The last few years have made us realize that consumer demand is unpredictable and that all elements of fulfillment depend on it. The question remains: How do you scale operations up and down without risking inefficiencies that compromise the core of your business?
An important part of the answer lies in the use of intelligent technology. It is becoming increasingly clear that the interplay of different technologies is the 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 have to use technology to maximize physical assets because you can’t magic them,” said Mark Picarello, CEO of Pierbridge, a WiseTech Global company and provider of multi-carrier parcel shipping TMS to retailers, 3PLs, manufacturers and other carriers. “This is very much about the connection between WMS and TMS, because you’re talking about the whole warehouse, and those things really need to work together.”
Creating an integrated WMS/TMS environment helps shippers address their biggest challenges in today’s fulfillment environment. On the transportation side, they are subject to constantly fluctuating (and usually increasing) carrier tariffs and fees, as well as unpredictable carrier capacities. In terms of warehousing, the US and beyond is experiencing record-low vacancy rates and a crippling labor shortage. Add to that the wild swings in e-commerce market delivery demands, and today’s fulfillment landscape is harder than ever to navigate.
Many businesses experience truly dramatic fluctuations in demand, with monthly order volume increasing from zero to 4,000, then 10,000, then 25,000 and beyond. The challenge then becomes how to maximize their existing warehouse staff and space while optimizing parcel shipping to meet and adapt to these large swings in demand. These companies are increasingly turning to logistics management technologies to find solutions.
First, says Picarello, think about your relationships with your carriers. “When talking about capacity, it’s always about growth and more and more shipments. But the real key is to deal with the swings – ups and downs – and continue to spread that transport across all the different carriers.” The pandemic brought new tactics for many carriers who previously only had a handful of trusted carriers; Suddenly things got heated and they formed new relationships with a far wider range of transport providers. “You can’t just delete that,” says Picarello.
“Freight carriers have been using more and different shipping options, and as their fulfillment volumes fluctuate up and down, they need a way to employ all of these transportation providers,” he adds. “For example, if the volume goes down, it’s important to make sure you’re maintaining that mix. You don’t want to alienate a carrier that you may need when volumes pick up again.”
Of course, the larger the number of carriers you work with, the more complex it is to manage and allocate loads in a way that keeps everyone happy. Automating this process by deploying a TMS is critical.
But that won’t get you any further if what comes out of the warehouse isn’t trimmed for flexibility and efficiency.
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 won’t need for a while. Let’s say you have a sale for snow shovels in July or ketchup in January when you know that sales will pick up around the 4th of Julyth. It’s old-school thinking, he says, and it’s important to at least be aware of the true costs of these decisions across the board. “If I have 100 pallet spaces and only need five pallets of ketchup, but buy 20, I’ve used up 15% more space than I need,” explains Hespeler. “If you have a WMS, you can use business intelligence and analytics to see what sales were like last year. If the deal for the ketchup goes through, you can see when you actually sold it and how much.
“Everyone is short on storage space,” Hespeler continues. “But much more critical than the lack of storage space is the lack of inventory.” He says there’s a balance between having inventory to meet normal demand and then having some inventory available for an anomaly, a spike in demand. “But with a WMS, you can see if you can’t afford to use that bin because you need it for mustard.” Essentially, a sophisticated system allows you to combine data flows about buying patterns and demand forecasts to make those decisions about decide whether and when to stock up.
“They always want visibility into historical product movements and stock levels without committing too much, taking up too much space, and having too much safety stock,” says Hespeler. “And when the business grows, it’s difficult to manage.
“There’s a lot more to consider than just whether you can afford the space for safety stock,” he says, adding that warehousing needs to be organized according to what he calls a true product zone hierarchy. Products come in different sizes and packaging, as do shelves: they have to match. As an example, Hespeler cites an aisle with racks designed only for standard-size pallets. Perhaps the first level is completely filled with pallets. “What we don’t want to see is that there’s another standard pallet location with just a few boxes right above this location.”
Hespeler claims that if you only receive crates and not full pallets, with a good storage solution you can pack them more efficiently in specific zones within the warehouse to maximize space utilization. For example, you can park crates of different items next to each other because the WMS keeps a detailed overview of where everything is in the warehouse. “That’s only possible with an automated storage system,” he says. “They have designated locations for each item. You don’t just throw them somewhere in the warehouse.”
Next, when TMS and WMS work together, you can flow different products or orders through the warehouse at different rates and with different urgencies, all controlled by detailed and accurate data. As an example, Hespeler cites an order for dog collars for a pet shop. The order comes in and the WMS knows it needs 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 a handheld RF device to find the location, scan and pick the order, and bring it to a packing station. When the picker gets there, there is an already generated label that he can stick on the order that contains the information the dispatcher needs that the order has to be on a 3pm truck in this case. Then the TMS functions take effect and help the dispatcher to find the carrier. “You just scan the label and then it all comes out on one screen and you can run that job exactly as it needs to be run,” says Hespeler. “You just print the label. You don’t have to make decisions.”
“Such automation is particularly important when there is a lot going on,” Hespeler continues. “If the warehouse isn’t full, it’s super easy to make this 3pm truck. But when it’s full, things get missed.” Without automation, there’s a lot more manual activity per box, he points out. You will need to re-enter the order and then decide which carrier you want to use.
“You’re allowed to make mistakes,” he says. “You might pick a bunch of orders that have a lower service level agreement or that are 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 prioritizes each order as it’s picked and taken to the Packstation to help the company meet its Service Level Agreements (SLAs). “It could be on the same day or two days on the ground, or maybe shipping is free and there’s no SLA,” he says. “It’s critical that the system selects the most cost-effective shipping option.”
Fostering a marriage between WMS and TMS isn’t just about saving money, says Picarello. It’s essentially about staying in control. “It’s important to scale responsibly,” he says. “Recently there has been too much focus on growth, growth, growth and the capacity issues that come with it. Now we’re entering peak season and it looks like demand is still increasing, but it’s not as lumpy as it was. And it looks like the major airlines are more than equipped to handle the volume. So if you scale by adding resources or storage space, you could hold the bag in these uncertain times.”
Ultimately, a well-mixed suite of WMS and TMS technologies will help you back off or reduce the throttle exactly as needed, conclude Picarello and Hespeler. “Both the WMS and TMS need to take into account all the things an organization is trying to do and balance that as part of the fulfillment,” says Picarello.
Resource link: www.pierbridge.com
