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Function documentationCost Distribution Management Locate this document in the navigation structure

 

Freight costs are an important part of financial reporting in your businesses. You need the ability to allocate freight costs at charge element level across a number of charge sources to manage the following business processes:

  • Freight costs

  • Material valuations

  • Profitability of customers, products, and lines of business

Allocating costs effectively enables you to perform the following tasks:

  • Management reporting using business intelligence (BI)

  • Financial posting of inbound and outbound freight costs

For shippers, freight costs cover the following stock movements:

Inbound

  • Purchases

  • Sales returns

  • Intercompany or intracompany stock transfers

Outbound

  • Customer sales

  • Purchase returns

  • Intercompany or intracompany stock transfers

For logistics service providers (LSPs), freight costs cover the cost of moving the goods contained in forwarding orders for their customers.

The system uses the freight charges in the freight order, freight booking, and freight settlement document as the basis of the freight cost distribution.

Prerequisites

You have specified the cost distribution settings in Customizing for Transportation Management under   Basic Functions   Cost Distribution  .

For both shippers and LSPs, you have assigned the distribution profiles to the relevant organization in the Customizing for Transportation Management under   Basic Functions   Charge Calculation   Basic Settings for Charge Calculation   Define General Settings  .

For LSPs that want to use the freight cost in the freight order for internal settlement, you must enable freight orders and freight bookings for cost distribution. In all other cases, you have the option of performing this enabling. For more information, see the following Customizing activities:

  • Freight orders in Customizing for Transportation Management under   Freight Order Management   Freight Order   Define Freight Order Type  .

  • Freight bookings in Customizing for Transportation Management under   Freight Order Management   Freight Booking   Define Freight Booking Type  .

Features

You can view the results of a cost distribution on the user interface (UI). You can only change the distribution settings in Customizing. The following are the main cost distribution features:

  • Distribution method

    The system distributes costs in a direct or hierarchical distribution. In a direct distribution, the system distributes costs according to the attributes you specify in the distribution rule and distribution level without reference to where in the item hierarchy you package a product. In a hierarchical distribution, the system uses a step-by-step approach to take each level of the packaging hierarchy into account in the distribution.

  • Distribution rule

    The system uses criteria such as gross weight, net weight, gross volume, and distance times gross weight to perform a cost distribution.

  • Distribution level

    The system uses a target level of forwarding orders or ERP items in a distribution.

More Information

Topic

Link

Using cost distribution for shippers, including individual prerequisites

Cost Distribution for Shippers

Using cost distribution for LSPs, including individual prerequisites

Cost Distribution for LSPs

Role and structure of freight orders

Freight Order