SAP TRANSPORTATION MANAGEMENT AND THE RAIL INDUSTRY

By Devin Berci-09/21/2016
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Introduction

Most of us are somewhat familiar with the use of Rail from a Shipper’s perspective, however the LSP (Logistics Service Provider) side of the industry provides its own set of complexities. It is one thing to plan and tender a load to a rail carrier, but it is an entirely different world to be the carrier that received the tender request. The carrier or LSP has to not only rate and bill that order, but they also have to execute and track it as well. They also have to execute equipment provisioning, long haul and work train planning/building, assessing assessorials, and providing events or track and trace to customers.

Another added complexity in North America, revolves around interline (other railroads) tendering and settlement. This can be done using rule 11 or through rates. These routings can include multiple interchange points and multiple railroads. This entire process is standardized and regulated by private and governmental organizations.

SAP TM has many features and functions to support these different processes throughout their life cycle. On the carload side of the business, source station and destination station are more critical than the actual pickup and delivery location. On the intermodal side, the shipper and consignee are used to determine which ramps the shipment should be routed through. These intricacies can be satisfied using the network and optimizer in SAP TM. There are many other rail specific processes that differ from other logistic modes. These are highlighted in the below sections.

 

Equipment

The type of equipment used is very important when looking at the Rail and Intermodal industry. Typically, customers order an entire railcar or container. Because the customer is paying for an entire piece of equipment, they are given the option to select the type of equipment that they require. Different equipment will carry a different cost to use. Entering the equipment type into the system allows for the correct ordering of equipment when the tender is sent out. It can also be used to make sure that the correct charges are calculated (see Charges for more).

On the equipment, details such as Railcar number, container number, and seal numbers can be stored. These numbers are important to store because on the shipper/3PL side, they may need to be reported to carriers when tendering. On this LSP side, they are used internally to track equipment and tie events for the equipment to the orders. This can provide visibility to delays, incorrectly routed equipment, and automatically charge assessorials. Also commodity information, hazardous indication, piece count, and weight/volume can be recorded.

 

Railcar Unit

A Railcar Unit is the SAP TM object for logistic processing of transportation with railcars. It describes the assignment of cargo to a railcar. The Railcar Unit can contain one or many railcars. It could be used to model a unit train with many cars in it, or it could only be used to model just one car. In both of these scenarios, the Railcar Unit replaces the transportation unit. Therefore, it can be generated by a Freight Unit Building Rule (FUBR), or it can be manually created. Alternatively, in a consolidation type scenario, a standard Freight Unit can still be created, and then the Freight Units can be manually assigned to the Railcar Unit. Depending on the scenario, the stages on the Railcar Unit can be planned to one or many Freight Orders. In general, the Railcar Unit provides another level of data to help model Rail Processes in SAP TM.

 

Charges

Charge management for rail has a few different requirements which can be fulfilled by SAP TM. This includes station to station rating (rather than shipper to consignee rating). This can be achieved using zones and including the locations serviced by each station into the zone. There are also equipment considerations to take into account. The difference in price between equipment can be handled using different equipment types or categories. Charges can be calculated on each individual railcar or container on the order. This allows for correct rating for each piece of equipment on the order.

Assessorials and additional services can be added to an order and charged as needed. In the event of a known assessorial or service at the time of order entry, a service can be added to the order and charges can be calculated based upon the service details. This could include storage, planned switching, or a tank/container wash. For an unplanned assessorial, event based charges can be used to add additional charges to the order automatically.  Examples of this would include demurrage, detention, or re delivery due to a locked gate.

Interline settlement can be paralleled to sub-contracting in SAP TM, however the invoices are sent electronically to Railinc using a process call REN (Rate EDI Network) rather than directly to the carrier. Depending on the type of shipment, this can either be based on a Tariff rate, or a quoted rate from the carrier. In the case of a quotation, SAP TM’s freight quotation request can be used to gather the estimated charges for the interchange. On other side of the transaction, a Forwarding Quotation could be generated to provide a rate to another Railroad if they want interchange with you.

 

Empty Equipment Provisioning/Return and Triangulation

Getting empty equipment to and from a customer can be a difficult process. The optimization of this process can be even more tricky. Typically, it is handled by an individual with a great deal of experience of the business in that region. SAP TM can help with this task. This will help you to get empties to your customer so that they can load it. And on the delivery side, it will help you plan to get them back once they are done unloading. The equipment movement can either be tracked as part of the customer order and on its own. This can become very useful when demurrage or detention needs to be charged to a customer. If the provisioning is part of the order, it will contain all of the required information to accurately bill the assessorial. SAP TM will also use triangulation to help chose a piece of equipment that is already close by or will be close by soon because of another order. This will help prevent unnecessary movement of equipment.

 

Rail Schedules

Schedules can also be used to help plan which train an order should go on. A schedule in TM allows you to maintain cutoff times for both hazardous and nonhazardous goods. This can help plan when items will need to be available at the station to get onto the train, or indicate if it should wait for the next day. Schedules can also be used as an input to identify which orders need to be picked up first from a customer’s siding, so that they can make the cutoff for a train heading to the consignee’s destination.

 

Event Tracking

Event tracking in SAP Event Management provides many benefits to both customers and internal employees. This includes everything from asset visibility, to track and track, and to assessorial charges. As mentioned in previous sections, events can be used to charge customers for assessorials. Due to the fact that order information can be shared between SAP TM and SAP EM, the customer requested information can be compared to actuals to determine if an assessorial should be charged. A good example of this is to compare when a customer ordered equipment, to when it was delivered, and finally when it was released. These data points can be coupled with business rules to determine if any assessorials should be assessed. The events are also very useful in the typical track and trace functions. This can range from a customer using these events to track were their goods are, a manager to compile performance data about a train or terminal, and a service representation to proactively help catch when a railcar gets on the wrong train.

 

Summary

As we have seen in the sections above, rail from a LSPs perspective brings in a new level of complexity. Luckily SAP TM is able to provide functionality to support this added complexity. Another great advantage of TM over other system’s is its ability to react to changes quickly and efficiently. This includes re-planning and optimizing as new information and orders becomes available. These actions could also be triggered automatically based upon the LSPs internally reported events.

From the LSPs perspective, there is also a major difference between operations, order management and finance. Operations teams need to be provided with work plans of how the trains should be built and executed. This can be facilitated by Railcar Units and Freight Orders. The Customer Service teams need to have customer orders and quotes to manage their interactions with customers. This is handled through Forwarding Quotations and Forwarding Orders. The finance team needs to be aware of what to invoice the customer and what to expect from other Railroads. This can be handled using Forwarding and Freight Settlement. Finally, internal users and customers need to track their shipments. This can be achieved with Event Management.

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