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Are all warehouses created equal?

Emily Kucukalic Thursday, August 24, 2017 Blog

By Paul Coppin

SAP consultants have all embarked on a project where the philosophy is to implement a vanilla best practice solution. However, once the project is up and running and we open up the hood, it is not so simple!

Along similar lines, we can start thinking ‘All warehouses are created equal. We only need a template solution for all our customers. In all warehouses, we take stock off trucks, label it and put it away. We sometimes replenish it to a pick face. We count it. We pick it when it needs to go out’.

Let’s consider two warehouses. An FMCG (Fast Moving Consumer Goods) warehouse of a food company and an engineering warehouse for an aeronautical company.

Products and stock

In our FMCG warehouse batch management is key to managing stock. Batch determination rules are normally complex depending on the customer if it’s for export, the grade of the stock, or a range of other criteria. For example, certain customers require perfect stock rotation. That means that any batch that goes out needs to be newer than the last one. Not always easy when returns are factored in!

Furthermore, we may also in our FMCG warehouse need to manage stock in units such as a wheel (of cheese) where the weights vary and need to be captured. This is because all financials such as sales price and stock valuation is by weight. This is called catch-weight management (also known as random or protein weight management). SAP standard catch-weight management is a complex and far-reaching function that will have a significant impact on any project deliverable.

In our engineering warehouse batch and catch weight management are generally not factors but much of the stock requires identification by serial numbers. If serialisation is important to your world, then the old SAP WM does not have the capability for this. It is best to look to EWM, perhaps with your S/4HANA solution.

Storage

In the FMCG warehouse storage is simple. Typically, two types of storage are required. One for pallets which are normally packed to a uniform height to fit in our (say 1.4 metre bins) and a pick face for small quantity picking. Sometimes we may want to have a third level for picking ‘inners’ or bottles. I am of the view that if 95% or more of the picks are full pallets; no pick face is warranted. I have implemented solutions where this is the case. The simplicity of the SAP standard partial pallet pick all out of racking has meant a successful implementation!

The fact that pallets are largely uniform will mean it can generally be stored in racking anywhere across the warehouse even though we may want rules that can be quite flexible to have fast moving stock at the front or heavier stock lower down. Rules can be more stringent such as refrigerated stock in the chiller. But essentially all stock can go into racking of the same size and type.

In the engineering warehouse, we require open storage for wings, bulk storage for engines, cantilever racks for pipes and conduits, carousels for washers and small items and a host of other types for the diversity of product size and shape.

In this type of environment, bins are generally reserved for particular items. We call these fixed bins.

Handling

The nature of storage in the different warehouses means that the type of MHE’s (Material Handling Equipment’s) will vary. In our FMCG warehouse, we will have forklifts for racking and trolley or hand pick onto a conveyor for pick faces.

The requirements for managing stock and moving it in the engineering world is often (although not always), far more complex. Assuming both our warehouses have RF (Radio Frequency), this will mean a very different construct for managing resources and queues.

While talking about RF, the screens and validations are totally different if you are working with batch managed and serialised items.  I will talk later about packing and staging lane checks which also means different RF functions in our respective warehouses.

Packing

When stock arrives at our FMCG warehouse it is logically packed automatically. This may be done in many ways, such as automatic packing rules because we know the quantity per pallet or from an interface from a production system, an ASN (Advanced Shipping Notification) or a palletizer.

In our engineering warehouse, inbound packing may or may not be required. If we decide to pack it may be because we are going to put away large volumes of serialized items and we don’t want to have to scan each item. This packing is likely more to be manual because stock is less likely to be neatly palletized.

Staging lane checks

In our FMCG warehouse, we would consider RF developments to check inbound and outbound stock. This is because pallets of stock look very much the same; especially if the difference is only a batch number or a product variant such as a different flavour of juice. Temperature checks and data capture are also typical features in FMCG.

Replenishment and Pick Faces

In our FMCG warehouses, a dilemma always exists if to allow mixed batches in the pick face bins. If you do you are heavily reliant on pickers to pick the correct batch. Unfortunately, the discipline to always get this right is rare. The alternative means that the pick face bin is always picked to zero at the end of a batch run. The size of batch lots may also limit the capacity of pick face bins. This is less of an issue with EWM where you can have multiple fixed bins for a product. The net result of not mixing batches is inefficiencies with space usage and replenishment movements that may hold up picking.

I have in several cases implemented a nifty solution called Dynamic Replenishment. The Batch is determined in the delivery, not in the pick task. Prior to picking, a custom program is run that determines any shortages of any particular batch in the pick face and generates replenishment moves to pick face bins that are not fixed.

Of course, in our engineering warehouse, simple min/max replenishment will suffice.

Modeling

The key to getting the structure and layout of our FMCG warehouse correct is getting the pick face size correct. I have done a project with a confectionary warehouse where pick face bins contained 13 pallets! Don’t fall into the trap of always applying a single pallet plus a layer or two. The size is a factor of volumes of part pallet picks, their frequency and batch lot size. This allows you to maximize on efficiencies of replenishment and picking.

With our engineering warehouse, the fixed bins make layout design more intuitive. You need to have the right storage type for the right product. I have been involved with a solution where they were putting large vehicle esky’s (chilly bins, if you’re a Kiwi) into rack storage. One esky per bin with a fixed bin solution made it naturally messy to maintain a large fixed bin master. These should have been stored in a bulk storage.

Naturally, with our engineering warehouse having many MHE’s, we need the layout to be such that as far as possible they do not occupy the same travel path for efficiency and safety.

Now…

Perhaps different solutions and approaches are required for warehouses in different industry sectors and no single ‘best practice solution’ can be easily applied! Download a summary of this content Are-all-warehouses-created-equal-Aug-2017.pdf (8 downloads)

Interested in more? Get in contact with us to streamline your warehouse solutions today.

 Paul Coppin – Plaut SAP SCM Consultant.

Paul last worked with us in 2008 and has spent the last nine years at Linfox. He has now returned back into the Plaut fold, to service our clients and support the Supply Chain Management practice. 

Click here to contact  Paul

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