Inventory inaccuracy is a nightmare for any warehouse. If left unchecked, inventory inaccuracy can lead to a negative feedback cycle of declining productivity and increasing inaccuracies. A downward spiral where warehouse productivity declines and feeds even more inaccuracies in the system. Left to itself, inventory inaccuracy erodes profitability and warehouse efficiency in a big way:

a. Poor customer service when a wrong product is shipped to a customer or a wrong delivery date is promised

b. Increase in Backorders because ATP system thinks there is plenty of stock

c. Lost productivity when operators run around looking for missing products

d. High product obsolescence when the missing products are “found” but too late to be of any use

e. Direct hit to profitability when there is an inventory write off

f. High inventory levels because you need the extra safety stock to hide the inaccuracies

g. Inefficient warehouse usage when you need to stop warehouse operations to carry a physical count in order to satisfy auditing requirements

Here are some steps that you can take in Naxtor WMS to improve accuracy:

1. Use RF devices to transact on the spot. This is the easiest way to improve inventory accuracy. When transactions are recorded on the spot in real time, there is less chance of error. This means going paperless and using task management in WMS to convey pick instructions to operators.

2. Train Warehouse Personnel to follow documented procedures when exceptions occur in the warehouse. The warehouse workers should be familiar with the procedure when an exception occurs e.g. if a product is not found as suggested by the system or damaged, the operator should know how to log exception and follow the steps.

3. Find and fix root cause when exceptions occur in the warehouse. Task execution using RF is a great way to record exceptions in real time as they occur. Analyze exception data in warehouse control board to see where and why exceptions are occurring? Are more exceptions being recorded for certain items or certain employees? Why? If a shipment of wrong product was detected, where did that pick come from and was the inventory corrected for the original item? Was wrong putaway the cause for a pick exception?

4. Storage Policy of items in your warehouse also impacts accuracy. To avoid picking the wrong items, make sure that items similar in appearance are stored apart from each other. Commingling items in the same locator is also a recipe for shipping inaccuracy. You also need to make sure that locators properly marked and physically distinguishable. When slotting items in the locator make sure that the locator corresponds to the item velocity and has enough space to store the maximum quantity of item specified. If a locator stock is overflowing into warehouse aisle, its usually not a good sign. If you have negative inventory allowed flag enabled in your warehouse, you need to question really hard as to why is it needed?

5. A counting policy is a must for every warehouse. Cycle counting a great way to gradually improve inventory accuracy. While eliminating yearly physical count is a noble goal, it can only be achieved when the warehouse has reached a certain threshold of accuracy level.

6. Bar codes or RFID are great auto-ID technologies to improve accuracy. Barcodes have an error rate that is significantly lower than human data entry. Additionally DFI feature in WMS can further improve accurate data entry.

7. Checks in warehouse processes to ensure accuracy. Example of such checks could be an additional packing step to scan items prior to putaway or shipment, a weighing scale linked to a divertor to weigh and compare standard and actual weight of LPNs bound for storage or staging, etc.

8. Check Digits is another way to improve data entry accuracy. When you dispatch an operator to a suggested locator how do you make sure that the picks are coming from the suggested locator and not from any warehouse locator? Locator check digit is a great way of ensuring that operators perform picks and putaway at the same physical locator as the data entered in WMS.

Even if you are an information systems manager and think you’ve scrutinised the best range of warehouse management systems (WMS), leaving no stone unturned - there is still more to unfold.

How do you know what’s best for your organisation? How do you choose? This article will give you some practical tips and provoke your thoughts in this direction.

As WMS solutions continue to pour into the market, users struggle to differentiate one system from another — and vendors fight to break away from the competition.

Because all WMS products serve essentially the same function, helping businesses manage moving and storing items within a warehouse, vendors are striving to land new customers by providing added functionality and offering compatibility with other types of business software.

Warehouse and transportation management are two different concerns. Not so, think again… While many business managers view warehouse and transportation management as separate concerns, the two are closely entwined.

After all, it’s hard to manage warehouse inventory if you don’t have insight to the stream of items coming in and going out of your facility.

This is why a growing number of warehouse management system vendors are adding transportation management capabilities to their products, either in the form of add-on transportation management modules or built-in links to external transportation management system (TMS) products.

