Setting Up Transportation Lead Times and Freight Charges

This chapter provides overviews of freight calculations and transportation lead times and discusses how to create transportation lead times and freight charges.

Understanding Freight Calculations

This section discusses:

• Using estimated shipments with freight charges.

• Freight charge methods, freight arbitration plans, and units of measure calculations.

• Viewing and calculating freight charges.

• Billing freight charges.

You can calculate freight during order entry by setting up arbitration plans and rules by:

• Basing the freight charge calculations on four different freight methods: weight, volume, order quantity, or the value of the order.

• Setting up and assigning a default value to the freight method for the order from the buying agreement, sold to customer, or order group.

  The freight method can also appear by default from the selection on the Inventory business unit Shipping Options page.

Using Estimated Shipments with Freight Charges

To calculate freight charges at order entry, estimated shipments must be created. Estimated shipments enable you to group order schedules logically with the same shipping information so that freight charges can be calculated accurately. You can have multiple freight methods—such as weight, volume, value, and quantity—for each sales order, but each estimated shipment can have only one freight method. The system automatically manages the estimated shipments for you on the sales order.

Note. In PeopleSoft Order Management, you must have one freight charge method for each estimated shipment, but you can have multiple estimated shipments for each sales order. At shipment in PeopleSoft Inventory, there can be only one freight charge method per sales order within a single shipment.

If a schedule qualifies to become part of an existing estimated shipment, the system verifies that the freight charge method on the new schedule matches the default value from the buying agreement, sold to customer, or order group:

• If the freight charge method matches, the system adds the schedule to the estimated shipment.

• If the freight charge method doesn't match, the system automatically creates a new estimated shipment for the schedule.

  The freight charge method determines which value the system uses to find the appropriate freight breaks.

To calculate freight, the system evaluates the estimated shipment as it is added to the order and determines the freight sets and resulting charges that apply to the estimated shipment. To get the total freight charges for the estimated shipment, the system adds up the freight charges on all freight breaks applied to the estimated shipment. The system then adds up the sums of the estimated shipment freight charges, to get the total freight charge for the order.

After calculating the freight charges, the estimated shipment, estimated shipment freight charges, and total order freight charges appear for the entire order. To change or override the total freight charge for the order or to not charge the customer freight for the order, you enter a different amount or zero for the freight charges on each estimated shipment of the order on the Freight Charges page.

If you are using the single shipment option, freight can only be changed at the order header level. When the Populate Billing process (OM_BILL) is run, the freight amount is picked up and passed to PeopleSoft Billing on the first shipment of the order. In the case of multiple shipments for an order, the total freight amount is charged and billed on the first invoice. A flag is set on the Estimated Shipment table to indicate that freight has already been billed, so it won't be billed again with subsequent shipments for the order. If the seller pays for freight, no freight charges are passed to PeopleSoft Billing; however, the estimate for freight charges at order entry is still calculated and can be used for your own analysis.

Freight charges are passed to Vertex or Taxware. Vertex and Taxware determine if any tax is applicable to the freight charges.

If you are using credit card processing, the Order Repricing process reprices orders and includes the freight amount and the new price in the credit card amount stored at the order header level.

See Also

Estimated Shipments

Integrating with Sales and Use Tax Applications

Freight Charge Methods, Freight Arbitration Plans, and Units of Measure Calculations

Freight calculations are based on four freight charge methods: order quantity, order value, shipping volume, and shipping weight. The method must take into account units of measure. When you select a method, the system performs the unit of measure conversion if the schedules in the estimated shipment need to be converted to a common unit of measure.

Note. To ship certain items together on a single estimated shipment, verify that you have a common unit of measure. If the system doesn't find a common unit of measure to convert to, it creates another estimated shipment.

The same units of measure conversion for freight calculations applies to weight and volume pricing.

The freight arbitration plan defaults from the Inventory business unit to the estimated shipment. The freight arbitration plan flags tell the system which estimated shipment total values must be maintained in order to properly calculate freight. You can select one or more of these flags on the arbitration plan. These freight arbitration plan flags are:

• Freight by Order Quantity

  The system manages the total quantity of the estimated shipment in the ordering unit of measure of the first line added to the estimated shipment. If subsequent order schedules do not have conversion rates defined for the current estimated shipment unit of measure, the system forces the new order schedule to a new estimated shipment.

