WMS: flexibility & visibility matter
Traditionally bound by the four walls of the warehouse, warehouse management systems are building in flexibility and visibility to reach the supply chain.
By -- Modern Materials Handling, 11/1/2000
Even aside from the emerging e-fulfillment world, the world of warehousing and distribution centers is quite fluid these days. For instance, the warehouse shipping full truck loads of pallets and cases today may find itself picking by the piece, gift wrapping, and shipping by parcel carrier tomorrow. Or doing both.
Meanwhile, "the storage of products is becoming less important, while knowing where the product is in the supply chain is becoming more important," says Lars-Goran Olsson, director of product management for Industri-Matematik International, Mount Laurel, N.J.
To keep pace, the traditional warehouse management system (WMS) is changing too. While the traditional WMS once provided information about orders to users within the four walls of the warehouse, the WMS of tomorrow has to provide information to trading partners across the supply chain.
Olsson sees the WMS of the future satisfying five areas of need.
First, it serves as a supply chain hub to give transparency of inventory and orders across the supply chain.
Second, is the ability to handle a variety of warehouse models, including return centers, cross-dock centers, store replenishment centers, home delivery centers, and repair centers, each with their own WMS needs.
Third is coordination of all of the supply chain activities, including transportation.
Fourth is creating a storehouse of knowledge. The warehouse is the closest link in the supply chain to the customer, and can provide that information to the customer.
Lastly is the ability to provide item level detail about a shipment in real time.
That's why flexibility and visibility are the two key characteristics of new WMS systems.
What exactly does flexibility mean when applied to a software solution?
To Irving Chernofsky, research director for the Gartner Group, Stamford, Conn., it describes a WMS that is built to change rather than one that is built to last.
"One of the problems of early WMS vendors," says Chernofsky, "was that by the time a system was installed, the business had changed and the WMS had to be completely modified to handle the new processes."
A system that's built to change is one that's designed to adapt to changing business models without major modifications. "Today, many WMS systems are quite alike in the basic operations, so the question is how much can the system change to accommodate my future requirements," adds Olsson.
In a traditional fulfillment system, that might mean the ability to implement best practices like real-time cross-docking, postponement, or value-added services in a traditional warehouse. It might also mean handling the needs of a new business unit that wasn't even in existence the year before.
That's important, because the traditional warehouse models are morphing together, says Dan Trew, vice president of product strategy for Catalyst.
There used to be three distinct distribution models:
Large warehouses that shipped cases and full pallets by the truckload to wholesale distributors and stores.
Distribution centers that broke down pallets and cases, and then shipped smaller quantities of the product to individual stores.
Cataloguers that shipped individual items directly to consumers.
Today, says Trew, companies that previously performed just one or two of those functions now may do all three. "That's been an eye-opening experience for a lot of users," says Trew. "They have a system that was designed 10 years ago just to move cases and pallets, but now they have a new business model and they're not prepared for it."
The confusion over how to handle this new environment is leading many users to develop separate warehouses and even separate business units to handle their Internet fulfillment.
While space, storage, and equipment limitations may require two different facilities, the fact remains that a flexible WMS should be able to handle all three models in one warehouse. "There's no reason why you can't do pallet, case, and line item picking out of one facility, other than not having a warehouse physically set up to do it," says Trew. "In fact, I personally think a single facility has its advantages because the two business units can share inventory."
For users turning to the Internet as a new order placement tool, flexibility also refers to the ability to adapt quickly to the ebb and flow of demand for products.
"Products going through e-commerce channels tend to be more dynamic than traditional channels," says Rob Sweeney, director of product management for Yantra, Acton, Mass. "Not only do you have a high level of orders with fewer items, but the demand for specific items is changing all the time. That may require functions like dynamic slotting to reconfigure the warehouse based on what items are hot right now. Or, you may need to add new products on demand if your competitors are doing them, or by drop shipping them from a cooperating supplier without holding inventory."
In today's environment, individual consumers and business customers alike want to check the availability of inventory and the status of their order on-line without calling a customer service representative. Synchronizing the activities of multiple warehouses, or multiple partners in the supply chain, to provide a seamless, real-time view of inventory and order status beyond the four walls of the warehouse is what visibility is all about.
