Companies face increasing pressure to turn over goods in warehouses and distribution centers more rapidly. The benefits of reducing the transportation and distribution times throughout the supply chain are obvious: less inventory is needed, the operation is more efficient, and the supply chain has more potential to react flexibly to changes.

As a result of this increased turnover of goods, processes inside the warehouses are changing. The total storage time of goods in the warehouse is becoming shorter, and the number of goods movements in the warehouse (putaway, picking, stock transfer) are constantly being reduced. To support these changes, SAP has added new features to the Warehouse Management (WM) capability of mySAP Supply Chain Management (mySAP SCM): Yard Management, Cross-Docking, and value-added services (VAS). These features were delivered this year as part of SAP R/3 Enterprise SCM Extension 2.0.

Figure 1 shows an overview of how these new functionalities within WM are embedded into the big SCM picture. WM is one of the most-used functionalities in SCM, supporting all activities from inbound processing through internal task optimization, replenishment, physical inventory, and outbound activities such as picking, packing, loading, and shipping. People inside the warehouse are supported with real-time, mobile data-entry functions directly connected to the system. WM also tightly interacts with planning schedules, demand, and transportation plans, availability checks, and supply network planning, thus ensuring that fulfillment is done on time, on schedule, and with the required quality.

Figure 1

How the new WM functionalities fit into the SCM landscape

It is also important to remember that an execution facility runs continuous collaboration scenarios with planners, third-party logistics service companies, subcontractors, freight forwarders, and customs authorities. Today's execution facility finds itself as a node in the network community continuously exchanging information between purchasing, sales, quality management, production, financials, export/import, and transportation. It must also react rapidly to new information, and in particular adapt quickly to new instructions, products, processes, services, and operations. The modern execution facility must be able to do all this without the need of high investments.

Yard Management, Cross-Docking, and VAS help fulfill these modern demands on execution facilities. The information and examples I provide below show you how you might put them to use.

Yard Management

With Yard Management, warehouse management stretches beyond the “four walls” of the warehouse. This functionality forms an interface for the transfer of goods to and from transportation. The flow of goods in the warehouse can be optimized by effectively managing all inbound and outbound trucks, trains, trailers, and containers. The yard management process begins when the goods arrive at the location and ends when they leave the location. This process also supports you when scheduling staging areas, doors, and loading ramps, and in managing trucks, trailers, and containers in the loading site. An Alert Monitor (Figure 2) supports the supervisor by issuing warnings as soon as planned deadlines are missed.

Figure 2

Yard Management Alert Monitor

Yard Management will be of most interest to North American companies, as they tend to have more parking and lot space to deal with. It ensures transparency of the stock on the site and of the planned deliveries. Before a truck or container content is unloaded, it determines the right time window for this operation, ensuring maximum cross-docking capabilities and optimum use of your workforce. In the inbound delivery process, for example, a truck is first registered at a checkpoint and then directed either to a door for unloading or to a parking space on the site to wait. At the correct time, the truck is then directed from the parking space to a door, where unloading and loading take place. It is then directed to a waiting area on the site, to another gate, or to the checkpoint to be checked out.

Cross-Docking

With Cross-Docking, inbound goods can be directed straight from goods receipt to goods issue without being put away into storage. By using cross-docking, you can avoid duplicate goods movements within the warehouse, optimize the goods flow from inbound to outbound, and shorten routes within the warehouse. This accelerates the flow of goods and avoids unnecessary storage of goods in the warehouse. Within mySAP SCM, WM supports two types of cross-docking: planned and opportunistic.

For planned cross-docking, planning occurs simultaneously for several inbound deliveries, transfer requirements, or shipments, which are filtered according to criteria such as time period and document attribute. Planning can take place automatically, whereby the system processes cross-docking possibilities and matches inbound and outbound goods.

