Transportation PlanningTransportation Planning

EIN 5346 Enterprise Systems Optimization EIN 5346 Enterprise Systems Optimization

Fall, 2015Fall, 2015

Transportation PlanningTransportation Planning

Theories & ConceptsTheories & Concepts

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:•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)

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.

Transportation Planning OverviewTransportation Planning Overview

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.

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

Order Life Cycle for Transportation Order Life Cycle for Transportation PlanningPlanning

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

Means: speed, shifts

Mode: by sea, land, air

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

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

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

Master Data for TP/VSMaster Data 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.

Vehicle ModellingVehicle Modelling 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

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

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

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.

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 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 Deployment heuristic is a source-location-by-source-location

approach to distribute the ATD quantities.

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

Deployment horizon defines the maximum horizon for which orders are ready.

Deployment HorizonDeployment Horizon Deployment pull horizon defines the horizon for the relevant

requirement (ATD-issues).

Deployment push horizon defines the horizon for relevant ATD-receipt, e.g. production order (see Figure 12.2).

Deployment HorizonsDeployment Horizons

Deployment Strategy for HeuristicDeployment Strategy for HeuristicSNP only uses push rules to calculate deployment if the ATD quantity

covers the demand. The following rules are available:

Pull deployment: Deployment fulfills all of the demand within the pull deployment horizon.

Products are distributed according to the due date specified at the demand locations. The system does not distribute any supply to the demand source in advance of the demand date.

Pull/Push deployment: The system immediately distributes all supply to the demand

locations (ignoring the demand dates specified at the demand locations) to fulfill all demands within the pull deployment horizon..

Push by demand: System immediately distributes the entire supply for the entire

planning horizon to the demand locations to fulfill all demands. The pull deployment horizon is ignored.

Example of Deployment StrategyExample of Deployment StrategyThe following example illustrates the three push rules: Pull distribution, pull/push distribution, and push distribution by demands.

Example of Deployment StrategyExample of Deployment StrategyThe following example illustrates the three push rules: Pull distribution, pull/push distribution, and push distribution by demands.

Fair ShareFair ShareIf demand exceeds supply, the system can use fair share rules to

calculate deployment using the available-to-deploy (ATD) quantity. Various methods use fair share rules to assign a limited amount of available product to sources of demand. The following rules are available

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

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

Fair Share RulesFair Share Rules

Transport Load Builder (TLB)Transport Load Builder (TLB) Transport load builder is a planning tool for execution 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) 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.

Load balancing Distribute the products to be loaded evenly onto

different truck loads

Straight Loading vs Load BalancingStraight Loading vs Load Balancing

Capacity Restrictions for TLBCapacity Restrictions for TLB 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.

Transportation PlanningTransportation Planning

SAP Implementation SAP Implementation

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

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

Deployment Relevant Setting in Deployment Relevant Setting in Product MasterProduct Master

Create Work Area for SCMCreate Work Area for SCM

Maintain Means of Transportation in Maintain Means of Transportation in SCMSCM

Exercises: Exercises: (Due date 9/24/2015)(Due date 9/24/2015)

1. Create integration model for plants in SAP ERP system and verify them in SCM system

2. Create integration model for DCs in SAP ERP system and verify them in SCM system

3. Create integration model for vendors in SAP ERP system and verify them in SCM system

4. Create integration model for customers in SAP ERP system and verify them in SCM system

5. Create integration model materials at plants in SAP ERP system and verify them in SCM system

6. Create integration model materials at DCs in SAP ERP system and verify them in SCM system

7. Create integration model work centers in SAP ERP system and verify them in SCM system

8. Create integration model purchasing info records in SAP ERP system and verify them in SCM system