Equipment Buying Guide: Supply chain software basics
From the factory to the warehouse to the shipping department and beyond, software applications are enabling end-to-end supply chain management.
By Bob Trebilcock, Executive Editor -- Modern Materials Handling, 4/1/2009
An important shift has taken place in materials handling over the last decade. Once, the focus was on the physical movement of goods. Today, the information about the movement of those same goods is as important, if not more important, as the physical movement.
It’s not just tracking the movement of goods and enabling process inside a distribution center or factory. Across the supply chain, software enables suppliers, shippers and customers to replace just-in-case inventory with accurate and timely information about the status of orders, inventory, shipments and events. That information might include the amount of inventory on a shelf or the fact that a truckload of anticipated inventory is stuck on the road.
The aim of these systems is to capture that real-time information and make it visible to decision makers across the supply chain. These systems are the basic building blocks that enable management of the contemporary supply chain from end to end. Here’s a rundown of the most common applications being used by leading supply chain managers today to solve a variety of operational problems inside and outside the four walls of a warehouse.
Think of them in three different categories:
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Enterprise-level applications reside at the corporate level and serve as the information backbone, or the systems of record, of the supply chain.
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Supply chain planning (SCP) applications also reside at the corporate level, but may also be used by plants and warehouses. These look at the information about orders collected by systems of record and create plans to get the work done.
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Supply chain execution (SCE) applications are assigned the job of executing the plans created by planning systems.
Warehouse management systems (WMS) direct order fulfillment and replenishment activities.
Enterprise resource planning
If you’re building a house, you start with a foundation. In the supply chain, an enterprise resource planning (ERP) system serves the same purpose. It is a packaged business software system that allows a company to:
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Automate and integrate the majority of the business processes,
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Share common data and practices across the entire enterprise, and
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Produce and access information in a real-time environment.
ERP systems reside at the host or corporate level. Think of them as the wiring and plumbing of a company: Typically, the core business processes managed by the ERP involve the manufacturing, distribution and financial needs of a company, including cost accounting, inventory, purchasing, customer orders, invoicing, vendor invoices and payments, customer receipt processing, general ledger and shop floor control features.
The data created by those processes is maintained in a common file and in a common language understood by all the other systems in an enterprise, whether those systems are part of an integrated supply chain suite or linked together through interfaces.
Manufacturing execution systems (MES) synchronize manufacturing processes across a facility or supply chain.
Order management
Filling an order begins with an order management system (OMS). These systems capture order information from customers by phone, fax, EDI (electronic data interchange) or the Web. OMS systems were once a function of an ERP system: They checked credit, passed an order on to a supply chain execution system, and tracked the status of an order in batch mode. A company with multiple divisions—and multiple ERP systems—might have multiple order management systems.
Contemporary systems, also known as multi-enterprise OMS, sit above the ERP and present one face to the customer: Place an order and the OMS will parse out the different line items of an order to the right division, the right manufacturing plant, the right third-party distributor or the right warehouse. The OMS then passes that information on to the other systems and partners in the supply chain to fill the order.
Supply chain planning
Supply chain planning (SCP) software is an umbrella technology that enables you to do advanced supply chain planning and scheduling including decision support, optimization and cross-functional decision making.
An SCP system usually resides at a corporate level, where it looks at the orders to be manufactured, picked and shipped as well as the constraints, or limitations, on the availability of capacity, materials, equipment and human resources. With that information, the system determines the best way to schedule an order and plan for the future. Planning software may even determine that an order can’t be profitably filled under any circumstances and shouldn’t be scheduled. While there are many planning components, most attack a problem from one of three angles:
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Strategic planning looks at capital asset allocation as well as market and sourcing decisions, like where to locate a warehouse or DC to serve a particular market.
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Tactical planning asks the questions: Given my customers’ demand and my resources, what can I make that will produce the most profit for my company?
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Operational planning takes the supply chain plan developed by the strategic and tactical planning programs and develops an operational path to execute those plans. First, it may develop weekly production and stocking schedules. Then, it might break the weekly plans into smaller units of time, right down to the day, hour, minute and even second.
Multi-echelon planning
This is an emerging application used to optimize the amount and positioning of inventory across the supply chain. Traditional inventory optimization is a little like playing checkers: These systems look at inventory in one dimension, such the inventory levels at a specific warehouse or parts depot.
