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Getting to Know Your Distribution Center – The First Step in a Proper Warehouse Management Software Selection Process

By Ian Hobkirk | 08/13/2017 | 3:34 AM

IStock_000067146697_MediumPerhaps the most important way to ensure a successful Warehouse Management Software (WMS) project is to begin by thoroughly understanding the operational requirements. This may sound like a self-evident statement, but most failed WMS implementations can be traced back to a team of project leaders who only had a surface-level understanding of the needs of the distribution center, and were either unwilling, or unable to do the hard work of digging into the details of how things really work on the “other side of the wall.”

 

It is appropriate, therefore, that our first step in the process of selecting a new WMS begins with “Discovery” – or, in some cases, “re-Discovery” of the day-to-day requirements of the distribution center.

 

An effective discovery process consists of the following tasks:

 

1. Kickoff Meeting: This involves assembling all key stakeholders to review the project tasks, timetable, and roles and responsibilities. Another key component of the project kickoff is a thorough “future visioning session” to document the various changes which could impact the business over the lifecycle of the software system which is being selected.

 

2. Personnel interviews: These interviews are often most effective when conducted in an organized way in a conference room as opposed to on the warehouse floor, where notes can be more easily taken and through documentation can be created.  The following key staff members should generally be interviewed:

 

    • Warehouse manager
    • Receiving manager
    • Shipping manager
    • Transportation/logistics manager
    • Inventory control
    • Manufacturing/production manager (if applicable)
    • Procurement/purchasing

3. Detailed Process Observation: This task involves taking the detailed descriptions of processes from the interview stage and comparing them to how the processes are observed to work in the distribution center. This task involves actually watching processes like picking and packing, and sometimes following an inbound and outbound order through its lifecycle in the warehouse. This observation often affords an opportunity to talk to workers who may have additional details of how processes work, and exceptions to the rule which must be accommodated by the software.

 

4. Document IT architecture and infrastructure: This task involves discussing the various software systems in use and their relationships to each other. It is important to document which systems and versions are in use, and what key functionality is handled by each. Interface points should be mapped (what data elements are exchanged between systems, how frequently, and in what format). Preferences that the IT group may have for databases, programming languages, and operating systems should be noted.

 

5. Analyze operational data: This task involves reviewing key operational data and identifying patterns which will help in subsequent steps when improved processes must be designed. Key data reports which are often reviewed at this time include:

 

    • Outbound order volumes, average and peak
    • Typical order profiles by order type
    • Typical inbound purchase order profiles

Subsequent blogs will outline the steps that follow Discovery in a proper WMS selection process.

Better Transportation Management: Three Factors that can have a Big Impact

By Ian Hobkirk | 01/27/2017 | 6:16 AM

Private: Better Transportation Management: Three Factors that can have a Big Impact

January 27th, 2017

 

For many companies, better transportation management is an area of significant savings potential.  While there are dozens of ways to attack transportation cost reduction, this blog focuses on three factors that can have the biggest positive impact on a company’s ability to manage freight:

 

  • Improved ability to source competitive rates from carriers
  • Improved ability to optimize loads,
  • Improved ability to more easily select the right carrier for each load

This blog will discuss these three factors and highlight areas where companies have used improved processes and enabling technology to reduce rates and improve service levels.

 

Carrier Contract Procurement

Managing the carrier bidding process can be a daunting proposition – so daunting that many companies do it infrequently or simply rely on spot rates. Why is rate procurement so challenging for many companies? To begin with, the sheer volume of data to be managed can be intimidating. Companies must first analyze their historical freight spend, scraping together what data they have from freight bills and their internal systems. They must then identify trends and make predictions for future business levels in various regions. Then, they must take this massive forecast and transmit it to dozens of carriers for bidding…and for many firms, the hard part hasn’t even begun yet.

 

When the bids are received, comparing and analyzing them all can test the limits of many data analysts’ abilities. Most companies logically strive for uniformity amongst bids – the proverbial “apples-to-apples” comparison. While a uniform comparison is vital when analyzing multiple bids, it can often stifle the carriers’ ability to offer creative discounts. When carriers offer to drop rates when certain lanes can be bundled together, or create other conditional scenarios, a shipper needs to be able to weigh these possibilities against other bids. Spreadsheets are often stretched thin when it comes to these tasks.

 

Many companies have found that the solution lies with bid management tools. These tools are sometimes – but not always – contained in their company’s Transportation Management Software (TMS) system. Newer TMS systems often have web-based user interfaces to manage the requesting and submitting of bids. TMS providers who offer their solution in an “on-demand” format often have access to a rich database of rates, since all of their users manage loads on the same server. Some of these TMS providers have begun offering “community bench-marking” services to help identify situations where all of the carriers may have bid high on some lanes. They can even suggest alternate carriers who may be able to offer lower rates than the core bidders.

 

One area where many TMS providers can lag behind however, is in the ability to offer so-called “expressive bidding” capabilities to carriers. This technology still largely falls in the domain of Online Procurement software providers. These companies offer web-based bid management tools that allow carriers to submit “if/then” statements that relate to specific conditions under which they can offer discounts; if the shipper is willing to meet the conditions, their price structure will change. Online Procurement providers also offer the ability to analyze these expressive bids side-by-side with bids from other carriers and play “what if?” When complex scenarios can be evaluated and compared with other bids, then the balance between uniformity and creativity is reached and the shipper benefits.

 

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Load Optimization

For many traffic departments, transportation execution means simply selecting the best carrier and effectively tendering loads. Little in the way of true dynamic load optimization takes place on a day-to-day basis. The reason? Dynamic load optimization with manual tools is only possible when shipment volumes are low enough for shipping analysts to examine each load on a case-by-case basis. High-volume optimization requires the use of a complex analytical engine usually found only in the optimization module of a Transportation Management Software system. There are four key types of load optimization that most companies contend with:

 

MODE OPTIMIZATION

Many companies rely on basic rules of thumb such as weight cutoffs to determine when a load gets shipped via a parcel, LTL, or truckload carrier. However, while these rules may be correct eighty or ninety percent of the time, there are still a high number of instances where a sub-optimal mode gets selected. The only effective remedy is the ability to dynamically rate shop multiple modes and carriers for every load. Only then can the complexities of each carrier contract be taken into account, and regional anomalies be considered.

