impact of economic downturn of warehouse management system

Impact of Economic Downturn of Warehouse Management System (WMS) in UAE Market

CM Maran Assistant Professor (Senior), IT & Systems Division

VIT Business School, VIT University, Vellore – 632014 Tamilnadu, India

E-mail: [email protected], [email protected]

I. INTRODUCTION The evolution of warehouse management

systems (WMS) is very similar to that of many other software solutions. Initially a system to control movement and storage of materials within a warehouse, the role of WMS is expanding to including light manufacturing, transportation management, order management, and complete accounting systems. To use the grandfather of operations-related software, MRP, as a comparison, material requirements planning (MRP) started as a system for planning raw material requirements in a manufacturing environment.

This study is conducted in order to find the market potential in the UAE region and the capability of the companies to invest in the IT product viz WMS during the economic slowdown. It also aims at finding out the readiness of the companies to invest in such products and the impact of economic downturn among the various business verticals.

Not every warehouse needs a WMS. Certainly any warehouse could benefit from some of the functionality but is the benefit great enough to justify the initial and ongoing costs associated with WMS? Warehouse Management Systems are big, complex, data intensive, and applications. They tend to require a lot of initial setup, a lot of system resources to run, and a lot of ongoing data management to continue to run. That’s right, you need to "manage" your warehouse "management" system. An often time, large operations will end up creating a

new IS department with the sole responsibility of managing the WMS.

II. NEED FOR THE STUDY The earlier findings suggest that there are

quite different perspectives regarding a WMS implementation from the companies interviewed. There is a strong priority associated with reducing costs as a result of implementing the WMS from companies. The companies also seem to acknowledge that if service levels fall as a result of the implementation then these will also have a financial cost to the organisation.

However, it also appears that many of the companies interviewed seem to be less aware of the wider implications of implementing a new systems development project within an organisation, the complexity of this task and the wide ranging possible organisational impacts that may also be caused.

This lack of knowledge seems particularly apparent because of the frequent problems in terms of developing an accurate requirements specification for the WMS, which ultimately leads to further conflict between the software supplier and the user organisation.

It is somewhat ironic that the vast majority of Senior Managers and particularly the Directors recognised that employing consultants was important to overcome his knowledge gap, despite the associated cost with their employment. It suggests that while directors can tolerate this cost, they see it as a necessary addition to increase the likelihood of a successful WMS implementation. What they do not appear to

The Seventh International Conference on eLearning for Knowledge-Based Society, 16-17 December 2010, Thailand

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appreciate is that it is their own lack of understanding of the WMS and its impacts is a key problem and that they need to further engage with the implementation process.

III. OBJECTIVE OF THE STUDY

Primary Objective: 1. To define the Warehouse

Management system (WMS) and its functions in the warehousing activities.

2. To analyse how the Warehousing service providers are affected by the economic downturn in the UAE region.

Secondary Objectives:

Market analysis in the UAE region to find out the potential of the current market.

Readiness of the companies to invest in software product.

To identify the market share of various software products in UAE region.

To identify what percent of the distributors are using software to manage their business activities.

IV. REVIEW OF LITERATURE

Financial impacts of enterprise resource planning implementations: Robin Poston*, Severin Grabski this study focuses on a specific technology — Enterprise Resource Planning (ERP) and its impact on firm performance. Economic and industrial organization theories provide the basis for the examination of how ERP systems affect firm coordination and transaction costs. ERP systems are expected to: reduce costs by improving efficiencies through computerization; and enhance decision-making by providing accurate and timely enterprise-wide information.

This research finds, after accounting for within-firm variances, no significant improvement associated with residual

income or the ratio of selling, general, and administrative expenses in each of the 3 years following the implementation of the ERP system. However, a significant improvement in firm performance resulting from a decrease in the ration of cost of goods sold to revenues was found 3 years after the ERP system implementation ERP provides the same functionalities of previous stand-alone systems while allowing access to enterprise-wide information by employees throughout the entire company on a controlled basis Consulting survey results of Fortune 500 companies suggest perceived tangible and intangible benefits from ERP of cost reductions and revenue improvements including (but not limited to) inventory and personnel reduction, productivity and order management improvement, improved information, improved processes, and improved customer responsiveness.

