SAP TM Agreement Determination: What It Is and Why It Matters

If you`re involved in supply chain management, you`re likely familiar with SAP Transportation Management (TM). This comprehensive platform allows companies to manage their transportation processes, from planning and execution to settlement and analysis.

One key feature of SAP TM is agreement determination, which plays a critical role in ensuring that shipments are executed according to agreed-upon terms. In this article, we`ll take a closer look at what agreement determination is, how it works, and why it matters.

What Is Agreement Determination?

Simply put, agreement determination is the process of determining which master agreements and contracts apply to a particular shipment. In SAP TM, this is done by evaluating a set of rules and conditions, which can include:

– The origin and destination of the shipment

– The product being shipped

– The mode of transportation (e.g. truck, rail, ocean)

– The carrier being used

– The customer or supplier involved

Based on these factors and others, SAP TM will determine which agreements and contracts apply to the shipment in question. This includes both pricing agreements (which determine the rates to be charged for the shipment) and service agreements (which specify the level of service to be provided).

How Does Agreement Determination Work?

In SAP TM, agreement determination is typically done using the SAP Business Rules Framework plus (BRF+). This is a flexible and powerful framework that allows users to define rules and conditions for agreement determination and other processes.

Using BRF+, users can define rules based on a wide range of criteria, including:

– Data from the shipment (such as origin, destination, and product)

– Data from the relevant agreements and contracts (such as rates, service levels, and other terms)

– Other factors, such as the current date and time, or the availability of specific carriers or modes of transportation

Once these rules have been defined, SAP TM can use them to automatically determine which agreements and contracts apply to each shipment as it is being planned and executed. This ensures that the correct rates and terms are applied at each stage of the process, from tendering and booking to invoicing and settlement.

Why Does Agreement Determination Matter?

Accurate and efficient agreement determination is critical for supply chain management for several reasons:

– Contract compliance: By automatically applying the correct rates and terms for each shipment, SAP TM helps ensure that companies are complying with the terms of their agreements and contracts, reducing the risk of disputes and legal issues.

– Cost savings: By identifying the most cost-effective agreements and routes for each shipment, SAP TM can help companies save money on transportation costs.

– Service level optimization: By applying the appropriate service levels for each shipment, SAP TM can help ensure that customers receive the level of service they expect, while also optimizing carrier utilization and minimizing transit times.

Overall, agreement determination is an essential process for any company that relies on transportation to move goods and materials. By using SAP TM to automate this process, companies can ensure accurate and efficient execution of their transportation processes, while also optimizing costs and service levels.