Ten top tips on creating a 'best practice' Warehouse Management System
Sep 22, 2015
By Ian Roper, supply chain solutions divisional director, the Access Group.
The demands placed on modern supply chains have created a complex set of exacting requirements for Warehouse Management Systems. The challenges are many and growing, so Ian Roper, divisional director, supply chain solutions at Access Group examines ten top factors to consider.
Warehouse Management Systems (WMS) have moved a long way from the days of boxes in sheds supervised by a man in a brown coat and a clipboard. A vastly increased number of Stock Keeping Units (SKUs) are handled through multiple distribution and retail channels, in some cases never entering the physical warehouse at all. Requirements for speed, accuracy and efficiency have never been more onerous, nor has the need to monitor, trace and track goods right through the supply chain. Increasingly, a WMS must interact with other locations, other business functions and other partners, from suppliers and manufacturers to carriers and customers and all these parties may have the need to interact with the system.
In addition, the warehouse system itself is not static - both physically, and in terms of players and channels, it is constantly evolving to meet market demands.
Every supply chain, every warehouse operation, to some extent requires a unique warehouse management solution: yet there are common factors a customer should be looking for in any robust, flexible, long-term and effective solution. Here are ten of them.
1. Integration
The warehouse is not an island. Within the company the WMS will need seamless integration with, at the very least, financial, sales & order processing, and depending on the company, manufacturing, retailing, HR and other systems. Externally the warehouse needs to talk to supplies and their carriers, customers and theirs, possibly directly to end-users, and to third parties such as tax and customs authorities, waste contractors, hygiene and other regulators, auditors. the list goes on.
A plausible WMS vendor will have created and demonstrated proven interfaces, perhaps: with a number of other systems in common use. They will also be able to demonstrate that these interfaces continue to be updated and refreshed.
2. Legacy
Many firms are saddled with 'legacy' systems, in WMS and elsewhere, especially after mergers and acquisitions. Often it is neither economically nor politically possible to replace these in the short term, and a 'big bang' changeover or upgrade may pose unacceptable operational risks. A new WMS needs to be able to work in harmony with legacy systems, and be capable of being rolled out, functionally and geographically, in manageable increments.
3. Visibility
A prime function of WMS is to offer visibility of the location and status of all the goods in the system: not just within the warehouse, but in transit, at suppliers' despatch or customers' goods-inward bays, at other associated warehouses and locations, even on return back from end-users. But 'visibility' does not come from several yards of print-out. The system must report in near-real-time in a form that is readily intelligible to the interrogator, and that clearly flags up actual or potential problems.
Visibility is needed not just of the physical location and status of stock, but of the costs it gathers as it moves through the supply chain.
Increasingly, visibility must be extended to other partners. Suppliers need an advance view of likely demand, while the warehouse needs updates of delivery times and quantities (particularly of any unplanned variances). Transport contractors need to see the shape of future business to plan routes more effectively. Especially, end-users expect to be able to track their order status right through from warehouse shelf to last mile delivery. Automated messaging is key, and needs to be available at all levels from simple e-mails to full EDI.
4. Order picking
Order picking is a much more complex operation than it was. Once, a particular product would almost always be despatched as a single item, others by the case, or by the pallet. Order picking increasingly involves the assembly of mixed cases and pallets, increasing complexity and the room for error. Not all systems can deal effectively with this.
At the same time, the science of order picking has developed different approaches depending on the nature of the product, demand patterns, physical restraints on locations and other factors, that optimise the use of, and travel by, staff. Put-away can similarly be optimised for effort and use of location. Increasingly, a warehouse may be running several different strategies, or need to change from one to another (for example when coping with spikes in demand). The WMS must offer the flexibility to apply the different techniques effectively.
5. Returns management
Returns have long been a problem in some industries such as fashion and apparel, but for most companies the small volumes involved were readily manageable by ad-hoc procedures - or, often, simply written off. The growth of e-tailing, in particular, has increased the volumes of returns by orders of magnitude - 50% rates are not rare - and their effective management has become a make-or-break issue.
Ideally, receiving advance notification of impending returns the WMS must allocate the return to the appropriate recovery channel - repacking within the warehouse, or perhaps component recovery by a third party contractor, or sale to a secondary market. Quarantine systems may have to be maintained. Stock levels and locations must be updated as goods become re-available for sale, as must forecasts of what is likely to become available in the future, and demands on suppliers adjusted accordingly. Recovering, and accounting for, packaging is another important issue.
6. Labour management
Many warehouse operations are inherently labour intensive and many supply chains have significant peaks and troughs in activity. A WMS needs both to forecast forward labour requirements based on demand expectations, and as far as possible, to smooth the peaks and troughs by bringing forward some activities, or by postponing less time-sensitive orders. WMS should be able to show whether it is more economically effective to extend overtime, or hire casual staff, or even to turn down business if the costs exceed the benefits.
