WMS
Lean and Agile
Distribution relies on having accurate precise information. The
information must be readily available to all partners within your supply
chain. You would utilize WMS or ERP software to to manage your
inventory. Newer ideas include "Vendor Managed Inventory" techniques to
reduce inventory and "harden" you supply chain links.
In this section
we will answer the following questions about WMS (Warehouse Management
Systems) and list the features and functionality you may expect from
most of vendors. Since WMS and ERP systems overlap in functionality, we
will focus on the inventory control aspects of the software.
What exactly is
a WMS?
What do these
WMS do?
Are WMS
reliable?
Are WMS
justifiable and affordable?
What forms the
basis of WMS cost justifications?
Are WMS really
necessary in today's business environment ?
What else
is necessary in attaining a "World Class" Lean and Agile Distribution
Center status? (hint
. . . it all starts with a WMS)
How do barcode
scanners work WMS?
Are You Ready
For a WMS ?
What are the
risks associated with implementing WMS?
First Some
Interesting Statistics
"40% of the
purchasers of Warehouse Management Systems were satisfied with the
operation of their WMS". In other words, 60% were dissatisfied,
according to a recent study by Arthur Anderson Consulting.
"Users of
properly scoped and implemented WMS report productivity improvements of
20% to 30%, inventory accuracy of better than 99% and labor cost savings
of 25% or more, much of it in indirect support and clerical areas"
according to John M. Hill in his paper titled Perspectives on Material
Handling Practice", Warehouse Management Systems Perspective 1999
What exactly
is a Warehouse Management System?
A “WMS” is
a software program designed to direct the flow of materials both into and
out of specific storage locations, in an ordered sequence, based upon a
predetermined set of operational parameters.
The WMS
software is available from a host of vendors who are classified by price
range into three categories.
-
Tier #1
$750,000 to over $2,500,000
-
Tier #2
$200,000 to $750,000
-
Tier #3
$35,000 to $200,000
Depending upon the
vendor, the software may reside on a PC or on a main frame platform.
-
Tier #1
Vendors typically offer mainframe applications
-
Tier #2
Vendors typically offer mainframe applications, some offer PC based
platforms or combinations of both
-
Tier #3
Vendors typically offer PC based platform applications, while a few
offer mainframe applications as well
What
do these systems do?
The WMS provides a
formal structure by which the distribution center’s operational activity
is carried out by operators as directed by a precise set of instructions
which was created by the distribution center management team.
These procedures typically
are built around the following basic functionality normally included in
the WMS
-
Inventory Control
-
Storage Location Management•
-
Quality Control Interfacing
-
Order Selection
-
Automated inventory replenishment•
-
Receiving
-
Shipping
-
Operator Productivity
-
Report Generation
An Inventory
Control module includes . . .
- Audit Trails
-
Who,
what, when, and where product was received, placed, and who
moved product to location
-
Query
-
Lead
Time Calculation
A Storage
Location Management module includes . . .
-
Random
Put-away Algorithms
-
Integrates
storage of product by velocity
-
•Location
Management . . .
-
Assigns
locations by size, weight, volatility, status, etc.
-
Storage by
Type . . .
-
Service
Inventory
-
Normal
Stock
-
–Sales
Samples
-
–Office
Supplies
-
–Literature
A Quality
Control module includes . . .
-
Quality Control Management . . .
-
Quality Control Hold . . .
-
Lot
and Batch Tracking . . .
-
Notification . . .
An Order
Selection module includes . . .
A Quality
Control module includes . . .
-
Quality Control Management . . .
-
Quality Control Hold . . .
-
Lot
and Batch Tracking . . .
-
Notification . . .
An Order
Selection module includes . . .
An Automated
Replenishment module includes . . .
A Receiving
module includes . . .
A Shipping
module includes . . .
An Operator
Productivity module includes . . .
-
•Task Performance Records . . .
-
Interleaving Tasks . . .
-
Typically
used to improve and track fork truck efficiency by creating dual
commands such as store and then retrieve
-
Routing . . .
-
Random Order Checking . . .
A Report
module includes . . .
-
Management (Real Time Status Updates) . . .
-
•Departmental Performance Reports . . .
-
Supervisory Statistical Reports . . .
Are Warehouse
Management Systems reliable?
