Posts Tagged ‘Warehouse Management Systems’

3plThird-party Logistics providers (or 3PLs) have special warehouse management needs, above and beyond those of, say, the manufacturer that distributes its own products, as pointed out recently in a white paper by WMS publisher Accellos.  That’s worth remembering, the article states, when a third party logistics provider that’s looking for warehouse management software hears it biggest customer suggest they simply use what the they’re using.  Accellos’ conclusion: a 3PL’s special needs warrant looking at a product designed specifically for their logistics niche.  As a result, they highlighted Five Business Drivers a 3PL should consider when evaluating warehouse management systems for their own purposes…

  1. Inventory Integrity – To a 3PL nothing is more important than properly assigning, tracking and managing their clients’ respective inventories.  It’s even more daunting when multiple clients’ inventory share the same building.  The ability to concatenate (or ‘join’) overlapping identifiers such as item codes or pallet codes with a client ID to provide a truly unique identifier should be considered.
  2. Customer Service Enablement – A system built for the multi-client environment of a 3PL must ensure client access to their information only.  So in addition to providing real-time information on inventory, you can provide individualized client self-service features too, like custom alerts or exception reporting.
  3. Concurrent Client Logistics – This means being able to manage multiple clients within a single building, utilizing shared resources while maintaining inventory integrity and data security for each 3PL client’s workflow.
  4. Revenue Assurance – Tracking revenue producing activities from client to client, with different standards and actions, can be complex.  Clients often want to be billed in different ways for differing actions or rules.  A system dedicated to the needs of a 3PL can handle these requirements by tracking the right revenue producing actions, client by client.
  5. Beyond the Four Walls – Items outside the building should also be taken into account, like transportation and supplier management.  If you overpay to move goods in and out of the facility, your internal cost efficiencies can be compromised.  Improvement requires the management of routing rules for multiple clients that may not be included in a standard WMS package.

The takeaway for 3PLs is the need for a careful needs analysis, taking into account all the factors that make your distribution center and policies unique.  One size does not fit all, would seem to be Accellos’ overarching point, and a “purpose-built” WMS may be the better solution for the full-service 3PL.

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leading_laggingAPICS Magazine recently published an article titled “A Failure to Communicate” by Ron Crabtree, an author of five books on operational excellence.  In it, Crabtree points out a variety of both leading and trailing indicators that, when analyzed correctly and acted upon, can yield considerable improvements in a company’s fulfillment performance out of the warehouse.  The points and conclusions we’ve drawn from his article are worth sharing… and will, we believe, be of value to anyone seeking to improve warehouse performance.

In the article, the author breaks down a variety of common performance metrics used in warehousing and distribution operations.  Most warehouse performance indicators tend to be of the “trailing” nature.  That is, they reflect, usually from a financial performance perspective, what has already happened in the warehouse.  Trailing indicators include:

  • Hours worked (and hours worked per unit)
  • Invoice lines shipped per hour
  • Parts and Labor cost per line

But what if you could use your trailing (or financial) indicators as a springboard to improving warehouse performance by analyzing key “leading” indicators?  These would be the data you need to improve future performance.

Crabtree relates the experience of a retail-level consumer goods fulfillment center that was using cost per line shipped and percentage of returns as its key metrics of financial success.  But returns were unacceptably high, and a quick analysis determined this was the result of the wrong items being shipped in the first place.  This resulted in still greater costs being incurred because the company was performing a 100% audit on outbound containers to seek out the problem’s source.

Crabtree’s consultants decided to examine the underlying causes, which turned out to revolve around issues with the handheld units and location labeling.  It turned out that the warehouse was handling 25,000 different items, about double what it was sized to do.  As a result, goods were crammed into every nook and cranny.  Partly due to the excess in items stocked, bar code labeling had deteriorated over time, and upon review it was determined that handhelds were failing far too often.  The combination was stressing the system to the point of having financial (i.e., “trailing indicator”) impact on the company.

