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Simplifying complex distribution using SAP MDM

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Retail operations evolve around Merchandising, Supply Chain, Distribution, Stores and Sales. All of these areas are centered on customer centricity and maximizing product range. Distribution Center operations fall at the initial part of the entire value chain. DC operations are complex and heavily dependent on ability of Retailer to know their Products well. In absence of this critical ability Retailers fail miserably in handling various critical operations including Distribution Center operations. In this article we will take a look at as how Product MDM aspect adding value to DC operations. This article will also illustrates as how SAP MDM brings this aspect in reality.

Author(s):    Ajay Vaidya

Company:    Tata Consultancy Services

Created on:  3 December 2016

Author Bio Ajay has been associated with Tata Consultancy Services (world-leading information technology consulting, services organization). He is handling the responsibility of Head of MDM solutions.


Success of Retailers are in to personalize their Product to the extent possible. It would not be too far where Retailers would create the Product for their specific individual customer. However this creates a huge expectations on Retailers ability to know their Products very well.

Distribution Center operations fall at the initial part of the entire value chain. DC operations are complex and heavily dependent on ability of Retailer to know their Products well. In absence of this critical ability Retailers fail miserably in handling various critical operations including Distribution Center operations. In this article we will take a look at as how Product MDM helps to optimize the DC operations. This article will also illustrates as how SAP MDM brings this aspect in reality.

Distribution Center Operations

Distribution Center operations are based on handling Products effectively and efficiently. Operations are spread across following areas:

  1. Receiving the Products from Supplier
  2. Storing and maintaining the Products in DC
  3. Arranging the store orders for pickup
  4. Picking the Store orders and delivering to stores

At a high level this operation looks simple and straight forward. At the small scale in mom and pop store, this operation is indeed relatively simple. However as the Retailer scale grows, the Distribution operation becomes complex and extremely difficult to manage for large scale Retailers.

Let us look at impact of Product information on these operations. Various functional components are depicted in the following diagram.

  1. DC operations execution
  2. DC Workforce management and Capacity planning
  3. DC operations maintenance
  4. Store order management and fulfillment
  5. Fleet management and store delivery
  6. Regulations compliance
  7. Waste Management
  8. Quality Control

Following diagram illustrates the functional view of a typical Distribution Center in the context of Product Information Management

Most of these various Distribution Center functions are directly associated with Product and Product Information management. These functions are directly impacted by the organization ability to manage the Product Information. Any gaps in Product Information Management directly create adverse impact on efficiencies of these functions.

Broadly we can classify DC operations into Receiving Products shipment, Movement and Storing of Products in DC, Distribution of Products to stores and Transportation. Each of these high level functions are heavily dependent on Product Information:

  1. Receiving Products shipment: Products are shipped to DC by suppliers. Product shipments are tracked based on pallet ID, Supplier ID and Product characteristics primarily dimension details of the Products along with handling-safely information. At the receiving end, DC check the Pallet and Supplier details to ensure necessary products are arrived.
  2. Storage Operations: Received Product shipment is further analyzed for compliance in terms of accuracy as per purchase order and dimensional information. Any incorrect Product or out of turn dimension and weight items are rejected and put off either for returns to supplier or for separate handling. Once Products are accepted, they are stores in specific slot as per the DC Product Hierarchy or based on Merchandising Hierarchy. Aisles in DC are typically arranged by the specific Product Hierarchy definition. It enables DC operations to be optimized in terms of labor saving and optimal Products movement.
  3. Store Distribution: As per the store orders, Products are pulled from various aisles in DC and packed together in Pallets. The shipments are tracked and validated against store orders, pallet ID and Product details packed in that pallet. Any deviation against Store order are communicated and handled accordingly.
  4. Transportation: Store shipments are loaded into various vehicles. Before loading shipment to vehicles, again Pallet ID, Product ID, Dimensions and quantity details are verified. Dimension information is used to ensure that shipment would fit properly in vehicles. Vehicle IDs are also recorded to track the shipment all the way to store locations.

Data Model view of the Distribution Center in Products perspective

Following diagram illustrates typical Business Entities and their relationships in the context of Products for Distribution Center. Following entries are illustrated from Product Information Management perspective only. It does not show others aspects like Order Management, Fleet Management etc. This illustration is a generic representation and is not associated with any specific organization needs.