 

CONSOLIDATION OPTIMIZATION

As shipment volumes creep up, it can become more challenging to identify and combine multiple loads which are scheduled to ship to the same destination on the same day. It can be even more difficult to identify shipments scheduled to ship on the following day to the same destination, and determine if they can be pooled while still meeting the customer service objective. A robust TMS – relying on accurate data entered in the Order Management System – can often identify these shipments and weigh the cost/service tradeoffs.

 

POOL-POINT OPTIMIZATION

When companies have a number of suppliers in some distant region, it may make sense to pool inbound loads in a remote location and then make a full truckload shipment to their final destination. In this instance, even more complex decisions must be made as to when it makes sense from a cost and service perspective to follow this strategy. TMS systems equipped with a load optimization module can perform pool point optimization based on pre-defined business rules.

 

MULTI-STOP TRUCKLOAD OPTIMIZATION

This form of optimization creates loads where a single truck can leave a distribution center full, and make multiple deliveries. While multi-stop truckloads often can save money, they can be very challenging to create. How much can fit on a truck before it is full? How long will it take to make the multiple stops, and will each load arrive on time? Are the savings worth the complexity? Only an advanced optimization engine can weigh these decisions in a high volume environment. Not all TMS systems offer this functionality, and those that do must have the system fine-tuned to accommodate each company’s business rules.

 

Carrier Selection & Tendering

The remaining steps in a winning transportation management strategy are selecting the best carrier for each shipment and tending the load to that carrier. However, without the ability to rate-shop against multiple carriers, and to manage a tiered tendering system, companies tend to rely on rules of thumb to prioritize carriers in particular regions. The process can get complicated when the primary carrier is unable to accept a load, and secondary carriers must be used. Furthermore, the staff members responsible for selection and tendering may be influenced by outside factors – they may prefer to give loads to carriers that they have a personal relationship with, or they may avoid rating loads with multiple carriers simply due to the time required to do so.

 

Without the ability to easily rate loads against electronic contracts, the traffic department spends much of its time calling carriers, getting quotes, and then calling back the “winning” carrier to tender the load. The result is a traffic group mired in mundane, repetitive transactions, and unable to focus on improving efficiencies.

 

A TMS can rapidly rate each load against an electronic rate table and determine the first, second, and third choice carriers for each. This ranking can be based on pre-defined business rules rather than an employee’s personal affinity for a particular carrier. In this way, a company-wide transportation program can be executed against, even if there are many facilities planning loads. Additionally, more advanced criteria can be used to select carriers other than simply the lowest cost. For example, to achieve optimal rates, a shipper may have had to make certain capacity commitments to carriers in specific lanes. An advanced TMS can monitor performance against these commitments and direct loads to lanes where the shipper may be falling behind.

 

When it comes to load tendering, an effective TMS system can work wonders to reduce the administrative workload of the traffic department. Rather than getting bogged down in a cycle of voice mails and call backs, the TMS can be set to automatically tender loads using defined procedures. For example, the load can be tendered to the first-choice carrier, and if that carrier rejects the load, it is then tendered to the next carrier in succession and so on. Alternately, a load can be “blast tendered” to multiple carriers at once, and the first responder receives the load. When capacity is severely constrained, many TMS systems offer spot bidding capabilities, where shippers can post loads on a spot board and carriers can bid on it.

 

A key to making these tendering processes work is effective electronic carrier communications. A growing number of carriers are able to communicate via EDI, using direct system-to-system communication. However, for many shippers, their best rates come from smaller carriers who are unable to use EDI. For these, web portal communications can be the best way to interact. Loads are auto-tendered via email, and the carrier clicks on a link within the email to view the load and respond. Responses are keyed directly into the TMS by the carrier themselves, eliminating manual data entry and decision making by the shipper.

 

Other Areas to Target

In addition to the three largest areas discussed in this blog, many companies have experienced significant cost reduction by targeting other areas such as: 

  • Improving tracking and tracing of shipments (improving customer service levels and reducing administrative load)
  • Improving visibility of inbound loads (leading to distribution optimization and improved fill rate)
  • Improved ability to audit and pay freight bills (leading to reduced freight spend and administrative costs)

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« 10 Ways to Achieve E-Commerce Distribution Success, Part 10 of 10 - Improve Wave Management

By Ian Hobkirk | 10/17/2016 | 6:05 AM

By Ian Hobkirk
Managing Director of Commonwealth Supply Chain Advisors

Under increasing pressure to work faster, better, and smarter in today’s omni-channel and e-commerce business environment, companies need help getting their distribution operations up to speed with customer demands and expectations. To help, Commonwealth Supply Chain Advisors has identified 10 key tactics that successful companies are employing in order to make a graceful transition to higher levels of e-commerce in the distribution center.

 

In Parts 1 through 4 of this ten-part blog series, I covered the four Basic Tactics: Create a Forward Pick Area, Setup Effective Replenishment, Determine Overall Pick Strategy and Determine the Optimal Pick Methodology. Parts 5 through 7 focused on the Intermediate Tactics: Practice Real-Time Warehousing, Optimize Packing, and Manage Parcel Shipments Effectively. Parts 8 and 9 covered the first two Advanced Tactics: Pick-to-Shipping Container and Goods-to-Picker Systems. This blog, the final blog in our 10 part series, is about improving wave management, the third Advanced Tactic.