• Freight by Order Value

  The system manages the total value of the estimated shipment in transaction currency.

• Freight by Shipping Weight

  The system manages the total weight of the estimated shipment in the shipping weight unit of measure defined for the first item added to the estimated shipment. If subsequent order schedules do not have conversion rates defined for the shipping weight unit of measure, the system forces the new order schedule to a new estimated shipment.

• Freight by Shipping Volume

  The system manages the total volume of the estimated shipment in the shipping volume unit of measure defined for the first item added to the estimated shipment. If subsequent order schedules do not have conversion rates defined for the shipping volume unit of measure, the system forces the new order schedule to a new estimated shipment.

Note. The freight arbitration plan freight-by flags should complement the freight charge method that defaults from the buying agreement, customer, or order group.

The freight arbitration plan freight-by flags can affect the number of estimated shipments created for the sales order if you have not defined all the required conversion rates.

Order Value

If you use order value as the freight charge method, the system calculates freight by summing the extended net prices of the order schedules for each estimated shipment and checking against the order value freight breaks to see what freight charges to add to the order. The total order freight charge is the sum of the freight charges calculated for the order values of each estimated shipment.

Order Quantity

If you use order quantity as the freight charge method, the system calculates freight by summing the quantities of the order schedules for each estimated shipment and checking against the order quantity freight breaks to see what surcharges to add to the order. The total order freight charge is the sum of the freight calculated for each of the estimated shipments.

If the schedules have different units of measure, the order quantity freight charge method converts the units of measure on each schedule of the estimated shipment to a common unit of measure. The common unit of measure is the default from the first schedule in the estimated shipment.

If there is no conversion for the different ordering units of measure, a new estimated shipment is created by the system. Set up unit of measure conversions on the Units of Measure page.

The example illustrates how the total order quantity is determined using a unit of measure conversion. In the example, six eaches makes up one case:

• The estimated shipment contains schedule 1 and schedule 2.

• The schedule 1 quantity is one each.

• The estimated shipment quantity unit of measure is each.

• The schedule 2 quantity is one case.

• The ordering unit of measure for the item is eaches.

  This each is converted to the standard unit of measure for the item, which is eaches. The schedule 2 case is converted to the standard unit of measure, which is six eaches. Total quantity is maintained on the estimated shipment in the eaches' unit of measure.

  The total order quantity for the estimated shipment is seven eaches.

The example illustrates how the total order quantity is determined without using a unit of measure conversion:

• The estimated shipment contains schedule 1 and schedule 2.

• The schedule 1 quantity is one each.

• The estimated shipment 1 quantity unit of measure is each.

• The schedule 2 quantity is one case.

• The estimated shipment 2 quantity unit of measure is case.

  Because there isn't a converted unit of measure, there are two estimated shipments.

Volume or Weight

If you use shipping weight or volume as the freight charge method, the system calculates freight by assigning a shipping unit of measure to the estimated shipment. The first schedule assigned to the estimated shipment determines the shipping unit of measure for the estimated shipment. The system finds the shipping unit of measure assigned to the inventory item for the inventory business unit.

If there are multiple shipping units of measure defined for the item or inventory business unit, the system selects the shipping unit of measure that is the same as the ordering unit of measure.

If there is no shipping unit of measure to match the ordering unit of measure, the system selects the first shipping unit of measure. Each shipping unit of measure is assigned a weight and volume unit of measure. These are the weight and volume units of measure assigned to the estimated shipment.

The system then converts the order schedule quantity in the ordering unit of measure to the quantity in the shipping unit of measure on the estimated shipment. Then the shipping weight and shipping volume of the order schedule are determined in the correct units of measure and are used to maintain the total shipping weight and volume for the estimated shipment.

To meet PeopleSoft Inventory packing requirements, the system attempts to find the shipping weight and volume units of measure defined for the inventory business unit pick plan options. If these exist, the system assigns these weight and volume units of measure to the estimated shipment.

If the PeopleSoft Inventory business unit weight or volume unit of measure is different from the estimated shipment weight or volume unit of measure, the system checks to see if a conversion factor has been defined between the units of measure. If no conversion factor is defined, the weight or volume units of measure defined for the picking and packing options for the inventory business unit aren't used.

When new schedules are added to the estimated shipment, the system verifies that a conversion factor is defined for the weight and volume units of measure if the weight or volume units of measure are different between the new order schedule and the existing estimated shipment. If no conversion rate is defined, the system forces the new order schedule to a new estimated shipment with new weight and volume units of measure.

