Building a Smarter Warehouse
Cloud computing, omnichannel management, and big data are the questions. Can your warehouse supply the answers?
Warehouse perceptions have changed considerably over the past two decades. It wasn’t long ago that users perceived the four walls as just that—a fixed, immovable force that served as the nexus for any distribution network.
Today, such representations are increasingly obsolete largely because of forces beyond the four walls. Cloud computing, e-commerce, omnichannel management, big data, and last-mile logistics are reshaping today’s distribution facility.
The warehouse is still core. But its role in the supply chain is much more fluid. The modern DC is molded by countless external pressures that are eroding convention and shaping invention. Technology and materials handling innovation have become important catalysts in the evolution of smarter warehouses.
Smart by Design
The intelligent warehouse features three critical traits—visibility, mobility, and flexibility. Technology, ultimately, is the means to those ends.
"Warehousing is no longer an unsophisticated business. Operators need to embrace technology and understand it," says John Watkins, CEO of Manhattan Beach, Calif.-based cloud WMS solutions provider 3PL Central.
"Two things come to mind when we talk about smart warehouses," says Mike Howes, vice president, software engineering and services at Forte Industries, a Mason, Ohio-based materials handling engineering and systems integrator. "The first consideration is visibility into the operation. This includes the ability for users to get to information they need in an approachable and intuitive way.
"Secondly, it’s not just about data," he says. "The cornerstone of an intelligent warehouse is real-time actionable information. Traditional systems typically bring good data to the screen. But you have to use the secret decoder ring to figure out what it’s trying to tell you."
Real-time visibility is contingent on accessibility, which raises the importance of mobile solutions. There’s no shortage of rugged RF devices, smartphones, tablets, and wearable technology, as well as the requisite software and applications to support a more dynamic workflow and workforce.
Gathering and vetting information is one thing. Users also need to be empowered to act on real-time data. The tactical pressures omnichannel places on a warehouse, whether a shipper facility or 3PL, cannot be minimized.
"We’re not necessarily seeing a reliance on big data, but rather on systems talking to one another. This doesn’t naturally happen," says Steve Katz, vice president of sales and marketing at 3PL Central.
That’s why the growth of e-commerce and the emergence of omnichannel management frame the importance of intuitive DCs. Change is the operative word in any B2C supply chain. Consumer proclivities are a moving needle. Inventory ebbs and flows. Managing exceptions is an expectation. All the while, SKU diversity and availability, customer service, and economy demands endure.
"Omnichannel is the new normal," says Chris Castaldi, director of business development at W&H Systems, a materials handling systems integrator based in Carlstadt, N.J. "There is a presumption that a retailer will always be in stock on the items the consumer wants to buy, and that product can be delivered quickly.
"In the omnichannel world, retailers have a holistic view into inventory, allowing them to fulfill orders from any location or ship inventory to other locations where inventory is needed or sells better," he adds. "The goal of omnichannel is to give retailers a 360-degree view of customers, orders, and inventory."
Whether consumers opt for same-day delivery, click and collect/return at store, shop and "showroom," or even pick up e-commerce shipments at specified locations, order and inventory systems need to identify demand variances and react. Warehouse optimization becomes paramount.
While DC infrastructure is evolving, the level of functionality is consistent. "Conveyors are conveyors," says Howes, who contends warehouses are looking more at technology, and less at equipment.
"Users want adaptive architecture—a way to layer information technology over materials handling systems and automation that allows them to optimize what they have now and moving forward," he adds.
get out the crystal ball
The rapidity of change is a challenge for businesses as they try and adapt existing infrastructure and technology systems. Whether it’s identifying automation needs or picking the right warehouse management system (WMS), operators have to account for the future.
Over the past few years, this has proven to be a real concern. Many businesses made educated warehouse technology buys to enhance their e-commerce operations only to see the omnichannel trend catch fire and change requirements. Inventory traditionally resides in the warehouse. But now companies are pulling and positioning product from countless different touchpoints in the supply chain, whether it’s in a brick-and-mortar backroom, directly from the manufacturer, or from other DCs and depots. So technology and systems in the DC have to adapt.
There’s no discounting the reality that shippers are in the midst of a revolution in terms of how they fulfill different channels. On-premise WMS is gradually being replaced by cloud-based solutions—albeit at a slower pace than other logistics technologies because of security concerns. As automation continues to expand, warehouse control systems (WCS) that broker communication between the WMS and conveyance systems are also becoming more popular.
"As the ‘traffic cop’ for the distribution center, the WCS is responsible for keeping everything running smoothly, maximizing the efficiency of the materials handling subsystems, and often the activities of warehouse workers themselves," says Castaldi. "It provides a uniform interface to a broad range of materials handling equipment such as ASRS, carousels, conveyor systems, sortation systems, and palletizers."
But even a WMS and WCS aren’t enough for some operations. That’s why there’s another category of software hitting the market—the warehouse execution system (WES).
"Some WCS players have started introducing optimization capabilities that enable users to become smarter about how things work," says Howes. "But the data dump from the WMS comes out and tells you what to do. So you can only optimize so far."
