Monday 20th Nov 2017 - Logistics Manager

Integrate to differentiate

Warehouse management systems (WMSs) are under going rapid change as warehouse operators seek ways to cut costs and speed up the flow of goods through the supply chain.

Vendors are adapting WMS technology to support new mobile tracking and picking technologies such as radio frequency identification (RFID) and voice recognition. WMS suppliers are also responding to demands for quicker decision taking by getting their products to work closer to real time.

Once seen as a stand-alone application, WMS is now one of a number of supply chain execution systems that must work together to provide an efficient flow of goods. Logistics managers like to talk about breaking down the walls of the warehouse so that what goes on there is transparent to systems involved in other parts of the supply chain.

Despite a slower rate of investment in corporate IT in general, companies are still investing in systems for warehouse operations both to update existing warehouses and to support new styles of flow through working such as cross docking. Even so the market in Europe is at best flat.

A need to invest
The trend towards larger, more automated distribution centres has kept WMS companies afloat. In some countries, such as the UK, labour shortages too are prompting logistics managers to invest in systems. ‘As a result of the labour shortages within the key strategic areas of the Midlands, often referred to as the “hot zone”, there is an increasing demand for warehouse management systems,’ reports Richard Hyne, sales manager, Open Business Solutions. ‘Companies using manual systems to manage their supply chain operations are more dependent upon human resources.’

With the prospect of productivity improvements of up to 30 per cent on an upgraded WMS, according to outsourcing company EDS, this is one area of the logistics budget that provides a reasonable return on investment. WMS sales are also being maintained by competition in the logistics business, which has spurred operators to strive for more efficient warehouses.

EDS claims impressive savings from WMS systems in terms of reduced inventory, increased productivity and better use of assets. The service company puts productivity improvements at between 10 and 30 per cent. Better cube utilisation through more efficient put-away, replenishment and picking strate-gies could add another 10 per cent according to EDS. Using radio devices to capture data on the warehouse floor can give accuracy of up to 99 per cent, says Paul Turner, a senior consultant at EDS.

And the good news is that suppliers are now under pressure to make deals especially as they cast about for customers in a crowded market. Traditionally, WMS suppliers have been small and numerous, each company has tended to concentrate on particular industries and on specific geographical areas. The reason for this fragmentation is the varied requirements of warehouse operators.

Some sectors, such as fast moving consumer goods, demand systems able to cope with high volumes, others, such as pharmaceuticals, need systems able to handle control and security. A third group of users headed by the automotive industry look for a WMS tuned to dealing with stock items of very different sizes.

However, the old specialisms are breaking down as leading software companies develop products that can be adapted to match the requirements whatever the industry sector. ‘The key differentiators [between suppliers] come down to the ability of systems to work in different environments with different volumes and different levels of complexity,’ says Simon Shorthose, sales and marketing director, Europe, Middle East and Africa, for Catalyst International.

WMS packages are becoming more complex because more is required of them. ‘When warehouse management system solutions first entered the market, they focused only on controlling movement of materials within the warehouse. Today, they take in a much wider range of activity, in some cases including light manufacturing, transportation management, order management and complete accounting systems,’ explains Andrew Dalziel, global manager for supply chain solutions at Intentia.

A recently announced warehouse project by German logistics company Stute is typical of the new breed of WMS installation. Stute is building a 20,000 sq m material management centre at Hamburg, due to open next year, that will supply parts for the Airbus 380 under a system supplied by PSI.

The centre will consist of a small parts warehouse, a pallet warehouse and a highly automated facility with cranes for larger parts. RFID will be used to collect data in the centre, which will be linked to the Airbus IT systems so that orders and planning information can be shared. Parts will be delivered to an Airbus factory 12 km away on a just-in-time basis.

On target
Most warehouses are not as high tech as the proposed Airbus centre. However, in common with other areas of IT smaller enterprises are now being targeted by suppliers as the tier one market reaches saturation.

Users have two options: buy a WMS from the same company that sold them an ERP system or purchase a so-called best of breed system and adapt it to run with other company systems. It seems that more are going for the ERP option.

