WMS and 3PLs
By Staff -- Modern Materials Handling, 3/1/2000
As if what is going on in standard warehouses isn't enough, e-commerce has multiplied the demands on warehouses and WMS systems exponentially.
The contrast to their predecessors is extreme. Catalog fulfillment centers, the closest thing dot coms have to a business ancestor, are accustomed to receiving orders during the day and batching them to a warehouse overnight to be picked and shipped later. With e-commerce, however, customers expect their orders to be filled as soon as they are received. And they expect to be continually updated on the status of the order. Add to that the global nature of e-commerce. And then there's the complete unpredictability of returns and the emerging art of reverse logistics.
One result of this has been many dot coms decide they don't need to do any warehousing. That has resulted in a real surge of business for third-party logistics providers (3PLs) as the dot coms turn to them for warehousing services.
But it's not just Internet companies that are turning to 3PLs to handle their distribution requirements. Traditional brick-and-mortar companies accustomed to picking and shipping pallets and full containers are also turning to 3PL's to handle the small, individual orders associated with a new business environment.
"Most companies are looking inwardly at all their functions and asking if this is a core competency," says Ronald Riggin, managing director, Global MARC products for TRW. "For the company that answers that question with a no, the 3PL can get all their inventory under control under one roof."
Those 3PLs need a different breed of WMS, and only recently has it become available to them. Most importantly, they need software flexible enough to adapt to their changing mix of customers and inventory.
"A 3PL doesn't know what its customer and inventory mix is going to look like from year to year," says Riggin. "It needs a WMS that can change when business changes."
In other words, 3PLs require all the functionality of a best-of-breed WMS, plus some additional functions. These include the ability to support multi-company ownership of inventory and the ability to provide detailed billing information, depending on how the customer is billed.
"Billing may be based on the number of transactions processed, on certain transaction types, on the amount of space utilized, or some combination of the three," says Patrick Majure of Majure Data. "The WMS has to be able to distinguish between those options, and do it for a number of different customers."
In a 3PL environment, the WMS also needs to differentiate between different order types. This requires the ability to assign different order types to different pickers, to print on different paper depending on the client, and to cycle count different products in different ways.
In a dot com environment, the WMS needs to be able to provide real-time information to a host system. This allows it to meet the increased demand for customer service and order information provided to e-commerce customers about the status of their orders. Catalog companies have typically received orders during the day and batched them over-night for picking and shipping the next day.
"The 3PL is not just processing orders, it is sharing information across disparate systems within a supply chain," says Dave Linnen, vice president of product strategy at Intrepa. "The WMS in a 3PL has to be able to receive information from different companies and different systems."
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