What is SAP TM? A Complete Guide to SAP Transportation Management
It is pretty easy to guess what your online search history might look like. Knowing what SAP TM is, means you have been trying to figure out what is probably the best new logistics module in the SAP family. Modern supply networks are so fast with so many more data points, so many more carriers, and so much more complex. Companies need IT systems that enable the planning, executing, and real-time tracking of freight moves of any kind, across all transportation modes. That solution is SAP Transportation Management (SAP TM).
This article will define SAP TM, how it works, and address user's biggest concerns like freight order, freight units, forwarding orders, 3PL and Mapper Classes, OTR, and TOR ID. This article will be useful to logistics experts, SAP Consultants and aspiring SAP TM professionals. It will offer a practical guide to the module.
What is SAP TM?
SAP TM (SAP Transportation Management) is one of the SAP modules that help manage the movement of goods by various transport methods (i.e. road, rail, air, ocean, multi-modal) by planning, executing, controlling, and optimizing. SAP TM is part of the SAP Supply Chain Management (SCM) and is offered as an on-premise solution. SAP TM is also available as part of SAP S/4HANA and is called SAP S/4HANA Transportation Management (TM).
SAP TM helps the business answer the following logistical management questions:
1. What is to be shipped? (This speaks to the demand that must be met.)
2. What is the mode of transport? Who is the transport service provider? (This speaks to the planning and the transport service provider selection.)
3. How is the shipment (transported goods) monitored? (This speaks to the execution of the transport function and the settlement of freight and reporting.)
Transportation Management is designed to fully integrate with SAP modules SD (Sales and Distribution), MM (Materials Management), EWM (Extended Warehouse Management), and Finance. This makes it possible to manage the movement of goods by transport as an integrated part of the supply chain process.
Why Companies Use SAP TM
- All-inclusive transportation method planning
- Automated carrier selection (considering cost, capacity, and service level)
- Advanced freight cost & settlement
- Enhanced track and trace of shipments and performance
- Decreased transportation costs from building and optimizing routes
- Integration of load planning and routing with warehouse operations, sales, procurement, and finance
What is TM in SAP? (Short Answer)
TM in SAP means Transportation Management. This SAP module oversees the entire logistics process (beginning with the transportation requirement generated by a sales or purchase order needing delivery and ending with the delivery of the goods and the settlement of freight costs with the transporting company). Simply put, SAP TM is the "brain" of logistics and determines what and when goods should move and who should move them.
"I want to know what TM in SAP means" commonly is asked in cases when the poster wants to know what SAP TM means. In fact, both questions are the same; the acronym TM in SAP refers to Transportation Management in the SAP product line.
Core Building Blocks of SAP TM
Understanding some building blocks, like SAP's document flow, is necessary before we can analyze some of the terms, like freight orders and freight units. Here's SAP's document flow:
- Transportation Requirement — generated via a sales order, delivery, or purchase order
- Freight Unit — a basic unit that cannot be subdivided
- Freight Order — a transport document that a carrier receives
- Freight Booking (for ocean/air) — a booking of space with a carrier
- Freight Settlement Document — a document that provides a settlement of freight
We can now examine the terms that are often looked up.
What is a Freight Unit in SAP TM?
A Freight Unit (FU) is the smallest demand unit that can be planned in SAP TM. Transportation requirements can be specified, for example, from sales orders or outbound deliveries. SAP TM creates one or more freight units. This is done by the system based on the freight unit's building rules.
Freight units describe demand. Think of a freight unit as a "package of demand" that informs a system of the need to move "this amount of this type of freight" from A to B by a specified time.
Freight Unit Specification
- The freight unit specifies a defined amount of freight, expressed as weight, volume, a number of handling units, or some other measurement.
- Freight units are automatically generated based on Freight Unit Building Rules (FUBR). These rules describe how the source documents are disaggregated or aggregated to create freight units.
- A freight unit may be adjusted, split, or consolidated before it is analyzed for a transportation plan.
- It contains the origin and destination with the date and the details of the items.
- A freight unit is the primary input to a transportation plan, whether the plan is performed through an optimizer or other manual means.
The freight units that are created are further grouped for the purpose of generating the transportation document (Freight Order) to execute the plan.
What is a Freight Order in SAP TM?
A Freight Order (FO) is the primary document for transportation execution in SAP TM. It describes an actual transportation service (e.g., a "truckload," "container," or "shipment") that is to be performed by a particular carrier, on a particular route, using a particular vehicle or resource.