By contrast, the WES takes advantage of raw data to optimize the entire DC operation. It allows users to pull order information from an ERP system or WMS—information that is vanilla, not heavily modified—and lets the software figure out the best optimization. This includes automation on down to inventory, asset movement, and picking.
"It helps warehouse operators get their hands around more of the operation so they can do a better job of optimization," says Howes.
The WES is not for everyone. Complex picking scenarios, a hallmark of e-commerce, often require highly developed and mature WMS software. But in circumstances where facilities have less stringent requirements, shippers may prefer using a WES that offers just enough functionality.
And for shippers that have already made significant capital investments in WMS solutions that are now lacking, the WES can fill the execution gap.
"Instead of making changes to the WMS, some prefer to use a WES," says Howes. "That reduces risk and short- and long-term customization fees, and purposes the WES to fit more specific needs."
The IT Factor
As the omnichannel space matures, warehousing and technology are increasingly connected. Companies have an abundance of options in terms of materials handling systems, infrastructure, mobility hardware, and software to plug and play different functionalities.
The DC has truly become a "data warehouse" and operators need to mine this information to make more proactive decisions about where to position inventory to fulfill traditional brick-and-mortar channels, as well as e-commerce.
"It’s not just about looking at real-time data," says Howes. "Companies can also capture information and play it against simulated scenarios—looking for opportunities to optimize or avert downstream problems before they arise." This level of visibility empowers more supply chain-type decision-making.
WMS, WCS, and WES implementations help shippers and third-party logistics providers optimize on the fly, which is a competitive differentiator as omnichannel flux breeds uncertainty.
Future innovation will likely replace many mundane tasks that still exist on the warehouse floor. Facilities will become smarter. As the Internet of Things phenomenon takes hold, systems will intuitively communicate with one another, creating even more synergies.
"In the supply chain, nothing happens in isolation. Like a house of cards, each link is influenced by everything that comes before and after," says Castaldi. "With the right warehouse software and systems, businesses are no longer forced to play the hand they’re dealt."
OSH’s Telemetric Conversion
Orchard Supply Hardware (OSH) has been a customer of forklift manufacturer Hyster Company for more than 20 years. The San Jose, Calif.-headquartered home improvement retailer, which is a subsidiary of Lowe’s, operates one distribution center in Tracy, Calif., to serve 70 locations across the Golden State and Oregon.
Its Hyster dealer—Papé Material Handling—provides preventative maintenance and repairs. It also helps OSH evaluate and determine equipment specs, set up leases, and keeps the company generally informed of new equipment releases that may be beneficial to its operations.
Over the past year, OSH has implemented a new warehouse management system (WMS), and is in the process of adding a labor management system. Additionally, the retailer is looking to integrate the forklift company’s Hyster Tracker wireless asset management system.
“We anticipate that Hyster Tracker will enhance both of these systems by providing real-time data that can be used to improve operator training, better understand and plan equipment needs, and verify labor standards,” says Tiffany Cheney, manager of DC services at Orchard Supply Hardware.
Currently, OSH is piloting three units with Hyster Tracker and is scheduled to receive approximately 60 units later in 2015.
Lift truck telemetry has become a fashionable feature inside the warehouse as businesses embrace big data. Mining actionable information from materials handling equipment provides users with a better understanding of performance, as well as clues to where operational efficiency is lacking. OSH is just beginning to tap this potential, but already Cheney sees considerable opportunities.
“Hyster Tracker provides a vast amount of data that can be used for several different purposes,” explains Cheney. “For example, we have three shifts in our facility. Understanding equipment usage between shifts will help determine if we have the right amount and type of equipment to support operations.”
As companies become more familiar with materials handling telemetry and big data, the upside is considerable. Smarter systems require smarter employees who can understand and interpret performance information on the fly. Warehouse efficiency, or inefficiency as the case may be, sometimes provides clues to bigger problems elsewhere in the supply chain.
For example, if lift truck telemetry indicates assets are idling too much at certain times, there may be a broader issue with inbound transportation scheduling. Staggering deliveries, or perhaps holding shippers/vendors compliant to routing guides and schedules, may be the ultimate solution.
On the software side technology continues to ripen, providing users with complementary solutions that allow them to optimize lift truck performance. Looking at data and being able to think and plan forward is part of that adaptive architecture that warehouse execution systems bring.
Inside the Omnichannel DC
The explosion of e-commerce has forced warehouse operators to rethink how they equip facilities and fulfill different channels. Managing multiple channels within one facility requires significant capital investment in systems and technology, such as:
- Inventory management system that spans the entire supply chain for achieving real-time visibility.
- Distributed order management system to decide cost-effectively whether to drop orders into a DC, e-commerce fulfillment center, combination DC, or store to meet customer service levels.
- Warehouse Management System.
- Warehouse Control System to direct the flow of materials within the warehouse and communicate with all the materials handling equipment.
- Conveyors for moving products to appropriate locations.
- Sortation units that deliver items to shipping locations.
- Picking/packing systems for directing workers what to pick, how many, and where to pick or pack. Some DCs are starting to use robotic picking technology.
- Automatic Storage and Retrieval Systems (AS/RS).
- Miscellaneous: Robotics, goods-to-person, transportation management systems, RFID, equipment to apply labels to cartons.