External IP+edited v2Management access to fast, accurate, real time information is of the essence. Warehouse bottlenecks Warehouse bottlenecks can occur at multiple points within the

Version: 2 Copyright Britehouse SSD (Pty) Ltd, 2011 Page 1

White Paper

Improve Business Performance across the Supply Chain

with Warehouse Management Systems

Supply Chain efficiency is the key to unlocking new markets,

competitive advantage and improved margins. By utilizing the

visibility provided by Warehouse Management Systems

businesses can not only decrease reaction time to bottlenecks, but

increase operational efficiency and throughput by driving sound

business processes to deliver results.

Protecting you profitability

Profitability margins are always under pressure in current markets

where companies need to be globally competitive. Constant price

sensitivity of customers places the profitability pressures back to

the Supply Chain to find cost and time savings in order to deliver

not only the goods to customers on time, on location and on price,

but to deliver the results the business requires to go forward.

The challenges of managing the supply chain

Inventory and logistics management often constitutes the largest

cost component for a business. The challenge is to control these

costs while simultaneously increasing service. Challenges that

impact cost and efficiency are:

• Limited supply chain visibility

• Inadequate communication

• Warehouse bottlenecks

• Warehouse space constraints

• Picking and putaway errors

• Disconnected manual processes

• Lack of process control

• Limited flexibility and ability to adapt to changes

• Inefficient use and planning of labour

• Poor Stock Controls

Improve business performance across the supply chain with SAP Extended Warehouse Management system


Lack of Supply Chain visibility

Warehouses sometimes operate as an island in the sea of Supply

Chain information always being the last to know of incoming

volumes or sales. Not seeing what’s coming until it’s too late

destroys any planning capability and limits the part the warehouse

can play in an efficient Supply Chain. Plans then need to be

reworked often leading to additional resources resulting in

unexpected costs.

Poor information results in poor planning and forecasting. Without

the correct tools from where to access accurate and reliable

information Supply Chains continuously fail to deliver on lead

times. Accurate forecasting based on reliable information enables

flexible and effective Supply Chains.

Inadequate communication

Warehouse management systems provide large volumes of data

that are difficult to interpret at a glance as well as being kept

across multiple systems. This disparate information introduces

risks to the business as this information needs to be consolidated

after the fact, and that can lead to incorrect representation of the

facts. Within the time sensitive environment that is Supply Chain

Management access to fast, accurate, real time information is of

the essence.

Warehouse bottlenecks

Warehouse bottlenecks can occur at multiple points within the

facility. From slow receiving to inaccurate picking that requires

inspection, or slow loading resulting in late delivery times and

waiting trucks in the yard. Some bottlenecks are aggravated by the

increase in volume through put, or originate as a result of it.

Bottlenecks at any point within the warehouse will leave another

activity underutilized or inefficient as a result.

Warehouse space constraints

Warehouse space is always at a premium, whilst filling the space

with the correct stock the market requires may not be the

Warehouse’s responsibility, but placing the stock in the most

optimum position for storage and movement is. Inheriting facilitates



that do not meet the warehousing needs often force bad business

practices as an ability to cope with this constraint. Often incorrect

storage is the main cause of damage and claims against

warehouses and as such failing to supply the product in the

optimum salable state.

Picking and putaway errors

These errors are common place in warehouse environments that

rely on user knowledge and scenarios where verification of what

stock is taken and where stock is put. In multiple shift

environments precious time is wasted searching for stock the

previous shift handled. Furthermore enforcing accurate stock

picking and placement is a time consuming process without

systematic help. Resulting inaccurate deliveries to customers not

only has a cost implication from the resulting claim, but the lost

sale opportunity cost for the customer resulting in lack of trust in

the supply chain and the resulting change in demand.

Disconnected manual processes

Repacking and assembly of goods before they are seen as salable

products is often a function that happens outside warehouse

controls. These value added processes are often completed by the

warehouse but not on system and as such little control over

consumption and efficiency is possible.

