Supply Chain Logistics and Warehouse Management -- Supply-Chain Logistics Segment or Warehouse Operation with WMS Program Considerations

Introduction

This introductory section has four goals: 1) to define the supply-chain logistics segment storage/ pick concept with a Warehouse Management System (WMS) program; 2) to examine company vendor purchase orders, customer order information, and the physical SKU flows; 3) to outline the warehouse storage/pick concept and WMS program objectives; and 4) to identify the signals that indicate a warehouse requires a WMS program.

A warehouse with a WMS program is similar to all industry supply-chain groups, regardless of what is being processed: single small items, master cartons, or pallets. Most or all basic storage or pick/pack activities are performed at the warehouse:

1. Unloading, receiving, checking, and SKU identification;

2. WMS and company SKU identification, with associated SKU quantity and WMS scan; SKU identification and movement to a storage/pick area;

3. Storage activity, including deposit and withdrawal transactions and WMS SKU identification and storage/pick position identification scan transactions and information transfers;

4. SKU transport from a storage area to a packing or shipping dock area;

5. WMS SKU identification or symbology: receiving, storage, picking customer order SKUs; packing, scanning, weighing, preparation of manifests, and shipping preparation;

6. Warehouse customer order loading and shipping;

7. Handling returns, out-of-season SKUs, and customer transfers;

9. Maintenance, sanitation, and loss prevention;

9. Inbound and outbound delivery truck yard control;

10. Internal storage and pick locations reorganization (e.g., A, B, and C zones);

11. Handling SKUs with expiration dates and manufacturer lot numbers.

WMS programs can work in all kinds of warehouses. In a manually operated forklift truck storage/pick concept, an employee with a hand-held (or fixed-position) scanner scan or RF tag reader reads each SKU and storage location identification. Scanned transactions are sent to a computer to update SKUs and storage/pick location status. Some WMS programs work on a paper-based system. In that case, a program using paper, scanner, or reader transactions tracks the quantity to an identified position. In a storage/pick concept with a WMS program, each storage/pick position has a WMS identification and a SKU quantity. An identified customer order assures that the identified SKU is transferred on time to the correct location and, in due course, onto a delivery vehicle.

In an AS/RS crane storage warehouse, a WMS program performs the same functions as in a warehouse using a manual hand-held scanner barcode or RF tag-reader, except that the SKU identification is scanned by a fixed position fixed-beam scanner or RF tag reader, and a warehouse computer updates the identified location.

Control

When a company considers installing a WMS program in a warehouse, the design team determines who is responsible for SKU and customer order activities, tasks, and/or communications (e.g., company host, WMS program, or warehouse computer). Each SKU or customer order activity, task, or communication is related to an identified SKU, physical customer order, or specific information flow. The design team evaluates the warehouse control system's ability to modify extant warehouse activities, tasks, or communications, and decides where the responsibility should lie (e.g., the host computer, WMS program, or warehouse computer).

SKU and Customer Orders and Data Flows

In a WMS program using identified SKUs, transaction and information flows have patterns like water flowing through a large funnel. A funnel mouth accepts a large SKU volume, SKU mix, and information quantity. Over a predetermined time period, a wide SKU mix and various identified SKU quantities from vendors are delivered to the storage/pick facility.

Another important concept is customer order information flow for WMS-identified SKUs.

These are the orders from WMS-identified customers that occur on a daily basis. The WMS-identified SKU is placed in a company inventory file along with the customer ordered SKUs. The time period for most storage/pick concepts to complete the order and delivery cycle is 24-48 hours.

In some industries, such as pharmaceutical wholesale business, the customer order delivery cycle occurs three or four times per day, which means a cycle time of less than 24 hours. With high customer service standards, one can create special cut-off times to guarantee delivery within 24 hours (e.g., the latest customer order arrival time is 0400 p.m.).

As WMS-identified SKUs flow through the funnel, value-added activities are performed to ensure that orders are processed quickly and efficiently, and so maintains profitability. However, as the design team adds customer order numbers and order lines, increases customer order SKU quantity, and value-added activities handled by a storage/pick concept increases, the available time to perform value-added activities diminishes-this is small mouth of the funnel.

First Steps

When your company considers a WMS program for a warehouse, two key components are ware house operation and WMS program. The first question is: What component warehouse or WMS program is most important? The answer is based on project type, cost, time, and other factors.

There are two project types: remodel an existing warehouse or construct a new warehouse.

If the project is remodeling an existing warehouse, then the warehouse is an established operation in an existing building with activity stations, equipment layout, identified SKU and customer order travel paths, and employee activity procedures and practices. The warehouse has identified SKU storage/pick positions. Because the warehouse equipment is already in place, identified SKU and customer order travel paths and operational practices and procedures are unlikely to change, and there are no drawings required for governmental code approval, the design team will focus on 1) understanding the existing warehouse; 2) understanding the WMS program features; 3) understanding warehouse operations; and 4) determining what WMS program modifications or changes for implementation in your existing warehouse are needed. In some companies, designing a WMS program for an existing warehouse can be demanding and can create changes in an existing operation, such as when a WMS program needs to support SKUs with lot numbers. In that case, there will be a need to distinguish different SKUs lot numbers in a storage location with dividers to assure accurate and efficient picking strategies.

