CHOOSING THE BEST WAREHOUSE MANAGEMENT SYSTEM. A thought paper on Factors that need to be considered while choosing the best WMS for your business

Transcription

1 CHOOSING THE BEST WAREHOUSE MANAGEMENT SYSTEM A thought paper on Factors that need to be considered while choosing the best WMS for your business

2 Executive summary Growing customer demands and changing market conditions call for all business processes to be streamlined for increasing transparency, servicing consumers better, improving operational efficiency and preparing for contingencies. Since the warehouse play a crucial part of most organizations, storing most of all what drives the business, managing it properly is of utmost importance. However, there are numerous processes and factors that need to be considered and weighed when deciding upon the best way to implementing an efficient and effective warehouse management solution. This paper sheds lights on the various aspects of warehousing and shares ITC Infotech s understanding of integrated warehouse management. It discusses the importance of a well-designed WMS (warehouse management system) in the context of today s competitive and dynamic business environment. In addition to illustrating a framework for a typical warehouse management system, it aims to help organisations identify the factors that ensure successful implementation of a WMS and shares a logical approach to selecting the right WMS tool. Outside-In perspective Introduction 5 Challenges & Drivers 6 Essentials of Warehouse Management 8 The Typical Solution Framework 10 Selecting the Best Tool 12 Conclusion 13 About the Author 14 About the Company 14 2 Choosing the Best Warehouse Management System Choosing the Best Warehouse Management System 3

3 Introduction Manufacturing businesses are growing by leaps and bounds to meet increasing demands. The only way they can ensure sustainability and gain a competitive is by introducing innovative products and delivering them to the customer on time while also planning for eventualities, which makes it imperative for them to rethink old processes. The sheer volume of products to be stored and distributed at multiple locations at different points in time and through various channels demands that modern-day supply chains be backed by robust warehouse management to ensure that they have the agility and competitiveness to meet the needs of growing businesses. Driven by fast-changing factors in their internal and external environments, warehouse operations manage multiple, and often conflicting business needs, including demand fluctuation, product shortage, product lifecycle, transport market volatility, etc. Thus, warehouse operations demand more proactive monitoring and selfcorrective mechanisms for smooth functioning. Latest trends involve achieving warehouse excellence by integrating available resources effectively and establishing thoughtful process flows by leveraging relevant technology elements. Integrated warehouse management can power up existing warehouse operations, streamline inventory and increase revenue if implemented properly. Thus, it is crucial to align new warehouse solutions with existing technologies, processes and policies in the company. 4 Choosing the Best Warehouse Management System Choosing the Best Warehouse Management System 5

4 Challenges & Drivers An indispensable part of the industrial unit, the warehouse is a repository of all essential materials and supplies that businesses use. It is important to capture all inventory movements, status changes and adjustments for to ensure accuracy in warehousing. This requires keeping records of all materials received, breakage adjustments, physical count adjustments, balance adjustments, sales, transfers, etc. Good warehousing offers real-time visibility and information to managers for reviewing, analyzing, and forecasting future business requirements. Insightful inputs from the warehouse can also help in reducing loss of sales caused due to unavailability of stock, ensuring smooth operations and gaining control over cost of goods sold (COGS) and inventory investments. location, or inventory status. Locations can further be classified into aisles, racks, shelves, bins or other specifically defines areas. Warehouses must be customized to suit business needs for increasing operational efficiency. Organized warehousing leads to error reduction, less clutter, correct identification of products, reduced wastage/breakage, and optimized workflows. However, the road to devising and implementing an effective warehouse management system is fraught with challenges. Typically, most organizations face the following problems while on their journey to growth and maturity: High customer expectations Growing operations Consolidating space and infrastructure Such challenges can be can be overcome by enabling business processes with right set of technologies and tools. A Warehouse Management System (WMS) integrated with auto identification technology and enterprise ERP ensures effective and efficient warehouse operations. There are many industry and geography specific WMS solutions available in the market. Such solutions have in-built optimisers and world-class analytical engines, and are known their capability to integrate all Drivers Minimize Costs Efficiency Maximize Productivity warehouse processes seamlessly. They can also be integrated with other advanced technologies to deliver greater flexibility and adaptability. Nevertheless, the success of WMS solutions depends on a few of factors that help increase efficiency and effectiveness by measuring the value created by each factor and streamlining processes. Effectiveness High Customer Service Excellence An organized warehouse lays the foundation for efficiency and quality. It could either be a different physical location, a logical division of inventory, or an independent financial entity in terms of category, geography, ownership, High Customer Expectation Meet high demands at lower cost Faster delivery & safe handling Accurate & error free execution Deliver higher service levels Changing Processes Growing Operation Complexities High Operational Excellence Growing businesses & volumes Increasing variants, SKU, batches High transaction- small lot orders Increasing warehouse task etc Monitoring and Measurement Consolidating Space & Infrastructure New tax structure push to consolidate space Huge storage bins/location mgmt complex High inventory and no stock visibility High search time & stock non traceable Measure KPI Reduce WH cost per case Maximize space utilization Maximum resource utilization Reduce wastes & obsoletes Align processes Labor Management Task & Resource Mgmt Dynamic cycle counting Task Interleaving Faster throughputs Automate Processes Inventory accuracy Free erroneous shipment Bin & HU Management Staging, Picking, Put away Slotting, Routing Auto replenishment Ensure Timely execution Error free delivery OTIF supplies Value added services VAS, Packing, Kitting WH Monitor TU Management Returnable Mgmt FMFO Adherence Easy traceability Reduce turn around time Reduce Order cycle time Yard Management Cross docking Deconsolidation RF integration Monitoring & Measurement Measure service levels in detail Track instant status for visibility Higher controls in operation Complex analysis & reports Timely & accurate reporting Higher Operational Excellence Cost & service level pressure Integrate all resource & processes Better optimize the routes & load Maximize resource utilization Incorporate latest technology Changing Processes New product & new handling rules Need efficient storage & retrieval in time Need flexibility in batch mgmt FMFO/LIFO Need value added services & practices Higher process accuracy to meet 6 Choosing the Best Warehouse Management System Choosing the Best Warehouse Management System 7

