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Improving Warehouse Productivity
Without Resorting to Tier 1 Technology
What is “Tier 1” Technology?

 The term “Tier 1” is frequently used, but is a
  gross over-simplification
 Conjures up images of “expensive”
  technology
 “Overkill”
 “The Cadillac”
 Often used in context of WMS vendors




                                                   Image source: General Motors
                                                                                  |2
Tier 1 Technology Isn’t Bad

 For many large, complex
  operations, the only path to
  supply chain improvement
  involves making a large capital
  investment
 Many of the technologies which
  we consider “Tier 1” have been
  the pioneers – developing cutting
  edge technology that improves
  efficiency
 This technology then get adapted
  and trickles down to mid-tier
  providers over time

                                               |3
An Alternate Title for our Presentation…




"How can I improve my
 warehousing problems
 without a major capital
     investment?“




                                             |4
But how?

 Isn’t this asking to get
  something for nothing?
                No.
 There are two basic ideas
  which are under-exploited by
  many enterprises today:
   1.   Leveraging new advances in
        technology which they may not
        be aware of
   2.   Sharpening the saw – stepping
        back and making fundamental
        process changes to improve
        the operation

                                         |5
Common Challenges

 Whether their capital budget
  is 5 figures or 8
  figures, companies face the
  same basic set of challenges:
   – Reduce labor costs
   – Improve accuracy
   – Improve space utilization
 Secondary challenges:
   – Meet regulatory compliance
     mandates
   – Meet retail compliance
     mandates


                                          |6
No Shortage of Solutions…

 There are countless solutions available to address these
  challenges…




    WMS              Conveyor-based pick modules                Pick-to-Light Systems                       Speech




    Carousels                          AS/RS                       Robotic Handling            Warehouse Control Software
                                                                                                           (WCS)

       Image sources, clockwise from top left: Intermec, Abel-Womack Integrated Handling Solutions, Lightning Pick,
                  Voxware, Remstar, Diamond Phoenix, TGW Ermanco, Kiva Systems, FORTE Industries                            |7
Process-Centric Approach

 Rather than jumping immediately to
  technology, let’s look at several strategies to
  address these challenges…
   A.   Pick more efficiently
   B.   Put-away more efficiently
   C.   Pack and ship more efficiently
   D.   Reduce walking
   E.   Improve labor productivity
   F.   Improve accuracy
   G.   Improve space utilization




                                                    |8
Process-Centric Approach

Each strategy has a set of execution tactics…
1.    Cluster picking                 16.   Pick restriction
2.    "Tandem" picking                17.   Large quantity override
3.    Receiving staging by zone       18.   Min/max replenishment
4.    Clustered put-away              19.   Demand-based replenishment
5.    Put-away by movable unit        20.   Slot the warehouse more
6.    Implement specialized packing         effectively
      processes                       21.   Basic productivity tracking
7.    Pre-manifesting                 22.   Advanced productivity tracking
8.    Dynamic label application       23.   Task interleaving
9.    Cartonization                   24.   Pick confirmation
10.   Palletization                   25.   Cycle counting
11.   Seal cases more quickly         26.   Track product by lot #
12.   Weight-based accuracy           27.   Pick product by lot #
      confirmation                    28.   Track serial numbers
13.   Create a forward pick area      29.   Track country of origin
14.   Two-tier bin system             30.   High density storage
15.   SKU Mirroring

                                                                             |9
Process-Centric Approach

 Some Tactics require enabling technology…




                                              | 10
Focus on Mid-Tier WMS

 Mid-Tier WMS has been
  in use for at least 15
  years
 Generally, mid-tier
  means a more limited
  set of functionality for a
  lower price
 Often, mid-tier WMS
  systems had some key
  gaps which made them
  not practical for many
  users with special
  requirements

                                           | 11
The SaaS Model

 In the last 5 years, the Software-as-
  a-Service (SaaS) model has become
  a popular means of deploying WMS
 With the SaaS model, the software
  vendor hosts the WMS application
  on their own server and deploys it
  via a web connection
 True SaaS is multi-tenant: multiple
  users are on the same instance of
  the software
 Customers do not pay an up-front
  license fee – just a monthly usage
  fee
 Upgrading and remaining on the
  current version of the software is
  much easier

                                           | 12
What are the TRUE Capabilities?

 Commonwealth Supply Chain
  Advisors conducted a survey
  of three of the top mid-Tier
  WMs providers to assess the
  extent to which functionality
  gaps have been plugged in
  recent years
 Two providers offer only SaaS-
  based WMS
 The third offers both
  traditional, licensed WMS and
  a SaaS WMS

                                              | 13
What are the TRUE Capabilities?
 We created a list of 30 functionality
                                                                                                                                                                                                                             Level of
                                                                                                                                                                                                                             support
                                                         Challenges            Strategies                                              Tactics                                                  Enabling Technology
                                                                                                                                                                                                                            from Mid-
                                                                                                                                                                                                                            Tier WMS

  points which have traditionally been                                                      Cluster picking - pick multiple orders at the same time and put them in discrete containers
                                                                                            by order
                                                                                                                                                                                                       WMS                     3



  challenging for mid-tier WMS providers
                                                                              Pick more                                                                                                               WMS                      2
                                                                              efficiently   "Tandem" picking - when case picking, two different orders can be picked at the same            Double-length electric pallet
                                                                                                                                                                                                                              n/a
                                                                                            time utilizing a double-length electric pallet jack                                                        jacks
                                                                                                                                                                                                  Tugger vehicles             n/a

  to address                                                                               Receiving staging by zone - at receiving, direct that inbound product be staged on a pre-
                                                                                           defined movable units based upon it’s destination zone
                                                                               Put-away Clustered put-away - allow multiple SKUs to be put away in the same trip through the
                                                                                                                                                                                                       WMS

