Warehouses are built around numbers—from the facility’s square footage, to how many rows of racking it takes to stock the number of stock-keeping units (SKUs), all the way to the amount of orders processed through a facility in a day. This article takes the numbers associated with warehouse management systems (WMS) you don’t see in the marketing brochures or advertisements of WMS vendors, and gets you thinking before you purchase and begin to implement a WMS.

If you watch television, you may be familiar with the CBS show NUMB3RS . Rob Morrow stars as an FBI detective aided by his mathematician brother in solving bank robberies and homicides. The show depicts how the confluences of FBI work, and mathematics provide unexpected revelations and answers to the most perplexing criminal questions. Let’s take a look at those number junctions in your distribution center.

30 Percent

Less than 30 percent of warehouses are efficient, according to “Benchmarking Warehouse Performance,” a study by the Georgia Institute of Technology ( Atlanta , Georgia [ US ]). That probably speaks directly to why you’re reading this article. You may have been wondering if a WMS system could make your warehouse more efficient.

Interestingly, about 30 percent of the 600,000 warehouses in the US have a WMS system installed. As the guy on the television show says, “Hmm” What are the numbers telling us? Only 30 percent of warehouses are efficient, and 30 percent of warehouses have a WMS system installed. Do you see a correlation?

Those numbers are telling me there are “crimes” taking place in 70 percent of warehouses. Although these crimes aren’t bank robberies or homicides, they do involve money lost and people getting hurt. My point is this: There’s a lot of information out there on how to make your warehouse more efficient, but what you need to realize is “it’s not what you know that counts, it’s what you do with what you know.” Many of you already know your warehouse is inefficient, and you’re not doing anything about it.

Assuming you are part of the 70 percent which process orders through an inefficient warehouse and that you are also part of the 70 percent that have not installed a WMS system, let’s look at possible reasons you’ve given for not implementing a WMS.

• Your warehouse is not big enough.
• You don’t have enough people or orders to justify such a large investment.
• Your information technology (IT) staff isn’t large enough.
• You are currently searching for a system. (Perhaps you’ve been researching WMS systems for years by attending trade shows, reading industry articles, and talking with vendors, but you still haven’t made a decision and purchased one.)

The reasons are endless, but your real reason is very likely a result of the next two numbers.

$100,000 to $500,000

A company will typically invest between $100,000 and $500,000 for software alone, but that software investment represents only a fraction of the overall costs. By the time hardware, training, implementation, revamping the warehouse, and consultants fees are added, that number can reach over $1 million faster than you can say multiplication. Those intangibles will usually reach one to three times the cost of the software. About 60 percent of the overall cost will be tied up trying to integrate the WMS system to the existing enterprise resource planning (ERP) system.

The main reason only 30 percent of all warehouses have a WMS is because only 30 percent have been willing to bite the bullet and make the investment. There are other contributing factors, though.

220

More than 220 WMS vendors exist. How can anyone make an informed decision and select the correct business partner with so many options? Most companies don’t even try; they enlist consultants with an expertise in WMS to help them make that decision. The ones that don’t employ a consultant usually make their decisions based on cost, and then bring in a consultant to help dig them out.

Believe it or not, consultants provide an unbiased evaluation of your processes and potential vendors. They have no emotional ties to the current way you process your transactions. Many companies that automate their inefficient processes and procedures on their own end up doing do things wrong faster!

Trying to transform your warehouse into an efficient distribution center is really something you do not want to do alone. Think about your warehouse for a second. Your warehouse provides the fuel your organization needs to run. You may complain about high gas prices for your car, but the fuel that runs your distribution center or your supply chain is so costly that its value ranges between 6 percent and 20 percent of your organization’s annual revenue. In lay terms, a $100 million organization will have somewhere between $6 million and $20 million of fuel in its warehouses.

Think about the type of fuel your organization and supply chain runs on: inventory! Other than your people, nothing is more valuable to your company’s success. Let’s look at the real value of that inventory fuel. Let’s assume your organization makes four cents on every dollar, which means that for every $100 of lost inventory, the company must generate $2,500 in new sales to replace that $100 of lost inventory. Think about the effort your highest-paid people must exert to generate $2,500 worth of sales. It’s no secret that the highest-paid people within your organization are salespeople. Think about why they are the highest-paid in the company—it’s mainly because it takes a minimum of five visits to make a sale, and it costs three times as much to get a customer back as it does to keep an existing customer.

As an operations person, you may think salespeople are worthless and cause you all kinds of headaches, but in actuality, nothing happens until somebody sells something. And salespeople cannot efficiently or effectively perform their jobs if they do not know what’s in inventory. That’s why it’s crucial to involve a consultant to help select a system based on your current needs and your future requirements. The next three number regarding WMS systems are pretty startling, too.

30, 42, and 56

More than 30 percent of all WMS implementations fail. Only 42 percent are implemented within budget. And 56 percent of the implementations are delayed.

When you add the fact that it takes nine to twelve months to implement, and twenty-four to thirty-six months to realize a return on your investment, you begin to wonder if a WMS system is really worth it.

When you work the numbers, on a potential $1 million investment, you won’t see that money back for at minimum three years—and that is if everything goes perfectly. If everything goes as planned, your return on investment (ROI) could take four years or longer. By then, your business model might have changed so much that it will be time to invest in the next new thing, if your organization is still around.

You may be wondering where that last statement came from. A WMS is the one piece of technology that can shut your business down if not implemented correctly. Why? Because most organizations make dumb decisions. Why do they make dumb decisions? Because without the assistance of an outsider, “you don’t know what you don’t know!”

Another example of a bad decision that most senior executives make when investing in a WMS system is to implement it at their corporate location’s distribution center first.

Typically located at the company’s headquarters, executives often want to implement where they can see the progress. And because the headquarters’ warehouse is usually the largest, executives think a return will be realized much faster, because of the volume. But when satellite locations are dependent on that corporate location, what happens when the hub has the sniffles? It becomes the flu at the locations’ downstream.

