Cat Logistics on Extended Warehouse Management_2010.12.2-11.38.55

Cat Logistics EWM JourneyOverview Mark Teegardin Date: Nov. 2010 The Challenge: Cat Logistics wanted to make a bold move: • • • • Dramatic returns required a bold move Incremental growth not acceptable Internal development was becoming a costly alternative Desire to stay ahead of technology changes In 2002 Steve Wunning, President, Caterpillar Logistics Services: “We believe that we can do more. By integrating supply chain activities with a comprehensive IT solution, we can reduce development costs 40%, implementation costs 30%, and ongoing operations 20%, all while shortening start-up durations. The net effect will benefit both the bottom line and the end customer.” Committed to Customer Success © 2010 Caterpillar Logistics Services, Inc. Caterpillar Confidential: Green 2 Approach Alternatives • Upgrade existing / develop new systems • Lacks true integration • Incremental improvements, incremental benefits • Increased capital expense, longer development cycles • Purchase off the shelf solutions and adapt • • • • Lower investment Improved integration Large providers historically underfunded SPM functionality No commercially available off the shelf solutions that met the current and future requirements • Change the rules: a new approach • Cooperative approach to share development costs • Input to new commercial software vs. adapting what was available • Leverage similarities in requirements Committed to Customer Success © 2010 Caterpillar Logistics Services, Inc. Caterpillar Confidential: Green 3 Caterpillar Confidential: Green 4 . Inc.Service Parts Logistics Software Alliance Service Parts Solution
Intellectual Property
Know-how
Capability
Scalability Best-InBestIn-Class Logistics Performance for Customer Satisfaction and Cost Committed to Customer Success © 2010 Caterpillar Logistics Services. Strategy: Fully Integrated Solution Concept:      ~ 80% common processes/ technology Leverage Ford and Cat Logistics volumes Commercialize system software Exit development Become implementers and integrators (Cat Logistics)  Intellectual Property  Know-how  Capability  Scalability Benefits: Lower development costs International capabilities Natural (planned) technology upgrade path Increase 3PL market opportunities (Cat Logistics)  Shared Risks between Cat Logistics. Inc. Ford. Caterpillar Confidential: Green Dramatic Cost Reduction 5 . and SAP     The Result: State of the Art Service Parts Management Solution Across Multiple Industries Best-In-Class Logistics Performance Increased Customer Satisfaction © 2010 Caterpillar Logistics Services. Delivering Enterprise Value Through Supply Chain Excellence Cat Distribution Services  MORTON  Manufacturing Logistics MOSCOW GRIMBERGEN SHANGHAI SINGAPORE PIRACICABA JOHANNESBURG MELBOURNE Transportation © 2010 Caterpillar Logistics Services. Inc. Caterpillar Confidential: Green External Client Business 6 . Africa. Middle East & CIS) 6 Continents 23 Countries 20 Languages 108 Facilities & Offices Shipping to 190+ Countries 11. Caterpillar Confidential: Green 7 .450 Employees Committed to Customer Success © 2010 Caterpillar Logistics Services. Of Freight/Yr $2. 160M+ Orders/Yr 21B lbs. Ft.900+ Employees 29M+ Sq. Inc.Cat Logistics Today Americas 61 Locations 6200 Employees EAME (Europe.4B Transportation Purchased/Yr 20M SKU’s Serviced/Yr Asia-Pacific 12 Locations 1250 Employees 33 Locations 4. Inc. © 2010 Caterpillar Logistics Services.Why SAP? • Global Capability & Focus on the Customer Needs • Committed to the Ford-Cat Alliance Vision of Industry Leading Service Parts Logistics Solution • Modular Development and State-Of-The-Art Technology Now and Into the Future • Commitment to the SPM space • Best “fit” of existing SPM offerings • Industry strength. Caterpillar Confidential: Green 8 . financial strength and proven expertise • Development capability SAP is Caterpillar’s SPM strategic direction – for internal use as well as for external clients. Aligning Our Strategy 5% Client 80% Unique Unique 15% Solutions Industry Specific 20% Std. Solution 80% Standard Solution Current © 2010 Caterpillar Logistics Services. Caterpillar