Key Business Entities

  1. Product : Which is at the center of all operations of Distribution Center
  2. Packaging : Maintain details of various packaging levels for Product and also key information like weight and dimensions
  3. Distribution Center: Represents the DC entity.
  4. DC Type : Represent if DC is the primary Hub or Secondary Hub. Primary Hub generally is the primary consolidation point for major supplier’s products. Whereas secondary Hubs are more regional and can accept supply from local supplier. Secondary Hubs also get Product supply from Primary Hub
  5. DC Chambers : DC would have Products that need specific environmental conditions or special handling. These Chambers are created to handle specific type of products. For instance, frozen food products are managed in “Frozen” chambers. Whereas notebooks and writing pads kinds of Products are managed in “Normal Temperature” chambers.
  6. Supplier : Represents Supplier entity associated with various Products. A Supplier can supply multiple Products. Also same Product can be supplied by multiple Suppliers. Also Suppliers can also be set to supply to specific Distribution Centers. It is less likely that single Supplier will supply to all DCs across the country without incurring additional cost.
  7. Store : Stores are supported by multiple chambers belongs to multiple Distribution Centers. The number of Chambers and DC supporting to specific store depends on the Product range in that store.
  8. Store Type : Store type plays important role in DC operations. “Super Stores” need specific attention due to magnitude of Products ranged. Whereas “Convenient” stores needs quick regular supplies due to their limited storage areas and fast flow of specific Products.

SAP MDM solution for Products-Distribution Centers

This section illustrates simple configuration in SAP MDM to represent the Distribution Center operations in the perspective of Product Information Management. Following illustrates basic relationships among key business entities for simplicity purpose. However additional relationships can also be configured (as illustrated in Data Model section) as per business requirements.

For various entities configured, basic attributes are considered for simplicity of illustration. However in reality there would be many attributes associated with these key business entities.

Following diagram illustrates configuration of Overall entities as mentioned in Data Model.

Product entity is illustrated with dimension information for various packaging level (each, Case and Pallet), associated DC chamber need and category details with Product ID. There would be many more attributes in Product entity including various specification. This diagram, illustrates specific view of Product from Distribution Center perspective.

Packaging entity maintains the dimension based information for various packaging level. There are other ways as well to configure packaging dimension information including hierarchies and multi occurring attributes.

Distribution Center represents the primary entity. It is associates with Suppliers, Products and Stores and represents operational relationship among these entities.

Typically there would be multiple chambers representing associated with single DC. Large DCs could have all the chambers all together at one place. Chambers could be classified as “Normal Temperature”, “Cold Storage” and “Frozen”. Based on Business needs others types of Chambers are also possible which are not illustrated here. Chambers association with DC provides critical information about DC capability and range of Products it can handle. Following illustration shows Capacity details for various Chambers associates with DCs. One way of doing it by defining tuple for DC capacity.

DC Type represents the primary purpose of the DC. There could be Primary DCs or Secondary DCs. Primary DCs are typically one or two in numbers and are the central consolidation point for major suppliers. Primary DCs distribute to secondary DCs and also in some cases directly to Stores. Secondary DCs are more regional catering to specific location stores and also full filing local supplier and store needs.

Stores are associates with Distribution Center from where they would get primary supply. This Store-DC association information along with Store logistics operating details are critical for the DC operations.

Store type represents the capacity and range and nature of Products in that Store. Typically “Convenient” stores would have more food and bakery products demands where as “Super Stores” would have more demands in bulky products. “Convenient” stores needs high frequency supply for DC to Stores due to their limited storage capacity.


Distribution Center plays a key roles in operational optimization of Retailers. Whereas Products are at the center of Distribution Center operation. The operational efficiency of Distribution Centers are direct reflection of efficiency of managing Product Information (in the context of logistics).

Organization have realized the importance of Product Information Management not only at sell side of the business but also at the Distribution and Logistics space of the business. SAP MDM enable to maintain the various key business entities information and their relationships at appropriate level to represent Business scenarios as accurately as possible

Related Content

SAP MDM Console Guide

SAP MDM Data Manager Guide

Key Capabilities of MDM

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