"That may mean integrating your WMS with your trading partners systems so you can monitor their activities in real time, or it may mean distributing-or deploying-your solution over the Internet to manage their facilities for them," says Steve Christensen, vice president of sales for Renaissance Software, Lake Success, N.Y.
Visibility tools allow users across the supply chain to receive alerts and notifications when events occur or don't occur so that a user can take proactive steps rather than just react. Visibility also allows users to do more effective cross-docking, merge-in-transit, and postponement.
"The goal is to provide item level detail in advance to the different nodes in the supply chain, whether they are DCs, consolidation centers, or return centers," says Olsson from Industri-Matematik International. "Think of those Russian dolls that nest inside of each other: You want to know about the item in a box, in a container, on a pallet, in a truck. That way, warehouse managers know exactly what's arriving, and what they want to do with that inventory before it arrives."
As WMS vendors develop the functionality to provide flexibility and visibility, they are bundling those together with other related applications, like transportation management and order management systems, to create integrated supply chain suites.
"That's clearly the next wave of product development," says Chernofsky of the Gartner Group. "Supply chain suites are going to be the next determining factor of who makes it and who doesn't in the WMS market."
We'll take a look at how those suites are altering the
market in December's IT Report.
Early on, establish that the vendor has experience in your vertical, and a solution available for your platform, not in development.
Software Gal: Sure. We've done two dozen installations in the herbal tea industry.
Warehouse Guy: But are you running on an AS/400 platform?
Establish the potential savings and price points appropriate to your operation early on.
SG: We can reduce inventory by at least 15%, and save 10% on labor.
WG: But can you implement for $300,000? We can't afford a Tier I solution.
Are you both working in the same time frame?
SG: We can't implement for at least six months. And it'll take three months to go live.
WG: We have a year to roll this thing out. That'll work.
Clearly identify five to eight items that are critical to your operation. Beyond that, accept the basic package.
SG : Will you batch or wave pick?
WG: Wave pick. And we need RF capability.
Now's the time to visit a vertical like yours to see the solution in action.
WG: You had them up and running so they could receive and ship on the first day.
SG: We can do that for you too. No problem.
If you're satisfied with the site visit, script a demonstration of their system running your warehouse.
WG: What if I want to be alerted when inventory needs replenished?
SG: Watch. With exception management, you can get an e-mail when you're low.
If the site visit and demonstration are a success, it's time to weigh proposals, including costs, the implementation program, service, and testing. Then it's time to let the contract.
WG: If you can define the path for upgrades, we're let to go.
SG: We'll have it in the mail tomorrow.
With all the talk of e-commerce, there's a temptation to divide the world of warehouse management systems into two camps: new economy solutions for e-fulfillment, and old economy solutions to serve traditional facilities.
That would be a mistake.
That's because at the end of the day, the core activities of a WMS remain the same. It's true whether the system replenishes retail outlets with full pallets and cases, or takes orders from a Web site and delivers individual products directly to a consumer.
"The systems still have to receive, pick, pack, store, and ship product," says Stephen Critchfield, systems consultant, Majure Data, Roswell, Ga. "They still have to provide accurate information about inventory levels and picking activities."
"There's a perception that e-fulfillment is a completely new animal," adds Ron Riggin, chief technology officer, MARC Systems, Reston, Va. "In truth, high-volume, rapid-turnaround fulfillment has been done by cataloguers and the replacement parts business for years."
That isn't to say that e-commerce hasn't had an impact on WMS applications. It has. As business ramps up to Internet speed, systems with marginal areas of functionality just aren't cutting it any longer. It's much the same as an old car that works just fine going to the grocery store but rattles and shakes on the interstate.
"There's a tremendous focus on leveraging the power of the Internet by WMS vendors," says Jim Tompkins, founder of Tompkins Associates, Raleigh, N.C. "But vendors are also finding they have significant work to do on their basic packages to meet the new demands on the warehouse. The way many systems worked may have been fine in the past, but with Internet speed they're being forced to rethink how to do those well."
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