Forward-looking logistics for
medical technology manufacturer ERBE
For
years, German medical technology company ERBE has achieved strong growth both
at home and abroad. Exports currently account for some eighty percent of
revenue. The structure that had evolved over the years was not equipped to
fully meet these and other challenges.
The
cornerstone of a new logistics center, built adjacent to the existing facility
on the southern outskirts of Tübingen, was laid in February 2007. Production
and logistics operations had to be maintained throughout the entire
construction period. After thirteen months of construction, the new warehouse
was ready for operations. It took just three days for ERBE to move into the new
logistics center with its six storage areas and get up to production level. The
nearly 3,000 square meters of floor space in the new logistics center
accommodate the following:
- Automatic small-parts storage area
featuring storage trays for nearly 15,000 boxes and with a capacity of 260
stock removals per hour
- High-rack storage area with
wire-guided narrow-aisle turret truck technology
- Block storage
- Quick-turnover zone
- Dangerous goods storage
- Sterile goods storage
IT support from AEB’s Warehouse
Management
The
entire intra-logistical process—from goods receipt to stock put-away, from
picking and stock removal to packing, from complete freight document
preparation to loading—is mapped by the Shipping and
the Warehouse Management
software developed by AEB in Stuttgart. Standardization and automation were the
benchmarks in planning and designing the IT architecture of the new logistics
process. For ERBE Elektromedizin GmbH, automation means not only mechanized
support but process support.
This
support is ensured by:
- Consistent use of scanners with an
online link to the Warehouse Management system
- Generation of efficient transport
chains within the warehouse
- Interfaces to the ERP system, so
inventory is continuously synchronized among the systems
- Electronic processing of all
documents needed for the Shipping
process
- Online transmission of Import Filing
and Export Filing
declarations to the customs authorities
This
represents another important step toward faster and more efficient order
processing. As soon as goods are received, the Warehouse Management system takes over inventory management, using diversified
multi-stage transport order chains to route the goods into precise bin
locations that have been predefined according to stock placement strategies.
Interfaces to the ERP system ensure that inventory is continuously synchronized
among the systems.
Warehouse management from push to
pull, from tiny to massive
One
innovation that facilitates stock put-away and removal in the automatic
small-parts storage area is the inclusion of both a laser-guided display and a
monitor display. When an employee initiates stock removal during the picking
process in the small-parts storage area, for example, movement orders are generated,
and the material flow computer controls the transport of the tray to the
appropriate picking bin. A laser beam points to the tray segment from which the
goods are to be removed. A graphic display also indicates the right compartment
on the monitor.
To avoid
errors in the picking process, the picker first scans the handling unit from
which the goods are to be removed, then the article to be removed, and finally
the handling unit into which the article is placed for further transport to the
packing station. AEB’s Warehouse Management also supports the picking process in the manual
warehouses. The Warehouse Management software calculates the best route within the warehouse
using transport chains and priorities stored in the master data. Employees
receive route-optimized driving orders on the forklift control terminal in the
high-rack storage area. In the other storage areas, handheld devices are used.
Scanners
support the removal of the goods in all storage areas. The pull principle,
already implemented in production processes as “kanban” control, is now applied
to logistics—for example, through the installation of “pulling” packing
stations that are mapped in the warehouse management system. While
consolidating goods from the various storage areas at the packing stations,
bottlenecks are avoided by triggering a picking order only after a line or
location in the staging area shows the appropriate capacity. Picked
goods—whether from the automatic small-parts storage, block storage or
high-rack storage area—are now made available at the consolidation shelf or
line originally defined for this consignment.
Warehouse management convenience and
transparency for staff
The
employee sees the consignment’s consolidation bin on the handheld device
through control and monitoring scans. The consignment volume and weight
determine whether the merchandise must be brought to the staging area or to one
of the ten lines. Following the system-supported check for completeness, the
consignment is released for packing. The packer receives a corresponding alert
in the packing station application. Data such as package type and package
content and other information needed for the Shipping
process is collected and administered at the consignment level. The packing
process is “qualified”: Each article with a batch or serial number is scanned
once more before being physically packed to make sure it is in the right
consignment. This provides an extra layer of control against the errors of
individuals in support of a system-wide zero-error strategy.
