Just as manufacturing is moving to real-time operations (see related story - Adaptive manufacturing moves in), warehouses and distribution centers are being transformed to meet the challenges of demand-driven supply chains.

Warehouses are still responsible for the basic tasks of receiving, putting inventory away, picking and packing, and shipping that they have always performed. Real-time order processing, however, is impacting the way those four basic functions are executed.

"What we're really seeing is the evolution of the distribution center from a place to warehouse finished goods until someone ordered them into a strategic fulfillment center where supply meets demand," says Jim Stollberg, vice president of HK Systems (800-457-9783).

The result is that fulfillment processes have become more complex. A company that used to ship 100,000 units a day on pallets now ships 50% of those units as mixed pallets or individual cases. What's more, a customer may require a significant number of value-added services to the products it orders and require shorter lead times. Real-time information is the ingredient that makes this new formula cost-effective as it directs materials handling operations.

"You can see real-time information at work in the overall performance of a distribution center," says Jim Tompkins, CEO of Tompkins Associates (800-789-1257). "Five years ago, we waited until the end of the shift to find out whether we hit our target for the day. Today, with real-time performance displays, we can see whether we're hitting our numbers, and if not, what area is falling behind. That allows management to adjust operations to address the issue."

What it all comes down to is using real-time information to balance the demand for products with the workload in a facility.

You can see this balance at work in the way that automated systems manage the flow of materials in a facility, says Jerry Koch, product director of software and controls for FKI Logistex (877-935-4564).

"In a sortation system, the merge understands the priority of the picking lanes and creates space between cartons to control how much product is being released to the sorter," says Koch. "Meanwhile, the sorter is monitoring the sortation lanes to determine where to send cartons before sorting them."

Those same control systems can be used to anticipate a spike in demand at a workstation. "If a sortation system senses heavy throughput at a particular shipping lane, the control system can automatically dispatch additional operators equipped with voice units to that lane to head off congestion and delays," says Ken Ruehrdanz, business development manager for Dematic (877-725-7500).

That ability to reallocate work applies to filling hot orders, an imperative in today's demand-driven supply chains.

"Every facility does planning at the beginning of the day around the orders they think they have to get out," says Bryan Morley, vice president of software engineering for Daifuku America (801-359-9900). "But then something happens and a new order becomes a higher priority than was originally planned."

With real-time order processing, the system can internally reprioritize the orders to accommodate the new order without shutting down other operations.

Finally, controls systems use real-time information to make the most efficient use of picking locations using a dynamic pick face strategy. This is especially useful in DCs where the number of products exceeds the number of picking slots.

"Even though you have thousands of products, you don't need to present them to a pick face all the time because they're not all needed every hour," says Juergen Baumbach, director of consulting services for Swisslog NA (757-820-3400). "Instead, product can be stored in a mini-load storage system to maximize storage space, then delivered as needed to an open pick location. That way, one picking location may be used for several products."

Just as control systems rebalance the workload on automated equipment as demand changes, warehouse management systems (WMS) and labor management systems (LMS) take that same information to optimize the workforce in the DC.

"When your plans change for whatever reason, the system can look at how each of your areas is performing and reallocate them to meet the new demand," explains John Murphy, vice president of workforce performance management for RedPrairie (888-624-8448). "You might find that you have more workers in replenishment than you need, and they can be moved to order picking."

Crossdocking is the DC equivalent of a hockey hat trick: The process speeds delivery to customers, reduces the cost to process an order and reduces inventory all at the same time.

The concept is simple: When the bar code label on an incoming carton is scanned, the WMS automatically allocates that product to a specific store. The carton is then automatically conveyed and sorted to a shipping lane with other cartons going to that store.

It is also cost-effective: One retailer reduced the cost per carton handled from $1.40 to $0.14 by implementing an automated crossdocking system, according to Dematic's Ruehrdanz.

While the concept is simple, the process itself relies on the coordination of a variety of real-time systems, including:

Advance ship notices (ASNs) from suppliers so the system has visibility into what's coming in;

Information from a transportation management system (TMS) to identify when it will arrive and when the outbound truck is scheduled to leave;

Demand information from inventory replenishment systems to know what stores are in need of the inventory;

A warehouse control system to manage the sortation of the product, and:

A WMS to orchestrate the procedure from the receiving dock to the right shipping lane.

As end-users become more accustomed to operating in real time, they are using that information to enable new processes, like the combination of reverse logistics and crossdocking.

Using real-time point-of-sale and store-replenishment systems, corporate planners can see that they've sold out of 34-inch sized jeans in one store, while they have a surplus in another store. "In the old days, we'd get on the phone and manually arrange for one store to ship their surplus to another store," says Tompkins. "Now, we can automate that process."

Instead of getting on the phone, a retailer's replenishment system can order a real-time transfer of excess inventory from a store to a DC. When that inventory arrives at the DC, it can be crossdocked and put on the next truck to the store that needs that inventory, just like a delivery from a supplier.

Likewise, Tompkins says, with real-time visibility into the contents of containers coming into port along with inventory levels in DCs and stores, retailers can now postpone the preallocation of inventory on a cargo ship until the very last moment. "Just a few years ago, I had to preallocate that inventory before it was loaded into a container and put on a cargo ship," says Tompkins. "Now, I can wait to allocate until it hits the dock, then I can crossdock it to a store based on demand."

What ties all of these examples together, says Tompkins, is that increasingly, businesses operate in a demand-driven world. "Customers want instant gratification," says Tompkins. "That is driving the requirement to operate in real time and the development of new materials handling processes enabled by real time."