounding rules. For example, you can round to 100 kg for thecondition basis or to a full dollar ($) amount for the condition value.

The above cases show how you calculate freight conditions, without takingother freight rates into consideration. Using freight comparisons, for example,you can select the most reasonable rate.

Freight comparison between groups of conditions

The condition types in the pricing procedure are grouped together intogroups (for example, basic freight 1, discount 1 – basic freight 2,discount 2,...). The freight conditions of the individual groups arecalculated and the values are compared for each. The most reasonable(or the most expensive) is automatically selected.

Minimum freightYou can mark a group of conditions as the minimum freight, that is, thefreight value of this group must not be fallen short of. This group isaccepted only if it does not have the smallest freight value of all groups.

In addition to using the above functions, you can also calculate amounts on acustomer-individual basis using Customer Exits. As an appropriate example,

we can use the calculation of the value of goods for insurances. The actual shipment costs calculation is done either on the basis of the stagesof a shipment or on the basis of the shipment header. The data can be takenfrom different sources, such as the shipment header, the items of theshipment, the shipment stages or the shipping units. The basis for thecalculation can be one of the following:

The existing delivery items

The shipping units of a particular shipping material type (for example,container, rail car)

If, for example, the delivery items are the basis for shipment costs calculation

and the freight rates are defined for a freight class, the system accumulatesthe weights for each freight class from the respective delivery items. Thefreight rates are determined for each freight class and each stage of shipment.

Shipment Cost Document Basically, the shipment document contains data that is important forprocessing a shipment. This data represents the physical flow of a shipment.It can, however, be important to redefine a shipment from the view of shipment costs calculation. This could be important, for example, when you

want to determine the shipment costs according to the method “mostexpensive main leg.”

Rounding rules

Freight comparisons

Customer-IndividualAmount Calculation

Basis for Shipment CostsCalculation



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This method is not yet implemented for Release 4.0, but it is an example of why a separate document is required for the shipment costs.

Fig. 4: Diagram representation of shipment costs calculation according to themethod ‘most expensive mail leg’ – planned function after 4.0

In the example above, the actual shipment flow plays a subordinate role forshipment costs calculation. The main legs are the most important parts forshipment costs settlement.

You still have to calculate several shipments “together.” This is particularlythe case if the insurance for a transportation chain is based on a percentagerate of the total transportation costs.

The shipment costs document in the above example requires an appropriatereference to the shipment components for which you have to have separateshipment costs calculation (stages, shipment header).

The above example shows a function that will not be available until afterRelease 4.0. However, this function requires a separate document in advancefor the shipment costs. The shipment costs document is available alreadywith Release 4.0. It must contain the following information:

Cost view

Overview of items with display of calculated costs

Representation of costs for each delivery item

Delivery viewOverview of deliveries that are part of these shipment costs

StagesOverview of stages that are part of these shipment costs

Document flowThe shipment costs document is integrated into the SD document flow.You can call up the document flow from the document.

Status management



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Shipment Costs Settlement

Shipment costs settlement with a service agent is included in the purchasingfunctions of the R/3 System.

Figure 5: Overview of shipment costs settlement

Shipment costs settlement covers the following functions:

Manual and automatic release of shipment costs documents forsettlement

Creation of external service orders and entry of services provided

Automatic settlement (ERS procedure)

Transmission of shipment costs to accounting department

Self billingInformation for the service agent with the respective information fromshipments and shipment costs documents



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Limitations

The following topics and functions in the area of shipment costs calculationand settlement will not, or only partially, be included in Release 4.0:

Customer shipment costs calculationIn the billing area, it is not possible to calculate shipment costs that aredependent upon shipment-specific information (for example, carrier,freight code, or geographical data).

Intercompany billing of shipment costsThere is no possibility to carry out intercompany billing if a specificcompany executes shipments for another company.

Freight informationThere is no separate transaction for calculating shipment costs in thesales quotation or order, in the purchase order, or in the shipment.

In shipment costs calculation, you cannot determine distances. Also,there are no two-dimensional freight conditions, nor is there any break-weight calculation.



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Glossary

Access sequence

The access sequence is a search strategy anddefines the sequence in which the system is tosearch for valid condition records.

Condition

Conditions stand for requirements that are

used in pricing.

Condition record

The condition record contains variable factorsthat are stored as master data with a definedvalidity area. These variable factors are used incalculating basic freight, discounts, andsurcharges. Factors of this type are, forexample, weight, carrier, freight class.

ERS procedure

ERS stands for ”Evaluated Receipt Settlement”.In automatic evaluated receipt settlement, youmake an agreement with the vendor that theydo not create an invoice for an ordertransaction. Instead, the invoice document isposted automatically on the basis of the datafrom the purchase order and the goodsreceipts. In this way, invoice variances (forexample, price too high) are excluded.

Freight class

One or several freight codes are assigned to afreight class. The freight class is a type of classification used in shipment costscalculation.

Freight code

Freight codes are used by carrier or railwayorganizations with a freight code set forclassification of goods that are to be shipped.They are determined automatically in the R/3System using certain criteria (freight code setand material) and used for communicatingwith the service agent.

Freight code set

Freight code sets are issued by carrier orrailway organizations and used for rail or roadtraffic. Special freight codes are defined in eachfreight code set. The freight code set isdetermined automatically in the R/3 Systemon the basis of certain criteria (country of origin, shipping type, carrier). It is the basis fordetermining the freight code.

Pricing procedure

The pricing procedure is a central element inpricing. It defines the valid condition types andthe sequence for calculation.

shipment costing

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