Transportation Planning EGN 5623 Enterprise Systems Optimization Fall, 2013

Transportation PlanningTransportation Planning

EGN 5623 Enterprise Systems Optimization EGN 5623 Enterprise Systems Optimization

Fall, 2013 Fall, 2013


Theories & ConceptsTheories & Concepts


Fall, 2013 Fall, 2013

Transportation Planning (Overview)Transportation Planning (Overview)

Objective of Transportation planning:To group delivery into shipment in order to minimize the number of shipments and the length of the shipments.

Transportation planning:•is carried out after delivery note is created in the sales (fulfillment) process. •Is executed either automatically several times per day to deliver in batches, or manually by the transportation planner.

SalesProcess

Major Businesses ProcessesMajor Businesses Processes

January 2008January 2008

© SAP AG - University Alliances and © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All The Rushmore Group, LLC 2007. All rights reserved.rights reserved. 44

Sales OrderEntry Check

Availability

ProductionProcess

Run MPS w/MRP

Convert ProductionProposal

Scheduleand Release

ProcurementProcess

Pack Materials

GoodsIssue

Purchase Requisition

Purchase Order

GoodsReceipt

InvoiceReceipt

Paymentto Vendor

CompletionConfirmation

F/G Goods Receipt

Order Settleme

nt

Post Goods IssueInvoice

Customer

Receipt ofPayment

Sales QuotationEntry Delivery Note/

pick materials

TP/VS in SCM (review)TP/VS in SCM (review)

THEORY AND PRACTICE OF ADVANCED PLANNER AND OPTIMIZER IN SUPPLY CHAIN DOMAIN by Sam Bansal

Time Horizons for TP/VS and Time Horizons for TP/VS and Replenishment in SCM (review)Replenishment in SCM (review)

Level of Detail and Time Horizon Level of Detail and Time Horizon of TP/VS and Deployment in APO of TP/VS and Deployment in APO Modules (review)Modules (review)

TP/VS and Replenishment Processes in APO TP/VS and Replenishment Processes in APO Modules (review)Modules (review)

TP/VS Module in APO System Structure and TP/VS Module in APO System Structure and Integration with ERP (review)Integration with ERP (review)

Overview Master Data and Overview Master Data and Application in TP/VS (review)Application in TP/VS (review)

Transportation Planning OverviewTransportation Planning Overview

Inputs to transportation planning: due date of customers’ orders, customers’ calendar of loading and unloading, capacity restriction of vehicles, vehicle availability, andincompatibility (e.g. of the goods and locations).

TP/VS offers an optimization tool for transportation planning.

The transportation planning creates “shipments” in APO.


After creation of a shipment, the subsequent steps are To select a carrier and to release the shipment.

The shipment is transferred to ERP after it is released in APO.

Order Life Cycle for Transportation Order Life Cycle for Transportation PlanningPlanning

Transportation Planning Process in Transportation Planning Process in APOAPO

1. Create shipments in TP/VS2. Assign transportation resource to each shipment3. Assign carrier(s) to each shipment4. Release shipments


The common process flow is to create deliveries in ERP first before running TP/VS.

TP/VS is designed for transportation planning of a production or trading company NOT for a transport service provider since TP/VS

doesn’t cover some of their common functional requirement but require the master data for products, location, and resources.

Transportation Planning OverviewTransportation Planning Overview TP/VS plans for orders which contain a start location

(LOCFROM) and a destination location (LOCTO).

Inbound documents: purchase orders

Outbound documents: delivery notes, sales orders, stock transfer orders,

and return orders.

ERP and APO don’t combine inbound and outbound orders in one shipment.

Master Data for TP/VSMaster Data for TP/VS

The main master data for TP/VS are: locations

manufacturing plant, distribution centers, customers, transportation zone, transport service provider.

transportation lanes, means of transport, and vehicle resources.


Master Data for TP/VSMaster Data for TP/VS Transportation Zone and Transport Service Providers:

The transportation zones and transport service providers (carriers) are location types 1005 and 1020, respectively.

The transportation zone data are stored in Customer Master data in ERP and are transferred to APO.

The transportation zone is implicit with the customer and the transport service provider using vendor in ERP.

TP/VS scheduling methods are predefined in the APO, as shown in next slide.

Vehicle Scheduling Methods List Vehicle Scheduling Methods List (A Hierarchy Structure for TP/VS)(A Hierarchy Structure for TP/VS)


Transportation Lanes (routes): Transportation lanes are defined from plants and DCs

to (customer’s) transportation zone, and are created manually in APO.

The allowed carriers are assigned per transportation lane (route) and transportation means explicitly.

The restriction on the validity of a transportation lane per product is ignored by TP/VS.

