NMK MUST (Expert Logistic)

Alexander Sudakov, the development director of NMK Mast LLC tells about experience of upgrade of a warehouse of electrotechnical and cable products.

1. Prerequisites of the Project.

The Nizhny Novgorod diversified company "MAST" works at the market of electrical equipment since 1993, and performs wholesale and distribution of electrical equipment and cable and conduction products. Geography of sales of the company: all central part of the Russian Federation. The company locates branches in the cities of Ufa, Kazan, Elektrostal.

Contributed to the active development of the company:

• Input in the range of new commodity groups (the general range about 6000 active SKU, apart from batches);
• Moving of a warehouse complex on the isolated territory on federal highway M7;
• Restructuring of commercial service;
• Development of a branch network;
• Application of modern IT solutions;
• Support by Company management of a general course towards development

In a certain point of growth of sales volumes and the corresponding growth of warehouse stocks the warehouse logistics of the Company began "choke". It was shown in problems in work of a warehouse at peak loads on receipts and shipments of Inventories. And summer of post-crisis 2010 peak also normal months became. These showed several "emergency" months complete inability of prompt actions of storekeepers in the accounting system existing then and an organization structure of a warehouse.

As a result, the speed and accuracy of warehouse transactions seriously decreased. Costs for the maintenance of stocks grew, the customer loyalty and a goodwill of the Company considerably decreased.

2. "Among richness of the choice": search of the solution and specific criteria when choosing WMS.

As a result, in August, 2010 the company management made the decision on opening of the project of automation of work of warehouse economy of the company based on a warehouse management system. Strategic objectives of the project were designated:

• Become the operator of the electrotechnical market which is completely satisfying customer needs at the expense of qualitatively new level of accomplishment of warehouse transactions.
• Understand the potential of a warehouse with the purpose of systematic development of warehouse technologies for ensuring growth of goods turnover of the Company.

It is important to note that before opening of the project the question of implementation in a warehouse of a system of address storage was many times brought up (as panaceas of the solution of all problems), and us became unstuck on an adhesive tape of the label of cells, cut out from sheets A4 with "addresses" of these cells, there was an attempt of integration into the existing system of data collection terminals. But all this in a complex did not work, and it was clear that something else is necessary. It became obvious that "the system of address storage", is not the separate software product (though in the market such "solutions" prevail), and only making systems on management of a warehouse or WMS (Warehouse Management System).

We approached the choice of a system very carefully since in our region there were several unsuccessful and expensive WMS projects and the management looked at similar technologies cautiously. Market monitoring of WMS showed that there are solutions Russian, and there are foreign. The cost of WMS, its implementation and the equipment "walks" with very broad range. Running start of the prices of such management systems set thinking and that is necessary for us and how many we are ready to pay for it.

All branches of the known forums on logistics, public articles in network on the subject WMS were re-read, the ratings of WMS (Dmitry Perov), special literature and the list of solutions – applicants for implementation is made. In the first round of elections such criteria were defined:

• Basic functionality. Project experience of integrator.
• Cost of the program.
• Implementation cost.
• Equipment cost.
• Terms.

And if the last four points easily and clear formed in the comparative table, then the first demanded a reality and complete understanding. And as usual it happens, unclear on paper was decided to see and touch the hands: the whole month was spent for business trips (several times Moscow and St. Petersburg, Perm). And only after that it became clear that to regard as of paramount importance that important to define how selection criteria. The first differences in the selected options to which we paid attention it is the WMS platform and type of the software of the database. Having estimated implementation cost and further maintenance) warehouse management systems of foreign production, we understood that the budget it will be unambiguous above planned and terms most likely will not suit us. Therefore we focused the attention on successful Russian developments.

The considered solutions on the 1C Platform seemed to us overloaded in the interface part and in logic of work. Besides, responses from above-mentioned forums and some clients not always spoke well for such solutions. Also options which used DBMS other than Microsoft SQL since in staff of our company the programmers who are closely connected with software solutions from Microsoft worked and work were cut.

Then the assessment of license policy (cost of the server license, cost of the user license, temporary restrictions) and approach to implementation was carried out. The attention to volume and structure of works on start of a system and training of personnel was paid. As for data collection terminals, we decided to use data collection terminals of Motorolla 9090.

And, of course, our main attention was riveted on functionality of the program: dynamic address storage, management of transactions of placement, replenishment, selection, shipment, inventory, sale of the server of management of the shipping documentation, setup of logic of work, instruments of work with statistics and the system of indicators of work of a warehouse, integration with 1C, additional functionality. At the same time it is very important to specify what from the described functionality, is included into the basic license of a system and that is not present.

