Entries Tagged 'Issue 20 July/August 2009' ↓

A tall man with a large presence, Ehrhardt + Partner Solutions Regional Manager, Middle East Ramon Thoms’ opinion on warehouse management technology carries some weight. He dishes out recommendations

If you refer to Ramon Thoms as a software provider, he will likely get offended. While  his company sells the highly popular LFS 400 warehouse management software, he describes his team more as consultants than salesmen. “We are not just selling a software,” says Thoms. “We are selling a complete solution. We begin with consulting and planning of warehouses, we are training and educating people, we are recommending warehousing material, we are calculating the demands and quantities of devices.” On his visits to customers and potential customers, he often sees areas in which they could improve. Often, he offers the following advice:

Ramon Thoms

1. Focus on processes
Always concentrate on the process itself, not on technologies, not on pricing. Analyse the processes that you want to establish in your warehouse. Do not analyse them only for the next 12 or 24 months. Take a wider look into the future. Do you want to grow? Do you want to add some brands? Do you want to add some new suppliers? Try to think about this. The process within the warehouse defines how many people you need to hire to run the operation, how high your costs will be and how efficient the complete complex will operate.

2. Try voice picking
Pick-by-voice technology is well established in the rest of the world, meaning Asia, Australia, Europe and North America. In Africa and the Middle East, however, labour is cheap, and it is less expensive to hire one or two more staff than to purchase a pick-by-voice terminal.

Continue reading →

To many in the region, warehouse management still means spreadsheets and manual labour.

 
A warehouse management system (WMS) provides a set of procedures that are computerised and automated to handle the end-to-end warehouse operations right from the receipt of goods until delivery to the destinations. It provides a logical flow and represents the physical activities of a warehouse in managing the stock of goods. It covers all the operations which are receiving, put away, order processing, order filling and shipping. A WMS can be stand alone system software or a part of an enterprise resource planning (ERP) system. The WMS market is maturing with a number of players entering the market. Though this competition is healthy in terms of development of advanced technologies, it is difficult for the customers to understand the various new features being added to the WMS and select the most appropriate system to suit their needs.

While a warehouse team may appear to operate ‘just fine’ without WMS, working with unwritten rules and unarticulated processes; WMS can help systemise these processes, ensuring that the entire team is operating at maximum efficiency. It can also provide measurements key indicators such as timeliness, productivity and accuracy.

Need for WMS
Since warehousing is an important function which interfaces manufacturing and retailing, it is essential to have a system which optimises cost without compromising on the service level. A WMS system is necessary for the following reasons:

- To maintain an optimum level of inventory
- To reduce labour costs
- To optimise warehouse storage space
- To increase service levels
- To increase inventory accuracy

A WMS helps in managing inventory on a real time basis and with the advent of technology, the system can help a company towards a more paperless system. It is increasingly interfacing with RFID, bar codes and automatic storage and retrieval systems to offer warehouse management solutions.

However the need for WMS should be justified by the volumes and sales value since purchasing a WMS programme involves a substantial investment. There will be high costs incurred initially, for example for set up and installation, as well as a team or even department to manage information systems. The returns can be seen when labour costs are saved, inventory accuracy is improved, service levels are enhanced,
warehouse space is optimised and inventory quantity is minimised.

Warehouse operations
The various steps involved in the supply chain process are receiving, put-away, order processing, order filling and shipping. Each process has its own scope for improvement and requires well-defined key performance measures to identify the areas of improvementon a continuous basis.

Receiving
The receiving process has the following steps:
- Create appointment
Create an appointment for the confirmed purchase order. The appointment
will have details such as trailer number, scheduled date and time, and gate number.
- Finalise appointment
When an appointment arrives, it is said to be finalised. The purchase order (PO) for that appointment is frozen and arrival date and time are recorded.
- Match actual received quantity with ordered quantity
In case of shortage:
1. If the order is for items to be stored inside the warehouse, continue with step 3.
2. If the order is for items to be cross-docked, check if the PO has stock for more than one store. When the PO is for multiple stores, the shortage quantity has to be allocated to stores based on a fair algorithm.
3. The quantity can be apportioned if all stores are of equal priority. If there is priority assigneds, an order can be fulfilled as per the store priority.
- Create a discrepancy report When there is discrepancy in the received quantity, generate a report which has the shortage or overage quantity along with the item number, vendor number and appointment details.
- Create container IDs
Generate a container ID for every container received. The container ID can be an intelligent number with details such as item number. If your WMS imposes the constraint that one container should have one item only, dummy container IDs can be created for system sake and one container ID can be mapped to child container IDs.

