Did you know that your SAP ECC system comes loaded with a set of tools that connect you directly to parcel carriers such as UPS, FedEx, USPS, and DHL? Here we explore the SAP components that will have you shipping parcel and LTL straight from SAP in a matter of weeks, not months. In addition to the technology aspects of shipping, we'll discuss business drivers and trends that are attracting companies to adopt SAP's shipping solution. This information is useful for companies interested in using the Software as a Service (SaaS) shipping solutions offered by parcel carriers.

    The software delivery model used to create shipping labels and perform parcel tracking is changing rapidly. Over the last few years, all of the major small parcel carriers have made it possible to access their shipping services directly within SAP. The carriers publish standard XML templates which are used to facilitate simple, robust communication between their customers' systems and their SaaS-based shipping application.

    Implementing a shipping solution in SAP means that you are essentially building an interface between your SAP system and the parcel carrier's Web-based solution. Web-based solutions offered by carriers such as FedEx and UPS are easily accessed with tools found natively in SAP ERP Central Component (ECC). There are three primary building blocks in SAP which are used to leverage the carriers' shipping services:

    (1) Web services: Web services calls are a type of Remote Function Call (RFC) that allows your SAP system to interface with different software components over the Internet using XML & HTTP. This capability permits secure direct peer-to-peer communication between SAP and the carrier's shipping application.

    (2) Express ship interface (XSI): XSI provides a flexible platform to gather the shipping data required by a carrier to produce a shipping label. XSI can be employed to generate shipping labels, bills of lading, air waybills and commercial invoices, as well as perform parcel tracking and proof of delivery in complex, high-volume shipping environments.

    (3) Packing station: The packing station transaction in SAP is used to pack items from deliveries and shipments into shipping cartons, coolers, pallets and the like. All the hardware required to support shipping (laser printers, barcode printers, scanning devices, scales, etc.) is connected to SAP and made available in the SAP's packing station. The packing stations are carrier independent; shipping labels for all of your carriers can be generated at one packing station.
    Current Business Drivers & Trends Supported by SAP's Technology
    Companies are showing increased interest in parcel and LTL shipping. This stems from a various motivations:

    - Extending beyond B2B into B2C: Many of the companies we speak to are traditionally B2B focused and are seeking to develop a stronger relationship with the end customer. There is a trend for companies to ship direct to the end customer and bypass distribution channels. Plugging SAP into the carriers' SaaS shipping engine provides quick access to a fully integrated parcel and LTL solution at a low price. This helps to address the need for delivering todays B2C experience, where consumers demand user-centric, anytime/anywhere information, and expect their experience on a mobile device or online.

    - B2C Experiences Set Expectations for B2B Customers: New customer expectations are inspiring innovation and driving competitive pressure in B2B industries like distribution and manufacturing. B2B business leaders are seeking to roll more B2C-like capabilities into the B2B user experience while simultaneously expanding their businesses into new geographies and channels.

    - Increased emphasis on Reverse Logistics: A number of different customer return scenarios are supported with the SAP shipping solution.
    This includes: printing return labels alongside the standard outbound shipping label, scheduling a carrier to pick up returns at the customer's facility, and requesting the carrier to email shipping labels to the customer, which can then be printed.

    Customer returns are increasingly prevalent for various reasons:

    -- Compliance and governance requirements to reduce waste and preserve the environment

    When the waste electrical and electronic equipment directive (WEEE) was introduced to UK law in January 2007, focus turned to the reverse supply chain. With the intention of reducing waste and improving environmental performance, WEEE attributed responsibility for the safe recovery and disposal of products to the business that places it on the market.

    -- Pharmaceutical returns
    Drugs need to be properly destroyed at a certified facility when they are recalled or become expired. These tend to be small quantities that lend themselves to parcel or LTL shipping by a carrier.

    -- Introduction of extended returns policies due to competitive pressures.

    -- Guarantees and the growth of online retailing, a sector in which returns typically range from approximately 5-35% for white goods and fashion items.

