From Distribution Warehouse to Package Factory

Feature Article | August 22, 2005 by admin

Wella

Wella

In 1999, Wella AG decided to implement an idea it calls “Eurologistics.” The idea called for transforming an existing distribution center into a central warehouse to supply all Wella customers in Germany, Switzerland, Austria, France, Luxembourg, Belgium, and The Netherlands. The first step of the project created the required logistical conditions in 2000 and 2001. The company almost doubled the capacity of its automated, high-rack warehouse (from 15,000 to 29,000 locations), significantly enhanced the existing technology to convey pallets and containers, and updated all related control systems.

Container Conveyance System

Container Conveyance System

The goal of the logistics system was to improve performance in the Weiterstadt distribution center by 80 percent and use almost the same number (240) of employees in picking. This goal was necessary to manage the significantly increased number of orders triggered by Eurologistics and revenue growth. Some 98 percent of all shipments have to arrive at their destination within 24 hours. Only the implementation of new warehouse management software – software that ensures optimal loads on the complex logistics machinery – could allow Wella to meet this ambitious goal.

Quick Change

Wella investigated various software solutions. After a feasibility study in 2002, the company decided to implement the decentralized SAP Logistics Execution System (SAP LES) – part of the mySAP Supply Chain Management solution. Some reasons for the decision included the ability of the SAP software to map complex logistics processes transparently and yet remain open to additional requirements in the future. Another reason was that Wella was simultaneously and uniformly implementing the materials management software and sales and distribution software of SAP R/3 in all of its European sales and distribution centers. The software was rolled out with a template tailored to Wella’s requirements. Overall, Wella was mapping its entire supply chain in SAP R/3: from planning to production control, sales, and distribution logistics.
Wella’s main requirement of the actual SAP LES implementation project was that it not compromise ongoing logistics operations. The distribution center in Weiterstadt had to remain at 100% capacity to deliver at all times. During the entire implementation, the logistics department had to manage all the subprojects related to the integration of all countries running Eurologistics and support the rollout of the templates for sales and distribution and materials management.

Legacy System as the Picking Solution

Layer Picking

Layer Picking

With its partners, SAP and Logiplus, the Wella project team developed a three-phase plan for the implementation. The first phase mapped functionalities for goods receipt and inventory management in SAP LES. This phase also included developing interfaces to pallet conveyance technology and the high-rack warehouse. In the second phase, the project team converted the replenishment processes from the high-rack warehouse to individual picking areas, including the layer picking system, a special feature of the distribution center. The system automatically moves the pallets released from the high-rack warehouse. This approach makes the appropriate replenishment quantity for the picking areas available for each item in Wella’s comprehensive portfolio of 7,000 products. Finally, the third phase converted the picking and shipping processes to SAP LES.
Technically, phase one proved to be the easiest phase to implement. It nonetheless involved high risk because it did not allow for the setup of a replacement solution for malfunctions and breakdowns with a reasonable amount of effort. Phases two and three were significantly more complex, but could be implemented in parallel with the processes running in the legacy systems without any problems. Accordingly, the project could always switch back to the legacy systems and maintain logistics operations in the event of any irregularities.
Phase three inserted a supplemental control table in the ERP solution. It filtered out orders from the organizations and areas not yet converted to SAP LES and redirected them to the legacy systems. Thanks to this small adjustment, the order load could be slowly brought up to speed in the new warehouse management solution. It also helped the team quickly recognize and correct the difficulties that always arise when installing comprehensive systems for material flows.

Acid Test for Flexibility

In the middle of 2003, Wella was unexpectedly taken over by Procter & Gamble, which thwarted the original plan to supply hairdressers and retail stores from the central warehouse. In the middle of the implementation, at the end of 2003, a decision was made to hand over all retail business to Procter & Gamble instead of supplying it from Weiterstadt.

Key Performance Indicators in Logistics

Key Performance Indicators in Logistics

That was the opportunity for the intended flexibility of the logistics concept and implementation plan to prove itself. On short notice and in parallel with the implementation of SAP LES, commercial customers had to be separated out. More important, the team encountered no difficulties in using the logistics capacity and systems that SAP LES had freed up to process the hairdressing business of the European sales regions and its 100,000 customers. After two years, the company reached its logistics goals. The distribution center became a pallet factory. It operates at high volume, handling 2.2 million packages with a total weight of 38,000 tons in fiscal year 2004–05.

Detailed Transparency

The new warehouse management software creates transparency at the smallest level of detail and process security at a level never-before reached. SAP LES stores a picking procedure for every Wella product. The procedure determines where products are to be taken from in the central warehouse and uses transport orders to define how goods move from picking locations to packaging locations in the most economical manner. Realized as an add-on, this sorting procedure allows employees to control their workload optimally. Picking occurs at picking locations with a pick-to-light system that operates without documents. The items in an order appear on a screen; the picker simply pushes a button to issue a receipt for each product stored in a shipping container.
Furthermore, data from SAP LES is transferred to downstream material flow systems that ensure seamless transport for pallets and containers on the automatic conveyor belts. In some areas of the DC, Wella uses special multiorder picking mobiles. Warehouse employees use them to pilot picking locations according to defined routes to fill orders in up to nine shipping containers along the shortest possible path.

Goods Issue

Goods Issue

Once the shipping contains have been closed and addressed at the packing station and the picking transport orders have been acknowledged, most of the packages still have a long way to go to reach trucks. The warehouse management software also monitors these transports.
SAP LES builds a solid foundation for current projects involving the integration of additional distribution tasks assigned to Weiterstadt by Procter & Gamble.

Dr. Jürgen Augustin

Dr. Jürgen Augustin

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