Streamline Inbound Freight Costing in 5 Steps

  • by Anton Karnaukhov, Senior IT Manager, Pacific Coast Companies, Inc.
  • November 1, 2006
See how to map the inbound transportation process in R/3 and mySAP ERP Central Component. Then, walk through the configuration steps necessary to automate how the system calculates and settles inbound freight costs.
Key Concept
A shipment cost document holds the total shipment costs associated with a particular shipment (e.g., freight costs, fuel surcharges, and insurance). You generate shipment cost documents in the transportation solution in R/3 or mySAP ERP Central Component.
Today’s high fuel prices have forced many companies to do a better job of calculating and tracking freight costs in their ERP systems. As freight costs become a more significant portion of the total costs of inventory, it is crucial to ensure that you appropriately calculate freight on incoming purchase orders.

When it comes to R/3 or mySAP ERP Central Component (ECC), most companies simply assign the freight charges to the header or line items of purchase order documents manually. Often this leads to discrepancies and manual overload because changing these freight charges and assigning appropriate freight vendors become a burden. SAP provides inbound shipment costing functionality as part of the transportation solution in the Logistics Execution System (LES) module that can increase the accuracy and automation of freight cost calculation on incoming shipments.

Say you have a scenario that requires you to calculate shipment costs automatically based on the information maintained in the shipment document. You then must transfer these costs as delivery costs to the original materials purchase order upon goods receipt so the incoming goods are valuated correctly. You need to account not only for the cost of the material, but also for the cost of shipping the goods from a vendor to a plant.

Here are five steps I developed to configure your R/3 or ECC system to generate a shipment cost document, calculate the shipment cost, and settle the shipment costs back to the material purchase order.

Anton Karnaukhov

Anton Karnaukhov is a senior IT manager at Pacific Coast Companies, Inc., in Sacramento, California. He earned an MBA degree at Heriot-Watt University and a BS/BA degree with a specialization in computer information systems at Western Carolina University. Anton has more than eight years of SAP implementation and development experience focusing on business intelligence and logistics modules in the manufacturing and resale industries.

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