Look at FoxMeyer , WebVan , Adidas , Nike , Builders Plumbing Supply , Toys “R” Us , and many others. Three of those companies are no longer around, two saw their stock price plummet as much as 20 percent, and one gave up and turned its fulfillment process over to a third party logistics provider. All because of a WMS system.

Some of you are probably wondering what the value of a WMS system is. The following numbers show the justification!

300 versus 1

Your data-entry personnel produce 1 error for every 300 keystrokes. With radio frequency (RF) scanning of bar codes, that number reduces to one error for every three million scans. Think about the accuracy of your inventory. Now think about your receiving department. How many keystrokes do they make a day?

50 percent

System-directed picks and put-aways will reduce the travel time of your forklifts by as much as 50 percent. Your put-away people spend at least an hour a day searching for put-away locations. That hour will be eliminated immediately. Picking accounts for 55 percent of your warehouse labor dollars. And 50 percent of the picking process consists of traveling to and from the locations.

35 percent

You can expect to receive as much as a 35 percent reduction in your operating expenses.

27 percent

The cost of carrying inventory is usually about 27 percent less in an automated environment.

20 percent

Inventory accuracy increases around 20 percent with a WMS system.

5 percent

Shipment accuracy improves around 5 percent.

Zero

After the system is implemented, you’ll have zero inventories to perform. However, anyone that says you can go live without a physical inventory count is nuts, and you should take an additional wall-to-wall physical inventory six to eight months after implementation. By then, the learning curve will be over, and everyone will understand the value of maintaining an accurate inventory. From that point forward, physical inventories won’t be necessary.

A look at those numbers should be enough to get you off of your hands and begin to seriously investigate a WMS system, but I know many of you will continue to gather data and take it back to your manager, vice president, president, and so on, only to have them again shoot down the idea of investing in a WMS system. Tell them a WMS system will also

• lower the total cost per unit shipped;
• reduce the number of inventory out-of-stocks;
• improve delivery accuracy and timeliness;
• increase profitability per order and per customer;
• reduce customer service cost;
• reduce phone communication costs; and
• increase sales.

Now is the time to take a serious look at your operation. With the continued strengthening of the economy comes more orders. With more orders comes more receiving, more inventory, and more people—and more inventory adjustments because of inadequately trained people and inefficient processes ultimately mean more returns and less money added to your bottom line.

Bottom Line

I don’t want you to think this is a doom-and-gloom article, but I want to make sure you get not only the good news about this technology, but also the truth. Many WMS vendors want you to believe that your company will experience WMS benefits relatively quickly after going live. In reality, at best it will take two years. Benefits can be experienced faster with a smaller system in a smaller location. Rolling out a WMS at a branch offers the opportunity to evaluate which processes need to be completely revamped, and what type of training will be required to ensure success. Most importantly, it prevents any and all disruptions of customers’ shipments.

Protecting your customers should be your top priority when purchasing and installing a WMS system. Today’s most serious business challenge is not selecting and implementing new technologies, raising capital, or hiring the right people. Today’s most serious business challenge is a scarcity of customers. The key to your organization’s success lies in knowing how to handle scarcity no matter when or where it appears.

In today’s environment, your customers have too many supplier options and too little money. Your customers won’t continue to patronize an organization that cannot send them what they want when they want it at a competitive price. You cannot do that efficiently without a WMS system properly installed. You already know having a lot of customers does not guarantee success when other key performance indicators (KPIs) suffer. You must energize your operation with the one tool that was designed to do just that: a warehouse management system.

About the Author

Rene Jones is the founder of Total Logistics Solutions Inc. ( www.logisticsociety.com ), a warehouse efficiency consulting company headquartered in Burbank , California ( US ). He is also the author of several books, including WMS 101 ( Selecting, Implementing and Maintaining a Warehouse Management System ).

By Bridget McCrea, Contributing Editor — Logistics Management

The worldwide market for WMS is expected to grow at a 4.8 percent clip over the next five years, according to the latest research from ARC Advisory Group. The market hit $1.08 billion in 2006 and is forecasted to be over $1.36 billion in 2011. A mature market, according to ARC’s Steve Banker, service director for supply chain management, the WMS sector is headed for faster growth in the coming years than it has in years past. Credit the fact that the average WMS solution has a lifespan of 11 years, and the fact the market posted significant growth from 1995-2000, with driving future demand for the software solution. Ian Hobkirk, senior analyst for warehousing and transportation for The Aberdeen Group in Boston , calls WMS a relatively mature market, with only about 14 percent of companies lacking such a solution. “Everyone else has something in place, or some level of warehouse automation,” says Hobkirk, who contrasts that with the TMS sector, where roughly half of the companies have no such technology in place.

Now, Hobkirk says many of the early adopters are looking to upgrade and/or replace their WMSs with today’s more technologically advanced, scalable solutions. Expect that trend to serve as the fuel that drives growth in the overall WMS market. “What companies are struggling with is whether they have a WMS that can grow with them,” says Hobkirk, “and that’s flexible enough to allow them to rapidly change business processes.”

Today’s WMS vendors are offering a broader suite of functionalities to better tie warehouse operations into the overall supply chain without huge expense and effort. But are you really ready for an upgrade?

By Bridget McCrea, Contributing Editor — Logistics Management, 7/1/2007

With an average lifespan of 11 years, many existing Warehouse Management Systems (WMS) are coming up for review right now—and many aren’t passing muster.

“As the years between 1995 and 2000 were high growth years for the WMS market, the current market will mirror—on a smaller scale—the previous era’s growth,” says Steve Banker, service director for supply chain management at ARC Advisory Group in Dedham , Mass. As shippers demand improved functionality from their WMS, Baker says it will be “like Baby Boomers having kids, and creating a smaller, mirrored baby boom.”

According to Banker, the worldwide market for WMS is expected to grow at a compounded annual growth rate (CAGR) of 4.8 percent over the next five years, moving it from a $1.0 billion market in 2006 to $1.4 billion in 2011. Creating much of that growth will be shippers’ need for upgrades to existing systems, as indicated by a recent Logistics Management study that found that 60 percent of responding companies are planning to upgrade or implement new software packages over the next 12 months.