 

 

TACTIC #10: IMPROVE WAVE MANAGEMENT

The forms of material handling automation covered in Part IX can create tremendous labor savings in the order picking process, largely through the creation of very large pick waves. Rather than accessing the same pick face several hundred times to pick a fast moving item, the entire supply of that item may be picked at one time and then separated by order using either a manual put-to-store process, or automated unit sortation technology such as a tilt-tray, cross belt, or bomb-bay sorters. These processes and technologies can contribute to ultra-high pick rates, but can sometimes create an unintended consequence.

 

Cluster picking and batch picking work best when a large pool of orders is built and combined into a pick wave. These large waves can take a long time to pick – sometimes several hours. This can have an impact on a company’s order cutoff time – the latest time a consumer can place and order and expect it to ship the same day it is placed. Order cutoff time is a function of the parcel carrier’s last pickup time, and the total order processing time. With a four-hour wave-pick processing time and a parcel pickup time of 7:00 PM, a company must have an order cutoff time of around 1:30 PM.

 

By having such an early cut-off time, a company may place itself at a disadvantage compared to its competitors who may be smaller in size but able to offer later cutoffs. Furthermore, they may miss an additional opportunity to up sell consumers by offering faster service for an expediting fee. If the company had a way to quickly process a smaller percentage of orders and pick them faster, the company might be able to offer later cutoff times for those orders where an additional fee is paid, but keep the same standard cutoff time for non-expedited orders. The challenge with this strategy in a highly automated system is that in many cases, the entire large pick wave must first be processed before any additional orders can be processed.

 

“Wave-less” Picking and Other Variations

In recent years, advances in wave management have allowed for the ability to dynamically insert high-priority orders into a large wave without having to wait for wave completion. This capability is sometimes referred to as “wave-less” picking, since the traditional concept of a pick wave is altered considerably with this approach. It should be pointed out that with this concept, the benefits of picking in large waves – grouping similar orders together and picking SKUs in bulk – are still preserved. However, a much greater level of flexibility is available to allow orders to be prioritized on the fly without waiting for a wave to complete. There are also overall efficiency benefits, as the wave ramp-up and ramp-down periods – with accompanying productivity declines – can be smoothed out.

 

This concept has been largely pioneered by developers of warehouse control software (WCS). This software acts as middleware between a WMS and the machine-level controls of the material handling system. It manages the orders in a particular wave and directs the picking process and manages the material handling equipment (MHE). This capability – while not inexpensive – can sometimes be implemented without replacing either the MHE or WMS in the distribution center.

 

 

It’s Time to Hone Your E-Commerce Distribution Strategy

This concludes our series on e-commerce. The proliferation of e-commerce affects all companies across the entire consumer goods supply chain, whether they are large or small, manufacturers or retailers. Even if a manufacturer has not chosen to develop their own e-commerce channel, it may be driven into the fray by having to fulfill e-commerce orders on behalf of their retail customers. With proper foresight and the courage to take the first few steps, companies can embrace e-commerce as a competitive differentiator that can drive higher profits and ensure that the enterprise is well positioned for the future.

 

Related Reading: Whitepaper: “E-Commerce in the Distribution Center, Making a Graceful Transition.”

10 Ways to Achieve E-Commerce Distribution Success, Part 9 of 10 - Employ Goods-to-Picker Systems

By Ian Hobkirk | 10/05/2016 | 7:14 AM

October 5th, 2016

Under increasing pressure to work faster, better, and smarter in today’s omni-channel and e-commerce business environment, companies need help getting their distribution operations up to speed with customer demands and expectations. To help, Commonwealth Supply Chain Advisors has identified 10 key tactics that successful companies are employing in order to make a graceful transition to higher levels of e-commerce in the distribution center.

 

In Parts I1 through 4 of this ten-part blog series, I covered the four basic tactics: Create a Forward Pick Area, Setup Effective Replenishment, Determine Overall Pick Strategy and Determine the Optimal Pick Methodology. Parts 5 through 7 focused on the Intermediate Tactics: Practice Real-Time Warehousing, Optimizing Packing, and Manage Parcel Shipments Effectively. Part 8 embarked on the first of the three Advanced Tactics: Pick-to-Shipping Container and this blog, part 9, explores Goods-to-Picker Systems as the second Advanced Strategy.

 

 

TACTIC #9: EMPLOY GOODS-TO-PICKER SYSTEMS

Eventually, if piece-pick requirements increase to a certain level, then goods-to-picker systems may make sense as a means of reducing pick labor (and improving space utilization). While good cart-based systems can produce pick rates of between 100 and 200 lines per hour, goods-to-picker systems have been known to allow rates of 400–600 lines per hour.

 

Goods-to-picker systems are available as many different forms of technology. A company’s choice of a system should be driven by:

 

•    Throughput requirements

•    Product makeup

•    Order profiles

•    Space requirements

•    Budgetary limitations

•    Flexibility needs

 

Some of the major forms of goods-to-picker systems include:

 

Horizontal Carousels

These systems produce very high pick rates but are not as space-effective as other technologies. Creative use of mezzanines and lift tables can extend the working height of these systems and make better use of cube. Successful horizontal carousel systems require that multiple units be grouped in a pod, where a single picker works multiple machines at the same time. This necessitates the use of sophisticated software to plan and execute each batch of orders that are picked. Unfortunately, over the last several decades, the mechanical designs of horizontal carousels evolved at a faster rate than the requisite software capabilities, and as a result many horizontal carousels systems were installed in the 1980’s and 1990’s, which failed to meet expectations. Some supply chain executives have a bad taste in their mouths from this situation; these individuals can take comfort in the improved software capabilities that have arisen in recent years. There are many, many examples of successful systems in a wide variety of industries.

 

Vertical Carousels     

Vertical carousels typically do not produce the same high pick rates as their horizontal cousins, but can still often exceed rates from cart-based systems. Vertical carousels excel when space utilization is the dominant design factor. The full height of a building can be typically utilized for storage while the picker remains on the floor level. Like horizontal carousels, software and system design are key to ensure that operators can pick from multiple units at the same time. It is also important that the parts stored in vertical carousels be somewhat uniform in size and height.