The shipping unit of measure, the shipping weight unit of measure, and the shipping volume unit of measure appear on the Inventory Definition - Business Unit Options: Estimated Shipment Definition page.

The example illustrates how the shipping weight is determined. Make sure that all of the schedules in the estimated shipment can be converted to the same weight unit of measure that you want to use to calculate freight:

• Four lines and schedules all with the same shipping information.

• The products on the first three schedules have weight measured in pounds.

• The weight of the product on the last schedule is in ounces.

  If there is a conversion rate to convert ounces to pounds, all four schedules can be on the same estimated shipment for the freight calculation. If a schedule can't be converted to a common unit of measure, a new estimated shipment is created for the last schedule.

See Also

Weight and Volume Pricing

Packing Orders for Shipment

Viewing and Calculating Freight Charges

Use the Carrier Table page to indicate whether or not you want freight charges calculated externally by a third-party freight interface. If you select external, you'll need to set up third-party information on the Carrier URL page.

At the order header level, access the Freight Charges page to calculate freight charges for the estimated shipments on the sales order. The selection on the Order Entry Features page determines when and how the freight charges are calculated:

• If you elected to have freight charges calculated online, they are calculated automatically at order save or when you click the Freight Charges link on the Order Entry Form page.

• If you elected to have freight charges calculated manually, they are calculated only when you click the Freight Charges link on the Order Entry Form page.

• If you elected to have freight charges calculated in the background, they are calculated when the Order Completion process (OM_BACKGRND) is run.

Click the Freight Detail link on the Freight Charges page to access the Freight Detail page, where you can view the audit details for how each freight charge was calculated for each estimated shipment.

At the order header level, access the Estimated Shipments page to view the details of each estimated shipment of the order. You can also change or add the freight charge method on the Estimated Shipments page.

In PeopleSoft Order Management, freight charges appear in the Price Summary section of the Order Entry Form page and are printed on the Sales Order report.

Billing Freight Charges

The freight charges that are passed to billing are either the amount estimated at order entry or at shipping time based on your selection on the customer Bill To Options page, which accesses the Bill To Details section of the Order Entry Form page by default. Freight charges can be calculated at order entry time and again at shipping time.

If you’re using the order value freight charge method, you must select bill at order entry. Then the freight charges can be recalculated or overridden up until the time when the first line of the schedule has been shipped.

When calculating freight at shipping time, freight charges are captured in the base currency of the inventory business unit that is established on the Inventory Definition - Business Unit Definition page.

The freight terms designate who pays for the freight, either the buyer or seller. The default freight terms appear in the Ship To section of the Shipment Schedules page, but they can be overridden at the order header or schedule level.

Understanding Transportation Lead Times

The transportation lead time is the in-transit interval from the date and time that a shipment leaves your warehouse (inventory business unit) to the date and time that it arrives at your customer's receiving dock. Time in transit is affected by such factors as the warehouse location, the freight carrier, and the customer location. Additional factors such as the days of the week that the warehouse, customer and carrier are closed also affect the lead time. You establish the transportation lead time that results from a particular combination of these factors and determine how the system should search the combinations to arrive at a transportation lead time for a particular order schedule.

Note. If the schedule is marked for customer pickup, the system will only look at the calendar for the Inventory Business Unit. Any rules will not be used.

The transportation lead time is used in calculating the scheduled shipment and scheduled arrival dates on the order when you enter either a requested arrival date or a requested shipment date.

The transportation lead times are calculated using arbitration plans and rules. The system searches for all matching transportation lead time rules and sorts them based on the arbitration plan using the longest lead time, shortest lead time, or the arbitration plan sequence. If the arbitration plan sequence is used, the system then looks to see if you want to sort the rules alphabetically, or by the longest or shortest lead time. The system then uses the first lead time rule in the list that produces a valid shipment and arrival date.

At the PeopleSoft Order Management business unit level, the system can process adjustments to the shipment and arrival dates by calculating the dates going forward or backward. Previously the dates were only calculated forward.

If the date is too early or late relative to the requested arrival date, hold processing can be used to further control the shipment. However, if the order is for a customer pickup, the Arrival Date Window hold does not apply.

