Logistics at work

TED MALEY looks at how important logistics and distribution are to the supply chain

Once upon a time manufacturers invested huge amounts of resources in tooling, production, sales and marketing. Managing the warehouse and getting the products out of the door was left to Bob down in Despatch – a person who ranked only marginally above the tea boy in the eyes of the Board.

Fast-forward to the 21st century and a new breed of logistics professional has replaced Bob. All of a sudden logistics is the darling of modern business. But why?…

Faced with growing imports, increased numbers of competitors and difficult exchange rates, manufacturers invested in technology, productivity, quality control and marketing to stay ahead. However the lesson of competitive advantage is that it does not last long – once your competitor enjoys the same brand strengths, raw materials and quality of finished product as you do, what’s left? As Professor Martin Christopher of Cranfield University aptly put it “competition is no longer between companies – competition is between supply chains”

But this is no academic argument; leading management thinkers such as Peter Drucker and some of the world’s largest research firms are saying logistics is key. Their thinking is driven by the fundamental changes in business created by the 24-hour society and e-commerce. E-business or not, your customers will be expecting a greater range of products, ordering less but more often, demanding ever tighter delivery schedules and stock availability whilst expecting to pay you less than last year. At the same time you will be placing the same demands on your suppliers.

Recent studies indicate that 40-60 per cent of a company’s supply chain costs (7–15% of revenue) are the result of factors outside its span of control. Business partner relationships across the supply chain and customer expectations are two such factors. No longer can an organisation stand alone – interdependencies among supply chain participants create an extended enterprise. So manufacturers must seek to create a smooth continual flow of materials – pipeline – from point of origin to point of consumption. And technology is the key to this.

Warehouse Management Systems (WMSs) were introduced in the ‘70s and their availability on PCs in the early ‘80s hastened their adoption.  They have now achieved mission-critical status amongst medium to large sized companies – managing the space, workforce, equipment, tasks and materials flow of a warehouse or distribution centre.

A WMS solution can increase efficiency in goods-in, put away, picking, packing and shipping. It allows for the accurate tracking of warehouse stocks and provides data analysis and reporting tools to facilitate continuous operational efficiencies. Virtually all WMSs now support radio (RF) terminals and scanners, both hand-held and truck mounted, offering real time stock control and vastly increased accuracy. Voice terminals have now come of age and are rapidly gaining acceptance in busy case picking environments.

Warehouse management systems can be obtained as modules within ERP software, off the shelf packages and from best in class providers. As you might expect, the more specialised the package, the greater the functionality available to you.

Consider the benefits that advanced best in class WMS and RF systems might bring to logisticians. These include:

  • accurate control of inventory, buy viagra online space, staff and equipment
  • increased accountability of staff due to all transactions being date and time stamped and written to the transaction log
  • improved operator and equipment efficiency.

A WMS can make life easier for staff too. Supervisors are able to plan work and monitor progress to improve customer service levels, and urgent orders will be easily merged into the picking process to improve service to the stores. A WMS makes your operation more flexible to meet both current and future requirements, and includes other benefits such as:

  • real-time stock data and instant traceability
  • the ability to utilise flexible receiving, putaway and picking routines independent hardware platform for operational resilience
  • and improved customer service – with advanced stock management and order handling.

Less mistakes occur as picking errors become almost non existent, and there is full stock control accuracy and subsequent reduced shortages. Full reporting with audit trails makes life easier and accuracy of stocks and picking provide large gains in customer service improvements including batch traceability and first-in-first-out processing.

Stock is more accurate with real-time management of storage and picking areas. Replenishment moves are triggered automatically by the WMS using user defined parameters and there is reduced cost of physical stock checks. Cycle counting may be done in real-time. It is no longer necessary to do a “wall-to-wall” check at off-peak times, and also less leakage/shrinkage. Add to this the prompt handling of urgent orders and full traceability at any stage of the supply chain and it is apparent that WMSs add benefits that simply would not be possible with a stock location system or a basic paper based WMS.

Yet warehousing is no longer just about storage. As mass customisation, one to one marketing and e-commerce takes hold, the warehouse has become a processing or e-fulfulment centre – an extension of the production process itself. Real time information and collaborative communication along the supply chain is the enabler to increased throughput volumes, greater product and order diversity.

Collaborative commerce is a relatively new concept and focuses on the use of the internet for business-to-business communication in the logistics arena. Typically there are five ways in which collaborative commerce can be used within logistics:

  • Visibility of stock: an enterprise-wide view of inventory to both the company and its trading partners across multiple sites
  • Data capture: supports data capture from non-EDI enabled trading partners
  • Order brokering: building on the visibility of stock and ability to receive orders, this enables orders to be routed to the appropriate distribution or fulfilment centre based on product availability and proximity to the customer and could also enable orders to be split between multiple centres
  • Query response: allows customers access to order status information
  • Event alert: the selective proactive notification of events either as they occur or if they do not occur when scheduled. This notification could be to the user or a trading partner and can be by fax, e-mail, pager or mobile phone

The supply chain has become the demand chain as customers place ever increasing demands on manufacturers. Consequently logistics and the effective use of technology have become the key competitive advantages in business today.

So there you have it. Logistics is a mission-critical activity, supported by technology that will keep the savings and productivity improvements rolling in for many years. What are you waiting for?

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