Lack of process control

Building warehouse processes on best practices is best practice.

However without warehouse systems to enforce the process, it is

only good on paper and not in practice. Lack of control over

processes makes tracking and visibility of productivity difficult and

as such time is spent micro managing each process as opposed to

fine tuning and accelerating.

Limited flexibility and ability to adapt to changes

Not being able to cope with spikes in volume or specialized needs

on short notice due to space constraints, lack of accurate

information is common place in warehouse facilities. These

problems will continue in growing supply chains, however the tools



to cope with these problems need to be in place in order to keep

these exceptions from disturbing the apple cart.

Warehouse facilitates often manage multiple parties stock storage

and handling needs, and as such the melting pot of inventory

handling needs is a large one. With that comes the need to cope

with irregular sized products or requests for handling. This can

incur additional costs of supply, or the warehouse may not be able

to cope with the requests along with regular supply.

Inefficient use of labour

Inability to track and measure labour productivity performance in

the warehouse makes managing the labour force to deliver

expected targets and results a massive manual task. As labour is

often the largest running cost component accurate reporting and

visibility of this risk is essential for an efficient warehouse facility.

Poor Stock Controls

Lack of verification and controls at key point within the warehouse

opens the business to risk of stock loss through theft and pilferage.

Verification of stock quantities is required of each point of handling

as this is the only measure to ensure stock responsibility at each

step in the process. Also this creates accountability for stock at

each point. Without the necessary controls in place this can quickly

become a black hole for costs.



The Solution: SAP Extended Warehouse Management

SAP Extended Warehouse Management (EWM) system can

deliver:

• Supply Chain Visibility and Information

• Optimize processes and volume throughput

• Optimize space utilization

• Increase distribution flexibility

• Improve information sharing between parties

• Improve inventory control

• Optimize labour utilization

• Integrate disconnected processes

Supply Chain Visibility and Information

Information availability is a vital tool for management to be able to

act or react to scenarios. Predominantly Warehouse Management

systems are seen as mountains of information without easy

understandable interfaces where users can find the answers they

seek. Within the time sensitive environment which is the Supply

Chain, readily available, accurate information makes all the

difference. SAP EWM’s Easy Graphics Framework, Warehouse

Cockpit and Warehouse Monitor, along with Post Processing

Framework, allows for the display, reporting and mobilization of

information. This enables screens placed at key points throughout

the warehouse to refreshing key figures or graphics. The

Warehouse Monitor functions as a central repository from where

all warehouse actions can be tracked and reported on, ensuring

easily accessible actual data. This monitor is customizable to

include all processes that require focus. This standard functionality

enables reporting on a live system for real time decisions.



Warehouse Monitor

Warehouse cockpit



Graphical Warehouse Layout

Optimizing processes and volume throughput

Warehouse flow contributes significantly to the efficiency of the

operation and by calculating the movement, considering the

constraints, allows the warehouse to maximize the profitability of

each resources time spent doing that movement. SAP EWM’s

Process Orientated and Layout Orientated Storage Control

enable this control per Warehouse task based on the function

being performed. Thus this configuration directs the labour either

by follow on step in the process, unload the truck then receive the

stock, hence Process Orientated, or by physical layout of the

facility, pick mezzanine located stock at the lastly in the pick

sequence, hence Layout Orientated. By utilizing either or both of

these strategies process adherence is driven by the system,

resulting in uniformed measurable improvement in throughput.

Thus improving throughput by driving process adherence, the cost

of labour is spread across a greater base, making it more

profitable.



Optimize space utilization

Warehouse space being a scarce commodity SAP EWM makes

use of a combination of storage strategies that are able to assist in

this bottleneck by giving each instruction individually planned

optimization in terms of stock placement. Operating within a

configurable framework SAP EWM Storage Strategies allows

Storage Sections within Storage Types along with Storage Bin

Types to efficiently determine based on the inputs where to place

the stock. By combining say Fixed, Dynamic and Bulk storage

strategies the warehouse has the ability to, receive and pick

constant fast moving lines from a fixed bin storage type, be able to

optimize slower moving stock in a dynamically optimizing storage

type and receive and pick Bulk volume articles in one warehouse.