Effective warehousing and supply chain management: PARLIKAD, AJITH KUMAR NARAYANAN.

Supply Chain Management has become the primary competitive weapon in many industries. This thesis describes a model of intelligent supply chain networks that will improve information visibility and flow within the supply chain. In the proposed model, products will have the intelligence to direct themselves throughout the distribution network and will have the capability to be purchased and sold while in transit. The report gives an overview of the supporting technologies that make such a supply chain a reality. It is intended to provide a preliminary outlook at the various issues related to implementation and could be used for future research as a basis for building the infrastructure required for the new model.

WMS Software Selection—All You're Betting Is the Business By Mohamed Y. Amer, Ronald D. Chase, and Chris L. Brumett

This article deals with the implementation issues and the selection of the right WMS provider and the features

Special Issue of the International Journal of the Computer, the Internet and Management, Vol. 18 No. SP1, December, 2010

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needed for the warehouse. Selecting a Warehouse Management System (WMS) for your organization involves a series of complex decisions that carry both immediate and long-term strategic and operational implications. If the selection and installation goes perfectly, it will occur virtually unnoticed. Receiving and shipping activities will appear to continue as usual as the real benefits of the WMS are steadily and increasingly realized over time.

On the other hand, the slightest hitch in the WMS implementation process can bring your warehouse to a standstill, confound all backup plans, and even destroy your business. The difference between a smooth and seamless transition to the WMS and the worst nightmare of your career depends heavily on the preparation and due diligence expended during the preparatory and software selection phases leading up to implementation. This article offers guidance on how to execute those critical activities successfully.

Third-Party Warehousing Selection: Christopher R. Moberg, Ohio University Thomas W. Speh, Miami University

Warehousing remains the most frequently outsourced logistics activity, but empirical research on the third-party selection process for warehousing remains scarce. The main goals of this research were to identify the most critical factors to customers during third-party warehousing selection and to compare the perceived performance levels of national and regional third-party firms on each of the selection criteria. Surveys were sent to warehousing customers in several industries. Responsiveness to service needs, quality of management, and track record of ethical importance were rated by customers as the most important selection criteria. Results indicate that respondents also rated the performance of the typical regional third-party warehousing firm as significantly better than national firms on six different criteria while national firms were rated significantly higher on only one criterion. It

is hoped that this research can provide guidance to logistics managers as they evaluate third-party warehousing options.

V. RESEARCH METHODOLOGY AND THEORETICAL FRAMEWORK

A. The Research Approach The study relies heavily on disclosed and

published materials such as warehousing firms’ annual reports, journals, newspapers and business magazines articles, published reports produced by consultants and special studies and reports commissioned by the UAE Government. In addition, the study also relies on information provided by the warehousing firms and users, 3PL providers, industry experts and practitioners by means of survey and unstructured interviews.

B. Methods for Collecting Data The main methods used to collect data

are literature review, interviews and a online survey.

Literature Review

Collecting vast amounts of information regarding global and local warehousing through literature review and compiling it into a meaningful form, which create the foundation for further analysis, is almost the only way to cover such a broad subject in the allotted time. Unpublished information and financial data needed for this thesis are hard to obtain directly from the companies and are confidential in nature for commercial reasons.

Furthermore, gaining access to key decision makers and management in the warehouses across UAE is not feasible due to the time and economic constraint of this study. Even if it might be possible to gain access to this level of personnel, it is certain that their corporate positions will influence their views.

Due to the time and cost factors and not to mention its convenience, government and company websites as well as news information on the internet are important sources of data throughout this study.


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Overall, the collection of facts and figures from the annual reports of companies, their websites, interviews, journals, newspaper and magazine articles form the backbone of the research and the profiling of warehousing cases.

Interviews A part of this process involves

interviewing and testing the findings against the learned opinions of people in selected positions that deal with the issues in question. These interviews serve as a feedback and check on the thoughts and findings of the researcher. The approach was not to conduct an in-depth research of a particular corporate function but to concentrate on the overall corporate directions and dominant factors influencing its activities.

Interviews were made with selected industry experts and practitioners to get their views on warehousing industry in UAE Personnel from various organizations were kind enough to be interviewed on an informal basis.

C. Methodology and approach: This survey was conducted in the period

of February - April 2009 with responses solicited by targeted e-mail lists, select trade association memberships, various related-industry databases and other targeted methods.

