Distribution Management Optimization. Increase Sales Decrease Costs Mitigate Risk

Transcription

1 Distributin Management Optimizatin Increase Sales Decrease Csts Mitigate Risk

2 Distributin Management Optimizatin Current WMS applicatins have left significant rm fr imprvement. James Tmpkins and Jhn Traendly, page 17, Supply Chain and Best Practices Cnsrtium, Rila Lgistics 2006, February 20, 2006 (Tmpkins Assciates) In 2004, Jhn Traendly released the results f the Sleus Grup s annual Retail Supply Chain Best Practices Review 1. The study included these findings in the area f vendr perfrmance: On time availability at shipment rigin 81.7% versus a gal f 97.5%, In stck at stres 94.3% versus a gal f 96.8%, Fill rate n clsed rders 93.7% versus a gal f 97.2%, Timely and accurate Advance Shipment Ntificatins 93.7% versus a gal f 90.0% In 2006, James Tmpkins and Jhn Traendly presented updated data frm the Sleus Grup at the RILA Lgistics 2006 cnference 2 : On time availability at shipment rigin 84.5% versus a gal f 97.4%, In stck at stres 94.7% versus a gal f 97.3%, Fill rate n clsed rders 91.8% versus a gal f 97.7%, Timely and accurate Advance Shipment Ntificatins 75.6% versus a gal f 90.3% The latest study included an additinal metric fr Perfect Order perfrmance, defined by the Supply Chain Cuncil as: The perfrmance f the supply chain in delivering: the crrect prduct, t the crrect place at the crrect time, in the crrect cnditin and packaging, in the crrect quantity, with the crrect dcumentatin, t the crrect custmer. Accrding t the study, vendrs delivered perfect rders 92.3% f the time versus a retailer expectatin f 99.4%. 1 1Retail Supply Chain BestPractices Review (Sleus Grup, 2004) The initial research, which tk place in 2004 and fcused n inbund supply chain practices, included retailers with ver $500 billin in sales, 87,000 retail utlets and 3.8 millin assciates. The first phase f this nging retail review included 3,000 questins acrss 37 different functinal tpics. The Sleus Grup was since acquired by Tmpkins Assciates. 2 Supply Chain and Best Practices Cnsrtium, James Tmpkins and Jhn Traendly, page 17, Rila Lgistics 2006 (Tmpkins Assciates, February 2006) 2

3 In the area f retail distributin perfrmance, Tmpkins and Traendly identified the fllwing: There are several key pprtunities t upgrade receiving peratins including expanded use f ASN s fr unlad planning and autmated prduct receipts. Autmated slt management tls can result in significant prductivity imprvements, but they are nt used in many D.C. s. Expanded use f crssdck and flw thrugh peratins is the ultimate key t imprved perfrmance. Current WMS applicatins have left significant rm fr imprvement. Regarding crssdck and flw thrugh peratins, Tmpkins and Traendly fund that: Csts, transit times and damage increase the mre times a prduct is handled in mving frm vendrs t stres r custmers. Flw thrugh at distributin centers required 3.0 tuches, and Crss dck at distributin centers required 2.0 tuches, while Pick frm stck at distributin centers required 5.3 tuches. The mix f crssdcked, flw thrugh and stred prduct can significantly impact average gate t gate times thrugh distributin centers. Receipt prcessing and crssdck t shipment staging (fr crssdck prducts) averaged 1.0 hurs, and Receipt prcessing and flw thrugh t shipment staging (fr flw thrugh prducts) averaged 1.7 hurs, while Time in strage (all strage types, including reserve strage and picking lcatins) averaged 503 hurs, plus the Pick frm stck t cmpletin f packing and mve t shipping time f 2.8 hurs. Yet, in spite f the clear advantages ffered by flw thrugh and crss dck prcessing, Tmpkins and Traendly fund that: While crssdck and flw thrugh are the mst significant pprtunities t reduce inbund rder cst and transit times, they are a relatively small percent f the rder flw. 3

