improving warehouse productivity without tier 1 technology
DESCRIPTION
Read this presentation to answer the question, "How do I improve my warehouse problems without a large capital investment?” You will learn: 30 process-based distribution center execution tactics; What technologies are available to cost-effectively enable more efficient processes; What features and functionality you can expect to get from a Tier 2 or Tier 3 WMSTRANSCRIPT
Improving Warehouse Productivity Without Resorting to Tier 1 Technology
What is “Tier 1” Technology?
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The term “Tier 1” is frequently used, but is a gross over-simplification
Conjures up images of “expensive” technology
“Overkill” “The Cadillac” Often used in context of WMS vendors
Image source: General Motors
Tier 1 Technology Isn’t Bad
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For many large, complex operations, the only path to supply chain improvement involves making a large capital investment
Many of the technologies which we consider “Tier 1” have been the pioneers – developing cutting edge technology that improves efficiency
This technology then get adapted and trickles down to mid-tier providers over time
An Alternate Title for our Presentation…
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"How can I improve my warehousing problems without a major capital
investment?“
But how?
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Isn’t this asking to get something for nothing?
No. There are two basic ideas
which are under-exploited by many enterprises today:1. Leveraging new advances in
technology which they may not be aware of
2. Sharpening the saw – stepping back and making fundamental process changes to improve the operation
Common Challenges
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Whether their capital budget is 5 figures or 8 figures, companies face the same basic set of challenges:– Reduce labor costs– Improve accuracy– Improve space utilization
Secondary challenges:– Meet regulatory compliance
mandates– Meet retail compliance
mandates
No Shortage of Solutions…
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There are countless solutions available to address these challenges…
Image sources, clockwise from top left: Intermec, Abel-Womack Integrated Handling Solutions, Lightning Pick, Voxware, Remstar, Diamond Phoenix, TGW Ermanco, Kiva Systems, FORTE Industries
Conveyor-based pick modules
Carousels AS/RS Robotic Handling
Pick-to-Light Systems Speech
Warehouse Control Software (WCS)
WMS
Process-Centric Approach
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Rather than jumping immediately to technology, let’s look at several strategies to address these challenges…A. Pick more efficientlyB. Put-away more efficientlyC. Pack and ship more efficientlyD. Reduce walkingE. Improve labor productivityF. Improve accuracyG. Improve space utilization
Process-Centric Approach
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Each strategy has a set of execution tactics…1. Cluster picking2. "Tandem" picking3. Receiving staging by zone4. Clustered put-away 5. Put-away by movable unit6. Implement specialized packing
processes7. Pre-manifesting 8. Dynamic label application9. Cartonization 10. Palletization11. Seal cases more quickly12. Weight-based accuracy confirmation13. Create a forward pick area14. Two-tier bin system 15. SKU Mirroring
16. Pick restriction 17. Large quantity override 18. Min/max replenishment19. Demand-based replenishment 20. Slot the warehouse more effectively21. Basic productivity tracking22. Advanced productivity tracking23. Task interleaving 24. Pick confirmation 25. Cycle counting26. Track product by lot #27. Pick product by lot #28. Track serial numbers29. Track country of origin30. High density storage
Process-Centric Approach
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Some Tactics require enabling technology…
Focus on Mid-Tier WMS
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Mid-Tier WMS has been in use for at least 15 years
Generally, mid-tier means a more limited set of functionality for a lower price
Often, mid-tier WMS systems had some key gaps which made them not practical for many users with special requirements
The SaaS Model
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In the last 5 years, the Software-as-a-Service (SaaS) model has become a popular means of deploying WMS
With the SaaS model, the software vendor hosts the WMS application on their own server and deploys it via a web connection
True SaaS is multi-tenant: multiple users are on the same instance of the software
Customers do not pay an up-front license fee – just a monthly usage fee
Upgrading and remaining on the current version of the software is much easier
What are the TRUE Capabilities?
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Commonwealth Supply Chain Advisors conducted a survey of three of the top mid-Tier WMs providers to assess the extent to which functionality gaps have been plugged in recent years
Two providers offer only SaaS-based WMS
The third offers both traditional, licensed WMS and a SaaS WMS
What are the TRUE Capabilities?
