Implementing Oracle Warehouse Management System (WMS) in a Supply Chain of Manufacturing Plants and Distribution Warehouses

Author: Jaidev Desai Company: Wipro Technologies

Jaidev Desai Governor’s Ballroom A/E 12:15pm – 1:15 pm Thursday

Objective • Present the audience with design considerations, solutions and nuances of implementing Oracle Warehouse Management System (WMS) in a supply chain of Manufacturing Plants and Distribution Warehouses

• Speaker : Jaidev Desai
• Sr. Consultant- Oracle Applications, Wipro Technologies • 11 years of experience in implementing ERP and business solutions in the Distribution/Planning domains • Extensive experience in Manufacturing • Experienced in implementing business solutions in Distribution Domain using products like Oracle Applications and BaaN

Approximate Duration of this presentation : 90 minutes

• • • • Introduction The Customer Highlights of the WMS Implementation Design Consideration for Oracle WMS in • Discrete Manufacturing Environment • Finished Goods Warehouse • Cross Dock Facility • Supply Chain of Manufacturing Plants and Warehouses • Sub-Ledger Level Accounting (Cost Groups) Transaction Based Labeling Optimization of the transactional processes Challenges

• • •

• This presentation/paper is a brief discussion on
• Design consideration while implementing Oracle Warehouse Management System(WMS) in a supply chain of manufacturing plants and distribution warehouses. • Benefits that the customer has derived from the solution • Challenges • Oracle’s E-Business Suite (11.5.9) was leveraged to deliver the solution for the customer.

The Customer
• • The parent organization is a $16B US global conglomerate with marketing presence in more than 150 countries. The range of products & services include Industrial Automation, Tools & Equipments, Electric Motors, Compressors, Instrumentation and Control devices, process and performance control systems, climate control technologies, reliable power technologies & storage solutions. The customer is the worlds leading electrical motor manufacturer in the world, producing more than 330,000 motors every day (From motors that drive consumer appliances to those that power large industrial machinery) The Customer went ‘Live’ with WMS (11.5.9) in April 2004 and has had subsequent rollouts of Plants and Warehouses since then.

Highlights of the WMS Implementation
• • • • • • • • • Manufacturing & Distribution operations spread across 3 continents 6 Manufacturing plants (all WMS-enabled) 21 Warehouses (of which 9 Warehouses were WMS –enabled) Approx User base: 150 Approx. 14000 Unique Lot-Controlled Finished Goods Integration to 3rd Party Label Printing Software Distributed MSCA Architecture for Load balancing Use of Bar Code Scanners, RF Scanners and PC Scanners Rule-based Label printing (pallet labels, Customer specific labels, shipping labels)

Design Consideration for Oracle WMS in Discrete Manufacturing
• High Level Requirements
• Real-time Inventory information
• Enablers were the RF Scanners, PC Scanners, Bar coded Labels, Label Printers, MWA Server, DFI Mapping

• Ease of conducting inventory transactions throughout the manufacturing facility
• Enablers were • Bar Coded Labels • Custom Reports (Bar Coded) • Simple processes of Inbound, Manufacturing and Outbound

• Ability to generate labels as the transaction occurs
• Enablers were the Label Format, Oracle WMS Rules and 3rd party Software

Design Consideration for Oracle WMS in Discrete Manufacturing • High Level Solution
• Inbound Process
• 3 sub-processes • Purchase Order Receipts • Receipts against Internal Shipments (inter-plant for Transfer parts) • RMA (Customer Returns)
Express Receive Assign LPN Suggested Put Away Cost Group Assignment PO Receipt Label Put away

WMS Rules

Design Consideration for Oracle WMS in Discrete Manufacturing • High Level Solution
• Manufacturing Process
• Discrete Jobs Released from MRP • Custom Reports Developed to ‘Release’ Jobs onto the Floor • WIP Orders transacted (Move orders & Completions) using PC Scanners/RF (with use of Custom Bar Coded Reports/Labels) • Each Palette was mapped as an LPN and Lot • Use of Lot Statuses (Quality Initiative) • Job Completion Label* triggered by the WIP Completion transactions * - Labeling Detail to follow

Design Consideration for Oracle WMS in Discrete Manufacturing • High Level Solution
• Outbound Process at the Plant
• Custom Reports were developed to give visibility to the Scheduled Orders (Internal Sales Orders and Customer Orders) • LPN triggered shipping - Mapping of the Direct Ship Functionality in Oracle • Transactions of Direct Ship at some plants done using a ‘tear’ off portion of the ‘Job Completion’ Label • Automatic Triggering of the Bill of Lading, Packing List and Shipping Label.

