| Freight Management |  |
| The purpose of Freight Management is to plan and/or to subcontract the transportation of inbound and outbound goods, which helps you select the most cost-effective way to get goods in and out of the site at the correct times. Functionality For this purpose, Freight Management offers the following functionality: Freight order control A freight order is, essentially, a commission to transport a particular number of goods. To plan the transportation of goods, and to subcontract the transportation of goods with or without transport planning, Freight Management must know which goods to transport. This information is provided by freight orders. Therefore, subcontracting and transport planning are based on freight orders. Freight Management creates freight orders from originating orders or users create freight orders manually in Freight Management. An originating order is an order from which a freight order is created, such as a purchase order or a sales order. Transport planning In Freight Management, transport planning is called load building. Load building is the process of creating load plans for a group of freight orders. A load plan is, essentially, a transport plan. A load plan provides you with information such as: Details about the goods to be transported Loading and unloading addresses, dates, and times The carrier that is to carry out transportation Transport costs Subcontracting Subcontracting is the process of offering freight orders to an external carrier for transportation. You can create load plans for the freight orders and offer the planned loads to a carrier, or you can offer groups of freight orders called clusters for which no load building is performed. Freight order clustering is one of the main processes within the subcontracting functionality. Carrier selection While performing transport planning and/or freight order clustering, ERP LN also looks for the most cost-effective and efficient carrier services. Carriers are selected by means of various criteria, such as prices, terms of delivery, the available types of transport of the carriers (can the carrier provide the appropriate type of transportation to transport the goods listed on the freight orders?), routes, and so on. Transport costing During transport planning and/or freight order subcontracting, the freight costs are also calculated. Freight costs are the costs of transportation of particular consignments of goods that an organization must pay to the carrier that actually carries out the transportation. Freight cost calculation is based on factors such as the quantities of the goods, the rates of the selected carriers, the type of transportation required, and so on. Transport rating Freight rates are maintained in freight rate books in Order Management. To determine the transportation costs of, for example, a freight order line, Freight Management retrieves the freight rate from freight rate books defined in the Pricing Control module of Order Management. To find the correct freight rate book, ERP LN uses freight rate matrices. A freight rate matrix is a group of attributes and values that serve as selection criteria for a rate book. If the matrix attributes match the properties of a freight order line, the rate book associated with the freight matrix is used to calculate the transport costs for the freight order line. Invoicing Most organizations have agreements with their customers and suppliers on how much they can charge for transportation: the full amount they had to pay to the carrier that carried out the transportation, some special rate, or no charge at all. In Freight Management, the amount for freight costs invoiced to the business partner is determined by the invoicing method defined for the business partner. For further information, see Invoicing methods. Positioning of Freight Management Freight Management is primarily intended for various types of companies that subcontract transportation to selected carriers, but Freight Management also supports companies that run their own fleet. Although this package does not focus on fleet management matters, such as fuel control, or the maintenance and costs of self-owned fleets, you can define such fleets and plan transportation for individual means of transport. Freight Management also supports centralized planning and subcontracting for organizations that work in a multi-site environment. Business environment Typically, Freight Management is used by an organization's traffic or logistics department, which is the department that deals with transportation for inbound and outbound goods. Shipping office In Freight Management, the traffic or logistics department is referred to as shipping office. The shipping office's activities include transportation planning and hiring carriers for inbound and/or outbound transportation. Some companies do not hire external carriers, but instead leave all their transportation to their own forwarding service. Companies that hire external carriers may or may not plan the transportation for these carriers. Planning groups In the shipping office, individual planners are, usually, responsible for transportation of specific types of goods or areas that require specific handling. In large organizations, the shipping office is often subdivided into several groups. These groups, rather than individual planners, deal with particular types of goods or areas that require specific handling. For example, one group can deal with overseas transport and another with domestic transport by road. In Freight Management, these groups are referred to as planning groups. Multiple shipping offices Very large organizations can have more than one shipping office. In these cases, each shipping office is usually responsible for the transportation of goods for particular groups of warehouses. Multi-site environment Various organizations, and not only the larger ones, work in a multi-site environment. This means, that transport is carried out or initiated in various sites. Such organizations require centralized planning and/or subcontracting for at least part of their transportation, which implies that the shipping office of one site performs planning and/or subcontracting on behalf of one or more other sites within the organization. Related topics Freight Management Master Data Freight Order Control Load Building Subcontracting Freight Rating and Costing Freight Invoicing |