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We created a list of 30 functionality points which have traditionally been challenging for mid-tier WMS providers to address
We asked each vendor to indicate whether this functionality was:– Standard Functionality– Configurable Functionality– Customization Required– Not Available Currently
We also asked about actual usage amongst their client base. Was the functionality:– Currently in-use with referenceable clients– Available but not currently in use– Not available
The vendors responded on the condition that they not be identified by name in this presentation
Challenges Strategies Tactics Enabling Technology
Level of support
from Mid-Tier WMS
Cluster picking - pick multiple orders at the same time and put them in discrete containers by order
WMS 3
WMS 2Double-length electric pallet
jacksn/a
Tugger vehicles n/aReceiving staging by zone - at receiving, direct that inbound product be staged on a pre-defined movable units based upon it’s destination zone
WMS 1
Clustered put-away - allow multiple SKUs to be put away in the same trip through the warehouse in a logical pick path
WMS 2
Put-away by movable unit - allow multiple SKUs to be placed on a license plated movable unit; allow the movable unit license plate to be scanned once at put-away, and direct put-away of all SKUs on that movable unit in a logical pick-path
WMS 2
Implement specialized packing process Process change n/aPre-manifesting - Calculate weight and quantity of all the multi-SKU pallets on an order before picking
WMS 3
Dynamic label application: Apply a retail-compliuant label to cases at time of picking with scan confirmation
WMS 2
Cartonization - determine the optimal size shipping container based on the cube and longest dimension of the items which are to be picked for an order
WMS 2
Palletization - prior to case picking, determine the number of cases to be picked to each pallet based on cube
WMS 1
Tape dispensers n/aCase sealer n/a
Weight-based accuracy confirmation - weight a carton or a pallet and compare it to a database of the actual weights - verify if the carton or pallet is within tolerance
WMS 1
Create a forward pick area n/aTwo-tier bin system - the same SKU can exist in two different bins in the distribution center
WMS 3
SKU Mirroring - the same SKU can exist in two different bins in the same ZONE WMS 3Pick restriction - the system can limit picking only to bins designated as "forward pick bins"
WMS 3
Large quantity override - if a single pick exceed x quantity and will drastically deplete the forward pick area, the system will direct the pick to be made from the overstock bin
WMS 2
Min/max replenishment - replenish to a bin if the quantity falls below a pre-set minimum level
WMS 3
Demand-based replenishment - proactively replenish to a bin if known demand for the item will exceed the quantity in the bin, EVEN IF the bin is not currently below it’s minimum stocking level
WMS 1
Slotting software n/aSlotting spreadsheet n/a
WMS 2Labor management software n/a
WMS 2
Labor management software n/a
WMS 1
Labor management software n/aPick confirmation - confirm that the correct product was picked based on a bar-code scan of the item or bin
WMS 3
Cycle counting - allow incremental cycle counting in lieu of physical inventory WMS 3Track product by lot # WMS 3Pick product by lot # WMS 3Track serial numbers WMS 3Track country of origin WMS 3
Push back rack n/aDouble deep rack n/a
Very narrow aisle (VNA) storage
n/a
Mobile storage rack n/a
Pick more effi ciently
Reduce walking
Improve labor productivity
Reduce labor costs
Put-away more
effi ciently
Pack and ship more
effi ciently
Improve accuracy
Improve space utilization
Accuracy is poor
The DC is out of space
Basic Productivity Tracking: Track lines picked per hour by worker regardless of pick type
Advanced Productivity Tracking: Track lines picked per hour by worker by pick type (i.e. distinguish between piece picks, case picks, pallet picks)
Task interleaving - combined put-away/picking cycles - when full pallet is put-away, search for full pallet picks which need to occur in proximity to the put-away bin and place this pick as the next task in queue
Improve storage density
Slot the warehouse more effectively
"Tandem" picking - when case picking, two different orders can be picked at the same time utilizing a double-length electric pallet jack
Seal cases more quickly
The Rating System
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Three levels…
Level: 3 Generally available
with minimal customization required
In use by at least some referenceable companies
Level: 2 Available but often
with some customization required
Might not be currently in use by any companies
Level: 1 If available at all,
customization is required
Might not be currently in use by any companies
The Tactics…
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1. Cluster picking2. "Tandem" picking3. Receiving staging by zone4. Clustered put-away 5. Put-away by movable unit6. Implement specialized packing
processes7. Pre-manifesting 8. Dynamic label application9. Cartonization 10. Palletization11. Seal cases more quickly12. Weight-based accuracy confirmation13. Create a forward pick area14. Two-tier bin system 15. SKU Mirroring
16. Pick restriction 17. Large quantity override 18. Min/max replenishment19. Demand-based replenishment 20. Slot the warehouse more effectively21. Basic productivity tracking22. Advanced productivity tracking23. Task interleaving 24. Pick confirmation 25. Cycle counting26. Track product by lot #27. Pick product by lot #28. Track serial numbers29. Track country of origin30. High density storage
1. Cluster picking
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Definition: pick multiple orders at the same time and put them in discrete containers by order
WMS Availability Assessment
Level: 3 Generally available
with minimal customization required
In use by at least some referenceable companies
2. "Tandem" picking
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Definition: when case picking, two different orders can be picked at the same time utilizing a double-length electric pallet jack or tugger vehicle
WMS Availability Assessment
Level: 2 Available but often
with some customization required
Might not be currently in use by any companies
Deep Dive: Pick Methodologies
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Which style of picking is best?