But by looking at the more “leading” indicators (such as handheld reliability, location accuracy, and quantity on hand accuracy), the team could find the root causes and begin to identify solutions.  In this case, those turned out to include creating baseline measurements for scanners by utilizing some trusted quality measures — taught by APICS — including TPM (total productive maintenance) and OEE (overall equipment effectiveness) principles.

By instituting rolling audits of unreadable locations, and a maintenance strategy based on a well-known quality and lean tool known as the Five Ss, the company brought their warehouse issues under control, resulting in a 20% reduction in cost per order line (a financial, or “trailing” indicator) and a 75% drop in wrong items shipped – needless to say, a huge money saver overall.

By utilizing these TPM and OEE indicators, “a meaningful set of metrics that directly attached the root causes for bad picking” was created, notes Crabtree.  This in turn improved workforce morale and accountability, and as the metrics went down, it served as an early warning that cost and accuracy issues were looming.

Hence, by identifying and acting upon the key “leading” indicators, the financial (“trailing”) indicators were brought into line, to the improvement of not just the warehouse’s lot, but the company’s financials as a whole.


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In our prior two posts (here and here), we looked at three of the five “drivers of complexity” noted in a recent white paper from Accellos, Inc. (www.accellos.com), providers of warehouse management solutions.  We looked at how “customer compliance,” “new channels,” and “new product introductions” can cause new challenges for warehouse managers.  Today, we’ll look at the last two cited in their report.

The fourth driver was defined as Value Added Warehousing.  This is where you may do some light kitting or manufacturing… or some specialized repackaging requested by your customer (or their customer)… it may involve inspection or quality testing… or special item tagging chores.  In all cases, you need to optimize your warehouse workflow to accommodate the staging or execution of these kinds of steps.  Your route steps and your WMS software need to be able to understand, accommodate, and where possible give visibility over this kind of process flow.  And your warehouse layout and staff have to be organized and arranged in support of that workflow.

The Accellos report then lists as its fifth complexity driver an interesting one that is becoming increasingly relevant in today’s environment of elevated fuel prices and increasing shipping costs.  It’s what they’ve termed Fuel-Optimized Supply Chain.

The report cites expert calculations that show that each $10 increase in the cost of a barrel of oil translates into a 4 cent per mile increase in transport costs.  The implication is that thought must be given to pooling inventory in fewer locations…  and to placing inventory (or warehouses) closer to customer locations (and if you think the trend of increasing fuel prices will continue, then this means you).

Managing multiple warehouses, instead of one, nearly demands a warehouse management system (WMS).  WMS provides common, optimized processes across warehouses.  It provides greater (and real-time) visibility into product location and order status, when properly integrated with your ERP system.  (And properly is the operative word there.)

Finally, the report notes that technology exists today to optimize order grouping as well as shipment routings.

In summary, the report highlights the importance of companies being forward-looking and proactive about managing the coming challenges posed by their customers, their suppliers and their transport requirements.

Warehouse management systems today are, much like ERP systems, an investment in the future well-being – and growth! – of your company.  They are no longer the domain solely of the large business, and increasingly they are becoming a necessity in some form, even for the smaller distribution and warehousing operation.  Not to mention, a necessary competitive factor, and often, a crucial competitive advantage.

Do you have questions about managing your warehouse or supply chain?  We invite your inquiry.  Meanwhile, we hope our synopsis of one firm’s findings about the changing landscape in WMS has been helpful to you in your own warehouse and business planning.

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In our first post, we looked at one of five “drivers of complexity” noted in a recent white paper from Accellos, Inc. (www.accellos.com), providers of warehouse management solutions.  We looked at how “customer compliance” can cause new challenges for warehouse managers.

The second driver cited in the report driving warehouse complexity is New Channels.  As a provider of products, your channels may vary, each sometimes requiring its own distribution model and corresponding strategy.  Wholesalers and distributors for example require the ability to handle truckloads of pallets with little paperwork or compliance labeling.  Shipping to retailers can be significantly more complicated, with custom pallet configurations, labels, unique packaging characteristics, and so on.  Your picking strategies and warehouse layout need to be supportive of these unique handling characteristics.  And your software must support them too.  Picking, staging and loading are especially important in retail fulfillment.

