Execute the extras
Totes Isotoner, others pursue value-added processes in the warehouse via WMS
By Joy LePree, Contributing Editor -- Manufacturing Business Technology, 11/1/2001 12:00:00 AM
For managers at Totes Isotoner Corp., warehouse operations go beyond the typical picking, putaway, and inventory tasks. "At our distribution center, we dispense to retailers, mass trade facilities, and our own outlet stores," says Doug Baker, director of distribution for the Cincinnati-based manufacturer of gloves, umbrellas, and accessories. "We also perform many value-added services, such as price ticketing and special artwork [packaging] for our retail customers."
Totes Isotoner is not alone. Distribution centers increasingly are relied upon to deliver value-added services that can include simple tasks like special artwork; and complex ones, such as kitting and light assembly.
While having the ability to perform these functions is important, coordinating them can be a nightmare. At Totes Isotoner, deployment of PkMS, a warehouse management system (WMS) software package from Atlanta-based Manhattan Associates, supports the execution of value-added processes.
"Previously [prior to implementing PkMS], the only way to handle value-added services was to receive the order, pick the order, and send it somewhere in the warehouse to perform the task after it was picked and ready to ship," says Matt Fette, Totes Isotoner's manager of warehouse and distribution systems. "But this delayed orders by two or three days because it required a secondary process. You always had to partial the goods for each retailer, because you wouldn't want to send Wal-Mart something that was intended for Kmart. It was a big management problem."
In response, WMS vendors—many of which have evolved to offer broader supply chain execution functions—offer packages to support these functions. Managers like Baker and Fette of Totes say these applications can serve as tools for making difficult but valued services easier to perform.
Adding value
Trends toward value-added processes are the result of pressure from manufacturers that seek less inventory, or pursue the late customization of product; as well as from retailers that request ticketing and labeling services. "They expect warehouses to expand on the business of simple storage and retrieval and move into value-added services so they aren't paying the warehouse simply to stock finished goods," says John Chorley, a senior product director with Redwood Shores, Calif.-based Oracle Corp., which offers a WMS that integrates with its widely used enterprise resources planning (ERP) system.
As a result, distribution centers are being asked to perform any number of the hundreds of value-added services that are possible. Examples include routine functions like placing documentation in the box just before shipment, or complex tasks like assembling a product in the warehouse.
"Companies that specialize in consumer packaged goods usually lean toward simpler value-added processes such as customized labels, packing lists, and custom packaging for mass merchandisers or retailers," says John Pulling, CEO of Grand Rapids, Mich.-based Provia Software, a vendor of the ViaWare supply chain execution suite. "On the other end of the spectrum is the high-tech industry, in which they do full kit-to-order and configure-to-order operations, as well as assembly in the warehouse."
Simple value-added tasks include ticketing, where the distributor supports the retailers they serve by applying the retailers' private labels or tags on the merchandise. "Tasks like placing a retail label on the merchandise, or placing a garment on a hanger, are considered simple services," explains Gil Bautista, president of Lake Success, N.Y.-based RenSoft Interactive, a vendor of supply chain execution software—including WMS—and a subsidiary of Vertex Interactive.
Some of the more complex tasks being performed at warehouses include kitting and light assembly. An example of kitting might include a set of golf clubs that is customized at the warehouse versus the manufacturing plant. "If someone orders a set of customized golf clubs, the order comes into the warehouse where they stock various heads and shots," explains Pulling. "The warehouse would look at that order, put together the specific assembly by pulling the golf clubs from stock, packaging the set, and sending it out."
An example of light assembly might be found in the appliance industry, says Jeff Ross, senior associate with eSync International, a Toledo, Ohio-based consulting services firm with supply chain execution expertise. "The idea is to keep the stock as generic as possible until it's ready for shipment," he says. "So, rather than making and storing some refrigerators with icemakers and some without, the manufacturer makes them all without icemakers and sends them to the warehouse. When an order comes in for a unit with an icemaker, it's installed in the warehouse."
Users of PkMS at Totes Isotoner say the support of the WMS has been invaluable. "We use SKU [stock-keeping unit] attributes to designate the product as having been modified for a particular customer. That attribute is carried with that customer's SKU on every case of goods that's been modified for them," Fette explains. "When it comes time to pick and run a shipping wave, PkMS is able to distinguish, based on selecting criteria, whether or not it should be paying attention to the SKU attribute or if it should simply pick generic goods. In addition to these functions, we can easily track an order as it is being sent through various areas. I can't stress the benefits of being able to back off the high level of management that was previously required."
The vendor universe
In looking for a solution that supports value-added processes in the warehouse, managers can look at broad-based enterprise system vendors with WMS offerings, as well as supply chain execution software specialists. "There are different tiers of solutions available," says Pulling. "There are ERP companies that have supply chain execution portions of their systems, there are suppliers that have some value-added functionality, and there is the best-of-breed approach, which integrates kitting, assembly, and value-added processing with warehouse management."
While best-of-breed supply chain execution systems offer high levels of functionality, they also require integration with ERP systems. Most of these packages offer certified interfaces with leading ERP systems.
Oracle contends its WMS offers as much functionality on par with best-of-breed systems, but is easier to integrate because it is designed to be an integral part of the overall product suite. "Using this type of system means there's no need for the type of integration complexity that you often get with warehouse management products," says Chorley. "Any tasks that can be done in Oracle Manufacturing, such as kitting or light assembly, are fully supported through elements of the Oracle discrete manufacturing functionality and can be performed in the warehouse."
In addition to adding functionality, the software packages also are coming down in price, says Dan Trew, a vice president with Milwaukee-based Catalyst International, a supply chain execution and WMS software vendor. "Ten years ago, a Tier 1 distribution center might have paid a million dollars to implement a custom solution to its enterprise, but now the products are mostly off-the-shelf and configurable," says Trew. "They also offer more functionality for a lot less price, which makes it affordable, even for small distribution centers."
It's about advantage
Better Methods Alexander, a Paterson, N.J.-based paper converting and packaging distribution company, previously assembled equipment in its warehouse using a system based on a groupware software package, but recently implemented RenSoft International's WMS. According to David Cohen, Better Methods Alexander's executive vice president and COO, RenSoft's solution organizes value-added processes.
"We basically use the software to put a big bear hug around the whole process," says Cohen. "Not only does it bring the costing, components, and timing of our kitting process together, but it also tracks the equipment and places it into finished good status once the product is assembled. We also have incorporated the kitting requirement with our forecasting system, which provides for the acquisition of replacement parts, in addition to new equipment components."
Totes Isotoner's Fette suggests that the flexibility of a WMS is a key consideration. "The software gives us the flexibility that allows us to ticket the inventory in advance of orders—during the picking process, or after the picking process," says Fette. "We now have ultimate flexibility to perform value-added processes in the most cost-effective way, and to be able to respond to a customer on a twenty-four hour basis if necessary."
In addition, Fette says that PkMS allows executing smaller, more frequent shipments. "We can accommodate customers who send in small orders every day based on their replenishment needs because we also can be very flexible in terms of the size of orders, the timeliness in which we handle them, and the efficiency of processing orders—all due to the implementation of this software," explains Fette.
Ultimately, says Totes' Baker, the WMS implementation is a source of competitive advantage. "Being able to accommodate these demands helps us retain customers," he says. "At the same time, it gives us a competitive edge over other companies that don't have the ability to meet the requests of the retailers."
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Catalyst International
www.catalystwms.com |
eSync International
www.exsync.com |
Manhattan Associates
www.manh.com |
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Provia Software
www.provia.com |
RenSoft International
www.rensoftinc.com |
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