Introducing the fulfillment execution system

Transcription

1 Introducing the fulfillment execution system A paradigm shift from traditional warehouse management systems automation that delivers

2 Introducing the fulfillment execution system A paradigm shift from traditional warehouse management systems By Greg Cronin, executive vice president, Intelligrated Summary A sea change is underway in warehouse management and fulfillment operations. Driven by e-commerce and omni-channel demand and enabled by innovative automation and software solutions, this new model of fulfillment execution ushers in an era of real-time adaptive workflow for optimized omni-channel fulfillment. When warehouse management systems (WMS) utilizing radio frequency terminals and bar code scanning equipment replaced paper-based systems in the mid-1980s, they marked a fundamental shift in warehouse operation and workflow. Yet today, these traditional WMS solutions remain focused on the cycle of planning, executing, monitoring and adjusting as a sequence of discrete events, limiting their ability to optimize real-time actions in the millisecond highvelocity environment of an e-commerce or omnichannel distribution center. In contrast, the new fulfillment execution system introduces adaptive, task-driven workflows based on real-time, constant analysis of inventory, labor, process and equipment information, exactly matching the optimization requirements of today s e-commerce or omni-channel fulfillment center. And the supply chain implications stretch far beyond the four walls of the warehouse. Why here, why now? As with most changes as revolutionary as this one, the drivers are complex. The genesis of fulfillment execution reflects a combination of technical capabilities and market demand in this case, the increased implementation of advanced software and automation technologies plus the unprecedented growth and customer expectations of e-commerce. Let s take a closer look at the factors behind these drivers. I. Increased implementation of automation equipment for companies of all sizes and volumes, especially e-commerce Qualified workers are scarce and expensive to employ. Even when labor is readily available, labor- 2 Fulfillment execution system

3 only operations reach a limit on daily order volumes (typically 2,000 to 3,000 orders per day depending on the flow layout) before human bottlenecks and work errors become counter-productive. Order profiles have shifted to smaller quantities that are more frequent, and customers expect faster deliveries and, more importantly, order accuracy and quality. These multi-line e-commerce operations are most efficiently handled through the use of automation, rather than labor-intensive environments. In today s fulfillment operations, the ultimate challenge is to solve this equation: how much labor + how much automation + real time execution software = the highest ROI? II. Increased e-commerce and its effect on fulfillment and order management systems Multi-channel shopping has dramatically impacted the traditional brick and mortar retailer s ability to retain market share and growth. Faced with the threat of internet-only e-tailers, today s retailers must rapidly transform their distribution operations to meet the changing demands of their in-store customers and at-home consumers. These changes are very new and challenging to retailers who now must enable this omnichannel fulfillment, leverage their existing infrastructure to handle increased each picking and respond to demand rather than rely on forecast-driven planning. Retailers need to adapt, or face shrinking market share, growth and profitability. It is clear that retailers will need more real-time, event-driven data to optimize their fulfillment operations and their automation to efficiently source orders, minimize shipping costs and time, reduce operating costs and respond to increasing consumer demands to shop anywhere at any time with outstanding customer service. This new fulfillment execution system is transformational, and is as different from a traditional WMS solution as the WMS solution was to the paper-based systems they replaced. In order to fully understand and appreciate where fulfillment execution is taking the industry, let s review where it started. 3 Fulfillment execution system

4 The state of warehouse software, then and now In the beginning, warehouse systems were the backend of an inventory, purchase and/or outbound order management system operating on a mainframe computer. This included paper-based, manual record keeping; key entering of information data; overnight report generation; and batch processing. Product moved faster through the warehouse than paper-based information, so batch generated reports were inaccurate and already outdated when reviewed by management. In the mid-80s, the new emerging mantra became the right product at the right location with the right operator. Real-time processes enabled the WMS to keep an instant record of the product s physical position, the order being processed, and the location of the operator in the warehouse. This allowed the WMS to direct workers to the most efficient path, significantly increasing both efficiency and accuracy. Real-time WMS became a must-have for high-volume distribution centers. However, with an architecture built from the inventory view down and focus on exception handling, WMS suppliers definition of realtime was measured in seconds to minutes. Little has changed from the mid-80s within these systems because their focus remains largely on moving inventory from receiving to shipping in a static process designed specifically for manual/labor centric warehouses. solutions have not concentrated on nor have they been able to provide real-time micro-second response time software required to optimize fulfillment operations. They lack an understanding of the role of automation in achieving throughput and how the automation must be closely coupled with managing orders, labor and inventory in a real-time, event-driven manner which is essential in today s world of rapidly changing order profiles, seasonal and promotional demands. While many WMS solutions still perform nonautomated receiving and putaway functions, these systems generally rely on warehouse control systems (WCS) to bridge the gap with automated equipment and order fulfillment software to manage order picking labor and processes. However, traditional separate WMS, WCS and order fulfillment software packages cannot do enough to optimize fulfillment and meet today s need for real-time order fulfillment execution. A new generation of fulfillment execution system providers is taking a different, more innovative approach to technology that leads to greater throughput at lower costs. The right fulfillment execution system will position omni-channel retailers to achieve unprecedented efficiency and accuracy, and expand these execution capabilities outside of the four walls of a fulfillment center. 4 Fulfillment execution system