In previous releases, the system did not consider exception dates for the carrier and the dates were only calculated looking ahead. The table illustrates the previous new methods to calculate the dates for an order date placed on Wednesday, 12/07/2006 with a requested arrival dates of Tuesday, 12/13/2006 and a three-day transportation lead time.

Creating Transportation Lead Times and Freight Charges

This section discusses how to:

• Establish transportation and freight arbitration plans.

• Identify transportation and freight key fields.

• Create freight and transportation rules.

• Select transportation and freight rule keys.

• Establish transportation breaks.

• Establish freight breaks.

To define freight and transportation arbitration plans and rules, use the Trft Rule and Trft Sets components.

Take these steps to set up transportation lead times and freight charge arbitration plans and rules to calculate freight charges internally:

Note. The same pages are used to set up transportation lead times and freight charges. However, you set up the breaks for transportation lead times and freight charges on different pages.

1. Establish arbitration plans that govern how transportation lead times and freight charges are calculated on the Arbitration Plan page.

2. Use the Key Fields page to select the values of the freight and transportation rule keys that the system searches for when selecting transportation lead times and freight charges.

3. Select the key fields from the arbitration plan to use for the rule.

4. Establish the rules for the freight and transportation on the Freight and Transportation Rule Entry page and add values for the key fields.

   Set up the actual breaks for transportation lead times on the Transportation Breaks page and the breaks for freight charges on the Freight Breaks page.

Pages Used to Create Transportation Lead Times and Freight Charges

Establishing Freight and Transportation Arbitration Plans

Access the Arbitration Plan page.

Freight by Order Quantity, Freight by Order Value, Freight by Shipping Weight, and Freight by Shipping Volume	Select an option if you are creating an arbitration plan for freight calculation. By selecting only the freight charge methods that you will be using, you can limit the number of additional estimated shipments that are created if there isn't a conversion for the unit of measure. Before assigning a schedule to an estimated shipment for the freight charge, the system checks to see if the units of measure of the schedule match the units of measure on the existing estimated shipment. If the estimated shipment is a new estimated shipment, the shipment inherits the units of measure of the schedule. If the new schedule units of measure do not match the existing estimated shipment, the system creates a new estimated shipment.
Default	To establish a default arbitration plan, select the check box. After selecting this option and saving the default arbitration plan, the check box no longer appears on this page. This default it used if an arbitration plan is not specified for the PeopleSoft Order Management Business Unit on the Shipping and Returns page.
Sort Option By	Use to determine how the system will sort the arbitration rules. Select: Arbitration Plan Sequence: The system will select the rule based on the arbitration plan sequence. If you select this option, you will also select the Arbitration Decision. Note. This option is used for simple transportation lead time calculations. Longest Lead Time, Plan Seq: The system will select the rule based on the longest lead time. This option is not used for freight charges. Shortest Lead Time, Plan Seq: The system will select the rule based on the shortest lead time. This option is not used for freight charges.
Sequence	Displays the sequence number which is automatically generated by the system. You can change this number as long as you do not select a number that has already been used. The sequence number indicates the order in which the system searches the transportation and freight arbitration plans.
Arbitration Decision	Determine how to sort the arbitration rules. This option is only visible if you selected the Arbitration Plan Sequence in the Sort By Option field. Options are: Alphabetically Longest Lead Time, Alpha Shortest Lead Time, Alpha
Rule Keys	Click to access the Key Fields page where you can select the combination of elements that determines a match on a sales order line. The keys that you select display in the Key Set group box.

Identifying Transportation and Freight Key Fields

Access the Key Fields page.

Select any number of fields from the available options. The system searches the transportation and freight arbitration plans and applies the plans that match the combination of values that you select for your transportation lead time and freight calculations.

Note. The Location Code field is used only for interunit transfers. The Vendor ID, Vendor Location, Third-Party Vendor ID, Third-Party Vendor Location, Item Category, Ship To location, and Vendor Freight Group fields are used only by PeopleSoft Purchasing.

Do not use a route code for rule keys that will be used for transportation lead time calculations because the route code interferes with the transportation lead time calculations. You can use a route code for freight charge calculations.

Creating Freight and Transportation Rules

Access the Freight and Transportation Rule Entry page.

Selecting Transportation and Freight Rule Keys

Access the Select Key Fields page.

Establishing Transportation Breaks

Access the Transportation Breaks page.

Fill in the values to enter breaks for the transportation lead times.

Establishing Freight Breaks

Access the Freight Breaks page.