What is SAP TM?

Companies use SAP TM (Transportation Management) to plan, control and monitor their transport operations. They benefit from real-time data from the supply chain and the automation of processes.

All in all, this makes it possible to significantly increase efficiency and reduce costs.

The functionality of SAP TM is based on real-time data processing, which is made possible by integration with SAP HANA (SAP's in-memory database). This allows companies to react quickly to changes in the supply chain and adapt their transport processes dynamically.

SAP TM also uses rule-based algorithms to optimise transport routes, use capacities efficiently and minimise costs. In addition, the TM system creates transparency about the current status of deliveries, which significantly improves communication with customers and partners.

In general, a transport management system (TMS) is a software solution that companies use to plan, control and optimise their transport processes.

Classic applications of a TMS are

• Transport planning,
• the monitoring of deliveries and
• the management of transport documents.

In addition, many solutions of this type enable transport costs to be analysed and potential savings to be identified.

Overall, a TMS is an important tool for companies that want to efficiently organise their processes relating to the transport of physical goods and reduce their transport costs.

SAP TM also has these basic features of a TMS, but offers many more functions.

SAP TM enables companies to control all inbound processes (freight purchasing) and outbound processes (freight sales) of their logistics centrally. To this end, the solution comes with a range of function modules:

Forwarding order management

Forwarding order management in SAP TM enables companies to create, confirm and manage their customers' forwarding orders.

In addition, diversion offers can be created and sent directly to customers. During order creation, the system can automatically calculate the optimum transport route and carry out an initial transport cost estimate.

Freight order management

Freight order management in SAP TM forms the basis for structured transport planning. It enables freight orders to be created and processed and assigned to the appropriate means of transport.

Freight forwarders and logistics service providers can use this module to optimally manage their transport capacities and automate transport processes.

The transport carrier can either be selected manually or controlled by stored optimisation rules. Companies also have the option of either sending freight orders directly to freight forwarders or carrying out a tender in advance.

Document management

Document management in SAP TM ensures smooth administration of all transport-related documents. Transport documents such as waybills, delivery notes or customs declarations are generated automatically and can be sent to the relevant parties. Digital archiving functions enable documents to be searched for and tracked quickly.

SAP TM also supports various file formats and communication channels so that documents can be sent via EDI, e-mail or other systems. By automating document creation and processing, sources of error can be minimised and compliance requirements can be met more easily.

Transport planning

Transport planning is one of the core modules in SAP TM. It was developed to realise the most efficient control of logistical processes.

Transport orders from different areas - such as inbound and outbound logistics, returns or store deliveries - are brought together centrally in SAP TM transport planning. This facilitates holistic planning, in which capacities can be optimally utilised and costs reduced.

Planning can also be carried out on the basis of both real-time data and simulations. SAP TM also supports various planning approaches - from manual scheduling to fully automated route planning in 2D or 3D.

Transport cost optimisation

The optimisation of transport costs is another important component of SAP TM. With the help of specialised optimisation servers, various scenarios can be simulated to determine the most economical solution.

The system analyses factors such as loading capacities, freight rates and preferred transport routes in order to find the optimum combination of costs and efficiency.

The simulations also utilise external systems such as GIS databases to enable dynamic, route-specific calculations. This enables companies to ensure that every transport is carried out at minimum cost while maintaining a high quality of service.

Tenders

SAP TM also includes a tendering function with which transport orders can be efficiently awarded to hauliers. Depending on the company strategy, this process can be fully automated or managed by dispatchers.

The system supports various communication channels such as EDI and e-mail. The tenders can be carried out either sequentially or serially, with offers being obtained and compared within defined time windows.

Condition management

In contrast to conventional ERP systems, SAP TM includes comprehensive condition management for complex logistics structures.

Companies can store extensive condition tables for different modes of transport - for example general cargo or containers - and automatically compare them with each other. This function enables flexible pricing and more precise calculation of transport costs.

The maintenance of the corresponding tables is simplified by special tools so that even large volumes of data can be processed efficiently.

Monitoring (Track & Trace)

The monitoring module in SAP Transportation Management helps with the continuous monitoring of all transport processes in real time. Customers and haulage companies can call up the current status of a delivery at any time, while drivers receive automated information on disruptions or changed routes.

The system also enables quick clarification of billing differences or delivery delays through transparent communication between the parties involved. Third-party solutions such as freight exchanges or telematics systems can be integrated via interfaces to make transport control even more precise.

Freight invoicing

Freight invoicing in SAP TM allows transport costs to be evaluated in detail. Companies can break down costs down to the level of individual shipments and utilise various billing mechanisms. Invoice approvals and checks can be carried out either manually or fully automatically.

The system also supports various billing models, including the credit note procedure and automatic cost allocation based on master data. This guarantees precise freight cost control and ensures efficient handling of payment processes with transport service providers.

Analyses and reports

Last but not least, SAP TM includes comprehensive analysis and reporting functions to optimise transport processes based on data. Companies can generate detailed reports on

• transport costs,
• delivery times,
• route performance and
• evaluations of carriers.

Real-time dashboards also enable continuous monitoring of KPIs.

Integration with SAP Analytics Cloud or other BI tools makes it possible to analyse historical data and derive forecasts for future transport costs. Furthermore, customised reports can be generated automatically and distributed to relevant stakeholders.

SAP TM offers numerous advantages for companies that want to optimise their transport processes. One of the biggest advantages is the increase in efficiency through the automation of routines and the utilisation of real-time data. This leads to faster transport processing and greater customer satisfaction.

