E-commerce is taking the world by storm. It�s enabling companies to respond to individual demands faster, more easily and more efficiently while reducing operating, sales, marketing and supplier costs. According to Forrester Research, Internet trade is expected to soar from $43 billion in 1998 to $1.3 trillion in 2003. With numbers such as this, it�s no wonder everyone wants a piece of the action. But logistics professionals are recognizing that with the evolution of e-commerce must come a revolution in the way they manage their warehouse.
Also according to Forrester Research, online companies are shipping 400 orders per day, on average, and collectively exceeding two billion per year. You can imagine how such demand could turn into a logistics nightmare for many manufacturing and distribution facilities. Although many companies have been quick to implement the basic technologies for online selling, most don�t understand the importance of, and therefore neglect, sound methodologies for delivering the goods to their customers.
Fulfilling Great Expectations
Though it isn�t surprising the 1999 holiday was the biggest season for Internet trade thus far, it may surprise you that nearly 50% of all online consumers experienced problems in the fulfillment of their orders. But, what�s most surprising is while many dot-coms are spending millions of dollars on glamorous advertising campaigns, they�re avoiding the most important element of success � customer service. Though many companies to date have failed to recognize the vital role distribution and order fulfillment play in their e-commerce strategies � giving front-end technologies priority treatment � back-end operations are critical to ensuring online customer satisfaction. According to Robert Mann of Andersen Consulting�s Supply Chain Practice, �Success depends on fulfillment operations that can meet high levels of customer service. Companies run a high risk of losing customer loyalty through poor performance. Right now, reliability and service are the only things that matter.�
So, how do you propose on fulfilling those expectations?
The answer lies in your ware-house, the epicenter of your enterprise. The secret is being able to transform the inventory into valuable information based on real-time data, to give you complete visibility into your back-end operations. That is one of the greatest attributes of WMS. It lets you know what you have and where it is in real time and enables you to transfer that information to your trading partners throughout the supply chain as well as to your customers. With WMS technology in place, customers can track the status of orders in real time, whether it�s been picked, packed or shipped, and the method of shipment. In other words, a WMS ensures that your customers get what they want, when they want it � after all, isn�t that what service is all about? Just look at the top ten reasons cited for WMS implementation, they�re all customer-centric:
� reduced errors
� improved inventory accuracy
� increased productivity
� reduced paperwork
� improved space utilization
� elimination of physical inventories
� better workload control
� improved labor management and reporting
� support of customer EDI requirements
� support for value-added customer compliance programs
Functionality for the Future
A WMS directs operators through the warehouse, maximizing time and space while minimizing errors. This has been the premise of warehouse management systems since its emergence on the market in the late 1970s. However, the demands of dynamic trade are creating an increasing need for warehouse efficiency and back-end visibility. WMS technology helps warehouses adapt to new, Internet-based distribution channels and prepare for the future.
WMS technology gives warehouses the ability to manage the change in order pools (different types of orders entering the system). In new warehousing scenarios, operators may be directed to pick by zone, or to pick multiple orders per operator, to fulfill online orders more efficiently. Due to the increasing number of SKUs associated with online trade, warehouses may also need to alter replenishment cycles. More SKUs, taking up more valuable space, may change the frequency at which operators need to replenish primary pick fronts. Warehouses are experiencing large volumes of small, typically one-line orders � versus the large bulk orders of the past � which dramatically affect packing functions. Operators must work more efficiently to fulfill those single-line orders, which would otherwise take significantly more time to pick, pack and ship than bulk items.
Fulfillment companies are often responsible for fulfilling orders for numerous Internet sites. When it�s time to ship, a WMS helps these fulfillment companies meet the demands of their customers by producing and printing shipping labels and paperwork with their respective logos. This functionality not only ensures shipping accuracy but also helps fulfillment companies meet the service demands of their partners. A WMS also helps you provide other value-added services, such as kitting, often required by online consumers.
The Internet has also changed how materials are managed coming back in the warehouse. Due to e-commerce, warehouses and fulfillment centers are experiencing increasing numbers of single-item returns. Getting product back on the shelf and updating inventory status efficiently requires real-time WMS technology.
Redefining the Market
WMS vendors are responding to these new demands with improved applications. As the WMS industry has matured, it has replaced highly customized systems with truly standard products that offer improved functionality, reduced complexity, easier support and maintenance and a defined upgrade path for continuous improvement. The emergence of Web-enabled warehouse management systems not only improves the transfer of information across the supply chain to support enterprise-wide integration but also makes the system user friendly. People are simply more comfortable using the system.
These advancements are redefining the WMS market as a whole. Though historically reserved for Fortune 1000 companies, today WMS technology is accessible to mid-sized manufacturers and distributors as well.
Making it a Reality
The new demands placed on today�s warehouse and distribution facilities are resulting in a greater demand for WMS technology. The WMS industry is responding to these needs with WMS packages that accommodate growing e-commerce strategies. As the WMS industry has matured, it has introduced truly standard products and proven implementation methodologies that have reduced implementation time, lowered licensing fees and increased return on investment. As a result, more and more mid-sized companies are able to realize the benefits of WMS and position themselves to compete in the Internet marketplace.
Mid-sized companies, faced with limited resources, must also be especially cautious. In researching WMS solutions, it�s important to seek flexible, scalable, robust WMS products that are easy to support and maintain, and provide continuous improvement for your warehousing operation. But more importantly, mid-sized companies must look for a WMS supplier with a proven implementation methodology, a track record of successful
mid-sized WMS installations, and a corporate culture that complements your business practices.
Maintaining a competitive advantage, no matter what size you are, will increasingly depend upon your ability to respond to rapidly changing market trends quickly, efficiently and cost-effectively. It�s no longer business as usual. Therefore, running your business as usual will likely leave you lagging behind. Leveraging technology to improve overall operations, by increasing visibility, is the key to future success. With an eye on your backend, you�ll be positioned to move forward.
With over 22 years of WMS design experience, Jim Majure is a recognized expert and leader in the WMS industry. Jim is president of Majure Data Inc., an Atlanta-based supplier of WMS �solutions that make sense,� including RF Navigator, Majure Data�s SAP-certified, standard WMS package. He can be reached by e-mail at rfnavigator@majure.com or by phone at 800-353-2520.
