Trost relies on automation in scheduling
by Dr. Reiner Schmitz (Trost SE), Dr. Bernd Reineke (Abels & Kemmner GmbH)
Let’s start with a normal key figure: in a conventional scheduling company, a scheduler is responsible for around 1,000 to 5,000 active articles. In a company with automated scheduling, there can be more than 100,000 active articles per scheduler! It is therefore worth looking into automation in scheduling and finding out about the possibilities and experiences with this topic. In this article, you can read how Trost went about mapping its logistics business model in rule sets and decision tables and largely automating the processes.
The core business of Trost SE is supplying car and truck workshops with accessories and spare parts. Trost supplies the European market with around 150 branches, generating sales of €800 million (in 2014). Customer satisfaction is the top priority for the 4000 employees of the Stuttgart-based company. And customer satisfaction can only be achieved today through high availability and reliable delivery of goods of impeccable quality. Of course, prices also play a key role in winning a contract in such a highly competitive market. In order to survive in this logistics-heavy business, it must be possible to offer top performance at the lowest possible price.
Keeping costs under control
For Trost, it is therefore extremely important to have costs under control and to constantly work on the cost drivers. The focus of optimization efforts is therefore on administrative effort in the process chain and the level of inventories. As part of a new inventory optimization project, external support was to be provided by a supply chain specialist. Abels & Kemmner was chosen because it not only has many years of experience from numerous projects, but also stood out due to its consulting approach with simulation-based process optimization. With the help of the simulation approach, realizable results should be available in a short period of time and the possible potentials should be known.
High data volume from two ERP systems combined in DISKOVER SCO
Trost procures and stocks car and truck parts in two central warehouses in northern Germany and the Czech Republic. The sales branches are supplied from there. There was already a coordinated concept as to whether and how which materials were to be stocked in the branches and central warehouses. This concept had to be checked to see whether it still met the requirements of a cost-optimized logistics chain or whether changes were necessary. Data from two different ERP systems was provided and loaded into the DISKOVER SCO analysis and optimization tool from software provider SCT GmbH. Transferring such large amounts of data is no child’s play, but A&K has also built up expertise in this area over the years, so that the evaluations could be carried out in a short time.
Important: Work out boundary conditions and restrictions
An important input for the consultants was getting to know the actual processes as well as the framework conditions, bottlenecks and restrictions. These were collected and discussed in workshops and interviews. At the same time, DISKOVER SCO calculated initial simulations with existing parameters and stockpiling rules. The potentials determined in this way on a purely data basis are not yet reliable, let alone realizable. It is therefore standard procedure in A&C projects to bring together the results of the process analysis and the simulations in so-called inventory driver workshops and to discuss them together with the dispatchers involved. Experience has shown that restrictions and influencing factors come up in the course of these discussions that the dispatcher has to deal with on a daily basis, but which cannot be found in the pure data situation of the system. Starting with the group or collective planning for optimal utilization of the transport units (trucks, shipping containers) through to specific customer priorities and commitments, a number of planning-relevant aspects were also disclosed at Trost.
Reliable: Estimation of potential
The knowledge gained from the inventory driver workshops was used to refine the simulations, map restrictions and special requirements in decision trees and sets of rules and determine reliable potential. The potential was around 20% stock reduction with an availability of 98% for items in stock. This already very pleasing result was based on the old stockpiling concept, albeit with optimized forecasts and safety stocks. Further potential was expected from the revision of the stockpiling concept.
From analysis tool to application solution
However, in order to benefit from the expected improvements as quickly as possible, the decision was made to quickly introduce the DISKOVER SCO analysis and optimization system with subsequent optimization of the logistics business model. This meant that the modules and functionalities required for optimization, such as forecast and safety stock optimization, seasonal analyses or the set of rules for dynamic dispatch parameter optimization, were available in a short space of time.
Fast implementation
As part of the implementation of DISKOVER SCO, a daily interface to the two ERP systems was set up. For the first time, it was possible to carry out comprehensive analyses across all locations and create transparency about the entire demand and inventory situation. This was already a huge advantage compared to the previous situation. In the next stages of implementation, Trost placed great emphasis on automating the scheduling processes. The aim was to release the system proposals for replenishment of the stores without further checking by an MRP controller. However, this meant that the quality of the proposals had to be close to 100%.