    Evaluate and Select a Shipping Solution
    Take time to investigate the myriad of shipping applications on the market and select the one that is best suited to your company. Many alternatives to the shipping solution provided by SAP are available from third-party vendors. For most companies SAP's solution has compelling advantages and benefits that sway companies to adopt it:

    - The key shipping components (XSI, Web services and packing
    station) are already bundled into SAP. These are mature, robust
    tools that have been available for many years and are commonly
    used by many companies. Furthermore, they require no additional
    licenses and are supported by SAP for bug fixes and upgrades.

    - It is fully integrated with sales, delivery, and shipment documents
    and logistics processes. Access to tracking numbers and other shipping
    details, including real-time parcel tracking, is available directly
    within the logistics documents.

    - It's cost effective. By using functionality already provided by
    SAP, you can better leverage the investment that was already made
    in your SAP system. In addition, there are no subscription or
    maintenance fees charged by SAP or the carriers for this service.
    Parcel carriers do not charge to use their Web-based shipping
    applications.

    - The direct peer-to-peer architecture is fast and reliable; no
    middleware or additional hardware is required.

    For the most part, all shipping services offered by the carriers are available through SaaS. There are a few exceptions, however, so it is a good idea to ensure all of your requirements are met before undertaking to implement SAP's solution. For example, FedEx IDD Surface (Transborder) and IPD, UPS Trade Direct, and real-time GPS tracking are not currently available through Web services.

    Confirm That Your SAP Environment Meets Solution Requirements

    Check that your SAP system already has the tools required to support this solution. These tools are:

    - The Express Ship Interface has been available since SAP R/3 4.6.

    - SAP Enterprise Services provides your system with the capability
    to communicate directly with the outside world. This component was
    introduced with SAP R/3 5.0. If support for Web services is not included
    in your SAP release, then you need middleware, such as Business
    Connector or SAP NetWeaver Process Integration (PI) to translate data
    between IDOC and XML formats.


    Implementation Resources

    Implementing SAP's shipping solution is a team effort requiring a group of people with a broad spectrum of technical skills. Here are the high-level responsibilities of each core team member:

    - The logistics functional analyst's primary job is to identify the data required by each carrier, set up XSI and fit the solution into existing logistics processes.

    - The developer is responsible for setting up Web services, pulling together the data needed to create a shipping label, and building out the printing framework to direct images received from the carrier to an appropriate printer in the distribution center.

    - Change leadership produces training documentation and delivered the training to end users.

    - Primary activities for the Basis resource include activating ICM service HTTPS, applying SSL certificates for FedEx and UPS, creating RFC destinations for our scales, and adding the laser and bar code printers to the system.

    - The SAP security person adds new transactions codes necessary to support this solution to existing roles.

    - The network resource opened a port for HTTPS communication and added printers to the network landscape.

    - The network security resource verified that the HTTPS traffic with FedEx and UPS flowed correctly through the Web proxy server.


    Augmenting SAP's functionality by leveraging services provided by SaaS offerings are common and are by no means limited to shipping services. Faster deployment of functionality, increasing flexibility to react to changing market conditions, savings on capital expenditures, enabling business continuity and replacing on-premise legacy technology are all suitable reasons to choose web services to connect to SaaS offerings.


    Josh Riff co-founded Blue Harbors Consulting in 2001 and currently
    acts as chief executive officer and president. In addition to
    providing clients with executive consultancy regarding SAP planning,
    implementation, and services, he leads Blue Harbors' business planning
    and development initiatives. Prior to founding Blue Harbors, Josh held
    consultant, team lead, and SAP project management positions. With more
    than a decade's worth of SAP consulting experience, he has completed
    a variety of high-visibility SAP projects for companies such as
    PerkinElmer, McKesson, Barr Pharmaceutical, and Seminis. Josh
    has a bachelor of arts in English literature from the University of
    New Hampshire and earned a certificate in materials management and
    procurement from the University of California, Berkeley. You may contact
    Josh via email at Josh@BlueHarbors.com.

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