You know the old saying: everyone talks about the weather, but no one does anything about it. The same can be said about managing with real-time information.

For years, technology consultants and suppliers have talked about the importance of collecting and using real-time information. Many companies have heeded that advice and installed the tools to capture and process real-time information, including radio frequency data communication systems as well as warehouse, transportation and manufacturing systems. And with mainstream use of radio frequency identification systems rapidly approaching, real-time information will soon take on yet another dimension.

But now that real-time information is readily available, what, if anything, are manufacturing and distribution managers doing with it? More importantly, does the availability of real-time information change the way you manage a facility, a supply chain or a business?

To answer those questions, we turned to five experts who have been involved as a consultant or hands-on manager in the operation of a real-time facility.

MODERN: Let's start with a basic question: just what does it mean to manage with real-time data?

TOMPKINS: Let me give you a practical example. Last night, my wife called on my cell phone as I was driving home from the airport and told me not to get off at the usual exit because there was a real traffic jam. I got off at another exit and made it home on time. That was real-time information that allowed me to alter my plan to adapt to unexpected circumstances and be more efficient and effective.

RYAN: I like to talk about real-enough time. That means having the information in a time frame that's appropriate to the operation. You may only need to update an ERP [enterprise resource planning] system once a day. But down on the warehouse floor, where your operators are being directed by RF [radio frequency data communication] terminals, you need information updated every few minutes to keep your operators moving. And if you're talking about automated materials handling equipment where cartons are traveling past a sensor at hundreds of feet per minute, real time is measured in milliseconds.

MODERN: Does a facility being managed with real-time information look different from a facility being managed with traditional techniques?

TOMPKINS: It's totally different. If you go into a traditional plant or distribution center, you have a dedicated team assigned to receiving, another to shipping and another to picking. In the morning, receiving is going crazy and in the afternoon, your receiving guys are reading the newspaper.

Now, go into a real-time facility. At 7 a.m., 80% of the people are doing replenishment. At 1 p.m., 80% of the people are picking orders. At 5 p.m., everyone is packing orders. That's because you're using information to the dynamics of how you achieve your daily requirements.

MODERN: If we stay with that example, do we do things differently with real-enough information?

OUELLETTE: We sure do. For instance, if you have real-time visibility into your receipts, you can do a better job of staffing to handle receiving. Better yet, you may be able to manage back orders in a fashion that allows you to minimize the handling of new inventory. Instead of sending it to storage, you might be able to send it directly to a special back-order processing area upon receipt and start packing from there. On the execution side, real-time information is fed into data dashboards on your WMS [warehouse management system] that are configured against key performance indicators. That allows you to measure where you are three hours into a six-hour plan and adjust your labor force to make sure that you fill all your orders. That's a huge advantage.

MODERN: What are the tools that you need to manage with real-time data?

RYAN: In a warehousing environment, anyone running a state-of-the-art WMS is capable of that kind of performance. But I would add that there are more people not using a state-of-the-art WMS than are. Furthermore, there are many people with a state-of-the-art WMS who aren't managing with real-time data because they don't understand it.

TOMPKINS: In fact, whether managers are using real-time data varies even within companies. You might find that on the first shift, people do it extremely well and on the second and third shift, it's business as usual.

MODERN: Why the discrepancy?

OUELLETTE: Part of the problem is that managing by data is outside of the comfort zone of many traditional managers. The best managers have seen just about every situation you can throw at them, and they're used to managing by their gut. Asking them to look at data dashboards and react according to what the data is telling them is counter-intuitive to what they're used to doing.

TOMPKINS: You're also going to find managers who believe that the definition of management is to create a plan and stay the course. An example might be the manager who has decided to re-slot the warehouse once a quarter. Meanwhile, a new product comes in that's blowing off the doors. The system will tell that manager that based on the orders in the last three days, he should re-slot. But he's not going to make that change because he just re-slotted three weeks ago and it's not time to make the change.

MODERN: I understand that at IMI BEVCORe, Kelly Lee actually uses real-time information to do some of the things that Tompkins, Ryan and Oullette are talking about.

LEE: That's right. We started up in 2001 to distribute spare and service parts for vending and drink machines, and we ship all orders within 24 hours. To do that, our systems were designed to be Web-based and managed with real-time data. In fact, we do one of the things just mentioned by Bob Oullette: as soon as inventory is received in our WMS, the system tells us if there are back orders waiting for that inventory. If there are, we pick right from the receiving table.

MODERN: Do you use the information for more than filling back orders?

LEE: Sure. All our people are trained to receive, putaway, pick and pack. Out on the floor, every employee has a scanner. When each person signs in with an ID number, the system sends the employee to a workstation to do a task. When done at that station, the person is assigned to the next job, which may be in a totally different work area if we need more hands somewhere else. Our supervisors can make those allocations according to the work load, but most of the time the system does it automatically in the background according to what needs to be done at that time.

MODERN: Do your customers or vendors use that information?

LEE: Absolutely. Our customers can log into the system through a Web portal to see the status of their orders. And our vendors manage inventory for us. As soon as they see that our inventory levels have reached a predefined minimum, they automatically send us a replenishment order.

MODERN: We've been talking about using real-time information in the distribution center. I understand that before Doug Bonzelaar co-founded 2think, he was at Herman Miller, where he used real-time information to manufacture office equipment.

BONZELAAR: That's right. Back in 1994, we digitized all of our functions. When a customer sent us an order, we automatically received it, scheduled it, alerted our suppliers and carriers to our material and transportation requirements, and responded back to the customer with a ship date all within minutes. We synchronized the delivery of parts and components to the production line just like automakers – in the sequence of the orders being built. We received components and shipped them back out as a finished good within 12 hours. Our reliability was 99.87% on time to the shipping scheduled and our orders were complete and correct.

MODERN: Did you find any resistance to managing with real time information at Herman Miller?

BONZELAAR:We really didn't. In fact, most people thought the transition was going to be a bigger deal than it was. When you manufacture in batch mode, there's a lot of shuffling around on the shop floor as you decide what you're going to do next. Managing in real time eliminates a lot of that shuffling around. Our people were pretty quick to recognize that the shuffling wasn't adding value to the product.

MODERN: Kelly [Lee], did you have to overcome any resistance?

LEE: We did. The hardest thing was to get our warehouse manager to buy in to the system. He had 20 years of experience in a traditional facility. He didn't believe we could run the warehouse with the staffing levels we're now doing it with, and he didn't believe he could do it without dedicated receivers, pickers and packaging teams. Now, he loves it.

MODERN: Having managed with real time, could you go back to a traditional facility?

LEE: I don't think anyone working at BEVCORe would go back to the old way of doing things. There are just too many benefits.

Click on the icon to read the web exclusive sidebar - Benefits of real-time management.

Click on the icon to read more about the tools that enable real-time information. (The emerging world of real-time control - from October 2003)