Banker points to WMS advancements as the key driver to market growth. Where in the past, systems used radio frequency (RF) terminals to track product as it moved through the warehouse, today the focus is on voice recognition, a feature that’s included in most software packages. (See “Voices in the warehouse,” page 57.) Coming around the next corner is RFID, which is slowly, but surely, gaining acceptance as the best technology to feed real-time warehouse data to the WMS.

“There’s also been an emergence of multi-modal hardware applications, where RF scanning and voice, for example, are used in combination,” says Banker, who points out that RFID readers are also being integrated into forklifts, and new multi-modal applications involving RFID and voice are being explored. “By combining voice, RF and RFID in new ways, warehouse tasks can become quicker to perform, resulting in better data reliability.”

But while dreams of perfectly integrated technologies are inspiring many logistics managers to explore an upgrade, it’s certainly not as simple as cutting a check. At Eden Prairie, Minn.-based HighJump Software , Chad Collins, vice president of global strategy, says he’s seeing many shippers implementing their second or third WMS packages. Unfortunately, many of those companies are hitting resistance when trying to upgrade, namely because the systems put in place 10 or more years ago don’t always have a clear upgrade path.

“The architecture of the product doesn’t allow them to be upgraded easily,” says Collins. “For many, the cost of an upgrade is almost as costly as a new implementation.” Many times the problem lies in the hardware (such as the server) and the databases, he adds, which may no longer be supported by the software and/or hardware vendors.

“In the IT industry, these are referred to as ‘burning platforms,’” says Collins, “or aging technology platforms that need to be replaced not necessarily for a clear business need, but from an IT total cost of ownership need.” Before taking the leap, shippers should not only have a firm understanding of the allowances their current platform provides, but better know what’s available and what new functionalities make the most sense for their specific operations.

It’s all about SOA

While there’s a need for improved warehouse management tracking and controls, there’s always one or more software vendors ready and willing to tweak its offerings to meet those demands. Combine those demands with rapid advancements in technology, and you get the perfect recipe for “new and improved” WMS software packages.

Today’s systems are actually more generic than their forefathers, says Greg Aimi, director of supply chain research at AMR Research in Boston, who, like Collins, points out that many systems installed in the 1990s were highly customized to meet the needs of their users (be it by warehouse layout, practice fees, or other configurations). Newer systems (from 2000 and later) are based on service-oriented architecture (SOA), which includes more Web-based services and allows customizations to be relegated to “separate areas” from the vendor’s code.

“When a new version is released, it can be implemented without having to intertwine with the customizations, which aren’t so entwined with the code,” says Aimi, who predicts that by 2010 WMS systems will no longer be using the antiquated customization process, and will instead revolve around SOA. “This allows companies to upgrade without huge expense, effort and pain,” he adds.

Vendors are also looking outside of the warehouse walls and encompassing more of the supply chain under their umbrellas, says Collins. “Modern warehouse systems offer modules that really extend into the distribution channel,” says Collins, who advises shippers to seek out WMS vendors who share this philosophy.

Banker says shippers should also look at who is handling the integration: your company, the vendor or a third party. Look at the architecture of the original system, he says, as those that are functionally-rich and more than six or seven years old could require two months worth of work to get up and running. “For those, you will need substantial help from the vendor,” says Banker. “But if it’s a more modern architecture, your staff could probably complete the process over a weekend.”

Integration consideration

Whether your staff can handle the project depends on its level of IT competency, level of WMS customization required, and any contractual agreements, says Aimi. “Most of the time the contract for licensing the software doesn’t permit getting into the actual software of the product,” Aimi points out. “If you’re not permitted to work with the software in its raw code form, then you’re bound to be using the vendor to make those customizations.”

Also consider whether the WMS needs to integrate with an existing ERP system from a company like SAP or Oracle, says Aimi, who adds that small ERP players are getting up to speed with shippers’ needs in that regard. “Most companies should consider leveraging the vendor’s professional services staff for any customizations and changes that need to be made to the ERP system,” says Aimi.

Debugging is yet another issue that shippers should consider, particularly since no software implementation is ever complete on the day it rolls out. Aimi says vendors are typically good about getting any major bugs worked out quickly, but adds that most use a classification scheme designed to set priority levels for such fixes.

“If a customer reports a bug, they analyze it and assign it a priority,” says Aimi. “If that priority is low, then the likelihood that it will be fixed anytime soon is pretty low and may be a candidate to get fixed in the next major release.”

A bright side of any WMS upgrade is that the user learning curve tends to be substantially lower than the original installation, says Banker. “The first time you put in a WMS productivity goes down for a while before going back up,” he says. “Once a shipper has had a system in place, the only learning curves concern any new modules being introduced.”

Think out of the box

As with any piece of technology, WMS vendors are continuously honing their products to meet client needs. Going forward, Banker says more of them will move away from RF and instead incorporate the use of voice controls with RFID as a way to create even faster, more efficient systems.

“We’re already seeing some of this in the field,” says Banker, who sees the movement as a possible challenge for shippers with older WMS systems. “For some, it will take substantial re-architecture to support this. For others, it will be easy.”

Collins expects WMS providers to offer a broader suite of products in the coming months, as a way to help shippers tie more of the overall supply chain into their warehouse operations.

“When you do a WMS upgrade it’s not just about the four walls of the distribution center anymore. It’s really about pulling in additional pieces to a complete supply chain execution solution,” says Collins. “That’s something that wasn’t available when shippers first implemented WMS systems.”

Tales from the trenches: Buyers Products

WMS upgrades have become a biennial event for Buyers Products Company of Mentor , Ohio . Buyers’ IT Manager Pamela Davey says the manufacturer and distributor of truck parts braces itself for the process every 24 months for new functionalities and capabilities that its WMS provider, Manhattan, has to offer for its ILS.net system.