 

 

Vertical Lift Modules

From the outside, Vertical Lift Modules (VLMs) appear very similar to vertical carousels, but their operation is very different. A big advantage that VLMs have in this case is their ability to accept items of varying sizes and heights. VLMs are not quite as space efficient as vertical carousels due to the large extractor shaft in the center of the unit as well as lost space from the access window, but these disadvantages start to lessen as storage heights increase. Like vertical carousels, VLMs should be considered in areas that are space-constrained.

 

Automated Storage and Retrieval Systems (AS/RS)

AS/RS is an entire category of its own, and comprised of a variety of products which each work slightly differently. The major categories include pallet-handling and case-handling systems, with many varieties even within these categorizations. Common characteristics involve an extractor device of some kind retrieving a load and bringing it to an operator for picking.

Related Reading on how AS/RS can save space: “Six Ways to Postpone Your Warehouse Expansion.”

 

In the next and final installment of this ten-part blog series we’ll discuss the third Advanced Topic: Improve wave Management.

10 Ways to Achieve E-Commerce Distribution Success, Part 8 of 10 - Pick-to-Shipping-Container

By Ian Hobkirk | 10/05/2016 | 5:16 AM

10 Ways to Achieve E-Commerce Distribution Success, Part 8 of 10 – Pick-to-Shipping-Container

September 28th, 2016

Under increasing pressure to work faster, better, and smarter in today’s omni-channel and e-commerce business environment, companies need help getting their distribution operations up to speed with customer demands and expectations. To help, Commonwealth Supply Chain Advisors has identified 10 key tactics that successful companies are employing in order to make a graceful transition to higher levels of e-commerce in the distribution center.

In Parts 1 through 4 of this ten-part series, I hit on the four basic tactics: Create a Forward Pick Area, Setup Effective Replenishment, Determine Overall Pick Strategy and Determine the Optimal Pick Methodology. Parts 5 through 7 focused on the Intermediate Tactics: Practice Real-Time Warehousing, Optimize Packing, and Manage Parcel Shipments Effectively; with this blog, part 8, we embark on the first of the three Advanced Tactics: Pick-to-Shipping Container.

 

 TACTIC #8: PICK-TO-SHIPPING-CONTAINER

 

As discussed in Tactic #6 (Part VI – Optimize Packing), picking to the shipping container can greatly reduce handling requirements in the packing area. In order to execute on a strategy like this, there are several pre-requisites:

  1. Accurate product dimensions and weight must exist
  2. Scan-verification at time of picking must take place
  3. A cartonization system must be used to calculate the correct size shipping container
  4. A capable WMS system must be in use

 

Product Dimensions

For companies with a large number of SKUs available for e-commerce orders, capturing the measurements of each item can seem like a daunting task. However, automatic cubing devices can greatly speed this process. An automatic cubing device uses ultrasonic technology to ascertain the dimensions of an item. An operator places the item on the cubing device, presses a button, and within seconds, the length, width, height, and weight of the item are captured.  A SKU number is entered (or scanned from a bar-code), and the information is recorded in a database.

Image Source: Cubiscan

 

Using this technology can be a fast and accurate way to capture cubic dimensions of items. A variety of such devices are available, so companies should choose carefully. Minimum and maximum product size plays a role in device selection, as does the frequency of irregular parts (items that are not shaped like a rectangle). Cubing devices can usually be purchased or rented for short term engagements.

 

In high-inventory-turn environments, many companies find that an effective approach to cubing is to capture the cube of all inbound product at receipt, when it must be handled anyway. Then, after the bulk of the SKUs have been cubed, the remaining items are cubed as needed by selecting them from their bin locations.

 

Even with cubing technology, the effort is still very labor-intense, as ultimately, each SKU in the DC must be handled. In view of this, careful planning should go into the effort to ensure that all of the necessary data is collected. It is vital to distinguish between different pack sizes of the same item. For example, an item may come in a pack size of three. It is important to know if the unit of sale in this case is one or three. If the saleable unit is at the “each” level, then the box must be opened and the individual unit cubed. If the unit is sold in multiple pack sizes, it can be helpful to capture each individual pack size separately. In some cases, vendors may be able to provide data on product dimensions, but the same care must be exercised to ensure that the pack-size issues are communicated properly.

 

Although time-consuming, gathering cube data can be extremely useful for a number of distribution initiatives, including:

 

  • Picking to the shipping container
  • Slotting
  • System-directed put-away
  • Check-weighing
  • Pre-manifesting

 

Related Content: Planning a Warehouse Layout with Imperfect Data

 

In the next installment of this ten-part blog series we’ll discuss the second of the three Advanced Tactics: Employ Goods-to-Picker Systems.

 

 

10 Ways to Achieve E-Commerce Distribution Success, Part 7 of 10 – Manage Parcel Shipments Effectively

By Ian Hobkirk | 09/20/2016 | 10:15 AM

September 20th, 2016

Under increasing pressure to work faster, better, and smarter in today’s omni-channel and e-commerce business environment, companies need help getting their distribution operations up to speed with customer demands and expectations. To help, I’ve identified 10 key tactics that successful companies are employing in order to make a graceful transition to higher levels of e-commerce in the distribution center.

In Parts 1 through 4 of this ten-part series, I covered the four basic tactics: Create a Forward Pick Area, Setup Effective Replenishment, Determine Overall Pick Strategy and Determine the Optimal Pick Methodology. Parts 5 and 6 introduced the first two Intermediate Tactics: Practice Real-Time Warehousing and Optimize Packing. This blog, Part 7 is about how to manage parcel shipments effectively.