                                                                                                                                                                                                       WMS
                                                                                                                                                                                                                               1

                                                                                                                                                                                                                               2


 We asked each vendor to indicate
                                                                                 more      warehouse in a logical pick path
                                                                              efficiently Put-away by movable unit - allow multiple SKUs to be placed on a license plated movable
                                                                                           unit; allow the movable unit license plate to be scanned once at put-away, and direct put-                  WMS                     2
                                                                                           away of all SKUs on that movable unit in a logical pick-path


  whether this functionality was:                                                          Implement specialized packing process
                                                                                           Pre-manifesting - Calculate weight and quantity of all the multi-SKU pallets on an order
                                                                                           before picking
                                                                                           Dynamic label application: Apply a retail-compliuant label to cases at time of picking with
                                                                                                                                                                                                  Process change

                                                                                                                                                                                                       WMS
                                                                                                                                                                                                                              n/a

                                                                                                                                                                                                                               3



    –   Standard Functionality
                                                                                                                                                                                                       WMS                     2
                                                                                           scan confirmation
                                                                             Pack and ship Cartonization - determine the optimal size shipping container based on the cube and
                                                                                                                                                                                                       WMS                     2
                                                                                 more      longest dimension of the items which are to be picked for an order


    –   Configurable Functionality
                                                                              efficiently Palletization - prior to case picking, determine the number of cases to be picked to each
                                                                                                                                                                                                       WMS                     1
                                                                                           pallet based on cube
                                                                                                                                                                                                  Tape dispensers             n/a
                                                                                            Seal cases more quickly


    –
                                                                                                                                                                                                    Case sealer               n/a

        Customization Required                       Reduce labor costs
                                                                                            Weight-based accuracy confirmation - weight a carton or a pallet and compare it to a
                                                                                            database of the actual weights - verify if the carton or pallet is within tolerance
                                                                                            Create a forward pick area
                                                                                                                                                                                                       WMS                     1

                                                                                                                                                                                                                              n/a


    –   Not Available Currently
                                                                                               Two-tier bin system - the same SKU can exist in two different bins in the distribution
                                                                                                                                                                                                       WMS                     3
                                                                                               center
                                                                                               SKU Mirroring - the same SKU can exist in two different bins in the same ZONE                           WMS                     3



 We also asked about actual usage
                                                                                               Pick restriction - the system can limit picking only to bins designated as "forward pick
                                                                                                                                                                                                       WMS                     3
                                                                                               bins"

                                                                                            Large quantity override - if a single pick exceed x quantity and will drastically deplete the
                                                                                Reduce                                                                                                                 WMS                     2
                                                                                            forward pick area, the system will direct the pick to be made from the overstock bin


  amongst their client base. Was the
                                                                                walking
                                                                                               Min/max replenishment - replenish to a bin if the quantity falls below a pre-set
                                                                                                                                                                                                       WMS                     3
                                                                                               minimum level
                                                                                               Demand-based replenishment - proactively replenish to a bin if known demand for the

  functionality:                                                                               item will exceed the quantity in the bin, EVEN IF the bin is not currently below it’s
                                                                                               minimum stocking level
                                                                                            Slot the warehouse more effectively
                                                                                                                                                                                                       WMS

                                                                                                                                                                                                  Slotting software
                                                                                                                                                                                                                               1

                                                                                                                                                                                                                              n/a


    – Currently in-use with referenceable clients
                                                                                                                                                                                                Slotting spreadsheet          n/a
                                                                                                                                                                                                         WMS                   2
                                                                                            Basic Productivity Tracking: Track lines picked per hour by worker regardless of pick type
                                                                                                                                                                                            Labor management software         n/a



    – Available but not currently in use
                                                                                           Advanced Productivity Tracking: Track lines picked per hour by worker by pick type (i.e.                    WMS                     2
                                                                             Improve labor distinguish between piece picks, case picks, pallet picks)
                                                                                                                                                                                            Labor management software         n/a
                                                                              productivity
                                                                                           Task interleaving - combined put-away/picking cycles - when full pallet is put-away,

    – Not available
                                                                                                                                                                                                       WMS                     1
                                                                                           search for full pallet picks which need to occur in proximity to the put-away bin and place
                                                                                           this pick as the next task in queue
                                                                                                                                                                                            Labor management software         n/a
                                                                                            Pick confirmation - confirm that the correct product was picked based on a bar-code scan


