Penny Chen and Bimal Subhakumar, Chicago, US

01/06/2020

SAP S/4 HANA Transportation Management - Load consolidation for ocean containers

Introduction:

Transportation of goods usually happens in transportation resources such as container, trailer, railcar 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 brings 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 dynamic recoupling

·       Multiple containers loaded on to 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 that of truck scenarios. In FCL (Full Container Load) scenarios, container space in ocean vessel can be booked in advance. To reduce the cost, filling that space with demand fully, is the primary target for many of the ocean planners. Moreover, tracking of these container units is very critical. Container building is common in ocean scenarios modelled 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 software 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 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

3000

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 container and one 20 FT Refrigerator container

·       one 40 FT Standard Dry container and one 40 FT Refrigerator container

·       two 20 FT Standard Dry container 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/

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/4 HANA embedded TM’ too. Above business scenario can be modeled in SAP S/4 HANA 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 container and frozen products can only be consolidated to 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 Order

Products

Weight (LB)

Total Weight (LB)

Consolidation 1 (cheap) (680)

Consolidation 2 (expensive) (930)

SO1/FU1

Dry Product

50000

63000

One 40 FT Standard Dry Container

= 70 + 300

Two 20 FT Standard Dry Containers

= (50 + 200) * 

SO2/FU2

Dry Product

10000

SO3/FU3

Dry Product

3000

SO4/FU4

Frozen Product

40000

53000

One 20 FT Refrigerator Container = 60 + 250

One 40 FT Refrigerator Container = 80 + 350

SO5/FU5

Frozen Product

13000

 

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

 

·       PROD_01 is dry product and PROD_02 is frozen product.

·       5 SOs/FUs the with above quantity

·       Four container resources are available with above mentioned capacity.

 

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

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

 

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

 

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 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 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.