Transportation Lanes in SAP TM and SAP APO - PPT - V2.0 - Paresh Bhagwatkar

© Paresh Bhagwatkar, 2011May be used in whole or part with attribution and without permission

Paresh Bhagwatkar

Transportation Lanes in TM and APO

Version 2.0

Paresh Bhagwatkar

Content

Transportation lane overview Transportation lane design Carrier cost and priorities

Paresh Bhagwatkar

Lane Overview

Somerset, NJ

PA1PA2

Paresh Bhagwatkarc

Paresh Bhagwatkar

Structure of Transportation Lane

Shipping Point US01 > PA1

TL

LTL

Std. Bulk Truck

SNBO

QLTY

SVTN

Lane Header

Means of Transport (MOT)

Carrier

Paresh Bhagwatkar

© Paresh Bhagwatkar, 2011May be used in whole or part with attribution and without permission

Paresh Bhagwatkar

Transportation Lane Design

Paresh Bhagwatkar

Paresh Bhagwatkar

Key lane design considerations

Lane granularity Transportation zone design

• Regional zones

• Grouping of shipping points in zones

MOT granularity Carrier selection parameters

Paresh Bhagwatkar

Granularity of Lanes

Type Origin Destination Example

Point-to-Zone Shipping point Transportation Zone

SPFPT1 > US-PA1

Point-to-Zone Shipping Site (zone)

Transportation Zone

US-FRPT > US-USAPA1

Zone-Zone Transportation Zone

Transportation Zone

US-TX1 > US-PA1

Point-to-Point Shipping point Customer SPFPT1 > C12345

Point-to-Point Shipping Site (zone)

Customer US-FRPT > US-PA1

Point-to-Point Shipping point Plant SPFPT1 > PLT1

Point-to-Point Shipping Site (zone)

Plant US-FRPT > PLT1

Paresh Bhagwatkar

Paresh Bhagwatkar

Lanes from a Site and Shipping Point(s)

Plant 1

Plant 2

Plant 3

Site Freeport, TX

Plant 4

Customer or Zone

Point-Zone

Zone-Zone

Paresh Bhagwatkar

Paresh Bhagwatkar

Key Points

Zone Assignment• In TM zone is determined in TM (using postal code, zone, etc)

• In APO - Zone is assigned in the customer address from ERP

In addition to lane selection and lane granularity, compatibilities and incompatibilities also come into play

Paresh Bhagwatkar

Paresh Bhagwatkar

Sequence of Lane Search

Sequence Type Origin Destination

1 Point-to-Point Shipping point Customer

2 Point-to-Point Shipping Site (zone)

Customer

3 Point-to-Zone Shipping point Transportation Zone

4 Point-to-Zone Shipping Site (zone)

Transportation Zone

5 Zone-Zone Transportation Zone

Transportation Zone

Paresh Bhagwatkar

Paresh Bhagwatkar

Lane Overview

Somerset, NJ

Zone NJ

Zone PA1

Zone PA2

Cust 1Cust 2

Cust 3

Paresh Bhagwatkar

Paresh Bhagwatkar

Best Practices for Lane Definition

Point-Point Lanes• Usage

- High volume between certain plants/ points- Carriers give discount on a point to point basis based on volume or other reason

• Considerations- More data maintenance

Point-Zone Lanes• Usage

- Customers strewn across region- No specific customer has especially high volume- No appreciable discounts on point-point basis

• Considerations - Lower data maintenance

Zone-Zone Lanes• Usage

- Good to have as catch all in case lanes are missing- Customers with very sporadic orders may not warrant maintaining lane from Point to

Zone- Some companies may be able to rely totally on zone-zone lanes

Paresh Bhagwatkar

© Paresh Bhagwatkar, 2011May be used in whole or part with attribution and without permission

Paresh Bhagwatkar

Carrier Cost and Priorities

Paresh Bhagwatkar

Paresh Bhagwatkar

Carrier Cost and Priority

Carrier selection can be based on various combinations of cost and priority

Carrier selection strategy• Maintained on MOT level of lane

• Drives which combination of cost and priority is used

Carrier level of lane has• Cost

• Priority

Cost• Costs maintained on lane

• Costs retrieved from ERP system

• Costs calculated in TM

Priority

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Paresh Bhagwatkar

Carrier Selection Strategy (on MOT level)

System Behavior Usage

Neither Cost Nor Priority Carriers from lane ranked in the order of maintenance of lane

No real applicable scenario

Cost (only) Carriers from lane ranked in increasing order of cost

Used when lowest cost carrier is desired

Priority (only) Carriers from lane ranked in increasing order of priority (Priority 1 being high)

Used when service is most important and cost is not a consideration

Cost + Priority System gets cost for each carrier

Priority is mathematically added to cost

Resulting number is used for sorting in increasing order

Used as a tie-breaker when carriers tie at cost

Cost * Priority System gets cost for each carrier

Cost and priority are mathematically multiplied

Resulting number is used for sorting in increasing order

Used when service is much more important than cost.