SAP, Oracle, Manhattan Associates, and Sterling Commerce, for example, have combined warehouse and transportation management functions together. However, these solutions do have a limited set of integrated functionality.

WMS/TMS integration aims to provide seamless logistics visibility. This capability allows users to reallocate inventory on the fly and meet customer needs without unnecessary disruption or additional costs generated by the need to reroute or reship items.

Warehouse management systems and transportation management integration can improve delivery time for customers as well as achieve as well as additional cost-out opportunities from aggregating and consolidating shipments from a single facility.

The Choice is Yours

The trend toward deeper functionality and wider interoperability has led to more warehouse management system choices than ever before. Yet it has also created a much steeper learning curve for customers.

Every vendor has its strengths, but every vendor also presents a fairly compelling set of challenges. WMS users making this decision face an extremely complicated process.

The ever-expanding array of WMS products, offering varied features and capabilities, has made pre-purchase research increasingly important. Putting in quality time to understand your business and what you want to get out of a WMS is one of the most vital investments a company can make.

More information?

New World Business Solutions specialises in the engineering of elegant, high-performance logistics and supply chain solutions. As dedicated supply chain consultants we combine the practical skill, analytical expertise and cutting edge technology to deliver operational simplicity with quick returns.

The foundations of accurate order picking begin with a warehouse management system and end with an improved bottom line.

By Bob Trebilcock, Editor at Large — Modern Materials Handling.

Successful order fulfillment sounds easy: You deliver the right quantity of the right product at the right price to the right place at the right time.

It doesn’t get more basic than that. Yet far too many warehouses and DCs are still 60 to 70% accurate in their order picking because they’re running their operations with paper-based picking systems, says Craig Welch, senior application engineer for Daifuku America Corp.

That’s true despite that fact that order picking errors can ruin the bottom line. “I worked with one customer who was being fined $50 by Wal-Mart for every pallet with an error,” says Welch. “That was more than the product on the pallet was worth.” That company was in the red before factoring in the costs of reverse logistics, double handling and the potential loss of a customer.

How can a company turn a positive into a negative? Welch says there are at least six best practices that can improve order picking accuracy from 70% to 96% or more.

Foundations of Accurate Order Picking

WMS is fundamental: “A warehouse management system (WMS) is the starting point,” says Welch. “Even if you still do paper-based picking, a WMS is going to give you more accurate inventory.”

Automatic identification: Wireless bar code scanning, voice technology or pick-to-light technologies can build on the productivity and accuracy improvements generated by a WMS. They also drive accountability, says Welch. “It’s not just automatically collecting data that leads to improvements,” says Welch. “We’ve found that employees who know they are being tracked by the system are as much as 25% more productive.”

Receiving counts: With a WMS and data collection systems in place, the next step is to develop processes that drive accuracy at the receiving dock. “Accurate order picking begins with competent receives who understand the part numbers and product descriptions of what they’re receiving and make sure they get put away where they’re supposed to go,” says Welch.

Adding automation: Automated materials handling systems, like conveyors, sortation systems and automated palletizers use photo eyes, RFID readers, camera-based imaging systems and automated bar code readers to add another layer of confirmation before an order is picked.

Scales: WMS systems can collect size and weight information of every product stored in a DC. An automatic scale at the end of a picking line can flag a carton that weighs too much or too little based on the weight of the products associated with an order.

Cycle count: Even with a WMS in place, it’s still important to cycle count the quantity of product at a storage location or pick face, says Welch. “That’s where you find out if a product was misidentified coming into the system; if someone took out the wrong quantity; or if damaged or out-of-date product was removed from the storage location by not from the system,” says Welch.

By Katrina C. Arabe

Vendors are currently courting the warehouse management field with a new line of web-based management software. Before you rush into a purchase, be sure the software is really what your business needs — and if you even need it at all.

As the vendors of warehouse management software begin offering web-based packages to their clients, warehouse managers have the option of putting their operations online. For some warehouses, especially those of smaller and mid-size companies, there are advantages in doing so. Software upgrades are much easier and quicker with web-based systems. The software is located in one central place rather than having to be installed repeatedly in separate PCs. The software is simply installed on the main server and accessed through the browser. Managers can use the system from anywhere in the network, running warehouse reports whenever, and wherever, they are needed.