With a 180,000-square-foot warehouse that is “somewhat automated,” according to Davey, the company uses two pick towers and conveyors to move its tool boxes, salt spreaders, hitches, and hydraulics out the door to retailers like Northern Tool, Wal-Mart, and Tractor Supply, as well as individual installers.

Installed since 2002, the company’s WMS has been upgraded twice since original implementation. The process generally takes about three months, and another upgrade is scheduled for late-2007, says Davey, who says she particularly likes the way the vendor continues to roll more functionality into its core system—thus reducing the need for so many customizations. On the last round, for example, Davey says the system included a beefed-up replenishment module that allowed Buyers Products to “get a lot more benefit from automated replenishment.”

Davey says she’s looking forward to the next upgrade, and that she’s particularly interested in reaping the benefits of an improved cross-docking function. “The current version has very limited cross-docking capabilities,” says Davey, whose WMS wish list includes improved vendor compliance to handle special projects, such as the large national catalogue firm that needs special labels applied to every box that runs on its conveyor system. “We spend an awful lot of time writing up custom labels and developing custom procedures, and could use help in that area,” she adds.

To shippers looking to upgrade their WMSs in the near future, Davey’s most important piece of advice is to be realistic with timelines. Her firm’s pending upgrade, for example, will likely start being planned out in December, and roll out in March. Executive buy-in for the process is equally as important, says Davey, who advises logistics managers to quantify the benefits clearly before approaching upper management with the idea.

“Figure out why you’re upgrading and measure it, or else the boss will see it as a waste of time and money,” says Davey. “Once approved, factor in the time necessary to do sufficient testing and training because it’s not seamless.”

Tales from the trenches: Smith Dairy

It’s been about a year since Oroville, Ohio-based Smith Dairy upgraded the WMS system in its 60,000-square-foot main warehouse. As a matter of fact, the upgrade was so successful that the dairy product manufacturer is rolling out the new-and-improved system at its Richmond , Ind. , location.

Rewind back a few years and you’ll see that Smith Dairy was using a WMS developed by one of its equipment vendors. The system was highly customized and difficult to upgrade in a seamless fashion. “We wanted product to flow around the building without someone having to touch it,” recalls Dean Reed, director of IT, who spoke with several WMS vendors before going with a HighJump solution in 2004.

The move from a proprietary system to the more sophisticated WMS wasn’t easy, says Reed, who started the process in the fall of 2004 and saw it wrap up in the spring of 2005. “It wasn’t very pleasant,” says Reed, whose firm used a systems integrator to handle the switch. One particularly challenging point involved the operational parameters for an unmanned crane. “The integrator took too many liberties when it wrote that application,” says Reed, “and buried us for two weeks because the crane was so inefficient because their code was inefficient.”

Smith Dairy has since streamlined its WMS and subsequent upgrades, which take just a few days for the firm’s warehouse software manager to complete. Its most recent installation included a voice picking system and a new, Web-based interface that Reed says has a “nice, user-friendly menu that slides off the edge of the screen, allowing users to see more of the data.”

Reed says shippers that are considering a WMS upgrade should take a step back and consider what they want to get out of the changeover, how long it will take and what customizations will be required. “Be perfectly clear with what you expect the system to do,” says Reed, “and if you’re using an integrator, don’t give the company any wiggle room to take the easy route or you’ll wind up getting burned when you try to implement.”

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.

By Katrina C. Arabe

How do you handle nearly 3 billion lbs. of merchandise a year with speed and accuracy? For Sears, the answer is a wireless mobile system that tracks product movement in real time.

Upgrading the communications system of your material handling operation can pay big dividends. This is what Sears Logistics Services Inc. discovered after implementing a new wireless mobile system in its seven retail replenishment centers (RRCs). The new technology’s impact was quickly evident, boosting productivity by more than 30% and paying for itself within eight months. In addition, it dramatically cut overtime, virtually wiped out system errors and forestalled more than 90% of support calls.

The new system, installed in fall 2001, delivered the kind of performance that Sears Logistics, a subsidiary of Sears Roebuck & Co., demanded. Its seven RRCs provide all the merchandise to the 870 Sears shopping mall stores across the country. Volume is very high. Last year, these RRCs supplied 2.7 billion lbs. of merchandise to stores. Each day, these facilities process more than 25,000 pallets. Furthermore, merchandise is constantly flowing in and out, staying in storage for only 24 or 48 hours on average. “The new system was a bigger benefit that we thought it was going to be,” says Bryan Howell, a hardware specialist at Sears Logistics’ biggest distribution center, located in Pennsylvania .

The MobileBuilder 2.1 system from California-based PenRight Corp. replaced another wireless mobile system, which Sears had installed in the mid-90s. That older technology, in turn, had taken the place of a manual paper-based system. While the old wireless system had improved the management of deliveries, shipments and inventories, it wasn’t delivering enough speed and accuracy. “The old system was based on a DOS system, the new system is Windows CE-based,” says Winston Yuan, an internal consultant who selected and adapted the applications to the RRCs. “The DOS system was slower, less reliable and it was very difficult to connect to the host. With the new system the network connection is much more efficient, provides more memory, more hard drive space and it’s faster.”

Besides superior network connection, Yuan chose the MobileBuilder system because it didn’t need multiple scanning devices. It runs on a Pocket PC made by New York-based Symbol Technologies. This mobile device can utilize different scanning libraries. Instead of having to use four different scanning devices like it did in the past, Sears could rely on one handheld. This mobile device scans merchandise on its way into the distribution center to confirm receipt and on its way out of the distribution center to record that it has been shipped to fill an order. In this manner, product is tracked in real time—giving valuable information to everyone involved. Retail replenishment managers, who restock stores, can quickly find out what merchandise is available at the RRC. Also, store managers can access this data to learn what products are coming into the store and in what amounts.

