The changing face of real time
While many say they operate in real time, few are really there today. That is about to change, however.
By Robert Trebilcock, Editor at Large -- Modern Materials Handling, 7/1/2005
In the early 19th century … "Three things would give an investor an edge over his rival … closeness to … the source of news; the speed with which he could receive news of events in states far and near; and the ability to manipulate the transmission of that news."
—Niall Ferguson, author, The House of Rothschild
Two hundred years ago, the Rothschild banking family learned a valuable lesson about real-time information: The company that can act on the news faster than its rivals can win in the marketplace.
Back then it took 48 hours to send a letter by ship from the European continent to London. The Rothschilds cut that time in half using private couriers and homing pigeons. Their 24-hour advantage was the 19th century equivalent of operating in real time today.
Two hundred years later, businesses have closed more of the information gap. But they still face many of the same challenges as their earlier counterparts before they can operate in real time.
The first challenge is to devise and implement technology, systems and processes that allow the collection of information closer to the source of events.
The second is to increase the speed at which we communicate that information.
Finally, it's to have the systems and processes in place that allow the manipulation of that information to make meaningful business decisions.
Given that bar codes, sensors, warehouse management systems (WMS) and enterprise resource planning (ERP) have been in place for some time, many companies may assume they're already operating in real time. But these automated data collection technologies and software systems are only the building blocks of the next generation of real time in the plant, warehouse and supply chain.
"The next generation of real-time operation is about all the nodes of operation having access to the same information and giving you visibility across the system," says Mike Kotecki, senior vice president, HK Systems (800-457-8367). "It's the Holy Grail. We aren't there yet, but we're getting there."
Real-enough time
Just what is real time?
It's not a simple question. In fact, when it comes to manufacturing, distribution and the supply chain, real time is a relative term, depending on whether you're talking about an automated materials handling system or a business system.
"In materials handling and process control, real time is having information fast enough for the equipment to keep up with demand," says Ralph Rio, research director, ARC Advisory Group (781-471-1000). "In a business system, real time means having information a little faster than your competitors."
Think of it as real-enough time. The first might be measured in nanoseconds so that a conveyor diverter can sort cartons traveling at 600 feet per minute. The second might be measured in hours, or even days. Either way, it's having information at the ready when a decision has to be made, whether that information was collected a split second earlier or the previous day.
For instance, a distribution center that replenishes while filling orders has to operate in real time. "Otherwise, pickers will be out of synch with inventories," says John Hill, principal with ESYNC, (419-842-2210). Like-wise, Hill adds, a facility that crossdocks must be in real time to coordinate incoming merchandise with hot orders and outgoing trucks.
In a value-added processing operation, on the other hand, batching information is usually fast enough. "Most people handle value-added processing with temporary labor," Hill explains. "They don't have time to train temps on scanning devices. So, they tell the WMS they're going to move a bunch of picks to the value-added processing area. They wait until the temps have completed all their tasks to receive those picks back into the WMS. Just knowing that they're in the value-added processing area is enough."
But for those operations that require real time on a higher level, there are three components experts say must be in place. The first is inventory transparency. The second is data communication capability. And the third is the ability to make and execute decisions no sooner than is absolutely necessary.
Transparency
There are several reasons real time is becoming more important. One is the evolution from a make-to-stock to a make-to-order environment. Despite lean inventories, manufacturers and distributors have to be able to make and deliver an order when they promised it to the customer. To do that, they need real-time transparency of inventory and capacity.
"The Holy Grail used to be available to promise," says Tom Comstock, vice president of product marketing, Brooks Software (978-262-2400). "Now, with lean inventories, it's capable to promise. Can you make and deliver it when you say you will? Our customers tell us they'd rather turn down an order than miss a delivery."
The tools that provide that transparency are not new. However, a change in how they're used is underway.
"From our perspective, collecting information in real time hasn't changed much in the last ten years," according to Hank Stephens, product manager, wireless networking, LXE (770-447-4224). "What is changing is that the application of those real-time tools is extending deeper into the enterprise. We're no longer talking about automating the warehouse. We're now talking about moving outside the warehouse to get visibility into the movement of product across the supply chain."