‘The instability of the WMS marketplace gives cause for concern to both existing WMS users and those seeking to implement one in the near future,’ claims Jon Rail of XP Integration. ‘The WMS industry is subject to too many players, leading to a fragmented marketplace with no one organisation with a significant market share.’ As a result of this trend, insiders predict that there will be an industry shakeout leading to fewer, larger suppliers.

Enterprise resource planning (ERP) systems suppliers who have added warehousing modules to their products may well have an advantage because they can provide a higher level of integration.

‘Real-time visibility can only be achieved through a full integration of different supply chain modules and the use of one common database,’ contends Daryl Fisher, director for eWMS development at AquiTec.

‘End-users adopting a best-of-breed solutions need to integrate different modules which will slow down the movement of information. Also different modules will have separate data sources, making the process even slower.’

Integration becoming easier
However, standards such as Web services and the computer language XML are making it easier to buy best of breed software and graft it on to so-called legacy systems. Integration has long been a bugbear for WMS users. Because older systems were often designed to work on their own, they lack the standard interfaces that enable them to be linked to newer systems.

The move towards greater integration of WMS with other company systems is likely to get an additional boost from two quarters: from new regulation and a greater need for collaboration. E-business that already requires specialist distributors to deal with unwanted goods returned by customers to the warehouse. EC environmental regulations that will make it mandatory for manufacturers of electrical and electronic goods to take back obsolete products by 2005 will swell inbound traffic.

‘With the opportunity to sell people replacement products there is the potential for returns to drive closer collaboration between WMS and marketing systems,’ points out Simon Merriott, manager of fulfilment with management consultancy Kurt Salmon Associates.

Collaboration, ranging from enabling customers and suppliers to track orders through to letting them inspect stock levels and initiate replenishment, is much talked about these days, but still relatively rare in practice.

Integration is not welcomed by everyone. The prospect of increasingly tightly linked systems has raised concerns about viruses and the possibility of confidential commercial information ending up in the wrong hands. ‘People worry because of headlines about viruses and the loss of information,’ says Anne Knight, sales manager for WMS supplier Central Systems & Automation. ‘There is a lot of misguided fear about integration.’

The core activities of warehouse management – receiving, put-away, picking and dispatch – are now standard features of WMS packages, however newer software products have the ability to handle advance shipping notes, cross docking, flow through and yard management.

‘Vendors who have been pushing out one or two new releases per year are now diversifying into other areas of the execution suite,’ explains Meriott. ‘They are going out and doing yard management and offering tools for advance shipping notes. They are providing planning tools, and productivity reporting – the bit that allows you to screw down productivity.’

But there are even bigger changes afoot. ‘The silo optimisation mentality of old, where the WMS optimised the warehouse and the transport management system (TMS) optimised the transport, is no longer sustainable,’ says Dominic Regan, director of sales and strategic marketing of logistics software company G-log UK.

‘Instead we see the emergence of solutions which, through their use of open architecture and web-native technologies, allow tight integration, increasing visibility from the warehouse through to the distribution centre and the store.

Value and flexibility
‘This end-to-end capability provides users with the granularity of data and transparency of information that they need to make truly informed decisions across the entire supply chain. By linking these applications to emerging technologies such as RFID, voice technology, in-cab telematics and General Packet Radio Service (GPRS), enables far more value and flexibility to be built into the modern supply chain.’

Mobile applications are just in their infancy now. Although RFID, which involves tagging both individual items and pallets, is only being used by a small number of large distributors at present, the software suppliers Logistics Europe spoke too are convinced that this is the most important new thing in warehouse computing.

Although much work needs to be done on developing lower cost tags and on agreeing standards so that tags on goods can be read easily wherever they are in the supply chain, there is no doubting the benefits. RFID has the potential to provide real time stock taking, and vastly improved tracking and tracing with important implications for improved security.

‘With RFID, it is possible to have totally automated logistics tracking processes, whereby products can pass through the supply chain without having to be unloaded for checking,’ says Allen Scott, vice president of European operations at Manhattan Associates.

Clothing company Benetton is the latest retailer to commit to RFID. The company, which has ordered 15 million tags, plans to mark stock going on sale in its 5,000 stores. The tags will contain information on the colour, quantity and size of Benetton’s garments.

Voice applications are also finding a place in modern warehouses for picking, stock-taking and putaway. Typically, voice systems consist of a headset and a belt with a computer clipped onto it. The belt units, which contain a voice synthesiser and loudspeaker, are linked to warehouse management systems via a wireless network.

