Streamlining logistics execution at Arla Foods with SAP Extended Warehouse Management (SAP EWM)

Rocket Consulting Ltd
Company Powerpoint Slide MASTER
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Streamlining Logistics
Execution at ArlaFoods with
SAPExtendedWarehouse
Management (SAP EWM)
Presented by Rocket Consulting
EWM Solution Architect &
Markus Rosemann -SAP
Vice President Logistics and Order Fulfilment

Streamlining Logistics Execution at Arla Foods with SAP EWM
Creating a highly automated cold-store at Arla Foods
Incorporating the EWM Material Flows System (MFS)into the automation
Establishing efficient working practices with fully integrated mobile voice & RFID transactions
Integrating EWM into the global SAP Business Suite (ECC) with standard integration architecture including the added capability of Enterprise Services
Getting the most out of SAP EWM’s standard capabilities enabling the extension of standard business processes
Moving from a highly customised SAP WM solution to SAP EWM Template

What We’ll Cover
The SAP Supply Chain Strategy
Who are Arla Foods?
WMS Roadmap
New Sites and EWM
Implementing and Project Execution
Realisation, Challenges, and Benefits
Wrap-up

©2014 SAP SE or an SAP affiliate company. All rights reserved.
4
Customer
Logistics and Order FulfillmentDemand Networks require speed & efficiency Logistics and Order Fulfillment
[Logistics and Order Fulfillment]
Make informed decisions to balance customer service and the cost of delivering that level of Customer Service
Align integrated Distribution and Fulfillment processes around speed, efficiency and sustainability
Connect all the participants of the Logistics Network and track the progress of the delivery: manufacturing companies, freight forwarders, carriers and consignees
Warehouse Management
Transportation Management
Powered by SAP HANA

5
Customer
SAP Logistics and Order Fulfillment Strategy
Carriers
Shipper
Consignee
Integrated
Connected
Best-in-class
Vertical
Communication & Collaboration
Freight Forwarder

6
Customer
Inbound Processing
Transportation Unit Processing
Goods Receipt Mgmt. & Optimization
Inbound Quality Management
Internal Routing
Outbound Processing
Outbound Planning(Route, Wave, Bin, …)
Picking Optimization, Packing, Staging, & Load Management
Storage & Operations
Physical Inventory
Replenishment/ Rearrangement
Kit-to-Stock Management
Resource & Labor Management
Cross-Docking
Yard Management
Import/Export, Dangerous Goods, & Compliance
Native Technologies (RF, RFID, Voice, Material Flow System)
Analytics & Reporting
TCI/TCO Reduction, Optimization Tools
EXTENDED WAREHOUSE MANAGEMENT
SAP Extended Warehouse Management

Arla Foods —Background
Sixth largest dairy company in the world
12,500+ owners in seven countries
19,000+ colleagues
Milk intake is in excess of 12.5 billion kilos per year
Products are sold in over 100 countries
Over 73 billion DKK revenue per year

Arla -Worldwide

Arla in the UK

Arla Foods —UK Operations
15 production facilities
4 chilled distribution centres, plus 1 ambient, receiving from over 50 production sites across Europe
Third party logistics operations
24/7 operating hours, day one for day two delivery profile
Mixture of dairy products across retailer supply chain

WMS Roadmap History
There are multiple WMS within Arla, including integration to third party WMS
It was recognisedthat the landscape needed to be aligned and reduce the number of WMS to a couple of core applications
One of the core applications is SAP WM
In the UK, Arla has a very customiseddecentralisedSAP WM solution
This has been built up over the last 10 years which added cost and time to any new requirements

WMS Roadmap —Moving Forward
New greenfield sites and innovation required something new
The Arla business were investigating the use of Automated Guided Vehicles (AGVs) in the despatcharea of a new dairy in the UK
They needed a system that would integrate with the SAP ERP system and AGV Control System with sub second responses
At the same time, a new distribution centrewas being planned which needed multiple additions to the existing functionality available in SAP WM

WMS Roadmap —Additional Justifications
Return to standard solutions –standardisation
To enable future development and flexibility they needed to use as much standard functionality as possible
SAP WM no future development planned
SAP were putting the resource into only developing and enhancing SAP EWM

Hatfield Distribution Centre
Pallet and Tetratainer storage
Over 16,000 pallet spaces and 18,000 tetratainer spaces over 230,000 m2
Pick and pack operations via RF and Voice
Around 1.65 million cases of finished product and 2 million bottles of milk despatchedper week
Multiple supplier set up
Third party logistics for chilled products

Aylesbury Dairy
Automated tetratainer movements
75+ Automated Guided Vehicles (AGV) covering an average distance (per AGV) of 24 km a day
Radio Frequency Identification (RFID)
All tetratainers fitted with RFID tags for increased traceability
Just-in-time pick and despatch
1550 vehicles loaded per week