Put-Away
Put-Away covers identifying the right slot for the pallet and moving the pallet to its slot. The steps are as follows:
- Identify slot
Slots should be classified into prime and reserve. Prime slots are pick slots and reserve slots are used for storage. When items are received, they are generally in full pallets. They should be put on the reserve slots. For every pallet, a slot is selected based on the space availability and it is within the specific temperature
zone. In case of cross docking, the pallet is put away in the shipping dock. Each store will have a slot in the shipping dock where all the pallets
for a store will be consolidated to load into the truck.
- Move the pallet to the assigned slot

Order processing and order filling
Order processing is where the picking instructions are generated by the system.
It covers the following steps:
- Allocate quantity
- Create waves
- Release orders for processing
- Generate picks
- Generate order filling instructions
- Perform order filling

Shipping
Shipping includes the following:
- Validating the orders
- Packaging of goods into containers
- Preparing documents such as shipping papers, packing lists, container labels and bills of lading
- Sorting the container by destination
- Loading the containers into trucks
The following are some of the key performance indicators for receiving, put-away, order processing and order filling, which are incorporated in the WMS to measure the efficiency of a warehouse. The metrics are framed for a day’s values. The table opposite demonstrates how they are calculated.

Receiving
- Delivery
Delivery performance is measured by the percentage of appointments received fully. This is calculated by dividing the number of containers actually
received by the total number of containers scheduled to be received. This can be calculated for every item or store and in terms of measurements such as volume and weight, instead of containers. Another way of measuring
this is by finding the mean square deviation of the expected quantities from the actual quantities.
- Timeliness
Timeliness of receiving can be measured through the percentage of appointments
received on time. This is calculated by dividing the number of appointments arrived on time by the total number of appointments. It can also be measured through the mean square deviation of scheduled versus actual time received.
- Productivity
Productivity of receiving can be measured using the number of containers
received and unloaded per unit labour hour. This productivity can be compared with standard productivity. The formula for this measurement involves dividing the number of containers received by the number of labour unit hours worked.
- Efficiency
Receiving efficiency can be measured by dividing the time taken to process an appointment by the standard time it takes to process an appointment.

Put-Away
- Accuracy
Put-away accuracy can be measured through the percentage of pallets put away in the correct slot. This is calculated by dividing the number of containers put away in the right slot by the total number of containers put away.

- Accuracy of WMS
Accuracy of the put away in WMS can be measured by the percentage of slots correctly identified by the WMS compared to the total number of slots put away
- Utilisation
Utilisation can be measured by the percentage of space utilised in the warehouse.
This is calculated by dividing the space utilised in the warehouse by the total space available for storage.
- Productivity
Put-away productivity can be measured by calculating the number of containers put away per unit labour hour or machine hour.
- Efficiency
Put-away efficiency can be measured by comparing the time taken to put one container into its slot and the standard time it takes to put one container into a slot.

Processing and order filling
- Service level
Service level can be measured through order fill rate. This is calculated by dividing
the number of orders fulfilled by the total number of orders received.
- Efficiency
Order processing efficiency can be measured by comparing the average time it takes to fulfil a day’s orders to the standard time it takes to fulfil and order.
- Productivity
Order processing productivity involves an examination of the number of orders
fulfilled by each worker per hour. It is calculated by dividing the number of orders fulfilled per unit of labour per hour by the standard number of orders that can be fulfilled per unit of labour in one hour.

While the Middle East certainly offers outstanding logistics and transportation infrastructure, its distribution centres play a key role in its bid to become a logistics
hub. Proper warehouse management is therefore essential to increasing standards and efficiency in the industry as a whole. With the growing market, warehouses are becoming bigger and warehousing operations are becoming more challenging with increasingSKU volumes. Technology can help us to overcome these challenges with WMS.

When it comes to the topic of radiofrequency identification, a spectrum of opinion arises

Dr. Sabri Hamed Al Azazi, Chief Information Officer, Dubai Holding
“From a logistics and supply chain perspective, you cannot find a better technology to help you. In a warehouse, just by scanning the air with an RFID reader, you can always find the item that you are looking for amongst thousands of other items. Your partners, if they have a common system, will also know the status of the good – when it arrives in the warehouse, how long it takes to process. I haven’t seen any technology that can support you like RFID. RFID is also becoming cheaper. The price of passive tags has dropped to 40 cents each and active tags now cost around US$1. The hardware for RFID is very inexpensive. The integration, software and implementation, however, might cost you. If you’re a company with a large number of legacy systems and you need to link all these business support systems to the RFID system, that part is the expensive part. If you want to do a lot of customisation, that’s also expensive. But a normal, vanilla installation
is not costly at all. Cost is not an obstacle. The greatest challenge that RFID faces is whether or not people will accept it.”

