Shall We Dance?

Nov. 1, 2009
What do ex-NFL running back Emmitt Smith and professional dancer Cheryl Burke have in common? Before they sambaed their way to the 2006 crown on Dancing

What do ex-NFL running back Emmitt Smith and professional dancer Cheryl Burke have in common? Before they sambaed their way to the 2006 crown on “Dancing with the Stars”…not much. Transportation and warehouse management are no different. They seem to be strange dance partners at first glance. But, when the music is right and their steps are in synch, they can trip the light fantastic.

As transportation and warehousing expenses continue to increase, companies are reevaluating these key logistical components. Severely impacted by fluctuating fuel prices, transportation costs alone, for example, typically amount to approximately 50% of total logistics expenditures.

And, as demand softens, supply chain professionals across the country are reporting fewer inventory turns, resulting in products spending more time in warehouses and larger, less frequent shipments. This, in turn, causes logistics professionals to increasingly evaluate inventory and warehouse costs in addition to transportation expenditures. After all, companies do not make money when goods sit idle in the warehouse.

Gone are the days when retailers and wholesalers could allow their warehouse management systems (WMSs) to operate in isolation from their transportation management activities. In today's demanding consumer environment, companies cannot afford to lose the gains they have built in other areas of their supply chains because of inefficient execution on the road or in the warehouse.

Companies can make better logistical decisions by using the right technology system integration between warehouse and transportation management. By integrating WMS and transportation management systems (TMS), companies can enable real-time visibility and create cross-departmental workflows throughout the supply chain, significantly improving supply chain execution and profitability.

Away From Silos

Managing all aspects of a supply chain network can be a juggling act, with multi-channel distribution, multi-modal needs and high service requirements. Today's companies require greater visibility and control than ever before so customers are assured the right products will be delivered exactly when and where they need them.

To adapt to this ever-changing marketplace, it has become an imperative for companies to know where their inventory is and how to move it to the right spot. To accomplish this, companies should take a holistic view of their supply chains, starting with a more centralized logistics outlook. With full visibility into the activities and information that drive execution, companies not only preserve sales and revenues with more accurate orders, but also control and manage costs by improving the way they organize operations, labor, transportation and inventory. Major retailers, such as The Home Depot, The Men's Wearhouse and Tesco, have already recognized this value.

Unfortunately, traditional operations still have transportation and warehouse management broken down separately, or siloed. In reality, the two are closely intertwined. It is difficult to manage warehouse inventory without the insight into the flow of products in and out of a distribution facility. For example, if a distribution center does not have visibility into inbound transportation, then it makes it hard for the warehouse manager to plan for people and equipment to unload trucks.

Integration Models

Creating a single-source engine to share data, foster communications and provide visibility between transportation and warehouse management systems can enhance the performance and benefits of each solution beyond implementing each as a stand-alone. However, much like the successful duos on “Dancing with the Stars,” where one partner takes the lead while the other reacts, companies must determine where their priorities lie.

In order for companies to reap the full benefits of this type of integrated solution, they must first determine which model — transportation-driven or warehouse-driven — will best suit their business needs and objectives. The following is an overview of the operational characteristics that would indicate a certain propensity for each model.

Transportation-Driven Model

  • Product profile is weight or volume sensitive (e.g., bowling balls, styrofoam cups);

  • Creating the right routes and fully using transportation capacity are priorities;

  • Significant investments in sophisticated software that provides strong capabilities to assign routes dynamically.

Warehouse-Driven Model

  • Facilities run at high capacities with physical space constraints;

  • Major concerns over levels and mixture of orders as well as space utilization;

  • Heavy utilization of specialty or high-end warehousing equipment that supports automation;

  • Highly labor-driven operations with shift dependencies and significant amounts of overtime;

  • Major investments in sophisticated WMSs that include waving and task management applications.

Additionally, companies should consider a number of other factors to determine the most suitable integration model. It ultimately comes down to how companies manage these components: cost, service levels, inventory and labor.

