The Supply Chain Information Technology blog

I’ve recently toured several distribution center operations while evaluating new technology options. And one recurring improvement initiative that stood out at each of these sites is the pursuit of increased productivity. Nowadays, considering the constrained capital environment and short-term focus on operational budget performance, opportunities to invest in new technology are met with great optimism.

During my visits to these facilities, I noticed that the distribution and warehouse managers had very specific views of where and how they intended to leverage their technology investment – whether it be enhanced WMS functions that provide the ability to flow product from receipt directly to shipping or automated picking equipment options that can minimize direct labor for items in storage. 

Looking at the specific tasks identified by the DC managers for productivity improvement, their vision for the application of technology enhancement is accurate: The combination of WMS functions and automated material handing and picking technology will indeed increase the productivity in comparison to the current processes. But how much of those efficiencies are going to be relinquished through the inbound/outbound efforts feeding this process?

In some instances, the DC manager’s vision neglected the additional effort required to bring material into and out of the proposed automated picking application. They also did not factor in the effort required to consolidate multiple process/material flows for shipping. 

As I attempted to address how the proposed new process/technology applications would integrate into the existing operational flows, our discussions quickly reverted back to overcoming specific process challenges in the automation application. 

I wanted to take the conversation a step back and understand how this proposed application of technology could be leveraged across more the DC picking operations. But the DC manager was focused on the details of execution in one area rather than digging into how the proposed improvements impact the operation as a whole.  

My approach to productivity improvement is different. 

I start with a view of the overall operational metrics first (the forest). Only with a clear understanding of all requirements and constraints for a specific operation do I begin to dig into specific solution types (the trees) to support productivity improvements. 

In this particular case, you have to ask yourself: 

• Is the productivity enhancement that will be achieved by this order/SKU-specific technology approach sufficient to overcome the additional effort necessary to bring material into the system and then reintegrate completed order lines back into the main order flow? 
• Have you recognized the additional effort necessary to support automated process? 
• Have you considered how this additional effort will impact your new-found picking efficiencies?

The temptation to develop and execute point-specific technology-driven productivity enhancements is quite common. It’s easy to get sucked into the nuances of eking’ out every operational challenge and efficiency opportunity from a new technology application rather than spending time to understand the solution’s impact on the entire operation. 

This is a common reason why some technology-driven warehouse improvement initiatives struggle to achieve the overall productivity objectives expected by executive management.

For those of you who are ready to quickly implement changes that will drive productivity improvements, be careful what you wish for. Take the time to develop an in-depth, well-thought-out plan. Make sure to consider your point-specific technology applications within the context of your entire DC operation.

Points to ponder in your quest for productivity improvement:

• Get a clear picture of the forest – Make sure you have a clear understanding of the top-line DC operational performance. Evaluate all improvement options against the impact of the overall performance metrics for the operation.
• Work the processes from biggest to smallest – Look at the areas that require the most labor first. Sometimes the smallest improvements applied across the biggest area of labor can produce the best balance of investment and technology risk to productivity improvement.
• Look for common solutions first, and then consider specific solutions – Search for processes/technology solutions that can support the broadest range of order types and SKU mix. Technology-driven solutions can be expensive and risky when not properly planned. As a result, technology-driven solutions typically see the best payback when they’re applied across as much of the order volume as possible. Only after you have exhausted all the common options should you go down the path of order/SKU-specific technology-driven improvement initiatives.

-- Kevin

Using advanced shipping notifications (ASNs) in the warehouse may be old news for some, but there are others who are still building their knowledge on this topic. So, while thinking about what I would like to share with you on the blog this week, I thought this would be a good topic for beginners, and some of our readers who are seasoned ASN users may want to share their thoughts as well.

To begin, supply chain best practice tells us that we should be making use of ASNs for WMS-based inbound activity in the warehouse. This applies to many industries and is a key competitive advantage for many retailers and wholesale distributors. 

ASNs supplied by vendors and transportation service providers allow for streamlined inbound processes, warehouse planning, demand planning and reconciliation. The ASN provides key information on the inbound shipment, including:

When taken into the broader context of the overall supply chain, the ASN also provides key information to support:

With the evolution of software technology, the alternatives for breaking into ASN-based processing are greater and more flexible than ever. Here are a few tools and approaches for you to consider:

Electronic Data Interchange (EDI) Approach – Generally, this approach leverages the existing processes in place for using EDI to manage financial transactions, purchase order transmissions and customer order transmissions. EDI has a somewhat complex deployment for trading partners who are not accustomed to delivering supply chain information, but as a benefit, it centralizes transaction processing onto platform many companies already use.

WMS Vendor-provided Integration Tools – Your WMS vendor may provide the tools required to effectively collect information from your trading partners. A big advantage is that it’s ready out-of-the-box to integrate with the WMS.

