SAP Logistics Business Network (SAP LBN)

More and more logistics companies are aiming to optimize their supply chain. Topics such as transparency and efficiency as well as real-time tracking play a major role in logistics planning and execution. Especially the networking and integration of processes with new customers and partners as well as the incomplete traceability pose new challenges for logistics companies.

With the help of SAP LBN, different business partners along the supply chain are to be connected even better and more efficiently in the future. In this blog post, we explain whether and how this can be achieved.

The SAP Logistics Business Network (LBN) is part of the Business Network Initiative, a cloud-based offering for the cooperation of business partners with a focus on logistics. The goal of the SAP Logistics Business Network is the efficient and straightforward networking of various business partners along the supply chain.

In addition, SAP LBN supports various processes, such as tendering and subcontracting of orders, invoice verification, and working on jointly defined milestones. Logistics data is thus exchanged in real-time along the entire supply chain.

Furthermore, SAP LBN aims to map the visibility of order tracking or shipment tracking, which is achieved through connected visibility providers or carriers. Moreover, the SAP LBN enables transparency about material traceability within a supplier network.

SAP LBN currently focuses on SAP Transportation Management (SAP TM). For this purpose, the SAP Logistics Business Network provides three options: Freight Collaboration, Global Track & Trace, and Material Traceability.

The logistics industry and the demand for logistics services is huge. According to the "TOP 100 of Logistics" study by the Fraunhofer Working Group for Supply Chain Services, the total volume of the German logistics market in 2019 was 279 billion euros. The number of people employed in this sector alone is 3.25 million. It is clear that the economy is dependent on high-performance logistics due to its high-level division of labor. The freight forwarding and logistics industry has adapted to this in recent years, and freight forwarders now provide 83 percent of logistics services. (Source: https://www.dslv.org/dslv/web.nsf/id/pa_de_logistikmarkt.html)

Due to the increasing demand, shippers and manufacturers of goods often reach their capacity limits. This is because they often do not maintain their own fleets or only small ones. In addition, ad-hoc transport orders are not uncommon, which cannot be carried out due to their own low capacities and are therefore often awarded to external forwarders. The most important aspect of awarding a transportation contract to a forwarder is communication. The shipper and the forwarder must be able to effectively exchange transport requests, shipment status as well as documents and invoice details - and it is here that misunderstandings quickly occur.

This is precisely the interface where cloud-based SAP LBN finds itself, digitally connecting shippers and carriers with the Freight Collaboration option in conjunction with SAP Transportation Management (SAP TM). The Freight Collaboration option provides both business partners with an environment for efficient collaboration and enables a structured exchange of digital logistics data as well as real-time transport planning and delivery monitoring.

With the help of SAP LBN, it is no longer necessary from a shipper's perspective to network with individual carriers. All that is required is a one-time connection to the cloud-based LBN to gain access to an entire network of carriers. Also, since the SAP TM has native integration to the SAP LBN, there is no longer a need for middleware to convert message formats. 

So now let's imagine the above scenario again: as a shipper, we want to plan a transportation order and assign it to a carrier due to lack of capacity.

• Our transport planner plans a freight order via an integrated SAP TM in SAP S/4HANA and looks for an additional forwarder.
• For this, the transport planner sends a freight request via SAP LBN to a forwarder, who confirms the freight request within a short time and sends back a quote based on real market prices.
• The quote flows back through SAP LBN to SAP S/4HANA TM, where the transportation planner can accept the quote and send the freight order to the carrier for execution.

This procedure provides contractless and fast communication when awarding freight orders to forwarders. However, freight order placement or subcontracting is not the only important part of business partner collaboration. In principle, SAP LBN with the Freight Collaboration option also maps the E2E process and can be used for LTL or FTL real-time tracking of milestones defined in SAP TM by partners already offered, such as Project44 and Shippeo.

In addition, the exchange of documents, for example a delivery confirmation, is also possible via SAP LBN. This also includes invoicing, which can be done via SAP LBN to the forwarder as well as to the shipper. Time and again, errors occur in practice, especially here. For example, it can happen that a forwarder overbills a shipper for a surcharge. In order to resolve such a situation as quickly and efficiently as possible, SAP LBN's Dispute Management offers an additional option for resolving misunderstandings.

We would be happy to explain the SAP Logistics Business Network to you in practice and show you the system using a demo.

In addition to Freight Collaboration, the SAP Logistics Business Network also includes Global Track & Trace and Material Traceability core functions. Those we look at in more detail in a separate blog post.