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Warehouse Management Systems

A successful Warehouse Management System implementation require individuals who fully understand the operational aspects of a warehouse operation.  The term ‘warehouse’ can mean just storage, staging area, or an active picking floor (for direct order processing).  Warehouses are full of ‘stuff’ that has to be recorded, shelved (or palletized, containerized, etc.) or stored for some period of time.  The key is in retrieval; finding the stuff after you ‘put it away’.  This is often called a ‘pick’ process; where a system will produce a report, PDA screen (or other handheld device), or even shelve displays to direct a person (maybe a robotic process) to go find some ‘stuff’ and bring it (‘pick’) to a location; usually for packaging and subsequent transportation (shipping, FedEx, USPS, truck, etc.).

One way of identifying the ‘stuff’ is by bar code and shelf tagging.  Another (becoming more cost effective) is RFID (radio frequency identification device) tagging of individual items, their cartons or pallets.  In any case there is a schema to a warehouse (sometimes processed by randomization algorithms) that records where the ‘stuff’ was put away so someone/something can subsequently find it, retrieve or ‘pick’ it.

Once found or picked, the ‘stuff’ is then collected (like if you order from The Limited and want a blouse, skirt/slacks, undergarments, etc) and packaged and shipped.  A BOL (bill of lading) is prepared which may be just the attached invoice or FedEx shipping label, then the container (carton, envelop or container or truck or ship or airplane) is sent on its way.  The ‘carrier’ who picks up the ‘stuff’ all nicely packaged is then responsible for delivery to the customer or interim staging area (such as a centralized distribution or regional distribution center) where it is either used or forwarded to its final destination.

The Integrated Warehouse Management System should be capable of processing these functions while encompassing various technologies (bar coding, RFID, warehouse management systems, shipping and distribution and packaging systems.  Formalize written documents and procedures and documentation that identify how these systems function and how they fulfill a business requirement should be a key component.  The process flow of the accounting entries must reflect the business processes and the business plan to optimize the cash flow and expenses required to make such an operation profitable.  Furthermore, the system should be able to understand the data interlinking and data base integration requirements necessary to make all the pieces of an integrated warehouse management system ‘fit’ together; often from multiple vendors utilizing various technologies; all of which have to work together smoothly.

In a typical business situation, all this would be an integral part of an ERP system, with multiple components.  Some components (like the shipping/distribution) may be ‘third party’ systems as most ERP systems don’t deal well with this phase of the business.  The real ‘meat’ of the requirements for a Integrated Warehouse Management System should be an incorporation of the business rules and associated activities with the order processing, billing and cash management functions.  Depending upon specific industry requirements (pharmaceutical, retail, manufacturing, electronics, etc.), some of these detail items (like storage methods) require specific data and functional elements (like refrigeration and expiration date requirements).  In addition, each ‘customer’ or ‘vendor’ involved will have very specific requirements (for data, packaging, shipping, insurance, billing & notifications) that are unique to their specific operational needs.

Integral to the functioning of an Integrated Warehouse Management System is the order processing, shipping and payment processing reflecting the movement of goods (even between company locations).  This order processing, shipping and payment process is usually handled by electronic transactions.  These electronic transactions typically take the form of standardized Electronic Data Interchange (EDI) transactions and are transmitted between ‘Trading Partners’ by a variety of electronic messaging system transports (Secured Internet, Value Added Networks, Secure FTP).  This functional transaction process is defined within the methodology of Electronic Business Flow Management (EBFM) processes.

Traditional Electronic Data Interchange (EDI) and Just in Time (JIT) inventory management have merged with the focus on Internet Global e-Business to produce a new business process model: Electronic Business Flow Management (EBFM). This new business process model utilizes the traditional EDI infrastructure to form the foundation mechanism for electronic information flow that now feeds the Always On Time (AOT) inventory model. JIT is no longer sufficient, having been developed as an inventory reduction method; it has produced critical inventory shortages, which have been introduced into the process flow model by supply disruptions (strikes, inclement weather, wars, etc.). AOT represents a mechanism to insure that supplies (for manufacturing, distribution, and sales) are always available. This is accomplished by sophisticated inventory forecasting models, which in turn are fed constant information on supply availability and delivery schedules through EDI interfaces (both traditional EDI and the new Internet Global e-Business engines).

Building on previous supply chain models like KANBAN and other integrated Just In Time (JIT) systems, EBFM provides an automated approach to address the 'pull/flow' supply chain. This creation of the new EBFM business process model is inclusive of alternate supply sources that are dynamically balanced through the inventory and distribution control systems of an organization. This constant information flow from a multitude of sources provides the ability to create an AOT (Always On Time) inventory model. Supply outages, forecast with information from the EDI engines, will be pre-empted by rapid and automatic re-direction to supply alternates. This forecasted supply outage will trigger sophisticated inventory supply engines driven by the EBFM business model to generate additional EDI transactions that will alter existing purchase orders or transportation mechanisms (i.e. placement of an ocean cargo on the next Boeing 747 out of Hong Kong ). This process will enable a smooth and consistent performance of both the service and hard goods business cycle from raw materials through manufacturing to final consumptive delivery.

While still in its formative states, the EBFM model will enable the Global e-Business community to meet the constant and changing demand of the supply and demand cycle. On-going developments in high-technology hardware has provided the basis for sophisticated computer software engines that are capable of managing what will be enormous volumes of data. This constant flow of data will then be converted into manageable information, from which the EBFM model will be managed.

Business managers utilizing EBFM will have a tremendous advantage over those competing companies who will still rely on the old JIT inventory model and traditional business process management models. Usable and dynamic information from the EBFM model will provide instantaneous decision criteria for the demanding business decisions that sophisticated business managers have to make. This constant information flow to the management team of the organization will ensure the fast response that today’s business cycles require. It is not only the best product that makes the sale, but the availability of that product when, where and delivered as the customer wishes.

Skip Stein is prepared to assist your organization to meet the challenges presented by the evolving  Warehouse Management Systems. Contact us to learn how to implement EDI trading partner relationships or to grow existing relationships towards EBFM and the Global e-Business model.   

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Copyright © 1996-2008  Skip Stein
Last modified: September 19, 2008