Richard Bell, General Manager, RHS Group Logistics
“For us, RFID is great. It saves a lot of manifest reporting. How can you not believe
in it? From a logistics provider’s perspective, it provides a huge benefit. It is hugely time-saving, incredibly accurate and almost foolproof. I suppose as RFID becomes less expensive we will all be using it. We will certainly embrace it.”

Continue reading →

RFID is purported as an ideal tool for the oil and gas supply chain.

The oil field is a complex network of nodes with the ultimate objective of extracting, processing, and delivering hydrocarbons from source (ground) to destination (consumer).

This is a simplification of an intricate supply chain that provides a very unique set of challenges for a ‘delivery network’ that is dependant of people, products and processes for its success. Ultimately, without the right people, performing the appropriate processes, using the proper products, the delivery network fails.

For example, on an oil platform, if a tool is not available to perform a particular process, then this tool must be procured or the operation cannot be performed. Such an event, or rather lack of it, can prevent drilling activities from continuing.
The ‘tool’ can be a stud-tensioner used during the handling of risers, a tubular
pipe used for drilling, or any piece of equipment that is required to perform a particular task on a platform.

Continue reading →

SSI Schaefer shares its experience bringing the warehouse processes of one of the
world’s most renowned companies up-to-date, while maintaining business as usual.

Whether food, body care products or detergents – by deciding to buy the brands of
Unilever Schweiz GmbH, every day 150 million people around the world convert
these products into part of their lives. The company was founded in 1929, employs
approximately 1,250 people and disposes of a wide range of 400 qualitative
branded products. Since July 2005 the four international business areas of
Unilever Schweiz – Foods, Home Care, Personal Care and Foods Solutions –
have been concentrated at the Thayngen, Switzerland site. The warehouse has now
been modernised – with SSI Schaefer as the general logistics contractor.

This retro-fit project has some fairly complex angles. These include several not necessarily compatible storage areas, warehouse extensions based on different
“control generations” and project management while the facility is in operation.
Quite a challenge to the Unilever and SSI Schaefer implementation teams, with the
warehouse operating a two-or-three shift system and 300 employees in the production and supply chain.

Starting out
The warehouse is subdivided into several sections corresponding to the product range (raw ingredients, packaging and equipment, finished products). The dried products are stored in a seven aisle, high bay warehouse. Additional storage areas for refrigerated and frozen products are immediately adjacent to production.

Continue reading →

Software as a service could be just what companies need to minimise cash flow.

When Microsoft’s Hotmail was first launched in 1996 the concept of logging into an email account stored on a remote server felt awkward to most of us. “Where are my messages stored?” many of us asked ourselves. “Can someone else read my mail? How can this possibly be free?” Yet the lure of a mailbox accessible anywhere with an Internet connection at no cost was too good to resist. Hotmail quickly took over the world.

Today, a similar idea, known as software as a service (SaaS) is posed to take over in much the same way. Companies such as SAP are now providing popular programmes on-line to clients on a subscription basis, an alternative to selling users licenses to install the software themselves. “You can          Kamel El-Ghossaini
pay a monthly subscription and run the application through the web,” explains Kamel El-Ghossaini, Senior Manager, Supply Chain Solutions for Span Group. “This minimises your hardware costs and minimises your initial investment. But, at the same time, your data will be stored on a third party server.”

Span Group recently began selling integration software Boomi Atomsphere
in SaaS format. Clients can use the programme to connect different software services together. “Integration serves two purposes,” says El-Ghossaini. “The first is application integration, which means connecting your internal systems, for example your warehouse management system with your financial application. The second is business-to-business integration, where you have to integrate with your trading partners.”

Continue reading →

Aptec not only has to move computers and cash as fast as it can, it now has to compete with the most experienced of 3PLs.

As Operations and Commercial Manager for Aptec, one of the region’s largest IT distributionhouses, Mario Veljovic understands that the tangible products his company offers are nothing unique. “The bare IBM laptop is exactly the same as the one you can pick up from our competitors,” he says frankly. “The difference we make is the service we offer, the credit we offer, the price we offer and the overall support we can give them.”

