July 1997 • Volume 7 • Number 7
The Old Crystal Ball
By Jan B. Young, CFPIM
Extrapolating the future from the past is
dangerous business because the trends we see today may not
continue tomorrow. Nevertheless, extrapolation is a risk
worth taking. If we try to predict the future, we might be
surprised; if we fail to try, the future will certainly be a
surprise.
In the area of distribution and warehousing, there seems
to be five trends which have been in place for some time and
which seem to have the staying power to be important in the
years to come. They are:
Emphasis on logistics
The objective of distribution is to get the product to the
end customer as rapidly and as efficiently as possible,
including its manufacture, distribution and final delivery.
The reduction in inventories that has been made possible
over the last two decades by computer-based controls means
that more focus on the customer is necessary to maintain and
improve levels of service. The old-fashioned warehouse
manager who simply received whatever materials came in the
door and shipped whatever orders made it through the credit
approval process is no longer adequate. Business planning
and execution strategies must now exist at a higher
level.
Increased productivity through computers
The advent of modern warehouse and distribution management
systems has made significant productivity increases
possible. Things can be done with these systems that are
either impractical or impossible in a paper-based warehouse.
For instance:
- Stratification of storage to keep the fastest-moving items in the best locations and slow movers out of the way. While stratification can be done in a relatively static business without a warehouse management system, computerization allows it to be done in a dynamic business. The warehouse management system can potentially re-evaluate product positioning daily and where changes in demand are important; such daily re-evaluation can reap larger dividends than the basic concept of stratification.
- Techniques such as interleaving and real-time work dispatching can minimize and even nearly eliminate dead travel in the warehouse. These ideas have long been used in the dispatching of taxi cabs, but a taxi driver spends 15 to 30 minutes on each dispatch. In the warehouse, by contrast, the rate of dispatch is often close to 20 times as high and simply cannot be effectively handled by a human.
- What Dr. Edward Frazelle of Georgia Tech calls "order completion zones" can be supported only with a computer-based operations planning system, such as the ones embedded in most warehouse management systems. An order completion zone is a small pick zone which is designed to allow the complete picking of a selected group of orders, thus eliminating the need for consolidation on the shipping dock. The content of an order completion zone can potentially change several times a week, making the concept nearly impossible to achieve without computer support.
- The ability to develop material handling strategies
differently for different kinds of items, customers and
carriers, the ability to operate multiple strategic plans
at the same time, and the ability to change strategic
direction frequently and with precision require computer
support.
Improved communications through computers
The idea of transferring orders, shipments, invoices and
other documents electronically from one computer to another
has been around for a long time. Implementation difficulties
and the need to "partner" with suppliers and customers when
choosing among a bewildering array of options has delayed
the successful use of electronic data interchange for many
businesses. But there are signs that the situation is
improving and the rate of installation is accelerating. The
day may be coming in the not-too-distant future when
electronic commerce will become the norm and paper
transactions the exception.
Increased mechanization
The use of automated material handling and storage equipment
such as conveyor sortation systems, carousels, pick-by-light
systems and other devices is increasing after a decade or so
of slow growth. The increase is due not only to more
flexible and more reliable machinery, but also to increased
capabilities in most warehouse management systems to
interface and operate seamlessly with them.
Increased professionalism
A new breed of people is coming to the forefront of
warehouse equipment operations. The hoary, grizzled boss
that came up through the ranks can no longer handle the
technology of today. Instead, warehouses and distribution
centers are being managed more and more by professionals who
have significant computer background and extensive education
in management skills as well as experience in manufacturing,
transportation or inventory control and logistics. These
people are prepared to operate the warehouse as one element
in the company's logistics and as a business unto itself.
The significance of these five trends in the short term
is simple: Businesses which are not up to speed will soon be
left behind. In the long term, they point the way to
concepts which today may even be hard to imagine, but in the
future will be commonplace. To get ahead, you first have to
get caught up.
Jan B. Young, CFPIM, is director of warehouse technology for
Catalyst USA Inc., a supplier of off-the-shelf warehousing
and distribution systems. He is the author of "Modern
Inventory Operations," published by Van Nostrand Reinhold in
1990.
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