August 1997 • Volume 7 • Number 8
Coming Soon ...
Analytical Tools For Warehousing
By Jan Young, CFPIM
In the beginning, there was the warehouse ...
dark and dank, dusty and dirty, material piled everywhere.
Nobody really knew what was in it or where things were. In
the earliest days, it really didn't matter because the
building was small and contained only a few items. The
industrial revolution in the latter part of the 19th century
brought with it an explosion in the number of products made
and the number of parts and materials used to make them.
Warehousing became a problem for the first time in history.
The start of the automotive age in the early years of the
20th Century again multiplied the complexity of products.
Coming with the automobile, however, were new concepts of
systems and procedures. Primeval systems designers drew flow
charts, created forms and designed file folders so people
could keep track of the content of the warehouse, at least
to some degree of accuracy.
Technological advances
World War II brought the earliest digital computers and
post-war expansion led to their commercial exploitation.
Paper records were converted to punch cards and the punch
cards became tape and finally disk, while everyone pretended
that accuracy was not an issue. In the late 1960s the bar
code was perfected; RF-based mobile terminals appeared
shortly thereafter. Companies soon began to explore the use
of these technologies in the warehouse and a few began to
see benefits and real improvement as a result. Starting in
the late 1970s, specialists in real-time programming began
to market their services specifically to the warehousing and
distribution markets and the warehouse management system
(WMS) industry began to take shape.
Today, the modern warehouse management system has replaced the manual inventory tracking system and the batch mainframe-based computer system in essentially all large warehouses. RF terminals and bar codes are now in general use and some real gains in productivity and accuracy have been made. Most WMS purchasers today are upgrading from an earlier system and relatively few are pioneering. This new maturity in the WMS industry raises the question, "What's next?"
The continuing decline in hardware and software pricing is going to make lots of things possible in the future, but I believe that one development will ultimately stand head-and-shoulders above the others: the development of truly engineered warehouses.
Modern WMS systems collect history. The best systems
archive everything. Every time an employee touches material,
every receipt, every shipment, and yes, every mistake is
dutifully recorded for posterity. Gigabytes of data are
generated and are available for use. Yet most warehouses
consider this data as backup only, and few make any use of
its real potential. However, newer, more professional
management is arriving on the scene and is starting to
recognize its value.
Warehouse analysis tools
Over the next five to eight years the most fruitful growth
in warehouse management systems will be in the area of
analysis, primarily based on historical data. Beginning with
powerful and flexible data retrieval tools and ending with
multi-purpose configurable analysis engines, features will
appear on the WMS systems market which can answer questions
like these:
• How can I reorganize my physical storage to maximize productivity?
• Which lift trucks and which employees cause the most product damage?
• Are my storage locations sized appropriately? Which should I make larger and which smaller? How big should they be? How often does it pay me to change location sizes?
• What would be the impact on warehouse productivity and customer service when changing my shipping carton sizes? Should I negotiate with my suppliers to change their carton sizes?
• What is the value of increasing or decreasing pick location sizes? Is the net value favorable after adjusting for increased or decreased replenishment costs?
• How should my warehouse operations change with seasonal variations in demand?
• Am I operating the right balance of people in the right areas across different shifts and different types of work?
• And much more.
Modern warehouse management systems have, in effect, picked the low-hanging fruit. Yet as any farmer knows, the bulk of the fruit isn't low-hanging. The power of WMS history files will allow us to make a 1 percent gain here, a 2 percent gain there, and a 1.5 percent gain somewhere else. Given enough of these small and hard-to-achieve gains, total productivity will take another leap to an entirely new level of performance. Analytical tools — watch for them in a WMS system near you!
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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