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Beginner Steps in Advanced SAP TM – Milk Run Scenario

Introduction

Once I saw the TM Optimizer and cockpit possibilities on the SAP presentation material, I became an SAP TM enthusiast.  Since then, I have always wanted to put my hands on such advanced features of SAP TM, like vehicle scheduling and routing optimization, visual planning in the Transportation cockpit, Detailed package building, Load planning, etc. Besides, I know that access to advanced features of SAP TM is rare. Therefore, in this blog series, Beginner Steps in Advanced SAP TM, I would like to share my findings of underwater rocks that you may face in TM Optimizer. In my first blog, I would like to focus on one particular scenario that can leverage VSR Optimizer – Milk Run Scenario.

Business scenario

A Milk Run is a shipment method when goods are picked up from several shippers (e.g., suppliers) and delivered to one consignee (e.g., production site) within one vehicle trip.

We placed purchase orders for several suppliers with overlapping delivery windows. The freight can fit one truck, and the suppliers’ proximity allows to cluster the deliveries into one vehicle trip. Such an approach will allow benefiting on fleet capacity and cost optimization and can also reduce environmental impact.

Note: This article focuses on automatic planning of the Milk Run scenario in SAP Transportation Management, with the help of TM Optimizer only. The Freight costing and cost distribution are not included in the scope of this article.

 

Prerequisite

  • The integration between ERP and embedded TM (Advanced license) has been set up.
  • The FUs type is correctly identified in the customizing and assigned to the Freight Unit Building Rule (FUBR).
  • The rule for Pick-Up/Delivery Window is correctly maintained in the FU type.
  • Planning profile and Cockpit Layout are correctly maintained. Specifically, the Optimizer Settings must allow the planning of multi-stage orders.

  • Cost Settings are maintained accordingly to avoid skipped deliveries.

  • TM Optimizer is up and running.
  • Schedule lines are properly maintained, including transportation costs.

Here I would like to point on one fact, which was not evident for me. Let’s assume that we need to transport three FUs with different source locations (vendors A, B, and C) and the same destination location (a Production Site D). We expect that the proposed optimized route should look like A –> B –> C –> D.  You should keep in mind that it is insufficient to maintain only Transportation Lanes A–>B, B–>C, C–>D for the TM optimizer to build the route AàBàCàD. For each combination of the Source and Destination locations in the FUs, you must define the Transportation lanes (A–>D, B–>D, C–>D). Alternatively, you can define Intrazone Transportation lanes. Only then, the Optimizer can propose the result, which includes all four locations in one route.

Process Execution

Several POs to different suppliers are created. Each PO has generated a freight requirement – Freight Units (FU). The link between the PO and FU can be found in the additional tab in the PO Header (transaction ME23N).

The FUs Delivery windows are overlapping and, therefore, allow joined shipment.

The overview of the freight requirements can be seen on the map in the Transportation Cockpit.

 

Steps

  1. In the Transportation Cockpit, select the FUs that have to be planned together.
  2. Select the vehicle that should be assigned to the FUs (optional step).
  3. In the panel, select Optimizer planning à Selected Entries Only (or “…with All Resources” if you didn’t make the selection in step 2).

  1. The Optimizer proposes the Freight Order with a temporary number. The route is built based on the optimal costs based on the transportation lanes and planning profile data. You can use Explanation to analyze the planning results. The automatically created Freight Order (FO) can be accepted or canceled. In case you accept and save the proposed FO, the system assigns a static number.

 

  1. The FO contains three stages, initially visiting the suppliers’ location, finishing in the production plant.

 

  1. The planning results can be shown on the map.

  1. The Gantt chart is also available

 

Conclusion

SAP TM Optimizer allows performing a Transportation planning task within several clicks. Moreover, the TM Optimizer takes care of the freight requirements consolidation into one order, builds the optimal route, performs transportation scheduling, and controls necessary constraints.

The same results are also possible to achieve by manual planning. However, it requires significant user efforts.

 

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  • Thanks! Graph Theory is one of the "magic things" in computer science that were the reason I joined IT. Did some interesting graph algorithms in uni myself 🙂