Warehouse Management Systems
versus Extended ERP for Manufacturers
by David Barks, Vice President,
Radley Corporation
Any manufacturer that has a substantial number of shipments
from a distribution facility has likely at least considered bringing
some degree of automation to their warehouse and shipping functions.
For some companies, a full blown warehouse management system
(WMS) is almost a necessity, particularly if the operation relies
on an automated racking system, perhaps housed in a rack-mounted
structure with its own track-mounted materials handling system.
However, for the vast majority of manufacturers, even those that
complete a large number of shipments every day, a WMS that is
separate and distinct from their other business systems will
be counterproductive.
Even a full integration of WMS with an enterprise application
like enterprise resources planning (ERP) designed to eliminate
duplicate data entry will result in redundant systems and substantially
greater expense than a unified system. Moreover, WMS/ERP integrations
that rely on batch updates will create opportunities for inaccurate
information and will often slow operations down rather than expedite
them.
In this whitepaper, we will explore the drawbacks of integrating
standalone WMS and ERP systems, and make a case that for many
companies it makes more sense to extend the manufacturing application
used by the organization as a whole as opposed to integrating
with an entirely new technology stack. We will also offer advice
for selecting and implementing a warehouse automation solution
that works well with a manufacturing enterprise suite.
Basic warehouse management vs WMS
At a certain point in a manufacturing organization’s development,
management will begin looking for ways to automate the movement
of materials from manufacturing, into distribution and into the
customer’s hands. A broad spectrum of WMS can in fact help them
better utilize their workforce by automating the picking, staging
and shipping processes. The ultimate goal of course is to increase
the speed and reduce the cost of getting the right product to
the right customer at the right time. The primary business trigger
that often prompts a company’s management to begin considering
some type of WMS solution is the sheer number of shipments handled
each day. As the number of shipments increase, it becomes more
attractive to move the distribution process from an order-by-order
environment towards an arrangement that makes better use of labor
in the warehouse. Rather than sending someone into the warehouse
for each individual order, warehouse management technology can
make it possible for them to pick multiple orders in a single
pass through the warehouse, bring those orders to a shipment
staging area, crate them up appropriately for each carrier and
see that they are in the right place for pickup.
Warehouse management can also help automate the work of a number
or workers in the warehouse that might each be picking different
things that are all part of the same order. Through automation,
these workers can reliably be directed so that these items are
staged at the shipping area for proper inclusion in the combined
order. Moreover, it should be the goal of managers planning a
warehouse management project to allow warehouse workers to receive
instructions on what to pick on handhelds or other mobile devices.
This eliminates the need for workers to travel repeatedly to
and from a centralized dispatch station, where pick lists are
printed as hard copies and distributed. Most manufacturers are
producing a product that is then moving into an on-site or closely-located
warehousing or shipping area. If they are already running a modern
enterprise suite like IFS Applications, they have access to some
pre-existing logistics functionality which is tightly integrated
with inventory functionality and information on the customer
orders to be fulfilled.
Extended ERP
Extending that existing enterprise suite with straightforward
technology designed to direct workers in the warehouse can be
easily achieved without a standalone WMS solution. Moreover,
the extended ERP approach can enable the more challenging approaches
to picking and warehouse management including:
• Both batch and wave picking. Batch picking involves combining
the picking requirement for several orders and then sort the
materials for individual orders as the picker goes along. Wave
picking entails accumulation of a large number of orders for
picking as a batch and then sending picked items to a cartons
through an automated sorting apparatus that separates materials
for each order. • Voice-directed and light-directed picking.
Voice and light inputs can both instruct workers what to pick,
and extended ERP strategies will easily accommodate these methods.
• Picking by carrier. For some companies, it will make sense
to pick by carrier, particularly if there are a large number
of small shipments that need to be packaged accordingly for
UPS or FedEx while other larger shipments are treated much
differently for shipment by the pallet or truckload. • The
ability to drive picking information to warehouse workers over
handhelds in multiple languages. Even companies that are strictly
domestic in their footprint likely employ people for whom English
is a second language, and can benefit from making Spanish or
other languages available in the warehouse. Global companies
obviously need broad language support in their enterprise suite
and in their warehouse solutions, including through handhelds.
• The ability to accommodate requirements to pick and ship
items according to first-in, first-out (FIFO) or in accordance
with expiration dates.
• Revision level – which presents warehouse workers with the
challenge of looking at two of what appears to be the same
but in fact differ on the basis of detailed revisions or engineering
change levels that are tracked in the manufacturing system.
While these revisions are notated in inventory records, they
can not be noticed visually. Picking products that are subject
to revision levels requires warehouse workers to look into
bus inventory system to locate product characteristics and
pick by specifications for that customer.
At Radley, we believe that most companies will benefit more
from a unique approach of extending the logistics and shipping
functionality within an enterprise environment like IFS Applications
than they will from rolling out a full-blown WMS. After working
with a number of companies that have integrated full-blown WMS
systems with ERP systems, we have found that there is certainly
a gap between ERP distribution capabilities and WMS distribution
logistics. But that WMS probably duplicates a lot of the systems
within an ERP environment and delivers a lot of capabilities
that most manufacturers will not use.
