VSR Optimizer Cost and Constraints Calculations
Planning costs using VSR optimizer using Transportation Cockpit
In transportation Management planning and optimizing your resources is a crucial activity to make me most out of the VSR Optimizer functionality that SAP TM offers. In this particular post I would like to walk you to a very simple example of VSR planning optimization and most important which are the most important components that you need to configure in the system to get the correct cost estimations from the system.
First thing first, prior executing any planning, as usual, you will need certain Master data already created and maintained in the system. We will need at least the following
- Planning Profile
- VSR Opt Profile
- Means of Transports (In this case I will use FTL and LTL)
- Vehicle Resources
- Transportation Cockpit layout
(If you are unfamiliar with this last one, check out my previous blog of how to create this one Planning Cockpit in Transportation Management Design | SAP Blogs)
I will break this process into three steps:
1.- Define Cost and Constraints Settings in SAP TM
2.- Assign cost and Constraints into the Planning Profile in SAP TM
3.- Execute Planning in SAP TM
4.- Analyze planning result in Back End System
For the purpose of this exercise I will already have a few Freight units ready to be planned, needless to say, all the following Screenshots were taken from my testing sandbox
For the reference Means of Transports will be referred as MoT
With this, we are good to go!
1.- Define Costs and Constrains settings
To kick off we need to define our cost and constraints settings, for this we use the SAP defined for that purpose:
In this case I will give the following name S4TM2-COST-19.
After giving a header and a description to the Cost and Constraints settings we need to add our means of transports, in this case I am using:
- FTL and LTL
- Fixed cost based on capacity documents and vehicles
- Variable costs based on quantity and distance
For this example I want to set the following cost structure for my two means of transports:
a) Based on this I will add the fix costs according to my table:
b) After this, we need to go to the detail of each Means of Transports to add the variable costs
1.1 Configure FTL MoT
It is very important to define my FTL line as No Quantity cost relevant, I’m interested about the distance not really the weight of the goods transported
1.2 Configure LTL MoT
Equally, as FTL we have defined already our fix cost, therefore, we need to add our variable costs
In this case we do define Quantity cost relevancy (0,05 EUR per KG)
Alike FTL, LTL will have no option for extra stops, and no price based on distance
With this, we concluded our most complex step and we can move forward
2.- Assign costs and constrains to our planning profile
In order for our already defined cost constraints setting to be taken into account during planning we need to assign them to our planning profile as follows:
The place to store this will be in the lowest part of the screen
After completing this, we are ready to execute the planning.
3.- Execute planning on the Transportation Cockpit
For the planning we will always use the transportation cockpit fiory tile
It is very important to verify that we are choosing a cockpit layout wo which we assigned our cost and constraints settings. After doing this we can continue with our planning
For this example. I already created 6 SO with 6 FU ready to be planned with VSR Optimized
On the left you will see all my SO and FU, o the right all my resources and lastly my created FO at the bottom, in this case I have no FO created yet.
TO start planning I will choose one single FU to be planned selecting that particular FU line and then running the VSR optimizer with all resources. Keep in mind that this FU has a total weight of 2055 KG we will use that for the analysis
After VSR finishes compiling we will se the result with a temporary FO number assigned, most importantly the system decided to use LTL resource for this option.
We will proceed to analyze this result in the back end system
4.- Analyze Planning Result
To analyze what happened during this calculation we use the following transaction in SAP back end system RCC_LOG
Once we open this we check the last run that we executed with our planning profile based on date
If we open that specific line we will be able to find our cost calculation
Can you relate where do these figures come from?
Here the analysis:
Total Costs are 106.75 EUR ( 102,75 EUR Qty costs and 4 Fixed cost) But why?
The fixed costs are 3 + 1= 4 EUR per capacity document and vehicle, in this case we only have 1 FO
To this amount we will ad the result of 0.05 EUR x KG remember what was our FU weight? That’s right! 2055 kg therefore we will get the amount of 102,75 EUR as QTY costs.
These calculation make sense, but what happen if we make it a bit more challenging and we optimize all out freight documents at once?
Now in my optimizer I select all my documents:
In this case 1 FO is created but for this time FTL resource is chosen
If we analyze again the cost strategy in the back end system we will get the following:
As you can see on the VSR optimizer calculations, it estimated the cost for both available resources LTL and FTL being FTL (the line above)
- LTL:729,33 EUR
- FTL:505,97 EUR.
FTL is then the chosen one because of the price being the most affordable with 505,97 EUR. Then again, where does this calculation comes from?
Let’s check once more the original financial structure defined for FTL
We need to take as a departure point that FTL is based on distance, therefore the total distance that a vehicle needs to travel to visit all the scheduled stops is 390,97 KM
These is what VSR optimizer calculates in the background:
Capacity Doc 10 EUR + Vehicle 5 EUR = 15 EUR
390,97 x 1 EUR= 390,97 EUR
Two additional stops to visit all schedule stops:
50 EUR X 2= 100 EUR
Therefore 15+390,97+100= 505,97 EUR
5.- Wrap up and conclusions
As stated from the beginning, SAP TM provides a very powerful tool in VSR optimizer, this nevertheless needs to be feed with proper master data to work more efficiently. It’s worth to be mentioned that this was a very simple example of how SAP TM calculates costs and constraints, in real life tough, there are multiple other variants that need to be taken into account, and the most important is to having them identified and defined in the system.
If you are keen or interested in further information about SAP TM planning functionalities I personally recommend consulting the SAP Learning journeys for Transportation Management Planning as well as joining the Learning room for further content.
I would really encourage you to share your thoughts about this post, any feedback or contribution is more than welcome. Happy to read your experiences with planning with VSR Optimizer