Another advantage of web-based warehouse management software is that it eliminates problems that are typically associated with multiple platform use. For the program to run on different platforms, the user needs only to have compatible web access software. This umbrella accessibility makes it easier to distribute programs over the Internet and throughout the network. The relative ease of navigation is another plus. End users usually find that they can get around the system with little more than pointing and clicking.

Warehouse managers seem to appreciate the ability of web-based software to transmit and receive information in real time. This helps them better allocate time and labor to specific tasks. The fact that data acquisition is immediate on the web-based system allows up-to-the-minute analytics that were impossible prior to the software’s availability. In the words of Reg Bryant, warehouse director at L.G. Zenith, “At any point in the day, we can look to see how much work is left on the floor. We used to have to coordinate lots of reports and then guess at the figure. Now the system considers how much work is left that day and how many people are on the floor to work on it, and it tells us how quickly we can get the work finished.”

Of course, web-based warehouse management software may not be right for everyone. Generally, the software is more favorable in a small warehouse setting. These companies simply do not have the critical mass to build an infrastructure to run their own management software, a condition that makes them ideal for web-hosted systems. Large companies, on the other hand, are more likely to assume their own systems. In addition, it is the view of some professionals that web-based software is actually better suited to transportation management and other supply chain functions than to warehouse management. In their opinion, warehouse management is a strictly an internal operation so there is little need to involve an external enterprise.

For those that do adopt web-based software, they may wish to bring their customers into the fold. Giving clients access to the system would improve their visibility of the supply chain and facilitate better planning and scheduling on both ends. For many warehouse managers this is the way to go and web-based software helps them get there. In the words of Zenith’s Bryant, “We’re going to that next step so that we can allow our distributors to look at our deliveries and know what’s available and what isn’t within our warehouse.”

By Katrina C. Arabe

A distributor’s warehouse can be made more efficient and effective by implementing a warehouse management system. The results? Happy customers and increased business.

Without an efficient, cost-effective warehouse, a distributor may not have a business. A well-run warehouse allows the distributor to ship products to customers completely, correctly and on time. The cost of not doing so is high, from the sales force’s time to apologize and correct the error, to staff time to duplicate work, to the risk of losing a customer. In addition, the ability to do so at a profit is critical. Warehouse management software systems can be the lynchpin that makes the business work.

A recent survey by Industrial Distribution asked readers about their use of warehouse management software (WMS). While only 22% of the respondents indicated that they planned to purchase WMS this year, over 30% indicated that they already use such systems. The remainder were not planning on purchasing the systems due to cutbacks or changes in IT priorities this year, or had no plans to purchase.

There are three main objectives of those who plan to invest in a system in 2002. The objectives are tracking inventory levels, increasing productivity, and reducing shipping errors. The distributors are also interested in automating and streamlining picking, automating billing, and automating tracking.

All of these things can be achieved if the company is dedicated to making the system work. “It’s so dependent upon management saying ‘we’re going to put this investment in and we’re going to put a man on the ground to see that we get some benefit from it.’” Says David Allais, president of Pathguide Technologies. For example, Jeffrey Ramras, a vice president of billion-dollar distributor Applied Industrial Technology, is in charge of tracking the progress of his company’s warehouse management system. The new warehouse management program included conveyor and automated sortation systems and a software system that uses radio frequency bar coding. The company also re-designed its warehouse space. The results were increased productivity, personnel reductions of almost 15%, lowered error rates, and increased accuracy to 99%.

For the average distributor, a company that implements a warehouse management system in 2002 will begin to see return on the investment by 2003. Payback of the warehouse management systems will be seen in not only increased productivity, error reduction, and inventory accuracy but also reduced training time, improved picking procedures, and better utilized storage capabilities. Everything depends on the company’s management deciding to make the investment and then have someone analyze the results.

Jim Beckstein, the president of the construction and general-line distributor Mill Supplies, Ft. Wayne , Ind. , has two locations with a total of about 60 employees. Two years ago the company decided to install a system that uses a real-time warehouse management system with radio frequency bar coding. According to Jim Beckstein, the payback is very simple: you don’t have errors – more automation and fewer people equals less chance for human error.