Confidential: Green Future 9 . Inc. Solution 80% Standard Solution Current © 2010 Caterpillar Logistics Services. Caterpillar Confidential: Green Future 10 .Aligning Our Strategy 5% Client 80% Unique Standard Solution is based Unique 15% on Solutions Industry Common Processes Specific utilized Globally 20% Std. Inc. Aligning Our Strategy – Global Template • Definition: A configured SAP system. incorporating common. local Common business processes Reduced implementation risk Quick repeatable roll-outs Lower implementation costs © 2010 Caterpillar Logistics Services. standardized processes and data definitions that can be rolled out to multiple locations – – – – – Target 80 / 20% global vs. Inc. Caterpillar Confidential: Green 11 . Lessons Learned • • • • • Change Management is crucial (awareness at all levels) Transformational thoughts and actions required early Fully understand current process and rational Team willing to accept and advocate change Follow your Methodology & Implementation Processes • • • Leverage standard functionality Enhance for strategic advantage Do not over engineer your enhancements • • • Master Data Repeatable Templates for everything Stay current with SAP service packs Committed to Customer Success © 2010 Caterpillar Logistics Services. Inc. Caterpillar Confidential: Green 12 .Aligning Our Strategy . Inc. Evolve. Rollout Time TM? CRM EWM UPGRADES/SP ROLL .Aligning Our Strategy . Caterpillar Confidential: Green 13 End Goal COMPONETS MM .OUTS Global COE PRODUCT EVOLUTION GLOBAL CAT LOGISTICS LANDSCAPE Production Support METHODS SAP R&D – New EWM Functionalities © 2010 Caterpillar Logistics Services.Implement . Caterpillar Confidential: Green 14 .Implementation Approach • Continued Investment in Global Template • Continued Global Business Process Transformation • Component Installation Approach – Facility by Facility Go-Live • SCM Extended Warehouse Management – Worldwide Network Install of Component • SCM Service Parts Planning – Regional Go-Live • CRM & Billing Committed to Customer Success © 2010 Caterpillar Logistics Services. Inc. MN) installed in November 2007 Waco Distribution Center installed March 2009 Clayton DC scheduled for early 2011. Inc. Paul. Caterpillar Confidential: Green 15 .Current Progress • EWM – – – – Pilot Facility (St. IPC 3rd QTR 2011 MEDC scheduled for 2012 • SCM Service Parts Planning – DFIP installed in June 2009 – DRPR scheduled for mid year 2011 • CRM – CRM active through interfaces – BCR MEDC scheduled for 2012 (1st & regional) Committed to Customer Success © 2010 Caterpillar Logistics Services. Extended Warehouse Management . Caterpillar Confidential: Green 17 . Inc.EWM Highlights Increased Process Functionality • Inbound Processes • Outbound Processes • Internal Processes Key Benefits: • Integrated Yard Management Solution • System Directed Routing • Exception Driven Processing • Pick Bin Determination • Packaging Execution © 2010 Caterpillar Logistics Services. case and bulk picks Replenishment of forward picking areas Double-checking inspection and packing Removal Strategies Unloading of transport units Deconsolidation Slotting / Rearrangement Labor Management Decentral Quality Inspection Multi Client Warehousing Flexible Process Modelling Layout Modelling Warehouse Automation (MFS) Committed to Customer Success © 2010 Caterpillar Logistics Services.SAP ERP-WM vs. etc. SCM-EWM LES EWM EWM offers …  Core Operations Analytics Visibility Transportation Warehousing         Distribution Center            Internal Routing Monitor as central tool and central starting point Use of partial goods receipt in inbound processing (GR per HU) System guided put away with deconsolidation/fanning Complex wave planning and outbound route structure High volume picking and shipping and Warehouse Order Creation Broad stock/inventory view (pre-picked HUs.) Slotting & Better integration to Yard Management Functionality Warehouse Rearrangement – and Goods Receipt Optimization BI Integration Conveyor automation and pick-to-light integration Put-away Strategies Pallet managed inventories using Handling Units ePedigree/serialization with RFID integration Cross-Docking Process-oriented