Table of Contents
1. Overview
2. System Used
3. Perquisites
4. Configuration
4.1 Document Supplementation
4.2 Data Mapping
4.3 Freight Cost Item
5. Master Data
5.1 General Master Data
5.2 Master Data Specific to Freight Rate Table Strategy
6. Conclusion
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1. Overview
Secondary distribution companies in the oil and gas sector face the complex task of transporting bulk hydrocarbon products like gasoline, fuel oil, gas oil, and jet fuel. To facilitate this process, these companies often enlist the expertise of forwarding agents specialized in handling such products.
In this blog, we explore how secondary distribution companies can optimize their transportation services procurement using industry-specific solutions available within SAP S/4HANA Supply Chain for secondary distribution. The process involves a standard selling or transferring procedure for bulk hydrocarbon products, enhanced by the introduction of a Freight Cost Item Category.
By implementing this approach, companies can seamlessly generate a purchase order for transportation services, simplifying the payment process to forwarding agents. Our discussion will delve into the necessary configuration steps, Freight Rate Determination strategies, and essential Master Data considerations to successfully implement this streamlined procurement process.
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2. System Used
S/4HANA on Premise Demo Server, Release 1809.
SAP S/4HANA Supply Chain for secondary distribution | 2.0 SPS06
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3. Perquisites
Understanding of how SAP S/4HANA Supply Chain for secondary distribution works and its required set up, as the blog mainly focuses on the Freight Configuration and not the main processes
If you want to know more about the solution, you can check the below SAP Help Link which provides a good guide.
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4. Configuration
4.1 Document Supplementation
In this activity we assign the different Methods the system uses to determine whether the Unloading Item Type is relevant for Freight Cost Item Generation, how the distance is determined and the Freight Item is updated.
Transaction | SPRO |
Path | Industry Solution Oil & Gas (Downstream) > S4SCSD (SAP S/4HANA Supply Chain for Secondary Distribution) > Data Collation (DC) > Process Automation Toolset (PAT) > Processes > General > Define Document Supplementation |
4.1.1 Define Header Schema
4.1.2 Define Item Schema
4.1.3 Assign Document Data Supplementation to Document Type
4.1.4 Assign Document Data Supplementation to Unloading Item Type
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4.2. Data Mapping
This controls the Data Transfer from Source Structure Tables to the the Target Tables in the Data Collation Document or PO.
Transaction | SPRO |
Path | Industry Solution Oil & Gas (Downstream) > S4SCSD (SAP S/4HANA Supply Chain for Secondary Distribution) > Data Collation (DC) > Process Automation Toolset (PAT) > Processes > General Settings > Mapping |
4.2.1 Define Mapping Group and Field Assignment
Here you have the option to assign default values that can be mapped to the purchase order (PO) generated. For example, you can set default values for Account Assignment Category and Purchase Document Type to streamline the procurement process.
Note:
(FREIGHT_IC) is usually used when the unloading or discharge item is with reference to a Sales Document.
(FREIGHT_IS) is usually used when the unloading or discharge item is with reference to a Purchase Document.
4.2.2 Define the Mapping Schema and Assign the Mapping Groups
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4.3 Freight Cost Item
This part of the configuration process consists of two main sections: General Configuration and Configuration based on the Freight Rate strategy.
4.3.1 General Configuration
Transaction | SPRO |
Path | Industry Solution Oil & Gas (Downstream) > S4SCSD (SAP S/4HANA Supply Chain for Secondary Distribution) > Data Collation (DC) > Process Automation Toolset (PAT) > Processes > General Settings > Data Collation documents > Freight Cost Item |
4.3.1.1 Set Freight Charge Generation
We assign the Mapping schemas' defined above to the relevant Document and Unloading Item Types.
4.3.1.2 Enable Incoterm Determinations
In this step, we specify the Incoterms that, when entered in a Sales Document, trigger the relevance of the item category for generating freight costs.
4.3.2 Configuration based on the Freight Rate strategy
We have two approaches for determining freight rates. The first approach utilizes Freight Rate Tables, which considers distance and scale rates. The second approach Pricing Multi-reference involves transferring the amount from a condition type in a reference document (used in the unloading item category) to another condition type in the automatically generated Freight Purchase Order.
4.3.2.1 Freight Rate Table Approach
Perquisites:
Implement the following SAP Notes in the specified sequence and execute the post-implementation instructions:
If the notes have been implemented but the routines are still unavailable, check if the programs are available:
- FV64A451
- FV64A452
If these programs are available, you can create custom routines by copying their logic to enable the required functionality.
4.3.2.1.1 Define Conditions for Freight Rate Determination
In this step, we specify the condition type to which the Freight Rate will be transferred. If there are multiple conditions, you can specify the sequence number to prioritize them. For this example, we will use condition type (YPF1).