A multi-echelon solution is like playing Chinese checkers: It looks beyond the inventory levels at a single location and optimizes inventory positions in the equivalent of three dimensions throughout a network of trading partners.
For instance, it can take into consideration the inventory at multiple distribution centers as well as supplier warehouses. It can also consider inventory that’s already in-transit from a manufacturer or a distributor and product that’s about to be manufactured.
Supply chain optimization and network design
Another emerging application, these are planning tools that model and simulate complex supply chains. Using these programs, decision makers can decide the optimal way to source materials, locate manufacturing plants and distribution centers and set up transportation lanes.
Once the network design is in place, the system can run a series of what-if scenarios to determine how the supply chain performs when changes are made. What happens if inventory is shifted from one DC to another? What happens if there is an increase in orders in Florida and a decrease in the Northeast? By simulating real world situations, the system can predict how the supply chain will perform and can look for potential opportunities to optimize the current network.
Labor management systems (LMS) work with a WMS to manage activities in a DC.
Supply chain event management and visibility
These systems monitor the supply chain for events that are out of tolerance for the plan, like a shortage of parts at a manufacturing location or the breakdown of a truck delivering an important order. When those occur, the system notifies a decision maker by e-mail, pager or fax who can then take an action to correct the problem.
By building in work flow rules, the system can supply suggested responses that allow a manager to re-plan, like the best alternative in terms of cost and customer service requirements. Once stand-alone applications, event management and visibility solutions are increasingly integrated into other applications.
Supply chain collaboration
Supply chain collaboration systems go hand-in-hand with planning. In a global supply chain, where every participant has its own planning and execution systems, a collaboration platform enables the players outside of the enterprise to communicate, regardless of the systems they have, as if they were part of the enterprise.
Once a plan has been created to fill an order, and the resources and parts required to execute that plan have been identified, the requirements are made available to all of the players across the supply chain through the collaboration platform.
Each supplier will be asked to commit to whether they can provide all of the parts required in the time frame required. If a supplier can’t meet a deadline, that information can be fed back into a planning system to come up with an alternative.
Once the plan begins to unfold, the collaboration system can monitor the progress using event management, which alerts a decision maker when something important hasn’t occurred. Finally, the system can serve as a repository of performance information from across the supply chain for historical analysis.
Warehouse management
Inside the four walls of a distribution center, a warehouse management system (WMS) is still the starting point for inventory management. While these systems have evolved over the last decade, at heart they are a software execution tool used to manage people, inventory, time, orders and equipment inside a distribution center.
A basic WMS package supports the everyday functions that are central to warehousing: receiving, directed putaway, order fulfillment planning, picking and packing, and shipping the order. A more advanced WMS system may also support other important warehouse activities, like:
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Replenishment: The WMS will constantly update inventory and call for the movement of material from reserved storage to the active pick area so order pickers are never out of inventory, or will notify when it’s time to place a re-order.
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Cycle counting: Typically this is a process to systematically count inventory according to a plan, say once a year on fast-moving items. It is a support, or check, for the usual inventory accounting process.
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Productivity: WMS systems communicate with workers through the use of hand-held radio frequency devices and voice recognition systems. The data from those communications also provides a way to monitor and report productivity.
The most advanced systems will also support compliance labeling, and interface with other automatic handling equipment like automatic guided vehicles, automatic storage and retrieval systems, conveyors and carousels.
Warehouse control
A warehouse control system (WCS) is a layer of software that sits between a host system—an ERP or WMS —and automated materials handling equipment. While a WMS manages conventional activities performed by pickers and lift truck operators, a WCS synchronizes the activities of automated storage, picking and transportation solutions.
A WCS not only determines the best way to route material through a facility’s automated systems, it also provides real-time control to re-optimize orders as business conditions change and communicates updates back to the host system to provide real-time visibility into warehouse activities.
Labor management
While a WMS directs the activities of operators on the floor, it doesn’t determine how many employees will be needed or where they should be deployed. That’s the role of a labor management system (LMS).
These applications plan, manage, measure and report on the performance levels of warehouse personnel. They do that by comparing the work that has to be done in a warehouse against a set of engineered labor standards. That data is used to determine the number of employees needed for a shift.
