Streamline Inbound Freight Costing in 5 Steps

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.