Forwarding Order Management in Logistics Service Providers: The Forwarding Order as the Profit-Bearing Object in Enterprise Transportation Management
DOI:
https://doi.org/10.47941/ijscl.4074Keywords:
Buy-side and sell-side settlement, Forwarding order, Forwarding settlement document, Item hierarchy, Logistics service provider, Provider marginAbstract
Purpose: This paper examines forwarding order management in SAP Transportation Management (SAP TM) as configured for logistics service providers and tests one organizing idea: the forwarding order is the profit-bearing object of the business, meaning the document on which sell-side revenue and buy-side cost can be read together.
Methodology: The study is a descriptive, design-level analysis supported by one documented deployment. It analyzed the forwarding order in SAP TM using the vendor’s application documentation, a reference text on the system, and the configuration and project records of the deployment. A feature was included if it changes what the provider charges, what the provider is charged, or when either figure becomes known. The deployment is a single case at the North America operations of a large global transportation company. Its data are two counts: new settlement disputes per week and the size of the dispute backlog. The study has no survey, sample, or human subjects.
Findings: Three results emerged. First, three design elements carry margin directly: the item hierarchy, which sets chargeable weight on both sides; the stage model, which fixes when cost is recognized; and the cost pull, which sets the boundary between customer revenue and provider cost. Second, buy-side cost reaches the forwarding order by distribution from execution documents, so margin per order is a staged estimate. It is final only after carrier charges are settled, and its quality depends on charge accuracy. Third, in the deployment studied, correcting charge calculation at its source cut new settlement disputes by about nine percent per week and reduced the backlog from about 4,000 cases to under 400. The case measured disputes, not margin, so the link to margin is inferred.
Unique Contribution to Theory, Practice, and Policy: For theory, the paper links the transaction-level costing literature to the design of a transportation management system and sets out a staged view of margin per order. For practice, it offers guidance: capture the order accurately, keep both financial sides on it, configure the cost-revenue boundary deliberately, and guard the charge accuracy on which every margin figure depends. For policy, it points to the finance rules that should accompany that design: a defined margin, an owner for the cost-pull configuration, and reconciliation of estimated margin to final margin.
Downloads
References
[1] M. Berglund, P. van Laarhoven, G. Sharman, and S. Wandel, “Third-party logistics: Is there a future?,” Int. J. Logist. Manag., vol. 10, no. 1, pp. 59–70, 1999.
[2] D. J. Bowersox, D. J. Closs, and M. B. Cooper, Supply Chain Logistics Management, 5th ed. McGraw-Hill, 2020.
[3] R. Cooper and R. S. Kaplan, “Profit priorities from activity-based costing,” Harv. Bus. Rev., vol. 69, no. 3, pp. 130–135, 1991.
[4] J. J. Coyle, R. A. Novack, B. J. Gibson, and E. J. Bardi, Transportation: A Supply Chain Perspective, 8th ed. Cengage Learning, 2015.
[5] K. M. Eisenhardt, “Building theories from case study research,” Acad. Manag. Rev., vol. 14, no. 4, pp. 532–550, 1989.
[6] A. R. Hevner, S. T. March, J. Park, and S. Ram, “Design science in information systems research,” MIS Q., vol. 28, no. 1, pp. 75–105, 2004.
[7] R. S. Kaplan and S. R. Anderson, “Time-driven activity-based costing,” Harv. Bus. Rev., vol. 82, no. 11, pp. 131–138, 2004.
[8] R. C. Lieb and B. A. Bentz, “The use of third-party logistics services by large American manufacturers,” J. Bus. Logist., vol. 26, no. 2, pp. 1–28, 2005, doi: 10.1002/j.2158-1592.2005.tb00213.x.
[9] A. Marasco, “Third-party logistics: A literature review,” Int. J. Prod. Econ., vol. 113, no. 1, pp. 127–147, 2008.
[10] W. A. Muir and R. Reddy, SAP Transportation Management: The Comprehensive Guide, 2nd ed. Rheinwerk Publishing, 2018.
[11] K. Peffers, T. Tuunanen, M. A. Rothenberger, and S. Chatterjee, “A design science research methodology for information systems research,” J. Manag. Inf. Syst., vol. 24, no. 3, pp. 45–77, 2007.
[12] T. L. Pohlen and B. J. La Londe, “Implementing activity-based costing (ABC) in logistics,” J. Bus. Logist., vol. 15, no. 2, pp. 1–23, 1994.
[13] T. C. Redman, “The impact of poor data quality on the typical enterprise,” Commun. ACM, vol. 41, no. 2, pp. 79–82, 1998.
[14] SAP SE, SAP Transportation Management: Application Help. SAP Help Portal.
[15] K. Selviaridis and M. Spring, “Third party logistics: A literature review and research agenda,” Int. J. Logist. Manag., vol. 18, no. 1, pp. 125–150, 2007, doi: 10.1108/09574090710748207.
[16] G. Stefansson, “Collaborative logistics management and the role of third-party service providers,” Int. J. Phys. Distrib. Logist. Manag., vol. 36, no. 2, pp. 76–92, 2006, doi: 10.1108/09600030610656413.
[17] R. Y. Wang and D. M. Strong, “Beyond accuracy: What data quality means to data consumers,” J. Manag. Inf. Syst., vol. 12, no. 4, pp. 5–33, 1996.
[18] R. K. Yin, Case Study Research and Applications: Design and Methods, 6th ed. SAGE Publications, 2018.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Ajay Bhaktharahalli Nagesh Hemambika, Rajashiva Ramalingam
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
