Impact on Warehouse Management systems in context of gATP implementation
Global Available to Promise is one of the most promising modules of SAP to manage a sales order. The module has far-reaching impacts on business processes right from Sales Order acquisition to the warehouse level fulfilment strategy. In this blog, we will try to understand how gATP implementation (one of the core supply chain modules of SAP) is having far reaching consequences on warehouse management processes.
A warehouse is an important element of a supply chain fulfillment process very foundational to how inventory, deployment and logistics costs can be optimized. In a typical CPG setup, warehouse has a control on what finally gets shipped to the customer. They have the control to do product substitution, adds to the shipments and finally any cuts required to the shipments.
Product Substitution is required to be done when the original material requested in the order is somehow not available and a valid substitute is stocked in the warehouse. From a tactical standpoint, it would make sense to do product substitution at warehouse. Some reasons why this may happen are:
- Order got confirmed due to an anticipated supply (procurement or production orders) that did not materialize on time
- The inventory was incorrectly accounted due to mismatch in physical and system-entered inventory
- Damage to original requested material prior or at the time of product picking.
The downside of doing warehouse substitution is that the warehouse might inadvertently steal from other orders thus causing a negative ripple effect on the fulfillment plans.
Warehouse Adds is also an important concept. In many cases, specifically in stock transport orders between two affiliate plants, it might make sense to fill the truck up. This may involve adding products to the shipments, more than what was originally planned based on supply-demand situation. Thus adding a few products to send an optimized truck load makes sense.
In the same vein Orders may have to be cut due to a variety of reasons. For example instead of a 48 tonne truck only 45 tonne truck may be available or there may have been last minute rejections in sales orders. IN these situations, it makes sense for warehouses to take control of how the orders can be cut in an optimized way.
At the end of the day each supply chain is evaluated on Case Fill Rates and how optimized the truck loads are planned. In all these situations Warehouse has to work in a symbiotic way with the Shipment Planning and Order Management department. Taking last minute warehouse level decisions disrupts the plans laid out by the supply planning and global available to promise engines causing the supply chain to work in a global-sub-optimum fashion although local optima are realized.
Global ATP comes up with a globally optimum fulfillment plan with appropriate suggestions on Product Substitutions and confirmations to orders in times of very limited supplies. The confirmation is based on priority of customers, shipment dates, order entry dates or priority based on whether order is of Promotional or Emergency nature.
In a gATP implementation, it is thus very important for the project success to make sure that the solution in terms of the business process is bought in by not only the planning community but also by the warehouse management folks.