1. Transportation Planning EGN 5623 Enterprise Systems Optimization Fall, 2012

2. Transportation Planning Theories & Concepts EGN 5623 Enterprise Systems Optimization Fall, 2012

3. Transportation Planning (Overview)
This planning is carried out after delivery note is created in the sales (fulfillment) process.
It is either executed automatically several times per day to deliver in batches, or manually by the transportation planner.
Objective of Transportation planning:
To group delivery into shipment in order to minimize the number of shipment and the length of the shipments.
Second step? To show the order fulfillment process? Several times per day? In APO?

4. Major Businesses Processes
ECC 6.0
January 2008
Major Businesses Processes
Purchase
Order
Procurement
Process
Purchase
Requisition
Schedule
and Release
Goods
Receipt
Convert Production
Proposal
Production
Process
Goods
Issue
Run MPS w/MRP
Sales Order
Entry
Sales
Process
Invoice
Receipt
Check
Availability
Completion
Confirmation
Sales Quotation
Entry
Delivery Note/
pick materials
Payment
to Vendor
F/G Goods
Receipt
Pack
Materials
Order Settlement
Receipt of
Payment
Post Goods
Issue
January 2008
© SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.
Invoice
Customer
© SAP AG and The Rushmore Group, LLC 2008

5. TP/VS in SCM (review) BW: business data warehouse
OLTP: online transaction processing
THEORY AND PRACTICE OF ADVANCED PLANNER AND OPTIMIZER IN SUPPLY CHAIN DOMAIN by Sam Bansal

6. Time Horizons for TP/VS and Replenishment in SCM (review)
VMI: vendor managed inventory

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

8. TP/VS and Replenishment Processes in APO Modules (review)
TP/VS: transportation planning and vehicle routing
SNP: supply network planning
VMI: vendor managed inventory
PP/DS: production planning and detailed scheduling

9. TP/VS Module in APO System Structure and Integration with ERP (review)
LIS: logistics information system: transportation data
CIF: core (information) interface: master data
ATP: Available to promise

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

11. Transportation Planning Overview
Inputs to transportation planning:
due date of customers’ orders,
calendars of customers for loading and unloading,
capacity restriction of vehicles,
vehicle availability, and
incompatibility (e.g. of the goods and locations).
TP/VS offers an optimization tool for transportation plan.
The transportation planning creates “shipments” in APO.

12. Transportation Planning Overview
After creation of a shipment, the subsequent process steps are to select a carrier and to release the shipment.
The shipment is transferred to ERP after it is released in APO.

13. Order Life Cycle for Transportation Planning
OLTP: On-line Transaction Processing

14. Transportation Planning Process in APO
Create shipments in TP/VS
Assign transportation resource to each shipment
Assign carrier(s) to each shipment
Release shipments

15. Transportation Planning Overview
The common process flow is to create deliveries in ERP first before running TP/VS.
It is important that TP/VS is designed for the transportation planning of a production or trading company and not 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.

16. Transportation Planning Overview
Planning in TP/VS is possible 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.

17. Master Data for TP/VS
The main master data for TP/VS relates the geographical condition:
locations – manufacturing plant, distribution centers, customers, transportation zone, transport service provider.
transportation lanes,
means of transport, and
vehicle resources.

18. Master Data for TP/VS Mode: by sea, land, air. Means: speed, shifts
Vehicle resource: vehicle type, tonnage, capacity
Transport service provider: vendors (including own fleets or third party’s)

19. Master Data for TP/VS
Transportation Zone and Transport Service Providers:
The transportation zones and transport service providers (carriers) are locations of type 1005 and 1020, respectively. Both are transferred from ERP. The transportation zone implicitly with the customer and the transport service provider using vendor in ERP.
The transportation zone data are stored in Customer Master data in ERP and are transferred to APO.
TP/VS scheduling methods are predefined in the APO, as shown in next slide.
1005: location type (for transportation zone. E.g., by zip code).
1020: location type (for transport service providers. E.g. by zip code)

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

21. Master Data for TP/VS Transportation Lane:
Transportation lanes are required from plants, DCs to (customer’s) transportation zone and have to be created manually in APO. The allowed carriers have to be assigned per transportation means and transportation lane (route) explicitly.
The restriction of the validity of a transportation lane per products is ignored by TP/VS.

22. Detailed Planning in Transportation Lane

23. Vehicle Modelling There are three entities for vehicle modelling: Mode
Means of transport, 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 should correspond either the type of transport vehicle (e.g. one for 20 T truck, one for 40 T truck) or to the transport service provider.
Vehicle resource : type vehicle and category T (e.g. a resource with the capacity of 20 T is not allowed to load 22 T products.
Mode: by sea, truck, rail, air
Means of transport: speed (normal or express)

24. Entities for Vehicle Modelling
GIS - Geographic information systems
Wiggle factor: change range

25. Geo-Coding
The calculation of the transport duration depends on the accuracy of geo-coding of the locations and on the accuracy of the distance between locations.
The determination of the geographical settings of locations is performed either based on country and region (standard setting), postal code, or address.
The distance for the transportation lanes is performed either as the air-line distance (standard) or as the actual distance between addresses using a route planning based on the exact longitude and latitude of the locations as input.

26. Geo-coding Combinations for Scheduling
IGS: International GNSS Service
GNSS: Global Navigation Satellite System
This is to decide transportation lane (route, distance, travel time) for scheduling

27. TP/VS Optimisation
The optimiser is to create shipments with lowest penalty cost and meet all required constraints.
Hard constraints:
compatibilities,
opening hours (modelled by handling resource), and
finiteness
Soft constraints:
earliness and lateness defined in 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.

