Logistics professionals are sifting through the latest crop of software applications looking for solutions they hope will give them with an edge over the competition.
Automated storage/automated retrieval systems (AS/AR) are emerging as the pick of the litter. Many industry observers foresee a great future ahead for it. "The technology can be a game changer for certain sectors," says Ann Grackin, founder and CEO of ChainLink Research, Inc. in Newton MA. "In particular, distributors of 'one-each' items such as CPG, consumer e-commerce and B2B sellers of small parts and quantities. For others it may not make a difference."
For some, the poster child for the technology is the orange 800-lb KIVA Systems robot. Picture this -- a robot-guided "item fetch" metal platform carrying up to 3,000 lbs of inventory to pickers located in the centre of a warehouse. A laser-pointing system on a tower above them highlights the item to be picked. The picker selects the item and places it in a carton sitting on a separate "order fetch" platform. Once the order is completed, the picker instructs the attached robot to whisk the closed box to the shipping department.
In this scenario, goods come to pickers not vice-versa eliminating their need to walk around the facility. Also gone are traditional set-in-concrete storage racks, lift trucks and bolted-down conveyor systems. Instead software choreographs the movement of autonomous robots to transport goods and completed orders on the platforms.
AS/AR system benefits include increased employee productivity, higher pick accuracy, greater safety, less product damage and overall, lower warehouse operating costs. According to Mitch Rosenberg, Woburn MA-based vice-president Kiva Systems Inc., the estimated payback period is two to three years.
Strategically speaking, the advantages flow from the presence of "massively" flexible warehouse operations. "Our system runs on software not hardware," says Rosenberg. "It does not rely on fixed infrastructure. In fact, we can move our system for supporting a 100,000 sq. ft. warehouse to a new location over a weekend." So far, about 20 major firms including Office Depot, Walgreen's and Diapers.com--some with multiple installations -- have implemented the KIVA System.
For 3PLs (third-party logistics firms) the system may revolutionize their business model. "They have traditionally avoided automating their warehouses because of the great expense required to reconfigure facilities when existing clients leave or change their business plans," says Rosenberg. "With our system, the changes can be made simply, quickly and at low cost."
At the other end of the materials-handling spectrum sits PAS Americas' PowerStor, a pallet-handling technology that provides rapid storing and staging of large quantities of any-sized pallet in a small space. Using basic, battery-operated equipment, specialized racking and proprietary software, the system orchestrates automated put away and picking as well as dispatching completed pallets to the shipping dock.
According to Peter McCarthy, PAS Americas president & CEO in Oakville, the system is highly flexible, easy to configure and operate, suitable for all sizes of warehouses and delivers high throughput - as much as 200 pallets per hour per module.
"One of our customers, a dairy in Spain has a facility with 12,000 pallet positions that operates with only three employees," says McCarthy. "Our technology is very green. It can reduce CO2 levels by 90 per cent compared to facilities using conventional forklifts while significantly reducing utility costs."
Meanwhile back at the office, executives have other worries on their minds. "The perfect order is no longer good enough," says Steve Banker, Dedham MA-based ARC Advisory analyst. "The new focus is on demand signal response, especially in the CPG and the food & beverage sectors. Retailers require better supply chain performance from producers and distributors."
In Banker's mind, retailers have moved the replenishment goal posts from their distributions centres (DCs) and store rooms to store shelves where consumers can see and touch products when they want to buy them. That's because retailers lose sales when goods are sitting at the back of the store. But an energized demand-pull approach requires tighter integration of POS (point of sale) data with suppliers' databases that will result in more agile fulfillment.
"The new pain point is visibility," says Jim Burleigh, San Francisco-based senior vice-president, On-Demand Solutions, Red Prairie Corp. "For 3PLs -- it's not just about managing inventory.
"For producers and distributors especially those supplying major retailers they have to meet 17 different performance metrics -- label position on cartons, sending ASNs etc. Otherwise, they have to pay non-conformance fees."
But as firms try to keep inventory levels as lean and as possible, they face the risk of dealing with demand fluctuations. According to Burleigh, the solution is a more responsive supply chain.
To make that possible, Red Prairie has rebranded its recent acquisition of SmartTurn WMS as On-Demand WMS, integrating it into its existing core offerings to provide real-time visibility for less complex distribution operations.
For such items, On-Demand WMS creates the new world of warehouses without walls. They exist wherever inventory happens to be stored including 20-foot and 40-foot containers in fields or at building and project sites. Says Burleigh, "There is lots of low-level inventory such as building products etc. stored in those places. They do not require sophisticated controls -- manual counting and 'eyeballing' are good enough. For expensive and complex items, you might need bar codes or RFID tags."
Since the system is compliant with Web-services architecture, employees can control, monitor, aggregate and share data related to such inventory wherever it is. Such data can now be easily transmitted and accessed across wide-area, cellular and other expanding broad band networks that link smart phones, modem-equipped lap tops, smart phones and advanced PDAs (personal digital assistants).