But since not every move represents an important event, the key is to get visibility into the movements that matter.
"Real-time exceptions are becoming a big thing for customers as they move toward the real-time factory and warehouse," says Mike Frichol, director of manufacturing industry solutions, Microsoft Business Solutions (888-477-7989). "If I'm operating according to plan, I don't need to know anything. But I want to know immediately when an exception occurs."
The Holy Grail, of course, is that when a consumer removes a product from a shelf, that event would trigger the replenishment of that product all the way back to the manufacturing plant.
"We're a long way from that, but the technologies that could make it happen are becoming feasible," says Stephens of LXE.
Communication
In fact, there is still a disconnect between collecting information with a bar code, for instance, and communicating that information to a location where the data can be used for decision making.
"A bar code scan in and of itself doesn't mean anything," says Stephens. "If you haven't told your systems that you scanned the product, you're not operating in real time."
Why the disconnect? Despite 30 years of bar coding, "Not every company has the infrastructure in place to take advantage of that information," says Gil Bautista, senior director, warehouse distribution solutions, Symbol Technologies (866-416-8545).
Point of sale data is the perfect example. When it comes to the retail supply chain, few processes are closer to consumer demand than a real-time scan at the checkout counter. "Everyone does it," says Bautista. "But the question is: Do retailers use that information to replenish their shelves? The answer is: No, they don't."
In fact, according to John Hill, it takes up to ten days for information collected at a checkout counter to find its way back to a planning system that will schedule the replenishment of that item. "The infrastructure is wanting to support the real-time supply chain," says Hill.
Decision-making
Transparency and a communications infrastructure are critical elements of the real-time supply chain. But in order to advance the ball, companies must be able to execute against that information. More importantly, they must be able to make broader business decisions with that information.
"There are two components to real time today," says Ron Riggin, chief technology officer, MARC Global (866-703-8279). "One is the ability in real time to present a transaction to a user, execute it, record it in your system and move on." That's basic blocking and tackling today, says Riggin.
Real-time decision-making is the next step. "At the end of a day, we may have collected information from millions of transactions that were all executed and updated in real time," says Riggin. "But if you can't derive some meaning out of those transactions, what good are they?"
In other words, it's great to know in real time that a trailer is going to be late if the inventory on that trailer will keep a production line going. It's even better to know that it's one of a series of late deliveries in recent weeks. "What's developing, and what's different, are intelligent systems that can look at real-time information to alert us to what's happening now, but also forecast what might happen if we continue on the same trend," says Riggin.
Real-time materials handling
Just as real time is changing information systems, it will also have an affect on the materials handling systems that receive that information. In fact, the real-time materials handling system of today is not what it will become. But in some instances, it is an excellent start.
Consider this. A warehouse management system releases an order to a pick-to-light system. Order pickers select the items and place them in totes that are taken by conveyor to a sortation system that speeds the order to the shipping dock. Best of all, that order was not received until 7 p.m. and is being shipped less than an hour later.
Most people would call that a real-time system today. But is it the real-time handling system of the future? Not according to Gary Cash, vice president of product management and marketing, FKI Logistex (877-935-4564). "Real-time systems of the future will let what's already on a conveyor to fill one order be redirected to another more needy order. That's different than what is being done today," says Cash.
And he's not alone in that view.
"The next generation of real time will involve a constant reevaluation of all assets every second and operate as if it's a single mind across the facility," says Kotecki of HK Systems. "It's a new level of intelligence and users don't know what they're missing now."
The following stories in this special issue detail how materials handling and information systems both within and outside the four walls of facilities are changing to make true real-time operation a reality.
Building the real-time supply chain
08/31/2006Information-driven!
06/30/2002Real-time tech talk
06/30/2005Software enables the real-time supply chain
09/19/2006Eyes and ears of the supply chain
08/31/2006
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