storage control Assignment of Serial Number to HU possible Wave Management – pick-logig Replenishment Handling / Storage Unit Management Yard Management Enhanced configurable RF-technology Task & Ressource Management Expected goods receipt Value Added Services / Kitting Dynamic cycle counting Integrated labor management functionality EWM simplifies HUs by only defining them at Storage type level. Caterpillar Confidential: Green 18 . instead of Storage Location level Shipment and Transportation units fully supported Each. staging zones. Inc. GREEN – Implemented in production EWM Available Functionality INTERNAL WH • Yard Management • Quality Inspection Engine • Inventory Counts / Records Accuracy • Kitting (to Stock/ to Order) • Replenishment • Rearrangement OUTBOUND • Route Determination • Wave Management • Picking Bin Determination • Warehouse Orders • Work Assignment (labor mgt) • Picking • Packing • Shipping / Staging • Loading & Goods Issue INBOUND • Slotting • Receive ASN Data • ASN Validation & Correction • Transport Unit Arrival • Manage Transport Unit • Goods Receipt • Base Receiving • Putaway Bin Determination • Unload Transport Unit • Deconsolidation • Internal Routing • Putaway • Inbound Back Order Expediting • Push Deployment • Transportation X-Dock • Returns / Reverse Logistics • Packaging Engineering © 2010 Caterpillar Logistics Services. Inc. Caterpillar Confidential: Green BLUE – Current implementation YELLOW – Not yet implemented 19 . 200 outbound lines • Emergency customer facing for North Central US and Central Canada • Ship to Customers around the world Testing: • Integration . 8 weeks Go-Live: • 1-2 IT people on-site the first 2 months & Command Center Concept Committed to Customer Success © 2010 Caterpillar Logistics Services.~300 tests.~200 tests. 16 weeks • UAT . Inc. 600 inbound lines/1.St.000 sq ft. Paul. Caterpillar Confidential: Green 20 . MN (Brownfield) Facility Info: • 90.EWM Pilot . • Do not push the work into the next milestone. But it is worth it. • BCSets work well to transfer configuration and lock down settings when needed. Inc. Committed to Customer Success © 2010 Caterpillar Logistics Services.Challenges & Lessons Learned – St. It creates a snowball effect. Paul Performance Issues: • SCM 5.0 Service Pack 8 • Custom and CDP code • Data archiving and database reorgs • RF dead spots. access point failure Lessons: • Make sure to test using Production (real life) sized volumes. When you log OSS messages include all relevant information and example data. It takes some work to get agreement from all parties on standard practices. • Global Template works. Caterpillar Confidential: Green 21 . • SAP is willing to help. ~400 tests. 2.000 sq ft. 6 weeks (Blended solution-more business scenarios) Go-Live: (phased approach) • 2-4 IT people on-site the first 2 months & Command Center Concept Committed to Customer Success © 2010 Caterpillar Logistics Services. Caterpillar Confidential: Green 22 .~350 tests. TX (Greenfield) Facility Info: • 750.1st DC – Waco.000 parts numbers stocked • Ship to Customers around the world Testing: • Integration . 6 weeks (Auto) • UAT .500 inbound lines/9.500 outbound lines • Emergency & Stock for customer facing dealers plus network search • ~200 associates / 3 shifts over 100. Inc. 9 weeks (Regression & FRICE) • Business Simulation – volume & number of users. Challenges & Lessons Learned – Waco General Warehousing Issues: • Some RF process and performance • Few storage concepts • PGI performance and common process • Transportation cross dock process flow Lessons: • Strong SAP support for product and challenges • Scope Control – PTAM process • Leverage auto testing tools for regression testing . Inc. Caterpillar Confidential: Green 23 . Committed to Customer Success © 2010 Caterpillar Logistics Services.Velocity • Methodology Adherence – High Quality Delivery • Global Template grows as new functionality is implemented. Impact Analysis on existing facilities. Caterpillar Confidential: Green 24 .Continued Investment in Global Template • Additions to Caterpillar Global Template for Waco implementation – – – – Transportation Cross Dock functionality Multiple RF Screen sizes STO shipping and receiving ITS (Internet Transaction Server) RF Screens © 2010 Caterpillar Logistics Services. Inc. 16 weeks • *UAT .100 inbound lines/~18.000 parts numbers stocked • Ship to Customers around the world Testing: (Impacts of BP) • Integration – DC ~115 tests.