It also
enhances traceability based on batch and serial number. Like the other
consignment-specific documents, the package list is generated by the system
during the process and printed and checked in the dispatch office, where it can
then be added to the consignment as soon as the packing is complete. The
electronic link through ATLAS to the customs administration office also helps
shorten lead times in shipment processing. Integrated compliance screening,
which automatically checks all ship-to and bill-to parties against EU and US
sanctions lists, ensures that no consignment is sent out to anyone with
suspected links to terrorism.
Status monitoring and logistics performance
indicators
The Warehouse Management cockpit gives warehouse managers important information
for planning and controlling the processes they oversee. For example:
- Current number of open transport
orders
- Number of open and completed
warehouse order items
- Overview of the number of warehouse
orders, with color icons indicating their status
The
entire process is controlled and monitored by a system of indicators. All
relevant process information — involved parties, lead times, consignment
contents, consignment routes, Monitoring & Alerting information — is available for operational control,
creating greater transparency in the process, enhancing the reliability and
lowering the error rate.
By
consistently tracking the relevant indicators, ERBE Elektromedizin GmbH is able
to continuously increase logistical performance. End-to-end software support
yielded logistical processes that were less individualized but more reliable
and efficient. The consolidation bins before the packing area have proven to be
both physically and logically critical to Shipping
management.
It is
essential to have a seamless transition of the picking results into the packing
process. The aim is to achieve the current benefits of consistently
consignment-based but manual picking by an employee through quick and
error-free consolidation of the now fragmented picking process. This will be a
critical success factor of the warehouse process, which is much more heavily
reliant on a division of labor.
The
system was designed with very robust support to offer users rapid resolutions
when incorrect entries are made, or unpredictable inventory situations arise.
The conscious selection of an integrated software package—in which warehouse,
transport and export processes are mapped in a single environment—has paid off
by reducing the number of interfaces.
More customer service through
transparency
In 2012,
Erbe also implemented Monitoring & Alerting from AEB’s Supply Chain Collaboration Platform. The online application lets Erbe
employees in the company headquarters and at its subsidiaries around the world
see the status of any shipment at a glance. Erbe subsidiaries in Belgium or the
United States can call up their own orders and see whether the goods have
already been picked, packed, or issued. The status updates of the transport
service providers that Erbe works with – DHL, FedEx, Kühne + Nagel, Transmed,
etc. – are also integrated and visible in real time.
It’s not
only the consignees who have access to more information: The “Performance
Indicator” presents logistics managers with all key performance data at a
glance, so they always know how many shipments went out in a given period and
which percentage was on time. The logistics experts at Erbe wanted to bring
greater transparency to the flow of goods – both in-house movements and
shipments to customers – so they could act early to prevent possible delays. AEB’s
Monitoring & Alerting now lets you quickly see if goods remain too long at
a hub or an outbound delivery faces a possible delay. Information technology
makes it possible to schedule and plan the direct shipment of goods to
customers throughout Europe. Erbe has the capacity to respond quickly to any
incidents and head off possible delays.
The
customs department also benefits from having transparent export transactions.
If a proof of export is not received on time, the case manager is notified by
e-mail. Overall, both Erbe and its customers now benefit from end-to-end
transparency throughout the process until the shipment arrives at its final
destination.
Summary, benefits, and Outlook
ERBE
Elektromedizin GmbH has responded to legal requirements and internal targets by
reorienting itself and completely reorganizing its logistical processes within
two years. The sales department has been relieved of organizational
responsibilities and is now able to focus exclusively on customer contact,
shipment releases and availability checks.
ERBE
customers now benefit from faster and more reliable deliveries. And ERBE
customers will enjoy more benefits in the future—as ERBE continues to shorten
lead times, for example, by eliminating European logistical processing stages
still in place to exploit further cost-cutting potential. In this way,
logistics helps protect competitiveness. The quality of logistics is rising,
meanwhile, as the risk of defects is lessened, which in turn decreases the
number of costly returns. The implementation of a new logistics concept already
enables faster, more efficient and more customer-centered processing while
offering further potential for future developments.