1. Transportation Planning EGN 5623 Enterprise Systems Optimization (Professional MSEM) Fall, 2012

2. Transportation Planning Theories & Concepts EGN 5623 Enterprise Systems Optimization (Professional MSEM) Fall, 2012

3. Transportation Planning (Overview) Transportation planning: 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 shipments and the length of the shipments.

4. Sales Process Major Businesses Processes January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.4 Sales Order Entry Check Availability Production Process Run MPS w/MRP Convert Production Proposal Schedule and Release Procurement Process Pack Materials Goods Issue Purchase Requisition Purchase Order Goods Receipt Invoice Receipt Payment to Vendor Completion Confirmation F/G Goods Receipt Order Settleme nt Post Goods Issue Invoice Customer Receipt of Payment Sales Quotation Entry Delivery Note/ pick materials

5. TP/VS in SCM (review) 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)

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)

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

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

11. Transportation Planning Overview  Inputs to transportation planning:  due date of customers’ orders,  customers’ calendar of 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

14. Transportation Planning Process in APO 1.Create shipments in TP/VS 2.Assign transportation resource to each shipment 3.Assign carrier(s) to each shipment 4.Release shipments

15. Transportation Planning Overview  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.

16. Transportation 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.

17. Master 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.

18. Master Data for TP/VS

19.  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.

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

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

22. Detailed Planning in Transportation Lane

23. Vehicle Modelling  The three entities for vehicle modelling are:  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 to either the type of transport vehicle (e.g. one for 20 T truck, one for 40 T truck) or the transport service provider.  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.

24. Entities for Vehicle Modelling

25. Geo-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.

26. Geo-coding Combinations for Scheduling

27. TP/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.

28. Table 8.1 Costs within the Cost Profile

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.  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.

30. Scheduling with Runtime Lanes

31. Carrier 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.

32. Keep the same carrier for continuous move Carrier Selection principle

33. Deployment 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.

34. Deployment 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.

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 based on short term data and is a step towards execution.  The deployment horizon defines the maximum horizon for which orders are ready.

36. Setting for Deployment Heuristic

37. Deployment 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).

38. Deployment Horizons

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.

40. Fair 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 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.

41. Fair Share Rules A and B

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 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.

43. Fair Share Rules

44. 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.

45. 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

46. Straight Loading vs Load Balancing

47. Procedure for Straight Loading

48. Horizon 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).

49. TLB Horizon

50. Capacity 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.

51. Transportation Planning SAP Implementation EGN 5623 Enterprise Systems Optimization (Professional MSEM) Fall, 2012 Transportation Planning SAP Implementation EGN 5623 Enterprise Systems Optimization (Professional MSEM) Fall, 2012

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

53. Transportation Planning Overview  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

54. TP/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.

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

61. Change Inbound Quota Arrangement

62. Exercises: 1.Maintain supply chain data model in supply chain engineer 1)Maintain Plant 2)Maintain Distribution centers 3)Maintain Customers 4)Maintain vendors 5)Maintain location products 6)Maintain resources 7)Maintain PPM (“P” and “S” types) 2. Transportation mode and mean 3. Create transportation in SCM 4. Mass generation of transportation lanes 5. Display created transportation lanes 6. Assign materials to transportation lanes 7. Create quota arrangements in SCM 8. Model consistency check