Discrete Order Picking Cluster Picking
Zone Pick: Pick & Pass Zone Pick: Pick & Consolidate
Batch Picking
Deep Dive: Pick Methodologies
• Pro’s:– Simple for operators– Less error prone– Little/no technology required– May be the only practical method to
pick very high-cube items• Con’s– Very high levels of walking– Operators return to home-base after
each order is picked– Each order requires a trip through
the entire warehouse
Discrete Order Picking
Deep Dive: Pick Methodologies
• Pro’s:– 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
• Con’s– 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
Cluster Picking
Deep Dive: Pick Methodologies
• Pro’s:– 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• Con’s
– 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
Zone Pick: Pick & Pass
Deep Dive: Pick Methodologies
• Pro’s:– Reduces overall travel distances for
the SKU’s in the order– Well-suited for orders with diverse
sizes and shapes of SKU’s– Well-suited for mixing case and piece
picking on the same order
• Con’s– Very complex for software to manage
consolidation process– Requires labor downstream to
consolidate orders– Requires space to buffer product
Zone Pick: Pick & Consolidate
Deep Dive: Pick Methodologies
• Pro’s:– Well suited for instances where the
same SKU appears on a large number of orders
– Well suited for single line, single piece orders
• Con’s– Only suits a limited order profile– Requires additional downstream
handling– Can be complex to execute
Batch Picking
3. Receiving staging by zone
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Definition: at receiving, direct that inbound product be staged on a pre-defined movable unit based upon it’s destination zone
WMS Availability Assessment
Level: 1 If available at all,
customization is required
Might not be currently in use by any companies
Inbound
Zone 1 Zone 2 Zone 3
4. Clustered put-away
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Definition: allow multiple SKUs to be put away in the same trip through the warehouse in a logical pick path
WMS Availability Assessment
Level: 2 Available but often
with some customization required
Might not be currently in use by any companies
5. Put-away by movable unit
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Definition: allow multiple SKUs to be placed on a license plated movable unit; allow the movable unit license plate to be scanned once at put-away, and direct put-away of all SKUs on that movable unit in a logical pick-path
WMS Availability Assessment
Level: 2 Available but often
with some customization required
Might not be currently in use by any companies
Zone 1
MU #T-745
6. Implement specialized packing process
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Definition: separate the less skilled packing functions from the more skilled manifesting functions
10-step process
7. Pre-shipping
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Definition: Calculate weight and quantity of all the multi-SKU pallets on an order before picking
WMS Availability Assessment
Level: 3 Generally available
with minimal customization required
In use by at least some referenceable companies
8. Dynamic label application
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Definition: Apply a retail-compliant (or other) label to cases at time of picking with scan confirmation
WMS Availability Assessment
Level: 2 Available but often
with some customization required
Might not be currently in use by any companies
Case label
9. Cartonization
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Definition: determine the optimal size shipping container based on the cube and longest dimension of the items which are to be picked for an order
WMS Availability Assessment
Level: 2 Available but often
with some customization required
Might not be currently in use by any companies
Image source: Tetris
10. Palletization
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Definition: prior to case picking, determine the number of cases to be picked to each pallet based on cube
WMS Availability Assessment
Level: 1 If available at all,
customization is required
Might not be currently in use by any companies
11. Seal cases more quickly
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Definition: speed up the case sealing process without adding excess labor
Image sources: Betterpack, 3M
12. Weight-based accuracy confirmation
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Definition: weigh a carton or a pallet and compare it to a database of the actual weights - verify if the carton or pallet is within tolerance
WMS Availability Assessment
Level: 1 If available at all,
customization is required
Might not be currently in use by any companies
13. Create a forward pick area
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Definition: stock a smaller supply of many SKUs in a high-density area of the warehouse
8 SKUs stored on 8 pallets = 32 walking feet
vs.
