Inventory Management in an Automated World

Forget the global supply chain snarls for a moment and consider another changing reality with inventory: the increasingly intricate flow of goods and inventory transactions involved inside today’s fulfillment centers.

While warehouse management system (WMS) software solutions have long been responsible for inventory control in DCs, the complexity of inventory flows and inventory visibility in a modern fulfillment center is a far cry from mainly manual DCs of the not too distant past, where one forward picking zone often served the whole operation.

Today, by contrast, fulfillment centers might have multiple zones of automation with subsystems like automated storage and retrieval (AS/RS) solutions or robotic goods-to-person (GTP) systems that may have software that manages some aspects of inventory, along with storage and bin location functions.

Getting these subsystems to interoperate smoothly with WMS when it comes to real-time inventory allocation as part of order release, as well as timely replenishment of SKUs needing by multiple picking systems, is changing the functional needs in the WMS market. Metering the flow of goods around order release is also part of the value proposition for warehouse execution system (WES) software, a category of software that sits between the automation and WMS, and is offered by a mix of vendors, including some WMS providers.

“In today’s distribution, it’s all about product flow,” says Dan Gilmore, chief marketing officer with Softeon, a WMS and WES software provider. “And certainly, there is a segment of the market where DCs are growing larger and more complex. In these environments, that means there’s more and more processes and systems that need to be synchronized. And, if you can’t do that well, you wind up with bottlenecks.”

The core inventory management features in WMS remain relevant, however. WMS solutions still use bar code data capture to verify inventory consumption or moves, and functions like cycle counting and tracking minimum SKU levels as part of managing replenishment of forward pick locations, remain WMS table stakes. But when it comes to metering the flow of inventory to automation as part of a nimbler approach to order release, things are changing.

Optimal use of goods-to-person automation involves an interplay of labor, machine and inventory resource insights that likely calls for a mix of warehouse execution/warehouse management capabilities.

Inventory flow and WES

A primary use for WES is managing order release to processes and systems on the floor in a way that creates a level flow of work that makes the most of the robotics and machinery. The WES market has multiple players, including integrators with WES and WMS vendors that have built up WES capabilities. Major warehouse automation vendors also offer software at the WES and WMS levels.

In most cases, the WMS remains the system of record for most inventory data, but WES functionality is increasingly being deployed for smart order release, with real-time monitoring of inventory levels as part of that. The beauty of WES, says Gilmore, is that it level loads and pulls work through a warehouse, which triggers inventory allocation and replenishment activity.

“Clearly, there is some opportunity now with WES capabilities to achieve a much more level-loaded flow of work, and that’s true where it’s manual processes, or automated facilities, or some combination,” says Gilmore.

While some automation subsystems track minimum inventory levels and request inventory from a WMS or a WES, some operations may want the WES to actively monitor inventory in different zones and make the call on when replenishment or other inventory moves are needed, says Gilmore.

“The advantage of letting the WES do it is that it can look at the whole flow of work and inventory more holistically—not only what one goods-to-person system is doing—but all the other automated and manual systems, and manage the whole flow of goods,” says Gilmore.

WMS software is still the transactional foundation for the warehouse, adds Gilmore, and is essential for controlling inventory as part of processes like receiving, putaway, crossdocking, or pack out and shipping workflows.

However, WES shines at the orchestration role as it examines the order pool, looking at resource and inventory availability in the way it releases work and triggers needed inventory allocations, so that with the fewest number of SKUs and inventory replenishments, the DC operation sees maximum throughput in a given amount of time, says Gilmore.

WES capability also helps by dynamically changing work routing decisions. For example, a WES can sense congestion at a put wall system, and temporarily route work that is normally processed by that put wall though some alternative method, like a cart-pick process. Then when congestion at the put-wall system clears, the WES can start releasing work back to the put-wall system.

“This is very different than what most WMS solutions have done in the past,” says Gilmore. “More smarts and machine learning come into play. You want to be able to take advantage of all the optimization opportunities.”

Constant coordination

With more automation in warehouses, major WMS vendors have been building out their WES capabilities to communicate on a near constant basis with automation systems when it comes to order release and inventory disposition decisions, notes Sean Elliott, CTO for Körber Supply Chain Software, which offers WMS and WES software.

Typically, a higher-level system such as a WES or a WMS is used to manage inventory flow and replenishment of SKUs held in goods-to-person automation, with the GTP solution’s software typically controlling bin manipulation and slotting within the automation.

Generally, WMS tracks and manages inventory at an aggregate level in the DC, while the WES capability is aware of the automation status, knows current inventory levels in the automation, and has logic and rules to prioritize what system to assign the work to.

“You do see more inventory disposition decisions being required for optimal execution,” says Elliott. “WMS vendors have taken on more execution capabilities because it’s the only way you can orchestrate that kind of inventory view into the execution plan. That aggregate inventory view is helping determine what to dispatch, when to dispatch, and when to replenish, which becomes a critical component of how a WMS fosters that execution optimization.”

