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(Abridged excerpt from “SAP Leonardo” by Martin Elsner, Glenn González, Mark Raben, SAP Press – Rheinwerk Publishing, 2018. Text by Dr. Michael Stollberg)
Identifying of the challenges
In the first process step, car parts (e.g. seat frames, mirrors, cable lines, etc.) are ordered from the respective suppliers. This is done on the basis of framework agreements, so that at this stage Schnellecke primarily makes call-offs, i.e. a repeat order according to the contract. When a delivery arrives (mostly by truck), a quality check is carried out in the second step (visual check and random samples), and the goods are labeled for internal goods management and stored in the warehouse. For warehouse management, the third process step, the retention time in the warehouse is relevant in addition to the inventory level, as there is a limited timeframe for the installation of some auto parts (especially technical components).
The provision of finished modules (e.g. seats, exhaust systems, center consoles, etc.) by Schnellecke to the production lines of the automobile manufacturer is also carried out by call-offs based on a framework agreement. When such a call-off is received, the ordered modules are assembled from the individual parts in the warehouse in the fourth process step (sequencing) and then packed into special containers for transport and easy removal at the production lines. These JIS containers are labeled with so-called rack lists, which specify the contents and destination of the individual parts. In the fifth step, they are transported by truck from Schnellecke to the delivery zone of the automobile manufacturer and there, according to the rack list, they are brought to the corresponding production line for immediate processing (sixth step: line feeding).
In the exploration workshop, the analysis of the process steps was carried out in parallel working groups. The following key challenges were identified:
Optimization potential
A key finding was that no holistic overview of the JIS logistics process from procurement, to warehousing, to handling customer call-offs was available, neither at the operational level (e.g. to clarify questions such as “How many call-offs are still outstanding today?”, “Is the inventory sufficient for this?”, “When do which parts have to be reordered?”) nor from a financial point of view (“How many call-offs have been handled today/this week/this month?”, “What is the revenue per call-off/day/week/month?”, “What costs were incurred and what are the cost drivers?”). Although IT systems existed for the individual operational process steps, it was not possible to carry out cross-process monitoring to quickly answer the questions listed here. For the financial questions, corresponding reports were manually created in a time-consuming manner, most of which were available with significant delays and without the desired level of detail.
The greatest optimization potential was identified in line feeding and the steps directly upstream (sequencing, transport). It was only known that the JIS containers for the call-offs had been correctly packed and labeled and had left the premises of Schnellecke, but not whether they had arrived at the automobile manufacturer on time and had been brought to the respective production line in the correct sequence. There were also a significant number of inquiries and complaints about missing deliveries due to mix-ups on the premises of the automobile manufacturer – over which, however, Schnellecke had no means of control.
With the objective of a holistic and forward-looking solution for the identified challenges, a concept was jointly developed using SAP Leonardo technologies. For traceability, the JIS containers were equipped with IoT sensors.
An Indoor Positioning System (IPS) was set up for this purpose: IPS receivers were installed in each of the relevant physical zones – in particular the loading zone at Schnellecke and the preloading areas and production lines at the car manufacturer. Each JIS container is equipped with a radio transmitter that can log on and off from the IPS receivers. This enables the current position and compliance with the sequence to be checked in real time, thus enabling traceability even outside the company’s own premises.
SAP Cloud Platform as the basis
The SAP Cloud Platform was selected as the basis for implementation because it enables integration with the business processes and, with the available services, provides the appropriate foundation for implementing the digitalization strategy. The position data of the JIS containers is recorded via the IoT services of the SAP Cloud Platform, stored in an SAP HANA database for further processing, and there linked with the business data from Schnellecke’s existing IT systems (customer call-offs and delivery data from the SJS system and financial data from the FI/CO system). These systems are connected via the integration services of the SAP Cloud Platform.
The planned applications were implemented on the SAP Cloud Platform based on the SAP Leonardo SAP Moving Assets solution (formerly SAP Vehicle Insights) and the SAP Analytics Cloud. The operational dashboard visualizes the current position of the JIS containers in the IPS zones and enables real-time monitoring of the sequence deliveries by Schnellecke employees and by the automobile manufacturer. Thus, all parties involved have the same information at their disposal and can use it as a basis to handle or prevent any bottlenecks or sequence violation.
The financial analysis enables detailed financial controlling in real time on the current data for the entire JIS logistics process. As a result, the requirements of Schnellecke’s Finance division were fulfilled.
Real-time tracking of JIS containers
The first solution implemented was the operational dashboard. It is used for real-time tracking of the JIS containers in the transport and line feeding process steps in order to monitor sequence compliance and prevent delivery bottlenecks.
Zones 1 to 4 are located on Schnellecke’s factory premises, while Zones 4 to 9 are located on the premises of the car manufacturer. These are each equipped with IPS receivers. The JIS containers log in and out of the respective zones via the IPS radio transmitters.
The implemented application shows the current number of JIS containers in the individual zones as well as the destination of the containers. The latter is possible by linking the IoT data with the operational data from the SJS system. For example, it is defined in the SJS system that a certain container is to be delivered to the ML4 production line. If this container is then reported via the IPS system in Zone 1 (loading at Schnellecke), the application displays the container in Zone 1 with the destination ML4 production line. Further down the line, the container will show up in the Incoming Goods Zone at the car manufacturer and then at the ML4 production line. Any sequence violation (e.g. if the container appears in Zone ML1 instead of Zone ML4) is immediately apparent and can be corrected as quickly as possible. For this purpose, the application is available both as a desktop version and on mobile end devices, and is available to both Schnellecke employees and those of the automobile manufacturer.
The implementation was carried out within three months from kick-off to go-live and in accordance with the SAP Leonardo methodology. The early validation of the user interfaces by the end users and the agile development with scrum reviews after each sprint were decisive for the fast and smooth implementation.
Project evaluation
With the real-time tracking of JIS containers, essential requirements regarding transparency, efficiency, and stability for the core business were met. In addition to the SAP Leonardo technologies used, the methodological approach for early involvement of the relevant stakeholders, decision-makers, and end users was especially crucial.
For future cooperation, the expansion to a digital control center for the entire JIS logistics process with rollout for international customers is planned. In the process, Schnellecke can benefit from the experience gained in the project since, for successful digitalization, every organization must go through a learning curve that ranges from new technologies and their optimal use, to value creation and new types of business models.