Case Study: Manufacturing & Logistics

CHALLENGE.

A global commercial, industrial and residential equipment with manufacturer with operations in over 80 countries decided to consolidate two of its largest manufacturing plants into a single new greenfield plant located in the United States. The new plant was to be designed to be more efficient with significantly increased capacity and utilization.

The two plants varied greatly in terms of the products they produced, how they were produced and the types of parts required to produce them. One plant received its demand plans primarily via make-to-stock (MTS) forecasts and repeatable production schedules whereas the other plant was primarily dependent on make-to-order (MTO) sales demand. In both cases, the majority of metal and plastic components were to be fabricated in house resulting in the need for multiple discrete production operations housed within a single facility and seamlessly integrated for just-in-time supply of semi-finished goods to finished goods assembly lines.

Both plants required a myriad of solutions for supporting internal logistics. Among these included milk runs, kanban supply, small parts, large parts, bulk storage, repacking and narrow aisle storage to name a few.

Lastly, the building was to also house the corporate headquarters, R&D and shared service functions which complicated the operational design and layout of the facility considerably.

SOLUTION.

To address these challenges, the company worked with a multi-national team of consultants comprised of industrial engineers, SAP EWM experts, and general contractos to design the factory and implement a new SAP Extended Warehouse Management (EWM) system to run all of its manufacturing and logistics operations. The implementation included the following steps:

  1. Industrial design: Industrial engineers modeled current material movements and velocities, to determine optimal factory layout and operational design.

  2. Business process analysis: Business analysts and SAP EWM experts conducted a detailed analysis of current and future state of both systems and processes. The result was a detailed business requirements document and system design specifications outlining the SAP EWM solution architecture, configurations and required custom development.

  3. System configuration: Functional and technical SAP EWM experts configured the system to meet the requirements, including sales and purchase order processing, production supply and execution, quality management, warehouse logistics, receiving, packing, repacking, shipping and inventory control.

  4. Integration with existing systems: Transportation experts configured and integrated small pack, less than truck (LTL) and truckload (TL) systems needed for the tender, execution and freight of finished goods shipments destined for internal distribution or end customer locations.

  5. User training: Using prepared work instructions and procedures created during test preparation and execution, change management and training experts created a training video library containing all trainings by job role necessary for adequately preparing system users. Trainings were delivered in person but the library served as a supplement for new users needing additional instruction.

IMPACT.

The consolidation of two manufacturing plants into a single new greenfield plant presented several challenges, including complex logistics, inventory management, integration of systems, and staff training. By implementing SAP EWM for its logistics operations, the company was able to streamline its processes, improve inventory management, reduce waste and energy consumption, and improve data accuracy. Overall, the implementation of SAP EWM helped the company achieve its goal of creating a more efficient and sustainable manufacturing plant. Some key benefits are listed below:

  1. Utilization: Provided real-time visibility into warehouse capacity and inventory levels, optimized storage and reduced waste. This, in turn, significantly improved inventory carrying costs and production capacity utilization.

  2. Inventory: With SAP EWM's advanced inventory tracking and management capabilities, we were able to achieve higher levels of inventory accuracy, inventory turnover and lowered days inventory outstanding (DIO).

  3. Customer Service: By optimizing warehouse processes and workflows, order cycle time, order accuracy and order fill rate were all improved.

  4. Productivity: SAP EWM provides real-time visibility into warehouse operations, enabling managers to optimize labor allocation and reduce wasted time. This improved labor productivity, order cycle time, units per hour (UPH), and cost per unit (CPU).