 

 TACTIC #7: MANAGE PARCEL SHIPMENTS EFFECTIVELY

 

With increased e-commerce come increased levels of parcel shipments. The choice of parcel carriers in the United States is generally limited to two main providers: UPS and FedEx, with some shipment profiles also lending themselves well to the United States Postal Service (USPS).  Among shippers, the choice of which carriers to use is almost a religious debate. For every shipper with a strong preference for one carrier, there is another shipper with the same preference about the opposite carrier. Horror stories abound about “the time we switched to the ‘other’ carrier”, and why we switched back.

 

Part of the reason for such differing opinions often comes down to the strength or weakness of the shipping manager’s relationship with the parcel carrier’s local account manager. The speed with which a carrier acts to resolve problems, and the perceived level of attention from the carrier, often factor heavily into a shipper’s choice. Additionally, shippers may go for long periods of time without aggressively renegotiating rates. Then, when they introduce the competing carrier and give them an opportunity to bid for the business, the new carrier submits extremely aggressive rates in an attempt to unseat the incumbent. This can lead to the perception that the shipper had been taken advantage of by the incumbent carrier. In reality, both major parcel carriers tend to get complacent when a shipper does not aggressively negotiate for better rates on a regular basis.

 

Dynamic Multi-Carrier Rate Shopping

To effectively deal with this oligopoly, I often recommend that shippers divide their shipments between UPS and FedEx, rather than giving one carrier all of the business. This forces both carriers to constantly be “on their toes” to offer competitive discounts, and allows shippers to determine the best carrier for each parcel on a shipment-by-shipment basis. To do this effectively requires the use of multi-carrier manifesting software. Rather than having separate computer terminals for both UPS and FedEx manifesting, these systems allow each parcel to be quickly shopped against rates from both carriers (and the USPS in many cases), and select the lowest cost provider based on the shipment characteristics, destination, and service level required. In a matter of seconds after weight capture, the appropriate carrier can be selected and a shipping label can be printed, from one terminal and one label printer. Manifesting software can interface with the WMS or ERP systems to receive shipment data and transmit tracking numbers and other data in a timely fashion. Multi-carrier rate shopping can reduce freight spend, improve manifesting efficiency, and reduce the number of terminals and other hardware required on the warehouse floor.

 

Parcel Invoice Auditing

In addition to making effective carrier-selection decisions upfront, it is just as important for companies to carefully audit their parcel invoices after the fact. For many firms, this is a daunting challenge. Parcel bills are complex by their very nature. In addition to ensuring that the correct rates and discounts have been charged, a single parcel shipment can have a maze of confusing accessorial charges attached to it, which may or may not be valid. Duplicate shipments may be invoiced. The guaranteed service level may not have been met by the carrier. Proper auditing involves at least 34 points of validation on each shipment, including:

 

Parcel Invoice Auditing Points
1. Incorrect Rate or Discount 13. Inaccurately Billed Collect Shipments 25. Saturday Delivery and Pick-up Validation
2. Incorrect Accessorial Charges 14. Inaccurately Billed 3rd Party Shipments 26. Early A.M. Deliveries
3. Late Deliveries (GSRs) 15. Duplicate Invoice 27. Invalid Account Number Usage
4. Dimensional Weight Errors (DIMS/SCC) 16. Duplicate Tracking Number 28. Returned Service Labels not used
5. Manifested but Not Shipped (Voids) 17. Inactive Account Reporting 29. Additional Handling Charges
6. Address Corrections 18. Multiple Account Validation 30. No Proof of Delivery
7. Commercial/Residential Adjustments 19. Declared Value (Insurance) 31. Special Contract Consideration
8. Delivery Area Surcharge (DAS/Rural) 20. C.O.D.s 32. Packages Not Previously Billed
9. Extended Commercial/Residential DAS 21. Undeliverable Returns 33. Chargebacks
10. Fuel Surcharge 22. Weight Accuracy 34. All Miscellaneous Charges
11. Minimum Net Charge 23. Large Package Surcharge  
12. International Import and Export 24. Late Payment Fee Visibility  

 

Companies that have invested time into a meticulous auditing process generally find that they are able to uncover a surprising number of errors and recover no small amount of funds. However, the act of checking each of these 34 points can be a never-ending task that consumes a tremendous amount of administrative resources. Many companies choose to outsource this function to a third-party auditing firm that specializes in parcel billing. These firms often work on a contingency basis, and only bill their clients for a percentage of the funds they are able to recover.

 

In the next installment of this ten-part blog series we’ll move on to the Advanced Tactics, starting with: Pick-to-Shipping Container.

10 Ways to Achieve E-Commerce Distribution Success, Part 6 of 10 – Optimize Packing

By Ian Hobkirk | 09/13/2016 | 7:06 AM

September 13th, 2016

Under increasing pressure to work faster, better, and smarter in today’s omni-channel and e-commerce business environment, companies need help getting their distribution operations up to speed with customer demands and expectations. To help, I’ve identified 10 key tactics that successful companies are employing in order to make a graceful transition to higher levels of e-commerce in the distribution center.

In Parts 1 through 4 of this ten-part series, I hit on the four basic tactics: Create a Forward Pick Area, Setup Effective Replenishment, Determine Overall Pick Strategy and Determine the Optimal Pick Methodology. Part 5 introduced the first Intermediate Tactic: Practice Real-Time Warehousing and this blog, Part 6 details how to optimize packing.

 

TACTIC #6: OPTIMIZE PACKING

The packing operation is often the biggest area of inefficiency that still remains when distribution centers convert to higher levels of e-commerce. Packing requirements often creep up over time, and since the evolution is gradual, companies often initially address the needs with manual processes that simply proliferate as volumes increase.

 

There are four levels of packing automation which companies often go through in their evolution.

 

Evolution of Packing Methodology: From Manual to Fully Automated

 

Manual Packing

 

 

 

 

 

 

 

Specialized Packing

 

 

 

 

 

 

 

Semi-Automated Packing

 

 

 

 

 

 

 

Fully-Automated Packing

 

 

 

 

 

 

 

Manual Packing

In manual packing environments, large pack stations are utilized, each staffed by a worker who performs all of the various packing and shipping functions themselves. While having a greater breadth of ability, this worker usually becomes a “jack of all trades,” and is unable to execute the packing process in a very efficient manner.