Specialized Supply Chain Visibility Tools – Supply chain visibility tools are an extremely robust mechanism and are becoming easier to deploy. Many – such as a SaaS (software as a service) model – eliminate the headache typically associated with new systems infrastructure (servers, network, etc) implementation. 

External Service Provider Approach – As has been the case for some time, there are well-qualified service providers on the marketplace who can accept ASN information in a variety of formats (EDI, flat file, email, fax, paper) from your trading partners and quickly turn the data around for your format and content needs. So, you don’t need an internal process.

There are several additional approaches which can be examined, including a hybrid of the above or your own custom-developed solution (such as a trading partner web portal). The first step is defining what works best for you and your heaviest trading partners, and considering what the less-sophisticated end of the spectrum can live with as well. 

I’d be interested in hearing about what you’re doing in either a mature environment where you’ve been using ASNs or whether you’re evaluating an approach for entry.

- Matt

 

 

 

As Paul Faber pointed out in his recent blog post, Walmart will soon begin applying removable RFID tags to individual items to improve inventory control and visibility inside stores. The theory is that tagging individual articles should reduce stock outs, shrinkage, and misplaced inventory while increasing labor productivity and shelf availability. 

This move toward item-level tagging may very well help push RFID to the next level in the supply chain world. I have long seen the retail store floor as being a key factor in the technology’s adoption. But I also believe that product authentication is another key driver in making the case for RFID. The vision for its role is well delineated by GS1 and its affiliate EPCGlobal.  

This vision is based on assigning a serial number at manufacturing or packaging to each item or sellable unit. This serial number must be unique across the global supply chain. It is stored in a data repository that can be updated as the item changes hands throughout the supply chain. Anyone taking custody of the item would be able to query the serial number against the repository to see if the item is registered or if there is anything suspicious about its history. This vision needs a physical data carrier to accompany each item that can store rather lengthy item-level serial numbers and be easily read throughout the supply chain.  RFID tags are a good fit for this role.

This type of authentication should help reduce counterfeiting, theft, and fraud, which are a bane to many industries. But there are few places where combating this pestilence matters more than in the pharmaceutical industry – an industry that definitely could benefit from higher visibility and security. I’ve seen estimates on worldwide annual industry losses due to counterfeit drugs as high as $75B. 

Safety is another key concern, as counterfeiting impacts the content and potency of delivered product. Mass serialization at the sellable unit level has been positioned as a tool for product authentication by legislation, regulations, and industry and standards organizations.

Brazil and Turkey are currently in the process of deploying pharmaceutical product authentication through mass serialization. Various European countries have piloted similar programs utilizing a ‘book-end’ approach with a single commissioning and authentication event. The latter occurs at the hospital or pharmacy. 

In the US, states have been addressing the problem through ePedigree laws and regulations, which focus on tracking the chain of custody. California’s ePedigree requirements – due to go into effect in 2015 – require serialization at the sellable unit level. Given the effort required to be compliant, many pharmaceutical manufacturers are already pursuing solutions to support these requirements.

RFID is not the only data carrier capable of supporting a global standard for serialization at the unit level. High density or 2-D barcodes can also be used for mass serialization. Brazil’s and Turkey’s requirements are based on GS1 DataMatrix bar code symbology. Europe also appears to be embracing the DataMatrix bar code as the foundation for pharmaceutical product authentication. 

And I have a feeling that most US-based manufacturers and distributors are looking toward 2-D bar codes rather than RFID tags as the vehicle to meet serialized ePedigree requirements.

There are certainly RFID success stories in the pharmaceutical industry. But when 2015 finally arrives, I wonder if it will still be more of a niche player in pharma than a mainstream auto-id technology. 

In a high-margin industry, a $.08 to $.10 passive tag on each sellable package shouldn’t matter that much. So I find the limited enthusiasm for RFID in pharma somewhat perplexing, especially since it provides advantages over 2-D bar codes that go beyond regulatory requirements. But I appreciate performance concerns and challenges. 

More importantly, we tend to look at RFID’s cost purely from a tag perspective. Infrastructure must also be taken into account. Image scanners and cameras are much more commonplace in the supply chain than RFID readers and software.

I’m still a believer in RFID. I think the ‘Internet of things’ will have a major impact upon the supply chain. But I’m not sure the RFID adoption rate will be going into overdrive anytime soon. I think that RFID still remains more of an evolutionary proposition than a radical transformation agent within the supply chain world – at least for the time being.

-- Tom

Additional Resources:

Documenting Distribution Operations: FDA Validation Beyond the Laboratory and Manufacturing Facility (White Paper)
http://www.tompkinsinc.com/publications/monograph/white-papers/fda.asp