 The vendors responded on the condition
                                                                                                                                                                                                       WMS                     3
                                                                                            of the item or bin
                                                                                            Cycle counting - allow incremental cycle counting in lieu of physical inventory                            WMS                     3
                                                                               Improve
                                                      Accuracy is poor                      Track product by lot #                                                                                     WMS                     3
                                                                               accuracy


  that they not be identified by name in
                                                                                            Pick product by lot #                                                                                      WMS                     3
                                                                                            Track serial numbers                                                                                       WMS                     3
                                                                                            Track country of origin                                                                                    WMS                     3
                                                                                                                                                                                                  Push back rack              n/a

  this presentation                                 The DC is out of space
                                                                             Improve space
                                                                               utilization
                                                                                           Improve storage density
                                                                                                                                                                                                 Double deep rack
                                                                                                                                                                                              Very narrow aisle (VNA)
                                                                                                                                                                                                      storage
                                                                                                                                                                                                                              n/a

                                                                                                                                                                                                                              n/a

                                                                                                                                                                                                Mobile storage rack           n/a




                                                                                                                                                                                                        | 14
The Rating System

Three levels…




                     Level: 3                Level: 2                Level: 1
                   Generally available    Available but often    If available at
                    with minimal            with some               all, customization is
                    customization           customization           required
                    required                required               Might not be
                   In use by at least     Might not be            currently in use by
                    some referenceable      currently in use by     any companies
                    companies               any companies

                                                                                        | 15
The Tactics…

1.    Cluster picking                 16.   Pick restriction
2.    "Tandem" picking                17.   Large quantity override
3.    Receiving staging by zone       18.   Min/max replenishment
4.    Clustered put-away              19.   Demand-based replenishment
5.    Put-away by movable unit        20.   Slot the warehouse more
6.    Implement specialized packing         effectively
      processes                       21.   Basic productivity tracking
7.    Pre-manifesting                 22.   Advanced productivity tracking
8.    Dynamic label application       23.   Task interleaving
9.    Cartonization                   24.   Pick confirmation
10.   Palletization                   25.   Cycle counting
11.   Seal cases more quickly         26.   Track product by lot #
12.   Weight-based accuracy           27.   Pick product by lot #
      confirmation                    28.   Track serial numbers
13.   Create a forward pick area      29.   Track country of origin
14.   Two-tier bin system             30.   High density storage
15.   SKU Mirroring


                                                                             | 16
1. Cluster picking

 Definition: pick multiple orders at the same   WMS Availability
                                                  Assessment
  time and put them in discrete containers by
  order




                                                      Level: 3
                                                    Generally available
                                                     with minimal
                                                     customization
                                                     required
                                                    In use by at least
                                                     some referenceable
                                                     companies
                                                                    | 17
2. "Tandem" picking

 Definition: when case picking, two different     WMS Availability
                                                    Assessment
  orders can be picked at the same time
  utilizing a double-length electric pallet jack
  or tugger vehicle




                                                       Level: 2
                                                      Available but often
                                                       with some
                                                       customization
                                                       required
                                                      Might not be
                                                       currently in use by
                                                       any companies
                                                                       | 18
Deep Dive: Pick Methodologies

 Which style of picking is best?
   Discrete Order Picking                    Cluster Picking                              Batch Picking




                    Zone Pick: Pick & Pass                     Zone Pick: Pick & Consolidate




                                                                                                          | 19
Deep Dive: Pick Methodologies
                 • Pro’s:
                    –   Simple for operators
                    –   Less error prone
Discrete Order      –   Little/no technology required
                    –   May be the only practical method to
    Picking             pick very high-cube items
                 • Con’s
                    – Very high levels of walking
                    – Operators return to home-base after
                      each order is picked
                    – Each order requires a trip through
                      the entire warehouse
Deep Dive: Pick Methodologies
           • Pro’s:
              – Dramatically reduces walking
              – Possible to do on a limited scale
                without a high degree of technology
Cluster       – Each order is only touched once
              – Orders are ready-to-ship as soon as
                picking is done
Picking    • Con’s
              – Hard to pick a large group of orders
                without real-time instructions
              – Orders may travel significant distances
                without any picks being performed
              – Travel distances are excessive in large
                warehouses with many SKUs
              – Increased likelihood of errors
Deep Dive: Pick Methodologies
                  • Pro’s:
                     – Reduces walking in larger distribution
                       centers
                     – Each order can only be routed to zones
                       where there are picks
Zone Pick: Pick      – Orders are ready-to-ship as soon as
                       picking is done
   & Pass         • Con’s
                     – Almost impossible to manage without
                       real-time warehousing
                     – Zone routing can only be done with
                       complex conveyor systems
                     – All of the SKU’s in the order travel
                       through the entire DC
Deep Dive: Pick Methodologies
                  • Pro’s:
                     – Reduces overall travel distances for the
                       SKU’s in the order
                     – Well-suited for orders with diverse sizes
Zone Pick: Pick        and shapes of SKU’s
& Consolidate        – Well-suited for mixing case and piece
                       picking on the same order
                  • Con’s
                     – Very complex for software to manage
                       consolidation process
                     – Requires labor downstream to
                       consolidate orders
                     – Requires space to buffer product
Deep Dive: Pick Methodologies
                • Pro’s:
                   – Well suited for instances where the
                     same SKU appears on a large number of
                     orders
                   – Well suited for single line, single piece
Batch Picking        orders
                • Con’s
                   – Only suits a limited order profile
                   – Requires additional downstream
                     handling
                   – Can be complex to execute
3. Receiving staging by zone