Workers on a warehouse floor can receive voice instructions, ask questions and report shortages without having to carry paper with them or keep returning to a picking desk. They do not have to unholster and operate a scanning device and they can keep their eyes on what they are doing at all times.

‘The European market is ripe for rapid expansion,’ says Greg Tanner, managing director of Europe for Vocollect, one of the main suppliers of voice technology for use in warehouses. ‘Led by the retail sector an increasing number of distribution and warehouse companies are set to achieve a tangible return on investment.’

Try it out
With increasing integration, greater amounts of information about warehouse activities and a need for more flexibility, some WMS packages now include simulation software that allows logistics managers to try out warehouse layouts. ‘It can be a time-consuming and expensive exercise, especially if you get it wrong. Many of the leading vendors now have warehouse simulation capability. So the message is – don’t gamble, validate your ideas through simulation,’ urges Turner of EDS.

Sounds like wise advice. WMS software is critical to efforts to make warehouses more efficient. As the velocity and responsiveness of the supply chain increases and the warehouse is no longer a place to keep goods, but merely a sorting office along the supply chain, IT is essential to keeping things on the rails.

 

How Sainsbury’s warehouse strategy affected its suppliers

Changes in warehousing systems can have far reaching effects in the supply chain.

When J.Sainsbury decided to reduce its 20 distribution centres to nine large fulfilment factories, it also insisted that its 3000 suppliers ship exactly what was ordered, in the quantities ordered. They are required to package and label shipments systematically, accurately so that Sainsbury’s can do away with manual checking, saving thousands of man-days in costs.

Sainsbury’s sole supplier of Chinese ready-meals, Ethnic Cuisine, has been using an automated production system from Mobile Computing Systems for just over a year now. The system converts the daily electronic data interchange (EDI) order from Sainsbury’s into a computerised production schedule. The finished meals are barcoded and automatically checked off the production schedule. Warehouse operators using hand-held computers to assemble pallets using a pick-list generated automatically from the same EDI data.

‘Ethnic Cuisine feels it is ready for full accreditation from Sainsbury’s. In addition it has made savings of several hundred thousand pounds in the first year of operation, by eliminating accidental under- and over-supply,’ says Richard Scott, managing director of Mobile Computing Systems.

 

The ten-point WMS selection plan

  • The selection of a Warehouse Management System (WMS) depends on the strategic and tactical objectives of the organisation, not just the needs of the traditional warehouse. The system must meet the diverse and changing needs of retailers, wholesalers, manufacturers and consumers, handling both bulk and single picking.
  • A good Warehouse Management Systems should support best practice in Radio Frequency and RFID as well as the implementation of other value added services.
  • Increasing the flow of information through the use of capacity planning and Advance Shipment Notices (ASNs) will enable warehouse managers to better predict future workloads and help to synchronise cross-docking activities.
  • In this new era where supply chains now compete with other supply chains, it is no longer feasible to regard the warehouse as a stand-alone operation. Decisions about the type of WMS a company will select and how its warehousing operations will be organised need to be made in the context of the extended supply chain.
  • The WMS should be able to interface with core business systems within an ERP environment as well as take advantage of Web services for communications and messaging. The goal should be to improve inventory accuracy and increase customer service through reliable real time execution of transactions and information flow.
  • Companies should focus not only on their current needs and what fits their business model today, but also on their future requirements. A flexible, upgradeable WMS will enable a company to make vital improvements in the future, at a much lower cost.
  • A good WMS should offer integrated processes and data to handle ‘reverse logistics’, particularly in the mail order and web shopping arena, where returns can sometimes be more than 50 per cent of original orders.
  • While there may be basic business processes common to all industries, companies should choose a solution that can handle the particular requirements of their industry. In this way, the solution is tailored to its needs rather than the organisation having to adapt its business processes to the software.
  • Most important of all, companies should select a solutions provider that is going to be around in one, three and five years time so that when it is time to upgrade, the supplier organisation is still around – check out the company’s long-term financial viability!
  • Invest in the WMS to get the best out of it by providing training for warehouse staff and other users in the supply chain. These powerful tools can only make a difference if staff are trained to take advantage of them.

Source: Manhattan Associates