Respondents were contacted via VOIP (Voice Over Internet Protocol). The key person in the company has been interviewed and questioned. Mostly the key person involved in the survey was the warehouse manager or the finance manager of the company. Respondents were asked questions to estimate and analyse the impact of global economic slowdown in different business verticals.

Internet Survey The survey is one of the most common

ways to collect data. Apart from interview, respondents were sent questionnaire through internet using the online survey website

called “Zoomerang” even after taking into account the low rate of response.

Internet survey was carried out to find out the respondents views and experiences about the economic downturn.

A. Country Analysis Strategically located at the South-Eastern

tip of the Persian Gulf, the United Arab Emirates occupies a total area of about 83,600 sq. km (32,400 sq. miles) – roughly the size of Portugal – and has 700 km of coastline, 600 km along the Arabian Gulf and 100 km bordering the Gulf of Oman (National Media Council, 2007). Its long coastline and strategic location have facilitated the development of an open, merchant economy.

Source: www.worldatlas.com

The UAE is composed of seven Emirates, each with a large degree of autonomy and divergent natural resources endowments; for instance, Abu Dhabi produces 85% of the UAE’s oil, whereas in Dubai, petroleum represented less than 3% of the GDP in 2006 (Government of Dubai, 2007). Sheikh Khalifa bin Zayed Al Nahyan, the ruler of the Emirate of Abu Dhabi and Federal President of the country, rules by the motto ‘God, Nation and Royal Family’. He assumed his functions in 2004 after the death of his father, Sheikh Zayed bin Sultan Al Nahyan, the first president of the Federation (since 1971) and an immensely popular figure within his country. Sheikh Zayed pursued liberal economic and social policies, while ensuring universal free access to education and health care for his citizens,


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which brought him much popularity and his country the stability necessary for its development.

B. National Economic Performance The UAE’s economy is one of the

most dynamic economies of the region; nevertheless, a closer examination allows us to moderate this first impression.

Economy of United Arab Emirates[1]

Currency United Arab Emirates dirham (AED)

Trade organisations

OPEC WTO

Statistics

GDP $186.4 billion (2008 est.)

GDP growth 8.5% (2008 est.)

GDP per capita $40,400 (2008 est.)

GDP by sector Agriculture (1.6%), Industry (61.8%), Services (36.6%) (2008 est.)

Inflation (CPI) 14.4% (2008 est.)

Labour force 3.266 million (2008 est.)

Labour force by occupation

Agriculture (7%), Industry (15%), Services (78%) (2000 est.)

Unemployment 2.1% (2006)

Main industries Petroleum and Petrochemicals, Fishing, Aluminium, Cement, Fertilizers, Commercial Ship Repair, Construction Materials, Boat Building, Handicrafts, Textiles

External

Exports $207.7 billion f.o.b. (2008 est.)

Export goods Crude Oil, Natural Gas, Re-exports, Dried Fish, Dates

Main export partners

Japan 23.6%, South Korea 9.2%, Thailand 5%, India 4.8% (2007)

Imports $141.1 billion f.o.b. (2008 est.)

Import goods Machinery and Transport

Equipment, Chemicals, Food

Main import partners

China 12.8%, India 10%, United States 8.7%, Japan 6.1%, Germany 5.9%, United Kingdom 5.3%, Italy 4.6% (2007)

Gross External Debt

$73.71 billion (31 December 2008 est.)

Public finances

Public Debt 22.4% of GDP (2008 est.)

Revenues $83.15 billion (2008 est.)

Expenses $48.3 billion (2008 est.)

Source: Wikipedia

C. Economy of UAE The United Arab Emirates has a rapidly

growing economy with a high GDP per capita and energy consumption per capita.

The GDP per capita is currently the 14th in the world and 3rd in the Middle East after Qatar and Kuwait as measured by the CIA World Factbook, or the 17th in the world as measured by the International Monetary Fund; while at $168 billion in 2006, with a small population of 4 million, the GDP of the UAE ranks second in the CCASG (after Saudi Arabia), third in the Middle East — North Africa (MENA) region (after Saudi Arabia and Iran), and 38th in the world (ahead of Malaysia).