In contrast to a freight unit that describes demand, a freight order describes the plan and the execution of that demand. Freight orders may contain a number of freight units (consolidation). In some cases, a freight unit may be divided among a number of freight orders.
Types of Freight Orders in SAP TM
- Road Freight Order (FRO): Freight by truck
- Rail Freight Order: Freight by rail
- Ocean Freight Order: Freight by sea & freight bookings
- Air Freight Order: Cargo by air
Components of a Freight Order
- Mode of transport & carrier
- Source & Destination stops
- Planned vs Actual Dates & Times
- Freight Units
- Load Information
- Status
- Freight Cost Reference & Calculation
Freight units tell you what needs to be moved, freight orders tell you how the freight units will move.
What is a Forwarding Order in SAP TM?
Forwarding Order (FWO) is for forwarding orders. This is when a company (forwarder) manages the movement on behalf of a customer and uses subcontractors or 3PL and does not own the method of transport.
When a forwarding company processes a shipping request, a forwarding order is made. Details collected include:
- Information for the customer and the shipper/consignee
- Details regarding the cargo such as weight, volume, and packaging. Also, information if there are dangerous goods.
- The desired pick-up and delivery dates
- Any service agreements and instructions.
- Customer billing and invoicing information.
Forwarding orders are important for freight forwarders and 3PL/4PL companies because they handle the logistics for the customer. Freight orders are important for companies that transport their own goods.
The main difference: Freight orders are for companies that transport their own goods. A forwarding order is for a freight forwarder that manages transportation for the customer.
What is 3PL in SAP TM?
3PL means Third Party Logistics. This is when a company uses an external provider to manage part or all of its transportation and/or warehousing needs instead of having an in-house fleet and carriers, as is the case with SAP TM.
Utilizing 3PL in SAP TM:
SAP TM incorporates 3PL providers in the following ways:
- Carrier Master Data — SAP TM provides 3PL providers as either carriers or Forwarding Agents.
- Tendering — SAP TM offers the capability to either automatically or manually tender freight orders to 3PL carriers to perform the order.
- EDI/API — SAP TM provides a number of 3PL providers with a means of integration through Electronic Data Interchange or API technology for the purposes of real time status updates, shipment tracking and the exchange of documents.
- Freight Settlement — SAP TM provides a means of calculating and settling the freight charges of 3PL providers, offering a clear and accurate invoicing and cost measurement.
SAP TM offers 3PL providers the ability to grow their transportation network while not having to own the physical transportation infrastructure and still be able to retain the transparency and control via a single solution. This is important for manufacturers, retailers and e-commerce service providers, as it provides the ability to achieve the flexibility in the use of carriers without having to own transportation fleets.
Mapper Classes in SAP TM
Mapper Classes are concepts in SAP TM, which are a developer's concern and deal with the Integration of SAP TM with SAP ERP/S4HANA (and other systems). When system to system communication via the TM Integration Framework occurs with regards to Sales Orders, Deliveries and documents pertaining to the Freight, the data in one of the systems will need to be "mapped" to the data in the other system.
A mapper class is a segment of custom or standard ABAP code that implements a particular mapping interface. Such interfaces can be found within the /SCMTMS/ and the CIF frameworks, for example. Mapper classes describe how source data fields are transformed to match the structure of the target data that SAP TM requires.
Mapper Class Use Cases
- Transformation of sales order or delivery data to transportation needs.
- Mapping of customized ERP fields to freight unit or freight order fields.
- Improvement of standard SAP TM integration to provide client-customized business logic.
- Data transformation during the creation of Transportation Requirements (TR) from external or non-SAP systems.
For SAP TM consultants and developers, mapper classes should be understood, especially for integration and enhancement projects. This is particularly the case when standard SAP integration falls short of the client's business needs, and a custom field map is necessary.
What is OTR in SAP TM?
OTR is an acronym for Order Based Transportation Requirement. It is one of two principal methods that SAP TM deploys in order to generate transportation requirements within the system from sales or purchasing documents. The other method is delivery based transportation requirements.
How OTR Functions:
- OTR can be generated directly from a sales order or purchase order — even prior to the creation of outbound or inbound delivery in ERP
- This allows transportation planning to start earlier in the process. This results in increased lead time to plan the carriers, the transportation capacity, and the routes.
- When the delivery is later created within ERP, the OTR is generally updated or substituted by a delivery-based requirement, depending on the system setup.
