The Supply Chain Matters blog provides Part Three of a multi-part market education series focused on the emerging trend for what we have termed as WMS Accelerator technology.
In this commentary, we dive deeper into why this new technology approach will become more attractive given the rapid changes that are occurring among multiple consumer and product industries and their respective customer demand and supply fulfillment networks.
In our prior Part One commentary, we explored a capsule history of the generations of Warehouse Management Application Systems (WMS), their need for being integrated with a system of record for customer or inventory replenishment orders, labor reporting and other data. We observed how over time, similar to legacy ERP systems, many of these WMS systems were subject to high levels of customization requiring added integration needs.
Among today’s more online focused customer fulfillment process needs, WMS systems are now less flexible in terms of accommodating business process changes. Many were designed leveraging traditional inventory management strategies to support replenishment of other customer warehouses, distribution centers, or large customers.
For the most part, most legacy installed WMS are considered mature, with added process or information integration changes classified as Extended WMS. However, in many cases the application still resides behind the firewall at customer sites, with software, information integration and overall systems maintenance remaining the responsibility of internal IT groups.
Our belief is that the extent of the COVID-19 disruption on customer fulfillment needs implies that Extended WMS is morphing to a more Cloud based WMS Accelerator that can leverage more intelligent warehouse orchestration, but with a far quicker time-to-value. This approach leverages object-based data integration and management, incorporates artificial intelligence and machine-learning technology as well as Internet of Things (IoT) enablement across physical and digital process areas. At the same time, such capabilities can augment the capabilities and presence of existing WMS applications.
In the second part of this series, we highlighted the market entry of what will likely be considered as a WMS Accelerator application provider manifesting this new approach, that being AutoScheduler.ai. For over a decade, the technology has been deployed across consumer product goods producer Procter & Gamble and other manufacturers to orchestrate process extensions of warehouse activities required to support changing B2B and B2C customer fulfillment channels.
What is Really Occurring
Prior to the ongoing COVID-19 disruption many businesses were under pressure to increase overall efficiencies, reduce costs, but at the same time, be able to support the dramatic shifting of market response capabilities toward either B2B or existing B2C customer fulfillment processes.
From a warehouse and distribution perspective, inventory movements needed to support high numbers of orders with less stock-keeping units. COVID-19 exploded the consumer shift toward online buying for all forms of products, essentials and otherwise.
The Example of Procter & Gamble
We have been highlighting on Supply Chain Matters examples of companies who had previously understood that agility, flexibility and flow-thru logistics were needed capabilities, and because they were already invested in changed processes, they were better able to pivot in COVID-19 response and in business opportunity.
One of those manufacturers was P&G, a company that has long been recognized and admired in supply chain management circles, especially for its relentless customer fulfillment perspective that focuses planning outside-in, from the customer retailer’s fulfillment facility and back among supply network, production and distribution capabilities.
Five years ago senior management at this iconic consumer goods company recognized a need for improving efficiency and lower costs for its North America based production and distribution footprint. The branded consumer goods producer launched a supply chain transformation initiative with a goal to reduce a cumulative $10 billion in cost savings over five years, where various products would be produced in fewer, but larger manufacturing and distribution facilities. For this consumer goods icon, the outside-in tenet that customer order arrival dictates supply chain response remained fundamental as contrasted to localized optimization of production and other supply and demand network elements.
Keeping with its overriding mission that the consumer drives the supply chain, the transformation effort featured design principles of flow-thru product and logistics based on levels of product demand and further directed at the ability to restock retailer inventory replenishment needs within one day. Integrated workflows were essential as was the agility to accommodate needed changes within any single day, or combinations of warehouse work shifts in that day.
Included in the plan was the design and construction of a new $500 million production facility in Berkeley County West Virginia, a mammoth 2.5 million square foot capacity facility equipped with leading-edge automation that can shorten the time of customer order to retail shelf to just one day. The West Virginia site was chosen to meet a requirement to be able to serve upwards of 80 percent of U.S. east coast product demand within one day’s truck transport. Today this facility produces branded Swifter cleaning products, branded shampoos, body washes and dish detergents. Major suppliers of different bottles and caps as well as packaging and cardboard supplies have co-located their production facilities close-by. Highly automated production equipment produce various products and then ship to a mixing center in nearby Shippensburg Pennsylvania, one of six jumbo U.S. distribution centers.