There are various deviating estimates regarding the actual growth rate of the nation’s GDP. However, all available statistics indicate that the UAE currently has one of the fastest growing economies in the world. According to a recent report by the Ministry of Finance and Industry, real GDP rose by 35% in 2006 to $175 billion, compared with $130 billion in 2005. These figures would suggest that the UAE had the fastest growing real GDP in the world, between 2005 and 2006.

Although the United Arab Emirates is becoming less dependent on natural resources as a source of revenue, petroleum and natural gas exports still play an important role in the economy, especially in


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Abu Dhabi. A massive construction boom, an expanding manufacturing base, and a thriving services sector are helping the UAE diversify its economy. Nationwide, there is currently $350 billion worth of active construction projects. Such projects include the Burj Dubai, which is slated to become the world's tallest building, Dubai World Central International Airport which, when completed, will be the most expensive airport ever built, and the three Palm Islands, the largest artificial islands in the world. Other projects include the Dubai Mall which will become the world's largest shopping mall when completed, and a man-made archipelago called The World which seeks to increase Dubai's rapidly growing tourism industry. Also in the entertainment sector is the construction of Dubailand, which is expected to be twice the size of Disney World, and of Dubai Sports City which will not only provide homes for local sports teams but may be part of future Olympic bids.

The currency of the United Arab Emirates is the Emirati Dirham.

The United Arab Emirates has several major ports, including one of the world's largest, Jebel Ali Port. Other important ports in the UAE include Port Zayed, Khalifa Port, Port Rashid, Port Khalid, Hamriyah Port, Port of Ajman, Saqr Port, Um Al Quwain, Khor Fhakan and Fujairah Port.

A. Warehouse Management Systems (WMS)

The evolution of warehouse management systems (WMS) is very similar to that of many other software solutions. Initially a system to control movement and storage of materials within a warehouse, the role of WMS is expanding to including light manufacturing, transportation management, order management, and complete accounting systems. To use the grandfather of operations-related software, MRP, as a comparison, material requirements planning (MRP) started as a system for planning raw

material requirements in a manufacturing environment.

Soon MRP evolved into manufacturing resource planning (MRPII), which took the basic MRP system and added scheduling and capacity planning logic. Eventually MRPII evolved into enterprise resource planning (ERP), incorporating all the MRPII functionality with full financials and customer and vendor management functionality. Now, whether WMS evolving into a warehouse-focused ERP system is a good thing or not is up to debate. What is clear is that the expansion of the overlap in functionality between Warehouse Management Systems, Enterprise Resource Planning, Distribution Requirements Planning, Transportation Management Systems, Supply Chain Planning, Advanced Planning and Scheduling, and Manufacturing Execution Systems will only increase the level of confusion among companies looking for software solutions for their operations. Even though WMS continues to gain added functionality, the initial core functionality of a WMS has not really changed. The primary purpose of a WMS is to control the movement and storage of materials within an operation and process the associated transactions. Directed picking, directed replenishment, and directed put away are the key to WMS. The detailed setup and processing within a WMS can vary significantly from one software vendor to another; however the basic logic will use a combination of item, location, quantity, unit of measure, and order information to determine where to stock, where to pick, and in what sequence to perform these operations.

B. Other Functionality/Considerations

Wave Picking/Batch Picking/Zone Picking. Support for various picking methods varies from one system to another. In high-volume fulfilment operations, picking logic can be a critical factor in WMS selection. See my article on Order Picking for more info on these methods.


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Task Interleaving. Task interleaving describes functionality that mixes dissimilar tasks such as picking and put away to obtain maximum productivity. Used primarily in full-pallet-load operations, task interleaving will direct a lift truck operator to put away a pallet on his/her way to the next pick. In large warehouses this can greatly reduce travel time, not only increasing productivity, but also reducing wear on the lift trucks and saving on energy costs by reducing lift truck fuel consumption. Task interleaving is also used with cycle counting programs to coordinate a cycle count with a picking or put away task.

Automated Data Collection (ADC). It is generally assumed when you implement WMS that you will also be implementing automatic data collection, usually in the form of radio- frequency (RF) portable terminals with bar code scanners. I recommend incorporating your ADC hardware selection and your software selection into a single process. This is especially true if you are planning on incorporating alternate technologies such as voice systems, RFID, or light-directed systems.

