Not so long ago, a warehouse management system (WMS) was an insider's game. The software and its users played only inside the four walls of the warehouse.

By bringing discipline and repeatability to distribution processes, they delivered huge gains in productivity and inventory accuracy compared to paper-based operations.

But what happens to the warehouses and distribution centers that have been up and running for years on these systems? How do they continue to deliver incremental value to the facilities if they have already automated key processes?

That's the challenge facing both WMS users and suppliers. 'Up until recently, WMS was focused on 100% inventory accuracy and automating specific practices with RF [radio frequency],' says Tom Kozenski, WMS industry strategy leader for RedPrairie (877-733-7724). 'We can declare victory on that. Now we're looking for ways to squeeze more juice out of the orange.'

Warehouse systems are now at the core of a broader suite of solutions that optimize processes within the warehouse while making links to other nodes in the supply chain. This expanded tool set is designed to manage all of the processes required to fulfill a customer's order from end to end.

The supply chain execution suite represents a big change in thinking. Manhattan Associates (770-955-7070), the largest best-of-breed provider of WMS, refers to this process as 'from source to consumption.'

Taken together, these changes add up to a potentially dramatic shift in the breadth and focus of WMS applications.

Here's a thought: A warehouse management system is expected to deliver ten or fifteen years of productive use before it's replaced.

Yet, a lot can change inside and outside the four walls of a warehouse over that much time. That's why WMS is no longer an end unto itself. Leading WMS providers now view their solutions as a platform for building a total order fulfillment solution.

'The heart and soul of a company today is how they satisfy their customers,' explains Dave Simbari, CEO of Optum (914-993-3400). 'The value-added services that a company brings to the table are what differentiate competitors. To do that, we need technology that can adapt to a dynamic market.'

There is another dynamic at work here as well. The emergence of a supply chain suite coincides with the emergence of the corporate-level supply chain executive.

'Clearly, the supply chain has become far more strategic in our customers' organizations,' says Jim Treleaven, CEO, Catalyst International (800-236-4600). 'As it is viewed as a source of efficiency within the organization, the need to optimize all the components is far more critical.'

'Our customers used to look at logistics as a cost of doing business,' adds Prashant Bhatia, director of product management for Manhattan Associates. 'Now they look at their supply chains as a competitive advantage. They want a technology solution that will allow them to manage the overall supply chain.'

Every provider has its own take on what constitutes the supply chain execution suite. Most would agree that WMS is the core component. But adding new supply chain execution tools can enhance the original system and drive new productivity gains. In fact, there are many tools that offer opportunities for improvement: transportation, yard and labor management, slotting, reverse logistics and returns, event management and visibility, trading partner management, and even RFID.

'WMS is the most difficult piece to implement,' explains John Pulling, COO, Provia Software (877-776-8421). 'Once you've done that, you have a foundation in place to start integrating more applications that will drive more value at multiple stages.'

'Integration' is the key word.

'At its best, a logistics platform is more than just a bunch of applications linked together,' explains Steve Banker, service director, supply chain management, ARC Advisory Group (781-471-1000). 'It breaks down the processes in a vertical niche, defines the best practices around those processes, identifies the functionality gaps needed, and then provides an integrated solution.'

WMS, transportation management (TMS), and yard management (YMS) are the applications most likely to be integrated first.

In the old model still prevalent at most companies, the various processes required to fill an order operate independently of one another. The result is that with the best of intentions, the transportation department can plan loads that hurt the warehouse, and the warehouse can fill orders that add to the cost of transportation.

Integrate those systems together and the results are very different. 'When the WMS, TMS and YMS share orders, the visibility is immediate,' Kozenski says. 'As soon as the TMS plans the orders, the facility knows when to check trailers into the dock based on their shipping times. The WMS then releases work to the floor in the order it will be loaded into the trailers for multi-stop orders. Meanwhile, the YMS gets the trailers with hot inventory to receiving.'

Squeezing more juice out of the orange applies to more than just getting more out of your WMS system. It also applies to the benefits you should get from looking beyond the individual nodes in the supply chain. That is referred to as optimization, which represents the direction WMS is headed next.

Optimization starts with a very different question than traditional WMS. It first asks: What are the constraints of inventory, labor, carriers, available equipment, and capacity of the warehouse and transportation departments?

Once the system answers that question, it asks: What is the optimal way to pick and ship the order? The answer, of course, is based on those constraints and customer service requirements.

'When an order comes in, we can look across all the nodes within the supply chain,' explains Bhatia from Manhattan. 'That could be my orders on file with the supplier; the product already in transit to my DC; or the inventory already on the shelf. I can optimize the fulfillment across warehousing and distribution, which is something I've never been able to do before.'

Traditional systems still work when the answers to the fulfillment questions are clear, like filling an order that's due tomorrow. 'Optimization comes into play when the best thing to do is not so clear,' adds Pulling of Provia. 'Is it better to bring in temporary labor and ship today, or hold the order until tomorrow and expedite shipment? Like factory scheduling, an optimization engine helps you manage the schedule around when you release things to the warehouse floor.'

The concept of the supply chain execution suite is new. So, is anyone doing it yet in their operations?

'The answer is that the majority of users obviously do not do this,' says Bhatia. 'But we do have a handful of clients who are working toward this vision. They're using WMS, labor management, slotting and TMS, and are looking at other portions of the footprint.'

But to realize that vision, organizations will be forced to think differently about the way their logistics are operated from source to consumption.

'There are two types of companies trying to implement these solutions,' says Simbari of Optum. 'There are the innovators, who understand what the future holds, and the sick and dying who are desperate to do something. For the companies in the middle, it's slow going because it will require business process changes within companies.'

For those with the patience to change, those new processes enabled by supply chain technology may pay big rewards.

Click on the icon to learn more on supply chain execution.
(Adding value inside the four walls - web-exclusive - December 2004)

Click on the icon to learn more on supply chain execution.
(Adding value outside the four walls - web-exclusive - December 2004)