What is SAP Transportation Management (TM)?

SAP Transportation Management (SAP TM) is an integrated SAP solution that lets shippers and logistics providers plan, execute, and optimize freight transportation across all modes, from road and rail to air and ocean. It manages the full transportation lifecycle within a single application.

Companies are constantly improving their supply chains to increase efficiency and reduce costs. Achieving efficiencies in freight transportation can be a major challenge. This guide explains what SAP TM is, how it works, its key capabilities, deployment options, who uses it, and how it relates to SAP EWM.

Definition of SAP TM

SAP Transportation Management (TM) is a unique, integrated solution from SAP that allows shippers to manage their transport processes in a robust order management environment. With many companies choosing to outsource the logistics side of their business, SAP TM is an important tool for both shippers and third-party logistics providers to ensure that shipments are planned, tracked and executed efficiently.

SAP TM is a complete solution for all shipment-related needs, including transportation planning and collaboration, freight settlement, fleet management and business intelligence. The solution can be configured to suit any mode of transportation from air to ocean.

By integrating with SAP ERP, TM can directly leverage the data and structure of logistics documents (such as sales orders, delivery notes, and purchase orders) in the ERP system.

In addition to its own extensive suite of features and capabilities, SAP TM also integrates with other applications within SAP's Business Suite software. This integration allows customers using other solutions within the Business Suite to easily access transportation information directly related to orders.

For example, by integrating with SAP Global Trade Services (GTS) customers can use SAP TM to monitor the status of shipments in compliance with export regulations. Or, by integrating with SAP Extended Warehouse Management (EWM), users can see real-time inventory information based on the status of shipments moving through their supply chain.

SAP TM gives you the ability to manage resources, transportation and distribution in one application. The software consists of two main components:

• Transportation Planning & Optimization (TPO)
• Transportation Execution (TEX)

A Brief History of SAP TM

SAP's transportation functionality has evolved through several generations. The original solution was LE-TRA (Logistics Execution – Transportation), a basic module within SAP ECC that handled shipments and shipment cost documents. SAP later introduced a dedicated SAP TM product as a separate, standalone (sidecar) system, with release 9.x being the most widely used. Since SAP S/4HANA release 1709, full Transportation Management has been available embedded directly in the S/4HANA core. SAP has stated that the future of TM is on the S/4HANA stack, and the compatibility scope for the legacy LE-TRA solution is ending, so most new implementations now use S/4HANA TM.

How Does SAP TM Work?

SAP TM works by turning a transportation demand into an optimized, executable plan and then managing it through to settlement. The process generally follows these stages:

• Order integration: A sales order, purchase order, delivery, or stock transport order in SAP ERP creates a transportation requirement in TM, which is broken down into freight units, the smallest plannable units of goods that must move from A to B.
• Planning and optimization: Planners use the transportation cockpit to consolidate freight units onto resources. They can drag and drop loads manually or run the optimizer, which evaluates lanes, costs, and delivery dates to find the cheapest feasible option, even across multiple transport modes (road, rail, air, ocean).
• Carrier selection and tendering: TM determines the best carrier through strategic freight procurement or freight tendering, sending transport offers to carriers.
• Execution: The plan becomes a freight order or freight booking, which is executed and tracked, with status updates and event management along the route.
• Freight settlement: TM calculates freight charges, verifies carrier invoices, and settles costs, integrating with SAP finance for accurate cost distribution.

Key Capabilities of SAP TM

SAP TM covers the full transportation lifecycle with capabilities such as:

• Transportation planning and optimization using the cockpit and optimizer engine.
• Multimodal and multi-leg planning across road, rail, air, and ocean, including pre-carriage and on-carriage legs.
• Freight order and freight booking management for execution.
• Carrier selection, tendering, and freight agreements.
• Freight cost calculation and settlement with invoice verification.
• Order and delivery integration with SAP SD, MM, and LE.
• Analytics and reporting for transportation KPIs and cost transparency.