Detailed Planning in Transportation Detailed Planning in Transportation LaneLane

Vehicle ModellingVehicle Modelling The three entities for vehicle modelling are:

Mode (by sea, truck, rail, or air) Means of transport (speed such as normal or express), and Vehicle resources

The mode is maintained with the customising path and is used only for grouping purpose, such as by sea, by air, by truck.

The means of transport corresponds to speed (normal vs. express), or shift.

Vehicle resources: vehicle type, category, and capacity (tonnage T) (e.g. a resource with the capacity of 20 T is not allowed to load 22 T products.

Entities for Vehicle ModellingEntities for Vehicle Modelling

Geo-CodingGeo-Coding The transport duration are computed based on

geo-coding of the locations and the distance between locations.

The geographical settings of locations are determined by country and region (standard setting), postal code, or street address.

The distance for a transportation lane is estimated as the air-line distance (standard) or the actual distance between addresses using a route

planning based on the exact longitude and latitude of the locations as input.

Geo-coding Combinations for Geo-coding Combinations for SchedulingScheduling

TP/VS OptimisationTP/VS Optimisation The optimiser creates shipments with the lowest penalty

cost, while meeting all required constraints.

Hard constraints: compatibilities, opening hours (modelled by handling resource), and finiteness

Soft constraints: earliness and lateness defined in the optimiser profile

The TP/VS optimiser is a mixture of local search and evolutionary search. For configuration of the optimiser, the optimiser profile has to be created.

Table 8.1 Costs within the Cost Table 8.1 Costs within the Cost ProfileProfile

Scheduling with Runtime LanesScheduling with Runtime Lanes In order to generate a schedule with runtime lane, it is

critical to determine the distance of the runtime lanes.

The distance of the runtime lanes is either based on GIS information or is calculated using the geo-coding distance and the wiggle factor from the means of transport.

The mean of transport has to have the option ‘GIS quality’ selected and the average speed for city, country road and motorway have to be maintained, if detailed distance needs to be calculated with geo-coding.

Scheduling with Runtime LanesScheduling with Runtime Lanes

Carrier SelectionCarrier Selection Criteria for selecting carriers:

service-quality-based priority, and cost.

Carrier selection is performed after the planning for shipments is done, and before the shipments are transferred to SAP ERP.

If one stage of transport is already assigned to a carrier which has the flag for continuous move, the same carrier is selected for succeeding stage.

• Keep the same carrier for continuous move

Carrier Selection principleCarrier Selection principle

Deployment OverviewDeployment Overview Scope of Deployment

To handle the deviation between demand and supply happens.

The basic idea of deployment is to convert planned stock transfers into confirmed stock transfers according to the available supplies, the demand, the deployment strategy, and the fair share rule.

If the demand exceeds the supply, it has to be decided which demand at which location will be covered and to what extent.

Deployment OverviewDeployment Overview The available-to-deploy (ATD)-receipt and ATD-issues are

category groups which are assigned to the location and location product master.

ATD-receipt: Stock Production order for finished goods Purchase order for raw/trading materials.

ATD-issues: Deliveries Confirmed distribution requirements

Safety stock is ignored by deployment. Safety stock is modelled as a demand in SAP APO, not a supply element.

Deployment HeuristicDeployment Heuristic The deployment heuristic is a source-location-by-source-location

approach to distribute the ATD quantities. Deployment is either carried out online in the interactive planning book or in the background in SAP APO.

For each source location, a separate background deployment planning run is required (see the figure 12.1).

Deployment is based on short term data and is a step towards execution.

The deployment horizon defines the maximum horizon for which orders are ready.

Setting for Deployment HeuristicSetting for Deployment Heuristic

Deployment HorizonDeployment Horizon The deployment pull horizon defines the horizon for the

relevant requirement (ATD-issues). The deployment push horizon defines the horizon for relevant

ATD-receipt, e.g. production order (see Figure 12.2).

The deployment focus is the short term, therefore a distribution requirement that is close to today might ‘steal’ the ATD-quantities from a distribution requirement further in the future.

The SNP checking horizon is applied to reduce/eliminate the deployment need. It takes all issues (e.g. deployment confirmed distribution requirements) into consideration before using ATD-receipts for the deployment confirmation of new requirement (see Figure 12.3).

Deployment HorizonsDeployment Horizons

Deployment StrategyDeployment Strategy Pull deployment:

Distribution order is confirmed according to requirement data of planned distribution orders at the source location.

Pull/Push deployment: Confirmed distribution orders are scheduled as early as possible.

Push by demand: Deployment pull horizon is overruled by the planning horizon.

Push by quota arrangement: All ATD-receipts within the deployment push horizon are shipped

to the target location according to outbound quota of the source location regardless of requirement in target locations.

