Plan Complex Shipments Using Transportation Leg Planning

  • by Sachidanand Padgaonkar, SAP Senior Consultant, Infosys Technologies, Ltd.
  • July 1, 2006
Learn a step-by-step procedure for configuring transportation legs across the supply chain, planning for these shipments, and determining the costs involved with a real-life example. Even though transportation leg planning is well integrated with various SAP modules, in most companies this activity is handled in bits and pieces by the logistics, sales, and finance teams. This overview consolidates the tasks to provide an understanding of the entire process.
Key Concept
Leg planning is a major part of planning out a shipment from a source to destination location. Leg planning resides within the transportation component of Sales & Distribution. It takes into account deliveries, which are part of the sales order and delivery component of SD. Often you’ll need to split your shipment into multiple legs. Leg planning functionality enables you to organize transport more effectively, select proper logistics service providers, prepare shipment papers, and ascertain shipment costs.
Transportation planning must be complete and accurate before a shipment leaves the point of departure. This includes organizing the means of transport, specifying the route, and defining the stages of the route in the most efficient way. SAP’s leg transportation functionality helps in planning, tracking, and controlling shipments and the associated costs.

I'll demonstrate it with the example of a company with warehouses in San Jose, San Francisco, and Oakland that plans to ship its product to customers in New York, Washington, and New Jersey. It includes multiple modes of transport: from the San Jose, San Francisco, and Oakland warehouses to the San Francisco harbor (by truck); from the San Francisco harbor to the New York harbor (by ship); and from the New York harbor to customers in New York, Washington, and New Jersey (by truck). This requires what is known in transportation planning as a segmented delivery.

Even though I use SAP 4.7 Enterprise as my frame of reference, the concepts hold true for all earlier and later versions, including mySAP ERP Central Component (ECC).

My example company appoints a transportation agent for shipment. It prepares shipment papers at the port of origin (San Francisco) and port of entry (New York) according to applicable shipping terms. Each of the shipment legs involves different costs, some borne by the shipping party and some by the end consumer. They include costs associated with insurance, cleaning, and customs in addition to transportation costs. The end consumer in my example is a person who receives the final shipment of goods in New Jersey. SAP R/3 provides a mechanism, known as transportation planning, which allows you to plan different legs during a shipment and arrive at best possible approach.

Sachidanand Padgaonkar

Sachidanand Padgaonkar is an SAP Senior Consultant at Infosys Technologies Ltd. with 10 years of consulting experience executing the diverse modules of SAP Financials, Sales and Distribution, and Logistics, with a special focus on the SAP Retail industry solution. Sachidanand is currently a consultant in the SAP space for leading high-tech companies in the San Francisco Bay Area. He has a degree in electrical engineering and an MBA in finance. He has published many articles in international publications and was a speaker at ASUG 2006 in Orlando.

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