You are on page 1of 10

INTRODUCTION

Steve booked an item from a renowned e-commerce site and


immediately gets a mobile alert that his item has been dispatched from
the West Town sorting facility. This doesn’t awe us anymore, does it?
The West Town facility, housing the item, is a 1.2 million square feet
(equivalent of 28 football fields) area of land. Steve’s item is one among
the 15 million items that needs to be picked, packed and loaded within
few minutes on a truck that is waiting at one of many dock doors. In a
intense competitive environment, companies cannot afford to lose time
in day-day operations. A facility, like West Town, needs to be on its toes
to churn out every item requested in the shortest time possible. The
technology that lies behind the scene, silently absorbing the growing
load is a Warehouse Management System that continuously evolves
and innovates to keep up with the quickening pace of service and
competition.

The Next Generation Warehouse Management System, adopts leading


technologies of Warehouse Automation, Lean and Analytics for bringing
quick turnarounds and reducing waste in the system.
“Amazon has built an e-commerce
juggernaut thanks in large part to Amazon
Prime. All the goodies you can buy with the
two-day shipping perks are thanks to the
$99-a-year service. It is an undeniable fact
that this disruption is fueled using a
revolutionary warehouse management.
Amazon greatly relied on automation and
technology to achieve this feat.”
thestreet.com

World is moving towards instantaneous In the entire supply chain, Warehousing plays
services. Time is of essence and services are a significant role in reducing logistics lead
being measured in seconds. Uber has made it time and supply chain costs. Warehousing
possible to book cabs in seconds, memories alone contributes 10% other total logistics
are being shared with our social circles and cost. An improvement in warehouse
food is being ordered in seconds, even a bank operations results in considerable impact on
loan is available at our fingertips in seconds. the order to ship time and total landed cost
In today’s Connected and Digital era, this of the product. Technologies are powering
“Instant Phenomena” is no more a factories to produce customized products in a
bandwagon, but is slowly becoming a great fraction of a day. This revolution is trickling
necessity. down further in the supply chain and
transforming warehouse operations to a
To serve the time conscious customers,
great extent.
businesses are striving towards leaner and
more agile delivery structures. Large retailers There are several trends reshaping the
have already shrunk their lead times to less warehouse management space. Exisiting
than 3 days. High competition coupled with warehouse management systems (WMS)
impatient customers are forcing supply need to adapt to as well as adopt the new
chains worldwide to reinvent itself for trends to keep up to serve its purpose
achieving faster lead time and lower costs. effectively. This New Generation WMS would
serve as the key to leaner, short and faster
cycles.
Next-Gen Warehouse Management Systems methodology and Advanced Analytics to
(NG-WMS) are insta-warehouse systems that simplify and automate the operations of a
respond to customer demands warehouse. A Next Gen WMS would play a
instantaneously and reduce the warehousing critical role in enabling faster roll-outs of
costs intelligently. These WMS leverage the product and shorter time for taking the
principles of Internet of Things (IOT), Lean products to the market.

AUTOMATION in rise
A warehouse operation is either an Inbound Challenges in Inbound operations: The
Operation or an Outbound Operation. Inbound operation cycle involves the manual
Inbound operations cover the cycle of reading of pallets and manual entry of
receiving a product against a purchase order, information into ERP systems. This leads to
inspecting the quality of items entering the high cycle time (GRN time). Consequently,
warehouse and placing them at their high GRN time results in an increased
appropriate locations inside the warehouse inventory levels. The process of manual
(Put-Away). These operations consisting of placement of incoming materials lead to
numerous sub-processes are fraught with sub ineffective space utilization and lower
optimal processes and manual intervention, accuracy of inventory location that impacts
affecting the time for completion. the retrieval time negatively.
Mobility and Robotics will enhance automation in a Next Gen WMS
reducing operation cycle time by 20%, increasing space utilization upto 90%