5 Essentials of Warehouse Management To make the most of any warehouse reduces the chances of errors by eliminating the management system, it is important to identify need for manual ticking. the factors that have the greatest impact on Automation of inventory receipts and put-away both its functioning and the business. The WMS must be able to track inventory by Availability of real-time inventory location (like bin, shelf) along with the count in updates Sales and inventory management each location. resources can work more efficiently if they can Support for different picking methods Different keep a tab on inventory updates while companies have different picking methods. picking, packing and shipping through instant Some organisations have different methods even notifications. within the same warehouse depending upon the Complete integration of the accounting value, size, etc. of the products to be picked. The system with back-end operations This helps warehouse management system should be able in eliminating duplicate entries. to support all such methods. Integration with bar-coding and radio Advanced reporting system A WMS must frequency technologies This helps workers support designing of complex as well as ad-hoc track the items being picked, packed and reports apart from the standard ones. shifted quickly and more efficiently and Advanced BIN systems The system must allow for creation of bins based on certain criteria/need/use like pick-able, nondedicated, dedicated, storage, virtual, etc. Automated inventory control The system must be capable of tracking and dispensing inventory based on various methods like LIFO/FIFO and expiry date. Scalability the WMS must be capable of meeting business needs even after the organisation scales up in future. Availability of EDI integration, compliance and ASN labelling The system must comply with standards and have multiple labeling methodologies available. 8 Choosing the Best Warehouse Management System Choosing the Best Warehouse Management System 9

6 The Typical Solution Framework Most companies follow a typical framework to ensure smooth operations. They design the system so that it not only considers the various factors that have a bearing on the functioning of the business model, but also takes into account the way each element interacts with and affects the others. There are three aspects to it - layout, processes, and infrastructure all of them interrelated to and interdependent on each other. The process involves: Defining objectives and principles Adopting storage policies and laying guidelines Understanding and examining various processes Analyzing the design Studying the infrastructure and automation possibilities Designing the final framework based on inputs gathered Maximize throughput by optimal use of space, people & equipment Maximize storage & Minimize travel Faster turnaround of pick & put away Achieve FMFO Flow & easy traceability 1 CAD drawing - Demarcation of storage & Non storagearea, Rack, Aisle, D&D, Repacking, Resl, VAS, MHE, Pallet, Dock & Bays Infrastructure - Amenity & Utility Area, Office, Canteen, Washroom, Truck Parking, Water, Electrical, Security etc. 6 Design Output Define Objectives & Principles Layout 2 Adopt Storage Policy & Guideline Dynamic Storage Ground or Rack storage Product grouping Product Velocity Storage Pack & Pick Factor EHS considerations - Fire, Electrical & Pest Current Layout & Constraints Level of MHE automation Current LMS/ WMS usage Item traceability like Bar-coding HHT usage & data scanning ERP technology supporting LMS Study Infra & Automation 5 Infra Design Analysis 4 Process Process Consideration 3 Put away, Storage & Pick Process Directed Put away or Cross Dock Continuous, Zone & Wave Pick Customer Wise Pick or Order Pick Pallet, Case or Loose Pick Resource Usage or Integration Space Analysis Inventory Holding, Volume Movement, Product velocity, Pallet & Bin Fit, Lane Depth Analysis, section grouping, Pallet Estimation. Storage Analysis Process benefit analysis, SKU & Order Profiling Movement Analysis Time & Motion Capacity & Infrastructure planning Risk assessment 10 Choosing the Best Warehouse Management System Choosing the Best Warehouse Management System 11

