Carrier Selection

Once a freight order has been built, a shipper must choose (and communicate with) the business partner responsible for moving the product. We refer to this as carrier selection.

The carrier is the business partner that you subcontract the freight order to. The carrier can be different from the executing carrier, which is another business partner role that you can assign to your freight order, if the carrier itself subcontracts the execution of the freight order to a third party. That way, you have the option to differentiate between the party you contracted with and the party actually executing the freight move.

Carrier Selection

Carrier selection is used to assign a suitable carrier to your subcontractable business documents (for example, freight orders), either manually or automatically. Carrier selection can be done for freight bookings and also via report /SCMTMS/PLN_OPT. The aim is to find a carrier with the lowest costs under consideration of the defined constraints.

In manual carrier selection, you manually assign the required carrier to your business documents. If you have configured a check against transportation allocations, the system takes this into account and checks the transportation capacities (transportation allocations) that you have defined for the individual carriers. If, during the allocation, the system finds relevant transportation allocations without capacity or that certain rules are violated by the allocation, warning messages appear. When you want to take business shares into account for carrier selection that you have to define this in the transportation lane and carrier selection settings.

A separate optimization is available for automatic carrier selection. It takes selected optimization options into account when determining the most cost-effective carrier for all business documents that you have selected. If none of the carriers are available, the system does not assign any carrier to the relevant business documents.

Status Management in Subcontracting

The figure shows which statuses change during the subcontracting process.

Transportation allocations allow companies to assign defined quantities of capacity to certain business partners. This includes set minimum or maximum capacity restrictions that regulate how much business is allowed with a certain carrier in a certain region for a certain means of transport. A separate business object is used to model these allocations.

Often, firm relationships exist with carriers in the form of contracts. These contracts can guarantee that an amount of business is allocated to a carrier, which if not met, results in penalties. SAP TM has the tools to track these relationships or, alternatively, divide up business between different carriers.

An allocation represents the planned capacities for a carrier and a trade lane during a validity period. The capacities can be defined for multiple dimensions, such as volume, weight, and 20-foot equivalent units, as well as a sequence of time periods of the same granularity, which are frequently called (time) buckets. For each dimension and time period, the allocation captures the already-consumed portion of the maintained capacity. All freight documents matching the carrier, trade lane, and validity period consume the corresponding buckets of the allocation. When a freight document is created, the matching allocations are determined asynchronously and updated according to the freight document’s capacity. The consumed quantities are visible in the allocations and allow tracking of the capacities and their utilizations.

The following are examples of transport allocations:

• A carrier commits to at least 25 shipments or truckloads from Nashville each day. However, for business reasons, the availability changes each day.
• A carrier normally provides two trucks per day from Dayton, Ohio. For business reasons, the carrier is able to offer, on Tuesday and Friday only, five trucks to the shipper.
• A carrier can include extra capacity to the existing number of shipments by truck. For example, a carrier could add five more trucks during the week between Tuesday and Thursday.

  Carrier capacity can be defined for any geographical level in an arbitrary dimension. When defining the allocation, the trade lane can be specified as follows:

  • Along: Both source location/zone and destination location/zone can be specified
  • From: Source location/zone only
  • Within: Using zone hierarchy
  • To: Destination location/zone only
  • Inbound: Destination zone is specified
  • Outbound: Source zone is specified
  Extended carrier selection optimizer interface
  • During carrier selection either using optimizer or manual planning, the allocation can be checked
  • During tendering, the allocation can be checked

Creation of Transportation Allocations:

When you create a transportation allocation, you define the following:

Creation options: You can specify, for example, whether a transportation allocation is to refer to a transportation lane and whether time buckets can be overwritten.

Scope of transportation allocation: Here you enter, for example, the planning period (yearly, weekly, and so on). You are free to choose the start of the planning period. For example, you can define a bucket from Monday 14:00 until Tuesday 14:00.