A warehouse operator needs to have access his activities without the need for any
to stock related details quickly and manual intervention.
immediately. Mobility solutions comprising
Robots constitute Automated Storage and
Hands-free devices allow operators the
Retrieval (AS/RS), an advanced system for
freedom to access information while on the
storing items. AS/RS technology is used in
move on the floor. A range of devices like
high volume distribution centers for
simple barcode scanners and RFID enable the
accessing extremely high racks found. While
operators to scan incoming pallet and
capital intensive, use of Robots lead to
retrieve all related details in one-go. Returns
maximizing storage space, increase in put-
and storable items are separated quickly,
away productivity, reduction in warehouse
labeled with unique identifiers and routed
labor and higher Put-Away accuracy.
into their respective locations. Use of
Wearable devices like Smart Watch is
enhancing worker productivity by supporting Next Gen WMS will improve
uploading of information directly into the inventory location accuracy to
WMS with just few taps. Smart Glass with its >99.9 % by leveraging advanced Put
Augmented Reality solution is giving visual Away rules
confirmation to the operator assisting him in
Directed Put Away rules recommends storage GTP systems also attract a higher amount of
locations based on configurable parameters capital investment than PTG systems.
of velocity, volume and/or weight, and
material classification to dynamically slot
Voice and Light based sensors in
material. This reduces the low inventory
location accuracy caused due to incorrect a Next-Gen WMS will power
Put-Away rules. Additionally, the rules both PTG and GTP methodologies
enable minimizing storage fragmentation, achieving more than 99.9 % pick
enforcing compliance with hazardous accuracy.
material, reducing obsolescence and
implementing different storage restrictions. A voice picking system, via speech
recognition capabilities, allows warehouse
Outbound operations cover the cycle of
operators to communicate with the WMS
picking a product against a sales order,
like a human-human interaction. This is
packing and loading onto outbound trucks.
advantageous for slow moving stock items.
Challenges in Outbound Operations: A In addition, Pick to Light Systems employ LED
predominant challenge in this process is the displays to quickly and easily locate the
time taken for picking an item. Picking correct location of a stock item. Light picking
methodologies can be broadly classified into is beneficial for fast moving SKU’s.
“Goods To Picker” (GTP) and “Picker To
Goods” (PTG). In a GTP environment, pickers
remain at their workstations while a
software-driven System AS/RS retrieves, LEAN warehousing
conveys and delivers required SKUs to the
picker directly. In contrast, a PTG system Doing more with less is the motto of any lean
directs picking associates to static pick facings operation. Lean warehousing aims to reduce
located throughout the warehouse. inventory carrying cost and working capital by
Voice/light systems assist the pickers in carrying fewer inventories. However,
navigating to locations accurately as well as in inventory availability is extremely crucial to
confirming the pick-up. A quick comparison of order fulfillment. Managing lower inventory
features favours GTP over PTG. A PTG system levels without affecting fulfillment is achieved
spend 35% more time travelling. GTP also has by adopting Cross-Docking and Drop-Shipping
more scalability, achieved by just having to methodologies.
configure the WMS for any additional aisles.
Additionally, GTP can pick up 50% more lines Cross-Docking is a supply chain strategy that
Than PTG. However, in case of a system supports Lean Warehousing by redirecting
failure, a GTP System may halt the entire incoming material to outbound docks of the
warehouse operation unlike a PTG system. warehouse directly, with limited
intermediate material handling. Cross Pull replenishment systems use demand
docking reduces the material handling as well data to drive both replenishment and
as the need for storage in the warehouse. This production. Only immediate customer
reduces the routing/re-routing to/from requirements are drawn from the protective
storage racks. Thus, It enables a lean inventories upstream. This is powered by the
warehouse with exceptional inventory saving actual consumption data at the store
by cutting down the inventory holding and (store/SKU/daily demand) along with
handling costs. forecasts. This allows for a much more
granular approach than push systems. A next
A well-executed cross docking strategy Gen WMS with pull replenishment can affect
can improve service levels by 40% and service level performance with upto
reduce transportation costs by 30%.
30% reduction in inventory, 20%
At the warehouse where cross docking is increase in perfect orders and 10%
performed, a Next-Gen WMS is responsible
increase in revenue.
for daily planning and execution of incoming
and outgoing orders. This involves visibility Drop-shipping allows orders to be shipped
into future orders and knowledge of the straight from the supplier to the customer.
destination of an item before it is received via This enables faster delivery of items,
visibility into all dock and yard storage reduction in the storage needed impacting
locations Advanced Shipment Notification the warehouse size.
(ASN) and Yard management systems (YMS)
for providing. Integrating point-of-sale (POS)
software along with order management All big retailers in the world - Alibaba, Amazon,
systems (OMS) would power visibility of eBay, sell online with zero inventory, owning
future orders for better planning. no stores, warehouses, or stock. They focus
and invest in branding, merchandising, and
customer support while relying on drop ship
Costco Wholesale, second largest retailer in distributors to fulfill products at wholesale
the world, follows a high-volume-low-margin prices.
strategy. It aims to sell merchandise in large
volumes to customers at competitive rates, However, Drop shipping is sought with risks.
similar to Walmart. An extremely crucial With drop shipping, a WMS needs to keep a
aspect to enabling this strategy is tight cost check on the suppliers, quality of goods,
controls. Both the retailers have implemented tracking and returns. Advanced integration
cross-docking, that has reduced their between WMS and the supplier’s order
inventory carrying cost and labor costs, to management system is beneficial in
keep a check on their prices as a part of their supporting drop shipping.
strategy.
A Next-Gen WMS keeps track of all the tasks
VISIBILITY in operations that are assigned to an employee/Equipment.
All the pending tasks can be released in one
Radio Frequency Identification (RFID) has
go. The incomplete tasks are acknowledged
created a mini disruption in warehouse
with a message or alert that enables
management. Its ability of being read through
instantaneous resolution of the problem.
packaging without a direct line of sight,
resistance to damage on exposure to dirt, Inventory Record Accuracy (IRA) is a measure
moisture and heat has made it a strong tool of how closely official inventory records
for enabling visibility in harsher and newer match the physical inventory. Many
environments. RFIDs are gradually vanishing managers equate IRA with cycle counting. In
blind spots common in supply chain Cycle Counting a small number of items are
operations. RFID also stores information physically counted, daily, on a random or
about any inventory movement from semi-random basis. The physical count is
receiving to put-away, picking, and shipping. compared to the inventory record. When
This can provide valuable insights into route necessary, the records are corrected. Cycle
optimization counting can achieve very high accuracies,
level the workload, reduce inventory,
A Next-Gen WMS needs to keep track of
continuously measure inventory accuracy,
every item in the warehouse. With RFID tags
function without interruption of operations,
it is much easier to locate a pallet without a
facilitate process improvement and eliminate
line of sight. An active ultra
the annual inventory audit. With RFID cycle
wideband RFID system has the capability to
counting becomes much easier in a Next-Gen
locate where a tagged object is located to
WMS.
within a few inches. However, these are fairly
more expensive. Accurate inventory and Warehouse operations are faced with large
vehicle location data is communicated in real- amounts of information. Interlinked Data is
time to Next-Gen WMS to create optimized stored in silos in order processing systems,
tasks, enable interleaving opportunities, and warehouse management systems, labor
also decrease cycle counting resources. A management systems and the like.
recent study by AMR Research indicated that Warehouse Analytics are designed to pull
this information to one place and give
RFID adopters in the consumer goods
valuable insights into warehouse operations.
industry have reduced supply chain
costs between 3 and 5 % because of
enhanced supply chain visibility.
conclusion Warehouse management systems have experienced a
metamorphosis from being custom built to highly
specialized applications, to standardized systems that
offer a high degree of warehouse operations functional
support. All of us benefit daily from the efficiencies
delivered by warehouse management systems every
time we receive an item delivered at home.

