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 delivery need to be converted to a common unit of measure.

Note:

To ship certain items together on a single delivery, verify that you have a common unit of measure. If the system does not find a common unit of measure to convert to, it creates another delivery.

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 delivery. The freight arbitration plan flags tell the system which delivery 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 delivery in the ordering unit of measure of the first line added to the delivery. If subsequent order schedules do not have conversion rates defined for the current delivery unit of measure, the system forces the new order schedule to a new delivery.

  • Freight by Order Value

    The system manages the total value of the delivery in transaction currency.

  • Freight by Shipping Weight

    The system manages the total weight of the delivery in the shipping weight unit of measure defined for the first item added to the delivery. 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 delivery.

  • Freight by Shipping Volume

    The system manages the total volume of the delivery in the shipping volume unit of measure defined for the first item added to the delivery. 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 delivery.

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 deliveries 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 internal freight by summing the extended net prices of the order schedules for each delivery 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 delivery.

Order Quantity

If you use order quantity as the freight charge method, the system calculates internal freight by summing the quantities of the order schedules for each delivery 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 deliveries.

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

If there is no conversion for the different ordering units of measure, a new delivery 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 delivery contains schedule 1 and schedule 2.

  • The schedule 1 quantity is one each.

  • The delivery 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 delivery in the eaches' unit of measure.

    The total order quantity for the delivery is seven eaches.

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

  • The delivery contains schedule 1 and schedule 2.

  • The schedule 1 quantity is one each.

  • The delivery 1 quantity unit of measure is each.

  • The schedule 2 quantity is one case.

  • The delivery 2 quantity unit of measure is case.

    Because there is not a converted unit of measure, there are two deliveries.

Volume or Weight

If you use shipping weight or volume as the freight charge method, the system calculates internal freight by assigning a shipping unit of measure to the delivery. The first schedule assigned to the delivery determines the shipping unit of measure for the delivery. 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 delivery.

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 delivery. 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 delivery.

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 delivery.

If the PeopleSoft Inventory business unit weight or volume unit of measure is different from the delivery 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 are not used.

When new schedules are added to the delivery, 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 delivery. If no conversion rate is defined, the system forces the new order schedule to a new delivery 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: Delivery Management Definition page.

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

  • Four lines and schedules 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 delivery for the freight calculation. If a schedule cannot be converted to a common unit of measure, a new delivery is created for the last schedule.

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