Online Pallet Optimization Case Study – Clemens Food Group
“The Online Pallet optimization alone represents the ROI for the whole project. Let alone the others.” [Stuart Farber, 2019]
Back in the day when we wanted to encourage the sales of InsightZAP (RainbowSAP back then), we launched the 4X4 program. The 4X4 program was an initiative by which the undersigned completed four SAP Projects in four days! Four days from start to Ready to be used on Production. Can you imagine? I can, because I’ve done it more than 10 times!
Envision the four projects built in parallel during the 1st day. On the 2nd day, all four projects match the customer’s initial expectations. The 3rd day gives imagination room to expand, and the 4th day the expectations are surpassed and the projects are handed to the customer. In a world where SAP projects can (and often do) take months to complete, require a team of at least three people, and costs gazillions of dollars – completing four projects (requested by the customer) in four days by a single person is nothing short of miraculous!
Well, I’m about to share one such miracle. Here’s an overview of a single project in a single 4X4 program that took place at Clemens Food Group back in 2019.
I should first note that I didn’t take part in the process of the projects’ selection, thus I was surprised to find the project “Online Pallet optimization during Sales Order Creation” in the 4X4 list.
Those of you who love business processes will enjoy the next paragraph. The rest may skip it knowing that it will not affect your understanding of this InsightZAP use case whatsoever.
Clemens Food Group is a pork supplier. Unlike manufacturers of bicycles, computers or mobile phones, at Clemens they take a whole item and they split it apart. In a bicycle company, for example, we’ll take a chassis, two wheels, handlebars and pedals and turn them into a bicycle. Every bicycle looks exactly the same as the one produced before and the one that will be produced after. The industry Clemens works in is fascinating since they take the ‘bicycle’ and they break it down into components. But in the Clemens’ case, the resulting ‘wheel’ may look different than the previous/proceeding ‘wheel’, let alone cases where there is no ‘wheel’ at all in the resulting component list. On the same day, the finished goods are packed, or sent for further processing.
The Problem (Our Starting Point)
Each finished product is packed in a designated box type and pallet pattern. Different finished goods are never loaded together on the same pallet. Namely, a pallet may hold only one finished good at the time. Yet, in case the customer ordered a quantity that surpasses the content of a pallet, the same finished good may be on several pallets. The reader may now ask: what is the content of a pallet or how many boxes fit in a single pallet? That depends. It depends on the box size & shape, its weight, and how the boxes physically fit in the pallet. It’s not rocket science and as soon as this information is keyed into the material master data, SAP knows it as well. However, this value changes from one finished good to another. The problem starts when the customer does not order the exact quantity that fits in full pallets. In extreme cases the customer orders a full pallet amount minus/plus a single box. In these cases the shipping truck will end up with a pallet loaded with one box short or a pallet loaded with a single box only. It results in a waste of transportation space.
Clemens Food Group sells billions of dollars of products every year and the Order Entry process is interesting. Back in 2019, when a Clemens customer called-in to order, they might have asked for 100 boxes of one finished good and 200 boxes of another finished good. At the point of ordering, the customers were indifferent to the exact amount of boxes. For them, it could easily be 99 boxes of the first pork part or 201 of the other. However, as soon as the order was submitted, asking the customer to change the order quantities was a burden — both for the customer and for Clemens. Just think that Clemens employees needed to contact the person who had submitted the order, and to ask her/him to change the quantities in the already submitted order and correspondingly in their books.
In order to get the number of boxes and pallets prior to the delivery, the employees needed the ordered material’s master data. The Clemens team needed to use the material master (t-code MM03, Display Material) to view that material’s master data. By pressing the <<Additional Data>> button and the ‘Unit of Measure’ tab thereafter, they would see the conversion ratio between the various units of measures (UoM) and pallets. Dividing the ordered number of boxes with that ratio yielded the residual (aka modulo)- the value of the reminder. Namely, how many boxes will be loaded on the last pallet. However, this process was very time consuming and negatively influenced the customer’s buying experience.