Decision for EWM
ERP WM+TRM
Third Party
ERP WM DC
SCM-EWM
WMS Selection
Future Integration Requirements
Standard Integration to ERP
MFS and ITS
Solution Flexibility
Scalabilty
X X

Vendor Selection
ERP WM+TRM
Consultancy X
Consultancy Y
Rocket Consulting
Vendor Selection
Detailed knowledge of Arla processes
Consultants with detailed EWM experience
Flexible ways of working
Aligned with Arla approach
X X

Key Functionality Requirements
New functionality
required
Additional processes can be supported
Maintain existing levels of functionality
Integrated solution with AGVs
Unloading by HU to increase efficiencies for goods receipt
Integration with production systems to enable real time goods receipts from production
Optimisationin the supply chain
Inventory during picking
Resource management
Cross delivery HUs
Kit to stock
Third party segregation
Real time integration without reliance on ERP being available
HU cubing
Operator segregation
Management reporting

Business Blueprinting
200 Page Blueprint
Reference Group
Key business resources
Steering Group

Solution Finalisation
EWM Templates
Pallet solution for a fast moving distribution centre
Voice picking with AGV integration for fresh milk tetratainer operations in a dairy
Voice picking with manual movements for fresh milk tetratainer operations in a distribution centre

Project Execution
Development and test model agreed
Gaps and developments confirmed
Implementation partner built and unit tested build and changes
Arla operations conducted Integration and Regression tests
Super user and end user training conducted by Arla project team with implementation partner support
Hypercare support done throughout go-live period by Arla and implementation partner

Realisation —RFC Communication
EWM
ERP
Third Parties
AGV
APO
Synchronised

Realisation —AGV Processes
Multiple processes for AGVs
To enable smooth running of the plant, the cold store systems needed to have low response times
Collection from production
Staging of handling units
Replenishment of picking bins
Pre-staging of picked handling units
Problem resolution area
Partial handling unit area
Quarantine area

Realisation —AGV Integration
Time Critical Processes
Material Flow System (MFS)
Plant Connectivity (PCo)
Telegrams

Realisation —Enhanced Processes
Optimisation
Warehouse Monitor Changes
Wave Simulation
Dual Wave Processing
RF Presentation

System Based Challenges
Challenges
Business requirements
New Integration
Version
Performance
Testing

Change Management Challenges
Greenfield sites
Training of new solution and new ways of working to colleagues unfamiliar with Arla processes
Training of new solution to colleagues in a fast moving workplace
Misinterpretation of delivered solutions
Although regular communication was in place, key users didn’t have the functionality they were expecting
A number of minor changes and amendments to reports were implemented to support the business needs

Benefits —Aylesbury
Automated tetratainer movements
Reduction in number of people needed in the supply chain
Real time production bookings
Handling Unit level postings enables real time stock visibility for fresh milk for the first time in Arla
RFID tracking
Increased traceability throughout the supply chain
Voice picking
Increased accuracy and hands free operations

Benefits —Aylesbury/Hatfield
Wave release
In conjunction with a mixture of fixed and dynamic picking bins, allows stock to be in place before operators arrive
Cross line placement
Cross line placement to reduce congestion of operators and AGVs
Consolidation groups/cross delivery handling units
Deliveries relevant for order combination can be grouped on to the same Warehouse Order and HU to reduce transport costs and increase warehouse efficiencies

Benefits —Management and Reporting
Increased focus on process driven reports (work centre operations)
Now increased visibility of tasks in work centres
Kit to stock
Pallet inverting
Consolidated cockpit for easy access
All key reports available from one transaction
Traceability reports take less than 60 seconds
Previously a dairy could take up to 24 hours

Benefits —Integration
Decentralised solution allows operations to keep running
Warehouse functions not affected by ERP unavailability
Sub second communication via plant connectivity
Integrated system landscape allows for end to end business process monitoring
Solution Manager integrated to allow end-to-end business process monitoring

Benefits —Scalability
Template solution built as base for future rollouts
System code is not proprietary
Choice of vendors available to support future roadmap
EWM being actively developed
New functionality made available to support new business processes

Takeaway tips
Process mapthe business requirements and build the solution to support them
Implement sandbox client so that standard functions and processes of the system can be clearly understood
Standardised integrated landscape supports rapid response and updates
Change management is key throughout the implementation
End-to-end integration testing should be prioritised
Carefully consider the version of EWM you implement
Select the right vendor who understands the business processes as well as the technical solution

Questions & Further Information
Questions please?
www.rocket-consulting.com
Supply Chain Innovation Team
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Streamlining logistics execution at Arla Foods with SAP Extended Warehouse Management (SAP EWM)

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