Integration with Automated Material Handling Equipment. If you are planning on using automated material handling equipment such as carousels, ASRS units, AGVs, pick-to-light systems, or sortation systems, you’ll want to consider this during the software selection process.Since these types of automation are very expensive and are usually a core component of your warehouse, you may find that the equipment will drive the selection of the WMS. As with automated data collection, you should be working closely with the equipment manufacturers during the software selection process.

Advanced Shipment Notifications (ASN). If your vendors are capable of sending advanced shipment notifications (preferably electronically) and attaching compliance labels to the shipments you will want to make sure that the WMS can use this to automate your receiving process. In addition,

if you have requirements to provide ASNs for customers, you will also want to verify this functionality.

Cycle Counting. Most WMS will have some cycle counting functionality. Modifications to cycle counting systems are common to meet specific operational needs. Counting and check out my book on Inventory Accuracy and Cycle Counting.

Cross Docking. In its purest form cross-docking is the action of unloading materials from an incoming trailer or rail car and immediately loading these materials in outbound trailers or rail cars thus eliminating the need for warehousing (storage). In reality pure cross-docking is less common; most "cross-docking" operations require large staging areas where inbound materials are sorted, consolidated, and stored until the outbound shipment is complete and ready to ship. If cross docking is part of your operation you will need to verify the logic the WMS uses to facilitate this.

Pick-to-Carton. For parcel shipper’s pick-to-carton logic uses item dimensions/weights to select the shipping carton prior to the order picking process. Items are then picked directly into the shipping carton. When picking is complete, Dunn age is added and the carton sealed eliminating a formal packing operation. This logic works best when picking/packing products with similar size/weight characteristics. In operations with a very diverse product mix it's much more difficult to get this type of logic to work effectively.

Slotting. Slotting describes the activities associated with optimizing product placement in pick locations in a warehouse. There are software packages designed just for slotting, and many WMS packages will also have slotting functionality. Slotting software will generally use item velocity (times picked), cube usage, and minimum pick face dimensions to determine best location.

Yard Management. Yard management describes the function of managing the


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contents (inventory) of trailers parked outside the warehouse, or the empty trailers themselves. Yard management is generally associated with cross docking operations and may include the management of both inbound and outbound trailers.

Labour Tracking/Capacity Planning. Some WMS systems provide functionality related to labour reporting and capacity planning. Anyone that has worked in manufacturing should be familiar with this type of logic. Basically, you set up standard labour hours and machine (usually lift trucks) hours per task and set the available labor and machine hours per shift. The WMS system will use this info to determine capacity and load. Manufacturing has been using capacity planning for decades with mixed results. The need to factor in efficiency and utilization to determine rated capacity is an example of the shortcomings of this process. Not that I’m necessarily against capacity planning in warehousing, I just think most operations don’t really need it and can avoid the disappointment of trying to make it work. I am, however, a big advocate of labor tracking for individual productivity measurement. Most WMS maintain enough data to create productivity reporting. Since productivity is measured differently from one operation to another you can assume you will have to do some minor modifications here (usually in the form of custom reporting).

Activity-based costing/billing. This functionality is primarily designed for third-party logistics operators. Activity-based billing allows them to calculate billable fees based upon specific activities. For example, a 3PL can assign transaction fees for each receipt, and shipment transaction, as well as fees for storage and other value-added activities.

C. Factors affecting the success rate of WMS implementation

The earlier findings suggest that there are quite different perspectives regarding a WMS implementation from the three

stakeholder groups interviewed. There is a strong priority associated with reducing costs as a result of implementing the WMS from Directors. The Directors also seem to acknowledge that if service levels fall as a result of the implementation then these will also have a financial cost to the organisation.

However, it also appears that many of the Directors interviewed seem to be less aware of the wider implications of implementing a new systems development project within an organisation, the complexity of this task and the wide ranging possible organisational impacts that may also be caused.

Senior Managers are more aware of the service issues associated with implementing a WMS and this is probably due to their position as they are likely to have the complaints from both the users and the Directors if the system fails to perform as required. Consequently, it is likely that the Senior Managers have a stronger vested interest and awareness of the importance of managing the change process effectively as it is they who would bear the brunt of the problems if things go wrong. However, this role is likely to be made more challenging because of the lack of support and understanding that seems evident among many Directors associated with WMS projects.