All basic functions of WMS applicant for implementation, were considered and analyzed in "live" warehouses. Opinions on the implemented WMS are found out from the staff of these companies (logistics directors, chiefs of warehouses, storekeepers, administrators of software). And on the basis of it the list of competitive solutions was reduced to four, and according to the results of the held tender the Expert Logistic system from IT Scan company as the most open and functional solution with good reviews on practice of operation was selected.

Together with the choice of the solution and job analysis of the seen automated warehouses understanding that our warehouse complex is not ready to automation at all came. Therefore it was decided to book preproject logistic audit of a status of a warehouse and by its results to execute technical upgrade of a warehouse with the subsequent automation.

3. "Egg or chicken": and with what after all to begin upgrade of a warehouse?

Before works the project team was created from managers of the company, each of which was responsible for the direction. Such approach provided task allocation, their parallelization and corresponding speed of accomplishment.

3.1. Audit of a current status of a warehouse.

The warehouse Mast complex consists of several store buildings: 1. The central warehouse (further Tsskl) – the main warehouse of the Company. 2. An easy warehouse (Lskl) – the facilitated warehouse, racks execute a role of load-carrying structures. Serves for storage of Inventories from the Systems of Cable Laying group (pipe PVC a corrugation., a metal hose). 3. A warehouse of storage and unwind of the check point (SKLKPP) – coils with a cable.

Indicators Tsskl Lskl SKLKPP Length, m 48 25 25 Width, m 36.3 12 14 Height of overlappings, m 6 4.7 5 Operating height, m 7.5 4.5-6 5 Area, sq.m 1742.4 300 350 Volume, m3 10454.4 1410 1750 The stage is is not present no

Knowledge gained in the course of studying of warehouse management systems surveys of the operating automated warehouses allowed to look at our warehouse in a new way.

The summary list of problematic issues which affected efficiency of work of a warehouse was the following: 1. Non-optimal arrangement of rack beams. 2. Use of the area, but not volume. 3. Irrational use of the auxiliary areas. 4. Excess passes in unnecessary places, and, on the contrary, their absence in the necessary place. 5. Lack of a zone of acceptance and shipment. 6. Unsatisfactory living conditions of personnel

Here is how warehouses before upgrade looked:

"Business customs" - here a complete description of technology of storage in a warehouse of that period. And no technologies as such existed. Storekeepers were divided into crews on the Inventories groups. There was a senior of crew. The financial responsibility of storekeepers was separated on-brigadno and on-grupno. Tough separation of warehouse transactions in a warehouse on electrotechnical and cable and conduction products though differences in acceptance and selection of these products were not.

And here facts of that period of work of a warehouse:

• One crew can be "in soap", all others have a rest.
• There are no standards of acceptance and shipment.
• Search of Inventories can be conducted for hours.
• Mixing of the cargo flows (entering and proceeding, and also storages)
• Input of the storekeeper in work – 6 months
• Tough dependence of performance on knowledge storekeeper of products, and manipulation of these personnel of a warehouse.

The conclusion which we drew based on audit of a warehouse complex was unambiguous and obvious: the situation from inefficient technology of storage and an ogranization of work of personnel was aggravated with unimportant living conditions of personnel of a warehouse. In total, all this caused a high staff turnover, not interestingness of the Company in labor market, the corresponding approach to work and a personnel spirit.

3.2. The made decisions on the revealed problems.

The planned actions for creation of a modern warehouse concerned:

• Changes of technology of a warehouse (methods of storage and placement of Inventories, technologies of warehouse transactions, zonalities of a warehouse, standards of acceptance and shipment, warehouse equipment systems and mechanisms).
• IT ensuring warehouse activity (implementation of WMS).
• Increases in level of training of personnel, his interest in work.

As understanding of potential of a warehouse was one of project objectives of upgrade, the changed (project) technology of storage and processing of Inventories was taken as a basis of calculations of load-carrying capacity.

Highlights of this technology following:

1. Standards of pallet storage of Inventories are entered.

2. Special racks or methods of storage for oversized goods are entered.

3. The small-pieces goods were placed on the upgraded mezzanine rack and one more mezzanine in a warehouse is built. 4. Large-size cable products were a permeshchena on the street and in new (constructed within the project) a warehouse of storage and unwind of a cable.