When space constraints occur, accuracy is compromised,

increasing stock risk. In Dynamic environments the decision to

place stock, even within the framework determined, needs to be

optimized on a daily basis to ensure maximum utilization. SAP

EWM’s Slotting and Rearrangement functionality enables this by

using configured conditions on determining where the best

placement is for stock fitting a set of requirements i.e. Packaging,

Forecasted sales, price, etc. As the stock matching these

requirements change due to market forces, the composition of

areas in the warehouse changes. This Slotting and

Rearrangement process can suggest new putaway rules or

storage section based on the characteristics. It can also schedule

the tasks to perform the movement of this stock to rearrange their

placement, or leave existing stock in their respective bins and only

optimize new receipts of that particular stock item. The aim of this

functionality is to give the warehouse constantly optimized stock

storage that will allow for the most efficient throughput of stock.



Increase flexibility

Being able to build every process within the warehouse into the

system as a measurable executable task allows for greater

visibility when the warehouse is facing changing requirements.

Flexibility stems from the ability to be proactive when facing

changes. SAP EWM’s Labour Management component coupled

with the visibility provided by the Warehouse Monitor allows

Warehouses to continually monitor productivity and manage

resources in the required areas so as not have bottlenecks and

remain able to cope with demands.

Improve information sharing between parties

SAP EWM’s Advanced Shipping Notification functionality allows

parties within a supply chain to notify each other of a shipment

they have distributed to the next party in the chain, this allows

better planning between partners as well as optimizes the stock

availability through trusted relationships. This stock can then be

available to promise quicker than in the traditional scenario without

compromising warehouse efficiency or incurring cost.



Improve inventory control

Stock counts and inventory management is always of large

concern for warehouses and even more so for 3PL and service

providers, as the main risk that they negate for the principal

business is the risk stock loss through logistical activities pose.

The traditional stumbling block for Inventory control is the moving

target scenario. Meaning counts could historically never be

executed during normal operations as the stock is constantly in

movement, and the only way to have a reliable count is by bringing

the business to a halt and executing a wall to wall count. SAP

EWM’s Physical Inventory module allows for Physical inventory

counts to be executed during operations by using RF scanning

technology. The use of RF devices is however a prerequisite for

this functionality, however without RF functionality the counting

and clearing/posting can happen at separate intervals whilst work

continues. Also the reporting of differences along with the financial

difference can report from EWM, before posting any change to the

ERP system. This enables monitoring and analysis by inventory

personnel to ensure less surprises come time for annual stock

counts. Cycle counts, Ad-hoc counts and Annual stock counts all

form part of a Queue of work in the RF environment. This queue of

work can be combined with the normal picking and replenishment

tasks, thus by setting the priorities of these tasks, no idle time for

resources can be accomplished as well as maintaining the

percentage of stock that is counted within a set period of time.

The posting and clearance is also managed by tolerance levels set

by user that is qualified to do the clearance, by financial value or

sum of units to be posted. This can also be automated given these

tolerances, and by doing so the view of available stock from all

points of interrogation can be 100% accurate ensuring a level of

customer service by being able to sell stock that is physically

available for sale.



Optimize labour utilization

Ensuring consistent performance from labour in order to maximize

the return on cost becomes increasingly difficult as volumes and

throughput rises. SAP EWM’s Resource Management as well as

Labour Management components create a framework for

optimizing this. Resource management allows for the assignment

of warehouse tasks to resources based on their qualifications and

what they are allowed to do. Also the use of System Guided mode

ensures Task Interleaving so the resource is constantly engaged

with warehouse tasks based on the functions they are qualified to

complete. Thus there is no idle time during the shift. The follow on

for this solution is to use the Labour Management component to

track and measure each resources performance. This is done by

completing labour studies on the work steps that are completed by

the resources and using the findings to setup Engineering Labour

Standards through which planned time for completing a process

can be compared to actuals. This process also enables reporting

on performance per resource as well as assist in capacity planning

for forecasted workload. Labour Management can also interface

with Human Resource Management to report on time and

attendance and assist with incentives and compensation. This is

the most accurate method of tracking of performance per Labour

resource by being able to measure and compare actual work

performance with accurately planned work. This functionality

allows for the active management of labour performance to in turn

manage labour cost.