In the past decade, these systems have grown too vast.


They are facilitating selling 200 items per second,
stocking more than 10 million items, maximizing
utilization space of 1.2 million square feet, managing
around 2000 employees, controlling conveyor belts
moving at 20 mph and managing thousands of suppliers.
These applications are the unsung heroes behind
clockwork operations of a warehouse. Beating the
evolving customers’ demands using a legacy WMS will
have a serious negative impact on the sales. It is time for
organizations to take notice of the huge leaps of
advancements in Warehouse Technologies so as to
remain relevant in the hyper competitive business
environment.

A Next-Gen WMS will provide the necessary


directive to harness various advanced devices and
technologies for maximum warehouse operations
and business impact
References
1. http://www.ssi-schaefer.us
2. http://www.rfidjounal.com/
3. http://www.mhi.org/
4. http://gartner.com
5. http://oracle.com
6. http://www.supplychain247.com/
7. http://www.cisco.com/c/dam/en/us/solutions/collateral/industry-solutions/iot-warehouse.pdf
8. https://www.sparkpay.com/the-numbers-behind-drop-shipping

About the Author


Sandeep Koyya is a Supply Chain Consultant within Birlasoft’s ERP
Consulting Practice. Sandeep has an M.B.A. from NITIE, Mumbai
and a certified Green belt in Six Sigma. His primary areas of
expertise include supply chain management and manufacturing.
His experience includes advising companies with supply chain
planning and execution issues across manufacturing industries.
He can be reached at sandeep.koyya@birlasoft.com