5 Fulfillment execution: the Intelligrated & Knighted strategy The emergence of the fulfillment execution system has the potential to change the game within the four walls and beyond (into the store and ultimately delivery to the consumer). These new solutions are better equipped than traditional WMS software to optimize the work order flow, labor, inventory and automation equipment. With real-time execution of fulfillment operations, customers experience higher throughput, lower operating costs and higher service levels that are required for today s high-speed each picking operations. As the future moves beyond the four walls of the distribution center, look for the addition of store operations software modules (shelf management, e-commerce picking), Distributed Order Management (optimized order sourcing and execution), store and last mile (consumer) truck delivery management. As we move ever closer to order now/get now, it s an exciting time to be part of the supply chain industry for automation providers, for retailers and DC managers, and for consumers. The table below compares and contrasts typical WMS functionality versus fulfillment execution systems. While not all major WMS vendors share every product attribute, the evolution of functions and capabilities of the fulfillment execution system towards optimization for multi-channel, e-commerce and increased automation will become readily apparent. A new generation of fulfillment execution system providers is taking a different, more innovative approach to technology that leads to greater throughput at lower costs. 5 Fulfillment execution system

6 Retail & E-Commerce Functionality Customer base and experience primarily focused on non multichannel/e-commerce facilities Good piece picking capabilities, but poor automation integration that typically requires WCS Optimized fulfillment execution system focused on each picking for e-commerce and store replenishment Customer base primarily retailers with omni-channel inventory or e-commerce only retailers Overall Performance Reactive system focused on holding and moving inventory from one location to another in a static process More suited for manual/labor intensive warehouses Proactive system utilizing information from all sources in milliseconds to actively control and adapt to sudden changes, problems or exceptions Well suited for manual/labor intensive warehouses and automated facilities Architecture Architected from inventory management view down All product movement must be completed before any other work is released Architected from machine controls view out View and control over automation and labor with no restrictions on releasing work Fulfillment Center Intelligence No intelligence or brain capability to view or control automation No automated decision making capability Central intelligence or brain provides visibility and control of automation and labor movement simultaneously Points-based dynamic tasking system provides optimization engine, with algorithms architected from the machine control level out Customer can set parameters and finetune the point system to fit operations and adjust to any changes of product type, seasonality or process flow 6 Fulfillment execution system

7 Fulfillment Center Intelligence, continued Software assigns points to various activities or flow requirements. Based on the accumulation of these points, the system makes automatic decisions to balance and prioritize work throughout the entire operations Dynamic tasking with this point system allows quick adjustments to changes in priority or process flow interruption, requiring minimal supervision. This is ideal for high-speed, automated systems where manual supervisor intervention would be too late to affect positive change Allows flexibility for changes by the customer, without the need for software programming Visibility & Response Time Little or no consideration to the dynamics of a millisecond changing environment or peripheral work (automation) Cannot view into the automation. Each type of automation is considered one location with no information regarding where a product/order is located or how the automation is functioning Response time of two to five seconds too slow to control automation. Does not know that the status of the assets have changed Only as up-to-date as the last completed action. No ability to make intelligent adjustments mid-stream Full visibility of inbound, outbound, automation flow, inventory and yard management for increased throughput speed Controls orders and re-plans work assignments continuously Millisecond, automated decision making based on visibility of full operation, business of the day, changes/exception handling Eliminates need for supervisory intervention, and provides full visibility to increase accuracy in decision making 7 Fulfillment execution system

