Prioritizing for a changeover

By Rick Bushnell -- Modern Materials Handling, 5/1/1998

"How do I survive while my company is redesigning (reinventing) the processes that use the new technology?"

I have provided 3 answers to the 2 questions and then I have gone on to explain a little more about what the 3 answers involve.

1. Learn how to balance improvements to material flow (using warehouse management systems, electronic commerce and bar codes, etc.) with improvements to work flow (using document and image management as well as electronic commerce.) To do this you will need to know what current activities are costing you.

First, we have to develop an understanding of how things as seemingly diverse as document management and bar codes, and activities like receiving, shipping, ordering and accounting all fit together.

Senior management will have to understand that many of the overhead costs are related to accounting functions that could be eliminated by streamlining the work flow related to procurement, receiving, order processing, shipment verification, payment, and invoicing. Then executives and middle managers will need to "engineer" in order to simplify-and even eliminate-processes.

WARNING! This procedure is difficult today because there is a very strong interdependency between work flow in the front office and material flow in the warehouse or factory.

2. Develop a master plan that improves processes by eliminating or simplifying front office as well as warehouse or manufacturing activities.

If you are going to install an enterprise computing system to integrate all functions and eliminate the use of paper documents, you must develop a master plan. It must take into account changes to work flow and material flow. The importance of this plan cannot be overstated because the implementation will span several years and reach into a number of different functional areas.

In many situations a warehouse management system (WMS) will cut costs in that part of the operation right away. So it will make sense to divide the project into two parts; warehouse and related material flow make up one part, and front office work flow activities, the other.

The division is made possible because the upfront master plan keeps the installation and startup activities in the context of a total integrated system. The work flow and the material flow need to be addressed simultaneously in the planning phase but can be divided as implementation starts.

3. Prioritize installation based on payback factored by necessary changes to system, supplier and customer relationships, and processes.

If you are to start with the WMS, you should start sending orders electronically, requesting bar coding, and using bar coding to receive, store, and take physical inventory. This will take some time as suppliers are implementing the complementary technology. But it will provide definite payback in labor savings.