For years, warehouse management systems (WMS) have been improving productivity inside warehouses and distribution centers.

But there is another less heralded role for WMS systems: companies like National Frozen Foods are using these systems to manage manufacturing processes (to learn more, view the "Click on MMH" at the bottom of this page.)

The idea of using a WMS in a plant isn't new. "Our earliest clients used our systems to manage their raw materials and work-in-process," says Patrick Majure, vice president of sales for Majure Data (770-587-3054). "It was a natural extension of the system to also manage finished goods and maintenance materials."

Majure has a term for the process: enterprise materials management.

While the term may not have caught on, the concept of using a WMS on the shop floor is gaining currency. That is especially true as manufacturers confront demands for smaller runs and highly customized products.

In fact, several leading vendors, including RedPrairie (262-317-2000) and Irista (877-726-3683), have begun addressing these needs with hybrid systems with functionality not traditionally available in either WMS or manufacturing execution systems.

"We looked at our customer base and found that 67% of our installs are used to manage raw materials in a production environment," says Scott Rishel, vice president of business development for Irista. "There's a gap between traditional manufacturing and warehousing systems that needs to be addressed."

What's missing from traditional warehouse systems is a unified view of inventory and processes from raw materials through to finished goods. In these operations, synchronizing the flow of inventory with the manufacturing processes is paramount.

In traditional manufacturing environments, the WMS loses sight of raw materials once they are handed off to an enterprise resource planning (ERP) or manufacturing system. The WMS doesn't pick them up again until they become finished goods. That's sufficient in process manufacturing facilities with long production runs. But not in today's build-to-order facilities.

A single, integrated database is the key to getting real-time visibility into all the operations, says Nelson Nones, senior director of product management for Apriso (562-951-8000): "Without an integrated system, you lose visibility of raw materials stored at line stocking locations and of your work-in-process material, and that results in more inventory in the system."

For example, Hewlett-Packard uses a WMS system from Apriso to route incoming materials from the receiving dock to the manufacturing line for just-in-time manufacturing in some of its Compaq computer facilities. The computer maker then uses the warehouse system to manage finished goods from the production line to the shipping dock for delivery to customers.

In quite a different industry, a meat processor uses a system from Coolearth Technologies (206-770-9061), a provider of hybrid WMS/manufacturing execution systems. It delivers raw beef to a production line; weighs the meat as it's processed and packaged; labels and directs cases to a palletizing and staging area; and then ties the cases on a pallet to the original lot of beef used for that run.

Elsewhere, a supplier to the home building industry uses a WMS to build and deliver customized countertops to the customer when they're needed.

On one level, there clearly are similarities between manufacturing operations and order fulfillment in a distribution center: Inventory is still received at one end of the process and then picked and shipped at the other end.

What happens in between, however, is different. Those differences are the application gap mentioned by Rishel that are now being serviced by hybrid WMS systems adapted to meet the needs of manufacturers (See "Five phases of materials management" below).

For one, a bill of materials requires a more sophisticated inventory management solution than a pick list. "If you're out of a SKU (stockkeeping unit) in a distribution center, you may still deliver a partial order to a customer," explains Dan Trew, vice president of product strategy for Catalyst(800-236-4600). "But you don't want to tie up inventory at the line if you can't produce the final assembled product. That means the back-ordering logic has to be more sophisticated in a manufacturing environment than in a warehouse."

Delivery is different too. Instead of shipping a product out of a building onto a truck, the WMS' client is the manufacturing line or a workstation.

While a traditional WMS tracks the movement of inventory, a manufacturing system also tracks the consumption of that inventory. "Just because finished goods have been made doesn't mean that all the material went into production," says Bob Carver, vice president of marketing, LIS (888-547-9670). "The correlation between the consumption of raw materials with the product coming off the line is the point of struggle for traditional systems."

What's more, as raw materials are combined to form components or finished goods, they increase in value. The WMS has to report those changes back to an ERP system.