8 Visibility & Response Time, continued Creates blind spots when work is out of balance, behind or in gridlock with no ability to make quick, meaningful corrections Creates larger buckets of inventory to catch up by holding product on conveyor/buffer lines, racking or floor locations. Results in lower throughput and additional expenses for automation, racking, floor space and labor Similar to a manufacturing execution system, the software ties together and controls all work areas, subsystems and islands of automation. Provides central intelligence or brain overseeing the operations, adapting the automation and human resources to accomplish workload at desired service level Process Handling Configuration levels: Typically maintain many enterprise-level warehouse configurations, creating challenges for customers wanting multiple processes within the same four walls Return process: Lack ability to tie returned inventory to the original outbound order Inventory Management Cycle Counting: Does not take frequency into account when assigning cycle counting tasks. Most customers want to dynamically set their cycle counting limits based on SLA for that product Barcode Parsing: Too rigid to support simple barcode parsing requirements. The user cannot parse more than one data element from a single linear or 2D barcode. This constraint causes extra work in the warehouse (i.e., setting up work processes to work around this issue) Configuration levels: Allow for configurable settings at multiple levels within the warehouse: per each SKU (lot, serial number or special tracking number). Configurations can be completed by the customer, using drag-and-drop workflows Return Process: Provides full returns RMA processing including tracking the original outbound order to the inbound return, returns quality checklist, and applying credit notification for a successful return Inventory Management Cycle Counting: Full cycle counting capabilities utilizing the dynamic tasking points optimization system. Inventory cycle counting audit can be initiated by time, by previous errors, by location, by SLA all configurable by a business analyst 8 Fulfillment execution system

9 Process Handling, continued Waving: Waving functionality does not allow the user to aggregate cartons across multiple waves. If the same consignee places two separate orders (which is possible in e-commerce) over the course of one day, the operations staff will not be able to aggregate those orders until outbound staging location (needs to be manually performed outside of the system) Barcode Parsing: Can capture data via barcode (all standard symbologies), RFID or through any other tracking technology Waving: Wave planning and release is very flexible and has the ability to handle multiple orders for one consignee in one day (or even in one wave release) Slotting Requires a subsystem and the following procedures, which are typically accomplished after work hours or on weekends (often overtime hours): Stop all picking activities Determine and assign new optimum picking slot locations Re-slot with manual labor Resume picking Enables re-slotting in real time during the normal course of activities Ideal for e-commerce, with a high number of SKUs and multiple line item shipments More efficient with reduced labor costs to re-slot with more update status for fast selling SKUs Inventory Management Fully integrated Work with traditional systems or customer built WMS as well If integration to current business systems is too expensive or involves risk, can be integrated with the current WMS and share a common data interface Fully integrated Fully integrated Labor Management 9 Fulfillment execution system

10 Upgrades Due to customizations to base line product, upgrades are difficult and many times nearly full replacements Historically expensive in the WMS space Application architecture provides the ability to insert (drag and drop) pre-built applications from a library of apps into a customer s system eliminating the need to develop (or re-develop) new code enabling faster implementations. Customers can also develop their own applications which they can drag and drop into their own system Application tool also permits base system upgrades to customers because these customized applications (specific to a customer s site) can be simply added (drag and dropped) into the new upgraded version No other WCS/WMS has this capability Speed of Implementation System is architected as one large product - internal system switches to either on/off functional capabilities in all work areas Traditionally numerous customizations System is architected modularly can be implemented in degrees from a basic WCS to a full WMS Fast installations with pre-built applications in functional work flow areas System can be configured by a business analyst Cost of Implementation Business models created in the 1980s are based on professional services, accounting for the majority of the installation cost/ price Business focus built around change orders and customizations System designed to be configured by business analysts rather than programmers, reducing costs and implementation time License model pricing Allows for more customer configurability and is upgrade-friendly 10 Fulfillment execution system

11 Order Picking Technologies Pick-to-light, voice and other order picking technologies delivered as subsystems from third party suppliers Fully integrated order picking technologies including pick-to-light, voice and mobile pick carts Equipment Integration Minimal integration with automation equipment Typically must utilize a WCS, adding cost and additional integration risk Architected to integrate and drive automation Yard Management Typically a subsystem Fully integrated into the WMS with graphical views (of dock doors/personnel production activity through the use of colors) as well as to both inbound receiving and outbound shipping Geographical Automation and Work Process Views No graphical capability for automation view of real-time activities No view of labor activities Color-coded to depict the production performance of automation as well as work areas and individual labor In most operations, this display is all that is needed for both management and operations personnel to evaluate realtime performance Business Intelligence Tools BI tools are not in use today traditionally provided data to a reporting tool like Crystal Reports Integrated BI tools utilize the power of Micro-Strategies, the Gartner top rated BI tool Data is captured and reported quickly Displays/reports can be accessed by tablet or smart phone 11 FESWP Intelligrated. All rights reserved.