Design Consideration for Oracle WMS in Discrete Manufacturing • Benefits
• Accuracy, Control and Ease of transactions at the plants • The Custom Reports developed for the customer, have further streamlined the process of manufacturing and shipping • Transaction-based Labeling has resulting in better tracking of inventory within the plant and further on in the supply chain • Quality Initiative mapped in Oracle Applications via the use of Material Status Control has complimented the customer’s efforts in Quality.

Design Consideration for Oracle WMS in a Finished Goods Warehouse • High Level Requirements
• • • • • Real-time Inventory information Customer Compliance Labeling * Consolidate Shipments in the Outbound process System guided Picking Rules * Quality Control initiatives

*- Covered in subsequent sections

Design Consideration for Oracle WMS in a Finished Goods Warehouse • Outbound Process
• Combination of Pick Release Waves and Manual Assignment of Sales Order Lines to form Deliveries • ‘Custom Pick Slips’, that were bar-coded with the Task IDs. This allowed the pickers to Scan the Task Ids and assign the tasks manually

Select SO Lines

More on the picking rules in the section marked “Optimization of the transactional processes” ”
Create Deliveries Pick Release Waves Assign Tasks (manually) Assign Tasks (manually) Pick/Stage Ship Confirm

WMS Picking Strategy/ Rules

WMS Label Printing

Design Consideration for Oracle WMS in a Finished Goods Warehouse • Benefits
• With the use of “Express Receipts”, the process of Receipts in the warehouses was quick. As the incoming Shipments had LPNs, hence, the Express Receipts processed a Receipt for all LPNs within a delivery in a single transaction. • The Quality Control Initiatives have been mapped with the use of Material Status to Control to prevent Inventory to be transacted (picked) till such time Quality assurance decided the course of action for the Lot/s of motors. • Picking Rules optimized to minimize breaking of palette(skids)

Design Consideration for Oracle WMS for a Cross-Dock Facility
• The customer’s manufacturing facilities were predominately in Mexico. It was important for the business to quickly consolidate the shipments coming in from multiple manufacturing plants and “Cross Dock” the same to separate Trucks headed to 6 different distributions centers in the United States. The solution design for the transaction system at such a location would focus on speedy transactions to ensure that the shipments reach to the 6 regional distribution centers with minimal time spent in this crossdocking facility.
Regional Warehouse in USA- North Consignment Warehouses at Customer Locations

Regional Warehouse in USA - West

Regional Warehouse in USA - Mid West

Manufacturing Plant in China

Cross Docking Facility in Mexico

Regional Warehouse in USA - South

Manufacturing Plant - MexicoM1

Manufacturing Plant - MexicoM2

Manufacturing Plant - MexicoM3

Design Consideration for Oracle WMS for a Cross-Dock Facility
Solution Implemented • The Incoming Truck Loads were put away to specific locations in the warehouse. On an hourly basis the custom ‘open sales order’ report runs and a matching of the on hand inventory was done using an Excel Macro. A load sheet was prepared and the LPNs were loaded onto specific Dock Doors using the “Direct Ship” functionality in Oracle WMS. • A ‘Customized’ Internal Packing List is generated per Delivery. This report was a custom report, that has detail such as LPN#, Lot, Item, Quantity and Delivery #. Most of the Data was Bar-coded, so the onward Warehouse in the US could receive this with ease.

Design Consideration for Oracle WMS in a Supply Chain of Manufacturing Plants and Warehouses
• The Customer has a complex logistics network between the Manufacturing plants (primarily in Mexico) and across the Warehouses in the United States. At any given time, there are large amounts of Inventory that resides in-transit, hence, the tracking of inventory (both across the supply chain and in transit) in terms of Lot/LPN #s becomes important to the business. Custom Reports were developed for the customer, thereby giving him the ability to track LPNs/Lots that were in transit. Custom Reports were made for Cost Accounts as well to track the Dollars Amounts that were in transit.

Solution Implemented

Design Considerations for Sub-Ledger level accounting (Cost Groups)
• High Level Requirements
• The customer’s financial controllers needed to have visibility to the inventory valuation at the sub-ledger of the Raw materials, Subassembly and Finished product that each plant held. • At the Warehouses, the Business operated under multiple business divisions, The financial controllers needed the visibility (at sub ledger level) of the inventory in dollar terms that belonged to each business division. The Finished Goods Warehouses were a shared facility to store and handle the inventory of the multiple business divisions. Within the warehouses, there was no storage space segregation based on the business division.

Design Considerations for Sub-Ledger level accounting (Cost Groups)
Solution Implemented at the Manufacturing Plants
• Separate Cost Groups were defined to represent the Accounts that mapped to • Raw Material (RAW) • Sub-Assembly (WIP) • Finished Goods (FG)
The above was done at individual manufacturing plants.

