Merchandise distribution happens in a distribution center by using a Pullplanning process:
Existing requirements of the DC recipients, which are stores, are bundled in procurement documents for ordering goods from a supplier. These procurement documents are called Collective Purchase Orders. This means, in this pull planning process, procurement- and issue documents are connected with each other, and this information is stored in the system as distribution data.
The involved parties in this process are the supplier, the distribution center and the stores.
The solution processes shown in the figure above, Merchandise Distribution & Collective PO, describe the overall retail process with the intent of executing Merchandise Distribution to store(s).
The Merchandise Distribution planning phase can happens by creating an allocation table, which refers to an existing procurement document and generates the needed issue documents in a second step via follow-on documents generation. This is called the Push planning process.
In the Pull planning process, existing stock transfer order, and/or sales order quantities are combined in a collective purchase order to the supplier at article/DC level.
The Merchandise Distribution processing phase starts with the goods receipt in the DC, and ends with the goods issue from the DC. There are three basic processing methods: cross-docking, flow-through, and putaway, as well as two optimizing procedures: cross-docking/flow-through, and cross-docking/putaway.
When you are optimizing the supply chain, the logistics of goods that involve distribution centers are increasingly characterized by just-in-time processes (such as cross-docking) at the distribution centers. These fast processes are based on the fact that the quantity distribution among the DC’s recipients was already defined when the DC goods receipt is posted. This means the usual putaway and picking processes at the distribution center are not necessary for this merchandise. The advantages of this include lower handling costs, reduced stocks, and consequently less capital lockup, and a faster flow of goods at the distribution center.
If the supplier pre-picks/pre-packs the merchandise, the distribution center can process these packages, possibly containing different articles, using cross-docking. This is the leanest processing method in merchandise distribution, as no picking is required in the DC. Basically, only goods receipt and goods issue are to be posted. Other steps like adjustment posting, and generation of the outbound deliveries, can be automated according to customizing settings.
Cross-docking is the most efficient processing method in the DC, as the merchandise arrives at the DC already pre-packed by the supplier. This means that, in the DC, the pre-packed merchandise only has to be moved from the goods receipt to the goods issue area, without additional handling effort; it is marked for each recipient/store. However, supplier pre-packing usually comes at a cost.
The site distribution profile is used to define the basic characteristics of a site for merchandise distribution:
Do you plan to use cross-docking and/or flow-through at the site?
Do you want to use picking for deliveries in cross-docking?
In this profile, you also define the time for adjusting the distribution data. This can be done in a general default setting, but also separately for each business process (push, pull, returns), for example:
Goods receipt
Goods receipt, checking size of variance
Manual
This profile also allows you to define the time for generating follow-on documents (outbound delivery, distribution order), for example:
Goods receipt
After adjustment
Manual
The article distribution profile primarily defines the processing method, as well as the system reaction to quantity differences at goods receipt (over/under deliveries) by means of the assigned adjustment profile. The assignment of the distribution profile to the article (logistics view, DC) is a prerequisite for using the merchandise distribution functions for the article. Note: However, the processing method of the assigned article distribution profile can be overruled in the push planning process by means of the allocation table item category.
The processing phase starts with the goods receipt for the supplier purchase order in the DC. When goods receipt is posted, the distribution data is adjusted to the actual quantities, and then the merchandise is distributed among the recipients. In cross-docking, the merchandise is delivered already pre-packed by the supplier, thus packing at the distribution center is not relevant. The merchandise is then sent to the goods issue area, where goods issue is posted.
The stock transport orders (= purchase orders from store to distribution center, issue documents) are connected with the standard (supplier) purchase orders (procurement documents), and are displayed together in the distribution monitor. Here, the stock transport order item (white line) is displayed for the connected standard purchase order item (dark grey line).
In the Merchandise Distribution Monitor, the system displays the subitems of your selected collective purchase order(s) which are ready for merchandise distribution. Typically these subitems are displayed in a dark grey line.
In a separate, white colored line and displayed underneath, the item(s) of the stock transport order(s), referring to the collective purchase order subitem, are also displayed.
In this distribution monitor, two process steps can be executed: The adjustment of merchandise and afterwards the generation of outbound deliveries. Executing an adjustment can only be done when the corresponding distribution profile (which has been assigned in the site master data of the affected distribution center) has been set as manual quantity adjustment, on the other hand the adjustment will be done automatically.
After the outbound deliveries have been generated, the procurement status as well as the general status are updated and display the green complete symbol.
The second phase in Merchandise Distribution is the processing phase in the DC, which starts with the goods receipt of the supplier purchase order, and ends with the goods issue from the DC. When a goods receipt in the DC is posted, the adjustment confirms the relevant processing method(s).
The merchandise arrives at the distribution center for goods receipt and can be posted to a cross-docking storage location. Deliveries are then generated, and picking is not required.
Pre-Packed Cross-Docking:
For pre-packed cross-docking, the supplier must be told the quantities ordered by the individual recipients. This is mapped in the system using the VAS (Value Added Services) pop- up in the collective purchase order document.
Since the recipients (stores) do not necessarily order full units of each article, the supplier has to pre-pack the goods. This means that the supplier creates (possibly mixed article) packages for each recipient, which are all delivered to the DC, and from there sent further on to the recipients.
After the goods receipt of pre-packed merchandise, it can be moved to the goods issue area right away for goods issue posting. The merchandise is now en route to the stores.
Collective Purchase Order
Collective purchase orders are procurement documents for ordering goods from a supplier for a DC, and they are used in the Pull planning process of merchandise distribution. At DC level, you use a collective purchase order to bundle existing requirements of the DC recipients, which are stores. Their requirements are recorded in the system as stock transport orders (STO in the previous figure).
Cross-docking (CD) is the leanest process for the retailer, as it means that the external supplier delivers pre-packed merchandise to the DC. Therefore, the pre-packing details were included in the supplier's PO (= collective PO). This function is called Supplementary logistics services (SLS), which are article-specific services supported by logistics. You can use this SLS function to order pre-packed merchandise from a supplier to be delivered to a distribution center. SLS sub-items are then created by the system during supplier purchase order generation. Technically, the SLS function is part of the Value Added Services (VAS) technical foundation. In the system, it will be found under the tab Menu and the path Environment → Value-Added Service → VAS Details. In a pop-up, called Value Added Services, the pre-packing information like recipient data, quantities, etc. are stored.
This SLS function is supported in the merchandise distribution pull processes, when collective POs are generated. To enable the SLS process in a Retail Public Cloud System, a BAdI (RFM_COLLV_PO_SLS) must be implemented.