4 Finally, Tmpkins and Traendly ffer the fllwing statistics n the average retail DC mix f flw thrugh, crssdck, and pick frm stck rders: Crssdck 16% Flw thrugh 9% Pick frm stck 75% Bringing a knife t a gunfight Mst warehuse management systems are nt well suited t supprt the needs f mdern retailers, particularly retailers needs t leverage advance shipment ntificatin, flw thrugh and crss dck prcessing, and imprved stre in stck perfrmance. They are designed t supprt traditinal distributin activities within the fur walls f the distributin center, but lack the capacity t capture and prcess the data necessary t effectively enable the distributin center t ptimize the velcity and cntinuity f freight flw frm the vendr thrugh the D.C. and t the stre. Current, accurate and cmplete visibility int supply chain activity Mst warehuse management systems d nt facilitate visibility int cmprehensive and accurate supply chain activity. With adequate supply chain perfrmance histry retailers can enter int mre effective and prductive cllabratin with vendrs and ther stakehlders in the extended supply chain. A rbust supply chain data warehuse cmpnent f a warehuse management system will infrm merchandising, lgistics, and supply chain planning and executin. Effective analysis f supply chain data enables adjustments t planning and executin that prvide cntinuus incremental imprvement in extended supply chain perfrmance. Preservatin f supply chain surce data Effective analysis f supply chain events is nly pssible if riginal, surce data is maintained. Best in class distributin management slutins must preserve the integrity f surce dcuments (PO, ASN, and receipts), as ppsed t mst receiving systems that require changes t surce dcuments in rder t receive merchandise. This includes, fr example, the requirement that many receiving systems impse that demand that a PO be changed t enable the receipt f a substitutin against the PO. Practive identificatin f truble shipments Because they lack visibility int inbund shipments, distributin centers are ften unaware that an inbund shipment is a truble shipment, because analysis f the shipment was nt pssible, due t lack f infrmatin, r is cumbersme, due t a lack f autmated tls t cnduct an analysis. Because a truble shipment is nt identified until it arrives at the receiving dck, it is likely t linger n a trailer, n a receiving dck, r in strage, until it can be reslved. 4

5 Rapid reslutin f truble shipments Cmpunding the prblem is the lack f distributin slutins that facilitate cmmunicatin, research, reslutin, and executin f the reslutin f truble shipments. Shipments that arrive at distributin centers early r late, d nt match their crrespnding PO r advance shipment ntificatin, d nt include necessary value added services, r are damaged create bttlenecks thrughut distributin center prcesses that slw merchandise flw, and waste human, equipment, and strage resurces. Distributin management ptimizatin depends n practive truble identificatin and tls t facilitate and expedite truble reslutin and cmmunicatin. Flw thugh, crss dck, pick frm stck, and future best practices Warehuse management slutins based n traditinal manufacturing distributin may prvide adequate supprt fr pickfrm stck practices, but ften lack supprt fr flw thrugh and crss dck practices that ffer retailers the mst gains in distributin ptimizatin. Many WMS fferings als lack the cnfigurability necessary t adapt t future best practices and distributin technlgies. Withut the availability f effective distributin slutins, retailers are frced t implement expensive warehuse management slutins and spend additinal mney t design and implement middleware slutins internally, r with the help f a third party, r t pay fr mdificatins t the warehuse management slutins themselves. In huse, middleware slutins, r mdificatins t existing sftware are nt likely t benefit frm best practices input t future design enhancements. They are als likely t lack the flexibility necessary fr retailers t enhance r change distributin r MHE systems t maintain cmpetitive supply chain and enterprise perfrmance. Data In rder t prvide merchants, vendrs, and distributin centers the greatest pssible pprtunity t reslve a discrepant shipment befre it becmes a truble shipment at the receiving dck, distributin management slutins must capture all the data relevant t the PO life cycle. This data is als necessary fr cmplete, accurate visibility int supply chain activity. Necessary data includes the cmplete PO recrd, and: ASNs Order types (crss dck, flw thrugh, pick frmstck) Advance freight dcuments Allcatins Receiving dcuments Strage and retrieval activity Receiving activity Inventry activity Shipment validatin Distributins (manual r autmated) Vendr nn cmpliance Outbund shipping Truble shipment activity Stre receiving Value added services Order types (crss dck, flw thrugh, pick frmstck) Allcatins Strage and retrieval activity Inventry Activity Distributins (manual r autmated) Outbund shipping Stre receiving 5

