Application of a SAP SCM EWM warehouse management system for distribution centers in a retail chain

Project figures
  • 2 distribution centers in Moscow, Minsk
  • Over 100 own stores in various formats
  • About 300 suppliers
  • More than 10 commodity groups
  • About 7,000 items in the retail center’s product range
  • Up to 500 items per order

Main inventory groups

Grocery

Water, juices

Perishable meat and dairy products

Deep frozen products

Fruits and vegetables

Alcohol and tobacco goods

Related non-food products

Household chemistry

Basic operations at distribution centers
  • Receipt of goods from domestic and foreign suppliers
  • Processing of returns
  • Quality inspection
  • Placement of goods on various types of shelves, with due account for storage requirements
  • Picking by items, boxes and pallets
  • Wave picking, breakdown by commodity groups and delivery routes
  • Order picking supervision
  • Distribution cross docking
  • Weight checks during receipt and disposal (shipping)
  • Control of the loading onto transport vehicles
  • Scheduled and selective stock-taking
  • Accounting of returnable packages
Problem statement, WMS requirements
  • The client regains control of the previously outsourced warehouse operations transferring them to its own warehouses. The company uses the SAP WMS system, a component of the SAP ERP corporate core, as a transitional solution. SAP WMS does not meet today’s business requirements and needs quite a number of improvements. A decision is made to apply the SAP SCM EWM (Extended Warehouse Management) system at two logistics facilities with a two-month interval
  • The new WMS must have a user-friendly interface to enable warehouse employees to quickly learn and master the new functions
  • Ensure reliable integration with the main SAP ERP corporate accounting system in the way of exchange of transactional and basic data
  • Ensure error-free transfer of leftovers to the new WMS
  • System scalability depending on the company’s business expansion
  • Quick replication of processes at new logistics facilities
  • Support integration with external software including the mechanical warehouse equipment (conveyer belts, weighing equipment)
  • Of critical importance is to significantly increase the order performance (percentage of successfully executed orders) and picking accuracy, to reduce the number of loading errors and to strictly observe shipment deadlines
  • All warehouse operations must be performed online using RF terminals
  • Highly automated warehouse processes and planning of warehouse operations
  • Transparency and personalization of all processes. Ensure convenient on-line monitoring of warehouse operations
  • Appropriate storage conditions for different commodity groups
  • Support the stock accounting of catchweight goods (fruits, vegetables, cheeses, sausages etc.) in terms of two units of measure (kilograms and packaging units), so as to use the basic unit of weight (kilogram) for primary accounting purposes, packaging units (boxes, baskets, heads, loafs, etc.) for speedy order picking
  • Support of different types of storage rack systems (frontal racking system, gravity bins, shelves for small-piece products)
  • Accounting of returnable packaging (thermal containers, shipping nets, pallets, boxes)
TLS Solution
  • In-depth review of the warehouse structure and operations, internal commodity flow and principles of commodity exchange with counterparties. Allowance for specific features of goods storage and handling operations, consideration of the customer’s preferences to the extent of their implementability in the system. Proposals to optimize warehouse processes, modeling of the future solution.
  • Recommendations for changing the business processes of the warehouse logistics, the functional responsibility of employees, the topology of the warehouse facilities
  • Determination of the functional implementation profile adjusted for the specifics of this business. Search of best solutions.
  • Statement of technical requirements to improve the system with due consideration of the optimal business logic, interface ergonomics, and customer preferences
  • Allowance for specifics of a warehouse with a large variety of products and a limited number of storage positions / bins:
    • ensured the cross-docking process with products distributed around the floor
    • configured the two-step “consolidation-deconsolidation” picking process in the processing center using a wave picking option
  • The wave picking option also enables to link order picking operations to shipping intervals and commodity groups (storage areas)
  • Configuration of integration settings enables to meet the acceptance control requirement: the receipt of goods is posted to the ERP after the acceptance of goods by the storekeeper is duly checked for errors by the operator
  • Configured tolerances for excess / incomplete deliveries and the excess acceptance logic
  • Configured various placement and picking strategies taking into account business requirements and the warehouse topology:
    • Placement next to a fixed picking place
    • Placement with respect to the types of warehouses and storage areas linked to different product line groups
    • Single-piece picking using an optimal route among shelves
    • Runtime customized replenishment of box picking bins
    • Replenishment of fixed bins rounded upward to the required unit of measure

TLS Solution
  • Systemic segmentation of commodity flows within a warehouse into stages including levels of authority for resources
  • Configuration of catchweight goods handling processes; improvements to the business logic to enable the automatic choice of the required alternative unit of measure; integration with the warehouse weighing equipment
  • Developed an option to change the status of outgoing handling units involving the Handling Unit Completion operation as part of the picking control process to prevent shipment of unchecked pallets
  • Configuration of processes for the Yard Management module to enable due control over the loading of outgoing handling units onto transport vehicles and to control vehicle capacity when creating loading tasks
  • Configured the Resource Management option to break down the workforce, machinery and equipment by their roles (functions) and by access permissions in relation to certain storage areas.
  • Activated the System-run Operation mode. Configured the warehouse task queues for different processes
  • Designed and configured a virtual shipment exchange scheme to offset shipment discrepancies detected when the goods are accepted in outlets (shops)
  • Developed extensions for the standard EWM warehouse monitor
  • Developed the necessary analysis reports for the by-shift staff performance and for the turnover

Result
  • Timely launch of two storage facilities with a full set of functions; after-launch support, training and adaptation of employees to new working conditions
  • High flexibility of processes in relation to different commodity groups
  • High flexibility of processes in relation to different commodity groups
  • Process automation and staff performance control enabled to reduce the warehouse headcount by 20% while increasing turnover by 10-15%
  • End-to-end control over all warehouse operations
  • Picking accuracy increased by 20-30%
  • Order performance increased by 35-50%
  • Online sessions for operations with RF terminals enabled to increase the validity of data on storage bin content several times
  • The Low Stock Control function enables runtime stock review across bins in the order picking process, which also significantly improved the validity of data on leftovers at picking places