Visibility in the extended warehouse

Automating the extended warehouse is the key to success, according to a recent Aberdeen Research report.

By Noel P. Bodenburg, Managing Editor -- Modern Materials Handling, 2/16/2007

Automating the extended warehouse is a key to success, according to a recent Aberdeen Research report.

The findings of the report show that while functional silos continue to be the largest barrier to extended warehouse management performance, best of class companies are chipping away at those silos.

"While automation in the dock and yard has proven a building block to better operation, those technologies alone no longer serve as a predictor of top performance," says Jeff O'Neill, Director of Research Development at Aberdeen, who authored the report. "What is proving a boon for companies is automation in extended processes, such as returns management, distributed order management and visibility."

Seven technologies are important to cutting costs and creating a comprehensive extended warehouse management program:

1. Dock management
2. Yard management
3. In-transit visibility
4. Multi-warehouse visibility
5. Distributed order management
6. Returns management
7. Logistics asset tracking

All about visibility
Companies using a multi-warehouse visibility system are more than five times as likely to have reduced warehousing costs since 2004. Those using distributed order management were more than three times as likely to have cut cycle times. And, automated dock management system users were twice as like to have cut cycle times as those using a manual system or no system, according to the report.

Top performers all had the following in common:

• Created dynamic dock and yard environments to support customer-specific demands
• Actively implemented multi-warehouse visibility systems and distributed order management systems
• Captured extended warehouse metrics and shared them in real time
• Updated current technology infrastructure to take advantage of service-orientated technology.
• Used dashboards and analytics technology

Measure of success
According to the report, 68% of companies that have implemented extended warehouse technology increased inventory accuracy; 67% improved order fulfillment accuracy; and 56% improved their ability to meet customer-specific requirements.

For instance, those using returns management systems are six times more likely than their peers not automating that process to have reduced their warehousing costs by more than 10% since 2004.

“Despite the up front capitalization for extended warehouse automation, Aberdeen research indicates that those investing in a robust automation infrastructure are seeing sizable reductions in overall warehousing budgets,” O’Neill says.