Plan with the VSR Optimizer

The total cost, which the optimizer is designed to minimize, is a weighted sum of the following items:

• Non-delivery/execution penalty (per freight unit (FU))
• Earliness and lateness penalty (per FU)
• Fixed cost (per vehicle or tour)
• Travel-dependent costs (per vehicle), for example, distance and duration.
• Load-dependent costs (per vehicle and tour)
• Sustainability costs, such as CO2 emissions

You can define the costs per duration for each VSR optimization run. You can also define a maximum value and a unit. The unit refers to both the costs and the maximum value. If you do not specify a unit, the system measures duration in seconds.

You can define the costs per distance for each VSR optimization run. You can also define a maximum value and a unit. The unit refers to both the costs and the maximum value. If you do not specify a unit, the system measures distance in kilometers. You can also specify the cost basis. This determines if the system uses the costs per distance from the costs per distance field in the planning profile or from the transportation lane. Alternatively, you can specify that the system is to take the sum of both values into account. When optimizing for destination-based distance costs, you have to define the distance cost in the transportation lane.

You can define the costs per quantity for each VSR optimization run. You can also define a unit. You cannot define a maximum value for the costs per quantity. However, you can specify if the system is to use the costs per quantity from the transportation lane or from the costs per quantity specified in the planning profile.

For costs per quantity from the transportation lane, you can specify if the system is to calculate the costs in a distance-independent way or if it is to multiply them by the distance.

For costs per quantity from the planning costs, you can specify if the system is to calculate the costs in a distance-independent way per transportation lane or if it is to multiply them by the distance. The system determines the costs per stage if costs are calculated in a distance-independent way. You are not allowed to define a unit. If multiplying by the distance, the system uses the fixed value that you have defined in the costs per quantity field.

You can define the maximum number of intermediate stops and the costs per additional stop.

The figure illustrates the route-based and destination-based costs as follows:

• Destination-based cost:

  • Freight order (A→B→C) = Distance (A→B→C) * Cost (A→C) = 300 * 1.5 = $450.

  • Freight order (A→C→B)

    = Distance (A→C→B) * Cost (A→B) = 250 * 1.9 = $475.

• Route-based cost:

  • Freight order (A→B→C) = Distance (A→B) * Cost (A→B) + Distance (B→C) * Cost (B→C) = 200 * 1.9 + 100 * 1.8 = $560.

  • Freight order (A→C→B) = Distance (A→C) * Cost (A→C) + Distance (C→B) * Cost (C→B) = 150 * 1.5 + 100 * 1.8 = $405.

Route-based and destination-based distance costs can yield different results. In North America, destination-based distance cost calculation is used frequently, whereas in Europe, route-based distance costs are primarily used.

The optimizer operates within the constraints defined in the preceding figure. The optimizer evaluates any changes in routing caused by constraints for their Effect on the scheduling and timing. It communicates any change of time or date to all tasks on that resource or to any dependent tasks on any other resource. Considering both aspects in parallel ensures effective planning.

The optimizer tries to assign freight units to vehicles and determine an effective delivery order for each vehicle so that total transportation costs are minimized. It considers several constraints and takes penalty costs into account as part of the total transportation cost. 

The following penalty costs are defined in the planning profile and can be used to control the decisions made by VSR optimization:

• Premature pickup
• Delayed pickup
• Premature delivery
• Delayed delivery

The optimizer calculates extra costs if the transportation plan deviates from the requested pickup and delivery dates. This is done when using soft constraints in the pickup and delivery time window and defining penalty costs in the planning profile.

There is a balance in the optimizer process between selecting the cheapest mode of transport and adhering to promised delivery dates and defined pickup dates. For example, the optimizer could decide to ship via an intermodal means of transport even if this means delivering a day late. This is on the condition that savings made by selecting a slower means of transport outweigh the penalty costs for delayed delivery.

The penalty cost for premature pickup is incurred when the scheduled pickup time falls between the earliest pickup time (hard constraint) and the allowed premature pickup (soft constraint).

The penalty cost for delayed pickup is incurred when the scheduled pickup time falls between the allowed late pickup time (soft constraint) and the latest pickup time (hard constraint).

The penalty cost for premature delivery is incurred when the scheduled delivery time falls between the earliest delivery time (hard constraint) and the allowed premature delivery time (soft constraint).

The penalty cost for delayed delivery is incurred when the scheduled delivery time falls between the allowed late delivery time (soft constraint) and the latest delivery time (hard constraint).

• Forwarding orders, SAP ERP-orders, and deliveries work only with a single day and time for pickup and delivery.

• To allow more flexibility for freight consolidation and routing optimization SAP TM Planning uses Time Windows.

• The combination of pickup and delivery definition and penalty costs controls how the optimizer schedules within the time window.

Windows control when goods are to be picked up and delivered. VSR optimization schedules the pickup or delivery exactly in the window defined. If there were no windows, VSR optimization can schedule these dates to minimize the total costs.

You can also control the optimization when windows are not taken into account and goods are picked up or delivered too early or too late.

You can create windows by defining the tolerances within which a premature or delayed pickup or delivery is to be allowed. You specify for each tolerance if VSR optimization is to consider it a hard, soft, or hard and soft constraint. Specifying constraints controls if VSR optimization calculates penalty costs when the constraints are not adhered to.

The following tolerances can be defined:

• Maximum earliness
• Maximum delay
• Delay without penalty costs
• Earliness without penalty costs

The dates and times defined for the pickup and delivery in the freight unit are the basis for calculating the tolerances. The exact time for the pickup date or delivery date can be considered.

Conditions are used to set up pickup and delivery windows. The condition is specified in the freight unit type.

• None

• Hard (acceptable dates)

• Soft (requested dates)

• Hard and soft (both)

VSR optimization takes constraints into account when it assigns freight units to capacities. You can differentiate between hard and soft constraints:

• VSR optimization always adheres to hard constraints.
• You model soft constraints using penalty costs, for example, lateness costs that are part of the total costs.

The following are the relevant condition types:

• For pickup and delivery time window definition: /SCMTMS/TOR_TIMEWIND

• For earliness and lateness cost definition: /SCMTMS/FU_PNLT_COST

Using the planning cost settings, the optimizer can determine the best means of transport to use. For example, a break-even analysis between a large truck and a small truck can be modeled with this setting.

There is a relation between pickup and delivery penalty time and cost per duration. Depending on business rules, it could be better to delay pickup or deliver early. 

The maximum distance and durations are useful for deciding on rail or air transport instead of road. The maximum number of stops and costs are useful for reducing the number of visits during a week at customers or suppliers. 

The figure shows two stop-offs between locations A and D. Stopover costs are applied to influence the outcome of VSR optimization. The source and target location in a route are not taken into account when calculating the number of stopovers. Maintain the number of stopovers plus one.