 

As the image above indicates, there are as many as ten (10) steps in a packing process, and it takes a very talented worker to master all of these and be able to rapidly transition from one diverse task to another. Carton erection, order checking, dunnage & sealing, manifesting, and label printing require a highly specialized skill set. Having a single worker perform all of these functions does not lend itself well to economies of scale.

 

Additionally, with manual packing, each packing station must have a significant amount of equipment and supplies: stacks of knocked-down corrugate, case sealing devices, dunnage machines, bar-code scanners, parcel weigh-scales, label printers, and other devices. The cost of acquiring and maintaining all of this equipment can be high.

 

Manual packing is often practiced in non-real-time warehousing environments, where the absence of bar-code scanning at picking necessitates a secondary checking process during packing. This amounts to significant additional labor requirements, as well as additional scanning equipment and computer terminals at each packing station. The job requirements for the packing role also increase to a higher level of sophistication than would otherwise be required.

 

Even within the realm of Manual Packing, however, it is possible to make simple changes which can lead to process improvements. For example, one often-overlooked device in this area is the automatic tape dispenser. These units can be programmed to dispense a specific length of tape that is suited to the size carton being used. Operators push one button, and a piece of tape is quickly fed out of the machine, and applied to the parcel. Pack times are reduced as is tape consumption.

 

Specialized Packing

A natural evolution towards greater packing efficiency involves a simple division of labor into two basic roles: (a) packer and (b) manifesting clerk. In this way, the more manual aspects of packing (case erection, sealing, etc.) can be performed by workers with those skill sets, and the more information-oriented function of manifesting can be performed by another worker. Expensive equipment like scales and printers can be isolated to just the manifesting function, and overall cost can often be reduced.

 

Semi-Automated Packing

Semi-automated packing actually reduces a number of the packing steps by utilizing a “pick to shipping container” process. While Tactic #8 will discuss how this functionality can be achieved in more detail, migrating to this operating method can produce real savings.

 

Case erection is performed en masse prior to order picking, sometimes using automated carton erectors. Ideally, the parcel carrier should also be selected prior to picking. This is usually possible if a good database exists of unit weights to enable effective multi-carrier rate shopping. Once the carrier is chosen, the shipping label is applied to the carton and serves as a “carton ID label” for the life of the order in the distribution center. Two very tedious functions – carton erection and label application – can be converted to repetitive, assembly-line style functions.

 

Picking to the shipping container is usually only practical where real-time warehousing is used, and the pick transaction can be confirmed with a bar-code scan at the time of pick; this eliminates the need for a labor-intense secondary check at packing.

 

During the picking process, units are picked and placed directly in the appropriate shipping container, eliminating the need for extra handling at packing. The packing function is reduced to adding documents and dunnage, and case seal. The manifesting function is reduced to a simple weight verification and sortation by carrier.

 

Fully Automated Packing

Fully automated packing involves the use of three pieces of equipment to round out the packing and shipping process:

  •  Case sealers
  • In-motion weigh scales
  • Sortation technology

This equipment must, of course, be tied together with a well-designed conveyor system with an appropriate amount of accumulation capacity.

 

Spotlight: WCS

Managing the various devices required for fully automated packing can sometimes be challenging. If shipping label application is to be performed during packing, it is especially important for data transmission speeds to be fast. Some companies have found that the use of a Warehouse Control Software (WCS) system simplifies device management and facilitates greater communication speed. Architecturally, a WCS sits between the WMS and the machine level controls for the conveyor, weight scale, printer-applicator, and any sortation equipment that is used. To learn more about the role of a WCS in the warehouse, see this presentation: “WMS vs. WES vs. WCS, Sorting out the Truth from the Hype.”

 

 

In the next installment of this ten-part blog series we’ll move on to cover the third and final Intermediate Tactic, Manage Parcel Shipments Effectively.

 

10 Ways to Achieve E-Commerce Distribution Success, Part 5 of 10 – Practice Real-Time Warehousing

By Ian Hobkirk | 09/08/2016 | 7:20 AM

September 2nd, 2016

Under increasing pressure to work faster, better, and smarter in today’s omni-channel and e-commerce business environment, companies need help getting their distribution operations up to speed with customer demands and expectations. To help, I’ve identified 10 key tactics that successful companies are employing in order to make a graceful transition to higher levels of e-commerce in the distribution center.

 

In Parts 1 through 4 of this ten-part blog series, I detailed four basic tactics: Create a Forward Pick Area, Setup Effective Replenishment, Determine Overall Pick Strategy and Determine the Optimal Pick Methodology. This blog, Part 5, will focus on the first Intermediate Tactic: Practice Real-Time Warehousing.

 

TACTIC #5: PRACTICE REAL-TIME WAREHOUSING

As the complexity of a company’s pick methodology increases, the need for a real-time warehousing system to direct and confirm the execution of these picks becomes more and more important. While discrete order picking and very basic cluster picking can be managed with paper-based pick tickets, high-volume cluster picking, zone picking, and batch picking almost always require the use of a WMS to administer.

 

Wireless, mobile devices are WMS’ backbone. These devices generally feature a small computer screen where workers receive instructions, a bar-code scanner where workers can confirm that they have properly executed those instructions, and an alphanumeric keypad to enter additional pieces of information.

 

WMS serves several critical functions in the distribution center:

 

Organization of work

  • Task direction
  • Transaction confirmation
  • Real-time location tracking
  • Elimination of redundant data entry

WMS systems are usually cost justified by the labor savings they enable. For instance, labor requirements can be drastically reduced when companies transition from discrete order picking to cluster picking. This labor can be redeployed to other areas of the operation where it can be better utilized.