With the construction of a new warehouse, there is no existing building/warehouse equipment to be considered. The design team will have drawings that show how the facility will look, along with a description of operations to explain how vendor delivered WMS-identified SKUs and customer orders will flow through the facility, or how the warehouse will look and operate when using a WMS program.

As a new building and warehouse operation drawings are being finalized, written specifications and description of operations are drawn and developed and written (prior to RFQ transmittal to vendors for price and government for approval), WMS program features, description of operations are combined with a building and warehouse design parameters. Warehouse concept features and description of operations design parameters have an impact on a warehouse degree of mechanization or automation, activity locations, bar code/RF label use and location, control and size, scanner/reader location and type and WMS-identified SKU or customer order handling sequence, and how a WMS supported WMS-identified SKU or customer order transaction is reported to a WMS program.

Tie the Warehouse Operation and WMS Program Knot

Integrating a successful WMS program into a warehouse is like tying a knot. Your project design team leader and team members must understand the objective (the knot), how a knot will look, and how to move two strands to create the knot. When installing the WMS program in a ware house project, the team members who tie the warehouse and WMS program knot are the ware house/WMS integrator, warehouse equipment vendors, and WMS program team members. One strand is your warehouse team and host computer team; the other strand is the WMS program team. A completed knot is a company host computer and a warehouse with a WMS program that satisfies your company operational, cost per unit, and customer service standard objectives.

Pebble in a Pond

To design a warehouse with a WMS program, a warehouse concept with a WMS program and building design are based on specific design parameters:

1. Peak day vendor SKU delivery that includes pallets or master cartons;

2. Customer order number, lines per customer order, and associated SKUs per peak day;

3. Customer order cube and order/delivery cycle time, weight, and SKU mix;

4. Storage/pick position bar code or RF tag label location and required line of sight or a radio frequency tag within a transmission range; and

5. WMS program to completely understand WMS supported transaction locations and WMS identified SKU and customer order flows.

If a change is made to one or several design parameters, a change has potential to affect each storage/pick WMS supported activity or WMS program. The activities are

1. Customer order process;

2. Vendor delivery truck control, receiving, and QA;

3. Transport;

4. Storage put-away and withdrawal;

5. Pick line or position setup and replenishment;

6. Customer order pick;

7. Batched customer order sort;

8. Customer order pack;

9. Customer order manifest, sort, and load;

10. Prepack and other value added activities;

11. Across-the dock, customer order returns and vendor re-work activities; and

12. Host computer, warehouse and WMS program integration.

Signals that a Warehouse Needs a WMS Program

As a warehouse business grows, business growth results from an increase in existing SKU inventory to meet seasonal demands, from new customers or from new SKUs. Business growth factors and variance from an actual SKU inventory compared to budgeted inventory are factors that create signals that a company has a requirement for a WMS program. Other signals are

1. Actual inventory balance or physical inventory balances have a substantial difference to the guide inventory;

2. Demand for frequent, accurate, and quick SKU inventory cycle counts and inventory file updates;

3. Short customer orders due to "no stocks" or "stock outs;"

4. Customer back orders due to lost inventory;

5. Canceled customer orders or customer complaints;

6. Customer order numbers increase;

7. Small size customer orders increase;

8. SKU numbers or pick positions increase;

9. Vendor SKU deliveries and vendor number increase;

10. Inventory quantity and storage positions increase;

11. Assure proper SKU rotation;

12. Manufacturer lot identification accuracy;

13. Accurate and on-line receiving, storage, pick, replenishment, and manifest transactions;

14. Facility size, employee number, multiple shift operation, and mechanized or automated material handling equipment;

15. Decrease or to maintain your customer order/delivery cycle time with accurate orders that are delivered on time to a correct address; and

16. In summary, if your existing manual warehouse is overstretched.

Warehouse Storage/Pick Concept with a WMS Program Resources

To achieve a storage/pick concept with WMS program strategy objectives, your design team must efficiently use or allocate a warehouse and WMS program scarce resources. The resources are facility layout, warehouse storage/pick concept suppliers, employees or labor, site location, building that is owned or leased by the company, management team, company host, WMS program, and warehouse computer suppliers, SKU vendors, customers, consultants, and industry groups or associations.

Warehouse with a WMS Program Operational Objectives

A warehouse with a WMS program operational objective is to improve profits and customer ser vice. To achieve the objective, a warehouse with a WMS program

1. Maximizes a facility, customer order ship carton, transport concept or vendor or customer delivery vehicle space utilization;

2. Maximizes a storage/pick concept utilization;

3. Maximizes employee utilization;

4. Reduces SKU handlings and assures an identified SKU is delivered to the correct location;

5. Assures WMS scan transaction information transfer, thus maintaining SKU accessibility and inventory tracking capability;

6. Assures a designed SKU rotation;

7. Minimizes company logistics operational expenses;

8. Protects a company assets; and

9. Assures satisfied customers.

Overview

The purpose of this guide is to show the reader, when considering the implementation of a WMS program in a warehouse, the applications of a WMS program, as well as procedures, practices, tips, and insights. This will provide the design team with an opportunity to maximize a company profits 1) by reducing a warehouse storage/pick concept with a WMS program design, development, and installation time period and costs; 2) by reducing logistics operating costs; and 3) maximizing customer service with on-schedule and accurate deliveries.

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