YOUR BEST WAREHOUSE MANAGEMENT SYSTEM: GETTING MAXIMUM VALUE FROM YOUR WAREHOUSE AND YOUR FUNCTIONAL AREAS Ultra Consultants 847.692.6485 www.ultraconsultants.com 1
CONTENTS Executive Summary The Case for a WMS The Core of WMS: Number and Location Setting Up Your WMS WMS and Your Business Functions Concluding Thoughts 3 3 3 4 6 9 Ultra Consultants 847.692.6485 www.ultraconsultants.com 2
EXECUTIVE SUMMARY Successful companies must be able to deliver product to customers on time while maintaining an optimum inventory level. The ongoing discrepancy between supply and demand requires a Warehouse Management System (WMS) that will complement the abilities of an ERP system, and help maximize the performance of your warehouse operations and the functional areas within your business. THE CASE FOR A WMS Grow a successful business. A challenging proposition to say the least. This is due in no small part to the fact that managers in successful enterprises must conduct and succeed at three distinct and closely-related tasks: Design and produce a product that consumers need or want. The finest product in the world will not be successful if it doesn t meet the needs of consumers. Produce it with perfect quality. Being close on the quality scale will just not cut it. Price it well. The price of the product should present a solid value proposition to the consumer. Meeting these criteria is a daunting proposition and many books have been written to provide guidance to companies. However, meeting these criteria is still not enough. The successful company must be able to deliver this desired, quality and well-priced product when the customer wants or needs it. In a perfect world, we would be able to accurately order and receive our raw material exactly when we need it. In addition, we would know with precision the demand for our products, so that economical shipments could be produced, then packaged and shipped to customers as they come off the end of the production line. But our world doesn t look like this. So, we balance the distortions in both supply and demand with inventory, stored of course in a warehouse. ERP systems do a fine job of assisting in managing procurement, production and scheduling. But the management of inventory requires a specialized tool set: A Warehouse Management System. THE CORE OF WMS: NUMBER AND LOCATION Early on, most large businesses learned that computers provided a perfect tool to manage something as tangible as inventory, however many small and mid-sized businesses still relied on paper systems. The result has been Ultra Consultants 847.692.6485 www.ultraconsultants.com 3
the maturation of computer-based WMS that support all sizes of businesses, from a small family operation to the largest distributor, Amazon. At the simplest level with WMS, you need to know two critical pieces of information: 1. The number of each item available. 2. Where each item was placed. Early in my career I was responsible for a sizable warehouse containing a large inventory of plush, stuffed animals at an amusement park. My system was simple and included manual 3x5 cards with inventory quantities and locations, along with a notebook containing the cross-reference between my SKU s and the vendor SKU s. This system worked, but was limited as all required information was in a fixed location, i.e. the data card deck or my cross-reference book. Today recording this same data can be handled by typing the data into a system, using bar codes or, for the most sophisticated system, radio frequency (RF) technology. Today, many businesses have the same items in numerous different warehouses that could be scattered over a large geographical area. In addition, many retailers require the supplying business to manage the inventory even into the retail outlets. This scenario requiring management of both diversely-located suppliers and many customer locations quickly becomes unsustainable with a simple system. Modern WMS provide the tool set to manage both this complex ecosystem and collaborate with users in diverse locations as well as mobile users. SETTING UP YOUR WMS The first consideration in setting up your WMS is determining how data will be entered into the system. In a small storage area with limited stock keeping units (SKU s), i.e. items, fixed terminals or PC s may be all that s needed. Most operations are large enough that some form of wireless technology will be appropriate. The following are some of the advantages that result from installing a modern WMS: Wireless systems, consisting of bar code or RF scanners, will provide far greater efficiency and throughput as more orders are produced in each period. More flexibility will be realized as fixed storage locations will not be required. Items can be stored wherever space is available. The quantities and locations sent back to the server will be available to all users. Employee training is reduced since the wireless device each picker is using will tell them where to find needed items and how many to pick. Real-time, on-hand inventory is available to all users, both on-site and remote. This data can also be made available to consumers. This allows all users interacting with the ecosystem to know the exact status of available product always, which will result in more accurate decisions. Inventory data can be entered more rapidly and with fewer errors. Even when errors do occur, correcting them will only be a scan or keystroke entry away. Next, determine if your warehouse layout and equipment will be able to support your WMS: Make sure that your storage racking is not too dense and allows for the clear streaming of wireless signals. Racks and storage locations should be clearly labelled with both storage locations numbers and the related bar code. Make sure that your WMS input/output technology is compatible with the goals of your system. Ultra Consultants 847.692.6485 www.ultraconsultants.com 4
ERP systems do a fine job of assisting in managing procurement, production and scheduling. But the management of inventory requires a specialized tool set: A Warehouse Management System (WMS). Ultra Consultants 847.692.6485 www.ultraconsultants.com 5
