***Comments Appreciated*** This presentation gives an overview of transportation lanes in SAP TM and SAP TPVS (the functionality is very similar in those products). It talks about the concept of the transportation lanes, the levels at which data exists, and the granularity of transportation lanes along with guidelines on deciding the granularity. Also, it goes into different carrier selection strategies and how priority and cost interact. This presentation does not go into the priorities for broadcast tendering (which is functionality in SAP TM 8.0 and onwards). That will come in update version 3.0.

1. Transportation Lanes in TM
and APO
Version 2.0
Paresh Bhagwatkar
© Paresh Bhagwatkar, 2011
May be used in whole or part with attribution and without permission

2. Content
Transportation lane overview
Transportation lane design
Carrier cost and priorities
Paresh Bhagwatkar

3. Lane Overview
PA2 PA1
Somerset, NJ
Paresh Bhagwatkar Paresh Bhagwatkarc

4. Structure of Transportation Lane
Shipping Point
US01 > PA1 Lane Header
TL
Means of Transport
LTL (MOT)
Std. Bulk Truck
SNBO Carrier
QLTY
SVTNParesh Bhagwatkar Paresh Bhagwatkar

5. Transportation Lane Design
Paresh Bhagwatkar
© Paresh Bhagwatkar, 2011 Paresh Bhagwatkar
May be used in whole or part with attribution and without permission

6. Key lane design considerations
Lane granularity
Transportation zone design
• Regional zones
• Grouping of shipping points in zones
MOT granularity
Carrier selection parameters
Paresh Bhagwatkar

7. Granularity of Lanes
Type Origin Destination Example
Point-to-Zone Shipping point Transportation SPFPT1 > US-PA1
Zone
Point-to-Zone Shipping Site Transportation US-FRPT > US-
(zone) Zone USAPA1
Zone-Zone Transportation Transportation US-TX1 > US-PA1
Zone Zone
Point-to-Point Shipping point Customer SPFPT1 > C12345
Point-to-Point Shipping Site Customer US-FRPT > US-
(zone) PA1
Point-to-Point Shipping point Plant SPFPT1 > PLT1
Point-to-Point Shipping Site Plant US-FRPT > PLT1
(zone)
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8. Lanes from a Site and Shipping Point(s)
Point-Zone
Zone-Zone Customer
or Zone
Site Freeport, TX
Plant 2 Plant 4
Plant 1
Plant 3
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9. Key Points
Zone Assignment
• In TM zone is determined in TM (using postal code, zone, etc)
• In APO - Zone is assigned in the customer address from ERP
In addition to lane selection and lane granularity, compatibilities and
incompatibilities also come into play
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10. Sequence of Lane Search
Sequence Type Origin Destination
1 Point-to-Point Shipping point Customer
2 Point-to-Point Shipping Site Customer
(zone)
3 Point-to-Zone Shipping point Transportation
Zone
4 Point-to-Zone Shipping Site Transportation
(zone) Zone
5 Zone-Zone Transportation Transportation
Zone Zone
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11. Lane Overview
Cust 1
Cust 2
Zone PA2
Zone PA1
Cust 3 Somerset, NJ
Zone NJ
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12. Best Practices for Lane Definition
Point-Point Lanes
• Usage
- High volume between certain plants/ points
- Carriers give discount on a point to point basis based on volume or other reason
• Considerations
- More data maintenance
Point-Zone Lanes
• Usage
- Customers strewn across region
- No specific customer has especially high volume
- No appreciable discounts on point-point basis
• Considerations
- Lower data maintenance
Zone-Zone Lanes
• Usage
- Good to have as catch all in case lanes are missing
- Customers with very sporadic orders may not warrant maintaining lane from Point to
Zone
- Some companies may be able to rely totally on zone-zone lanes
Paresh Bhagwatkar Paresh Bhagwatkar

13. Carrier Cost and Priorities
Paresh Bhagwatkar
© Paresh Bhagwatkar, 2011 Paresh Bhagwatkar
May be used in whole or part with attribution and without permission