 Definition: at receiving, direct that inbound   WMS Availability
                                                   Assessment
  product be staged on a pre-defined
  movable unit based upon it’s destination
  zone



     Inbound



                      Zone 1   Zone 2   Zone 3        Level: 1
                                                     If available at all,
                                                      customization is
                                                      required
                                                     Might not be
                                                      currently in use by
                                                      any companies

                                                                       | 25
4. Clustered put-away

 Definition: allow multiple SKUs to be put   WMS Availability
                                               Assessment
  away in the same trip through the
  warehouse in a logical pick path




                                                   Level: 2
                                                 Available but
                                                  often with some
                                                  customization
                                                  required
                                                 Might not be
                                                  currently in use
                                                  by any companies
                                                               | 26
5. Put-away by movable unit

 Definition: allow multiple SKUs to be placed   WMS Availability
                                                  Assessment
  on a license plated movable unit; allow the
  movable unit license plate to be scanned
  once at put-away, and direct put-away of all
  SKUs on that movable unit in a logical pick-
  path


                      MU #
                      T-745
                                                      Level: 2
                                                    Available but often
                                                     with some
                                                     customization
                                                     required
                                                    Might not be
                                                     currently in use by
                               Zone 1                any companies
                                                                     | 27
6. Implement specialized packing process

 Definition: separate the less skilled packing
  functions from the more skilled manifesting
  functions
 10-step process




                                                  | 28
7. Pre-shipping

 Definition: Calculate weight and quantity of   WMS Availability
                                                  Assessment
  all the multi-SKU pallets on an order before
  picking




                                                      Level: 3
                                                    Generally available
                                                     with minimal
                                                     customization
                                                     required
                                                    In use by at least
                                                     some referenceable
                                                     companies
                                                                    | 29
8. Dynamic label application

 Definition: Apply a retail-compliant (or        WMS Availability
                                                   Assessment
  other) label to cases at time of picking with
  scan confirmation


        Case label




                                                       Level: 2
                                                     Available but often
                                                      with some
                                                      customization
                                                      required
                                                     Might not be
                                                      currently in use by
                                                      any companies
                                                                      | 30
9. Cartonization

 Definition: determine the optimal size        WMS Availability
                                                 Assessment
  shipping container based on the cube and
  longest dimension of the items which are to
  be picked for an order




                                                     Level: 2
                                                   Available but often
                                                    with some
                                                    customization
                                                    required
                                                   Might not be
                                                    currently in use by
                                                    any companies
                                                      Image source: Tetris   | 31
10. Palletization

 Definition: prior to case picking, determine   WMS Availability
                                                  Assessment
  the number of cases to be picked to each
  pallet based on cube




                                                     Level: 1
                                                    If available at
                                                     all, customization is
                                                     required
                                                    Might not be
                                                     currently in use by
                                                     any companies

                                                                      | 32
11. Seal cases more quickly

 Definition: speed up the case sealing
  process without adding excess labor




                                          Image sources: Betterpack, 3M
                                                                          | 33
12. Weight-based accuracy confirmation

 Definition: weigh a carton or a pallet and    WMS Availability
                                                 Assessment
  compare it to a database of the actual
  weights - verify if the carton or pallet is
  within tolerance




                                                    Level: 1
                                                   If available at
                                                    all, customization is
                                                    required
                                                   Might not be
                                                    currently in use by
                                                    any companies

                                                                     | 34
13. Create a forward pick area

 Definition: stock a smaller supply of many
  SKUs in a high-density area of the
  warehouse
                            8 SKUs stored on 8 pallets = 32 walking feet




                                                          vs.
                                                  Smaller supply of the same 8
                                                   SKUs stored in carton flow
                                                              rack

        8 SKUS = 8 walking feet*

        *(Can be increased to   32   SKUs per walking foot)
                                                                                 | 35
13. Create a forward pick area

 Storage mediums include:
      – carton flow
      – static shelving




Image source: Borroughs Corporation, Frazier Industrial Company      | 36
14. Two-tier bin system

 Definition: the same SKU can exist in two     WMS Availability
                                                 Assessment
  different bins in the distribution center


                          Overstock




                                                      Level: 3
                                                   Generally available
       Forward pick                                 with minimal
                                                    customization
                                                    required
                                                   In use by at least
                                                    some referenceable
                                                    companies
                                                                   | 37
15. SKU Mirroring

 Definition: the same SKU can exist in two   WMS Availability
                                               Assessment
  different bins in the same ZONE


                        Overstock




                                                   Level: 3
       Forward pick                              Generally available
                                                  with minimal
                                                  customization
                                                  required
                                                 In use by at least
                                                  some referenceable
                                                  companies
                                                                 | 38
16. Pick restriction

 Definition: the system can limit picking only   WMS Availability
                                                   Assessment
  to bins designated as "forward pick bins"


                         Overstock




                                                       Level: 3
       Forward pick                                  Generally available
                                                      with minimal
                                                      customization
                                                      required
                                                     In use by at least
                                                      some referenceable
                                                      companies
                                                                     | 39
17. Large quantity override

                                                    WMS Availability
                                                     Assessment

 Definition: if a single pick exceeds x quantity
  and will drastically deplete the forward pick
  area, the system will direct the pick to be
  made from the overstock bin