Additional questions that should be answered prior to installing a WMS: Do employees need to have a keyboard to enter data? How much data will employees have to enter? How large do the scanner keys need to be? Will you need scanners that can resist abrasion and contact with chemicals? Will the scanners need touchscreens? Will scanners be used in direct sunlight? Can screens be read at different times of the day? How important is processor speed? Are you willing to trade off faster processor speed for shorter battery life? Finally, determine how the WMS data will be shared with your ERP system. Will it be shared on a real-time basis or will it be batch uploaded on an hourly or other timeline basis? WMS AND YOUR BUSINESS FUNCTIONS Receiving Simply put, receiving is the process of verifying that the item(s) you find on your loading dock match the items you ordered in both style and quantity. With a modern WMS, you can scan the incoming bar code and print your own labels with your SKU and other information relevant to your operation, such as vendor names and contact information, purchase order number, lot numbers, package counts, number of pallets, etc. You can even create pallet labels that will help in tracking the life cycle of incoming items. To get the optimal WMS performance, create your future state process first, then research the WMS you re looking at to determine the extent to which it will support your vision. When reviewing WMS, make sure the systems address considerations like the following: View the details of single receipts or multiple receipts from the same vendor Assign storage locations based on inventory or bin characteristics Create a matching purchase order for items ordered without a PO Receive similar items against multiple PO s Lastly, be sure to work with your supply base to assure that they are providing the data required to make your WMS operate at world-class levels. Slotting Slotting is the process of determining where certain types of items will be stored and how far people will need to travel to pick them for shipping. Several strategies for slotting involve the following: By velocity Put high volume items closest to the shipping dock By velocity with bulk picking Put high volume, small items in the same area close to shipping Slotting by fit Maximize the use of cubic space This is a complex analysis, so take some time, determine the level of sophistication that s needed and begin with a pilot area and limited number of SKUs so the impact can be properly measured. Ultra Consultants 847.692.6485 www.ultraconsultants.com 6
To get the optimal WMS performance, create your future state process first, then research the WMS you re looking at to determine the extent to which it will support your vision.
Putaway In this step, there are three choices: 1. Unload an entire trailer/container and move to the same location 2. Unload the trailer/container and sort the boxes by item to put away like items together 3. Unload items and move directly to their storage location. Each approach has pros and cons. Your choice depends on the quantities received and how soon you will consume it. Take the time to analyze the ultimate use of an item, then implement a strategy for it that will minimize double handling, long travel distances and other wasted effort. Picking Several strategies can be employed to gather items for shipping: Fixed Location Picking Material handlers are shown the items to be picked on their mobile device, including their storage location. Batch Picking In this scenario items are consolidated to minimize total travel time or to assure the likelihood that all items for a shipment will be picked together. Zone Picking Material handlers are assigned to warehouse zones. They are assigned items to pick simultaneously for a given order from each zone. These items are then delivered to an assigned area for consolidation and packaging. For large warehouses this approach can significantly reduce the time to pick an individual order. Wave Picking This is a combination of zone and batch picking. It works best for operations that have many SKUs and many picks for a given order. The important point is for those designing a system to assure that both the layout of the warehouse as well as the configuration of the software support the chosen strategy. Most modern WMS will support any of these strategies. The success of picking strategies will depend on the appropriateness of the putaway strategies that have been implemented. Cycle Counting Modern WMS perform a solid role in organizing and assigning cycle count tasks. Within all modern ERP systems, a cycle count program can be defined: Will counts be done daily, weekly or some other frequency? Setting up an ABC approach to categorizing inventory allows for a company to assure that A-items (generally high cost or high volume items) are counted more often the C-items that may be low cost and easily replaced on short notice, i.e. nuts and bolts. The required counts for a given day or week can be sent directly to individual bar code scanners with the latest locations. This will minimize lost time as employees look for items that may be stored in several places. The counts recorded in the mobile device can then be uploaded to ERP for analysis. Most modern ERP systems will hold transactions in abeyance during cycle count activities, then process after the counts. This allows counts to occur whenever it s convenient for the employee. Since the WMS is actively assisting incoming and consumption transactions, significant increases in inventory accuracy can be realized. As this cycle counting process matures, the need for an annual physical inventory can usually be eliminated. Ultra Consultants 847.692.6485 www.ultraconsultants.com 8
Kitting and Subassembly In many cases, it will make sense to create a subassembly area in your operation. This could be a light assembly and packaging operation prior to shipment, or an operation to consolidate items required by a production process. In either case, specific locations can be configured in a WMS such that material handlers are directed to deliver items accordingly. CONCLUDING THOUGHTS A significant portion of WMS selection and implementation involves up-front planning. Therefore, it is critical to identify waste in your system and inefficiencies that may be caused by poor processes or obsolete computer systems. Your ideal planning process should include defining your desired future state processes to help you find the best WMS solution. After selection but before implementation, define the warehouse management strategy to cover each of the aspects of warehouse management covered in this paper. This strategy definition phase, along with your project plan, is the single most critical part of your WMS implementation. Having completed this exercise, your project team would begin the ERP/WMS implementation in earnest. This final phase of the project is comprised of the configuration, testing and practice with the systems to assure that the desired future state has been achieved. Ultra Consultants 847.692.6485 www.ultraconsultants.com 9