A warehouse management system can be costly, which is a common complaint for many smaller companies. For example, a system that includes software, hardware, training and installation for a typical industrial distributor with annual sales of about $10 million and a single warehouse facility, could cost around $125,000. Small distributors with talented workers who are familiar with the warehouse and don’t make mistakes, probably consider it unnecessary to purchase such an expensive system. Small companies interested in rapid growth and companies of ten or more employees with high turnover that can lead to inefficiency and mistakes should consider looking into purchasing systems.

To have the most effective warehouse management program, it is vital to integrate it with the company’s overall operating system. This allows all parts of the business to “speak” to each other, making the whole facility more efficient. With management investment and commitment to the program any company can utilize a warehouse management system effectively and successfully.

Source: More Than a Storage Facility

May 2002

Industrial Distribution

Victoria Fraza

Automated warehousing applied to part or all of a distribution centre operation can provide a wide range of benefits including space savings, lower building costs, improved productivity, more efficient material flow, less people, safer operations, reductions in inventory, increased reliability, reduced running costs, better ROI and lowest lifecycle cost.

Automated warehousing systems provide the maximum possible usage of available floor space and building height.

In some cases, this enables companies to increase storage capacity by up to 400% compared to conventional forklift operations. Where space is limited, switching to an automated warehousing solution can free up additional space for other activities, such as manufacturing.

And because automated warehousing solutions make the most effective use of space, building costs can be kept to a minimum. Significant cost savings are possible through the need for less land and a smaller building. Because Automated Warehousing systems do not require special floors or expensive in aisle guidance systems. further savings can be achieved.

Automated storage and retrieval machines also weigh a lot less than comparable narrow aisle trucks further reducing construction requirements.

Improved Productivity

Automated warehousing systems also offer tremendous performance in terms of productivity.

Not only do they work faster than forklifts and narrow aisle trucks, they can also operate 24 hours a day, 7 days a week, keeping product on the move.

With automated storage and retrieval machines, there are none of the delays associated with putting away or retrieving pallets from high locations. Every pallet is picked up and deposited at the same speed regardless of where it is located within the system.

Automated warehousing systems can also enhance the efficient flow of materials through a manufacturing facility or distribution centre. By integrating the system with production materials handling systems, raw materials, tools, parts, work-in-process, and finished goods can all be efficiently delivered to where they are required just-in-time.

The systems can also be set up to provide a buffer storage function on assembly lines, and can service multi-floor applications.

By using automated storage and retrieval machines the need for drivers/operators is eliminated. Compared with conventional methods, and calculated over the life of the machine, savings can be substantial and the ROI can be highly attractive.

The machines operate within fixed aisles protected by safety fences so the risk of people being injured in a collision is minimised. The need for operators to physically lift heavy products, or even heavy empty pallets, is also eliminated.

Reductions in Inventory

With integrated location and inventory control software combined with faster throughput, it is possible to reduce stockholdings.

Inventory can be accurately tracked at all stages, maximising stock availability. Stock control can also be improved, with the software enabling goods to be automatically picked on a First In First Out basis, or by ‘use-by’ date etc. Intelligent location control ensures goods are located in the most appropriate zone depending on their usage within the Automated Warehouse.

Once the automated warehouse has been set up, ongoing operating costs are minimised. Typical warehousing costs involving refueling or recharging of batteries, regular mechanical and electrical maintenance, and staffing, lighting are also minimised.

What is Warehouse Management System (WMS)

WMS Benefits

Advantages for WMS Users

What is Warehouse Management System (WMS)

Warehouse management systems (WMS) are best described as the advanced technology and operating processes that optimize all warehousing functions. These functions typically begin with receipts from suppliers and end with shipments to customers, and include all inventory movements and information flows in between. Warehouse management systems have typically been associated with larger, more complex distribution operations. Small, non-complex distribution facilities have historically not been viewed as candidates to significantly streamline operations and reduce costs. However, even smaller and midsize companies are increasingly recognizing the significance of warehouse management systems in today’s environment of integrated logistics, just-in-time delivery, and e-commerce fulfillment.