Integrate disconnected processes

SAP EWM’s Value Added Services and Kitting offering enables

processes such as packaging and repacking to be done on system

and measurable in terms of a stock usage, tracking and labour

perspective. Thus no processes are done off system that are not

accounted for and reported on.



The Britehouse SSD Solution: SAP’s Extended Warehouse

Management (EWM)

Britehouse SSD (Pty) Ltd uses SAP’s Extended Warehouse

Management software, developed in collaboration by CAT

Logistics and Ford, to deliver improved business performance

across the supply chain to its clients across multiple industries.

For example, Barloworld Equipment, which sells, supports and

rents branded mechanisation products to customers who need to

move earth, handle materials and generate power in dealer

territories in Southern Africa, uses SAP Extended Warehouse

Management.

In addition to selling new machines, Barloworld Equipment also

locates, refurbishes and recirculates dormant equipment.

Last year (2010), Barloworld Equipment’s internal plants grew

shipments at the fastest rate in more than three decades. This was

largely due to the following improvements in its warehousing

operations:

• Full product traceability (inbound and outbound)

• Improved inventory accuracy

• Improved accuracy of product picking and dispatch to

customers

• Integration of the automated system into the physical storage

systems

• Improved efficiency and effectiveness of warehouse personnel

and equipment utilization through the use of RF scanners and

reduction of paperwork

• The ability to prioritise customer orders

• The ability to proactively identify potential problems through

the use of monitoring tools which also allow improved space

utilization.

Barloworld Equipment has 52 parts warehouses in the SADC

region and 65 808 total lines per month. It services more than

8 000 customers and has 310 000 active materials and 36 000

stocked items.

Britehouse Specialist SAP Division (SSD) has some of the

country’s best SAP expertise, and a proven capability for



innovation and rapid delivery of complex projects. It is well

equipped for its strategic intent to operate almost exclusively in the

large enterprise space.

Britehouse SSD is proud to be an SAP Service Alliance Partner,

having obtained the highest SAP Partnership Certification

available in South Africa. The Company is an SAP-certified

provider of solution operations using the Run SAP methodology.

Britehouse SSD applies industry knowledge and insight to deliver

innovative enhancements to SAP which help clients run their

businesses more effectively.

Britehouse SSD Approach

Overview

In line with Britehouse focus on providing massive value to its

customers through superior SAP Consulting services and

solutions, Britehouse introduces their Supply Chain Management

team.

The Britehouse Supply Chain Management team offers solid

supply chain knowledge with many years of SAP product

knowledge. This synergistic combination of practical business,

supply chain and SAP expertise allows Britehouse to ensure rapid

value return for all its customers.

Implementing a supply chain management solution can involve

risk. Britehouse combines its SAP and business knowledge and

experience to ensure success. The Britehouse approach delivers

major supply chain benefits and has proven to add value to new

and current SAP ERP implementations.

The track record of the Britehouse SCM team members are

testimony to their experience and success. This is reflected in their

responsibility for and involvement in, the majority of the SAP

Supply Chain Management projects in South Africa.



Capability

Britehouse has the capability to implement and support end-to-end

Supply Chain solutions. With reference to the fundamentals of the

Supply Chain Operations Reference (SCOR) reference model and

within the context of SAP (Core R/3 and supporting products e.g.

APO, BW, EWM etc.), the typical specifics in terms of capability to

deliver would be:

● SCOR Model: Plan > Source > Make > Deliver > Return

(enable)

Plan

The full suite of Demand and Supply Planning Solutions, from

strategic Integrated Business Planning/ Budgeting to operational

Demand Planning and Supply Network Planning. These solutions

will be underpinned by the typical MPS/ MRP processes and their

supply chain monitoring options.