Where, then, do these hybrid systems fit?

One scenario is the mid-size company with manufacturing and distribution operations under one roof. "You can call them a manufacturing warehouse or a hybrid production facility," says David Zimmerman, president and CEO of Coolearth. "These are companies that ship directly from their manufacturing facility to their customers."

Since those shipments may come from current production or finished goods in storage, the WMS needs to differentiate and schedule work at both locations.

Other companies use a single WMS to track, coordinate and synchronize the activities across two distinct facilities. "We're working with one manufacturer that uses the same system to manage a production plant in South America and a DC in North America," says Wes Downie, vice president, Foxfire Technologies Inc. (678-445-7763). "Shop floor functionality controls the processes at the factory. An ASN (advance shipment notice) sent to the DC links the finished goods back to production, and allows them to track the genealogy of the product from the raw materials in South America to a finished good in the U.S."

Mass customization and build-to-order manufacturing processes are key market drivers for the use of WMS in a manufacturing plant. In those circumstances, distribution and manufacturing are coordinated much closer together than in a traditional manufacturing environment.

"Logistics systems are a must for the build-to-order manufacturer," says Noah Dixon, industry strategist for RedPrairie. "They have to have a set of base products or components that can be customized very quickly, and they have to postpone making the final product as long as possible. The only way they can deliver the product where and when it needs to be delivered is with a WMS."

While distribution centers today also employ postponement strategies, the build-to-order factory still involves hard manufacturing processes, like cutting, stamping, and laminating that are now managed by a warehouse management system.

"What we're being asked to do goes beyond delivering the parts in a bill of materials and reporting on those parts," says Dixon. "We're deciding which orders are going to be produced based on the inventory in stock; when those orders are going to be produced; along with visibility into the supply chain to know whether components in the supply chain are going to arrive on time or not so I can make adjustments to my work plan."

There's another reason a WMS functions well in a make-to-order environment—the need for speedy changeovers. "In a make-to-order environment you need to change your processes very quickly," says Don Decaro, executive director of implementation services, MARC Global (703-948-5391). "A WMS can do that because the systems are designed to accommodate different verticals and different customers. The systems are designed for flexibility."

Recall management, lot tracking, and quality control are also driving the use of these systems. "In any industry with consumables, like food, beverage, and pharmaceuticals, lot tracking is critical, especially in the case of a recall," says Dixon of RedPrairie.

But it's not just consumables recalls where this matters. Lot tracking is also important for customer service and warranty issues. "We're seeing an increased need for tracking the serial numbers of components," explains John Pulling, COO of Provia Software (877-776-8421). "If I have to extend my warranty to cover my lack of ability to track the warranties on components, or I have to replace those components at my cost, it's dollars out of my pocket."

The countries of origin of components are also tracked by some users. "When you're making an end product, you have to respect that the end user may not want components from some countries," says Trew of Catalyst.

The supply chain visibility and event management capabilities of WMS systems are also being adapted for quality control management.

"Many WMS vendors have supply chain event management solutions," says Steve Banker, service director, supply chain management, ARC Advisory Group (781-471-1000). "The next step is to apply those to manage the release of a product from quality hold."

Many food and beverage companies, for instance, use contract manufacturers who are responsible for quality inspections. Often, inventory sits in a quarantine area for up to 24 hours before test results come back, even though most product passes inspection.

Using a supply chain event management solution, however, the product can now be shipped in advance of the test results. "If there's a problem with the inspection, we use supply chain visibility to identify where the product has been shipped," says Irista's Rishel. "An event management solution then notifies the receiver of the recall."

As these systems evolve, visibility solutions will allow distributors to do a more efficient job of bringing together the components for an order from multiple vendors to consolidation or flow through warehouses.

While these systems aren't right for all applications, one thing is certain: as the complexity of orders and materials flows increase, the need for them will grow.

Click on the icon to read how National Frozen Foods uses WMS.