This supply chain transformation effort included expansion of the Lima Ohio facility that produces and distributes liquid laundry products such as Tide, Tide Pods, Gain, Cheer and Gain, along with perfumes products used in shampoos, dish soap and diapers. The expansion included chemical process production that was once produced in Avenal New Jersey, the nearby co-location of bottle and corrugated supplier facilities. It further included the expansion and added automation of the site distribution center which today presents a massive footprint.
According to a 2018 published report by the Lima (Ohio) News celebrating the 10 year anniversary of P&G’s Lima warehouse, each day this facility can ship out more than 200 trailer loads of laundry detergent, perfume, feminine hygiene or other products either shipped to various U.S. regional distribution centers or shipped directly to customer distribution facilities, for eventual distribution to store or online fulfillment needs. Warehouse forklift operators have access to mobile electronic tablets that guide workers as to what items are to be packed on a trailer, or what items are to be staged for another planned shipment vs. put away.
This consumer goods provider’s customers are many in terms of overall scope of retailing, required service levels not only in selection and line-item fulfillment but in adhering to various retailer inventory replenishment schedules that vary by facility and day of the week. Planning for product promotions are a further factor in inventory planning and movement.
P&G is one of many other consumer product companies, undergoing a transformation that implies enhanced agility and required flow-thru inventory movement.
Service Level Requirements, Flow-Thu and Synchronized Logistics
It is little secret that one of P&G’s notable customers is global retailer Walmart. Earlier this month this retailer announced that it will tighten its on-time, in-full (OTIF) service level, commonly viewed as “must arrive date” among supplier shipments to a service level of 98 percent, or the supplier risks a fine amounted to 3 percent of the cost of goods. Suppliers were provided 15 days-notice to this change from the previous service level of 95 percent OTIF.
Walmart is but one example, and our readers know of building service requirements from Amazon, Costco, Target, Kroger as well as other retailers.
The role of WMS Accelerator technology comes into consideration when one thinks about the increasing need for more synchronized logistics, somewhat in the notions of a planning system for overall end-to-end material flows, ensuring all orders are produced, shipped and scheduled to arrive based on customer requirements. The technology seeks to address the need for more integrated inventory, equipment and facility workflows.
In an era long past, this was the purview of Distribution Requirements Planning (DRP) processes, but today’s Cloud-based new generation of technologies can perform these tasks by leveraging Artificial Intelligence, Machine Learning, IoT and other applied advanced technology.
Consider the following exceptions that are likely to occur in any given day:
- Scheduling of production lines in the right sequence to match product orders by required day-of customer shipment so that inventory can flow directly without added warehouse or yard storage needs.
- Determining when, during a work shift, should picking of product in the warehouse or customer fulfillment center be initiated based on either availability of all inventory line-items or which customer replenishment plan is needed for shipment.
- Avoiding the presence of an empty trailer occupying a dock door because the shipment is not yet ready. Better still, prioritizing scheduling appointments among dock doors based on the existing orders and inventory that needed to be accomplished at a given carrier pickup time .
- Creating the opportunity for, and then subsequently notifying the unloading team of an inbound trailer of product as being cross docked before unloading commences.
- Having one on-going schedule rather than each shift creating its own, avoiding the dead-time at the end of one shift and the start-up of the next.
- Minimizing the number of trailers moving in or out of various dock doors by sequencing daily trailer load requirements for drop and hook optimization by contracted carriers.
These are examples of how WMS Accelerator technology supercharges existing operational systems with added planning, sequencing and overall flow optimization, saving on labor and other customer service-related costs. At the same time, the technology can enable more informed and timely-decision-making geared toward requirements of flow-thru logistics.
Call to Action
As we continue to highlight in this ongoing series, it would behoove readers to educate themselves on these new and quickly evolving requirements for more synchronized logistics flows and how today’s Cloud based WMS Accelerator technology is addressing such needs.
This is an opportunity for revised thinking regarding warehouse management applications technology under a concept of leveraging digital and physical information sources in the planning of inventory flows, leveraging of more predictive analytics, facilitating better labor optimization and efficiency as well as overall equipment and facility coordination.
With the increased adoption of added automation and now worker assisted robotics, the opportunities for more timely management or adjustment to customer fulfillment needs become more feasible.
For our part, the Supply Chain Matters blog and our research arm, The Ferrari Consulting and Research Group will continue to provide added market education, technology development as well as provider profiles and consumer good business utilization in this evolving area.
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