Importance of OTR:
Order-based transportation requirement systems are of particular importance in the transportation planning systems of industries that deal with transportation planning a long time before the actual transportation of goods takes place. An example of this situation would be a complex manufacturing supply chain. Additionally, capacity with carriers must be contracted ahead of time. Using OTR, as opposed to waiting for delivery-based planning requirements, will improve the accuracy of planning and the timing of carrier negotiations.
What is TOR ID in SAP TM?
TOR refers to Transportation Order Requirement, and the TOR ID is the unique identification number of a transportation requirement in SAP TM. A unique TOR ID is generated for every order-based or delivery-based transportation requirement created in the system, and this ID is used to track, refer, and execute the transportation requirement at each stage of its life cycle.
Importance of TOR ID
- The TOR ID serves as the key reference number in linking the source document (sales order, delivery, purchase order) to the freight units and freight orders in SAP TM.
- It is essential for troubleshooting and monitoring. This is evident in instances when transportation requirements do not result in the creation of freight units.
- The TOR ID is commonly referred to by consultants and support personnel when examining the issues in the transportation requirement monitor and the freight unit building log.
- The TOR ID helps facilitate the traceability of the transportation requirements, which is particularly important for audit review and handling of exceptions.
For functional consultants and support analysts, the TOR ID helps provide insights into the transportation requirements traceability from the order to the delivery of the freight.
SAP TM Document Flow: Integration of Concepts
This is a practical example of how concepts are interrelated:
| Step | Document | Purpose |
|---|---|---|
| 1 | Sales Order / Purchase Order | Creation of business transaction in ERP |
| 2 | Transportation Requirement (OTR or delivery-based) — denoted by TOR ID | Demand is imported into SAP TM |
| 3 | Freight Unit | Demand is sculpted into a transportable Freight Unit |
| 4 | Freight Order / Forwarding Order | Transportation is facilitated with an in-house/3PL engagement |
| 5 | Tendering & Execution | Freight order is executed and tracked |
| 6 | Freight Settlement | Freight deal is realized and dispatched |
The above provides an overview of the simplistic power of SAP TM and its ability to be a complete one-stop logistics solution; each and every component from the start of the demand process to receipt of the final settlement is integrated throughout the entire system.
Key Benefits of Implementing SAP TM
- Visibility for all transport modes and all transport partners
- Costs decreased through improved selection of transport partners, consolidation of loads, and improved transport routing
- Increased efficiency by automatizing transport unit construction and the transport optimizer
- Reduced disputes around final transport costs
- Increased flexibility to adjust from simple domestic transport to complex, international, multiple modes of transport
- Excellent integration with SD, MM, EWM and Finance
Why Learn SAP TM Right Now
There is a global pressure to improve supply chains and a huge investment from industries, including manufacturing, retail, pharmaceuticals, and consumer goods, to implement SAP TM systems (both ECC and S/4HANA). Because of this, there is a high demand for professionals with knowledge of freight units, freight orders, forwarding orders, 3PL and TM systems (such as mapper classes, along with OTR and TOR ID monitoring).
Learning these core concepts is the first step for professionals wanting to transition to an SAP TM consulting role from a logistics SAP role, or from a different SAP module to transportation management.
For professionals wanting to gain practical, transport-related, and project-based skills in SAP TM, ERPVITS offers SAP TM courses that teach concepts through real-life examples and walk students through the configuration process.
Frequently Asked Questions (FAQs)
Q1. What is SAP TM used for?
SAP TM provides functionality to plan, execute, and track the movement of goods via all means of transportation as well as manage the selection of carriers, payment of freight, and settlement of accounts.
Q2. What is the difference between a freight order and a freight unit in SAP TM?
A freight unit indicates the demand for transport, whereas a freight order indicates the transport service which has been planned and executed.
Q3. What is the difference between a freight order and a forwarding order?
A freight order is typically used by a shipper who controls his own transport, whereas a forwarding order is used by a freight forwarder who controls the transport service on behalf of his customer.
Q4. Is SAP TM part of S/4HANA?
Yes. SAP TM is part of SAP S/4HANA as embedded SAP S/4HANA Transportation Management and is also provided as a separate on-premise solution.
Q5. What is a TOR ID used for in SAP TM?
A TOR ID is the key to a specific transport order and allows consultants and analysts to follow the transport order from the source sales order/purchase order through the execution of the transport.
Q6. Do I need to know ABAP to work with SAP TM mapper classes?
Knowing the basics of ABAP helps while dealing with mapper classes, but a functional consultant can deal with the standard SAP TM processes without knowledge of ABAP.
Consider the ERPVITS SAP TM Training program to gain foundational knowledge on SAP TM and immerse yourself in practical project frameworks.