When managed
properly. . . extremely reliable if you follow the rules! In fact most users
have found them to be so accurate, they have been able to completely
eliminate their need for their annual physical inventory.
The first
rule is . . .
everything has to be somewhere!
The second
rule is . . .
everywhere is considered a stock keeping location!
For example:
Each and every bin, slot, pallet rack, shelf, fork truck, pallet jack, spot
on the floor, dock door, or just out in the yard is considered a stock
keeping location!
Are they
justifiable?
Yes . . . many
small and medium size firms have been able to realize their ROI within a
year or less!
What
forms the basis of their cost justifications?
-
Hard
Justification
-
Elimination of
Physical Inventory
-
Elimination of Order
Checking
-
Improves Operator
Efficiency
-
Reduction in Staff
-
Order Turn Around
Time
-
Improved Order
Accuracy
-
Reduction in Inventory
Reduced Backorders
-
Soft
Justification
-
Improved Customer Service
-
Improved Inventory Turns
-
Improved House Keeping
-
Improved Work Environment
-
Improved Supplier Relationships
-
Reduced Order Errors
-
Improved Quality Control
Are they
really necessary?
A WMS is quickly
becoming a requirement more than an option in today’s “Supply Chain”
environment.
It is a
essential component of a Lean and Agile Distribution System.
For example,
major members of the Automotive Industry are requiring their Tier #1
subcontractors to have a WMS to which they may have electronic access to
at any time.
Tier #2
subcontractors will soon follow.
What else
is necessary in attaining a "World Class" Lean and Agile Distribution
Center status?
A WMS
represents the skeletal framework of your inventory control and
management system.
Two other
technologies enhance the performance and reliability of any WMS.
A barcode
is a “machine readable” symbol which may contain product
identification information and occasionally lot and batch
information as well.
Typically
barcodes are printed on a “man readable” label which is affixed to
the part, box, carton, pallet, or container.
Barcode
labels are also affixed to bins, shelves, and pallet rack.
They may be ceiling supported above bulk storage areas, located
above shipping and receiving dock doors, or at specific packing or
processing stations.
By
identifying each storage location, the WMS keeps track of each move
and previous storage location as well as who performed the move.
An optical
scanner is a laser scanner which is designed to read barcode information.
It communicates
to the WMS by a hardwire connection or the data may be transmitted in a
wireless fashion through the use of an RF ‘transceiver.”
In either
case information contained in the barcode is transferred to the WMS quickly
and accurately.
How do
scanners work?
You have two
choices when integrating scanning technology with a WMS . . .
Batch
process scanners will accept download information detailing a series
of tasks by hardwire from the WMS.
Operators
will follow instructions assigned to the scanner and perform the
necessary scans to capture and record movements.
Upon
completing the assigned series of tasks, the operator returns the
scanner to the cradle to upload information to the WMS and download
a new set of instructions.
Advantages
Low Cost
RF
scanners will accept download information from the WMS via a
transceiver and antennas.
Operators will
follow each instruction sent to the scanner and perform the necessary scans
to capture and record movements.
As each task is
completed, the scanner uploads the information to the WMS and a new
assignment is issued in real time.
Advantages
Uploads of data
are done immediately.
Operator errors
are reported immediately back to the operator.
Correction
instructions are relayed to the operator instantly.
While the WMS
provides a formal skeletal structure by which the distribution center’s
operational activity is carried out, Bar-coding and Optical Scanning provide
the “virtual” muscle power to make the WMS a most effective management tool.
Are You
Ready For a WMS?
In order to
sustain profitable operations and growth, we are being constantly pressured
to learn new ways of doing things and adopt new technology. In
doing so , we have become acutely aware of our dependencies upon others . .
. and our responsibility to others as
well!
We are quickly
becoming the generation that relies on instant communication.
While instant
communication was sufficient for our personal lives, customers and vendors
are now looking toward “speed of light” communications in the new business
environment.
Today there are
large number of Tier #3 vendors offering surprisingly robust and
economical packages. Most of these vendors have "optional" features so that
you need not purchase more that you require. Optional features can be
added later as you need them.
Most of the
packages are scalable to some degree, meaning their performance and
capabilities can be improved without converting to an entirely different
package.
Today,
there is little reason for not having accurate inventory information
available almost instantly!
What Are Your Risks?