Alternatively, you can plan cross-docking activities manually, where the warehouse planner defines the connection between inbound and outbound goods. Automatic planning is based on a particular cross-docking strategy, which sets the rules for the comparison. The system determines the best option for carrying out the cross-docking process and creates the link between inbound and outbound goods. Based on the data for the inbound stock and the outbound requirements, the system creates a cross-docking decision. The resulting cross-docking plan is displayed graphically in the Yard Management “door and dock” schedule.

Figure 3 shows the Cross-dock planning screen. The system selects the inbound deliveries and calculates the cross-dock efficiences for relevant outbound deliveries. As soon as a link is established, a cross-docking decision is stored. This decision results in a direct transfer instruction from the inbound delivery to the foreseen outbound delivery when the goods physically arrive.

Figure 3

A Cross-dock planning screen

Cross-docking opportunities can also be determined dynamically on the arrival of the goods. You can use opportunistic cross-docking if the defined business process allows other rules of execution, such as “first in, first out” (FIFO), to be canceled. For opportunistic cross-docking, existing transfer orders have to be canceled and new ones created so that newly arriving stock is assigned to the transfer order in place of other available stock. This is possible as long as execution of the original transfer order has not yet begun. Opportunistic cross-docking can be triggered in various situations — for example, when putaway transfer orders are created for inbound goods or during creation of picking transfer orders.

Value-Added Services

Value-added services (VAS) carried out in the warehouse include price labeling, customer-specific packaging, and postponement services. VAS provides functions for instructing, performing, and monitoring additional services in the warehouse, as well as extracting key activity figures that provide the basis for calculating the achieved value. Any operation that has to capture value-adding costs — warehousing profit centers within an organization, third-party logistics service providers, or companies with many special customer requests, for example — will find VAS useful.

VAS supports you in the creation of value-added services by identifying the VAS-relevant goods and determining workstations for carrying out the services. The corresponding goods are then directed to the workstations where an employee receives instructions according to the attributes maintained. The VAS monitor provides transparency across the stocks at all VAS workstations. Once the service has been provided, VAS sends the registered and confirmed activity data to SAP's Business Intelligence (SAP BI) application, where it is used for further cost and price calculations. This ensures that the value-added service can be calculated, accounted, and billed specifically to individual customer needs. The calculated result can be passed back to the SAP R/3 Materials Management module or another billing module (e.g., the CRM billing engine) to create a service invoice. VAS do not contain any price information. All pricing-relevant information has to be joined in BW.

Goods that are directed through the warehouse using the cross-docking process often have to be repacked or are subject to another service. The close link between VAS and the functions for yard management and cross-docking means that the value-added services from the logistics execution can be provided in connection with cross-docking.

Figure 4 shows a VAS order after completion. The warehouse and work center are visible as well as the executed instructions and the duration time.

Figure 4

A VAS order after completion

Configuration Flexibility

Companies need to adapt to operational changes on a daily basis — for instance, when a customer changes an order. Change happens slowly over time, too, such as when the warehouse is faced with continuously growing shipping volumes, smaller order sizes, shorter delivery times, additional services, or special requirements. Ideally, you want to support new processes or provide the changes needed without additional coding, and SAP's new WM features allow companies to adjust to new situations with minimum effort.

To illustrate, I'll describe the mobile transaction configuration required for yard management support. The mobile displays of PDAs (personal digital assistants) are small and can show only a limited amount of information. Many customers want to be able to adjust the screens to their chosen device and adjust the screen sequence to the specific needs that their operations and workers are confronted with.

Imagine that each screen displayed on a mobile device consists of the physical screen and a function module that handles the data being updated through the screen. To define a transaction flow, you need to define the sequence in which the relevant screens appear in different situations. You start with sizing the screens to the size available on your devices (Figure 5). Then you define in which transaction you use each physical screen (Figure 6). Finally, you define the logical flow of functions through a definition of predecessor and successor roles (Figure 7). Through this flexibility, you can easily achieve a tremendous variation of transactions for the different workers without adding one additional line of code.

Figure 5

Size the screen for your mobile device

Figure 6

Define the transaction for each screen

Figure 7

Define the transaction for each screen