Smaller supply of the same 8 SKUs stored in carton flow
rack
8 SKUS = 8 walking feet*
*(Can be increased to 32 SKUs per walking foot)
13. Create a forward pick area
Storage mediums include:– carton flow– static shelving
Image source: Borroughs Corporation, Frazier Industrial Company | 36
14. Two-tier bin system
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Definition: the same SKU can exist in two different bins in the distribution center
WMS Availability Assessment
Level: 3 Generally available
with minimal customization required
In use by at least some referenceable companies
Overstock
Forward pick
15. SKU Mirroring
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Definition: the same SKU can exist in two different bins in the same ZONE
WMS Availability Assessment
Level: 3 Generally available
with minimal customization required
In use by at least some referenceable companies
Overstock
Forward pick
16. Pick restriction
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Definition: the system can limit picking only to bins designated as "forward pick bins"
WMS Availability Assessment
Level: 3 Generally available
with minimal customization required
In use by at least some referenceable companies
Overstock
Forward pick
17. Large quantity override
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Definition: if a single pick exceeds x quantity and will drastically deplete the forward pick area, the system will direct the pick to be made from the overstock bin
WMS Availability Assessment
Level: 2 Available but often
with some customization required
Might not be currently in use by any companies
18. Min/max replenishment
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Definition: replenish to a bin if the quantity falls below a pre-set minimum level
WMS Availability Assessment
Level: 3 Generally available
with minimal customization required
In use by at least some referenceable companies
19. Demand-based replenishment
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Definition: proactively replenish to a bin if known demand for the item will exceed the quantity in the bin, EVEN IF the bin is not currently below it’s minimum stocking level
WMS Availability Assessment
Level: 1 If available at all,
customization is required
Might not be currently in use by any companies
20. Slot the warehouse more effectively
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3 Methods of Slotting:– Level 1: Determine the correct
STORAGE MEDIUM– Level 2: Determine the correct BIN
#– Level 3: Dynamic slotting
Factors influencing slotting methodology:– Demand volatility– Product lifecycle– # of new product introductions per
year– Stackability requirements– Segregation rules– Family grouping rules
Slotting Tools:– Spreadsheet tools– Specialty slotting software
Image source: Rubic’s
How to slot with a spreadsheet…
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Create Item Master– SKU– Description– Length– Width– Height– Overall cube– Conveyabiility– Pack size info
Determine Current Quantity on Hand
Determine rationalization strategy for current QOH
TG511A1000 THERMOSTAT GUARD - CLEAR COVER 05050C0601 176.83 N 189SC16124 16X12X4 SCREW COVER ENCLOSURE 10040E0101 835.52 N 46HGM-SZ SINGLE ZONE REFRIGERANT MONITOR 08010D0202 5,751.18 N 14AT150F1022 50VA TRANS 120/208/240V C BRK 08010E0101 76.62 N 197220B BRASS FLOW SENSOR 07010B0601 444.35 N 47RIB2401B SPDT POWER RELAY 24VAC/DC,120V 03070B0601 73.32 N 306UCP-422-43 MA/PSI XDUCER W/PSI IND. 07020E0601 193.69 N 124T-PB202-0 24VAC POWER SOURCE,4A,PNL 03040B0601 161.76 N 180
SKU Description Current Location Overall
Cube
Qty. on Hand, 2008
Item Master
Non-Conveyable?
