Are You Holding Onto Your Fulfillment System Too Long?

warehouse management system, order management system, WMS, OMS, Enterprise Resource Planning, ERPIn many cases, businesses are holding onto installed order management and ERP systems for more than 10 years – sometimes 15+ years – if they believe they’re the right fit. On the face of it, this is sound thinking considering the time and expense involved in implementing a new system.

Your OMS or ERP system may be right for your call center, the merchandisers’ management of inventory, accounting systems and integration with your web platform. But are your fulfillment system requirements the same as they were 10-15 years ago? For many businesses, the answer is a resounding no.

Maybe you’re being too conservative by expecting incrementally greater productivity from your distribution center’s fulfillment system each year without additional functionality. In most companies, direct and indirect labor accounts for more than 50% of the total cost of fulfillment, excluding shipping costs. People productivity in a DC is largely based on the feature/function set designed into the systems.

What are your distribution center requirements as you look forward?  Here are 13 major areas to consider:

  • Supply chain management of vendors and partners including vendor portals, Electronic Data Interchange (EDI) and Advanced Shipping Notices (ASN). This includes visibility into incoming receipts, management of vendor compliance requirements and communication of forecasts, purchase orders and invoices.
  • More accurate four walls inventory (up to 99.9%), including full barcoding of products, customer orders and returns using scanning and control systems.
  • Improved methods of velocity and hot pick slotting of merchandise, reducing picker travel time and increasing order throughput.
  • Better management of warehouse cube utilization with directed put-away and online location control.
  • Additional picking options to increase orders, line items and units picked per hour and order throughput.
  • Department and employee productivity standards and reporting.
  • More effective management of customer orders for multi-warehouse operations.
  • Improve management of outbound transportation costs and best way shipping to reduce costs.
  • Support for voice-enabled applications throughout fulfillment and distribution processes in receiving, put away, picking, returns and cycle counting. This requires radio frequency and barcode technology as prerequisites to voice-enabled applications.
  • Real-time KPIs and dashboards to manage fulfillment workflow.
  • Omnichannel requirements from distributed order sources (call center, web, stores, etc.).
  • Meeting supply chain requirements as a wholesaler to big-box retailers (e.g. vendor compliance interfaces for ASNs, barcode standards, etc.).
  • Interface to material handling equipment and sortation systems.

In addition to the fulfillment and distribution center requirements, there may be IT requirements important for the future.

Consider replacing aging technology that is becoming more expensive to support. Maybe the original software manufacturer is no longer developing the base software, or the application companies have moved on to current standard platforms such as SQL or .Net.

What benefits might your company gain from adapting a cloud-based or Software as a Service (SaaS) platform? These can include the option of transaction or pay-as-you go pricing, reduced IT costs and a lower upfront investment.

What are the system options for gaining these benefits?

  • Internal development – given the budget and project time, internal IT staff can add these functions to existing ERP or order management systems.
  • Standalone commercial systems – many of the above requirements can be met by interfacing specialized systems to your ERP or OMS. These include slotting and management of space; time collection and labor management; supply chain EDI, ASNs and vendor portals; real-time KPIs and dashboards; and enterprise shipping systems.
  • “Best of Breed” standalone WMS – These systems vary in functionality and price. Tier 1 systems will have the closet fit with the above requirements.

The requirements of each multichannel company will vary. Take time to do your systems requirements and understand which areas of warehouse management will give you the greatest return on investment.

To incrementally reduce costs and improve service levels each year, is your ERP or OMS software company adding features and functions so your fulfillment and supply chain systems can be more efficient and nimble enough to meet ever-changing requirements? Will the current software be the platform you can operate on for the next 10-15 years?

Curt Barry is president of F. Curtis Barry & Company

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