LOADS AND EQUIPMENT - CONTINUOUS MOVES WITH SAP TM

By Pankaj-05/21/2014
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Continuous move has been discussed as a tricky scenario in the past, but continuously requested business requirement in order to increase carrier utilization and reduce empty moves. Still amazing that alone in Europe 40% of every truck movement is with an empty truck. Apart from the various complexities that are related to the business side (taking into account the discounts, recalculation, empty leg charges, etc.), there is a lot more to be discussed based on how the shipper wants to model the continuous move in the logistics business. On the one side it might be considered to be a planning and consolidation issue, on the other side, often driven by cut off times, it is the challenge to plan good loads and then, re-utilize equipment on a continuous basis, even in outsourced scenarios. In a simple continuous move, the same carrier commits to two different loads in continuation to each other. For example, the carrier takes load one from plant to customer A. He then comes back to the plant and takes load 2 to the customer B.

Simple Continuous Move Scenario
Simple Continuous Move scenario

In addition to the continuation of the equipment movements, we have to deal at the same time with constrained equipment and fleet situations in carrier selection. Allocations and business shares between alternative carriers are key elements to manage that challenge. If we talk about allocations, they refer to the number of loads a carrier commits to, typically at a specific day, by location or region. If a carrier has 10 allocations for the day, it implies that the carrier has committed to take 10 loads on the day. So far, this is standard functionality in SAP TM (TM 9.2, TM 9.1 etc.) Allocations btw. are the closest you would deal with in SAP TM Strategic Freight Procurement (total contract volume, compared to individual freight orders in SAP Transportation Management, on the operations side).

For one of our clients specifically, the requirement was to utilize the concept of carrier allocation into continuous move scenarios. In standard SAP TM, the link between the transportation allocations and continuous move is managed by the carrier selection and optimization capabilities, which could be even combined with costs and priorities. But in fact, assuming the number of loads is the basis for the allocations in SAP Transportation Management – obviously, there is logical difference between what is seen as a load vs. how many trucks/equipment will be provided by a carrier that day. That means, the more subsequent loads will be assigned to a previously utilized carrier truck, the clearer it is, that there is an inherit miss match of the two concepts. For example, if the carrier allocates 10 trucks for a day, and there are 10 freight orders going continuous move with this carrier, the end result of the carrier selection would result in consumption of 10 allocations for the carrier. The business demanded that the carrier selection should result in consumption of 1 allocation in the above case since they are using 1 truck to cater all the 10 loads. For the business, the term allocation meant an actual truck. So the basis of allocations moved from truck loads to actual trucks. Taking into account the various cases that could be encountered during the optimizer run, the allocation bucket definition, this was a tricky but critical development.

Overview of Requirement
Overview of requirement

We introduced in the customer project within the 3 step carrier selection process the required enhancement and achieved very positive results. Leveraging the standard pre-processing logic of SAP Transportation Management (SAP TM 9.0, SCM CS Optimizer) we re-used the potential continuous pairs as they are defined based on the parameters in customizing (e.g. max distance between drop-off location of load A and the first pick-up location of load B) we run the evaluation logic, in the carrier selection optimizer. The logic forces the optimizer to consume one carrier allocation for all the freight orders going continuous move if possible. We enhance the results in post processing to give the optimum results in terms of costs and allocations.

This has been a business requirement stated even by customers who implemented SAP TP/VS (SAP APO) and certainly in previous SAP TM implementations. The results are very promising.

Pankaj

Credits: Gabor Nemes, Bernd Mosbrucker, Novigo.

References: SAP Strategic Freight Procurement (TM 9.2 SFP), SAP Transportation Management (SAP TM 9.0)

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