Buckets: Here you can define, for example, a subbucket distribution. If a carrier can only deliver, for example, in the morning, you can define two subbuckets (Morning and Afternoon) for the bucket Daily. As the percentage of the assigned business documents (for example, freight orders), you define 100% for Morning and 0% for Afternoon. In addition, you can specify the minimum and maximum product allocation quantity.

SAP Transportation Management distinguishes between the following three transportation allocation types:

• Air freight agreement allocation

  Stores information about transportation allocations of carriers that act as constraints for air freight agreements. You can create air freight agreement allocations directly from an air freight agreement.

• Carrier selection allocation

  Stores information about transportation allocations of carriers in a specific trade lane. The system uses carrier selection allocations when optimizing the carrier selection.

• Flight schedule-based allocation

  Stores information about transportation allocations of carriers at schedule departure level in a master flight schedule. You can create flight schedule-based allocations directly from a master flight schedule.

In Customizing, you can follow the menu path Transportation Management→Planning→General Settings→Define Transportation Allocation Types and define allocation types by specifying the following parameters:

• Default Type: If you created an allocation from scratch and did not choose an allocation type, the default allocation type is chosen; it’s set by this parameter.

• Mode of Transport: You can define the mode of transport or omit this field.

• Planning Period: You can choose among daily, weekly, monthly, quarterly, yearly, and schedule departure. Whereas the first considers all freight documents in the specified time period, the last option refers to departures of an underlying schedule. This means that all freight documents created for that departure are covered by the bucket.

• Schedule-Based Allocation: This specifies that the allocation depends on a schedule–that is, you can create the allocation only out of a schedule.

• Full Calendar Units: You can define whether the bucket fully covers a calendar unit or if it can start at any time but has a duration according to the planning period. If you use a daily planning period and do not use full calendar units, you can have a planning period from Monday at 8:00 until Tuesday at 8:00. If you use a monthly planning period and full calendar units, the bucket starts at 0:00 on the first day of the month and lasts until 0:00 on the first day of the next month.

• Use Attributes: This allows you to create multiple buckets for the same period of time. The buckets consider different attribute combinations based on shipping type, contract basis, or handling code. Using handling codes for the upper deck and lower deck of an airplane, you can define two buckets with individual capacities, one for the upper deck and one for the lower deck.

• Use Carrier Selection: This defines whether allocations of this type are considered by carrier selection.

• Carrier Selection Unit of Measure: If carrier selection is activated, you can specify the allocation’s unit of measure that is considered for carrier selection. You can define allocations with volume, weight, and TEU quantities and choose carrier selection considering the TEU capacities.

• Update Quantity Automatically: This defines whether a newly created allocation or bucket gets an automatic update of its consumed quantities.

• Bucket Overlapping: A freight document can cover multiple buckets of the allocation. Using this parameter, you can define whether all covered buckets get consumed by the freight document or only the first covered bucket gets consumed. This parameter cannot be changed if allocations already exist in your productive system because the buckets contain data according to both consumption modes, which makes the quantities hard to interpret.

• BW Relevance: This specifies whether the allocation type is relevant for analytics based on SAP Business Warehouse (SAP BW).

The objective of carrier selection is to provide a ranking list of carriers that are available to execute a planned freight order. You can perform carrier selection manually, by using an optimization algorithm, or by using an auctioning mechanism as part of the tendering process.

The primary objective of carrier selection is to assign a reliable and cost-efficient carrier to a freight order. This can be done in the background, interactively using manual steps, or by using an automated optimization procedure.

Carrier selection can be started directly from the freight order user interface (UI) or from any work list that displays freight orders. It can also be started for freight orders inside the transportation cockpit.

Carrier selection can be executed as part of a planning strategy (for example, by including method VSR_TSPS as in planning strategy VSR_1STEP, which is delivered as a standard planning strategy that combines vehicle scheduling and routing (VSR) optimization and carrier selection.