14. Carrier Cost and Priority
Carrier selection can be based on various combinations of cost and
priority
Carrier selection strategy
• Maintained on MOT level of lane
• Drives which combination of cost and priority is used
Carrier level of lane has
• Cost
• Priority
Cost
• Costs maintained on lane
• Costs retrieved from ERP system
• Costs calculated in TM
Priority
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15. Carrier Selection Strategy and System Behavior
Carrier Selection System Behavior Usage
Strategy (on MOT level)
Neither Cost Nor Priority Carriers from lane ranked in the order of No real applicable scenario
maintenance of lane
Cost (only) Carriers from lane ranked in increasing order Used when lowest cost carrier is
of cost desired
Priority (only) Carriers from lane ranked in increasing order Used when service is most
of priority (Priority 1 being high) important and cost is not a
consideration
Cost + Priority System gets cost for each carrier Used as a tie-breaker when
Priority is mathematically added to cost carriers tie at cost
Resulting number is used for sorting in
increasing order
Cost * Priority System gets cost for each carrier Used when service is much
Cost and priority are mathematically more important than cost.
multiplied
Priority is used as a magnifier of
Resulting number is used for sorting in
differences in cost.
increasing order
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16. TSP Selection Strategy - Neither Cost Nor Priority
Lane Data
Carrier Priority on lane Cost Determined
During TSP
Selection
Schneider National 3 $1100
CH Robinson 4 $1000
Celadon Trucking 1 $1200
Swift 2 $1000
TSP Selection Result
Rank Carrier
1 Schneider National
2 CH Robinson
3 Celadon Trucking
4 Swift
Paresh Bhagwatkar

17. TSP Selection Strategy - Cost (only)
Lane Data
Carrier Priority on lane Cost Determined
During TSP Selection
Schneider National 3 $1100
CH Robinson 4 $1000
Celadon Trucking 1 $1200
Swift 2 $1000
TSP Selection Result
Rank Calculation Carrier Summary
Result (Cost)
1 $1000 CH Robinson
2 $1000 Swift Comes after CHR because of the order of
maintenance in the lane
3 $1100 Schneider National
4 $1200 Celadon Trucking
Paresh Bhagwatkar

18. TSP Selection Strategy - Priority (only)
Lane Data
Carrier Priority on lane Cost Determined
During TSP
Selection
Schneider National 3 $1100
CH Robinson 4 $1000
Celadon Trucking 1 $1200
Swift 2 $1000
TSP Selection Result
Rank Calculation Result Carrier
(Priority)
1 1 Celadon Trucking
2 2 Swift
3 3 Schneider National
4 4 CH Robinson
Paresh Bhagwatkar

19. TSP Selection Strategy – Cost + Priority
Lane Data
Carrier Priority on Cost Determined Cost + Priority
lane During TSP
Selection
Schneider National 3 $1100 1103
CH Robinson 4 $1000 1004
Celadon Trucking 1 $1200 1201
Swift 2 $1000 1002
TSP Selection Result
Rank Calculation Carrier Comment
Result (C+P)
1 1002 Swift Priority used as tiebreaker
2 1004 CH Robinson Priority used as tiebreaker
3 1103 Schneider National
4 1201 Celadon Trucking
Paresh Bhagwatkar

20. TSP Selection Strategy – Cost Times Priority
Lane Data
Carrier Priority on Cost Determined Cost * Priority
lane During TSP
Selection
Schneider National 3 $1100 3300
CH Robinson 4 $1000 4000
Celadon Trucking 1 $1200 1200
Swift 2 $1000 2000
TSP Selection Result
Rank Calculation Result Carrier Comment
(C+P)
1 1200 Celadon
2 2000 Swift Swift comes second though they are
lowest cost
3 3300 Schneider
4 4000 CH Robinson Though CHR is low cost they come last
Paresh Bhagwatkar

21. Other “tweaks”
Cost + Priority – Spacing out priorities
• Possible to space out priority so that effect of priority is more for closely
costed carriers
• Use when small cost differences should take less effect on TSP
selection
Priority Only – Maintaining in steps
• Priorities maintained in steps of 10, 20, 50 or 100
• Use when there is an anticipation that later another carrier may be
placed between two existing carriers in the “gap”
Paresh Bhagwatkar

22. Tweak: Cost + Priority – Spacing Out Priorities
Lane Data Exaggerated Example
Carrier Priority on Cost Determined Cost * Priority
lane During TSP
Selection
Schneider National 300 $1100 1400
CH Robinson 400 $1000 1400
Celadon Trucking 100 $1200 1300
Swift 200 $1010 1210
TSP Selection Result
Rank Calculation Carrier Comment
Result (C+P)
1 1210 Swift Swift costed marginally more than CHR. If priorities were
maintained in steps of 1 CHR would have been chosen
2 1300 Celadon
3 1400 Schneider
4 1400 CH Robinson
Paresh Bhagwatkar

23. Contact
Paresh Bhagwatkar
• paresh@pareshbhagwatkar.com
• 973-495-9913
This document may be used without any permission, but, with attribution in whole or part, with or without changes,
and for any commercial or non-commercial purpose (under the creative commons “CC by 3.0” license)
Paresh Bhagwatkar