 

As with most forms of technology, one size does not fit all. There are over 100 different providers of Warehouse Management Software in the marketplace today, each with their own set of strengths and weaknesses. Careful attention should be given to the selection of a WMS provider. Decisions made here will have implications for years to come in terms of functionality which can be enabled in the distribution center, and the level of technical resources required to support and maintain the system. Related content, Whitepaper: “Selecting the Right WMS.”

 

Six categories of WMS vendors

I divide the WMS provider community into six categories:

 

  • Category #1: Full Features & Functionality
  • Category #2: Flexibility and Adaptability
  • Category #3: Short Time-to-Value
  • Category #4: Ease of Enterprise Integration
  • Category #5: Ease of MHE Integration
  • Category #6: Industry Focus

 

Properly implementing a WMS system can take a year or more. Generally, companies should allow the following amounts of time for this initiative:

Distribution Optimization:                             3 – 6 months

WMS Vendor Selection:                               2 – 4 months

WMS Implementation:                                  6 – 12 months

It is worth noting that for very simple operations without a lot of process complexity, WMS implementation time can be drastically shortened, to as little as two months. More companies are offering WMS in the Software-as-a-Service (SaaS) model which can facilitate shorter implementation times as well. To learn more about planning for WMS implementation, read, “The Ultimate WMS Preparation Guidebook.”

In the next installment of this ten-part blog series we’ll move on to cover the second Intermediate Tactic, Optimize Packing.

10 Ways to Achieve E-Commerce Distribution Success, Part 4 of 10 - Determine Optimal Pick Methodology

By Ian Hobkirk | 09/02/2016 | 9:09 AM

August 26th, 2016

Under increasing pressure to work faster, better, and smarter in today’s omni-channel and e-commerce business environment, companies need help getting their distribution operations up to speed with customer demands and expectations. To help, I’ve identified 10 key tactics that successful companies are employing in order to make a graceful transition to higher levels of e-commerce in the distribution center.

 

In this ten-part blog series I’m covering four basic, three intermediate and three advanced tactics that will help your firm achieve e-commerce distribution success. This blog, Part 4 will focus on the last Basic Tactic, Determine an Optimal Pick Methodology.

 

TACTIC #4: DETERMINE OPTIMAL PICK METHODOLOGY

Once the pick strategy has been determined, attention can be turned to pick methodology. There are many confusing terms for different types of picking, and there is not a universally accepted definition for some of them. Here’s a breakdown of each:

 

Discrete Order Picking

With this method, one order at a time is picked, start-to-finish, by one picker. Without a Warehouse Management System (WMS), this may be the only method of picking that can be practically executed in some distribution centers. Discrete order picking is simple to learn and not very prone to error. For companies used to picking large-cube orders, this method may be very effective; there simply may not be a good way for a picker to transport more than one order around the warehouse at any given time. However, discrete order picking is colossally inefficient for small- cube item picking. To pick five orders, each of which might fit in the size of a shoe box, a worker must make five separate trips around the entire warehouse. Walking is excessive, and labor costs are as well.

 

 

Advantages:

  • Simple for operators
  • Less error prone
  • Little/no technology required
  • May be the only practical method to pick very high-cube items

Disadvantages

  • Very high levels of walking
  • Operators return to home-base after each order is picked
  • Each order requires a trip through the entire warehouse

 

Cluster Picking

Moving from discrete order picking to cluster picking is one of the single greatest leaps forward in efficiency that a company can take in the distribution center. With cluster picking, multiple orders at a time are picked, start-to-finish, by one picker. As the orders are picked, they are placed in discrete, separate containers. In the analogy mentioned previously, the same five orders now involve only a single trip through the distribution center. Cluster picking is much easier with a real-time warehousing system where pickers are directed in an efficient pick path, and are told exactly what to pick and where to put it. However, good results are still attainable with paper-based systems, using batch pick-tickets. Paper-based cluster picking is certainly more error prone than discrete order picking, so if automatic data capture like bar-code scanning is not used to ensure accuracy, then secondary checking will need to be employed.

 

Advantages:

  • Dramatically reduces walking
  • Possible to do on a limited scale without a high degree of technology
  • Each order is only touched once
  • Orders are ready-to-ship as soon as picking is done

Disadvantages

  • Hard to pick a large group of  orders without real-time instructions
  • Orders may travel significant distances without any picks being performed
  • Travel distances are excessive in large warehouses with many SKUs
  • Increased likelihood of errors

 

Zone Picking

Zone picking involves multiple pickers each picking separate portions of the same order. It is often deployed in conjunction with cluster picking, where multiple pickers each pick separate parts of multiple orders at the same time. Zone picking works best when there are a variety of types of SKUs or very large SKU sets that orders can be drawn from. There are two flavors of zone picking:

 

Pick-and-Pass, or sequential zone picking, involves one picker “passing” a group of orders to another picker who then performs additional picks for the same orders. The product is still placed in a discrete tote or carton that is handed off to multiple picks in sequence until the order is picked to completion. Pick and pass can be used with cart-based picking (the entire cart is passed to the next picker) or with conveyor-based picking. With the latter strategy, more complex zone routing can be employed, where totes can skip over zones where there are no picks for maximum efficiency. Zone picking must almost always be deployed with a real-time warehousing system.

 

Advantages:

  • Reduces walking in larger distribution centers
  • Each order can only be routed to zones where there are picks
  • Orders are ready-to-ship as soon as picking is done

Disadvantages:

  • Almost impossible to manage without real-time warehousing
  • Zone routing can only be done with complex conveyor systems
  • All of the SKU’s in the order travel through the entire DC

 

Pick-and-Consolidate, or simultaneous zone picking, involves multiple pickers picking parts of the same orders at the same time. The items ore picked into discrete totes which must then be married up or consolidated in a secondary process downstream. This method is well suited for situations where the total cube of an order is fairly large, or where there is a wide disparity in characteristics amongst the various SKUs in an order. For example, there may be some large, non-conveyable items on an order along with smaller conveyable items. Each type of SKU would be picked in its own zone and the entire order would be married up at the end of the process.