In practice, successful WMS solutions are generally designed to merge computer hardware, software, and peripheral equipment with improved operating practices for managing inventory, space, labor, and capital equipment in warehouses and distribution centers. Implementation of a WMS allows a company to increase its competitive advantage by reducing labor costs, improving customer service, increasing inventory accuracy, and improving flexibility and responsiveness. A WMS enables a company to manage inventory in real time, with information as current as the most recent order, shipment, or receipt and any movement in between.

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WMS Benefits

• Faster inventory turns. A WMS can reduce lead times by limiting inventory movement and improving the accuracy of inventory records, thereby supporting a JIT environment. As a result, the need for safety stock is reduced, which increases inventory turnover and working capital utilization.

• More efficient use of available warehouse space. In addition to reducing safety-stock requirements, a WMS can often increase available warehouse space by more efficiently locating items in relation to receiving, assembly, packing, and shipping points. This increased efficiency can both improve productivity and lower inventory holding costs significantly.

• Reduction in inventory paperwork. Implementation of a real time WMS can significantly reduce the paperwork traditionally associated with warehouse operations, as well as ensure timely and accurate flow of inventory and information. Receiving reports, pick tickets, move tickets, packing lists, etc., which are typically maintained as hard copies, can all be maintained electronically.

• Improved cycle counting. Companies can use WMS to capture relevant data (e.g., frequency of movement, specific locations, etc.) to systematically schedule personnel for cycle counts. Such cycle counts not only can improve the accuracy of inventory records for planning purposes, but also can eliminate or reduce the need for complete, costly physical inventories.

• Reduced dependency on warehouse personnel. Implementing a comprehensive WMS facilitates standardization of inventory movements, picking methods, and inventory locations. This standardization helps to minimize reliance on informal practices, resulting in reduced training costs and lower error rates.

• Enhanced customer service. By streamlining processes from order to delivery, companies can more accurately determine product availability and realistic delivery dates. A WMS can automatically identify and release back-ordered inventory and also can reduce returns as a result of increased shipment accuracy.

• Improved labor productivity. A WMS helps optimize material flow, typically by incorporating several inventory picks into one or by “cross docking”. Cross docking is a process that routes incoming shipments to the location closest to the outbound shipping dock, thereby reducing warehouse handling.
  

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Advantages for WMS Users

For Management: WMS can help management to access an instant picture of

• How much inventory exists in the warehouse

• How many orders are currently being shipped

• What are the stages of processing of pending orders

• Staff productivity details

• Goods shipped by the warehouse over any given period of time.

The warehouse management can determine how much inventory exists in the various stages of processing unlike in non-automated warehouse management.

Sales people can determine how much inventory is available and can relate better to the warehouse staff thus bettering their Customer Relationship levels. Customer Managers can reserve inventory for a customer thereby ensuring that it will not be shipped to anyone else. Inventory Managers can track transactions at a very fine detail to diagnose unexpected sudden changes in inventory. For example, if we had thousands of pieces of some SKU yesterday and today we don’t have any, then where did they go? Were they shipped to some other customer? Were they sent to some other warehouse of the company to be shipped from there? Or did they get lost or were picked away? WMS helps answering such problems. The reports generated during checking processes enable policy decision to be taken about the reliability of the suppliers. WMS is designed to be flexible i.e., the process flow of the DC/Warehouse can now be modified easily as business needs change.

For Warehouse Supervisors: Productivity reports for each operator can now be generated and used to implement productivity based remuneration schemes or to fire unproductive employees. For those warehouses that have to cope up with Union problems these reports can help the company tremendously. Efficient tracking of warehouses activities are possible with WMS as it provides a comprehensive set of web-enabled reports detailing all the activities happening in the warehouse and their effect on the inventory management. WMS also helps to detect bottlenecks in operations, which can increase the overall throughput of the warehouse.

For Warehouse Operators: WMS provides graphical user interfaces (GUIs) wherein most of the time the operator has to just scans the barcodes. Default navigation of cursor on the screen mimics the standard business rule. Thus WMS eases the operator’s task and makes the data input process fast, increasing the overall efficiency of the operator. Some programs like Locating and Pulling are especially designed to run on hand-held radio frequency terminals. These terminals make the task of pickers and locators easy, as these are easy to carry. Modern WMS programs have been coded with extra emphasis on scanner based data input to minimize the need for keyboard or mouse input.

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