Push taking safety stock horizon into account: Basically like ‘pull/push’, but the ATD quantities used to cover the

safety stock are not deployed immediately and with a delay.

Fair ShareFair Share In most cases of a supply network, a source location may

supply to more than one target location. During deployment planning, the requirements may be processed in the order of their requirement date, so that shortages affect the requirements with a later date.

For requirements with the sales due bucket, the fair share rule defines which requirements are fulfilled and to which extent. Rule A: Percentage distribution by demand Rule B: Same absolute quantity of shortage for target

locations Rule C: Percentage division by quote arrangement of

source location Rule D: Division by priority of target locations.

Fair Share Rules A and BFair Share Rules A and B

Deployment OptimisationDeployment Optimisation The structure of deployment optimiser is similar to the SNP

optimisation. Both use the same objects for the optimiser profile, the cost profile, and cost setting.

The optimiser is able to delete confirmed stock transfers within the planning horizon.

Fare share strategies of deployment optimiser are: Rule A: percentage distribution by demand Rule B: percentage fulfillment of target.

Fair Share RulesFair Share Rules

Transport Load Builder (TLB)Transport Load Builder (TLB) The transport load builder is a short term planning tool to

combine confirmed distribution orders to form truckloads or other transport units according to the capacity restrictions.

The use of TLB is an optional step in distribution and replenishment planning.

TLB planning follows the deployment run and uses confirmed distribution orders as input.

Transport Load Builder (TLB)Transport Load Builder (TLB) The TLB procedure is to load all selected deployment orders

according to the restrictions in TLB-profile Two loading approaches (shown in Figure 12.14)

Straight loading The procedure for straight loading is in Figure 12.15. The orders are stored according to the loading group. The settings to control the procedure for transport load

building are maintained in the transportation lane and in the product master (see Figure 12.16).

Load balancing: Distribute the products to be loaded evenly onto

different truck loads

Straight Loading vs Load BalancingStraight Loading vs Load Balancing

Procedure for Straight LoadingProcedure for Straight Loading

Horizon for TLBHorizon for TLB The most important horizons for TLB are:

The TLB planning horizon TLB planning horizon defines which distribution orders

are taken into account for TLB run.

The TLB pull-in horizon It defines which orders might be scheduled forward

and is maintained in the transportation lane itself.

It starts from the earliest order, and combine it with other distribution orders within the TLB pull horizon (until the capacity is full) (see Figure 12.17).

TLB HorizonTLB Horizon

Capacity Restrictions for TLBCapacity Restrictions for TLB The relevant capacity restriction in the TLB profile includes

the following constraints: Maximum volume, Maximum weight, and Maximum number of pallets.

A lower limit exists as well to inhibit uneconomical transport orders.


SAP Implementation SAP Implementation


Fall, 2013Fall, 2013

TP/VS Module in SAP SCM TP/VS Module in SAP SCM

Note: Strategic network design issues are not handled by SAP SCM


TP/VS planning is performed on the basis of deliveries, but it allows to plan for sales orders as well.

If TP/VS plans for sales orders, planning is performed either on the basis of sales orders, sales order items or schedule line.

Which of these is used depends on the consolidation level (a setting on the client level) and is maintained with the customising path: APO-> TP/VS-> Basic setting -> Basic setting for

vehicle scheduling

TP/VS Planning BoardTP/VS Planning Board The central tool for TP/VS planning is the TP/VS planning

board, which is called with the transaction SAPAPO/VS01.

When the planning board is called, the user needs to enter an optimization profile, which contains restrictions on the resources, locations, compatibilities and/or order types (ATP categories).

The user can perform interactive planning of shipments on the planning board. There is a consistency check while saving the shipments (e.g. all relevant stages are assigned).

The user may create and use heuristics in ‘multi-level planning’ – view of the planning board.

TP/VS Planning BoardTP/VS Planning Board

Deployment Relevant Setting in Deployment Relevant Setting in Product MasterProduct Master

Create Work Area for SCMCreate Work Area for SCM

Create Locations (Plant, DCs, Create Locations (Plant, DCs, Customers, Vendors)Customers, Vendors)

Maintain Means of Transportation in Maintain Means of Transportation in SCMSCM

Change Inbound Quota Change Inbound Quota ArrangementArrangement

Exercises:Exercises:

PPM and PDS1. Setting for PDS in SCM system and create integration model

for PDS transfer2. Create integration model for PDS SNP transfer

Transfer of transactional data from ERP to SCM1. Create integration model for planning independent

requirement (PIR) 2. Transfer integration model for planning independent

requirement (PIR) to SCM

Maintain supply chain model in supply chain engineer1. Maintain supply chain model in SCM system2. Transportation mode and means

Documents

Transportation Planning EGN 5623 Enterprise Systems Optimization Fall, 2013