Four Symptoms of Warehouse Service Failure

The days when warehouses functioned within the four walls and primarily focused on moving goods in bulk from manufacturers to sellers were happier, simpler times. The mission and processes were straightforward, and the expectations from customers were far lower than they are in the current environment.

Today’s warehouse world is more complex. Customers are demanding more services, greater visibility into inventory and shipments, and shorter delivery times. In addition, organizations are no longer as insulated from the end users. Consumers are increasingly placing orders directly with manufacturers, increasing pick orders, decreasing the number of items per order, and increasing the number of items that need to be managed. They’re also expecting greater personalization, causing manufacturers to have to re-think everything they’re doing in order to balance customer satisfaction with economies of scale.

All of these factors are leaving gaps among key supply chain players – distributors, warehouses, manufacturers and suppliers – that disrupt the once-orderly flow of inventory and information. This is where the right warehouse management system (WMS) can play a key role. How can organizations tell if they have the wrong WMS? Here are four telltale signs:

1. It’s not helping optimize space. For many enterprises, factors such as personalization and customers ordering products directly have increased the inventory they must manage by an order (or two) of magnitude. Yet since that growth in inventory hasn’t been accompanied by a corresponding growth in square footage in the warehouse, space utilization has become even more critical to keep operations efficient. A WMS should be able to provide visibility into warehouse layout to help drive efficiencies in inventory management, storage and labor productivity. For example, if organizations can use data from their WMS to determine which items are picked most frequently, individually and as a group, they can design space so those items are stored close to one another in the same zone, and at the optimal pick height, which saves time and labor in both the put-away and picking processes. 
2. It’s not helping improve efficiency. The more logistics are synchronized, the more efficient a warehouse will be. A WMS that coordinates visibility and execution across distribution, manufacturing, in-line and off-line value-added services creates a precision warehouse operation. Embedding distribution-specific metrics around space, inventory, customer service and productivity give organizations a reliable means to track performance, identify weak areas and monitor improvement after corrections have been made. A good example is mixing dissimilar tasks such as put-away and picking in the workflow. With this capability, the WMS can direct lift truck operators to put away a pallet that’s along the route to their next pick rather than having them make two separate trips.  In larger warehouses, this method can greatly reduce travel time, increasing productivity while lowering fuel consumption, and reducing wear and tear on the lift trucks.
3. It’s lacking real-time, detailed visibility into inventory positions. Manufacturers are becoming distributors (and vice versa), and this channel expansion is creating an explosion of SKUs. Visibility down to the lowest unit of measure as well as by user-defined attributes is critical for proactive, informed decision-making to avoid excess or shortage situations. Visibility into inventory movement across the entire distribution chain improves inventory productivity, reduces the order-to-cash cycle, and ensures inventory accuracy. A WMS that directs and optimizes all distribution processes, including stock put-aways, replenishment, picking, counting and all other value-added services based on real-time and rules-based information streamlines inventory management and boosts labor productivity.
4. Customers need new services or higher service levels than can be provided. Customer service is typically the biggest impetus for implementing a new WMS. It could stem from a request (or several) that the current system either doesn’t support or doesn’t do very well. Some examples of these advanced distribution operations are first-in/first out, cross-docking, automated pick replenishment, wave picking, lot tracking, yard management, automated data collection and coordination with automated material handling equipment.

An up-to-date WMS should improve visibility into demand origin and support value-added services so the user can drive customer service levels higher. If you’re seeing any of the above telltale signs of failure to accomplish these things, it may be time to consider a more up-to-date approach.

Bill Tomasi is global director of product management at IBS, providers of ERP and WMS business applications for the wholesale, distribution and manufacturer/distributor markets.