~ 1100 tests. ~3. Inc.5M sq ft. ~16 weeks • Business Simulation – volume & number of users.300 outbound lines • Emergency & Stock for customer facing dealers plus network search • ~500 associates / 3 shifts ~200.DC & IPC – Clayton. 4-6 weeks (Auto) • UAT . 12 weeks (completed in 8 weeks) • *Integration – IPC ~775 tests.~175 tests. OH (Greenfield) Facility Info: • ~1. 20 weeks (script writing in process) Go-Live: (phased approach) • 2-4 IT people on-site the first 2 months & Command Center Concept Committed to Customer Success © 2010 Caterpillar Logistics Services. Caterpillar Confidential: Green 25 * = new process . Current Status & Lessons to Follow – Clayton Current Status DC & IPC: • DC – UAT IPC – Integration Test • Focusing on New functionality/process testing and Business Simulation Testing • Growing Auto Testing capabilities and UAT Realistic Production scenarios Lessons: • Strong SAP support for product and challenges around new functionality • Leverage SAP Max Attention services • Scope Control – PTAM process • Leverage auto testing tools for regression testing . Inc. Scheduled tuning and review of solution execution. Caterpillar Confidential: Green 26 . Impact Analysis on existing facilities.Velocity • Methodology Adherence – High Quality Delivery • GT grows as new functionality is implemented. • Leverage and grow Global team for continued implementation and support Committed to Customer Success © 2010 Caterpillar Logistics Services. Continued Investment in Global Template • Additions to Caterpillar Global Template for Clayton DC & IPC – – – – – – – – – EH&S Custom Table Archiving Extended Cross Docking Base Receiving VAS & Pack Specs QIE/QM – Scrap improvement GL & FI integration Slotting improvements Auto triggers for IPC PGI/Load/GR © 2010 Caterpillar Logistics Services. Caterpillar Confidential: Green 27 . Inc. What’s Next • • MEDC Project beginning (EWM & BCR) Execution Framework – Rollouts & Releases – Rollouts . Caterpillar Confidential: Green 28 . SP/EP. New Functionality. Greenfield. Latin America – GATP – Push/Pull Deployment – Order Management – Regional implementations – Additional SPP functionality Committed to Customer Success © 2010 Caterpillar Logistics Services. SCM modules • EWM Functonality – Voice Technology – Labor Management – Kitting – Supply Chain reporting extensions • Extension of SCM products and integration – BCR North America. Asia Pacific.EWM Brownfield. Inc. Greenfield & Retrofits – Releases – EWM Brownfield. Caterpillar Confidential: Green 29 .Thank You! Questions Committed to Customer Success © 2010 Caterpillar Logistics Services. Inc. Back-up Slides © 2010 Caterpillar Logistics Services. Caterpillar Confidential: Green 30 . Inc. qRFC or RFC .0 SAP CRM 7.2 SAP Transportation Management System Compliance Management Customs Management SAP Event Management CRM Middleware RFC* SAP SCM Basis PlugIn 2005 Master Data ECC 6.01 Portal Business Warehouse Exchange Infrastructure Web Application Server * tRFC.Service Parts Management: Architecture (2010) Customer Relationship Management Supply Chain Management SAP SCM 7. Billing. Marketing and Interaction Center RFC* XI global ATP SAP ICH Service Parts Planning SAP Internet Pricing Configurator SAP Extended Warehouse Management SAP Global Trade Service 7.0 (EP 3) Transactional Data RFC* XI Materials Management Logistics Execution Quality Management Financials/Controlling Environment. Service. Health and Safety SAP NetWeaver 7.0 CRM Server: SAP APO CRM Middleware Sales. . Execution Orders.Application Architecture: Warehouse Management ERP EWM WME Front-end Application Execution using RF Monitoring Inbound Planning Exception Management Outbound Planning WM Service Cross Docking Wave Planning Slotting Packing / Packaging Picking Strategies Putaway Strategies Master Data / Parameter Transactional Data (I/O Orders.) APO Lean Inventory Management KPIs (BW) . Delivery..