                                                         Level: 2
                                                       Available but often
                                                        with some
                                                        customization
                                                        required
                                                       Might not be
                                                        currently in use by
                                                        any companies
                                                                        | 40
18. Min/max replenishment

 Definition: replenish to a bin if the quantity   WMS Availability
                                                    Assessment
  falls below a pre-set minimum level




                                                        Level: 3
                                                      Generally available
                                                       with minimal
                                                       customization
                                                       required
                                                      In use by at least
                                                       some referenceable
                                                       companies
                                                                      | 41
19. Demand-based replenishment

 Definition: proactively replenish to a bin if   WMS Availability
                                                   Assessment
  known demand for the item will exceed the
  quantity in the bin, EVEN IF the bin is not
  currently below it’s minimum stocking level




                                                       Level: 1
                                                     If available at
                                                      all, customization is
                                                      required
                                                     Might not be
                                                      currently in use by
                                                      any companies


                                                                        | 42
20. Slot the warehouse more effectively

 3 Methods of Slotting:                    Slotting Tools:
    – Level 1: Determine the correct          – Spreadsheet tools
      STORAGE MEDIUM
    – Level 2: Determine the correct BIN      – Specialty slotting software
      #
    – Level 3: Dynamic slotting
 Factors influencing slotting
  methodology:
    – Demand volatility
    – Product lifecycle
    – # of new product introductions
      per year
    – Stackability requirements
    – Segregation rules
    – Family grouping rules

                                                               Image source: Rubic’s   | 43
How to slot with a spreadsheet…

 Create Item Master
   –   SKU
   –   Description
   –   Length                                               Item Master

   –   Width
   –   Height                                                                                                Qty. on
                                                                                                             Hand,
   –
                                                                                    Overall       Non-
       Overall cube                      SKU       Description   Current Location
                                                                                     Cube      Conveyable?    2008

   –   Conveyabiility
   –   Pack size info
                                  TG511A1000   THERMOSTAT GUARD -05050C0601
                                                                   CLEAR COVER        176.83       N           189

 Determine Current Quantity on   SC16124
                                  HGM-SZ
                                  AT150F1022
                                               16X12X4 SCREW COVER ENCLOSURE
                                                                  10040E0101
                                               SINGLE ZONE REFRIGERANT MONITOR
                                                                  08010D0202
                                               50VA TRANS 120/208/240V C BRK
                                                                  08010E0101
                                                                                      835.52
                                                                                    5,751.18
                                                                                       76.62
                                                                                                   N
                                                                                                   N
                                                                                                   N
                                                                                                                46
                                                                                                                14
                                                                                                               197

  Hand                            220B
                                  RIB2401B
                                               BRASS FLOW SENSOR 07010B0601
                                               SPDT POWER RELAY 24VAC/DC,120V
                                                                  03070B0601
                                                                                      444.35
                                                                                       73.32
                                                                                                   N
                                                                                                   N
                                                                                                                47
                                                                                                               306
                                  UCP-422-43   MA/PSI XDUCER W/PSI07020E0601
                                                                   IND.               193.69       N           124

 Determine rationalization       T-PB202-0    24VAC POWER SOURCE,4A,PNL
                                                                  03040B0601          161.76       N           180



  strategy for current QOH

                                                                                                             | 44
How to slot with a spreadsheet…

 Define variables:
   –   Velocity Variables
   –   Growth Rate Variables
   –   Bin Variables, Primary Pick Area
   –   Bin Variables, Overstock
   –   Tote Variables
   –   Current Storage Capacity
   –   Current Bin Box Used by Client
   –   Pallet Rack Bays Available




                                                | 45
How to slot with a spreadsheet…

 Establish multiple
  replenishment intervals…




                                             | 46
How to slot with a spreadsheet…

 Create storage medium rules
 Calculate theoretical qty on hand
 Rationalize against actual qty on
  hand
 Determine optimal storage
  medium
 Summarize results:
   – # of units of each storage medium
     required
   – “walk-back” bays required
   – Impact of various replenishment
     intervals
   – Changes over time

                                               | 47
21. Basic Productivity Tracking

 Definition: Track lines picked per hour by   WMS Availability
                                                Assessment
  worker regardless of pick type




                                                     Level: 2
                                                  Available but often with
                                                   some customization
                                                   required
                                                  Might not be currently in
                                                   use by any companies




                                                                       | 48
22. Advanced Productivity Tracking

 Definition: Track lines picked per hour by       WMS Availability
                                                    Assessment
  worker by pick type (i.e. distinguish
  between piece picks, case picks, pallet picks)




                                                        Level: 2
                                                      Available but often
                                                       with some
                                                       customization
                                                       required
                                                      Might not be
                                                       currently in use by
                                                       any companies
                                                                       | 49
22. Advanced Productivity Tracking

 LMS on Demand?




             YES.


