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Author's profile photo Maciej Jarecki

IS-Retail: Merchandise Distribution – Flow-Through

Today I would like to focus on two options for merchandise distribution Recipient-Driven Flow-Through and Merchandise-Driven Flow-Through. General approach to merchandise distribution with emphasis on Cross-Docking was described in another post which you can find here. Please review it as it describes beside Cross-Docking solution also general functionality like Allocation table (push model) and collective purchase orders (pull model) and it can be useful before going with this article.

Both of presented here solutions for merchandise distributions are part of general concept of Flow-Through method processing in distribution center. After goods receipt, articles are transported to repacking zone and after target quantity prepared to shipment is transported to goods issue zone where transportation process starts.

In Flow-Through method we can find two variants:

  • Recipient-Driven Flow-Through
  • Merchandise-Driven Flow-Through

Merchandise-Driven Flow-Through

As Merchandise-Driven seems at the beginning to be more complex as it uses Distribution orders and unfortunately requires Lean WM (yes, it’s a must). Lean WM is a limited or simpler version of classical WM and can be used to create transfer orders as pick orders but quantity is not managed on storage bin (means quantity is visible only on storage location level no storage type or bin)

Process flow:

  1. Based on allocation table (push method) purchase order is create or based on existing sales orders or STOs a collective purchase order (pull method) is created.
  2. During GR, storage location is determined that is connected with Lean WM. The merchandise distribution quantity is adjusted.
  3. Distribution orders are generated for each article from STOs or sales orders with respective quantity. Each distribution order contains information of recipient and use it later on as target storage bin.
  4. Outbound delivery to recipient is generated (not relevant for picking) and PGI is posted

Configuration – Logistics execution – Shipping – Picking

  • Warehouse Number needs to be activated as Lean WM.
  • Storage type for merchandise-driver flow through where stock removal confirmation is active
  • New movement type where no source storage type and source destination, source bin is not fill it. Shipment type needs to be stock removal (in my case A – Pick)
  • Controlling the assignment site/storage location and warehouse number. Level of activation needs to be set to 2 and storage type for picking must be set. 
  • Storage location determination – situation 05 – Material-driven FT might be filled it so it will be defaulted in MIGO and that’s the one connected with Lean WM.

Configuration – Logistics general – Merchandise distribution

  • Site profile for merchandise distribution – configuration as described in previous article.
  • Distribution profile for Article – Processing method is set to 3 – Flow-Through and distribution method is Merchandise-driven distribution
  • Assignment of movement type (configuration from previous step) to warehouse number for the purpose of merchandise flow-through

Process execution

In this example I will focus on the pull model means initial Stock Transfer Orders are created from DC to stores. Based on them collective purchase order to Vendor is created. During goods receipt distribution data is adjusted. According to configuration from Site profile, distribution orders and outbound deliveries are created immediately during goods receipt and distribution data adjustment.


Stock transfer orders for first collective purchase order

  • DC: ZPD2 -> Store: ZSK6 Article: 1050 Qty: 5Ea -> STO: 4500000981 18/04
  • DC: ZPD2 -> Store: ZSK6 Article: 1052 Qty: 3Ea -> STO: 4500000981 18/04
  • DC: ZPD2 -> Store: ZSK5 Article: 1051 Qty: 6Ea -> STO: 4500000982 17/04
  • DC: ZPD2 -> Store: ZSK5 Article: 1052 Qty: 8Ea -> STO: 4500000982 17/04

Collective purchase order: 4500000985 (have a look at allocation table relevancy – it’s set to 3 – Flow Through)

Stock transfer orders for second collective purchase order

  • DC: ZPD2 -> Store: ZSK6 Article: 1051 Qty: 3Ea -> STO: 4500000983 23/04
  • DC: ZPD2 -> Store: ZSK6 Article: 1052 Qty: 5Ea -> STO: 4500000983 23/04
  • DC: ZPD2 -> Store: ZSK5 Article: 1050 Qty: 1Ea -> STO: 4500000984 23/04
  • DC: ZPD2 -> Store: ZSK5 Article: 1051 Qty: 2Ea -> STO: 4500000984 23/04
  • DC: ZPD2 -> Store: ZSK5 Article: 1052 Qty: 3Ea -> STO: 4500000984 23/04

Collective purchase order: 4500000986

Goods receipt for PO 4500000985. Article document was posted where for third line instead of 11Ea I did a receipt of 14Ea. Over delivered quantity was distributed to the largest quantity as set in adjustment profile (assigned in article distribution profile).

Following distribution orders were created:

I confirm transfer orders and generate outbound deliveries to stores. Same procedure for collective PO 4500000986. In this case I have under delivery where for article 1052 instead of 8Ea Vendor delivered 5Ea and system distributed it with following store zsk6 instead of 5Ea – 4Ea and store zsk5 instead of 3Ea – 1Ea.

Outbound deliveries were created and as in previous case the storage location was determined for Flow-Through. Despite item category (NLN) is relevant for picking, generated delivery with NLN item category is not picking relevant. PGI is posted for deliveries and outbound logistic process on distribution center is finished.

Recipient-Driven Flow-Through

As recipient Driven Flow-Through offers quite standard logistic process means GR/Inb deliv for external procurement and replenishment delivery for STO but it might be configured in similar way as Merchandise-Driven Flow-Through process.

Stock transfer orders for collective purchase order

  • DC: ZPD2 -> Store: ZSK6 Article: 1050 Qty: 2Ea -> STO: 4500000999 20/04
  • DC: ZPD2 -> Store: ZSK6 Article: 1052 Qty: 3Ea -> STO: 4500000999 20/04
  • DC: ZPD2 -> Store: ZSK5 Article: 1051 Qty: 3Ea -> STO: 4500001000 20/04
  • DC: ZPD2 -> Store: ZSK5 Article: 1052 Qty: 4Ea -> STO: 4500001000 20/04

Collective purchase order: 4500001001

During GR for newly created collective PO quantity of article 1052 received is 10Ea.

For classic WM solution there are number of possible solutions to design this process. I have created two storage types, one as GR zone (storage type: M92) and one as Distribution zone (storage type: M96). During GR (Mvt 101), transfer requirement is created with and out of it transfer order to move goods from GR zone to Distribution zone.

During goods receipt against collective purchase order, replenishment deliveries were created for dependent STOs (and quantity was adjusted according to data distribution). As a next step delivery group can be created with reference to WM and as following transfer order for multiple deliveries can be create (TCode: LT0S). Those two steps might be performed automatically via user-exit when goods receipt transfer order confirmation for goods receipt is done.

User exit needs to be implemented to change target storage bin to receiver of delivery.

Second option for WM solution would be to mirror a distribution order and make item category of outbound delivery not relevant for picking. During GR (Mvt 101) beside standard transfer order from GR zone to Distribution zone user exit creates new TO to make a split of quantity to replenishment deliveries.

As the result you can see what is foreseen for deliveries in your storage bin:

The biggest issue in my opinion is that after PGI where delivery is without picking and no transfer order is created for it, system creates negative quantity to adjust differences between MM-IM and WM and new transfer order is needed.


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