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Posts Tagged ‘Warehouse Management Systems’

Software Connect is a consultancy that offers advice on business software.  They recently surveyed WMS buyers over the past two years to see what warehouse management software systems they were buying, and why.  Their conclusions were compiled into a report you can find here but we’ll summarize a few highlights here today, since we have helped folks implement WMS systems for many years and found their advice and comments timely.  For their report, they summarized 116 conversations with buyers.  The common denominator among these WMS system purchasers is that they all have “high order velocity and want to optimize their inventory movement” (and who doesn’t?)

Their key findings…

  • Fully 75% want barcoding, “still far and away the most used scanning tech in warehouses.” By contrast, just 7% were looking into RFID.
  • Budgets for WMS have gone up – as the ROI value over time has been proven, no doubt. In companies of 100 employees, systems are selling for around $300,000.  In companies of 20 to 100 employees, the costs run from about $100 to $150K.
  • Over 50% of buyers are managing multiple warehouses.
  • About half of buyers want standalone WMS, while the other half are looking for a full ERP + WMS system.
  • One-third of those surveyed wanted new software because they needed “more or better features,” (presumably over what they currently have), and 20% are looking to replace an older system.
  • 70% of buyers surveyed were tracking 10,000 or fewer SKUs. Over half of all respondents tracked between 1,000 and 10,000.
  • About 25% of WMS buyers manage customer-owned inventory, and thus have 3PL requirements, which often include things like unique labeling systems and of course the ability to track by multiple client-inventory-owners.
  • Buyers are using new WMS systems to replace a wide range of systems, but the most commonly cited were QuickBooks Enterprise, QuickBooks and Sage 300 (formerly Sage ACCPAC).

Software Connect’s wrap-up sums up their conclusions this way:

A WMS must be able to process all the steps necessary to complete an order. Often buyers demand software integration with other ERP, distribution, and supply-chain systems. All to better connect their warehouse, enterprise, and partner relations.”

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Our friends at Insight Works, a provider of automated warehouse and software solutions, have pointed out the most common ways companies lose money through warehouse and inventory mistakes.  Considering that these mistakes are common, and that the U.S. Bureau of Labor Statistics says that the number of U.S. warehouses has risen 15% since 2010, they are worth sharing.

Overstocking.  It’s an expensive issue for all supply chain operations.  Statistics show that U.S. companies are sitting on $1.43 of inventory for every $1 in sales – and that’s too much.  Errors that range from incorrect bin labeling and putaway procedures, to lack of oversight or pure laziness are all contributors.  But the bottom line is a considerable amount of tied-up working capital which, if recaptured, represents a sizeable bump in the bottom line.

That’s where automation helps, and often, very quickly once implemented.  A warehouse management system can automate stocking processes and ensure accuracy in stock counts, while also supporting managers with insights into optimal time to restock.

Mispicks-and Mis-shipments.  A single mis-pick costs, on average, about $22, and the average U.S. company has been shown to lose $390,000 annually due to mis-picks (yes, this obviously includes some pretty large firms, but not exclusively).

Here again, automation pays.  A robust warehouse management system can pinpoint and address inefficiencies. Barcode scanners help reduce the chances of mispicks and mis-shipments by eliminating risks associated with manual data entry.  Any picking errors are identified instantly by the barcode scanner, and incorrect items never make it to shipping, let alone customers.

Inventory count errors.  Mistakes in cycle counts, prevalent in manual or paper-based systems, hurt efficiency and drive up mistakes of either too much, or occasionally, too little inventory.

As the folks at Insights Works note… While inventory counts are undertaken to help support accurate inventory records, manual counts are time-consuming and prone to error.  A worker may, for example, accidentally group differently sized items together and count them as the same size, resulting in an incorrect count.  Replacing these manual processes with an automated system that leverages barcode scanners can reduce time spent on cycle and inventory counts and cut down on errors.  Best of all, when items are scanned and counted, data is automatically added to the inventory management system, further reducing administrative tasks and supporting accuracy without extra work.

Picking time.  Today’s WMS systems can direct workers on the most efficient routes to make their picks when filling orders.  Some can even provide optimal picking order based on certain order characteristics.  Workers save time, increase pick rates, and substantially reduce picking errors compared to manual systems.  This helps make even new, less experienced workers more efficient in short order.

Incoming inventory errors.  Some warehouses still use time-consuming and error-prone manual processes for counting and reconciling incoming shipments, which delay outgoing orders awaiting updated inventory data.  Instead, workers can leverage barcode scanning to more quickly receive and verify incoming shipments because scanned data is automatically sent to the warehouse management system — no extra steps needed. This supports speed and accuracy, and ensures that human errors related to incoming inventory are avoided.

 

The bottom line is this: Automated warehouse management systems have been around for years, and they greatly improve the efficiencies of all warehouse operations.  In fact, probably no other ERP automation component provides a faster payback.  If you’re not already fully automated ‘out back,’ perhaps it’s time you asked yourself why.

 

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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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