                                             | 50
23. Task interleaving

   Definition: combined                                   WMS Availability
    put-away/picking
    cycles - when full                                      Assessment
    pallet is put-away,
    search for full pallet    2. Put-
                                               3. Pick
    picks which need to        away
                             inbound          outbound
    occur in proximity to      pallet           pallet
    the put-away bin and
    place this pick as the
    next task in queue




         1. Pickup
         inbound
           pallet                                    4. Stage
                                                                Level: 1
                                                    outbound   If available at
                                                      pallet    all, customization is
                                                                required
                                                               Might not be
                                                                currently in use by
                                                                any companies

                                                                                 | 51
24. Pick confirmation

 Definition: using some form of automatic        WMS Availability
                                                   Assessment
  data capture technology to confirm that the
  correct item was picked (at the time of pick)




                                                       Level: 3
                                                     Generally available
                                                      with minimal
                                                      customization
                                                      required
                                                     In use by at least
                                                      some referenceable
                                                      companies         | 52
25. Cycle counting

 Definition: counting portions of the         WMS Availability
                                                Assessment
  inventory each day to ensure bin and item-
  level accuracy




                                                    Level: 3
                                                  Generally available
                                                   with minimal
                                                   customization
                                                   required
                                                  In use by at least
                                                   some referenceable
                                                   companies
                                                                  | 53
26. Track product by lot #

                         WMS Availability
                          Assessment




                              Level: 3
                            Generally available
                             with minimal
                             customization
                             required
                            In use by at least
                             some referenceable
                             companies
                                            | 54
27. Pick product by lot

                          WMS Availability
                           Assessment




                               Level: 3
                             Generally available
                              with minimal
                              customization
                              required
                             In use by at least
                              some referenceable
                              companies
                                             | 55
28. Track serial numbers

                           WMS Availability
                            Assessment




                                Level: 3
                              Generally available
                               with minimal
                               customization required
                              In use by at least some
                               referenceable
                               companies


                                                 | 56
29. Track country of origin

                          WMS Availability
                           Assessment




                               Level: 3
                             Generally available
                              with minimal
                              customization
                              required
                             In use by at least
                              some referenceable
                              companies
                                             | 57
30. Improve storage density

                        3 Under-Utilized Storage
  Double-deep storage
                              Systems…


                               Mobile storage rack




      Push-back rack


                                                     | 58
On-Demand WMS: What does it cost?

 Cost estimates…
   – Vendor #1
       • Ongoing monthly cost: Averages $3,000-$4,500 per month, but could be as
         much as $6,000.
       • Implementation cost estimate: $20,000 - $40,000
   – Vendor #2
       • Ongoing monthly cost: Averages $1,700 – 2,500per month
       • Implementation cost estimate: $4,000 (editorial note: Commonwealth feels
         this is a significant under-estimate)
   – Vendor #3
       • Ongoing monthly cost: $0
       • Implementation cost estimate: Under $100,000 for license and
         implementation for a moderate-complexity project
 Hardware: The above prices do not include:
       • Installation of wireless network in the DC
       • Handheld computers
       • Bar-code printers


                                                                                    | 59
WMS: Keys to success

 Don’t rush it!
    – Allow 12 – 18 months for selection and implementation
 Evaluate all the options (even Tier 1!)
 Document EVERYTHING about the current state
    – Al normal processes
    – All exceptions
   Test thoroughly
   Train
   Assign ownership
   Ensure visibility & reporting exist
   Conduct an honest readiness assessment

                                                              | 60
18 Steps to Success
      Strategy             Solution                Execution
                           Selection              Management
      Distribution           WMS Vendor                  WMS
      Optimization            Selection             Implementation


V    Detailed Discovery
     with Data Analysis
                            RFI: Determine
                             Vendor Pool
                                                      Functional
                                                      Alignment

i      Define Current        Round 1: RFP
                                                        Build
            State            (Written Bids)
s
       Design Future       Round 2: Scripted             Test
i          State               Demos

       Project Future                                   Train
o         Savings
                           Round 3: Site Visits

         Estimate
n   Implementation Costs
                             Negotiation &
                               Selection
                                                       Convert


     Build Business Case                               Go-Live



                                                       Optimize
                                                                     | 61
In Summary…

 Improved distribution efficiency IS within reach, providing a
  company is willing to make at least SOME investment in
  processes or technology
 Savvy companies who conduct a thorough evaluation of
  technology can often find that improvement is not as
  expensive as they thought
 Don’t rush the process – take the time required to design the
  solution correctly the first time.




                                                                  | 62
Thank You



20 Park Plaza, Suite 400 | Boston, Massachusetts 02116
(O) 617.948.2153 | (F) 617.507-6112
www.commonwealth-sca.com

Distribution Optimization | Transportation Optimization | Supply Chain Planning




                                                                                  | 63

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Improving Warehouse Productivity Without Tier 1 Technology