Source

Procurement, Subcontracting and the associated Inventory

Management processes supported by Supplier Collaboration

Make

Production Planning, Detailed Scheduling and Manufacturing

Execution with integration to low level systems. This includes all

scenarios in terms of Make to Stock, Make to Order and

configurable materials. Quality Management processes support

the manufacturing process from the batch management and

inspection of raw materials to the recording of results and the

Certificate of Analysis of the finished products.

Deliver

Managing Customers in terms of relationships, collaboration, order

processing and ultimately delivering product.

Enable



• Warehousing Solutions (WM/ EWM) with the appropriate

mobile applications (scanning) manage the material flow within the

supply chain.

• Supply Chain Performance metrics and visibility utilising

the SAP Business Objects Enterprise Performance Management

tools.

• Product Lifecycle Management supports the materials that

ebb and flow through the supply chain and Enterprise Asset

Management processes and tools ensure that the various work

centres and resources supporting the "Make" process are

operating at an optimal level.

In the case of bespoke developments that may be required to cater

for specific business requirements e.g. B2B, VMI solutions,

Britehouse has the skills and experience to effectively deliver on

these requirements. Existing custom developments can be quickly

assimilated allowing for fast-tracked support and enhancements.

Experience

Britehouse has a broad range of Supply Chain experience in both

implementation of solutions as well as in continuous innovation

and support of existing solutions. Amongst this experience are

solutions in the following industries: Chemical, Consumer

Products, Construction, Mill, Mining, Oil and Gas, Retail etc.

The focus is on the life-cycle of the integrated Supply Chain rather

than on the go-live date ~ the Supply Chain is seen as a dynamic

system that is continually adapting and changing. As such the

focus is not only building a robust scalable technical solution but

also on building capability in the people supporting the solution.

Skilled capable people allow the business to adapt quickly to

changes in the external forces on the supply chain.

With regards to existing Supply Chain solutions Britehouse has the

capability to quickly evaluate the health of a supply chain from an

SAP and business process point of view. Leveraging on

experience gained in dealing with a variety of Supply Chain

improvement initiatives, short and medium term interventions are

proposed leading to improved Supply Chain performance. These



improvements are typically in the areas of Customer Service and

Return on Assets.

Conclusion

Doing more, more often, with less has been Logistics’ greatest feat

since its inception. Logistics is a channel of the supply chain which

adds the value of time and place utility. Continues Improvement is

essential for survival and nowhere is this more visible than in the

Warehousing world, where you truly only are as good as you were

yesterday. No Supply Chain is exactly the same, however

Common Supply chain problems exist and seldom have common

solutions. SAP Extended Warehouse Management module has

looked at best practice within the science of Warehouse

Management and has produced a product that can enable

warehouse facilities to handle complex processes easily and

achieve volume throughput consistently. By facilitating these

processes through its framework it enables the unlocking of value

present in every warehouse. Structure and control of processes

based on accurate reliable information creates competitive

advantage and growth in market share. SAP Extended Warehouse

Management system is the key to unlocking potential in the Supply

Chain environment.

About Britehouse Specialist SAP Division (SSD)

Britehouse SSD (Pty) Ltd is the SAP Consulting arm of the

Dimension Data Group. Britehouse has built a strong reputation by

delivering successful projects to some of South Africa’s largest

Enterprise SAP Clients. Britehouse has a consulting base of over

208 highly skilled functional and technical consultants, all

operating under the same ethos as the initial vision to provide

strong skill-sets to deliver complex projects.

To learn more about Britehouse SSD, visit

www.britehouseSSD.co.za or call 0800981334 to speak with an

inside account executive about how SAP solutions can help your

enterprise.

External IP+edited v2Management access to fast, accurate, real time information is of the essence. Warehouse bottlenecks Warehouse bottlenecks can occur at multiple points within the

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