Technology does not usually come to mind when thinking about tobacco and candy. But a look behind the scenes of a large distributor of these products reveals a great deal of high tech. contadis AG, a company that supplies all of Switzerland with tobacco and candy, trusts its business to an up-to-date picking system that supports barcodes and to business software from SAP. “We focus on innovation in handling our processes. Our document-less picking system – the core of contadis – is the company’s pride and represents our innovative spirit,” says Jürg Treichler, directory of logistics and information projects at contadis.
The assortment of goods at contadis consists of some 10,000 items (6,000 of them related to smoking) and the related suppliers. A total of 2,500 packages must be picked daily to deliver goods to 6,000 customers from the tobacco and candy industries on time.
contadis is part of the Basle-based Oettinger-Davidoff Group, which uses SAP solutions as its business software at the group level. contadis first used the capabilities of SAP for Retail for financial management, then for controlling, and later for sales and distribution, warehouse management, and materials management. In addition to contadis, five additional subsidiaries are connected to the solution, which operates from a server at company headquarters in Basle.
contadis uses a picking system from Knapp in Graz, Austria – one of the most modern picking systems on the market. A master computer fed with data from SAP software controls the system. Data is exchanged over a specially developed interface. The consulting division of SAP (Schweiz) AG offered the logistics project support and advice.
Picking like clockwork
The SAP system stores the strategy for stocking and from-bin transfers; the strategy is based upon groups of goods, packaging, and sales figures. When an order becomes due, the order data moves from SAP for Retail to the master computer. The master computer calculates the volume of individual orders so that the correct-size carton is ready when picking begins. The software also determines the starting point for picking. The picking facility at contadis has various starting points that store cartons with barcodes scanned at the beginning of picking. With this starting signal, the software creates a unique connection between the customer, the order, the item, and the picking container. Assigning several contains or cartons to an order poses no problems.
The first portion of the items ordered is picked at the starting point, from which the carton makes it way through the facility. Wherever the carton must accept additional goods, the barcode is read. Once all good are on board, the carton moves to the gluing station. The number range of the barcode indicates, for example, how the carton is to be glued: on one or on two sides. The address label is then glued to the carton automatically. Finally, the software sends the carton to the correct loading ramp in the goods issue area. After all, the SAP solution knows the delivery routes and the trucks that deliver goods to customers. One last scan confirms the goods issue to SAP for Retail. The invoice and delivery note can now be printed. Data is synchronized every 15 minutes to guarantee that the inventory data in the warehouse management software is always up-to-date. It takes just a few minutes for a carton to cover the distance from the starting point to goods issue. In exceptional cases, the carton might need a half hour.
Intervention in the processes where needed
“If an item is missing because the required number of pieces might not be in the warehouse at the moment, an employee can notify the ERP solution manually,” says Roger Bleuer, director of logistics at contadis. “That action updates the invoice and the delivery note. Thanks to SAP, these kinds of interventions in processes have become much simpler.”
The transparent flow of documents makes it all possible. “The software allows us to have an internal track and trace,” says Treichler. “We always know where an order is, if a picking order has been issued, if the delivery is already at goods issue, of if the invoice has already been printed. We frequently used to search for cartons and documents.”
Transparency – foundation for optimization
A significant increase in transparency is the primary benefit that SAP software brings to the tobacco and candy distributor. And better data transparency for logistics is just as important as more flexibility in handling processes. As Bleuer says, “We used to have a warehouse system that could only map total quantities and assign the quantities to a warehouse location. We could not see if the goods were located at several locations.” That situation has changed fundamentally with warehouse management software from SAP. If needed, an item can be assigned to several warehouse locations to differentiate between the main warehouse, buffer zone, picking area, or other locations.
Such flexibility is tremendously important for rational picking because individual groups of goods and order volume make different demands on the process. Consider the following small selection of variants. Picking for cigarettes is mostly automatic. Tobacco and high-quality cigars are stored in a climate-controlled environment and picked by hand. The same is true for some candy products that also require climate control. Beverages, however, are stored on pallets. A storage strategy that uses optimized paths is especially important for beverages because of the weight involved. For smoking supplies, however, contadis uses the pick-to-light method; signal lights show employees the goods needed for an order. Workers use RF-controlled, handheld terminals with finger scanners to pick high-quality cigars and candy. For large orders, goods are often taken from the main warehouse rather than from the picking warehouse, a facility that operates without documents. All in all, a large variety of processes require technical mapping in IT.
Less effort with sales figures
The demand for many goods depends upon the season. Each year has its own trendsetters – goods that enjoy great demand during a particular period. And the selection of products also changes constantly. Logistics must react to these developments quickly. An important element here is optimization of internal paths. The principle is simple: articles with high demand are placed on front shelves and articles with low demand on placed on back shelves. “We always have to consider the constantly changing sales figures and new items,” explains Treichler. “Thanks to the SAP solution, we can quickly access the sales figures, which makes it much simpler to allocate new storage areas in the shortest time possible.” Special software used to handle these kinds of reports, but the software permitted such reports only on a monthly basis. Today, the same functionality with SAP for Retail guarantees a view of sales figures that is updated daily. Because the legacy ERP system did not provide transparency, the company found it much more difficult to optimize processes on a continuous basis. And it usually could not occur at all without an IT expert to redefine certain parameters or program new functions. “We were much more centrally organized with the legacy system,” says Bleuer. “With the implementation of SAP software, we have transferred more responsibility to the department concerned. Doing so particularly affected logistics – an additional advantage in our view.”
Logistics specialists at contadis see additional potential for improvements in the overall flow for route planning. More flexibility is conceivable here because, up until now, fixed routes formed the basis for planning the routes of the corporate fleet of 12 trucks. Right now, the barcode of the document-free picking facility is simply an aid for the internal transportation of goods. Ultimately, using the barcode someday as an external data carrier depends upon the logistics of customers. But it’s a possibility.