In the background, the carrier selection process can be initiated in the following ways:

• As part of the transportation planning process with background report /SCMTMS/PLN_OPT and using a planning strategy that includes carrier selection (for example, VSR_1STEP)

• By scheduling report /SCMTMS/TSPS_OPT_BGD
• By assigning strategy Carr_Sel as a creation strategy in the freight order type Customizing

The carrier selection process is predominantly used in land transportation. However, the carrier selection process can also be triggered for freight bookings using the background report or from the freight booking UI. In contrast to carrier selection for freight orders, carrier selection for freight bookings will only consider transportation allocations–no business shares or continuous moves.

The input data for carrier selection is one or more freight orders (selected interactively in a work-list) or a selection profile by which the freight orders that must have a carrier assigned are determined. In addition, carrier selection settings are required to specify exactly how carrier selection can be carried out. These settings control the carrier selection process and determine which constraints are used and how. Therefore, configuring carrier selection settings for automatic carrier selection is mandatory.

The following fields are the most important to influence the carrier selection process:

• Check Incompatibilities: Incompatibilities are checked only if this checkbox has been selected.

• Incompatibility Settings: If the Check Incompatibilities checkbox is selected, incompatibility settings define which incompatibility definitions must be adhered to.

• Type of Carrier Selection Settings: This parameter defines the purpose of carrier selection. Available options are General Carrier Selection, Carrier Selection for Tendering, and Carrier Selection for Direct Shipment.

• Allocation Usage: This parameter determines the consideration of transportation allocations. Available options are to use transportation allocations, not to use them, or to decide on the transportation lane level.

• BS Usage: This business share usage parameter determines the consideration of business shares. Available options are to use business shares, not to use them, or to decide on the transportation lane level.

• Strategy: The strategy determines how the objective of carrier selection is calculated in optimization. The objective can be based on cost, priority, the sum of cost plus priority, or the product of cost times priority. In addition, the Use Transportation Lane Settings option can delegate this decision by geography to the individual transportation lanes, so that in different geographical areas, different objectives can be pursued (for example, priority in one transportation lane and costs in another transportation lane).

• Carrier Cost Origin: Carrier cost origin defines how costs are calculated. Transportation charges from Transportation Charge Management or internal costs can be used. The No Cost Determination strategy can be used if carrier selection for tendering searches for the available carriers in a broadcast tendering process. Like the settings for strategy with the Use Transportation Lane Settings, you can delegate this decision by geography to the individual transportation lanes.

• Planning Strategy: The default planning strategy for carrier selection is TSPS_DEF.

• Optimizer Runtime: This parameter specifies the maximum runtime for the optimizer (in seconds).

• Consider Manual Assignments as Fixed: Dealing with manual assignments in automatic carrier selection is an important topic because there is likely a reason for manual assignments, and they cannot simply be overridden. Therefore, manual assignments can be considered as fixed when this checkbox is selected.

• Action for Manual Rankings: A similar question is how to deal with manual rankings. Available options for manual rankings are to keep them, remove them, or keep the carrier only when it is considered available.

• Transportation Charge Interpretation: If for any reason, the transportation charges for a carrier for a freight order are evaluated as zero, this parameter determines how to deal with it. Available options are to either ignore the carrier availability for this freight order or accept the carrier for this freight order as either the cheapest available carrier or the most expensive one.

• Action after Carrier Selection Run: Available actions after the carrier selection run are the automatic assignment of the highest ranking carrier to the freight order or doing nothing (that is, leaving this decision to a manual process/user, based on the created carrier ranking).

• Consider Hierarchy: This parameter chooses the available carriers. Options include considering only those carriers defined on the most specific transportation lane or considering all transportation lanes to retrieve available carriers.

• Continuous Move Type: With this parameter, you decide whether only simple continuous moves are allowed, only round-trips are allowed, continuous moves are not considered at all, or this decision is made on the transportation lane level.