Issue overview: Planning your operations for the next millennium
With just 19 months to go until the year 2000, here's an overview of developing practices in warehousing and manufacturing that you will want to factor into your materials handling system plans.
By Staff -- Modern Materials Handling, 5/15/1998
We all have images of how the next millennium should look. In fact, Hollywood has shown us a broad range of possibilities from the movie 2001: A Space Odyssey to the cartoon series The Jetsons.As we close in on the real year 2000, however, it's obvious that the entertainment industry missed the mark. Physically, our world is going to look a lot like it has for some time now. But that certainly doesn't mean there won't be quite a bit of change out there.
In fact, the forces of future change are already arriving at a pretty good clip. They include the compression of time, the expansion of information availability, heightened competition, ever expanding variety, more specific customer re-quirements, and a global perspective that we've never had to live with before. These forces are, in turn, converging to become a supercharged drive to deliver what people want when they want it in the form that they most prefer at each stage of the supply chain.
All of that puts considerable pressure on warehouse and plant activities. Making the necessary adjustments is no easy trick. However, now is the time to make your plans. With just 19 months to go until 2000, any major materials handling upgrade or new installation that is in the planning stages now will clearly have to deal with a broad range of millennial pressures.
With that in mind, Modern Materials Handling has identified six broad-based operational models that you need to consider in your planning. The six are:
- Order assembly centers
- Value-added service centers
- Adapatable manufacturing
- Crossdocking
- Flow-thru warehousing, and
- Postponement systems.
None of the models are theoretical or based on an unrealistic wish list. Instead, each is already being used (pioneered might be a better word in some cases) by forward-looking companies as diverse as Dell Computer, Allied Automotive, snack food giant Frito-Lay, and papermaker Boise Cascade.
All of the six models take into account specific pressures exerted on manufacturing and warehousing and create new operational practices to accommodate the challenges. At the same time, all models are adaptations of already well known materials handling practices. None require radical new materials handling or information managment technology that you haven't yet heard of or seen.
It's also important to note that no single model promises to be a silver bullet that solves all problems or fits anywhere. Neither are the six mutually exclusive. While, some operations might need to employ just one model, others will combine two or more. Elsewhere in the supply chain, two or more companies will apply various models at different stages and get equally positive results. It's a matter of matching the right models to the right situations at the right times.
To help get you started, here's a quick rundown on each of the six. Complete stories on the models appear on the pages following this overview.
Order assembly centers
This is what the conventional warehouses of today are going to become. The model will be used to support manufacturing as well as finished goods distribution.
In any case, order assembly centers will fulfill unpredictable order patterns, accommodate a broad stock keeping unit (SKU) mix, and ship orders same day even if received after 5 p.m. Frequent shipments to individual customers in small quantities and with high precision are also characteristic.
Value-added service centers
Companies supplying retailers will be highly interested here. The hallmark is value-added merchandise preparation such as applying tags or special packaging at the supplier's warehouse, removing that burden from retailers and moving it one step upstream in the supply chain. A vendor managed inventory program (complete inventory management by the supplier including automatic restocking) is the most advanced form of value-added operations performed at these service centers.
Adaptable manufacturing
Here is production at its most flexible. Whenever possible, manufacturing begins only after a specific order is placed whether the lot size if one or 100,00. It requires a high degree of materials handling agility and control to be able to cost effectively manufacture on demand to volumes that are determined by customers.
On the front end there must be a swift exchange of information between components suppliers and the manufacturer as well as between the company placing the order and the manufacturer. On the back end, all forms of finished goods inventory storage are practically eliminated.
Crossdocking
This is the ultimate in rapid handling of finished goods in shippable form between suppliers and customers. When pallets of goods hit the supplier's receiving dock, they are ideally transported directly to the shipping dock for immediate delivery to the customer in pre-set quantities.
Flow-thru warehousing
Able to support manufacturing as well as distribution, flow-thru warehousing is an inventory staging practice that relies exclusively on forward picking locations and fills them with only enough inventory for the immediate future, which can range from 1 day to 1 week.
Postponement systems
Here is the opportunity to manufacture long runs of a standard product and storing it in large quantities without fear of having too much of anything. To distinguish this finished or nearly finished product for customers, some form of customization must be needed prior to shipment. These finishing steps are postponed until a customer places an order for a specific quantity.
With these six models in mind, it's time to get a headstart on the next millennium. Surviving in it is clearly to going to require some insightful planning on your part in the coming months.
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