As a result, firms in the construction, parts management, food service and health care sectors can leverage their entire scattered inventory. "They will have a clearer idea of what inventory is really on hand and how much they have," says Burleigh. "On-demand WMS will make it easier for companies to collect more inventory data for analysis. That will reduce overhead and administrative costs, eliminate guesswork so they can make better business decision and boost customer service."
The Canadian developers of Track & Trace hold out the promise of providing real-time visibility of overseas cargo during its inland journey after leaving port. "That trip across the country can take as long as the voyage across the ocean," says Wes Mang, Brampton-based logistics manager, Export Packers Co. Ltd. international food commodity traders. "Current solutions do not report in real time, there is a lag of 48 to 72 hours. That's because most of them rely on container shippers' data stored on servers in Europe."
Track & Trace was jointly developed by Export Packers Co. Ltd. and Trade Link International Ltd., a Hamilton-based freight forwarder. The former looked after the research & development while the latter handled commercialization and marketing. They have applied for a patent.
As long as logistics service partners of any size can use Microsoft Word or Excel spreadsheet programs, Track and Trace can link their reports into the data pipeline. Before, such networks relied on EDI (electronic data interchange) technology. But many small players refused to get involved because of the cost and complexity of installing it. But now with a simpler IT entry point that brings on board almost all relevant players, seamless, real-time inventory visibility has become a reality.
Track & Trace's core technology includes proprietary trip hammers to record one-time events such as ship departure times and others that register daily-occurring events. It also offers users the flexibility to tailor its capabilities to suit their own existing logistics practices. In addition Track & Trace automatically transmits information directly into users' IT systems without requiring them to access it through Web portals.
The enriched data analysis has enabled Export Packers to create delivery KPIs (key performance indicators) to optimize scheduling, routing and other factors to produce more accurate ETAs (estimated times of arrival). As a result, the firm has increased by 15 per cent its use of drop shipments - cargo that goes directly from overseas suppliers to customers without Expert Packers handling it.
Besides reducing costs, handling and damage risks, it has improved customer service. "It allows our customers to get as close to our sources as we want them to be," says Mang.
Trade Link currently offers the service free to its clients. But if the patent is granted, the partners plan is to spin it of into a separate fee-charging logistics service. "We're now about halfway through the patent process," says Trade Link president, Anne Waldes. "We expect a final decision some time in 2011."
At the same time, updated fleet management tools can help shippers impose greater discipline over their total transportation spend by breaking down silos between private fleet operations and contract carriers. By integrating inbound and outbound activities to eliminate "empty miles", they can reduce overall transportation costs by up to 20 per cent according to Derek Gittoes, Redwood Shores, CA -based Oracle vice president, Logistics Product Strategy.
"Before, it was hard to manage both functions with the same application," he says. "Private fleets have a large HR component -- keeping track of hours driven, benefits etc. while managing third-party carriers was more about finance."
Another expanding trend is the spread of business intelligence (BI) to front-line staff. Firms initially introduced such technology to boost transaction efficiency by helping employees create purchase orders and bills of lading properly. But Gittoes says that now when employees pick a carrier from an approved list, each supplier's file includes a rolling 12-month service score card noting on-time performance, invoice accuracy etc. "With access to better data, they can make a guided choice," he says.
North American railroads will soon enjoy similar benefits as a result of Railinc Corp's recent implementation of the Teradata database version 13. (Cary NC-based Railinc is the US railroad industry's resource for IT and information services.) Basically, the database adds a new spreadsheet column into which Railinc can import geo-spatial data from the US Federal Rail Administration (FRA). It contains the longitude and latitude coordinates for the entire US rail network including accurate track mileage. By combining the FRA data with its own longitude and latitude data for all railroad stations, Railinc now has a digital, geo-spatial database for the entire US national rail system.
Railinc has just started to analyze the new resource to develop future revenue-generating services for its members. These include demonstrating current rail car and other equipment usage and creating activity profiles related to equipment wear and tear.
"Our next step is to look for new analytical tools to put on top of the database," says Bill Dupre, Railinc's applications architect.
No software roundup could avoid mentioning cloud computing. While many tout it as a new trend, in reality it is an updated label for hosted servers offering shared functions such as storage and applications delivered as software-as-a-service (SAAS). In 2011, SAP will join the parade by introducing Business ByDesign to Canada. It will offer to small- and mid-sized companies lacking in-house IT infrastructure a fully integrated business management software package to deliver best practices for managing supply chain, financials, customer relationships, human resources and procurement.
On the applications side, several users and analysts have recognized that SAP's own Extended Warehouse Management (EWM) solution as the equivalent of best-of-breed (BOB) applications. As a result, users can enjoy the best of both worlds since EWM is tightly integrated into SAP's other enterprise suite functions including a transportation management system (TMS) and Global Trade Services which deal with governance, regulation and conformance (GRC) issues.
Recently, the TMS's visibility engine has been beefed with RFID and sensor enablement upgrades which monitor inventory as it moves through global supply chains and ensures it is secure and stored under proper conditions. As well, the Global Trade Services 8.0 due out at the end of 2010 will enable users to enjoy quicker access to new laws and regulations from trading partners with fewer clicks.
Whatever solution users choose from the new offerings, true competitive value comes from creative execution not just buying the hottest system.