These solutions allowed to organize work of a warehouse, using means of mechanization, and standardized approach to technology of storage. And the most important, they convinced us that the potential of a warehouse is still very high that we have reserves. The implemented technology of a warehouse provided the standardized and ordered storage of goods even in peak loads.

Since the beginning of work of a project team the following events are held:

• The analysis of WMS existing in the market and some technologies of work of warehouses (1 month) is carried out;
• At the main range of the Company data of weight and dimensional characteristics (1 month) are measured and entered into the accounting system;
• Instructions for planning of receipts and shipments of Inventories are developed (for a transient period);
• The analysis of the existing reporting under Inventories is carried out, the necessary reporting is developed and implemented;
• The current and project plan scheme of a warehouse complex is developed.
• Technical characteristics are defined: racks, mezzanine, mechanisms;
• The analysis of load-carrying capacity of a warehouse is carried out;
• The handling platform with a ramp for the check point on drums is designed and built; The Warehouse of storage and unwind of the check point Is designed and constructed.
• The temporary system of address storage of the check point on drums is developed.

4. "Attention! Rake!": what it is important to know before test start of the WMS system.

Above we spoke about the choice of WMS, the preparatory period of automation of a warehouse, management of a project team. And here WMS is selected. The agreement is signed with vendor of the selected solution. Preproject examination of an object is conducted. The technical specifications considering specifics of business are made. The warehouse topology is prepared for implementation in a system. The logic and instruments of data exchange between WMS and the corporate accounting system, in our case 1C 7.7 are configured. A system and the equipment are prepared for test start. And whether you are ready?

I suggest to pay attention to a number of questions, obvious at first sight. All know about them, but judging by the facts from different WMS projects very few people are puzzled with their advance solution.

1. If weight and dimensional characteristics of packagings of Inventories are involved in logic of management of WMS of your warehouse, then the topology of a warehouse should reflect precisely the physical sizes of racks and cells, the areas, available to storage, and volumes are determined by these parameters. Same requirements to data on goods: weight and dimensional characteristics of Inventories should be measured (or are requested from the producer).
2. For accounting of Inventories we use also a barcode on the label of the producer, and of course the internal barcode generated by WMS. If barcodes of the producer to you are important, it is necessary to add and check this information in the corporate accounting system of 100%. It will allow to reduce both temporary, and financial resources at inventory of a warehouse and in future work in a circuit of WMS.
3. will Also important decide at this stage on the strategic supplier of supplies for work of the automated warehouse: labels, ribbona (a thermotransfer tape for printers of labels), a gofrotara, other types of packaging of goods which you will use.
4. Very important fact. It is not necessary to save on reduction of terms of training of personnel of a warehouse including preparation of a moral component. The successful start of the project in many respects depends on these people.
5. I is the last, when planning an implementation time of a warehouse management system I recommend to pay attention to date of start of commercial operation. It is clear, that it is better to plan it for less loaded seasons. Input of a system cardinally changes an order of warehouse transactions, it will be obligatory the period of adaptation of personnel of a warehouse and it will be simpler to make starting inventory.

5. let's roll: start of trial operation and start in commercial operation of WMS.

The period of time between contracting with IT Scan and an exit to trial operation, in our case made a little more than four months. At once I want to note that we after all stepped on all "rake" about which I warned the previous section, and time for remedial action was selected.

The company management set the task to be started in an operating mode, i.e. actually without stopping a warehouse. It entered certain difficulties since there was practically no reserve time for "a dopilivaniye of roughnesses". It is necessary to pay tribute to specialists of IT Scan company, throughout all project, they were nearby and at once resolved the arising problematic issues.

For carrying out end-to-end inventory of a warehouse, pasting of products labels with barcodes, transfer of a remaining balance in a circuit of the Expert Logistic program planned three days (from which 2 days – days off). Inventory and transfer of a remaining balance in a circuit of WMS took place rather successfully, and for the fourth day the automated work of a warehouse began. In the first three weeks after start (the adaptation period), little changes were still made to system operation and different defects were eliminated. But, all difficulties of this period were overcome using specialists of IT Scan company and by September a system earned rather harmoniously.

In the first weeks of work Expert Logistic proved the viability: except an order in a warehouse in a commodity remaining balance we received the increased speed and accuracy of selection, a possibility of arrangement of priorities at shipment, transparency of warehouse transactions. Input of the new employee began to take 3 days instead of 6 months.