With estimated annual revenues between US$300 million and US$400 million, Aptec distributes thousands of products from leading IT manufacturers to over 3,000 customers in 40 countries. Well-known retailers such as Sharaf DG, Plug-ins Electronics and Jackys Electronics, as well as corporate resellers          Mario Veljovic 
such as Emirates Computers and Alpha Data rely on its services.
“We never sell direct,” says Veljovic. “We only go through indirect channels.”

While the company’s 500 staff members work in offices and distribution centres in the UAE, Kuwait, Lebanon, Pakistan, Saudi Arabia, Turkey, Egypt and the UK, Aptec serves most of these subsidiaries through its 15,000 sq foot central warehouse in the Jebel Ali Free Zone. The facility contains a full racking system with bin locations, and can handle up to 3,500 pallet positions. On average, 2,000 SKUs of stock worth between US$10 million and US$15 million sit in the warehouse at any given time. The facility processes 30,000 orders and 360,000 order lines per year.

Continue reading →

With its new RAIS-MILS facility in DAFZA, RHS Group Logistics is turning its back on brand names and designing its own software.

When Rais Hassan Saadi opened its RAIS-MILS facility in Dubai Airport Free Zone (DAFZA), a joint venture with Malaysia’s MISC Integrated Logistics, it had plenty of experience working with warehouse management software (WMS). RHS Group Logistics, the company that manages the facility, had been tinkering with EXE Technologies’ EXceed at its distribution centre in Jebel Ali Free Zone (JAFZA) since its opening seven years before. “EXceed was an appropriate purchase for us at JAFZA, especially as we were finding our way in the logistics field,” explains Richard Bell, General Manager, RHS Group Logistics. “We also stayed on the upgrade path, so as the provider released new versions we would bring them into our facility. The idea behind this was that we would always                        Richard Bell
be relevant to the market’s logistics requirements.”

But as RHS Logistics gained more experience in the WMS field, it realised
that it understood client needs better than any packaged software. “At RHS Logistics in Jebel Ali we now develop all the functionalities around the system,” says Bell. “We’ve developed all the entries into the EXceed WMS ourselves. If a client needs a specific functionality that is not performed by EXE, we can develop that functionality outside of the system but still have a relationship with EXE.”

Bell says it now makes more sense for RHS Logistics to program its own software. “As we’ve found over the years, it is the clients who dictate what functionality they require, not software providers,” he says.

Continue reading →

Anyone looking to buy, sell or merge a company should check out its supply chain.

Due diligence is an analysis of a companies activities and records and is a key step in the acquisition, or potential acquisition, of a business. This review is done whether the company being bought is small and privately owned or is a multi-national corporation.

What differs between the two is the number of topics and records to be investigated. Basic points often include:
- Financial
- Property and assets
- Legal
- Operations
- Marketing and sales
- Management and personnel

Each of these topics can be further broken down with more details. The purpose is to assess the company to determine if it is worth acquiring and at the price being offered.

Tom Craig

Despite the effort, due diligence does not always succeeded in its purpose. The challenge with the due diligence will intensify going forward as the cost of credit increases. Cheap credit is a factor in many mergers and acquisitions. As the global economy and credit markets rebound and evolve, easy, low-cost financing will not be as plentiful as it once was. Private equity and other capital sources will put increased emphasis on performing due diligence properly.

Continue reading →

A consistent effort to go ahead with execution is finally following long-time rhetoric over developing dedicated freight corridors in India. While plans for new corridors are being hatched, LOG.India takes a closer look at the old ones.

The idea of a dedicated freight corridor (DFC) for India was born in early April 2005. In October 2006, a special purpose vehicle, the Dedicated Freight Corridor Corporation of India Limited (DFCCIL), was formed to oversee the project. While at the moment only two freight corridors (eastern and western) are sanctioned and work has started on them, there are four more legs to the corridor that are also being considered by the government.

Last month, former member of the Planning Commission, Anwarul Hoda, reportedly said that the commission was ready with a plan for four new dedicated freight corridors: Kolkata-Mumbai, Delhi-Chennai, Kharagpur-Vijayawada and Chennai-Goa. If accurate, this plan could be a timely solution. One of the key reasons stated for sanctioning western and eastern corridors is the high rate of saturation in the existing trunk routes of Mumbai-Delhi on the western corridor and Howrah-Delhi on the eastern corridor. The existing system on these routes is believed to be heavily
saturated, with capacity utilisation of 140 to 150 per cent. These new freight corridors are expected to provide long overdue relief and create additional capacity
for future use with a line capacity on the designated routes for another 25 to 30 years.

Continue reading →