  • 1. Improving Warehouse Productivity Without Resorting to Tier 1 Technology
  • 2. What is “Tier 1” Technology?  The term “Tier 1” is frequently used, but is a gross over-simplification  Conjures up images of “expensive” technology  “Overkill”  “The Cadillac”  Often used in context of WMS vendors Image source: General Motors |2
  • 3. Tier 1 Technology Isn’t Bad  For many large, complex operations, the only path to supply chain improvement involves making a large capital investment  Many of the technologies which we consider “Tier 1” have been the pioneers – developing cutting edge technology that improves efficiency  This technology then get adapted and trickles down to mid-tier providers over time |3
  • 4. An Alternate Title for our Presentation… "How can I improve my warehousing problems without a major capital investment?“ |4
  • 5. But how?  Isn’t this asking to get something for nothing? No.  There are two basic ideas which are under-exploited by many enterprises today: 1. Leveraging new advances in technology which they may not be aware of 2. Sharpening the saw – stepping back and making fundamental process changes to improve the operation |5
  • 6. Common Challenges  Whether their capital budget is 5 figures or 8 figures, companies face the same basic set of challenges: – Reduce labor costs – Improve accuracy – Improve space utilization  Secondary challenges: – Meet regulatory compliance mandates – Meet retail compliance mandates |6
  • 7. No Shortage of Solutions…  There are countless solutions available to address these challenges… WMS Conveyor-based pick modules Pick-to-Light Systems Speech Carousels AS/RS Robotic Handling Warehouse Control Software (WCS) Image sources, clockwise from top left: Intermec, Abel-Womack Integrated Handling Solutions, Lightning Pick, Voxware, Remstar, Diamond Phoenix, TGW Ermanco, Kiva Systems, FORTE Industries |7
  • 8. Process-Centric Approach  Rather than jumping immediately to technology, let’s look at several strategies to address these challenges… A. Pick more efficiently B. Put-away more efficiently C. Pack and ship more efficiently D. Reduce walking E. Improve labor productivity F. Improve accuracy G. Improve space utilization |8
  • 9. Process-Centric Approach Each strategy has a set of execution tactics… 1. Cluster picking 16. Pick restriction 2. "Tandem" picking 17. Large quantity override 3. Receiving staging by zone 18. Min/max replenishment 4. Clustered put-away 19. Demand-based replenishment 5. Put-away by movable unit 20. Slot the warehouse more 6. Implement specialized packing effectively processes 21. Basic productivity tracking 7. Pre-manifesting 22. Advanced productivity tracking 8. Dynamic label application 23. Task interleaving 9. Cartonization 24. Pick confirmation 10. Palletization 25. Cycle counting 11. Seal cases more quickly 26. Track product by lot # 12. Weight-based accuracy 27. Pick product by lot # confirmation 28. Track serial numbers 13. Create a forward pick area 29. Track country of origin 14. Two-tier bin system 30. High density storage 15. SKU Mirroring |9
  • 10. Process-Centric Approach  Some Tactics require enabling technology… | 10
  • 11. Focus on Mid-Tier WMS  Mid-Tier WMS has been in use for at least 15 years  Generally, mid-tier means a more limited set of functionality for a lower price  Often, mid-tier WMS systems had some key gaps which made them not practical for many users with special requirements | 11
  • 12. The SaaS Model  In the last 5 years, the Software-as- a-Service (SaaS) model has become a popular means of deploying WMS  With the SaaS model, the software vendor hosts the WMS application on their own server and deploys it via a web connection  True SaaS is multi-tenant: multiple users are on the same instance of the software  Customers do not pay an up-front license fee – just a monthly usage fee  Upgrading and remaining on the current version of the software is much easier | 12
  • 13. What are the TRUE Capabilities?  Commonwealth Supply Chain Advisors conducted a survey of three of the top mid-Tier WMs providers to assess the extent to which functionality gaps have been plugged in recent years  Two providers offer only SaaS- based WMS  The third offers both traditional, licensed WMS and a SaaS WMS | 13
  • 14. What are the TRUE Capabilities?  We created a list of 30 functionality Level of support Challenges Strategies Tactics Enabling Technology from Mid- Tier WMS points which have traditionally been Cluster picking - pick multiple orders at the same time and put them in discrete containers by order WMS 3 challenging for mid-tier WMS providers Pick more WMS 2 efficiently "Tandem" picking - when case picking, two different orders can be picked at the same Double-length electric pallet n/a time utilizing a double-length electric pallet jack jacks Tugger vehicles n/a to address Receiving staging by zone - at receiving, direct that inbound product be staged on a pre- defined movable units based upon it’s destination zone Put-away Clustered put-away - allow multiple SKUs to be put away in the same trip through the WMS WMS 1 2  We asked each vendor to indicate more warehouse in a logical pick path efficiently Put-away by movable unit - allow multiple SKUs to be placed on a license plated movable unit; allow the movable unit license plate to be scanned once at put-away, and direct put- WMS 2 away of all SKUs on that movable unit in a logical pick-path whether this functionality was: Implement specialized packing process Pre-manifesting - Calculate weight and quantity of all the multi-SKU pallets on an order before picking Dynamic label application: Apply a retail-compliuant label to cases at time of picking with Process change WMS n/a 3 – Standard Functionality WMS 2 scan confirmation Pack and ship Cartonization - determine the optimal size shipping container based on the cube and WMS 2 more longest dimension of the items which are to be picked for an order – Configurable Functionality efficiently Palletization - prior to case picking, determine the number of cases to be picked to each WMS 1 pallet based on cube Tape dispensers n/a Seal cases more quickly – Case sealer n/a Customization Required Reduce labor costs Weight-based accuracy confirmation - weight a carton or a pallet and compare it to a database of the actual weights - verify if