Written by Glynn Davis
Cutting costs and increasing efficiency while maintaining service levels to customers is the Holy Trinity for all retailers and nowhere is sustaining this balance seen as more important than in the area of warehouse and logistics management. Glynn Davis reports
The economic downturn has certainly prompted retailers to work even harder on getting the most out of moving physical goods throughout their businesses, which has over recent years become ever more complex as new channels have been added and many merchants have expanded overseas. Steve Smith, senior vice president for EMEA at Manhattan Associates, says: “The complacency has now been removed from the warehouse with logistics with finance directors initially recognising the need to cut costs but now they are recognising the need to service their businesses too.”
Resources are therefore being committed to the warehouse and logistics environments with the two key aims of: better inventory management; and improving efficiency around labour management. With regard to the former, Smith says the emergence of multi-channel retail is placing great pressure on the warehouse and logistics space, which is prompting merchants to move slowly towards a single pool of inventory - but there is a long way to go.
“(Many) retailers have duplicate inventory in the same warehouse and some could even send separate purchase orders to manufacturers for each channel. Warehouse management systems (WMS) need to be better integrated into retailers’ order management systems across channels,” he says.
Beyond the warehouse
One issue impacting this involves where customers should be serviced from. This includes considering which warehouses are the best option to deliver from, and also taking into account when goods are elsewhere in the supply chain. Effectively this is taking the WMS beyond the warehouse. “Retailers need to look at their network in a wider sense. Not necessarily what is in the warehouse but what is also in transit. There needs to be more intelligent availability,” suggests Smith.
For some retailers like US-based Bed Bath & Beyond, this has been extended to incorporate routing online orders from stores if there is no stock available in the warehouses. It will also do transfers from one store to another, which can affect ‘planograms’ and merchandisers across all its stores.
Another move that is boosting the visibility, and therefore availability of stock ‘beyond the warehouse’, involves giving suppliers web connections into retailers’ order placement systems, which enables goods to go swiftly into the order management systems and WMS, thereby providing very early visibility.
Such initiatives enable goods to be re-directed to different warehouses or sent direct to stores when changes in demand are spotted, thereby giving retailers a much more agile supply chain. Jane Fazzalari, retail director at JDA Software, says the desire to implement a more flexible warehousing and logistics capability has seen some retailers embrace cutting edge disciplines from the manufacturing industry - especially car production where vehicles are increasingly built-to-order for customers. The JDA Demand and Fulfil solution comes from the manufacturing sector and allows demand to be better forecasted and handled. For instance, for new products it uses an algorithm based on a product from a previous season that had similar characteristics.
Another ex-manufacturing software solution analyses how goods move through the supply chain from manufacturer to store - direct, via warehouse, drop-ship, cross-docked etc - and works out the most efficient route based on demand and forecasts. “It would only be run once a year as it requires re-engineering the supply chain but we are seeing a bit of interest in it in the market,” says Fazzalari.
Such action should take inefficiencies out of the supply chain as well as reduce costs, which is exactly the aim of labour management systems. In fact, they have become so integral to the warehouse and logistics activities of retailers that Andrew Kirkwood, senior vice president and executive director at Red Prairie, says that today 90 per cent of the WMS he sells have an integrated workforce management solution, compared with around 40 per cent three years ago.
“The WMS tells you where the stock is and the workforce software tells you where the people in the warehouse need to be,” he says. The objective is to be able to provide the pickers in the warehouse with a discrete time for their order pick that takes into account the location of the items and the weight of the goods and even the time of day in some cases as they will likely be slower at the end of their shift.
A key aspect to this is the location of goods within the warehouse. Smith says the re-slotting of goods quarterly is recommended, which seeks to replace the fast moving goods with slower moving items, with the objective of reducing the walking time for pickers fulfilling orders.
One of the other factors increasingly taken into account at the picking stage is corporate social responsibility (CSR) with transportation. “We understand what is being picked so we can provide information on weights and volumes and can group goods together to maximise the fill of the lorry,” explains Kirkwood.
As well as the speed of picking and CSR, the other key aspect taken into account when picking goods is accuracy levels. To improve the process, Kirkwood says touch screen technology has been introduced by some retailers at the secondary packaging stage to visually show the goods that should have been picked. “It’s all about making systems as simple as possible for warehouse staff,” he says.
Tim Williams, commercial manager at voice technology provider BCP, agrees and suggests that many retailers that have trialled voice solutions in their warehouses with the aim of improving speed and accuracy of picking could have gained much more from the technology. The problem has been that retailers have simply bolted-on voice solutions rather than integrating them within their WMS. “When using voice in real-time it creates a large volume of transmissions that the existing systems can’t handle. They do not expect to receive data back,” he says.
By implementing the relevant middleware, Williams says BCP voice technology can be used on a two-way continuous interactive basis that greatly improves productivity in the warehouse: “If picking goods that are not on the pick-face, then with the voice activation system it will recognise that it’s not on the shelf and get the item onto the shelf (if possible) before the picker gets there.”
Williams suggests that, regardless of the level of capital investment made by retailers in such solutions, the return on investment will be as little as six to 12 months. Bringing such pleasure to finance directors is now more than ever a crucial aspect of the IT department and, with the various proven solutions now being considered for implementation within the warehouse and logistics domain to improve efficiency, it seems the number crunchers might be in for some joy despite these tough economic times.