Logistics: Würth Establishes Transit Warehouse

At its European hub, Würth is consolidating its flows of goods from suppliers and its own internal production to its international subsidiaries.

This global specialist in assembly and fastening materials is also planning to send its packages out to end customers through a series of 10 shipping points – all with the help of the transit warehouse function of SAP Extended Warehouse Management (SAP EWM).

The southwest German town of Gaisbach features more than just the headquarters of Adolf Würth GmbH & Co. KG. Here, halfway between Stuttgart and Würzburg, the company also operates its main load transfer point. Well over 40,000 packages roll out onto Reinhold-Würth-Straße every day – that’s more than 10 million each year. Some 1,400 suppliers also send their wares here before they are shipped on to Würth’s international subsidiaries and end customers along with the company’s own products.

Adolf Würth GmbH & Co. KG, or simply AW KG, is the parent company of the global Würth Group, which employs over 74,000 people and generated €12.7 billion in revenues in 2017 (based on its preliminary year-end closing). To further optimize its flows of goods, AW KG recently began focusing on its European hub and its plans to implement a new approach to hub and loading management. In cooperation with the new internal service provider Würth Logistics, the European hub is tasked with serving as a central consolidation point for goods flows from suppliers and AW KG itself to the Würth group’s subsidiaries elsewhere in Europe.

The objective of the new hub and loading setup will be to coordinate the 10 shipping points on the AW KG premises and create overarching plans for the group’s end-customer business.

Optimizing Procurement for 35 International Subsidiaries and Counting

Today, when Würth Logistics plans a truckload for the group’s Italian subsidiary, the load is created and shipped out in the space of a day. Most trucks leave the grounds with a full load as well. In the past, the fact that the pallets coming from AW KG were often not enough for full truckloads presented a dilemma. The external logistics providers commissioned to handle these shipments thus resorted to taking on additional orders to fill out their trucks. The drawback was that these trucks had to stop on the way to their destinations to pick up new goods and transfer their loads at their own hubs. A group logistics study Würth conducted then revealed significant potential to reduce both costs and the flows of incoming goods while improving its unloading processes.

Würth Logistics: Taking Control to Ensure Full Loads

Since then, Würth Logistics has replaced the group’s external logistics providers and set its sights on ensuring that as many trucks as possible leave Gaisbach with full loads in tow. This is now possible because Würth Logistics has begun factoring in goods from suppliers in Germany along with the “base load” of shipments it handles from AW KG. Besides making better use of truck capacity and eliminating the need for stopovers, this enables Würth Logistics to align loads with the trucks’ axle weight limits and establish the order in which goods are to be unloaded in advance.

“When trucks are bound for an international Würth subsidiary, we now only have to load them once,” reports Jörg Hollstein from Würth IT. “In terms of quality, that’s a quantum leap for us.”

Four months after an initial handful of suppliers and select subsidiaries were connected to Würth’s European hub, their numbers have grown to 1,400 and 35, respectively. This corresponds to 80 percent of the group’s flows of goods in Europe, which is the highest level of efficiency currently attainable.

“We just don’t have the space for further optimizations right now,” Hollstein admits. “On the other hand, you’re probably going to see Würth establish similar hubs for the Asian and U.S. markets.”

SAP EWM 9.3 Provides Technology for Transit Warehouse

The key technology enabling Würth to speed its suppliers’ goods through its facilities is a new warehouse management function that has been available since the release of 9.3. version of SAP Extended Warehouse Management.

“The application can manage packages even when it doesn’t know what they contain,” explains SAP consultant Christine Bossert, pointing out a key characteristic of the technology that is geared in particular toward transportation providers. Incoming packages are marked with a number, the intended recipient, and an address, which meets one of the main requirements of a transit warehouse. Since the pallets are loaded straight back onto trucks whenever possible, goods receipts and issues are not even posted.

“We’d been maintaining something resembling a transit warehouse based on our existing systems, but weren’t happy with it,” Hollstein recalls. “In SAP Extended Warehouse Management, we’ve now got an application that offers transit functionality right out of the box.”

Loading Hub Serving End Customers in the Age of Amazon

While Würth’s European hub is concentrating on optimizing procurement flows for its international subsidiaries, its loading hub is consolidating flows of goods for its end-customer business in a single location – AW KG’s facilities in Gaisbach. Here, the typical order — from a small trade business, for instance — involves one or two packages containing just a few different items.

“Regardless of how many packages we have to process, every customer expects theirs to arrive on schedule and contain everything they ordered,” Hollstein points out. “The number of packages that need to be shipped out the very next business day has also increased significantly.”

At the moment, many different warehouse management systems are in use at AW KG’s shipping points, and trucks have to stop at several of them to pick up packages. This is why the company has now turned its attention to gradually harmonizing its system landscape. The first step is to involve controlling goods flows across 10 shipping points, with the first set to go live in the first quarter of 2018.

Centralizing Package Management at a Transit Warehouse

The transit warehouse function in SAP EWM is designed to receive information on packages that are ready to ship and manage them centrally, which means trucks from transportation companies only have to stop at a single loading point to pick up packages from all 10 shipping points. This frees up time that can be used to optimizing picking.

Saving Time for Picking

Let’s say a package needs to be delivered to the Ruhr region of northwest Germany. GLS, DPD, and other shipping companies pick up the packages at seven in the evening and take them to collection centers. From there, they are allocated to regional distribution centers. After being resorted, the packages are loaded onto delivery vehicles the following morning and brought to their recipients over the course of the day. Thanks to SAP’s new application, trucks can pull away from the loading ramp as late as 9:00 p.m.

“Besides enabling us to take some pressure off our pickers, this is making us a lot more flexible because we’re no longer constrained by grid traffic,” adds Hollstein, who is particularly pleased with the later last-order times Würth has introduced.

In the age of Amazon, speed is of the essence – and even those in small trades have long since grown used to receiving their packages the very next day.