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Challenges in transportation management

Transportation Management. How often have we talked about this crirical aspect of a supply chain. Well, not too often I guess. We are all obsessed with increasing production, boosting Sales and increasing customer satisfaction to drive economic growth. But we very often tend to overlook this part of the order fulfillment. May be we are not to blame entirely. The Transportation domain is very dynamic. Any planning or management requires a tool which is flexible yet accurate at the same time. Is it a tough ask? Yes it is. The number of factors which go into transportation planning can be enormous. Add to it some external factors and it makes a perfect recepie for trouble.   In SAP we have a transportation planning system (APO-TPVS) which is highly integrated with the Transportation execution in ERP. The challenges of transportation management right now are higher freight bills, tight capacity, fuel surcharges and relentless customer service pressure. Is this SAP solution useful when we give it very tough constraints and high standards to match. Let us check it for ourselves.  1). Higher freight bills: Yes the freight bills are ever increasing. Both for the customer and for the company (who uses 3PLs for delivery). Is there any way out? Not really. The only method a person can take is to be loyal to a tried and tested Transportation service provider. Here making long term contracts go a long way to cut your bills short. Secondly one should avoid making last minute changes to the schedules.   This is only possible if there is proper planning and homework done. And the earlier this Transportation planning is started, the better it is. Now the question is how early can we start. The obvious answer is at the time of Sales Order itself. Hence we need a solution which can provide us with accurate delivery time estimates at the time of creation or change of the order itself.   The TPVS solution comes with an option where you can integrate it with your R/3 system providing accurate delivery promise results at the time of creation/change of the customer orders. Available to promise also needs accurate time inputs to do scheduling.   TPVS provides this data to GATP so that the combined functionality of order delivery date is sent back to ERP at runtime.   2). Tight Capacity: This means that you cannot afford to waste any available space on the transportation vehicle. Also you would want to increase the efficiency of your logistics by utilizing the available resources fully. A vehicle is much better off serving a second shipment at the completion of the first delivery than returning to the base location empty.   TPVS is intelligent enough to prompt you whether this is a possibility at a minimal cost. This functionality called the continuous move enables you to increase resource utilization and hence increase your efficiency bringing down the capacity constraints.   It automatically combines the deliveries which can be delivered together or in a sequence. This helps us counter the tight Capacity problems.  3). Fuel Surcharges: Can’t do much about that one. I think increasing the resource utilization (as discussed in 2) is the only alternative.  4). Relentless customer service pressure: Here comes the tricky one. You should be clear about the following before creating shipments:      – What to deliver?      – Where to deliver?      – When to deliver?      – How much to deliver?      – What is the priority for delivery?      – Where are the goods now? Answering these questions before the customer asks you is the key to customer satisfaction. You should know which delivery you can afford to delay by a day and which customer needs to be delivered on time.   TPVS takes care of all these issues by effectively combining delivery constraints to your freight units. It models the delivery pickup windows with embedded conditions which enable you to prioritize your deliveries while combining and planning them. All this is done on top of accurate delivery promises (as discussed in 1). And finally integrating Event Management to this increases the customer visibility of the whole process. The customer with his unique delivery number can trackt he status of his shipment. Knowing what is going on leads to understanding and understanding leads to satisfaction.  I believe that TP/VS though lesser known of its APO brothers like DP, SNP, GATP etc it has a potential to play a key role in driving a company’s economic growth. After all we realize our potential when we actually start saving from our daily activities.

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      Author's profile photo Former Member
      Former Member
      Great post Ankur. When I was reading it I also remembered one other factor that it's quite relevant (at least in Europe): the availability of trucks for some regions. Many companies seem to have the same issue: there are regions for which it is hard to find more than X trucks a day (or week, etc), because TSPs don't want to take jobs for places where they cannot get a return transport. And when planning the supply chain without taking this constraint into account, companies end up either having stock on warehouse waiting for trucks or paying much more to have a TSP do a empty return trip.

      Again, it one other case with potential gains of having the sales order entry (GATP) integrated with the tranportation planning.

      Author's profile photo Former Member
      Former Member
      Hello Pedro,

      Thanks for your encouragement and your inputs. I had expected you to be the first person to post some comment . 🙂

      The problem you mentioned is new to me, because I have not done any project relating to Europe. I am still waiting and looking forward to that.


      Author's profile photo Former Member
      Former Member
      Hi Ankur and Pedro,

      I am not a expert in TPVS but I am a Supply Chain Consultant so excuse me if the points are already taken care in TPVS.

      One more basic crietria to take into account is the Type of the Material to Transport For example Perishable Goods have to be send to the destination before certain days if not the quality of Goods will be degraded like Grade "A" apples might become Grade "B" apples.

      Also If the material is Harardous or is there any restriction with Tranporting with other Materials. Like Flammable items all these will be constraints for Transportation Planning. We can group all the Similar Material for Transportation Planning.

      As Pedro mention mentioned Reverse logistics also need to planned like bringing back the empty containers etc.

      Author's profile photo Former Member
      Former Member
      Very good article and as we speak SAP continues to develop the product.

      Both of the comments listed above are now addressed in standard TPVS. 

      As an example you can create transportation lanes and require that the resource used on the shipment return to the origin or can continue from the last destination in a continous move. 

      With capacity constraints TPVS takes this into account in carrier selection on the lane.  You can create multiple lanes at different levels to control this.  As an example if you need to have a total capacity constraint for a TSP you can create a capacity of 10 trucks per day, but on a given lane you can restrict further to only allow for 3 trucks to go to one zone. 

      SAP TPVS is increasing its ability to negotiate this transportation needs and with 5.0 the configurability through condition, compatability, and control rules continue to improve the software as a whole. 

      If anyone has any questions please feel free to contact me.