By providing information in real time, the system has drastically reduced error. “The old system didn’t give us real time information for available bins and locations in the warehouse,” says Howell. “With the Pocket PC we have the ability to go real time and it actually eliminates human error.” It prevents such mistakes as workers selecting the same bin location twice, an error that can disrupt the process. “Based on an 8-hour shift, the old system would run 30 to 40 errors a day,” says Howell. “An error would lock up the entire system and it would be a lot harder and a lot longer to reboot the system to get it up and running again. With the new system sometimes you won’t see an error for a couple of weeks. It’s a major difference.”

This error reduction has translated to increased productivity, greatly improving slotting applications—the process whereby warehouse workers called slotters receive pallets sent by manufacturers via truck and then store the merchandise in bins in the warehouse. “We’ve (almost) doubled the productivity of our slotters,” says Howell. “I would say that in our old system the average pallets moved per slotter would be around the 220 to 230 range. Now our range is between 300 to 400 pallets.” Even peak time volumes pose no problem for the new system. The RRCs don’t have to hire extra help anymore for the busiest seasons and have even cut down on overtime. “Before we installed the new system we saw people working overtime in order to complete a shipment,” says Yuan. “Now I can tell you that most employees are getting their shipments filled in their regular shifts.”

Even if the wireless connection between the handhelds and the server is lost, the process is not hampered. Employees can continue working because these mobile devices retain the information until the connection is restored, during which time workers can send the data to the server. Memory storage is dense—with the Pocket PCs, which are equipped with a wireless LAN radio, holding up to 64MB. In fact, this large memory makes continuous connection to the server unnecessary. By only periodically connecting to the server, these mobile devices are able to run faster and get even more mileage from their batteries.

With its MobileBuilder system bringing so much speed and reliability, what is the next step for Sears replenishment? Even greater accuracy. “For the future, my personal expectation is to have a voice interface with the device because that will create even better accuracy,” says Yuan. In a few years, employees may be commanding their mobile devices to “scan box” or “display order” with their voices.

Source: Replenishment Heaven

Peter Strozniak

By Katrina C. Arabe

New innovations are streamlining the supply chain and increasing the efficiency of today’s technologies. Every warehouse stands to benefit.

Many of the latest warehousing solutions mix the old and the new. The old: technologies such as warehouse management systems, which have been around for a while. The new: software and information technology enhancements. In fact, these innovations are not only giving old technology new efficiencies, but they are also tweaking direct-to-customer distribution and fulfillment activities.

Pick-to-light systems have been given the IT makeover. Newer versions of pick-to-light systems are virtually touch-free. Previously in pick-to-light, the picker had to push a button when he had finished the task. Now newer systems of this long-standing technology have sensors, which detect when the picker’s arm is in a pre-designated spot in the picking area. Some even feature RF scanning, which doubles the accuracy.

Warehouse management systems (WMS) have also significantly gained in functionality and now provide solutions to current challenges such as downsizing inventory. This is a big concern because of two factors. First, warehouse managers are operating in a buyer’s market, with customers demanding quicker delivery with value-added service. Second, buying patterns have shifted—orders are smaller and more frequent. New warehouse management systems address these issues and trim the supply chain. They are not only more functional, but they can easily interface with other technologies. Many WMS applications enable automation while working with both ordering and shipping systems and logistics routing programs. These capabilities ensure the smooth flow of merchandise. At Helzberg Diamond Shops Inc. in Missouri , the WMS receives fulfillment recommendations based on the business activity at each of its 235 jewelry stores. The WMS then gives data to all the warehouse automation. “For us, automation vastly increases accuracy and speed,” says Orlando Jagoda, IT vice president at Helzberg.

Even small warehouses can benefit from IT improvements. Small operations can bring partial automation to their facilities through emerging Internet-based services. Application service providers (ASPs) are driving this phenomenon. They let thousands of small warehouses execute operations which were previously not possible without complicated and expensive warehousing technologies. “An ASP is a Net-based system whereby the user pays per transaction,” says Ken Ackerman, president of the Kenneth B. Ackerman Company, an Ohio-based supply chain management service. “It’s the same idea Xerox came up with 40 years ago when the company sold copies in lieu of copy machines. ASP is still very much in its infancy, but it will open IT to small warehouses. There are people selling this right now, and over time it will have a revolutionary effect on the industry.”

Material handling solutions that are on the IT edge include wireless technologies such as Palm Pilots and Ethernet bridges that can connect several locations to one network. In addition, robotics and automated picking technologies are easier to use, more compact and more efficient. Automated pallet loaders now use driverless vehicles or embedded platforms that elevate before releasing loads inside a trailer. In fact, most automated picking equipment moves around guided by rails. They pick products from shelves and place them in containers. Since experts say that approximately 60% of all picking activity consists of travelling, these robotic advancements greatly boost productivity by eliminating unnecessary strolling.

Voice or speech recognition is also gaining in popularity. This warehouse option frees both hands of the worker, boosting his productivity. It’s becoming easier to use. Workers no longer have to adjust vocal inflection so that the program can identify what is being said. Instead, users give speech samples to the system to memorize. In fact, the latest versions of this technology can interpret a range of languages and accents. Speech recognition may even make warehouse radio frequency (RF) technology obsolete, assert many material handling experts. Parcel delivery services already show this trend. At Conney Safety Products, a safety equipment distributor in Wisconsin, speech recognition is the preferred choice. With RF, “you have to stop what you’re doing, scan the item, and pick the ticket,” says John Swartz, vice president of operations. “That’s a big negative time-wise, so big that we’ve decided not to go the route of RF at all. With voice recognition the worker doesn’t have to scan anything.”

Radio frequency may avoid becoming outmoded because of its own IT advancements. RF identification tags have successfully tracked trailers, rail cars, marine containers and other costly items. Embedded or attached RFID tags contain data, which can be retrieved by low-wattage radio waves. This can be sent to a computer or saved on other digital devices to be uploaded later. RFID will work even without direct line of sight, and non-metallic objects such as trees will not obstruct radio wave transmissions. “RFID holds great potential for material handling,” says John M. Hill, principal of Ohio-based eSync International, a supply chain systems consulting and integration company. “The trouble is it’s far too expensive right now. You can afford to spend $50 or $100 on an RFID tag if the object is to identity rail cars, and be willing to spend a little less if you’re tracking automobiles. But the price per tag in a warehouse will have to be less than five bucks if there’s going to be a payoff.”