• •

A Category Set was identified that has the categories values of ‘RAW’, ‘WIP’ and ‘FG’ As a process, each item was linked to one of the above categories, depending on whether the item was a Raw Material (RAW) or Subassembly (WIP) or Finished Good (FG). WMS Cost Group Rules were written to tie the Cost Group to the Categories.

Design Considerations for Sub-Ledger level accounting (Cost Groups)
Solution Implemented at the FG Warehouses
• Separate Cost Groups were defined, that held account values mapped to individual business divisions. A Category set was defined that held category values of the individual business division. Each finished Goods was assigned to one Business Division. WMS Cost Group Rules were used to tie the business division category to the cost groups.

• •

Design Considerations for Sub-Ledger level accounting (Cost Groups)
• Optimal Space utilization: At the plants, there was no need to define subinventory based on the classification of items such as Raw Materials or Finished Goods. Regardless of which location/subinventory the item was stocked in, the valuation of the inventory was always derived from the WMS Cost Group Rule. The benefit was identical in the Finished Goods warehouse. By using WMS Cost Group Rules, there was no need to allocate space for inventory of separate business divisions. Kept the Cost Accounts/Financial Controllers happy – they were able to query on the inventory dollars and gain access to information (Inventory valuation by Division or classification immediately (at the sub-ledger level)

Transaction-based Labeling
Transaction based labeling is usually a very important consideration to enable WMS within an inventory organization. The following transactions were enabled to print labels automatically • Purchase Order Receipts: The Label was configured to print at the time of a Receipt. The label format contained bar coded information of the LPN, Purchase Order Number, Supplier and Item. This Label serves as an enabler for subsequent transactions, such as “put-away” and “inventory moves”. • Job Completion: The Label was configured to print, when the operator on the manufacturer line posts a ‘job completion’ of a Palette (Skid) of Motors in Oracle. The label format prints bar coded information of the LPN, Item Number, Customer Item Number and Lot Number. The label is then pasted onto the Pallet/Skid. The label serves as an enabler to transact subsequent transactions across the entire supply chain of warehouses and then onto the end warehouse.

Transaction-based Labeling
• Shipping Confirm: These labels were triggered when the Shipping Clerk completes a ‘Ship’ transaction in Oracle. The Shipping Labels containing customer information, shipping instructions, Customer Purchase Order, Customer Part Number and Quantity. These labels would reflect information that would be important for the end customer of these motors.

Solution Implemented
• Individual Labels were designed in the 3rd Party Labeling Software The Label Formats were defined with the Oracle provided data fields and mapped appropriately with the fields Labels in the labeling software. The Individual Labels were then tied to the Business flows such as “PO Receipts”, “(Job) WIP Completion” and “Ship Confirm”. The Users were mapped to the appropriate printers.

Transaction-based Labeling
• As the labels were Bar Coded and hence they complimented the Scanning process. The customer derived huge benefit in terms of transaction accuracy and transaction speed. The “Job Completion” Labeling helped to track and transact the specific Lot/LPN through the Supply Chain. The label help facilitate counting activity within the Finished Goods Warehouse. The Shipping Labels were almost a requirement. As the end customer wanted the relevant information, such as Purchase Order #, Customer Part #, etc, to be visible on the label (that was stuck to each palette (skid))

Optimization of the transactional processes
Picking Rules - Requirements
• • The Company’s corporate directive was to ensure, there was FIFO (First-in First –out) logic built into the picking rules. The warehouse managers wanted to ensure, that the picking rules would ensure, there was minimal breaking of a full palettes (skids) to fulfill a pick quantity. The solution was to build multiple Pick Strategies The strategy were then prioritized as follows (highest to the lowest) Consumption of the entire LPN with a sort on LPN numbers Lot Consistency Rule with a sort on LPN numbers FIFO (First –in –First Out)
* The above sequence of WMS Picking Strategy was implemented at 2 of the largest warehouse of the customer

The Solution*
• • • • •

• Organizational Challenges
• Transactions move from the office to the floor for receipts, staging, moves and ship confirm using handheld devices. • Complexity and volume of transactions makes barcode scanning a requirement in many warehouses (introduction of technology). • Transaction triggered Labeling meant that the Printing Setup – Printers, Software Licenses had to be installed at all the sites.

• Process changes for the Logistics Function
• Warehouse gets ownership and responsibility for releasing orders based on scheduled orders. • Use of License Plate Numbers (LPN #s) brings in more control. • Intelligent lot #s replaced by non-intelligent lot#s and LPN #s. • Support for Staging shipments within system. This meant, there was more control on the inventory transactions. • Two Part Scan: The customer had warehouses that had up to 5 levels to stock palettes (skids). There were 4 segments used in the stock Locator. By implementing a 2-part scan there was a reduction in scanning errors.

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