 

 

Advantages:

  • Reduces walking in larger distribution centers
  • Each order can only be routed to zones where there are picks
  • Orders are ready-to-ship as soon as picking is done

Disadvantages

  • Almost impossible to manage without real-time warehousing
  • Zone routing can only be done with complex conveyor systems
  • All of the SKU’s in the order travel through the entire DC

 

Batch Picking

Batch picking involves picking the entire quantity of a SKU, which is required for multiple orders, and then sorting it to those individual orders in a secondary process. Batch picking works best in a “few-to-many” environment, when there are a small number of very fast moving SKUs which are required for a large number of orders. For instance, a picker may pick an entire pallet of product, bring it to a sorting area, and then perform a “put” process and distribute the items to each of the outbound orders. Batch picking can be used in conjunction with other forms of picking as well. For example, a picker can perform a cluster pick – picking ten orders simultaneously into discrete containers – and then drop those orders at a “put” station where a few fast moving SKUs are put to the orders.

 

 

 

Advantages:

  • Reduces walking in larger distribution centers
  • Each order can only be routed to zones where there are picks
  • Orders are ready-to-ship as soon as picking is done

Disadvantages

  • Almost impossible to manage without real-time warehousing
  • Zone routing can only be done with complex conveyor systems
  • All of the SKU’s in the order travel through the entire DC

 

Related Content: “Distribution Center Design Series, Part II – Developing a Throughput Design Tool and Determining a Pick Strategy.”

 

In the next installment of this ten-part blog series we’ll move on to cover the first of three Intermediate Tactics: Practice Real-Time Warehousing.

 

10 Ways to Achieve E-Commerce Distribution Success, Part 3 of 10 - Determine Overall Pick Strategy

By Ian Hobkirk | 08/22/2016 | 9:32 AM

Under increasing pressure to work faster, better, and smarter in today’s omni-channel and e-commerce business environment, companies need help getting their distribution operations up to speed with customer demands and expectations. To help, I’ve identified 10 key tactics that successful companies are employing in order to make a graceful transition to higher levels of e-commerce in the distribution center.

In this ten-part blog series I’m covering four basic, three intermediate and three advanced tactics that will help your firm achieve e-commerce distribution success. This blog, Part 3 will focus on the third Basic Tactic, Determine an Overall Pick Strategy.

 

Tactic #3: Determine Overall Pick Strategy

 

The decision of an overall pick strategy should not be taken lightly. Companies that are in their infancy with e-commerce will likely not have the piece-pick volumes to justify expensive material handling equipment. It is advisable, however, to perform some long range planning and have some sense of what strategy will need to be employed once volumes increase.

 

Vehicle-Based Systems 

Many companies may already be performing this type of picking. They may be using electric pallet-jacks for floor-level picking or “man-up” order-pickers for multi-level picking. Neither of these vehicles lends itself particularly well to picking low-cube items to discrete orders. Manual picking carts, while not likely to win any technological awards, are the lynchpin of many piece-pick distribution centers, even those with high volumes of business. A key to effective cart picking is using the right cart design. There are seemingly infinite configurations of shelves to suit every picking need. It may be wise to purchase a few different designs as “prototypes” to test out in the warehouse before making a larger purchase.

 Advantages:

 Inexpensive
  •  Flexible
  •  Easy to add additional labor at peak periods
Disadvantages:
  •  Potential ergonomic issues
  •  Passing batches between zones is harder than with conveyors
  •  May be long travel distances to packing area
 

Conveyor-Based Systems

 
For large distribution centers with multiple pick zones, conveyor-based systems can be an effective means of fulfilling orders. When goods need to be conveyed a long distance to a shipping area, or when they must be routed to many different zones for picks by a variety of workers, conveyors can be a significant labor saver. Conveyor systems are not inexpensive however, and careful thought must go into their design. Systems should be designed with scalability in mind. Additional levels of a pick module might need to be added in the future, and the support structure should be designed to support this if needed. Generally speaking, conveyor-based systems evolve relatively well over time. Additional labor can usually be added fairly easily, and the system can be lengthened or additional levels can be added in the future.
 
Advantages:
  •  Well suited for large distribution centers with multiple zones
  •  Ties into automated packing systems well
  •  Operators can focus on picking, not transporting
  •  Can usually add labor in peak periods
Disadvantages:
  •  High upfront cost
  •  Less flexible than carts
  •  Not all SKUs are conveyable
 

Goods-to-Picker System

 
There are a wide variety of goods to picker systems available, including vertical and horizontal carousels, vertical lift modules, automated storage & retrieval systems (AS/RS), and robotic picking systems. Each has their relative merits, depending on the type of goods being picked and the outbound velocity patterns. Goods-to-picker systems offer the fastest pick rates of all three picking strategies, but are also the least flexible if business needs change. A potential middle ground exists now with the advent of robotic picking systems. These systems involve armies of robots bringing shelving pods to pickers and then putting them away again after picking is done. (In the third segment of this blog we’ll discuss each type of goods-to-picker systems in more detail.)
 
Advantages
  •  Ultra-high pick rates
  •  Excellent space utilization
Disadvantages
  •  High upfront cost
  •  Very inflexible if needs change
  •  System efficiency is highly dependent on the capabilities of the software controlling it.

 

 In the next segment of this ten-part series we’ll look at the final Basic Tactic (#4), Determine Optimal Pick Methodology.

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About Ian Hobkirk

Ian Hobkirk

Ian Hobkirk is the founder and Managing Director of Commonwealth Supply Chain Advisors. Over his 20-year career, he has helped hundreds of companies reduce their distribution labor costs, improve space utilization, and meet their customer service objectives. He has formed supply chain consulting organizations for two different systems integration firms, and managed the supply chain execution practice at The AberdeenGroup, a leading technology analyst firm.



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