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Optimizing Freight Management with Deloitte's SAP S/4HANA Innovation

In the dynamic landscape of logistics, precision is not just a goal it’s a necessity. Deloitte has developed a transformative solution in SAP S/4HANA for one of our clients in the chemical industry, enhancing the gap between Transportation Management System (TMS) freight data and customer billing documents. This innovative integration ensures that the precise freight cost is seamlessly mapped to the correct mode of transport thus reducing manual effort from pricing analysts and customer service representatives and improving accuracy in freight pricing and profitability. This article explores the intricacies of this innovation, emphasizing how it empowers companies to bill customers with improved accuracy.

Use Case Illustration

Our clients’ Pricing Managers faced a significant challenge intricately tied to the error-prone manual process of updating freight costs on customer invoices. Typically handled by customer service in conjunction with the pricing team, this task involves working with fixed freight amounts from carrier agreements or relying on rough estimates of freight costs when transportation is done in-house. However, these manual inputs often led to inaccuracies, causing not only operational inefficiencies but also impeding the strategic application of competitive freight charges. The delicate balance between maintaining competitiveness and ensuring profitability became increasingly difficult to maintain.

Moreover, the complexity of drop shipments within the company’s own plants imposed significant challenges on Pricing Managers. They were tasked with coordinating communication between different facilities, each with its own set of freight requirements and logistical intricacies. This necessitated ongoing updates to freight costs, which proved cumbersome and time-consuming.

In many cases, Pricing Managers found themselves in the difficult position of having to settle for an average cost, derived either from carrier agreements or internal transportation management systems. However, these averages often failed to accurately reflect the dynamic nature of freight expenses associated with drop shipments. As a result, Pricing Managers were frequently forced to resort to estimating freight values, a practice that proved unsustainable in the long run.

This reliance on estimates not only introduced additional inaccuracies into the invoicing process but also posed a significant challenge to the company’s ability to implement competitive freight charges strategically. Without access to precise and up-to-date freight cost data, Pricing Managers struggled to optimize pricing strategies effectively, ultimately hindering the company’s profitability and competitiveness in the marketplace.

Solving a Crucial Challenge: Billing Accuracy and G/L Mapping

In the complex landscape of logistics billing, achieving accuracy is paramount. However, traditional solutions often fall short in providing the level of transparency and differentiation required for precise invoicing. This challenge becomes even more pronounced in scenarios such as drop shipments, where standard SAP functionalities may not fully capture all relevant freight costs.

Limitations of current solutions

While SAP Transportation Management (TM) solution effectively determines freight values, its integration with SAP S/4HANA Sales Pricing presents limitations. The standard setup typically aggregates all freight costs into a single condition type on the customer invoice. This lack of differentiation by mode of transport and transparency on costs hinders accurate billing and reporting. Also standard S/4HANA does not process a multi-modal scenario where to send goods to a customer requires two or more modes of transportation, the combination of freight on those different stages is not included in the final freight value, system only considers the freight from the first leg of a multi-modal scenario.

Drop shipment complexity

In the context of drop shipments, where goods are directly shipped from a supplier to a customer without passing through the retailer’s inventory, standard SAP functionalities pose additional challenges. The system often fails to capture freight values from the vendor, especially in cases of internal vendors within the client’s own plants. This gap in data integration further complicates billing accuracy and financial reporting.

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Key Components of the Innovative Solution

Benefits of this Innovation

Deloitte’s Innovation Leveraging SAP S/4HANA’s Latest Features

This solution showcases Deloitte’s utilization of SAP’s cutting-edge functionalities to enhance and customize our services according to client needs. Through extensive testing across various industries, we’ve refined this integration to specifically address the unique requirements of logistics companies. Our commitment to innovation ensures that clients can maximize the benefits of SAP’s capabilities, tailored to their specific challenges.

Empower Your Billing Processes

Interested in discovering how this groundbreaking innovation can transform your logistic operations, enhance internal processes and improving customer relationships? Reach out to our team of experts at Deloitte to uncover how this collaborative solution can be customized to meet the unique challenges of your logistics operations. Elevate your freight pricing strategies and empower your company to invoice customers accurately for their freight expenses, leading the way towards heightened precision and transparency in logistics billing.

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