7 Selecting the Best Tool flexibility, technology and value. Choosing the right tool could be difficult; however, knowing the features required can help narrow down the options. The following illustration depicts a well- planned approach for evaluating a warehouse management system. Different WMS technology vendors provide different solution options with varying complexity and exception handling ability. Thus, it is important to identify the right set of functional and technical requirements before selecting a WMS tool. The tool must be selected based on the size of the organisation, nature of business and type of offerings. The tool also needs to be evaluated for functionality, Functional Evaluation Technical Evaluation Vendor Evaluation Cost & Commercials a) Business Requirement Analysis Line of business Scale of operation Level of automation business expectation b) Requirement Gathering of Warehouse IT Processes Current requirement Future requirement Data & gap analysis Current issues & problems c) Product Functionality analysis basis Vital & Desirable Standard feature Level of customization d) Final ratings on above parameters a) Software Architecture IT Landscape Operating system User Interface Configuration Database Transaction capacity User limitation b) Hardware Architecture Servers Security Systems c) Support Platform Technology Integration Upgrades Migration Deployment d) Demo & testing workshops a) Vendor capability & Competency for reqd. services & support b) Client Value Proposition. c) Research company reviews/ratings Financial Stability History & backgrnd Client satisfaction Quality certification Innovation invest d) Vendor Credibility Ratings e) Final rating on robustness, adaptability, Flexibility, Usability, Scalability, Enhance ability. a) Software licensing cost analysis b) Implementation cost basis fast/slow cycle & training cost. c) Support & Maintenance Cost analysis d) IT Hardware Cost analysis e) ROI calculation basis current budget /Investment plan f) Final rating on cost parameters Conclusion An integrated WMS system benefits Factors such as expansion to new organisations through: geographies/regions, changes in tax structure Easy storage & retrieval of stock (implementation of GST), expansion of organized retail footprint etc., make it crucial for organizations Visibility in operation to decide on aggregation of warehouse space, set Inventory traceability up more warehouses, and invest in technology and infrastructure. Thus, early adoption of Warehouse Reduced operation time Excellence & Automation ensures better support Reduced handling & storage cost for business growth. 5 Benchmarking & Comparison Weightage based Standard Rating Scale Priority based Faster turnaround Optimal use of resources like space, labour & MHEs Improved customer satisfaction and service level 12 Choosing the Best Warehouse Management System Choosing the Best Warehouse Management System 13

8 About the Authors Siddaraju G. is Senior Consultant and part of Business Consulting Group at ITC Infotech. He handles logistics consulting solutions in Warehousing & Transportation area across industries. He has more than 12 years of domain & consulting experience in industries like FMCG, automotive &healthcare and has led several operations excellence projects in the field of warehousing, transportation and shopfloor improvement initiatives. He has also led several large warehouse erections/constructions and WMS implementations. SaravanaSastha K is Associate Partner with the Business Consulting Group at ITC Infotech and heads the Supply Chain consulting team. He has more than 14 years of domain and consulting experience in industries like FMCG, metals &mining, transportation, cement, pulp &paper and auto-components in India and abroad. He has led several operations excellence initiatives leading to significant throughput improvement, cost savings and working capital reduction. ITC Infotech s Business Consulting Practice The Business Consulting Group (BCG) at ITC Infotech is a converging point for business & IT solutions. We aim to transform business performance, bringing a strategic perspective on process improvement and IT enablement. Our team blends domain experts and consultants, bringing unique capabilities to discover and resolve business concerns of the day. Our expertise spans Consumer Goods, Retail, Process Industry, Logistics & Transportation, across key business functions such as product development, production, supply chain management, sales and marketing management, field force management, and customer relationship management. 14 Choosing the Best Warehouse Management System Choosing the Best Warehouse Management System 15

9 About ITC Infotech ITC Infotech, a fully owned subsidiary of USD 7 billion ITC Ltd, provides IT services and solutions to leading global customers. The company has carved a niche for itself by addressing customer challenges through innovative It solutions. ITC Infotech is focused on servicing the BFSI (Banking, Financial Services & Insurance), CPG & R (Consumer Packaged Goods & Retail), Life Sciences, Manufacturing & Engineering Services, THT (Travel, Hospitality and Transportation) and Media & Entertainment industries. For more information, please visit or write to: contact.us@itcinfotech.com