How to slot with a spreadsheet…
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Define variables:– Velocity Variables– Growth Rate Variables– Bin Variables, Primary Pick Area– Bin Variables, Overstock– Tote Variables– Current Storage Capacity– Current Bin Box Used by Client– Pallet Rack Bays Available
How to slot with a spreadsheet…
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Establish multiple replenishment intervals…
How to slot with a spreadsheet…
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Create storage medium rules Calculate theoretical qty on
hand Rationalize against actual qty on
hand Determine optimal storage
medium Summarize results:
– # of units of each storage medium required
– “walk-back” bays required– Impact of various replenishment
intervals– Changes over time
21. Basic Productivity Tracking
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Definition: Track lines picked per hour by worker regardless of pick type
WMS Availability Assessment
Level: 2 Available but often with
some customization required
Might not be currently in use by any companies
22. Advanced Productivity Tracking
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Definition: Track lines picked per hour by worker by pick type (i.e. distinguish between piece picks, case picks, pallet picks)
WMS Availability Assessment
Level: 2 Available but often
with some customization required
Might not be currently in use by any companies
22. Advanced Productivity Tracking
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LMS on Demand?
YES.
23. Task interleaving
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Definition: combined put-away/picking cycles - when full pallet is put-away, search for full pallet picks which need to occur in proximity to the put-away bin and place this pick as the next task in queue
WMS Availability Assessment
Level: 1 If available at all,
customization is required
Might not be currently in use by any companies
1. Pickup inbound
pallet
3. Pick outbound
pallet
4. Stage outbound
pallet
2. Put-away
inbound pallet
24. Pick confirmation
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Definition: using some form of automatic data capture technology to confirm that the correct item was picked (at the time of pick)
WMS Availability Assessment
Level: 3 Generally available
with minimal customization required
In use by at least some referenceable companies
25. Cycle counting
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Definition: counting portions of the inventory each day to ensure bin and item-level accuracy
WMS Availability Assessment
Level: 3 Generally available
with minimal customization required
In use by at least some referenceable companies
26. Track product by lot #
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WMS Availability Assessment
Level: 3 Generally available
with minimal customization required
In use by at least some referenceable companies
27. Pick product by lot
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WMS Availability Assessment
Level: 3 Generally available
with minimal customization required
In use by at least some referenceable companies
28. Track serial numbers
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WMS Availability Assessment
Level: 3 Generally available
with minimal customization required
In use by at least some referenceable companies
29. Track country of origin
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WMS Availability Assessment
Level: 3 Generally available
with minimal customization required
In use by at least some referenceable companies
30. Improve storage density
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Double-deep storage
Push-back rack
Mobile storage rack
3 Under-Utilized Storage Systems…
On-Demand WMS: What does it cost?
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Cost estimates…– Vendor #1
• Ongoing monthly cost: Averages $3,000-$4,500 per month, but could be as much as $6,000.
• Implementation cost estimate: $20,000 - $40,000– Vendor #2
• Ongoing monthly cost: Averages $1,700 – 2,500per month• Implementation cost estimate: $4,000 (editorial note: Commonwealth feels this is a
significant under-estimate)– Vendor #3
• Ongoing monthly cost: $0• Implementation cost estimate: Under $100,000 for license and implementation for a
moderate-complexity project
Hardware: The above prices do not include:• Installation of wireless network in the DC• Handheld computers• Bar-code printers
WMS: Keys to success
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Don’t rush it!– Allow 12 – 18 months for selection and implementation
Evaluate all the options (even Tier 1!) Document EVERYTHING about the current state
– Al normal processes– All exceptions
Test thoroughly Train Assign ownership Ensure visibility & reporting exist Conduct an honest readiness assessment
18 Steps to Success
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Strategy Solution Selection
Execution ManagementVis
ion WMS Vendor Selection
RFI: Determine Vendor Pool
Round 2: Scripted Demos
Round 3: Site Visits
Negotiation & Selection
Round 1: RFP (Written Bids)
Distribution Optimization
Detailed Discovery with Data Analysis
Define Current State
Design Future State
Estimate Implementation Costs
Project Future Savings
Build Business Case
WMS Implementation
Functional Alignment
Test
Train
Convert
Build
Go-Live
Optimize
In Summary…
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Improved distribution efficiency IS within reach, providing a company is willing to make at least SOME investment in processes or technology
Savvy companies who conduct a thorough evaluation of technology can often find that improvement is not as expensive as they thought
Don’t rush the process – take the time required to design the solution correctly the first time.
Thank You
20 Park Plaza, Suite 400 | Boston, Massachusetts 02116(O) 617.948.2153 | (F) 617.507-6112www.commonwealth-sca.com Distribution Optimization | Transportation Optimization | Supply Chain Planning
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