Packaging technologies such as spacers and dummy boxes could have been used to fill the missing gaps in those sub-optimally loaded pallets. However, this solution was expensive both in packing time & the cost of packaging materials. These packaging solutions would require the warehouse team to pick cases vs pick a whole pallet, at a much higher labor cost.
Someone wise once said that sometimes the easiest way to solve a problem is not to create it in the first place.
What Clemens wanted me to do was to enable the Order Entry staff to spot those issues during the time of order and encourage the customers to adjust their order quantities accordingly. Ooops! InsightSAP is a platform that takes tabular data (report, query, db table, view, excel file, etc), enhances it, better organizes it and automates processes out of it. Then, the result can be shared and collaborated with others. It doesn’t have anything to do with transaction VA01 where Sales orders are being created. Not only that, we were talking about two distinct SAP worlds (Order Creation and InsightSAP Creator). When Sales Orders were created, the content wasn’t available in the DB. As I noted, I didn’t take part in the process of picking the 4X4 projects and thus, during the first 10 minutes of the first 4X4 day, I was caught by surprise and felt a bit puzzled.
Two hours later, a new concept was invented – Rainbow about nothing. An ALV (Abap List Viewer) report that gets a table of order items as its input and displays it. Just like that- the report gets a table with the following structure: line item, material number (SKU), quantity, and UoM and displays it as an ALV report with four columns — that’s it. No DB selection statements, no further manipulations or calculations. This ALV was presented in InsightSAP Creator (again, Rainbow back then) and was enhanced from the DB with the material description, and the conversion ratio between the specified UoM and a pallet (DB table MARM) for this specified material number. Now, the requested quantity was divided by the ratio and the residual was calculated as well as the percent it represents to a full pallet quantity. Next, conditional formatting was added:
Those records with zero residual (the request quantity for this material perfectly fits into an integer number of pallets)- colored green
Else, those records that have residual smaller than 20% or larger than 80%- were colored red.
Rest of the records were colored yellow
For example, in a pallet with a capacity of 100 boxes of this material:
Ordering 100/ 200 / 300 (or any other number that can be divided in 100 without remainder) boxes will yield a Green record
Ordering 213 boxes or 293 boxes will yield a Red record (the residual of 13 boxes is less than 20 boxes and the residual of 93 boxes is more than 80 boxes correspondingly)
Ordering 145 boxes will end up with a Yellow record
Now, we have something to start working with.
Next, I added a button to the Customer Data tab in the Sales Order screen. When pressing this button, I took the order items data directly from the screen and I called the t-code of the newly created Insight, sending it the related items’ data. The Insight was displaying the current order items with the added information and the predefined color coding.
The result: In two clicks of a button (Customer Data tab and Pallet Optimization) the Insight screen manifests itself. In one brief look, the order entry personnel spots those Red records and immediately knows what to ask the customer for (take off a few boxes of this material and add a few boxes of that material) in order to optimize pallets. Do note that this solution is highly customized since the organization may:
Add more colors (e.g. red, pink, yellow, and orange) to better depict the suboptimization level
Offer customers discounts to increase quantities in case it rounds up pallets
Prevent order entry personnel from selling over quantities in case they leave almost empty pallets
Appetite comes with eating, and in conjunction with this project I added another button to the Customer Data tab. Now, when displaying a sales order (tcode VA03) and pressing that button- an InsightSAP screen pops up with all that order’s partners. Selecting the relevant ones from the list of partners and pressing the ‘Send Order Confirmation’ button, sends the order confirmation as an email attachment. According to Stuart Farber, Vice President of IT at Clemens Food Group, this solution saves roughly 5 hours a day. But, that is a story for another post.
About Clemens Food Group:
Headquartered in Hatfield, PA, Clemens Food Group is a sixth-generation, family owned company. Clemens is a vertically coordinated company that includes hog farming, food production, and transportation.