Total interoperability is a fast approaching IT reality. The material handling industry has tried in recent years to achieve interface standardization so that different equipment and information systems can “talk” to each other. Experts say this would be a tremendous step, removing the need to adjust software every time there is new hardware. While total interoperability may be a few years away, task interleaving has already arrived on the warehouse floor. This new technology combines warehouse management jobs to decrease travel time. For example, warehouse forklifts, which pick up pallets and take them to another part of the warehouse, can be programmed to complete another task on their way back instead of returning empty-handed.

Data warehousing is another IT-driven warehousing solution. Data warehousing notes trends and what SKUs are selling over a period of time. Then utilizing trend analysis and statistical process control, it makes recommendations about where merchandise should be placed in the warehouse. Items in high demand are made more accessible while slower-moving ones are consigned to less-explored places. “We’re at the stage with this stuff now where many fundamental problems have been licked,” says Larry Shemesh, vice president and principal of Gross & Associates, a New Jersey-based material handling consulting firm. Total automation, he says, is “doable, but it won’t happen overnight.”

Streamline All Warehouse Processes and Reduce Errors

Developed by Naxtor Technologies, the Wireless Warehouse Management Solution (WWMS) streamlines all warehouse processes - receiving, picking, inventory operations, cycle counting, and adjustments.

Capabilities

• Enables distributors to improve customer service by helping ensure they get the right products out on time, every time, while improving operating efficiencies through directed warehouse activities

Benefits

• Streamlined warehouse process
• Immediate feedback
• Improved control over warehouse tasks
• Improved customer service

A small wireless handheld device communicates with Naxtor WWMS solution, sending information about who picks what inventory activity and when, in real-time.

Because the Wireless Warehouse Management Solution is fully integrated with Naxtor WWMS, distributors can implement one technology solution for all of their needs, and since the system offers a graphic user interface (GUI), it is easier to navigate than most character-based RF offerings.

Accurate Inventory

Wireless functionality enables on-the-fly inventory adjustments when discrepancies are found, and a fully integrated audit trail tracks all changes. Inventory movements within the warehouse are also immediately confirmed within the system.

WWMS also offers self-directed and system-directed methods for inventory management. The system-directed method automatically suggests up to six bins, giving users the option of choosing an alternative bin location.

WWMS includes a ranking system similar to ABC classes, but based on the number of hits a bin receives. Primary bin, bin ranking, along with weight and volume of bins and items can be used to calculate optimum placement in your warehouse. When a user locks a damaged bin location or indicates a full bin, the warehouse manager will receive an alert.

Receiving

With Naxtor WWMS, one or more users may receive against the same purchase order or warehouse transfer. The solution sums up the receipt line quantities as the user processes the transaction. If a distributor has multiple package sizes for an item or runs a random warehouse where more than one item or lot is in the same bin location, then a system of license plating or tagging is an available option, with the ability to create lot numbers and traceable tags on the fly.

During the receiving process, users may identify serial, lot, and lot attributes. If required, tags for individual pallets, cases, or boxes can be applied with recursive identification for several boxes on a pallet. Directed put away is part of the receipt process.

Picking Features and Benefits

Naxtor WWMS allows for the picking of a single order, multiple orders for different customers, and transfer orders in a single pass through the warehouse. The system directs the picker via the wireless handheld device to the appropriate bin locations, and ensures the correct bin is scanned, the correct item is scanned, and lot/serial is correct. Users have the ability to pick by zone or to pick the entire pick ticket, which enables multiple pickers to simultaneously pick the same ticket or by a pick-and-pass method.

Enhanced bin functionality allows picking sequences to be associated to bin locations. The picker has a “What’s Left” function that indicates the lines of the order left to pick. The user also has the ability to add multiple pick tickets to a “Group Ticket” and then pick either by zone or for the entire ticket.

You Can Count On It

Naxtor WWMS works with either a wireless device, or a batch-oriented PDA initiated from a PC, for cycle counting and physical inventory. The count is created and the user uploads the count to the PDA or enters the count number on the wireless device. Physical count selection allows you to count all bins for a single item or single bin location. The user then enters the count number and the system prompts the user with the bin and item to scan. By having the user verify the item and bin, it ensures the correct items/bins are being counted. The final count quantity is entered and the count updated. Lots and Serials can be adjusted on the device too. The PC user approves the count once any discrepancies have been investigated.

Inventory Operations

Item-lot quantities or individual tags can also be consolidated onto other tags or into other bins if needed. Similarly, item-lot quantities in large pack sizes can be broken down to smaller quantities and identified with individual tags before being dispersed within the warehouse, and all inventory movements can be immediately verified.

For more information on Naxtor Wireless warehouse Management System(WWMS) enterprise software solutions, please visit our website.

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

If you think a feature-packed warehouse management system (WMS) is out of reach, think again. Low-cost packages, with high-end features, are now available for small and mid-sized companies.

Warehouse management systems (WMS) are not just for the heavyweights anymore. Now, small and medium-sized companies can get their hands on affordable packages because WMS vendors are finally courting the low-end market. They are paying attention to this long-overlooked segment because Fortune 1,000 companies already have applications in place. That means that vendors must scramble to maintain revenues by pursuing other markets, and they’re doing so by scaling down their offerings and dangling attractive prices to entice small and mid-sized firms.

Penetrating new segments is important because the North American WMS market declined by 12% between 2000 and 2001, says Steve Banker, service director of supply chain management for ARC Advisory Group in Boston. Worldwide WMS software and service revenues may have hit $738 million in 2001 and is expected to climb to $1.17 billion by the end of 2006, but ARC anticipates that overseas markets will drive most of that growth. “The North American WMS market is mature,” says Banker. “Most of the 10% growth we’re forecasting over the next five years will occur outside of North America.”