Most companies fall prey to the common pitfall of looking at these components as siloed issues when they need to take a holistic look at impact to determine the best model.

Integration Lowers TCO

TMS has fully matured in the last five years, integrating functions such as transportation procurement, purchase order maintenance and shipment planning optimization.

Similarly, WMS has evolved to include broad and deep functionality when it comes to inbound execution and inventory management, and outbound planning and fulfillment.

Even though advancements in stand-alone WMS and TMS solutions have introduced new breadth and depth in functions and capabilities for these critical supply chain areas, without integration, companies will not realize the full efficiencies available in operations and execution. Integration between transportation and warehouse management lowers total cost of ownership, for example, by providing seamless logistics visibility and centralized communications to cover the following elements that may overlap and get lost in the middle: yard management; appointment scheduling; dock management; shipping documents; order release automation; customer compliance; inbound shipments/advanced ship notices (ASNs); pallet, order and shipment status; customer portals; and master files.

By and large, integration is driven by the tactical need to have a single source (single vendor) for a centralized logistics system where technologies, functions and terminology all use the same language.

Operational Benefits

An integrated solution synchronizes the communication between warehouse and transportation management to increase collaboration between WMS and TMS. Overall benefits are:

  • Increased overall execution efficiency;
  • Better operational visibility; and
  • New optimization between the two technologies.

A truly integrated solution meets warehouse and transportation management needs from sourcing to consumption.

A flexible and fully integrated suite also links warehouse and transportation optimization engines seamlessly, allowing companies to determine whether transportation or warehouse workflows will drive the system. At the same time, exceptions, changes and updates are dynamically updated in both suites. This type of integrated environment increases productivity by creating real-time execution that synchronizes warehouse and transportation information while providing one unified integration point to enterprise resource planning (ERP) systems.

An integrated WMS/TMS suite, built on one single technology platform, can provide operational and technology benefits that include:

Common data model — Data collected and shared across both models helps drive the integration. A common dataset provides a “single version of the truth,” allowing all departments to work with the same information, which reduces risk and decreases costs.

Synchronization between shipping, order planning and execution — The solution allows planning and optimization processes to happen in parallel, letting companies take advantage of the most efficient order planning, shipment and fulfillment activities.

Common access to system capabilities — The integration allows for visibility and centralized communications to cover areas that typically get caught in the middle of the two groups, such as appointment scheduling, dock door management and yard management.

Single portal for customers and carriers — Capabilities include greater visibility into purchase orders (ready to ship) and ASN information, as well as real-time shipment and order status.

Efficient exception handling — Advances in exception management include “automatic processing,” which allows customers to preconfigure how inventory is moved — with and without exceptions. When changes and updates do occur, the solution dynamically informs both the transportation and warehouse optimization engines and adapts workflows appropriately.

Elimination of redundant interfaces — In addition to complete data synchronization, as many as eight interfaces can be eliminated.

Increased communications — The solution provides integrated reporting, alerting, dashboard, scorecarding and business intelligence capabilities.

Better visibility into labor management — When warehouse and transportation are integrated with labor management, companies gain valuable insight into whether resource availability will be a constraint or not.

Ability to support multi-channel supply chains — A truly integrated system simplifies the complexity that accompanies multi-channel distribution. The ability to handle both large and small order processing, transportation and execution gives companies the flexibility to best address every consumer's needs.

Transportation and warehouse management do not have to be 800-pound gorillas with two left feet. The idea of a fully integrated WMS/TMS suite has progressed from concept to reality. When the two systems act as one, they exchange information and provide companies with more flexibility to determine how their supply chain processes are executed.

The synchronization of warehouse and transportation information, layered with the power to manage exceptions, keeps companies in step with supply chain visibility, increased flexibility and the ability to optimize workflows across departments.

Eric Lamphier is senior director, product management, with Manhattan Associates Inc., a provider of supply chain software solutions.

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