However, although the Directors seem to lack a sufficient awareness of systems development project issues, there also appears to be a general lack of IT and IS knowledge within the organisations studied. This lack of knowledge seems particularly apparent because of the frequent problems in terms of developing an accurate requirements specification for the WMS, which ultimately leads to further conflict between the software supplier and the user organisation. In many cases it appears that either the organisations have relatively few IT staff, or the IT staff do not have sufficient expertise in WMS. Those organisations that recognise this deficiency seem to make a conscious effort to bring in external consultants with relevant expertise. It is


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somewhat ironic that the vast majority of Senior Managers and particularly the Directors recognised that employing consultants was important to overcome this knowledge gap, despite the associated cost with their employment. It suggests that while directors can tolerate this cost, they see it as a necessary addition to increase the likelihood of a successful WMS implementation.

VIII. DATA PRESENTATION, ANALYSIS & INTERPRETATION

A. Profile of respondents A total of 100 respondents from various

verticals like automotive distributors, basic material distributors, beverage distributors, electrical and electronics distributors, chemical distributors, Logistics and warehousing verticals, Machinery and equipment distributors and warehousing verticals responded to the survey.

The details of the various respondents and the verticals have been furnished in the chart below.

Respondents include 15% of food and beverages distributors, beverage distributors contribute 2%, chemical vertical constitute 2%, Logistics and warehousing contribute 17%, basic material distributors contributed 15%, electrical machinery, industrial manufacturers and others constitute 1% each, consumer goods constitute 20% while electronics and machinery contributed 8% each. Note:

Yes1 - We have seen a decrease in customer spending and are reducing our revenue forecasts.

Yes2 - We have reduced our planned research and development expenditures.

Yes3 - We have reduced our planned sales and marketing expenditures.

C. Impact of the economic downturn – vertical wise

Given below is the brief description about the vertical wise impact of the economic downturn in the UAE region. Automotive distributors:

Among the respondents in the

automotive distribution sector, 20% of the respondents are not at all affected by the economic downturn, while 40% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures.

C. Basic Materials distributors

Among the respondents in the basic materials distribution sector, 18% of the respondents are not at all affected by the economic downturn, while 55% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures. This contributes to 9% each i.e. 27% in all.


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D. Beverages distributors

Among the respondents in the beverages distribution sector, 100% of the respondents are not much affected by the economic downturn so far in the UAE region. Since the beverages are a fast moving goods among the consumers there has not been a big impact in this sector.

E. Chemicals distributors

Among the respondents in the chemicals

distribution sector, 100% of the respondents are somehow or the other affected by the economic downturn so far in the UAE region. And companies have sorted out to measures such as decreasing the planned sales and marketing expenditures.

F. Consumer goods distributors

Among the respondents in the consumer goods distribution sector, 62% of the respondents are not much affected by the economic downturn, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures. Companies affected by the economic downturn constitutes to a total of 38% in this sector.

G. Electrical machinery distributors

Among the respondents in the electrical machinery distribution sector, 33% of the respondents are not at all affected by the economic downturn, while 33% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures.


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H. Electronic appliances distributors

Among the respondents in the electronics appliances distribution sector, 29% of the respondents are not at all affected by the economic downturn, while 29% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures. Companies that have been affected by the economic slowdown constitute a total of 43%.

I. Food and beverages distributors

Among the respondents in the Food and beverages distribution sector, 54% of the respondents are not at all affected by the economic downturn, while 31% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures. Only 15% of the companies belonging to this category of business have been affected due to economic downturn.

J. Industrial parts distributors

Among the respondents in the industrial

parts distribution sector, 33% of the respondents are not much affected by the economic downturn, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures. Almost 67% of the companies in this sector has been affected by the economic slowdown.

K. Logistics and warehousing

Among the respondents in the Logistics and warehousing sector, 20% of the respondents are not at all affected by the economic downturn, while 25% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures. About 55% of the logistics and distribution sector has been affected by the economic slowdown.


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L. Machinery parts distributors

Among the respondents in the Machinery parts distribution sector, 39% of the respondents are not at all affected by the economic downturn, while 34% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures.