6 Distributin Management Optimizatin Flw The flw graphic belw (Graphic 1) represents an ptimized PO life cycle, starting with the retailer passing the PO t the vendr and ending with the stre cnfirming receipt f the merchandise. The light blue bxes represent pprtunities t autmate distributin activity and the blue numbers represent pprtunities fr autmated cmparisn f data fr the purpse f detecting exceptins that require reslutin and fr ptimizing the path thrugh which the shipment r part f a shipment will flw. An imprtant intent is t detect and reslve exceptins as early as pssible in the life cycle, t eliminate r minimize delays. Anther imprtant intent is t detect pprtunities t redirect the flw f merchandise in rder t shrten the cycle time t delivery t the stre. Opprtunistic crssdcking is a gd example f redirecting the flw: if a shipment can be allcated prir t arrival at the dck, the distributin management slutin can determine if it is cnfigured t enable all r sme f the shipment t be treated as crssdck upn arrival. Opprtunistic crss dck merchandise may be ruted frm the receiving dck directly t the shipping dck, withut being subject t nn crssdck prcessing requirements. 6

7 If yu can t see it, yu prbably can t manage it Ultimately, the primary bjective f the supply chain is t execute the merchandising plan. A well executed merchandising plan implies delivering the right prduct t the right destinatin, n time, undamaged, in the crrect quantities and cnfiguratins. It als implies that this is accmplished as cst effectively as pssible. Visibility int supply chain activity directly supprts the executin f the merchandising plan and f the cntinuus imprvement f that executin. It als enables merchants t have an accurate view f the effectiveness f the merchandising plan, which enables cntinuus imprvement f that plan. When supply chain failures ccur withut adequate visibility, planners are required t make assumptins. Frecasting is challenging enugh withut unnecessary guesswrk. Effective supply chain visibility includes, but is nt limited t: A facility fr requesting allcatins and managing pending allcatins A facility fr ntifying respnsible parties f exceptins, fr enabling reslutins, and fr executing reslutins Real time infrmatin: Where a shipment is: inbund, internal, utbund, r cmpleted What has been dne t the shipment and what needs t be dne t the shipment Wh has perfrmed prcessing n the shipment and wh will perfrm additinal prcessing n the shipment When can the shipment expect t mve n t the next activity Histrical infrmatin t infrm tactical decisins and strategic supply chain planning. We gt trubles, trubles, trubles A best in class distributin management slutin will nt nly leverage supply chain data t pr actively detect exceptins (r allw them t be manually entered int the applicatin), it will als prvide a facility that cmmunicates the exceptin t apprpriate parties fr managing exceptins, reslving exceptins, and implementing the reslutin. In sme cases, timely truble detectin culd enable a shipment t be crrected befre it leaves the vendr s shipping dck. Fr the purpses f this paper, we will define a truble shipment as a shipment with an exceptin that must be reslved fr the shipment t prceed further in the fulfillment prcess. The Truble Slutin graphic (Graphic 2, belw) illustrates hw a truble facility culd ntify users, prvide visibility int unreslved truble shipments, prvide the data necessary t reslve a truble, and enable cmmunicatin between parties invlved with reslving a specific truble. 7

8 Prfiting frm Distributin Management Optimizatin in the Retail Supply Chain A cmpetent distributin management slutin will enable cntinuus imprvement f the extended supply chain s executin f the merchandising plan. It will als prvide infrmatin t supprt cntinuus imprvement f the merchandising plan itself. The benefits t the enterprise include reduced supply chain csts, increased sales due t fewer stck uts and better merchandise planning, and mitigated risk due t supply chain visibility that infrms planning and executin. Abut Cmpliance Netwrks, LLC Cmpliance Netwrks is a leading prvider f slutins that enable retail enterprises t ptimize flw within their supply chain and make infrmed supply chain decisins that ultimately increase sharehlder value. Cmpliance Netwrks's suite f retail centric vendr cmpliance and distributin management slutins ptimize supply chain efficiencies t accelerate retail prfits by increasing sales, decreasing csts and mitigating risk thrughut the extended supply chain. Since 1999, Cmpliance Netwrks has ffered best inclass vendr cmpliance ptimizatin and supplier perfrmance management slutins that enable retail enterprises t make infrmed supply chain decisins. Cmpliance Netwrks is prud t serve leading retailers such as Khls, Burlingtn Cat Factry, Pep Bys, The Sprts Authrity, Bn Tn Stres Crpratin, Oshmans and Gttschalks Stres. Additinal infrmatin can be fund at 8