To set up subcontracting

You can set up the subcontracting functionality in the way that best suits the requirements of your organization. The following guidelines and examples show how subcontracting can fit in with various business scenarios.

General guidelines

You can use freight orders for either freight order line clustering or load building. If load building is enabled for a freight order, the freight order cannot be used for freight order line clustering. Alternately, a freight order for which load building is disabled can only be used for freight order line clustering. If you use freight order line clustering for all freight orders, you cannot use load building. Loads created using the Freight load building functionality can be subcontracted. You can print subcontracting instructions for loads if the load status ranges from Actual to Completed.

The following are the basic ways in which you can set up freight order subcontracting. The scenarios discussed later show how you can fine-tune the setup to meet the requirements of specific business scenarios.

  • Use freight order line clustering for all freight orders
    If you set up subcontracting in this way, load planning is disabled for all freight orders, therefore, you can only subcontract clustered, unplanned freight orders.
  • Use freight order line clustering for freight orders with particular properties
    For example, you can contract out transport planning and execution for freight orders that require special transport types or transport conditions. For these freight orders, load building is disabled. This means, that for other freight orders you can use load building and subcontract the planned loads.
  • Use subcontracting for planned loads only
    As a result, freight order clustering is disabled for all freight orders. You can only subcontract planned loads.
  • No subcontracting
    You enable load building for all freight orders, but do not use the option to print subcontracting instructions for the planned loads.
Scenarios

The following scenarios describe how you can set up freight order subcontracting for shippers who do not use transport planning and shippers who plan part of their goods transports themselves.

The shipper does not use transport planning

In general, you can distinguish the following business scenarios for shippers who do not use transport planning. Each of these scenarios has its own setup requirements.

The shipper works with one carrier or logistics provider

The shipper is not involved in the planning and execution of transport. For transport planning and execution, the shipper has a contract or partnership with a single carrier or logistic service provider, who handles all his transport related requirements.

For this scenario, you can, for example, clear the Load Planning check box for the freight order types that you define to make all freight orders available for freight order subcontracting. Because only one carrier exists to whom freight orders are subcontracted, carrier selection by LN is not required. For subcontracting purposes, you only need to maintain one carrier.

You can also consider defining a default carrier in the Freight Order Control Parameters (fmfoc0100m000) session, which will be the default carrier for all new freight orders, or define a default carrier for the freight order types that you define.

If freight cost calculation and carrier invoice matching is not required, you can clear the Transport Costing check box in the Freight Rates and Costs Parameters (fmfrc0100m000) session, and you do not have to maintain carrier rate books in the Pricing module of Order Management.

The shipper selects from a list of preferred carriers

Again, the shipper is not involved in the planning and execution of transportation but, to efficiently subcontract freight orders, the shipper wants to make a selection from a list of carriers to find the most suitable and cheapest carrier. In such cases, the shipper must make an estimate of the freight costs prior to transportation and check the carrier’s invoice. This will help the shipper to keep a tab on freight costs and the degree of efficiency with which transport is carried out.

For this scenario, you can also clear the Load Planning check box for the freight order types that you define to make all freight orders available for freight order subcontracting. Because carrier selection and freight cost calculation are required, you must maintain a list of suitable carriers and carrier rate books in the Pricing module of Order Management.

The shippers plan part of their transports themselves

For shippers who plan part of their goods transports, you can distinguish the following business scenarios. As in the previous scenarios, these scenarios have a number of specific setup requirements.

The shippers plan regular transports, but subcontract transport planning of exceptional transport orders to a fixed carrier

The shippers plan most of the transport activities themselves, possibly because transportation is carried out by his own fleet or dedicated carrier, or because they simply want to be in complete control of the planning and execution of regular transport activities, most likely related to the shippers' core business. The more exceptional transport activities are not included in the transport planning, but are subcontracted as freight orders to a fixed carrier, parcel delivery company, or LSP. Freight cost estimation and invoice matching of the subcontracted orders are required.

In this environment, only particular types of goods, that most likely require special transport conditions or special means of transport, are subcontracted to a fixed carrier. This means that freight orders on which such types of goods are listed must be available for subcontracting. To accomplish this, you can define transport means groups or transport types for which you clear the Load Planning check box. You can add these transport types and/or transport means groups to items in the Items - Freight Management (fmfmd1100m000) session.

The shippers select the carriers

The shippers plan, and possibly carry out, regular transport, but exceptional transport orders are subcontracted to different carriers, which are selected on the basis of specific criteria. Freight cost estimation and invoice matching of the subcontracted orders is required.

The subcontracting setup for this environment is much the same as for the previous environment. The main difference is that the carrier who is to carry out the transport planning and the transport is selected from a list. Therefore, defining transport means groups and transport types for which the Load Planning check box is cleared will also do the job in this scenario. To enable carrier selection freight cost estimation, and invoice matching, carrier rate maintenance for the carriers maintained for subcontracting is required.

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