M. Medical equipment suppliers

Among the respondents in the medical equipment distribution sector, 100% of the respondents are not at all affected by the economic downturn so far in the UAE region.

N. Pharmaceutical industry

Among the respondents in the pharmaceutical distribution sector, 20% of the respondents are not at all affected by the economic downturn, while 40% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures.

O. Consolidated report of all the verticals

The above chart shows the impact of the

economic slowdown on the various verticals in the UAE region. This chart gives the consolidated report of how various verticals are affected by the economic slowdown.

P. Steps adopted by the companies


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Q. Usage of software solutions among the companies

The above chart shows the percentage of companies using software solutions for their business purposes. This software is used in order to take care of their inbound and outbound activities and the trading activities.

It has been observed that only 31% of the companies among the respondents used software for managing their business activities.

The rest 69% of the companies did not use any software to manage their business activities.

R. List of software used and their market share

The above chart shows the various

software used by the respondents and their respective market share in the UAE region. It is observed that SAP is being used widely among the respondents (23%), followed by customized solutions (17%) followed by ORION (11%).

S. Vertical wise usage of software

The above chart shows the various verticals and the usage of software by them. It is observed that the chemical and beverages industry did not use any software to manage their business activities. It is also seen that among the respondents, electrical machinery distributor’s vertical is using the software effectively to manage their business activities. It is also observed that most of the logistics and warehousing firms are not using any software for their business activities. A chunk of the respondents are not using software for their business activities. At this present scenario most of the companies are not showing interest in investing in the IT related products as a measure to cut down the costs.

T. Vertical wise Warehouse usage


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The above chart shows the warehouse usage by various business verticals. It’s observed from the above chart that the consumer goods distributors are the highest users of warehouses with a total of near about 29 warehouses, followed by the basic materials distributors with a total of 18 warehouses in all. There are certain other verticals which do not make use of the warehouses for their business activities.

U. Warehouse size – vertical wise

The above chart shows the warehouse

size used by various verticals in the UAE region. It has been categorised under three main categories i.e. less than 5000sq.ft, 5000-20000sq.ft and those above 20000sq.ft. It is seen that almost all the huge warehouses are being used by the machinery and equipment distributors. It is also observed that the warehouses employed by the verticals such as food and beverage distributors, basic material distributors and the consumer goods distributors are almost of the medium range of 5000-20000sq.ft.

IX. FINDINGS

• Among the respondents in the automotive distribution sector, 20% of the respondents are not at all affected by the economic downturn, while 40% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures.

• Among the respondents in the basic materials distribution sector, 18% of

the respondents are not at all affected by the economic downturn, while 55% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures. This contributes to 9% each i.e. 27% in all.

• Among the respondents in the beverages distribution sector, 100% of the respondents are not much affected by the economic downturn so far in the UAE region. Since the beverages are a fast moving goods among the consumers there has not been a big impact in this sector.

• Among the respondents in the chemicals distribution sector, 100% of the respondents are somehow or the other affected by the economic downturn so far in the UAE region. And companies have sorted out to measures such as decreasing the planned sales and marketing expenditures.

• Among the respondents in the consumer goods distribution sector, 62% of the respondents are not much affected by the economic downturn, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures. Companies affected by the economic downturn constitutes to a total of 38% in this sector.

• Among the respondents in the electrical machinery distribution sector, 33% of the respondents are not at all affected by the economic downturn, while 33% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures.


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• Among the respondents in the electronics appliances distribution sector, 29% of the respondents are not at all affected by the economic downturn, while 29% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures. Companies that have been affected by the economic slowdown constitute a total of 43%.

• Among the respondents in the Food and beverages distribution sector, 54% of the respondents are not at all affected by the economic downturn, while 31% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures. Only 15% of the companies belonging to this category of business have been affected due to economic downturn.

• Among the respondents in the Industrial parts distribution sector, 33% of the respondents are not much affected by the economic downturn, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures. Almost 67% of the companies in this sector have been affected by the economic slowdown.

• Among the respondents in the Logistics and warehousing distribution sector, 20% of the respondents are not at all affected by the economic downturn, while 25% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures. About 55% of the logistics and distribution sector has been affected by the economic slowdown.

• Among the respondents in the Machinery parts distribution sector, 39% of the respondents are not at all affected by the economic downturn, while 34% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures.