Other channels include direct to consumer, requiring the handling of small quantities, few line items, parcel container shipping via USPS or UPS, and rapid handling of a large number of small orders.  Your warehouse must be conducive to picking lots of “each” quantities.  Staff will often need to be concentrated into smaller pick “areas.”  The ability to do real-time shipping-rate selection as an integrated part of your system is useful.  And, you’ll need a process that supports stuffing of ancillary materials into each shipment.

Other channels the report cites include spare parts and consignment customers.  Here again, each has its own demand patterns, ownership (of inventory) characteristics, and space/layout demands in your warehouse.

A third driver cited is a New Product Introduction.  How do you ensure you’ll be able to meet demand… allocate the right (not too much, not too little) warehouse space, and properly handle returns, warranty work, etc.?

Practices cited for dealing with new products in your distribution center include:

– Close collaboration with the marketing team – not usually responsible for managing inventory levels – on expected inventory, and the corresponding implications on warehouse space planning and effective order movement.

– Obtaining weight and size (dimension) information early in the process, so cartons can be properly sized and optimized, and shipping methods evaluated.  It may seem obvious, but it’s easy to forget – until it’s time to deliver.

– Don’t let poor selling new products take up valuable space for too long in your warehouse.  Excess inventory clogs warehouse space and can limit movement and ability to expedite.

Next up, we’ll look at the report’s final two complexity drivers, and what to do about them.

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Our friends at Accellos, Inc., providers of warehouse management solutions, recently published a white paper entitled “The 5 Drivers of Distribution Complexity for Midsize Companies.”  Dry as that may sound, their paper highlights some of the complexities faced by warehouse teams today, along with some thoughts on how to handle them.  You can probably get the full paper at their site (www.accellos.com), but following are a few highlights…

The white paper’s authors identified five factors that affect warehouse managers by adding complexity to the task of picking, packing and shipping orders.  The five they chose were:

  • Customer Compliance
  • New Channels
  • New Product Introduction
  • Value Added Warehousing
  • Fuel-Optimized Supply Chain

One could quibble with their selection, perhaps, but I’ll bet most firms that manufacture and distribute their products are grappling with at least one of them.  Let’s take a look at their findings, beginning with the first item…

New Customer Compliance: In this case, your customer, often much larger than you, demands certain fulfillment characteristics.  For example, they want specific types of labeling to identify products and orders, or to assist them in their own inventory sorting.  They may want you to provide them with specialized packaging perhaps with a custom, pre-defined mix of products (we’ve seen variations on this with our own clients using our own WMS system…).  They may want electronic notices of shipping, or e-invoicing.  And of course, many want you to drop ship to their customers.

Each of these compliance scenarios comes with its own requirements in order for you to respond appropriately to your customer.  Specialized packaging or pallets requires that you have very flexible picking methods in your own warehouse that enable you to mix and match various product units.

Labeling issues require in-stream custom label-making capabilities on the warehouse floor, tailored to a customer or their ship-to location.

Electronic notices and invoicing move you into the realm of EDI (Electronic Data Interchange).  EDI adds an entirely new level of complexity to the WMS and ERP system.

And of course, specialized Ship-Tos require that your systems be able to handle the complexities of billing one location while shipping to (possibly many) others, and all the customized labeling and packing slip functionality that may require.

And that’s just one potential customer-required scenario placing added pressures on your warehouse team.  We’ll investigate the others, and their implications, in our following two posts…

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A 6-Part Series on Excellence in Order Fulfillment Through WMS

In this 6th in a series of six consecutive posts we detail key findings from Aberdeen Research’s surveys of over 130 firms that employ warehousing.  What are their challenges, what actions are they taking to improve, where are they investing, and ultimately, what does it take to be nearly “perfect” when it comes to warehouse order fulfillment?  Read on…

In this final post on fulfillment excellence in the warehouse, we look at the actions Aberdeen Research has concluded are necessary for any firm to improve its operating efficiencies.

