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Finding the Least of all Costs – Harmonizing WMS & TMS

Standing before the mirror with razor in hand in a dimly-lighted motel bathroom a few years ago, I made the mistake of attempting to even up my sideburns.  You who shave know the rest of the story.  Not willing to shave my entire head, I gave up and waited until my return home and a visit to the barber who cleaned me up, suggesting that with my eyes not quite what they used to be, I should leave future cosmetic fixes to him.

Possibly a stretch, but I thought of that vignette last week when rereading a Bob Trebilcock (Modern Materials Handling) interview with Manhattan Associates’ former CEO, Pete Sinisgalli.  In the transcript, Bob wrote and I’m paraphrasing: “If you manage order fulfillment operations to cut warehouse costs and improve throughput, it may cost you more money on the back-end in shipping.  Conversely, if transportation goals drive fulfillment, you may come up with an efficient way to group and dispatch your orders to reduce overall shipping time and costs, but lose those savings through more costly picking”.  Put another way, the value of performance improvement in the warehouse must be measured by its impact upon transportation and the customer – and, vice versa.  So, what’s the answer?  It’s not a visit to the barber – though the sideburn trimming analogy still applies!

Tackling the answer starts with a clear understanding of the tradeoffs between achievement of warehousing, transportation and customer service objectives, measurement of critical performance metrics, followed by some heavy horse-trading to resolve conflicts, and ending with an optimized fulfillment engine that provides as solid a solution as can be practically achieved.  And, we’re not just talking about information systems.  Top fulfillment engines integrate facility layout, equipment, workflows and systems that can be readily adapted to changing order profiles and shipping requirements.  Simple, right?  No, it’s not simple!  In fact, for most companies, it’s more daunting than cutting sideburns.

Sinisgalli was right when he said, “it’s about order fulfillment and no longer about point solutions [such as WMS and TMS]”.  Clearly, this view is shared by other leading supply chain execution systems suppliers as well as those ERP providers who have gained traction in the space.  That said, the statement not only represented a philosophical paradigm shift, but also triggered breakthroughs in technology refinement, specifically the harmonization of existing software applications, to better address the interests of all supply chain constituents.

Understanding that harmonized systems are not a visionary fantasy, the time for assessing their potential for operations is long overdue.  Working with sales and customer service, your first move should be to profile, characterize and group your customers in terms of what they expect from your fulfillment engine; e.g., visibility, order status updates, cycle times, value-added services, packaging, shipment modes and costs, returns processing, etc.  Match these expectations against corporate standards and performance goals and resolve disconnects.  Next, take stock of where your warehouse, shipping operations and carriers currently stand relative to meeting these expectations, identifying and prioritizing those areas most in need of improvement.  As implied earlier, don’t overlook the reality that improvements in one area may negatively impact performance in the others.  Highlight those areas that will gain the most from deployment of or upgrade to a harmonized WMS and TMS.  Then, prepare performance improvement recommendations that include:

  • Multiple scenarios for addressing customer requirements and existing operational deficiencies;
  • Related system costs and risks – don’t overlook the potential value of machine-learning and artificial intelligence enhancements;
  • A high-level value proposition for each scenario; and,
  • Your assessment of likely customer response.

With the foregoing completed, prepare for some compromising and start the horse-trading.  Here, depending upon the nature of your organization, you’ll be dealing with manufacturing, sales, service, finance, senior management and, once your organization is on-board, representative customers.  This phase is not for the faint-hearted, but once you’ve reached consensus, you’ll be well positioned for launching a program that will even impress your barber.
—John Hill, St. Onge Company

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