• Among the respondents in the automotive distribution sector, 100% of the respondents are not at all affected by the economic downturn so far in the UAE region.

• Among the respondents in the Pharmaceutical distribution sector, 20% of the respondents are not at all affected by the economic downturn, while 40% were less affected, while others were affected by the economic downturn and have sorted out to measures like reducing the market expenditures and R&D expenditures.

• The consumer goods distributors are the highest users of warehouses with a total of near about 29 warehouses, followed by the basic materials distributors with a total of 18 warehouses in all. There are certain other verticals which do not make use of the warehouses for their business activities.

X. CONCLUSION

The current scenario of the market is very competitive and compelling for the companies to automate all their warehousing operations. Survey results show that many companies have been affected by the economic downturn.

It is observed that a chunk of the companies in the UAE region are not using any software solution to manage their business activities. Companies that are not affected much by the economic downturn are not showing interest in immediate investment plans.


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CM Maran

Many companies still remain optimistic about the market condition and have said that the investment may likely happen after three or six months. Still many are satisfied with the manual operations and give a second thought to the investment in IT related products.

REFERENCE [1] Financial impacts of enterprise resource planning

implementations by Robin Poston*, Severin Grabski.

[2] Food and Beverage Industries: Overview of Software Requirements by Joseph strup.

[3] Effective warehousing and supply chain management: PARLIKAD, AJITH KUMAR NARAYANAN.

[4] WMS Software Selection—All You're Betting Is the Business By Mohamed Y. Amer, Ronald D. Chase, and Chris L. Brumett.

[5] Third-Party Warehousing Selection: Christopher R. Moberg, Ohio University and Thomas W. Speh, Miami University.

[6] Dubai Industrial City Report, http://wcm.dubaiholding.com/wps/wcm/resources/file/eb34570850e9eab/

[7] Cities Guide Dubai: Historical Background, The Economist,

http://www.economist.com/cities/findStory.cfm?CITY_ID=DUB&FOLDER=Facts-History

[8] WTO Trade Policy Review, Trade Policies by Sector UAE: Transport, pg 62

[9] History and Future, JAFZA, http://www.jafza.co.ae/jafza/content/section1/s1_2.aspx

[10] DP World website, http://portal.pohub.com/portal/page?_pageid=761,1&_dad=pogprtl&_schema=POGPRL

[11] JAFZA website, http://www.jafza.co.ae/jafza/content/section1.aspx

[12] Dubai World Central, http://www.dwc.ae/About-DWC.320.0.html

[13] DIC website, FAQs, http://www.dubaiindustrialcity.ae/wps/portal/dindc/kcxml/04_Sj9SPykssy0xPLMnMz0vM0Y_QjzKLN4k3tAwESYGZFr76kRhiPggxb31fj_zcVP0A_YLc0IhyR0VFAFLb99s!/delta/base64xml/L3dJdyEvUUd3QndNQSEvNElVRS82XzRfMTlV

[14] http://www.indexuae.com/Top/Business_and_Economy/Services/Logistics

[15] http://www.uasc.com.kw/index.asp

[16] www.wikipedia.com for UAE and UAE economy

[17] www.ameinfo.com

[18] www.zawya.com


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APPENDICES Project Questionnaire:

Please enter your contact information:

Contact Name* (CFO or Finance Head)

Job Title

Company*

Phone*

Website

E-mail*

Please complete the following:

Are you using Warehouses to manage your business activities? If yes then How many?

Are you in to 3rd party logistics business

What Technology solution /Software are you currently using for managing warehouse operations?

If yes, what is the name of the existing solution? Else, are you looking for a change in a better solution?

What is the size of your company by number of employees?

What is the size of your company by revenue?(if ready to disclose)

Do you feel your company has been affected by the Economic Slowdown?

What impact, if any, has the economic slowdown had on your business? We have seen a decrease in customer spending and are reducing our revenue forecasts We have reduced our planned research and development expenditures We have reduced our planned sales and marketing expenditures None of the above Other (please specify)

Can you give us an Idea of your Estimated Budget to buy a Software solution?

When is it likely to invest , if yes, when immediate/3 months/ 6 months

How soon do you plan to purchase a software solution?

Please provide any additional comments:


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impact of economic downturn of warehouse management system

Documents