To understand how RFID could be effective with your supply chain we should start from the place where your order take place, it is the warehouse.
A warehouse management system (WMS) provides a set of procedures that are computerised and automated to handle the end-to-end warehouse operations right from the receipt of goods until delivery to the destinations. It provides a logical flow and represents the physical activities of a warehouse in managing the stock of goods. It covers all the operations which are receiving, put away, order processing, order filling and shipping. A WMS can be stand alone system software or a part of an enterprise resource planning (ERP) system. The WMS market is maturing with a number of players entering the market. Though this competition is healthy in terms of development of advanced technologies, it is difficult for the customers to understand the various new features being added to the WMS and select the most appropriate system to suit their needs.
While a warehouse team may appear to operate ‘just fine’ without WMS, working with unwritten rules and unarticulated processes; WMS can help systemise these processes, ensuring that the entire team is operating at maximum efficiency. It can also provide measurements key indicators such as timeliness, productivity and accuracy.
Need for WMS
Since warehousing is an important function which interfaces manufacturing and retailing, it is essential to have a system which optimises cost without compromising on the service level. A WMS system is necessary for the following reasons:
- To maintain an optimum level of inventory
- To reduce labour costs
- To optimise warehouse storage space
- To increase service levels
- To increase inventory accuracy
A WMS helps in managing inventory on a real time basis and with the advent of technology, the system can help a company towards a more paperless system. It is increasingly interfacing with RFID, bar codes and automatic storage and retrieval systems to offer warehouse management solutions.
However the need for WMS should be justified by the volumes and sales value since purchasing a WMS programme involves a substantial investment. There will be high costs incurred initially, for example for set up and installation, as well as a team or even department to manage information systems. The returns can be seen when labour costs are saved, inventory accuracy is improved, service levels are enhanced,
warehouse space is optimised and inventory quantity is minimised.
The various steps involved in the supply chain process are receiving, put-away, order processing, order filling and shipping. Each process has its own scope for improvement and requires well-defined key performance measures to identify the areas of improvementon a continuous basis.
The receiving process has the following steps:
- Create appointment
Create an appointment for the confirmed purchase order. The appointment
will have details such as trailer number, scheduled date and time, and gate number.
- Finalise appointment
When an appointment arrives, it is said to be finalised. The purchase order (PO) for that appointment is frozen and arrival date and time are recorded.
- Match actual received quantity with ordered quantity
In case of shortage:
1. If the order is for items to be stored inside the warehouse, continue with step 3.
2. If the order is for items to be cross-docked, check if the PO has stock for more than one store. When the PO is for multiple stores, the shortage quantity has to be allocated to stores based on a fair algorithm.
3. The quantity can be apportioned if all stores are of equal priority. If there is priority assigneds, an order can be fulfilled as per the store priority.
- Create a discrepancy report When there is discrepancy in the received quantity, generate a report which has the shortage or overage quantity along with the item number, vendor number and appointment details.
- Create container IDs
Generate a container ID for every container received. The container ID can be an intelligent number with details such as item number. If your WMS imposes the constraint that one container should have one item only, dummy container IDs can be created for system sake and one container ID can be mapped to child container IDs.
Put-Away covers identifying the right slot for the pallet and moving the pallet to its slot. The steps are as follows:
- Identify slot
Slots should be classified into prime and reserve. Prime slots are pick slots and reserve slots are used for storage. When items are received, they are generally in full pallets. They should be put on the reserve slots. For every pallet, a slot is selected based on the space availability and it is within the specific temperature
zone. In case of cross docking, the pallet is put away in the shipping dock. Each store will have a slot in the shipping dock where all the pallets
for a store will be consolidated to load into the truck.
- Move the pallet to the assigned slot
Order processing and order filling
Order processing is where the picking instructions are generated by the system.
It covers the following steps:
- Allocate quantity
- Create waves
- Release orders for processing
- Generate picks
- Generate order filling instructions
- Perform order filling
Shipping includes the following:
- Validating the orders
- Packaging of goods into containers
- Preparing documents such as shipping papers, packing lists, container labels and bills of lading
- Sorting the container by destination
- Loading the containers into trucks
The following are some of the key performance indicators for receiving, put-away, order processing and order filling, which are incorporated in the WMS to measure the efficiency of a warehouse. The metrics are framed for a day’s values. The table opposite demonstrates how they are calculated.
Delivery performance is measured by the percentage of appointments received fully. This is calculated by dividing the number of containers actually
received by the total number of containers scheduled to be received. This can be calculated for every item or store and in terms of measurements such as volume and weight, instead of containers. Another way of measuring
this is by finding the mean square deviation of the expected quantities from the actual quantities.
Timeliness of receiving can be measured through the percentage of appointments
received on time. This is calculated by dividing the number of appointments arrived on time by the total number of appointments. It can also be measured through the mean square deviation of scheduled versus actual time received.
Productivity of receiving can be measured using the number of containers
received and unloaded per unit labour hour. This productivity can be compared with standard productivity. The formula for this measurement involves dividing the number of containers received by the number of labour unit hours worked.
Receiving efficiency can be measured by dividing the time taken to process an appointment by the standard time it takes to process an appointment.
Put-away accuracy can be measured through the percentage of pallets put away in the correct slot. This is calculated by dividing the number of containers put away in the right slot by the total number of containers put away.
- Accuracy of WMS
Accuracy of the put away in WMS can be measured by the percentage of slots correctly identified by the WMS compared to the total number of slots put away
Utilisation can be measured by the percentage of space utilised in the warehouse.
This is calculated by dividing the space utilised in the warehouse by the total space available for storage.
Put-away productivity can be measured by calculating the number of containers put away per unit labour hour or machine hour.
Put-away efficiency can be measured by comparing the time taken to put one container into its slot and the standard time it takes to put one container into a slot.
Processing and order filling
- Service level
Service level can be measured through order fill rate. This is calculated by dividing
the number of orders fulfilled by the total number of orders received.
Order processing efficiency can be measured by comparing the average time it takes to fulfil a day’s orders to the standard time it takes to fulfil and order.
Order processing productivity involves an examination of the number of orders
fulfilled by each worker per hour. It is calculated by dividing the number of orders fulfilled per unit of labour per hour by the standard number of orders that can be fulfilled per unit of labour in one hour.
While the Middle East certainly offers outstanding logistics and transportation infrastructure, its distribution centres play a key role in its bid to become a logistics
hub. Proper warehouse management is therefore essential to increasing standards and efficiency in the industry as a whole. With the growing market, warehouses are becoming bigger and warehousing operations are becoming more challenging with increasingSKU volumes. Technology can help us to overcome these challenges with WMS.