Near constant communication with automation systems through application programming interfaces (APIs) allow a WMS/WES solution to know the current inventory in different systems, but it’s up to the WES logic to make the smartest order release and inventory allocation decisions, Elliot explains.

On paper, one automation system might be more efficient at fulfilling orders in the order pool, but if that system is in the middle of replenishment and is short on inventory needed to complete the work, a different system may end up being faster, says Elliott. “To make the most optimal decisions, you can’t effectively do that without one system that actually understands the whole truth,” he says.

Division of duties

Some automation solutions are configured to let a WMS, WES or other host system control its inventory, while others have their own inventory software which in some instances triggers inventory replenishment requests.

Even when a host system manages the replenishment for a GTP or AS/RS, it’s typically the software at the automation level that controls aspects bin positions and performs fleet management over the robots or carriers.

It’s typically a division of duties, with WES or WMS capability to do the broader orchestration, but leaving the automation software platform to manage the actual movement of carriers and particulars of bin storage, explains Chris Bratten, manager of logistics consulting at Bastian Solutions, a warehouse integrator and solutions provider whose Exacta software offers WMS and WES capabilities.

Bratten says it’s usually best to have one higher-level system that can manage inventory and order release, but ideally involves granular, two-way communication, with the GTP solution having purview over movements and bin manipulation, and reporting inventory consumption as it happens.

“The host level system is coordinating all the work that needs to happen, and giving the machine parameters about when that work should happen, so the system can be prepared to move efficiently. The host system typically gives it some flexibility in how it completes its tasks,” Bratten says.

Not all GTP systems or system deployments are implemented in the same way, says Bratten, but generally, a WMS, WES, or some other host system oversees inventory levels and replenishment for a GTP solution. “It really can run the gambit from the [GTP] system being completely dependent on the host system [for inventory management], to some version of them working together and sort of holding hands through the process,” says Bratten.

With some older WMS or host systems, the architecture is such that continuous, API-based inventory reconciliations may be hard to achieve, but for the most part, newer, Web services APIs from major WMS providers make integration between AS/RS and host systems highly effective, says Douglas Card, director of systems and integrator sales for AS/RS solution provider Kardex Remstar.

“It’s gotten much better over the years because of the more open platforms that accept what are known as “REST APIs” which are like a common dialogue for disparate systems to talk to each other easily,” Card says.

With most of Kardex Remstar’s solutions, a WMS or WES functions as the overall inventory management system while detailed inventory data for the AS/RS or a bank of AS/RS machines is managed by Kardex Remstar’s software, says Card. In many deployments, the host system views an AS/RS like “virtual location or bin,” says Card. The host wants to know how much inventory is in the bin, but may not care exactly where it’s stored in the moment.

Monitoring minimum inventory levels can be handled by Kardex Remstar’s software to trigger replenishment, but more typically, the WMS tracks minimum SKU levels and handles the replenishment process.

Card adds that while effective two-way integration with WMS is not difficult to achieve today, one area that does need improvement is that organizations wanting to leverage AS/RS should have processes in place to capture accurate data on item weights and dimensions.

Having accurate weight and dimensional data at the WMS level ensures the AS/RS solution can use that to manage storage. “If you have good dimensional and weight data, it allows you to maximize the cube utilization potential of the system,” says Card.

Smarter coordination

Ultimately, WMS remains the key system for inventory management in most DCs, but as more DCs become fulfillment centers with automated zones that hold inventory, WES-level visibility into that inventory, and associated rules around dynamic order release, routing and related inventory allocation, becomes more important.

Not all WMS solutions are created equal, of course, with some having more WES capabilities, along with more traditional inventory control functionality. At the end of the day, it’s a more complicated world at the warehouse level, and that complexity involves inventory.

“Automated warehouses require more orchestration and inventory transactions, and this is where WES comes in,” says Laura Bickle, senior offering manager of WES at Honeywell. “WES is smarter in coordinating with each subsystem and decision point. It makes decisions in real-time, allowing for intervention and optimization throughout the fulfillment process. WES enables last-minute decisions that would increase order fulfillment efficiency in the warehouse. Honeywell’s WMS and WES have been tightly integrated to play to the strengths of both systems, with WMS used to plan the order fulfillment and WES executing it, while adjusting to various inventory exceptions that happen in a warehouse every day.”

WES doesn’t necessarily manage all inventory details at the automation level, but it does function like a near real-time intermediary when it comes to inventory, says Bickle, because it constantly exchanges data with various automation systems, and communicates with supply chain level systems that management replenishment from suppliers.

“Industry focus recently has been on integrating the various systems together,” says Bickle. “This opens up real-time communication of data to reduce the unknowns. It provides enough information so customers can efficiently fill orders without having WES control the inventory in every zone of the facility.

“WES ‘talks’ to various automation systems to interchange information needed to intelligently orchestrate order fulfillment, and provide a high-level inventory snapshot to WMS so it can communicate with the upstream systems,” Bickle continues. “This level of integration ensures the systems are in sync irrespective of who manages the inventory. Having a fully integrated WMS and WES enables as much or as little automation and allows for scalability as the warehouse grows.”