Whether you’re in the top 20% of all warehouses surveyed – meaning you deliver 98% of your orders “perfectly” and have actually reduced unit labor and overall warehouse costs year over year… or you’re in the “average” (middle 50%) category… or if you’re a “laggard” delivering more than 8% of orders “imperfectly” and lagging behind 80% of other, better warehouse operations… there are lessons to be learned by everyone.  These were determined, by category, as follows:

For the Laggards

Start with the picking process.  That’s half your direct labor.  Can you pick multiple orders concurrently?  Do you have interactive information regarding puts – commonly available by using RF (radio frequency) handhelds integrated with WMS software to manage your picking, packing, put-aways and shipping?

Use labor management to compare task performance with standards.  Put labor standards to work, and measure your performance to improve.

For the Average Firm

Besides the above… can you switch employees dynamically between functions (picking, replenishment, etc.)?  Can you do it in real time?  This is called task interleaving, and it improves labor efficiency in the warehouse.

How well do you manage containers, and the orders and lines they contain?  Explore ways to incorporate carton management or confirmation to increase service.

And Even for the Best in Class Firm

Leverage 3rd Party Logistics (3PL) providers.  Sometimes, outsourcing is the most economical alternative to order fulfillment when you’re running near current capacity, and capital is scarce.

Leverage emerging automation and mobility solutions.  This works in companies with high volumes of small direct-to-consumer shipments.  Solutions here include real-time technologies embracing voice, mobile warehousing and advanced material handling as long-term platforms for growth. 


All companies today can benefit from the move from paper-based, batch systems to today’s fully automated, real-time, RF-controlled, event-driven WMS solutions.  They can, as Aberdeensums it up, “reap rewards in the form of reduced labor costs and improved customer service, while becoming more agile under today’s multi-channel logistics requirements.”

** END of Series **

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A 6-Part Series on Excellence in Order Fulfillment Through WMS

In this 5th in a series of six consecutive posts we detail key findings from Aberdeen Research’s surveys of over 130 firms that employ warehousing.  What are their challenges, what actions are they taking to improve, where are they investing, and ultimately, what does it take to be nearly “perfect” when it comes to warehouse order fulfillment?  Read on…

Companies need to be prudent enough to select the right technology investments that maximize their ROI bang for the buck.  The challenge lies in aligning the right technology or solution to each operations-specific need, then comparing cost/benefits.

Aberdeen Research took a look at where over 130 survey respondents said they were planning to invest their warehouse management technology dollars.  Here’s what they found…

  • 94% of all firms said they would invest in “event driven processing” (real-time interactive activities in picking and replenishment).  This includes the broadest range of options, everything from auto-ID to Warehouse Management Systems to Labor Management Systems.  It also integrates Material Handling, Radio Frequency devices, even voice.  In short, this was the catch-all category.  Respondents were saying, in other words, Yes, we’re going to invest in electronic technology to better pick, put-away, track and expedite our order fulfillment.  Again, nearly all respondents said they were planning to do this. 
  • 88% narrowed their selection down simply to selecting a WMS
  • 83% indicated that auto-ID (mostly, bar-coding) was their highest investment priority.
  • All the other choices (Materials Handling; Labor Management Systems; Voice; and 3rd Party Logistics) registered under 62% of respondents reporting they would invest in these areas.

In effect, companies in surprisingly large numbers are saying that they are investing in warehousing technology, and the associated RF hardware — in huge numbers. 

These involve significant capital outlays, but because the benefits in labor productivity and resource efficiency are so high, significant ROI is produced.  In fact, over one-third of respondents said “it can self-fund” within one year.  Overall there is an average ROI expectation of merely 18 months.

Moreover, statistics showed that future investments in WMS technology overall are predicted to increase by 35% in 2012.  Companies today are upgrading in overwhelming numbers to newer equipment.  Companies are extending WMS into advanced picking and replenishment methods, and generally upping their game in terms of replenishment and fulfillment automation.

The results are in, and the investments in warehouse automation are growing dramatically. 

In our next and final post on this topic, we’ll take a look at “required actions.”  Whether you’re among the best-in-class, or worst, we’ll look at the actions you need to take to improve your warehouse performance now.

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