Priority is used as a magnifier of differences in cost.

Carrier Selection Strategy and System Behavior

Paresh Bhagwatkar

Paresh Bhagwatkar

Carrier Priority on lane Cost Determined During TSP Selection

Schneider National 3 $1100

CH Robinson 4 $1000

Celadon Trucking 1 $1200

Swift 2 $1000

Rank Carrier

1 Schneider National

2 CH Robinson

3 Celadon Trucking

4 Swift

Lane Data

TSP Selection Result

TSP Selection Strategy - Neither Cost Nor Priority

Paresh Bhagwatkar

Carrier Priority on lane Cost Determined During TSP Selection

Schneider National 3 $1100

CH Robinson 4 $1000

Celadon Trucking 1 $1200

Swift 2 $1000

Rank Calculation Result (Cost)

Carrier Summary

1 $1000 CH Robinson

2 $1000 Swift Comes after CHR because of the order of maintenance in the lane

3 $1100 Schneider National

4 $1200 Celadon Trucking

Lane Data

TSP Selection Result

TSP Selection Strategy - Cost (only)

Paresh Bhagwatkar

Carrier Priority on lane Cost Determined During TSP Selection

Schneider National 3 $1100

CH Robinson 4 $1000

Celadon Trucking 1 $1200

Swift 2 $1000

Rank Calculation Result (Priority)

Carrier

1 1 Celadon Trucking

2 2 Swift

3 3 Schneider National

4 4 CH Robinson

Lane Data

TSP Selection Result

TSP Selection Strategy - Priority (only)

Paresh Bhagwatkar

Carrier Priority on lane

Cost Determined During TSP Selection

Cost + Priority

Schneider National 3 $1100 1103

CH Robinson 4 $1000 1004

Celadon Trucking 1 $1200 1201

Swift 2 $1000 1002

Rank Calculation Result (C+P)

Carrier Comment

1 1002 Swift Priority used as tiebreaker

2 1004 CH Robinson Priority used as tiebreaker

3 1103 Schneider National

4 1201 Celadon Trucking

Lane Data

TSP Selection Result

TSP Selection Strategy – Cost + Priority

Paresh Bhagwatkar

Carrier Priority on lane

Cost Determined During TSP Selection

Cost * Priority

Schneider National 3 $1100 3300

CH Robinson 4 $1000 4000

Celadon Trucking 1 $1200 1200

Swift 2 $1000 2000

Rank Calculation Result (C+P)

Carrier Comment

1 1200 Celadon

2 2000 Swift Swift comes second though they are lowest cost

3 3300 Schneider

4 4000 CH Robinson Though CHR is low cost they come last

Lane Data

TSP Selection Result

TSP Selection Strategy – Cost Times Priority

Paresh Bhagwatkar

Other “tweaks”

Cost + Priority – Spacing out priorities• Possible to space out priority so that effect of priority is more for closely

costed carriers

• Use when small cost differences should take less effect on TSP selection

Priority Only – Maintaining in steps• Priorities maintained in steps of 10, 20, 50 or 100

• Use when there is an anticipation that later another carrier may be placed between two existing carriers in the “gap”

Paresh Bhagwatkar

Carrier Priority on lane

Cost Determined During TSP Selection

Cost * Priority

Schneider National 300 $1100 1400

CH Robinson 400 $1000 1400

Celadon Trucking 100 $1200 1300

Swift 200 $1010 1210

Rank Calculation Result (C+P)

Carrier Comment

1 1210 Swift Swift costed marginally more than CHR. If priorities were maintained in steps of 1 CHR would have been chosen

2 1300 Celadon

3 1400 Schneider

4 1400 CH Robinson

Lane Data

TSP Selection Result

Tweak: Cost + Priority – Spacing Out Priorities

Exaggerated Example

Paresh Bhagwatkar

Contact

Paresh Bhagwatkar• [email protected]• 973-495-9913

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