Satisfied Customers and Lower Costs

In support of its contract logistics and supply-chain management activities, Kuehne + Nagel Logistics offers total logistics planning, control and execution services, which are designed to turn its customers’ logistics into a competitive advantage.

Information and communication technology (ICT) plays an important role in improving Kuehne + Nagel’s operational efficiency and effectiveness, and that of its clients.

One such client is Unilever, a global manufacturer of Fast Moving Consumer Goods (FMCG). Crucially, the cornerstone of Unilever’s customer service philosophy is the assurance it offers retailers that Unilever always delivers what it promises, and on time. That is why Unilever turned to Kuehne + Nagel Logistics in 2008 to help it improve its lead times and order processing time.

Considering the complexity of the logistics involved and the time available, this was somewhat of a challenge to achieve. “Unilever has to reconcile its pending orders with available stock,” says Joost Hupkens, information services project manager at Kuehne + Nagel Logistics. “In the case of a shortfall, stock allocation is based on a predefined order-fulfillment priority list.”

Deploying the Right Tools

Kuehne + Nagel Logistics decided that automating and optimizing order management and stock allocation would improve lead times (by reducing stock-allocation and picking times) and eliminate errors, as requested by Unilever.

Kuehne + Nagel Logistics had initially considered implementing this functionality into its existing warehouse management system (WMS), but then decided it was not viable. “We dropped this idea because we have several warehouse management systems, which would have meant multiple implementations,” says Hupkens. “We decided the solution was a single, stand-alone application, which was capable of communicating and exchanging data with external systems. We chose the Mendix development platform because it offered the simplicity and ease-of-use we were looking for.”

In late-2008, Kuehne + Nagel Logistics brought in CAPE Groep, a Dutch IT and management consultancy active in the transport and logistics sector, to implement the online, real-time Order Management Portal.

Reflecting on the choice of development platform, “Mendix allows you to quickly and easily model your business processes and the underlying business rules, but without having to write computer code,” says Dennis Brugging, business consultant at CAPE Groep and manager of the Order Management project. “I have some experience developing applications under Microsoft .net. Now, that is programming. On the other hand, what we did in Mendix was business modeling.”

Faster, Error-free Allocation with Less Effort

The Order Management Portal, which has the Kuehne + Nagel house-style with its familiar look and feel, went live in April of 2009. It was delivered in six months and within budget.

Unilever sends its orders to Kuehne + Nagel Logistics’ warehouse management system in the form of standard electronic data interchange (EDI) messages. Following some initial processing, the system sends the Portal order details and related current stocklevels input to the automated allocation process.

Using a complex set of business rules, the Portal then determines which goods, and in which quantities will be allocated for every order line. An audit trail is maintained during the allocation process, logging the computation time and missing items.

Following the allocation, an electronic message is sent back to Unilever with the ‘provisional’ allocation details. At this point, Unilever can either ‘firm’ the allocation or adjust it manually. In either case, the final allocation is returned to the warehouse management system, which updates its database accordingly, and stock picking can begin.

Improved Customer Service at a Lower Price

The Portal has delivered several important benefits.

Stock allocation time has dropped significantly. “The elapsed time between receiving the last order and the start of stock picking has been reduced significantly,” says Brugging. “This in turn improves delivery times and provides Unilever customers with timely delivery information.”

In addition, lead times have improved in another way: “The Portal can round-off stock allocation to the nearest layer within a pallet,” says Hupkens. “This means that stock picking can be fully automated by using the layer picker, saving time and effort.”

And lead times are set to drop even further, once the ultimate objective of the Portal—to fully automate the allocation process—is achieved.