We have found that most manufacturers simply need a few pieces
of key automation, logistics support and labor and productivity
enhancing features but don’t need all of the bells and whistles
of WMS. In our experience, we have had success extending the
warehousing capabilities of IFS Applications by blending our
automated workforce productivity suite which includes data collection,
mobile devices, truck mounted devices and the ability to direct
workers to the next task. This approach delivers functionality
for picking and warehouse automation, driving efficiencies and
automation to the work of people performing those functions.
A WMS might accomplish some of the same things, but brings
the added cost of additional licenses for the application and
database, additional server hardware, additional support and
maintenance fees and additional staff time to maintain expertise
on two disparate systems. Moreover, the integration of the ERP
and WMS will add cost not only in the initial implementation
but during each upgrade as the integration will need to be “uplifted”
to accommodate new software for both the ERP and WMS.
Furthermore, integrating a WMS technology stack with a pre-existing
enterprise suite like IFS Applications can effectively slow down
processes and sabotage lean inventory initiatives. When a WMS
and a manufacturing system are integrated, the typical means
of doing that is to periodically refresh data in the WMS in a
batch process from the manufacturing software. In situations
when product must be shipped literally right after it comes out
of manufacturing, that batch integration is often not fast enough.
In these situations, an up-to-the-minute snapshot of the manufacturing
system is important. Furthermore, many companies today are turning
inventory too quickly to accommodate a batch process update to
a WMS, and can experience even more problems when it comes to
visibility from the manufacturing side of what is currently in
inventory in the warehouse.
In a make-to-stock environment, manufacturers are always trying
to make just enough product and have the correct amount of finished
goods in inventory. Lacking up to date visibility of what is
in the warehouse, it is harder to manage that lean inventory,
and a manufacturer might make excess of a product. Moreover,
product that according to the manufacturing system is still available
in the warehouse may have been shipped, making it impossible
to make good on promised delivery times.
These dynamics are illustrated by our experience with Richco,
a global manufacturer of quality plastic fasteners, wire management
devices, circuit board hardware, and custom components headquartered
in Morton Grove, Ill. Richco had implemented IFS Applications,
and also had a standalone, paperless WMS. When they started implementing
IFS Applications, they found that there were some things in their
pre-existing WMS that weren’t inherent in their new enterprise
suite, but there were also some overlaps and redundant functionality.
In order to bridge the gap between the two systems, it seemed
like they would have to go back to a paper-driven picking process,
which would have represented a step backwards. We were able to
implement extensions we had developed cooperatively with other
IFS customers to deliver the warehouse automation functionality
Richco required, eliminating the need for a separate WMS.
Planning the Project
When preparing to implement warehouse automation technology
– be that a full-blown WMS or tools to extend existing ERP functionality
– there are a number of hard questions to be asked. Making all
of the decisions necessary to chart a course of action should
not be rushed as the results of these decisions impact the business
for many years to come. Handling diverse customer needs Understand
clearly what their customer requirements are.
Many organizations believe they have a single, static process
they follow when serving all of their customers. Yet upon examination,
most business customers have varying needs. Understanding and
categorizing the varying needs of different customers can allow
a company to create a more flexible solution as opposed to a
rigid warehouse solution that meets 100 percent of the needs
of 50 percent of your customers.
Consider for a moment that a business has high volume customers,
high financial reward customers, demanding customers and low-volume
customers. A manufacturer may have customers in different industries
that need for things to be done in a slightly different way.
In some cases, the expectations of, or regulatory demands placed
on, the customer’s customer may impact the shipping process.
In situations like this, integration not only with the manufacturing
and inventory systems but customer relationship management systems
may be critical. Diversity in order size alone may require parallel
picking and shipping systems. Some customers you may order by
the hundred gross while others order by the dozen. In such a
situation 50 percent of orders might be packaged for delivery
by UPS while others are palletized and prepared for intermodal
transport.
Respecting the nature of the workforce
In planning a warehouse automation project, it is critical that
management understand the capabilities of their workforce. Can
they handle the learning curve presented by various automation
solutions, and will they be receptive to the resulting change?
Remember that, particularly if warehouse staff are performing
manual processes, they may need a very concrete overview of how
automation will affect them and benefit the company. Interdepartmental
cooperation While warehouse automation is facilitated by technology,
it is not strictly an IT-driven initiative.
The ultimate solution must be driven not only by customer needs,
but by the business intelligence needs of manufacturing, which
involves knowing what is in the warehouse at any given time,
and by senior management who need to assess inventory levels
and monitor business performance. Senior management must be directly
involved at the early stages of a process to establish goals
and deliverables. Once the goal is identified, it is essential
that key and knowledgeable members of manufacturing, distribution
and IT departments work closely to achieve that goal. In most
cases, a lot of the information necessary to achieve warehouse
automation resides in the manufacturing and customer relationship
management systems, so a thorough audit of existing systems and
functionality should be performed prior to selecting additional
technologies to add to the mix....end.
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