Withdrawal Order Generation

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Withdrawal
Order Generation

Client:

CPG

Category:

Data management

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The problem

C lient is a large tobacco manufacturer. The tobacco inventory is spread in multiple warehouses; the inventory is stored in various container types like cases, hogs heads and PM80 boxes. Factory orders tobacco using a concept called blend lines; the tobacco components for blend lines are spread across multiple warehouses to maintain blend integrity. Blend lines are set up in a custom application called Blend Line Generation (BLG). BLG gets the inventory from SAP and inventory is assigned to blend lines 4-6 weeks in advance. The current process approach involves the creation of Stock Transfer Orders (STOs) from the BLG system, and triggering SAP transactions manually to convert STOs into Delivery Orders and Transfer Orders (Pick Lists).

Problem #1

The pick list generation process does not consider impact of a withdrawal order sequence on the efficiency of warehouse operations. This can result in periods at the warehouse where specific shipping docks are overloaded or loading or unloading operation cannot occur because of a crew is not available. The impact of these types of conditions can result in a backlog of trucks waiting to unload tobacco or delaying a shipment to a factory. In certain situation this can have a direct cost impact in the form of demurrage for trucks or trailers having to wait more than the allowed time.

Problem #2

One key piece of functionality not available – is that of the ability to cancel blend lines after they have been ordered and after which associated STOs have been created. This forces the shipment of materials to factories and then sometimes having to return materials back to the warehouse. This is not only inefficient but also causes various logistical issues due to limited containment available at the factories. Factory ASRS system can only hold 1720 containers.

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How the issue was solved

A spenTechTM SCM solution was implemented for withdrawal order engine. An interface was developed from BLG to aspen to generate withdrawal orders (STOs) and pick lists (Transfer orders) to SAP. STOs were generated to truck capacities that were configured in Aspen. By automating the scheduling and sequencing of withdrawals, a number of efficiencies have been gained. Automated scheduling optimization will aim to smooth the usage of shipping dock capacity, and attempt to ship to destination plants in a sequence preferred by them for receiving (target /receiving times could also be captured on the tobacco order against each line item). This will minimize waiting time for trucks and relieve congestion in the warehouses at peak loading times.

C urrently, after STO (Stock Transfer Orders) are created – a leaf Logistician is required to manually run the appropriate transactions in SAP to convert the STOs to Delivery Orders. In order to simplify the work process the Logistician typically does this as soon as the STO is created (currently 3 days or so before line is due to ship). This process was made more efficient by redesigning the STO / Delivery Order generation process such that there is a one for one correspondence between STO’s and Delivery Orders. The Delivery Orders are based on truck size, source and destination. Delivery Orders would be converted into Transfer Orders by SAP allowing for loading on to Trucks

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Client benefits

W ithdrawal process is simplified and picklists are generated in warehouses that increased the warehouse efficiency. Blend line cancellations and modifications were simplified; this was a very tedious process in the SAP solution implemented. The blend line modifications / cancellations process reduced from 15 manual SAP transactions to one button click. The project also resulted in reducing the work force from 5 to 3 logisticians.