Mapping the requirements in regulations
This was to be achieved with the help of a new stockpiling and supply concept. In a first step, the supply portfolio of the sales outlets was defined by implementing decision variables (e.g. storage volume) and consumption characteristics that have an influence on stocking. This included, for example, the number of sales per year in a sales outlet. A minimum sales figure was specified here, which had to be met in addition to other criteria such as life cycle and hazardous goods labeling in order for the spare part to be stocked. If the minimum value was not reached, the material was not stocked and had to be obtained from the central warehouse when an order was placed. It was also possible to supply customers directly from the central warehouse.
Getting a grip on the infeed and outfeed process
In addition to monitoring the consumption behavior of the materials, it was important to automate the infeed and outfeed process. To this end, predecessor/successor relationships can be maintained in the material master across all plants and thus with minimal effort. It is particularly important to choose the right time for the initial stockpiling. While a successor material was stocked in the central warehouses against a forecast based on the consumption series of the predecessor material from the date of validity, stocking in the sales outlets is based on the stock range of the predecessor material. Only when the range of the predecessor material is less than the replenishment time is the successor material automatically switched to stockpiling via the set of rules. Parameters such as reorder point or safety stock are also determined from the previous data.
Testing in a pilot phase
The rules for setting the dispensing parameters were checked and fine-tuned during a pilot phase with application of the results to a manageable number of articles. This gave the dispatchers the opportunity to apply the results in their day-to-day business and check the effectiveness of the settings. Changes to the regulations are agreed and approved by the project team. Only the Head of SCM and his deputy are authorized to amend the rules and regulations. This ensures that there is no proliferation of rules and that no uncontrolled changes are introduced. After this evaluation phase, the roll-out to all branches and also to the central warehouses took place.
This was achieved
The implementation of the results from the potential analysis has paid off in a short space of time. Even without changing the logistics business model, inventories could be reduced by 25% within a year while maintaining the same delivery readiness. However, as the desired delivery readiness was not achieved with these settings, especially for highly sporadic articles, the decision was made to adapt the stocking concept. This problem was solved with more items in stock and higher safety stocks. The inventory reduction potential was correspondingly lower after this measure.
Flexible solution
The high degree of flexibility made possible with DISKOVER SCO should be emphasized. Strategies can be changed in line with the logistics business model with just a few “tweaks” to the rules. As with a control panel in a technical system, the process parameters can be changed using a potentiometer. The effects of the changes can be tested and assessed in advance using simulation. This allows strategic and process-related changes to be implemented within a short space of time.
High degree of automation
The automation of processes is bearing fruit: with the chosen solution, one dispatcher has over 100,000 active articles. This is a volume that can only be managed using the mechanisms and functionalities described. The dispatchers no longer plan, but only monitor the processes. DISKOVER SCO also provides the necessary controlling. The status of the processes can be assessed and monitored over time with the help of meaningful key figures, which are usually individually tailored to customer requirements. Threshold values for key figures can be defined as part of the so-called exception analyses. If the key figures reach the threshold values, DISKOVER SCO automatically sends emails to the defined group of recipients. However, the option of flexibly designing reports or pivot evaluations on various business objects (e.g. articles, orders, forecasts, transaction data, etc.) also means that everyone can quickly obtain the information they need. A programmer is not required for this!
Painless switch to SAP
Another point that was not a priority at the beginning, but was of great importance in the end, is the flexible option of connecting different ERP systems. Tost started with two ERP systems. Trost then decided to replace both systems with SAP. This means that DISKOVER SCO communicated with three different ERP systems for a longer transition period. With the interfaces to and from SAP available as standard, the connection to the new system was completed quickly and with very little effort for the IT department. During the changeover to SAP, which progressed on a branch-by-branch basis, the set of rules was used to operate the right interfaces at the right time.
Conclusion
Trost has set out to review its own logistics business model and identify potential. Trost has received a powerful solution for flexible mapping of the logistics business model and extensive automation of scheduling processes. The replenishment of the 150 branches is fully automated, and the role of the dispatcher has changed from operational clerk to controller with specific specialist know-how. With DISKOVER SCO, Trost has found a powerful and extremely flexible solution to support planning and scheduling processes. The independence from ERP systems benefited Trost with three system worlds involved.
