1. Transportation Planning EGN 5346 Logistics Engineering (MSEM, Professional) Fall, 2013

2. Transportation Planning Theories & Concepts Transportation Planning Theories & Concepts

3. 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.

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 planning.  The transportation planning creates “shipments” in APO.

12. Transportation 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.

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.

20. 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.

21. Vehicle 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.

22. 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.

23. 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.

24. 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.

25. Scheduling with Runtime Lanes

26. 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.

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

28. 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.

29. 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.

30. Deployment Heuristic  The 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.  The deployment horizon defines the maximum horizon for which orders are ready.

31. 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).

32. Deployment Horizons

33. Deployment Strategy for Heuristic SNP 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.

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

35. Fair Share If 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.

36. Fair Share Rules A and B

37. 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.

38. Fair Share Rules

39. 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.

40. 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

41. Straight Loading vs Load Balancing

42. 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).

43. TLB Horizon

44. 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.

45. Transportation Planning SAP Implementation Transportation Planning SAP Implementation

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

47. Deployment Relevant Setting in Product Master

48. Create Work Area for SCM

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

50. Maintain Means of Transportation in SCM

51. Change Inbound Quota Arrangement

52. Exercises: (Due date: 11/30/2013) PPM and PDS 1.Setting for PDS in SCM system and create integration model for PDS transfer 2.Create integration model for PDS SNP transfer Transfer of transactional data from ERP to SCM 1.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 engineer 1.Maintain supply chain model in SCM system 2.Transportation mode and means