Logistik für Unternehmen

Kaiser's Tengelmann controls merchandise and logistics processes with a single software solution

Success in the food industry requires an overall intelligent software solution, comprising category management, purchase, MRP, logistics and cash registers. The Kaiser's Tengelmann AG therefore decided to optimize its entire business processes and to replace ten different system components with one single merchandise management system with integrated logistics functions.

"Our customers come first. We do not only want to offer our customers an ideal and high-quality product range but an optimal service as well. This includes in particular our fresh products which are part of our core competences. We were well aware that our old system would not meet our needs on a long-term basis. Therefore we opted for a future-oriented IT solution", explains Dieter Beye, IT manager at Kaiser's Tengelmann.

In 2003, the Kaiser's Tengelmann AG started out to analyze all relevant business processes in order to standardize and combine them in a single IT system. This was quite a challenge for Germany's sixth-largest food retailer which in 2008 attained a sales volume of approx. 2.5 billion euros with some 19,000 employees. In order to guarantee the smooth supply of stores, the new software solution was supposed to support all logistics and picking processes, such as the voice-picking or the digital picking via other mobile data entry devices. After all, the four central warehouses in Nieder-Olm near Mainz, Viersen, Eching and Berlin need to supply all stores with fresh products, such as fruit and vegetables, dairy products, meat, and cold cuts (Fig.1). As to the dry foods, the stores are supplied in individual delivery cycles. In Nieder-Olm alone, some 2,000 articles are stored in the fresh food section whereas up to 7,000 different products are stored in the dry foods section. "This already reveals what we expected from the software solution", says Beye. After a long selection procedure, the retail expert opted for the software solution "Compex Commerce" of the Heidelberg software company Compex, since the software functions are not limited at the outset, but may be customized to the processes.

A prerequisite for the project's success was a good communication concept and a project structure that involved all functional departments. On the basis of the analyzed present processes, the departments - in a close cooperation with the Compex experts - defined the target processes according to Compex' "2BEE concept" (Best Enterprise Engineering and Business Engineering Environment). The result was some 17,000 pages of process specifications, documenting the big project. "Without the close cooperation, it would not have been possible to realize such an enormous project", explains Compex project manager Martin Ziegler. In the implementation phase of the process specifications, the functional departments checked the single processes and tested their interference on the existing system architecture. Function tests and comprehensive integration tests followed. The integration tests served for testing all deployed processes among each other as well as their interference on other existing systems. The processes as well as the interaction with the cash register system, the Data Warehouse, the optical archive system as well as the shelf planning system were also put to the acid test. The Kaiser's Tengelmann AG selected some employees who were trained as "super users". The task of these "rollout managers" is to assist their colleagues in rolling out the system in the single stores.

Thus, Compex Commerce was installed step by step in the headquarters, the stores, the warehouses and the delivery service. Once the project will be concluded, some 15,000 employees will work with the software which maintains some 100,000 articles in 700 stores. Approximately 450,000 order items per day will be processed in the central warehouses.

In the central warehouses, the new software controls and optimizes the operative processes, including goods receipt, fork-lift control, warehouse management, picking, and goods issue (Fig.2). All relevant information is entered online. In comparison to the paper documents, this saves a lot of time. Furthermore, Compex Commerce generates an automatic replenishment order, once the defined minimum stock level is reached. This guarantees both the optimization of goods delivery and a reduction of picking times. In order to optimize the goods movement and business processes, and to correctly control and evaluate the goods flow, the software offers several options for graphically displaying the warehouse management system. Thanks to this orientation guide, the user knows exactly where he stands within the warehouse and to what extend the warehouse's capacities are used. One view displays the warehouse capacity of the storage locations, gates, and trails. The "aisle view", on the other hand, displays the occupancy of storage locations, whereas the "detailed view" provides information on a storage location, such as its storage items.

A novelty is the article-based inventory management in all stores as well as an inventory and value systematic which Kaiser's Tengelmann will use to introduce a sales margin with a sales-oriented MRP and range structure. Furthermore, Kaiser's Tengelmann may realize the automatic MRP on the central warehouse level as well as on the store level within the same IT system.

On the central warehouse level, the retailer avoids stock shortfalls and unnecessary capital lockup thanks to the sound stochastic forecast procedures, Compex Commerce is based on. In order to permanently attain up-to-date data, the system uses past data, projects them in varying models, and transfers them to the current forecast. The calculated values are then compared with the actual sales data. The system creates forecast scenarios for each article and permanently optimizes them on the basis of the actual sales data. The system adapts and adjusts itself almost autonomously and after a short period of time, it calculates more and more exact values, resulting in optimal order quantities.

On the store level, the software makes order proposals to the store manager who can either confirm or change them. If a high forecast quality is reached in a sub-range, the automatic MRP may be activated. "Because one thing is for sure: Wrong or incorrect MRP forecasts may become an expensive proposition, since each stock shortfall does not only reduce the turnover and the contribution margin, but empty shelves also result in unsatisfied customers", says Christophe Loetz, Compex executive partner.

"With the help of the system, we want to offer our customers the products in the right quantity, in the right place, at the right time, and at an optimal price. Even if the demand might vary due to weekdays, seasons, school holidays or other factors", says Lutz Endrikat, head of the Organization department at Kaiser's Tengelmann. "In doing so, we plan to enhance our product presence, improve the inventory planning and eventually reduce capital lockup."

At the moment, Kaiser's Tengelmann is still being in the rollout phase. In early May, already approx. 400 of 700 stores used the Compex Commerce software for their fruit and vegetable ranges. While the rollout continues for the other stores, a store in Hofheim has already completed the rollout and is now working with the new software. As to the warehouses, the rollout has already been completed for the ones in Nieder-Olm and Viersen. In Eching and Berlin, the software still needs to be rolled out for the dry foods range.

Once the rollout is completed, Kaiser's Tengelmann will have made a big step forward on its way to the paperless office. A huge part of the paperwork will be replaced by online communication. The communication in the stores is done via 1,500 WLAN mobile devices as well as approx. 750 stationary PCs. In addition to that, further mobile picking devices, mobile fork-lift terminals and PCs are being used.

The process idea runs like a thread through the entire project. In the system, all business processes are displayed as workflows. In the automatic follow-up view, all open tasks to be processed are listed for each user.

The introduction of the Compex Commerce software, i.e. the optimizations in the process flow, resulted in a reduction of administrative tasks. Kaiser's Tengelmann intends to dedicate the saved time to its customers. "Sale instead of administration is our slogan. Only by dedicating more time to our customers, we'll be able to open up new sales potentials", Beye concludes.