Such projections have spurred WMS vendors like J.D. Edwards and Ann Arbor Computer to create low-end, Windows NT-based WMS packages for the small-to-medium firms. Companies with modest budgets can now choose from basic, software-only packages to feature-laden turnkey solutions that include the application, implementation and even hardware. Most systems are priced around $100,000, although some go for as low as $40,000 or as high as $300,000, depending on which features they integrate.
“WMS vendors are looking for ways to add more revenue to the bottom line,” says Tom K. Ryan, who runs his own supply chain consulting firm in Chicago. “They have the expertise and knowledge, so they’re taking the time to make the systems more applicable for small, simple operations that don’t need all the bells and whistles.”

Software vendors now offer several versions of their low-cost WMS solutions, from the very basic to feature-laden, increasing in price as they pack more functions. For example, Radio Beacon Inc. of Toronto has three versions of its low-end system—Radio Beacon Lite, Full and Pro. “They all do warehouse management, they just do more as you pay more,” says Dale L. Jeffries, Radio Beacon president.

Another vendor that is targeting smaller users is Washington-based Intek, which offers its Warehouse Librarian product for $50,000-$75,000 for 5 to 10 users. The exact price depends on hardware requirements, but all software and services related to the system are already included, according to Intek president Stan McLean. He says the package is ideal for manufacturers and distributors with yearly revenues in the $10-25 million range. The system tackles such warehouse functions as receiving, putaway, order management, shipping replenishment, order picking, and cycle counting.

North Carolina-based V3 Systems has also come out with affordable WMS solutions—the SCM and iSCM packages, which range from $40,000-$80,000. And because the systems are based on the same V3 architecture used by the vendor’s advanced and scalable solutions for larger companies, the low-cost packages can meet a company’s increasingly complex requirements. “Small to mid-sized businesses typically have looked to deploy the V3 solution in one or more distribution centers and scale the solution as their logistics needs grow or change,” says C. Ashley Campbell, V3’s president and CEO.

Even the biggest vendors, which have made their name with high-end, costly systems, are now pursuing smaller companies. For example, Denver-based J.D. Edwards & Co. offers a “foundation” product called Warehouse Management, which tackles warehouse basics and integrates financial software for accounts receivable, general ledger and other functions, for under $100,000.
Other large technology vendors with lower-end offerings are Manhattan Associates and Majure Data Inc., both based in Atlanta. Manhattan Associates makes PkMS Pronto, a system that integrates inventory management and radio frequency and starts at $75,000. Meanwhile, Majure Data offers RF Navigator complete for $150,000-$300,000. “It truly is a full-scale WMS,” says Patrick Majure, company vice president. “From replenishment to picking to loading trucks and everything in between, RF Navigator handles everything that needs to be done in a warehouse.”

Universal Supply Co., in New Jersey, can certainly attest to that. The wholesale building material distributor and supplier purchased and rolled out RF Navigator a year ago in its 100,000-square-foot warehouse with 9 workers. The company spent just under $200,000 for the entire system and has already made its money back, says Dante LaSasso, Universal Supply’s materials manager. “Our inventory has gone from being 85% accurate to 99.77% accurate,” says LaSasso. “Plus, we’ve reduced our warehouse staff by three full-time and one part-time workers, which means a $10,000-a-month savings in manpower alone.”

Indeed, such results are impressive, but before snapping up a low-cost WMS system, consultant Tom K. Ryan says that companies should address the following questions:
1) Does the low-end package fulfill your operational and functional needs?
2) Do you have to undertake various or difficult “workarounds” to make the system match your warehouse requirements?
3) Does the cheaper system integrate radio frequency and automatic data collection? These two features drastically reduce operator error.
4) Is the low-cost solution scalable?
5) Can the WMS meet growing needs?
6) Will it be able to manage increased transaction volumes or more complicated warehouse operations?
7) What support is the software vendor likely to give over the next few years?
Is the vendor financially stable?
9) What type of assistance will the vendor offer during the implementation of its software in the warehouse?
10) Can the vendor refer you to a third party for support with the system if necessary?

Also keep in mind, says Ryan, that lower-end WMS solutions are best suited for companies with 5 to 10 WMS users. They also work well with simpler operations, which can receive tremendous efficiency boosts from an automated pick, pack and ship system, particularly from automated inventory control. “A small operation can only reduce the number of employees by so much,” says Ryan. “But an even bigger benefit for such companies lies in the inventory control and inventory-level reduction that comes from an automated WMS system.”

And while every WMS package can manage warehouse basics such as picking and shipping, ARC’s Banker points out that not all low-end packages possess the features of their high-end counterparts. Small and mid-sized companies should also be aware that baseline software prices don’t cover hardware or implementation services, although some companies do include such services for a flat fee.

Overall, however, low-end packages have significantly advanced, packing many high-end features and often coming in at under $100,000. Vendors may offer widely varying features, service levels and prices, but the quality of these systems tends to be high because of three factors—a saturated high-end market, the ruptured technology bubble and vendors’ readiness to integrate complex features in their low-end products. In fact, according to Banker, most affordable solutions available today are real-time, RF-enabled, and execute the warehouse functions that companies find the most essential—receiving, putaway, picking and shipping.

By Katrina C. Arabe

Companies are discovering how to better maintain inventory and fill orders with powerful new tools and best practices. Find out how they’re making drastic cuts like 30% less inventory look easy.

When managing warehouses, companies aim to reduce costs in two major operations—maintaining inventory and filling customer orders. To make both more efficient, they are not only adopting new technology solutions but also implementing “best practice” procedures. While the high-tech approach involves utilizing new software tools (think “collaborative visibility” and “inventory optimization”), the “best practice” tack entails arranging items in the warehouse or distribution center in the most expedient manner.

One new technology approach is collaborative visibility, which is helping manufacturers work more effectively with suppliers to avoid excess inventory.