28. Table 8.1 Costs within the Cost Profile
Cost items include location, transp., dimension, transportation lane.

29. Scheduling 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.
If more detailed distance calculation with geo-coding is used, 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.
Run time lanes: the lanes for execution.

30. Scheduling with Runtime Lanes
Set schedule for each stops on the route.

31. Carrier Selection Criteria for selection of carriers:
service quality based priority, and
cost.
The carrier selection should be performed after the planning for shipments is done, but before the shipments are transferred to SAP ERP.
If one stage of a transport is already assigned to a carrier who has the flag for continuous move, the same carrier is selected for succeeding stage.

32. Carrier Selection principle: try to keep the same carrier for Continuous Move

33. Deployment Overview Scope of Deployment
To handle the cases when 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: execution of warehouse (DC) replenishment

34. Deployment Overview
The 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. Since safety stock is modelled in SAP APO as a demand, not a supply element.
ATD: available-to-deploy

35. Deployment 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 a step towards execution and is based on short term data.
The deployment horizon defines the maximum horizon for which orders are ready.
ATD: available-to-deploy
1:N relation

36. Setting for Deployment Heuristic

37. Deployment Horizons
The deployment pull horizon defines the horizon for the relevant requirement (ATD-issues), and 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. In order to reduce/eliminate the cases, the SNP checking horizon is applied. The concept of SNP checking horizon is to take 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).
ATD: available-to-deploy

38. Deployment Horizons Pull: good issues
Push: from the good receives side

39. Deployment 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.
ATD: available-to-deploy

40. Fair Share
In a supply network in most cases 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 later dates.
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.
ATD: available-to-deploy

41. Fair Share Rules A and B When insufficient supplies,
Rule A, by percentage. 225 = 300 x (300/400)
Rule B, by the same insufficient quantity =

42. Deployment 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 confirm stock transfers within the planning horizon.
Fare share strategies of deployment optimiser:
Rule A: percentage distribution by demand
Rule B: percentage fulfillment of target.
ATD: available-to-deploy

43. Fair Share Rules Rule A: by time bucket by percentage
Rule B: all by %, ignoring time bucket.

44. Transport Load Builder (TLB)
The transport load builder is a short term planning tool to combine confirmed distribution orders to truckloads or other transport units according to the capacity restrictions.
The use of TLB is an optional step in distribution and replenish planning.
TLB planning follows the deployment run and uses confirmed distribution orders as input.
ATD: available-to-deploy
Distribution order:?

45. Transport Load Builder (TLB)
The procedure for TLB is to load all selected deployment orders according to the restrictions in TLB-profile (such as straight loading and load balancing).
Straight load:
The orders are stored according to the loading group.
Load balancing:
Distribute the products to be loaded evenly onto different truck loads (see Figure 12.14).
Figure shows a procedure for straight loading. The settings to control the procedure for transport load building are maintained in the transportation lane and in product master (see Figure 12.16).
ATD: available-to-deploy

46. Straight Loading vs Load Balancing
Transport 1: truck 1.

47. Procedure for Straight Loading

48. Horizon for TLB
The most important horizons for TLB are the planning horizon and the pull-in horizon.
TLB planning horizon defines which distribution orders are taken into account for TLB run.
TLB pull-in horizon defines which orders might be scheduled forward and is maintained in the transportation lane itself.
Starting from the earliest order, combine it with other distribution orders within the TLB pull horizon (until the capacity is full) (see Figure 12.17).
ATD: available-to-deploy

49. TLB Horizon
Combining decision.

50. Capacity Restrictions for TLB
The relevant capacity restriction in TLB profile in the following constraints:
Maximum volume,
Maximum weight, and
Maximum number of pallets.
A lower limit exists as well to inhibit uneconomical transport orders.
ATD: available-to-deploy

51. Transportation Planning SAP Implementation EGN 5623 Enterprise Systems Optimization Fall, 2012

52. TP/VS Module in SAP SCM
Note: Strategic network design issues are not handled by SAP SCM

53. Transportation Planning Overview
Planning in TP/VS is usually performed on basis of deliveries, but it is possible to plan for sales orders as well.
If TP/VS plans for sales orders, planning is performed either on basis of sales orders, sales order items or schedule line. Which of these is used depends on the consolidation level which is a setting on client level and is maintained with the customising path:
APO-> TP/VS-> Basic setting -> Basic setting for vehicle scheduling

54. TP/VS Planning Board
The central tool for TP/VS planning is TP/VS planning board that is called with transaction SAPAPO/VS01.
When calling the planning board an optimization profile has to be entered. The optimization profile contains restrictions regarding the resources, locations, compatibilities or order types (ATP categories).
Within the planning board it is possible to perform an interactive planning of shipment. There is a consistency check when saving the shipments (e.g. all relevant stages are assigned).
It is possible to create and use heuristics in ‘multi-level planning’ – view of the planning board.

55. TP/VS Planning Board

56. Deployment Relevant Setting in Product Master

57. Create Work Area for SCM

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

59. Maintain Means of Transportation in SCM

60. Create Transportation lanes
Work area: SCM network work area

61. Change Inbound Quota Arrangement
Inbound quota: vendors quota defined in the vendor’s master.
Inbound: vendor
Outboard: factory

62. Exercises: Transportation mode and mean Create transportation in SCM
Create master data for raw materials in plant
Assign raw materials in plant to active model
Extend master data for raw materials to vendors
Assign raw materials in vendor to active mode
Maintain supply chain data model in supply chain engineer
Maintain Plant
Maintain Distribution centers
Maintain Customers
Maintain vendors
Maintain location products
Maintain resources
Transportation mode and mean
Create transportation in SCM

63. Exercises: 8. Mass generation of transportation lanes
9. Display created transportation lanes
10. Assign materials to transportation lanes
11. Create quota arrangements in SCM