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SAP S/4HANA Transportation Management - Load Consolidation for Ocean Containers

Services 01/06/2020

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Introduction:

Transportation of goods usually happens in transportation resources such as containers, trailers, railcars, etc. In SAP TM, we can use transportation units to model these transportation resources. TUs (Transportation Units) share some similarities and differences with FUs (Freight Units) and FOs (Freight Orders). While a FU only represents a pure demand, freight orders and freight bookings (FBs) represent pure capacities. However, TUs can represent both demand and capacity at the same time. TUs bring flexibility but has additional complexity and documents in the design. Thus, in general, the design direction is not to use TUs, if the business process can be designed with FUs and FOs. However, there are scenarios where TUs are required. For example:

  • Trailers get loaded or unloaded while not being coupled to the truck.
  • The truck is operating in different vehicle combinations across the stages in the freight order
  • Road train (One truck/tractor with multiple trailers attached) with a dynamic recoupling
  • Multiple containers loaded onto one truck
  • Advanced tracking of TUs separately via GTT/EM

Ocean Planning:

Usually, in ocean scenarios, it takes several days after the pick-up to deliver to the end consignee, compared to truck scenarios. In FCL (Full Container Load) scenarios, container space in ocean vessels can be booked in advance. To reduce the cost, filling that space with demand fully, is the primary target for many ocean planners. Moreover, tracking these container units is very critical. Container building is common in ocean scenarios modeled in SAP Transportation Management (TM).

As ocean planners build containers, they gain experience and will have a rough estimate of the quantity of the product that can fit inside a container. But when a shipper transports the products, with a product line of several hundred SKUs (Stock keeping unit) in a variety of dimensions, it is hard to estimate the quantity of the product that will fill the transportation resource. So, relying on the planner’s skill and experience is not a scalable solution and is not the ideal way to solve the issue. This should be technology-driven and planners should be able to design/configure/maintain the system based on their experience.

Business Scenario:

Since different types of containers are available, there are many possible ways to fill them with the demands (FUs). For example, there are 5 transportation demands to transport 2 types of products from the US to Germany on the same delivery date.

Demand/FU Products Weight
(LB)
Original
Location
Destination
Location
Delivery
Date
SO1/FU1 Dry Product 50000 Akutan, US Bremerhaven, DE 10/31/2019
SO2/FU2 Dry Product 10000 Akutan, US Bremerhaven, DE 10/31/2019
SO3/FU3 Dry Product 10000 Akutan, US Bremerhaven, DE 10/31/2019
SO4/FU4 Frozen Product 40000 Akutan, US Bremerhaven, DE 10/31/2019
SO5/FU5 Frozen Product 13000 Akutan, US

Bremerhaven, DE

10/31/2019

Now, if we have 4 different types of containers as below, there will be many ways we can assign the transportation demands into these transportation units.

Container Resources

Payload Weight (LB)

Tare Weight (LB)

Max Gross Weight (LB)

Cubic Capacity (FT3)

20 FT Standard Dry

53460

6062

59522

986

20 FT Refrigerator

53460

6062

59522

986

40 FT Standard Dry

63491

8156

71647

2393

40 FT Refrigerator

63491

8156

71647

2393

Additionally, there can be constraints such as dry products can only be shipped in standard dry containers and frozen products can only be shipped in refrigerated containers. For example, we can use

  • one 40 FT Standard Dry container and one 20 FT Refrigerator container
  • two 20 FT Standard Dry containers and one 20 FT Refrigerator container
  • one 40 FT Standard Dry container and one 40 FT Refrigerator container
  • two 20 FT Standard Dry containers and one 40 FT Refrigerator container

SAP Solution:

SAP TM 9.4 has introduced Load Consolidation functionality, which can be used to determine the most cost-efficient combination of container types. The details are available in the SCN link: https://blogs.sap.com/2016/11/14/monday-knowledge-snippet-mks-65-tm-9.4-load-consolidation

Click to Enlarge

The load consolidation considers the transportation demands, cost of different container types, and the incompatibilities between specific products and container types, to find the best combination of container types for the transportation of demands. The functionality is enhanced and is available in S/4HANA embedded TM too. The above business scenario can be modeled in SAP S/4HANA TM as below.

In addition to standard configurations such as master data, transportation network, etc... we need to configure three settings in the system to find the best and cost-effective combination of container types.

  1. Planning Cost Settings for different container types. For example

    Container Resources

    Fixed cost per document

    Fixed cost per resource

    20 FT Standard Dry

    50

    200

    20 FT Refrigerator

    60

    250

    40 FT Standard Dry

    70

    300

    40 FT Refrigerator

    80

    350


  2. Incompatibilities between products and container types to meet the additional requirements. Dry products can only be consolidated to standard dry containers and frozen products can only be consolidated to a refrigerator container.

  3. Add ‘Load Consolidation’ to page layout for transportation cockpit.

Based on the system configuration, we expect the below option 1 to be picked-up out of the different ways of consolidation.

Sales OrderProductsWeight (LB)Total WeightConsolidation 1 (cheap) (680)Consolidation 2 (expensive) (930)
(LB)
SO1/FU1Dry Product5000063000One 40 FT Standard Dry Container = 70 + 300Two 20 FT Standard Dry Containers = (50 + 200) * 2
SO2/FU2Dry Product10000
SO3/FU3Dry Product3000
SO4/FU4Frozen Product4000053000One 20 FT Refrigerator Container = 60 + 250One 40 FT Refrigerator Container = 80 + 350
SO5/FU5Frozen Product13000


Screenshots of the consolidation demo from SAP S/4 HANA system:

  • PROD_01 is a dry product and PROD_02 is a frozen product.
  • 5 SOs/FUs the with above quantity
  • Four container resources are available with the above-mentioned capacity.

Transportation cockpit with consolidation button, before load consolidation/optimization:

Click to Enlarge

After ‘Consolidation’ of ‘All FUs with All Resources’, now, we can see the planning status of FUs changed and two Transportation Units are generated:

Click to Enlarge

We can see that three Freight Units with dry products are consolidated in one 40 FT standard dry container and two Freight Units with frozen products are consolidated in one 20 FT refrigerator container. This is the best combination of container types based on cost and incompatibility. Also, the container space utilization is 99%.

Click to Enlarge

Subsequently, these container units can be assigned to Freight Bookings and other SAP TM processes can be completed.

Conclusion:

With load consolidation functionality in SAP Transportation Management (TM), now we can build containers efficiently. Container utilization can be improved, and the cost of transportation can be reduced. Using the SAP TM to identify the best option is a scalable solution and it greatly improves the planning efficiency, when there is a product line of several hundred SKUs in a variety of dimensions. Similarly, Load consolidation can be used for other modes of transport and various other scenarios. Implementation partners with multiple TM implementations can greatly help the companies to identify these business requirements and design the solution effectively. Novigo, with more than 50 successful SAP TM on-premise implementations, is the leader and the most experienced consulting firm in the TM area. Our consultants are well equipped to advise clients about the various aspects of TM Load Consolidation and are already working with multiple companies across the world in various aspects. We expect many companies will consider load consolidation functionality and we will be part of most of these projects.

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