“What we found is (that) companies have been working on the top-tier suppliers to take out the waste and create new efficiencies,” says Bill Linquist, a business unit leader for New Jersey-based Ingersoll-Rand Co. Ltd. “But companies aren’t working on the bottom tier suppliers (the remaining 20%) where you still see transactions and inventory waste.”

To help companies better collaborate with these suppliers, Ingersoll-Rand, along with Massachusetts-based software developer SupplyWorks Inc. and Illinois-based third-party logistics provider Roberson Transportation Corp. last year launched The 21st Supplier, a business-to-business service that optimizes discrete manufacturing procurement.

To improve supplier-manufacturer collaboration, the service gives suppliers insight into manufacturers’ inventory levels in real time. “When we provide visibility, inventory naturally goes down without doing anything else because suppliers realize for the first time what is out there,” says Linquist. In fact, he claims that the service has reduced inventory by 10-20% “in every case.”

“When you start to collaborate with your suppliers, it helps them think about what they can do to become more efficient, more effective and how they can execute better,” he says. Through collaborative visibility, suppliers can determine how long inventories will last and can forecast demand. In addition, they can study their own patterns and learn how much and how often they can ship. This will also allow them to cut down their own inventories.

Another cutting edge solution is inventory management optimization. For example, Boston-based Optiant Co. lets firms like Southern Novelties Co., a South Carolina-based packaging company, calculate the correct inventory levels at the correct locations. Its inventory management optimization software helped reduce inventory by maintaining it more strategically.

With Optiant’s software, Southern Novelties figured out that it made sense to hold more inventory upstream—before its metal ends are manufactured for specific products and become more affected by market forces. As a result, the company cut down inventory on its metal ends product line by 30%.

Inventory optimization also aided Arizona-based Dial Corp. Because inventory figures took time to calculate, Dial Corp. was hampered by both excess inventory at the end of every month and too many stock outs at the retail level. To remedy the situation, the company collaborated with New Jersey-based IMI Americas on a software tool that tackles customer fulfillment and affords a real-time view into its manufacturing and distribution network in North America .

“The (key) issue is how you manage the exception—not just planning and execution,” says Henry Bruce, a vice president of IMI Americas. He points out that many companies are skilled at forecasting product demand, but get stumped by day-to-day exceptions.

By gaining insight into its network, Dial was able to handle volatility in product demand planning. “Dial generates demand through promotions which would drive the volatility,” says Bruce. “They have insight now into that demand because they know how much they shipped to retailers (in past) promotion. We capture that and manage against it in the context of the promotion.”

As a result, Dial has been able to even out its demand flow, minimize stock outs and avoid having to dramatically discount extra inventory at the end of every month.

Inventory visibility also helps companies save on inventory costs. For example, customers of Connecticut-based NewRoads Inc., a business process outsourcing firm that offers order fulfillment and other services, can save on inventory costs by receiving products straight from the manufacturer.

For instance, if 60% of the customer’s inventory is fast moving and 40% is slow to leave the shelf, then the company’s overall inventory costs will go up because of the laggards. Through inventory visibility, NewRoads can offer to have the slow-movers shipped directly from the manufacturer to the customer, without stopping at NewRoads’ Kentucky warehouse. “This way our customers don’t have to incur the cost of storing the (slow moving) product here,” says Sally Miller, information technology director at NewRoads.

Another cost-cutting, high-tech approach is creating the “just-in-time” warehouse, which integrates a yard management system with a warehouse management and a transportation management system. The yard system allows companies to streamline the movement of products-laden trailers from yard to dock—including their unloading.

For example, New Hampshire-based ES3 LLC, a third-party distribution provider for the grocery industry, recently built a “just-in-time” warehouse that uses a yard management system from California-based WhereNet Corp, employing wireless, real-time locating system (RTLS) technology. “A lot of the yard maintenance management is gone,” says Geoff Davis, ES3 executive vice president. “We don’t have (those costs) and we don’t have to bill our manufacturers or retailers for it.”

As this example illustrates, receiving provides a huge opportunity to improve order fulfillment. “As we become more effective supply chain managers and get smaller and more frequent receipts, you have to pay attention to receiving,” says Jim Apple, a director and co-founder of The Progress Group, a logistics consulting group. “That’s the process of receiving efficiently; dock to stock time becomes more critical because the less of the stuff I have the more likely it is that what’s coming in the door is needed. I can’t afford to have five trailers sitting out in the yard that I haven’t gotten to yet.”

Improving order fulfillment doesn’t have to involve deployment of the latest technology either. For example, a well-established technology such as bar coding can result in huge efficiency gains. Progressive Distributor magazine looked at inventory costs for over 50 distributors from December 2001 through November 2002 and found that in warehouses where bar coding is used for receiving, picking and tallying up inventory, the cost of carrying inventory was on average 27.6% less than in those where such functions are manually completed.

Another highly effective approach is optimizing warehouse layout. Most distributors continue to store similar products close to each other, reserving warehouse areas for particular product lines. With this layout, finding products may be simple, but order pickers may often have to travel all the way to the back of the warehouse for popular items while slow moving products are needlessly stocked near the shipping, staging and receiving area.

To avoid productivity-draining travel, companies should position the most frequently picked items in the most accessible bins. In this manner, picking can be faster and more efficient, mostly taking place in a small area of the warehouse. In fact, in their study of 50 distributors Progressive Distributor found that less than 50% of stocked items make up 95% of hits (product requests). This means that the remaining half of products that are requested only 5% of the time can be placed farther away from the shipping, staging and receiving area without incurring too much extra travel.

Distributors can also further improve warehouse operations by following some additional layout guidelines. For one, they can store products that tend to be ordered together close to each other. Also, they can consider the order in which items should be pulled from stock in choosing bin locations. For example, if heavy products are usually at the bottom of a pallet, then they should be stored in lower bins or in locations where they can be picked first.

Indeed, when it comes to inventory management and order fulfillment, both high-tech and low-tech solutions can help your company drastically cut costs and dramatically improve efficiency.