A WMS will also be capable of monitoring labour efficiency. Some operators are quicker, and/or more accurate than others. Different warehouse management strategies may vary in their productivity. Labour monitoring can not only be a basis for reward programmes but can also spot less effective strategies, and operations where 'standard times' for one reason or another are at variance from reality.
7. Web access
Ten years ago, the Smartphone didn't exist. Now, it is rapidly becoming a platform of choice, not just for consumers to order and track, but for the performance of many supply chain tasks. Sales reps expect to check availability, or even reserve goods, while seated in their customers' office; shop-floor operatives may interrogate or alert the system about problems and discrepancies - perhaps including pictures of, for example, damage; and carriers may advise of traffic-related delivery time changes. No longer are PCs required on a desk hundreds of yards (or hundreds of miles) away.
The impact of web technology has much further to go. Very soon, customers will expect to be able to redirect a delivery, from their phone to the system, while the goods are in transit. Various systems of smart drop box or parcel station are being tried, both for deliveries and returns, which will require the customer, the carrier, the WMS (and conceivably the goods themselves) to be linked over the web. The 'customer' may even be a 'smart' fridge or other device capable of interrogating the system for availability and delivery time, 'negotiating' over substitutes and alternatives - and presumably doing the same with competing supply chains. A possible future involves 'predictive' purchasing and positioning - 'Big Data' could allow retailers to predict, with considerable accuracy, what and when a customer is likely to buy, and preposition the goods close to the customer.
All these developments are about time, making it imperative that there is web communication straight to core functions of the WMS. There really is no longer any time for rekeying.
8. Bespoke functionality
As noted, all supply chains are to some extent unique. As the Internet has revived the economics of small, niche and specialist producers this is likely to become even more true, and is likely to diversify even further the tasks that warehouse operators and logistics providers are required to perform. For example, kitting operations in warehouses may need to be tied to specific delivery personnel, trained in home assembly of the goods. Stocking for maintenance and repair operations may become significant in some sectors. Whether 3-D printing will take-off is moot, but some WMS may need to operate as a virtual warehouse for a distributed manufacturing base.
Other specialist operations and requirements already abound, often highly regulated. Environmental monitoring requirements in the food supply chain provides examples, as does the particular requirements of operating bonded warehouses. Some systems need to be able to treat products from different sources as equivalent; others may need to separate identical products to serve different channels. Some may need to reflect differing language requirements, accounting standards or regulatory requirements if, for example, stock is shared across facilities in two or more administrations.
No system has every conceivable function built in, and nor should it. But the vendor should be able to demonstrate the ability to create the required features without compromising the core functionalities, and in a form that suits system operators rather than code writers. Obviously this requires that the vendors demonstrate an understanding of the particular supply chain, its objectives and constraints.
9. What-if scenarios
If everything always went to plan, writing WMS would be a trivial task. But it doesn't. Anything from natural disaster to celebrity endorsement can throw a supply chain out of kilter. The first requirement is to have visibility, as far as possible, of what might be coming and what resources are available to cope. The second is to be able to ask 'what if?' in close to real-time.
The range of possible what-if scenarios is almost infinite, from simple cases like the impact of delaying a less time-critical order to accommodate an emergency requirement, to the long-term implications of, say, combining the stocks for High Street and e-tailing channels on one site. The WMS can not operate in isolation of course, but using its integration to other systems it should be able to outline the effects of the proposed action, both physically and economically, and to the extent that a change may disadvantage some customers, impacting brand reputation.
Presentation of resulting reports is also crucial. Change is likely to impact on operatives and others who do not have a comprehensive understanding of the supply chain, so it needs to be easy to demonstrate the relative merits of different courses of action.
10. Future proofing
As we have seen, supply chains are subject to many forces for change and the WMS needs a high degree of inherent flexibility if it is not to become outmoded - indeed a legacy system of its own, in short order. The system needs to be fully scaleable as operations grow or shrink. It needs to be readily adaptable to new or multiple business channels, physical locations and business relationships.
It also needs to be receptive to an increasingly wide range of technologies that can be used to input, output and interrogate the system. Do not disregard the simpler ones - the uptake of even old-fashioned 2D barcodes is less universal than might be thought. RFID is fairly mature as a technology, but the range of possible applications that may impact on warehousing and logistics in future is vast - to take an example, tagging key components to ensure that either rare materials, or noxious chemicals, are kept out of the waste chain, would directly impact on returns management functions.
Within the warehouse too, technology is taking a hold, and WMS needs to be capable of supporting voice-picking and pick-to-light/put-to-light, techniques, perhaps simultaneously. On the horizon, who knows the potential for 'smart' glasses/lenses in the warehouse? The ultimate hands-free pick?