SAP TM Deployment Options

SAP TM can be deployed in two ways, and the right choice depends on a company's system landscape:

• Embedded TM: Transportation Management runs on the same SAP S/4HANA instance as the core ERP. This removes the need to duplicate master data through the Core Interface (CIF) and lets orders and deliveries convert directly into freight units and freight orders. It is the recommended option for most companies already on S/4HANA.
• Side-by-side (sidecar) TM: Transportation Management runs as a separate system connected to one or more SAP ECC, S/4HANA, or non-SAP ERP systems. This suits organizations with multiple ERP instances that want to centralize transportation planning in one place.

Within S/4HANA, TM functionality is also divided into Basic Shipping, included in the S/4HANA digital core license, and Supply Chain for Transportation Management (SC for TM), the advanced, separately licensed functionality that includes the optimizer and advanced planning.

Who Uses SAP TM?

SAP TM is used by two broad groups. Shippers, manufacturers, retailers, and distributors who move their own goods, use it to plan outbound and inbound transport, reduce freight spend, and gain visibility. Logistics service providers (LSPs) and third-party logistics (3PL) companies use it to manage transportation on behalf of their customers, including forwarding orders and carrier collaboration. It is common in industries with high logistics complexity such as automotive, retail, consumer products, chemicals, and manufacturing.

Relationship Between SAP TM and SAP EWM

Improving the efficiency of a supply chain is one of the main goals for most customers. The procurement phase is the time the product is delivered after the order is placed. SAP Transportation Management and SAP Extended Warehouse Management (EWM) are both modules of the SAP S/4HANA suite. This time indicates the stage at which the ordered product is supplied. SAP TM helps reduce freight costs by optimizing resource capacity. SAP EWM helps improve warehouse efficiencies. For this reason, these two modules are modules that support each other in a supply chain process. SAP offers direct integration between SAP TM and SAP EWM. Thus, businesses can achieve end-to-end efficiency in their supply chain processes by using two solutions.

Integration Scenarios Between SAP EWM and SAP TM

The following scenarios are supported by the integration of SAP Transportation Management and SAP Extended Warehouse Management:

• Inbound delivery for sales orders (stock transfer order)
• Inbound delivery for goods receipts (stock transfer order)
• Outbound delivery for sales orders (stock transfer order)
• Outbound delivery for goods issue (stock transfer order)

Benefits of SAP Transportation Management

SAP TM delivers value across the entire transportation lifecycle. Key benefits include lower freight costs through route and load optimization, end-to-end visibility into shipment status, support for all transport modes (road, rail, air, ocean), automated freight settlement and cost calculation, and improved compliance through integration with SAP Global Trade Services. By optimizing resource capacity, SAP TM helps businesses reduce empty runs and consolidate shipments.

SAP Transport Management Consulting

Our team of experienced consultants have extensive knowledge and experience in all aspects of SAP TM, and work closely with our customers to ensure the successful delivery and implementation of the system. We take a holistic approach to our consulting services, ensuring the entire system is optimized to meet the needs of our clients. We understand that each customer has unique requirements, and we strive to customize our services and solutions to meet these needs.

SAP TM Consulting

Frequently Asked Questions

What is SAP Transportation Management used for?
SAP TM is used to plan, execute, and optimize freight transportation. It manages order-based transport planning, carrier selection, freight settlement, and fleet management across all modes of transport, helping shippers and logistics providers move goods efficiently.

How does SAP TM work?
SAP TM converts orders and deliveries into freight units, plans and optimizes them onto freight orders using the transportation cockpit and optimizer, selects carriers through tendering, executes and tracks the shipment, and finally calculates and settles freight costs.

What is the difference between embedded and sidecar SAP TM?
Embedded TM runs on the same S/4HANA instance as the ERP, sharing master data and removing the need for the Core Interface. Sidecar (side-by-side) TM runs as a separate system connected to one or more ERP systems, which suits landscapes with multiple or non-SAP ERPs.

What is the difference between SAP TM and SAP EWM?
SAP TM manages transportation and freight optimization, while SAP EWM manages warehouse operations. They are complementary S/4HANA modules; SAP offers direct integration between them so businesses can achieve end-to-end supply chain efficiency.

Is SAP TM part of S/4HANA?
Yes. SAP Transportation Management is available as an embedded component of SAP S/4HANA, as well as a standalone (sidecar) deployment, giving businesses flexibility based on their landscape and transport volume.

References

SAP Transportation Management - SAP
What is SAP Extended Warehouse Management (EWM)?
SAP TM Consulting