Creating Optimized Transportation Plans with SAP TM

Authored by Syed Shabbir Ahmad

The transportation industry is one of those landscapes that is ever changing, and the parameters of efficiency change with each business. Yet, there is a common goal that possibly brings all the businesses together in some sense- reducing the cost of transportation, cutting down the carbon footprint, and increasing the overall efficiency of transportation. In this blog, we will explore the Planning capabilities of SAP TM.

SAP Transportation Management (SAP TM) as a management tool for the transportation industry provides various modules like:

• Transportation Planning
• Order Management
• Contract Management
• Charge Settlement Management
• Strategic Freight Management
• Analytics and Reporting
• Transportation Execution

Planning: Challenge and its Solution

Transportation of any kind has a lot of moving pieces and avenues of optimization- be it the transportation of different kind of materials (like perishables, non-perishables, or over-dimensional cargoes), be it a shippers’ scenario or a logistics service providers’ scenario, or multi-modal transportation through various modes like ocean or airways.

Some of the major areas common across most of the said scenarios which can be considered the principal areas of optimization are:

• Route Optimization
• Optimization of vehicle/ resource utilization
• Schedule Optimization
• Load Optimization
• Carrier Selection/ Ranking

The result of the optimization of the above and other parameters based on the business, results in the overall optimization of the transportation scenario; reduced cost and carbon footprint, reduced turn around time, reduced damages, and an overall improvement of efficiency.

Unlike the Travelling Salesman Problem (TSP), as mentioned above, there are a lot of variables like multiple available vehicles of different capacities, different routes, acceptable time windows, and so on. So, the SAP TM Optimizer uses various modules and tasks to get the best possible solution of transportation plan based on the need.

• TVSR- Vehicle Scheduling and Routing: For Creating executable plans which results from the most optimum combination of the chosen vehicle, time windows, and routing.
• TVRG- Transportation Proposal: For creating alternative proposals to the suggested plan.
• TSPS: Carrier/ Service Provider Selection
• TSFM: Strategic Freight Management
• TVSO: Load Optimization

SAP TM’s Optimizer Engine takes into account various parameters like:

• Available resources ready to be planned
• Required minimum utilization of vehicle
• Maximum number of allowed stops and transshipment locations
• Adherence to the requested dates of departure and delivery
• Load planning constraints (like Last in First Out, stacking of the heaviest below, stacking height reduction as we move away from the drivers' cabin, etc.)
• Various incompatibilities (like incompatibilities between products, or between products and vehicle types etc.)
• Choice of route depending on the least distance or least cost (as the preference of the business might be)
• Carrier selection based on business share or carrier ranking

The cost model of the Optimizer gives us the freedom to model the optimizer to introduce the parameters not part of the standard solution. For example, in one of our previous SAP TM implementations for a large paint manufacturing industry, we modelled the optimizer to create a truck load by taking into the account the following parameters:

• Damage Reduction: Ensuring each product type had a maximum limit which needs to be adhered to thereby reducing damage to goods incurred during transportation.
• On Ground Operations Improvement: Creating a truck load which had an optimum balance of full pallets and partial pallets being loaded to ensure the warehousing and load activity efficiency.
• Minimum Utilization: Adhering to the minimum utilization of trucks while building the truck load as set by the business.
• Maximum threshold of unique Products: Creating a truck load which ensures that the count of unique products does not breach the maximum limit set by the business.
• Prioritization of Products according to Demand: Ensuring that the truck load built picks up the critical Products (based on the criticality set by the business for the day and the delivery date/ Order Age windows).

Similarly, across the various industries like apparel, logistics service provider, pump manufacturing, fresh produce, etc., we were able to use the SAP TM to help optimize the planning and creating of executable transportation plans. Each business has its own transportation parameters and needs, and SAP TM helps us model a system to consider various constraints and create a transportation plan.

This was about the capabilities of SAP TM when used for planning briefly. In future blogs, we will talk about the different modules taken one at a time. See you then!