The past few years have brought a vivid reminder that consumer demand is unpredictable and that all elements of fulfillment are in thrall to it. The question remains: How do you scale operations up and down without risking inefficiencies that threaten the very core of your business?
An important part of the answer lies in the deployment of smart technology. It is increasingly clear that different technologies working in concert with one another is key to a lean, flexible fulfillment operation. In particular, warehouse management systems (WMS) and transport management systems (TMS) must be part of a harmonious whole.
“You need to use technology to maximize physical assets, because you cannot magic them up,” says Mark Picarello, managing director of Pierbridge, a WiseTech Global company and provider of multi-carrier, parcel shipping TMS for retailers, 3PLs, manufacturers and other shippers. “This is very much about the marriage of the WMS and TMS, because you are talking about the entire warehouse, and those things really do need to work together.”
Creating an integrated WMS/TMS environment helps shippers face up to their greatest challenges in today’s fulfillment environment. On the transportation side, they are subject to constantly fluctuating (and usually rising) carrier rates and fees, along with unpredictable carrier capacity. In terms of warehousing, the U.S. and beyond are experiencing record low vacancy rates, as well as crippling labor shortages. Add to that the wild swings in delivery demands of the e-commerce market, and today’s fulfillment landscape is harder to navigate than ever.
Many companies are experiencing truly dramatic swings in demand, with monthly order volumes growing from zero to 4,000, then 10,000, then 25,000 and beyond. The challenge then becomes how they can maximize their existing warehouse staff and square footage, while optimizing parcel shipping to meet and adapt to these large fluctuations in demand. Increasingly, these businesses are turning to logistics management technology for solutions.
First off, says Picarello, think about your relationships with your carriers. “When people talk about capacity, it is always about growing, and shipping more and more. But the real key is to deal with the fluctuations — up and down — and continue to spread that transportation out across all the different carriers.” The pandemic brought in new tactics for many shippers who previously had only a handful of trusted carrier services; suddenly, the heat was on, and they were forming new relationships with a far wider range of transportation providers. “You cannot just cancel that out,” says Picarello.
“Shippers have engaged more and different carrier options and, as their fulfillment volumes fluctuate up and down, they need to have a way to keep all those transportation providers engaged,” he adds. “For example, when volume is dropping, it is important to make sure you keep that mix. You don’t want to alienate a carrier you might need when volumes go up again.”
Needless to say, the greater the number of carriers you are working with, the more complex it is to manage and assign loads in a way that keeps everyone happy. Automating that process through deployment of a TMS is critical.
But that is not going to get you where you need to be if what is coming out of the warehouse isn’t trimmed for flexibility and efficiency, too.
Martin Hespeler, vice president, Americas at Microlistics, another WiseTech Global company, says too many companies make the mistake of using their warehouse capacity to park inventory they will not need for a while. Say that you got a deal on snow shovels in July, or on ketchup in January when you know sales are going to spike around July 4th. It is old-school thinking, he says, and it is important to — at the very least — be aware of the actual cost of these decisions, across business operations. “If I have 100 pallet locations available, and I only need five pallets of ketchup, but I buy 20, I have used up 15% more space than I need to,” Hespeler explains. “When you have a WMS, through business intelligence and analytics, you can see what sales looked like last year. When the deal for the ketchup comes around you can look to see when you actually sold it and how much.
“Everyone is tight on warehouse space,” Hespeler continues. “But the one thing that’s way more critical than running out of warehouse space is being out of stock.” He says there is a balance between stock on hand, in order to fulfill normal demand, and then some stock available for an anomaly, a spike in demand. “But with a WMS, you can see if you cannot afford to use that warehouse space because you need it for mustard.” In essence, a sophisticated system allows you to combine data flows about buying patterns and demand forecasting in order to make those decisions about whether to stock up and when.
“You are always looking to have visibility into historical movement of product, and inventory levels, without over-committing, taking up too much space and having too much safety stock,” says Hespeler. “And, as business grows, it is difficult to manage that.
“There is a lot more to think about than just whether you can afford the space for safety stock,” he says, adding that warehousing needs to be organized according to what he refers to as a true product zone hierarchy. Products come in different sizes and packaging, and so does racking: They need to make sense together. Hespeler gives the example of going down an aisle with racks that are designed to have room for only standard-size pallets. Maybe the first level is all filled with pallets. “What we do not want to see is, just above that location, that there is another standard pallet location with just a few cases on it.”
With a good warehouse solution, Hespeler maintains, when you do receive just cases and they are not full pallets, you can pack them more efficiently in certain zones within the warehouse, so you maximize the use of space. For example, you can park cases of different SKUs next to one another because the WMS keeps detailed track of where everything is within the warehouse. “You can only do those things when you have an automated warehouse system,” he says. “You have designated locations for each item. You do not just throw it somewhere in the warehouse.”
Next, when TMS and WMS are working together, you are able to flow different products or orders through the warehouse at different rates and with varying degrees of urgency, all controlled by detailed and accurate data. Hespeler gives the example of an order for dog collars for a pet store. The order comes in and the WMS knows it has to be picked and shipped the same day, because the pet store needs it by tomorrow morning. Because the WMS system knows exactly where the dog collars are, it sends a picker with an RF handheld device to find the location, scan and pick the order, and take it to a pack-out station. When the picker gets there, there is an already generated label to slap on the order, which includes the information the dispatcher needs that, in this case, the order needs to be on a 3 p.m. truck. That is when the TMS capabilities kick in and help the dispatcher find the carrier. “You just scan the label, and then everything comes up on a screen, and you can fulfill that order exactly as it needs to be done,” says Hespeler. “You just print the label. You do not have to make any decisions.”
“Automation of this kind is particularly essential when things are busy,” Hespeler continues. “If the warehouse is not busy, it is super-easy to make that 3 p.m. truck. But if it is busy, things start to get missed.” There is a lot more manual activity per box required without automation, he points out. You have to rekey in the order, then make the decision about which carrier to use.
“You can make mistakes,” he says. “You might pick a bunch of orders that have a lower service-level agreement or are going by ground and will be picked up tomorrow morning, but you end up expediting them. Or vice versa.” Hespeler says there is intelligence built into the WMS that will prioritize any given order in terms of when it is picked and taken to the pack-out station, so the company meets its service-level agreements (SLAs). “It could be same-day, two-day ground, or maybe it is free shipping and there is no SLA,” he says. “It is critical that the system choose the most cost-effective shipping option.”
Fostering a marriage between the WMS and TMS is not just about saving money, says Picarello. It is fundamentally about keeping control. “It is important to scale responsibly,” he says. “There is too much focus lately on growth, growth, growth, and the attendant capacity issues. Now we are going into peak season, and it looks like demand is still increasing, but it is not as lumpy as it was. And it looks like the major carriers are more than equipped to handle the volume. So if you are scaling by adding resources or warehouse space, you could be left holding the bag through these uncertain times.”
Ultimately, a well-blended suite of WMS and TMS technologies will help you pull back or ease up on the throttle exactly as needed, Picarello and Hespeler conclude. “Both the WMS and the TMS need to take into account all of the things an organization is trying to do, and balance that as part of fulfillment,” Picarello says.
Resource Link: www.pierbridge.com