In addition, these systems monitor work throughout a shift and provide feedback in real-time to supervisors and associates. They also include business intelligence tools that provide upper management with the labor information it needs to proactively address problems before they become customer service issues and to accurately plan for the future.
Slotting
Slotting is the science behind determining where to store individual products in a facility to enable the most efficient picking. The general rule is that the fastest movers should be located closest to the shipping area and in the golden zone that is easiest to pick from within that picking locale. Slow movers, meanwhile, are located further away, in reserve storage.
Slotting software tools, which are available in most WMS packages and as stand-alone applications, look at a map of the warehouse along with the velocity of orders and order mixes to calculate which items will be picked most frequently and should be in the most advantageous position in the warehouse. In addition, the tool makes recommendations like putting the heaviest items at chest height to avoid back injuries or to separate similar parts to avoid picking errors.
Manufacturing execution
A manufacturing execution system (MES) manages the process on a shop floor much like a WMS executes orders in the warehouse. At least three characteristics are unique to an MES system:
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It tracks products and orders on the plant floor, managing the workload and collecting transactions for reporting to ERP systems.
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It electronically dispatches the orders or product requirements to shop floor personnel, allowing the schedule to change quickly in response to unexpected demand or to recover from equipment or material problems.
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Finally, MES uses its tracking capabilities to provide other data services to the shop floor such as quality tracking, electronic work instructions and lot traceability, among others.
Yard management
Yard management systems (YMS) are the bridge between warehouse and transportation management systems. A YMS controls all the activities at the facility’s dock and yard and schedules dock appointments to reduce bottlenecks. In that sense, it extends a transportation management system.
But if you think of a trailer as a warehouse on wheels, a YMS extends the view of the WMS. As soon as a truck checks in at the gate and scans the shipping documentation, the contents on that truck are considered available to promise. On the outbound side, a YMS allows you to coordinate your picking activities and wave planning around trailers that are going to be on hand to be loaded. As an analytical tool, a YMS provides information about the performance of your carriers because you know when they arrived at your location, not just when they were supposed to arrive.
Transportation management
Like a WMS, a transportation management system (TMS) receives a group of orders from an OMS, confirms the shipping dates required to meet delivery promises, checks rates, assigns carriers and establishes pick-up and delivery schedules before releasing the orders to the WMS for processing. Once the orders have been picked, packed and shipped, the TMS manages shipment tracking, consignee updates, freight payment and carrier performance measurement.
The basic functions of a TMS system today involve mode selection, whether that’s truck, LTL, parcel carrier, intermodal or rail; route selection; and carrier selection. A TMS can also do load building, that is, look at ways to optimize a group of known orders by combining LTL shipments into full truck loads or multi-stop truck loads. It also aggregates parcel shipments to a specific geographic area, like a regional distribution center. TMS systems are offered as both licensed software that sits on a server and as a hosted, software-as-a-service (SaaS) solution accessed over the Web.
| Supplier | Web site | Telephone |
| Aldata | www.aldata-solution.com | 404-355-3220 |
| Applied Materials | www.appliedmaterials.com | 408-727-5555 |
| CDC Software | www.cdcsupplychain.com | 770-351-9600 |
| ClickCommerce | www.clickcommerce.com | 312-482-9006 |
| Dematic | www.dematic.us | 877-725-7500 |
| Epicor | www.epicor.com | 949-585-4000 |
| HighJump | www.highjumpsoftware.com | 800-328-3271 |
| IBS | www.ibsus.com | 800-886-3900 |
| IFS | www.ifsworld.com/us | 888-437-4968 |
| ILOG | www.ilog.com | 800-367-4564 |
| Infor | www.infor.com | 800-260-2640 |
| i2 Technologies | www.i2.com | 800-800-3288 |
| JDA Software | www.jda.com | 800-438-5301 |
| Manhattan Associates | www.manh.com | 770-955-7070 |
| Microsoft | www.microsoft.com | 888-477-7989 |
| Oracle | www.oracle.com | 800-633-0738 |
| QAD | www.qad.com | 888-641-4141 |
| RedPrairie | www.redprairie.com | 877-773-7724 |
| SAP | www.SAP.com | 800-872-1727 |
| Sterling Commerce | www.sterlingcommerce.com | 800-876-9772 |
| Swisslog | www.swisslog.com | 757-820-3400 |
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