Transaction | SPRO |
Path | Industry Solution Oil & Gas (Downstream) > S4SCSD (SAP S/4HANA Supply Chain for Secondary Distribution) > Data Collation (DC) > Process Automation Toolset (PAT) > Processes > General Settings > Data Collation documents > Freight Cost Item > Define Conditions for Freight Rate Determination |
4.3.2.1.2 Assign Routine to Condition Type in MM Pricing Schema
Assign Routine (451) to the condition type you need to transfer the Freight Rate to.
Transaction | SPRO |
Path | Materials Management > Purchasing > Conditions > Define Price Determination Process > Set Calculation Schema – Purchasing |
4.3.2.2 Pricing Multireference Approach
Perquisites:
We need to activate the below BAdI to activate Multireference features in the Purchase Order standard screens, (/ICO/MO_TV_BADI_PO - Multireference f. ME2xN Transactions for BADI ME_GUI_PO_CUST). You can activate it by following the below path.
Transaction | SPRO |
Path | Industry Solution Oil & Gas (Downstream) > S4SCSD (SAP S/4HANA Supply Chain for Secondary Distribution) > Purchasing > Multireference > System Modifications > Business Add-Ins > Multireference f. ME2xN Transactions for BADI ME_GUI_PO_CUST |
4.3.2.2.1 Assign Reference Document Category to Condition
Here, we specify the Purchasing Pricing Schema to be used in the Freight Purchase Order, along with the condition type to which the rate will be transferred.
Transaction | SPRO |
Path | Industry Solution Oil & Gas (Downstream) > S4SCSD (SAP S/4HANA Supply Chain for Secondary Distribution) > General Settings > Pricing > Multireference |
4.3.2.2.2 Define Pricing Rules
Here, we define additional settings, including the condition type from which the rate will be transferred. In this case, the condition type is PR00, which is available in the pricing schema of the reference document, such as the sales order.
4.3.2.2.3 Assign Routine to Condition Type in MM Pricing Schema
Assign Routine (450) to the condition type you need to transfer the Freight Rate to.
Note:
If you intend to utilize both the Multireference Pricing and the Freight Rate Table approaches simultaneously, it's necessary to use two different condition types. Each condition type will be assigned a different pricing routine.
Transaction | SPRO |
Path | Materials Management > Purchasing > Conditions > Define Price Determination Process > Set Calculation Schema – Purchasing |
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5. Master Data
We maintain two types of master data: General Master Data and Master Data specific to the chosen Freight Rate strategy.
5.1 General Master Data
5.1.1 Set Up Transportation Material Determination
For each product to be transported, we must assign a transportation service material. This ensures that when a Purchase Order is generated to pay the transporter for their services, the system automatically selects the appropriate service material.
TCODE: /ICO/LO_FR_MTMAP_TCD
5.1.2 Extend Forwarding Agent
When creating the Forwarding Agent, ensure it is extended to vendor roles (FI and Purchasing) and maintain the assigned Incoterms, Purchase Organization and Purchase Group in the Purchasing View.
TCODE: BP
5.1.3 Create Purchase Info-record
To enable automatic Purchase Order generation, maintain an Info Record (ME11) for the following combination: Service Transport Material, Purchase Organization, Purchase Group, Vendor (Forwarding Agent), and a dummy price.
TCODE: ME11
5.2 Master Data Specific to Freight Rate Table Strategy
5.2.1 Define Distance for Freight
The distance is calculated from the supplying Plant to the Destination, which can be determined by the Receiving Plant Postal Code, Ship-to-Party Code, or Ship-to-Party Postal Code.
- Plant: Refers to the Supplying Plant.
- Postal Code: Indicates the postal code of the Ship-to-Party (for Sales Documents) or the Receiving Plant (for Purchase Documents).
- Forwarding Agent: Can be marked with (*) if the distance is not affected by the specific forwarding agent used.
TCODE: /ICO/LO_FRT_DIST_TCD
5.2.2 Maintain Freight Rate Table
We can establish freight rates with scales based on specific combinations. For example, if a forwarding agent transports 40 kiloliters of Gasoline 92 over a distance of 70 kilometers, the rate would be 65 EGP per kiloliter, resulting in a total condition value of 2600 EGP for Condition Type YPF1.
TCODE: /ICO/LOVC_FRKOND_TCD
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6. Conclusion
During the initial implementation of this solution on the actual project, I encountered challenges due to the lack of detailed documentation. Through extensive testing, I gained a deeper understanding of the system's behavior and how the solution operates. I sincerely hope that this blog proves helpful to those facing similar challenges. Your thoughts and comments are highly appreciated, please share them in the comments section below. Thank you for reading!
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