6. "Higher and higher!": adaptation and development of warehouse processes under control of WMS

On end of the "adaptation" period and project closure we received a modern effective technology warehouse under control of the WMS system: acceptance, placement, interwarehouse and intra warehouse movements, replenishment, a complete set and shipment, inventory, processing of Inventories under the order and a krossdoking. Cargo places of the completed orders are followed by packing lists.

The goods with accurate storage areas are completely counted and marked. And it is about 5 thousand nomenclature positions with various weight and dimensional characteristics and packagings. All warehouse processes are formalized, a system provides exact observance of business processes at selection and shipment of cable and conduction products (lot-based accounting, about 1000 positions, several thousands of batches). The personnel of a warehouse are distributed on the main objectives (acceptance, selection, control, shipment).

The personnel of a warehouse are equipped with radio-frequency data collection terminals of Motorolla 9090, all 15 terminals are used. For printing of labels 3 thermotransfer Zebra S4M printers are used.

Bilateral data exchange between WMS and CIS 1C 7.7 of the non-standard, i.e. considerably finished by us configuration is organized. WMS is configured taking into account new technology and logistic structure of a warehouse complex, features work with oversized goods and measured cable and semiconductor products are considered.

For example, all drums with a cable at us, it is job lots. In our case, primary party creation happens in 1C at execution of the receipt document. Further the receipt document is pumped over in WMS where unique barcodes on each job lot, except for standard bays with the fixed metric area (200 m) form. In WMS different processing rules of drums of a cable and standard bays are laid. After acceptance drums of a cable are placed to the respective storage area taking into account their dimensional characteristics.

At execution of the request in 1C, the manager sees specific batches of a cable with the accompanying characteristics and writes out the request of the client which is transferred to WMS. The task forms and arrives on the storekeeper's terminal. The storekeeper goes to the specified store cell if the drum needs to be moved to the equipped unwind zone, it moves a drum to the specified unwind zone cell if it is necessary to ship a remaining balance entirely (all drum) or unwind to make on site storages, then the actual selection and generation of a task for moving of the picked-up Inventories to a shipment zone cell is executed. If the drum is moved to a cell unwind zone, then the task for unwind of the specified cable metric area forms. After accomplishment of transaction of unwind the drum of a cable comes back to the storage area, and segment by request in the specified shipment zone cell.

After debugging of WMS technology, the next months at us passed under the auspices of motivational impacts on personnel: awarding, additional days to a holiday, the increased rates for processing. The managerial policy in the organization of work of a warehouse became more strict, penalties were added to motivation.

The block of billing of internal transactions is responsible for the system of motivation of personnel in Expert Logistic, besides settings of a system allow to appoint and control temporary, quantitative and cost standards in work of a warehouse not only on all warehouse transactions, but also different types of works. And the opportunity of a task of individual values of standards for each separate logical zone or section of a warehouse is given.

For example, except standard transactions we in addition consider pogruzo-discharging, i.e. unloading drums/pallet from the vehicle on a ramp at arrival before the actual acceptance and also loading drums/pallet in the machine during shipping works. At the same time the actual time, the number of pallets/reels, type of the CU is considered. Fixation of PRR with drums is executed by the senior gatekeeper of acceptance or a zone of shipment. On the TSD screen enters the code of a task of the employee for PRR, type of the machine and on end of PRR it enters the number of the submerged or unloaded reels or a pallet. Also history on control verifications of the completed orders is conducted and considered.

Now we complete the analysis of actual output of personnel and calculation of relevant standards. In the nearest future they will be entered into a system, and at us more accurate and fair system of motivation of personnel, will earn from a basis by "price-work" compensation with a system of key performance indicators (KPI).

For example, the report from this system "Card of Warehouse Transactions" allows to estimate time spent by the warehouse worker for works, time of each transaction type and its free time.

Or the report on automatic calculation of an award for the executed transactions, he allows to calculate on any moment of reporting period a "price-work" component in motivation of each employee.

The project is considered successful, both the management, and the staff of the company. It became possible thanks to close cooperation of our Company and IT Scan Company In a warehouse the order is provided, the speed and accuracy of selection of orders to clients grew. The human factor is minimized. Input of the new employee began to take 3 days instead of 6 months.

It should be noted that Expert Logistic proved as very "stress-resistant" system, with the developed immunity to intended violations of the set business process and simplicity in mastering. Therefore we perform maintenance of a system by own efforts. Also scaling of the solution on filial warehouses of the company is supposed.

Video
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