Another advantage is cost optimisation. By planning transports precisely and utilising resources efficiently, companies can achieve considerable savings. SAP TM also makes it possible to visualise transport costs transparently and thus reduce them in a targeted manner.

SAP TM also improves transparency and control over the entire supply chain. Companies can track the status of their deliveries in real time and react quickly to problems. This leads to greater reliability and better co-operation with partners and customers.

SAP Transportation Management is an integral part of SAP S/4HANA and can also be connected to SAP ERP ECC. This ensures close networking between ERP and TMS. In such scenarios, transport orders can be generated directly from the ERP business processes and transferred to transport planning in TMS.

A connection with SAP Extended Warehouse Management (SAP EWM) is also possible. This enables the coordinated management of incoming and outgoing goods, allowing warehouse stocks and transport capacities to be optimally harmonised.

Furthermore, freight forwarders and logistics service providers can be digitally integrated via standardised interfaces so that transport orders, status reports and invoicing can be processed automatically.

It is also possible to network production planning (SAP PP) with SAP TM. In this case, the TM system receives information from SAP PP about upcoming production orders. This enables it to plan transports for raw materials or finished goods at an early stage.

Integration with finance and accounting in the ERP system ensures transparent cost control through automated freight cost calculation and invoice verification.

SAP TM also has open API interfaces to flexibly integrate third-party solutions such as freight exchanges, telematics systems or analysis tools. This enables end-to-end, digital control of all processes in the areas of transport and logistics.

SAP TM makes a significant contribution to improving efficiency in the supply chain. By using real-time data and advanced planning algorithms, companies can optimise their transport processes and avoid bottlenecks. The software also makes it possible to handle transports faster and more cost-effectively, which leads to greater customer satisfaction.

Another factor that increases efficiency is the automation of processes. SAP TM automates routine tasks such as the creation of transport documents or the calculation of tariffs. This reduces manual effort and minimises the risk of errors. In addition, the software offers extensive analysis tools that provide valuable starting points for continuous process improvement.

SAP TM supports the reduction of transport costs through intelligent planning, automation and the use of powerful optimisation algorithms. The software analyses various transport options and selects the most cost-efficient solution based on factors such as freight rates, capacity utilisation, routing and delivery times.

A central element is the so-called optimisation server, which uses advanced algorithms to calculate transports in terms of costs and efficiency. This server simulates different scenarios, evaluates alternatives and finds the optimum combination of carriers, transport routes and load carriers.

Companies can use this feature to reduce costs, for example by using consolidated loads, avoiding empty runs or including alternative means of transport in their planning. Transport costs can be reduced even further through real-time data synchronisation. SAP TM takes dynamic freight rates into account, for example.

SAP TM plays a central role in the automation of transport processes. The software automates routine tasks such as the creation of transport documents, the calculation of tariffs and the planning of transport routes.

Another example of automation is the use of real-time data to dynamically adjust transport plans. SAP TM can react automatically to changes in the supply chain - for example by rerouting deliveries in the event of traffic disruptions. This leads to greater flexibility and better service for customers.

SAP Transportation Management was originally offered as a standalone component within the SAP Business Suite. However, with the introduction of SAP S/4HANA 1709, the TMS functions were integrated directly into the S/4HANA environment.

Since then, they have been an integral part of the overall S/4HANA solution and are known as "SAP S/4HANA Supply Chain for Transportation Management", or SAP S/4HANA TM for short. Thanks to the "embedded approach", seamless interaction between logistics, sales, production, materials management, warehouse management and finance is ensured.

SAP TM can also be connected to SAP ERP ECC 6.0. There, it can supplement the classic SAP LE-TRA (Logistics Execution Transportation) module, which only contains basic functions for planning and handling transport processes.

Yes, SAP TM can be easily integrated with SAP EWM (Extended Warehouse Management). The integration enables companies to closely link their warehouse and transport processes. This allows goods movements to be planned and processed more efficiently.

One example of the possibilities offered by integration is the automatic creation of transfer orders in SAP TM as soon as goods are made available in the warehouse. This leads to faster processing of deliveries and better utilisation of resources. The integration also enables comprehensive transparency regarding the status of goods movements, which significantly improves collaboration between warehouse and transport.

How long a TM implementation takes depends on the initial requirements, the size of the company and the desired functionalities. The project duration is often in the region of six to twelve months.

In general, the implementation of SAP TM takes place in several steps:

1. Analysis and planning

Firstly, the business requirements are recorded and the target image is defined. This includes identifying the transport processes to be optimised, selecting relevant SAP TM functionalities and defining the integration strategy with existing SAP or third-party systems.

Important to know: There is no migration path from SAP LE-TRA to SAP S/4HANA TM. This means that existing TMS data from SAP ERP ECC cannot simply be transferred to SAP S/4HANA. Instead, it is necessary to set it up from scratch (greenfield approach).

2. System design and configuration

The system is configured based on the requirements. This includes the creation of master data, the definition of transport models, tariffs and optimisation rules as well as the adaptation of processes for transport planning, freight invoicing and tendering.

3. Integration with existing systems

If required, SAP TM is connected to other SAP solutions such as EWM and external transport service providers. Data communication takes place via SAP CPI (Cloud Platform Integration) or classic EDI or API interfaces for the digital freight forwarding connection.

4. Tests and training

An extensive test phase takes place before productive use. This involves checking transport orders, booking processes, invoicing and integration with external partners. At the same time, users are trained to ensure a smooth introduction.

5. Go-live and optimisation

After a successful test phase, the TMS system is transferred to live operation. In the first few months, close monitoring is carried out in order to make adjustments and optimise performance.