the carton or pallet is within tolerance Create a forward pick area WMS 1 n/a – Not Available Currently Two-tier bin system - the same SKU can exist in two different bins in the distribution WMS 3 center SKU Mirroring - the same SKU can exist in two different bins in the same ZONE WMS 3  We also asked about actual usage Pick restriction - the system can limit picking only to bins designated as "forward pick WMS 3 bins" Large quantity override - if a single pick exceed x quantity and will drastically deplete the Reduce WMS 2 forward pick area, the system will direct the pick to be made from the overstock bin amongst their client base. Was the walking Min/max replenishment - replenish to a bin if the quantity falls below a pre-set WMS 3 minimum level Demand-based replenishment - proactively replenish to a bin if known demand for the functionality: item will exceed the quantity in the bin, EVEN IF the bin is not currently below it’s minimum stocking level Slot the warehouse more effectively WMS Slotting software 1 n/a – Currently in-use with referenceable clients Slotting spreadsheet n/a WMS 2 Basic Productivity Tracking: Track lines picked per hour by worker regardless of pick type Labor management software n/a – Available but not currently in use Advanced Productivity Tracking: Track lines picked per hour by worker by pick type (i.e. WMS 2 Improve labor distinguish between piece picks, case picks, pallet picks) Labor management software n/a productivity Task interleaving - combined put-away/picking cycles - when full pallet is put-away, – Not available WMS 1 search for full pallet picks which need to occur in proximity to the put-away bin and place this pick as the next task in queue Labor management software n/a Pick confirmation - confirm that the correct product was picked based on a bar-code scan  The vendors responded on the condition WMS 3 of the item or bin Cycle counting - allow incremental cycle counting in lieu of physical inventory WMS 3 Improve Accuracy is poor Track product by lot # WMS 3 accuracy that they not be identified by name in Pick product by lot # WMS 3 Track serial numbers WMS 3 Track country of origin WMS 3 Push back rack n/a this presentation The DC is out of space Improve space utilization Improve storage density Double deep rack Very narrow aisle (VNA) storage n/a n/a Mobile storage rack n/a | 14
  • 15. The Rating System Three levels… Level: 3 Level: 2 Level: 1  Generally available  Available but often  If available at with minimal with some all, customization is customization customization required required required  Might not be  In use by at least  Might not be currently in use by some referenceable currently in use by any companies companies any companies | 15
  • 16. The Tactics… 1. Cluster picking 16. Pick restriction 2. "Tandem" picking 17. Large quantity override 3. Receiving staging by zone 18. Min/max replenishment 4. Clustered put-away 19. Demand-based replenishment 5. Put-away by movable unit 20. Slot the warehouse more 6. Implement specialized packing effectively processes 21. Basic productivity tracking 7. Pre-manifesting 22. Advanced productivity tracking 8. Dynamic label application 23. Task interleaving 9. Cartonization 24. Pick confirmation 10. Palletization 25. Cycle counting 11. Seal cases more quickly 26. Track product by lot # 12. Weight-based accuracy 27. Pick product by lot # confirmation 28. Track serial numbers 13. Create a forward pick area 29. Track country of origin 14. Two-tier bin system 30. High density storage 15. SKU Mirroring | 16
  • 17. 1. Cluster picking  Definition: pick multiple orders at the same WMS Availability Assessment time and put them in discrete containers by order Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 17
  • 18. 2. "Tandem" picking  Definition: when case picking, two different WMS Availability Assessment orders can be picked at the same time utilizing a double-length electric pallet jack or tugger vehicle Level: 2  Available but often with some customization required  Might not be currently in use by any companies | 18
  • 19. Deep Dive: Pick Methodologies  Which style of picking is best? Discrete Order Picking Cluster Picking Batch Picking Zone Pick: Pick & Pass Zone Pick: Pick & Consolidate | 19
  • 20. Deep Dive: Pick Methodologies • Pro’s: – Simple for operators – Less error prone Discrete Order – Little/no technology required – May be the only practical method to Picking pick very high-cube items • Con’s – Very high levels of walking – Operators return to home-base after each order is picked – Each order requires a trip through the entire warehouse
  • 21. Deep Dive: Pick Methodologies • Pro’s: – Dramatically reduces walking – Possible to do on a limited scale without a high degree of technology Cluster – Each order is only touched once – Orders are ready-to-ship as soon as picking is done Picking • Con’s – Hard to pick a large group of orders without real-time instructions – Orders may travel significant distances without any picks being performed – Travel distances are excessive in large warehouses with many SKUs – Increased likelihood of errors
  • 22. Deep Dive: Pick Methodologies • Pro’s: – Reduces walking in larger distribution centers – Each order can only be routed to zones where there are picks Zone Pick: Pick – Orders are ready-to-ship as soon as picking is done & Pass • Con’s – Almost impossible to manage without real-time warehousing – Zone routing can only be done with complex conveyor systems – All of the SKU’s in the order travel through the entire DC
  • 23. Deep Dive: Pick Methodologies • Pro’s: – Reduces overall travel distances for the SKU’s in the order – Well-suited for orders with diverse sizes Zone Pick: Pick and shapes of SKU’s & Consolidate – Well-suited for mixing case and piece picking on the same order • Con’s – Very complex for software to manage consolidation process – Requires labor downstream to consolidate orders – Requires space to buffer product
  • 24. Deep Dive: Pick Methodologies • Pro’s: – Well suited for instances where the same SKU appears on a large number of orders – Well suited for single line, single piece Batch Picking orders • Con’s – Only suits a limited order profile – Requires additional downstream handling – Can be complex to execute
  • 25. 3. Receiving staging by zone  Definition: at receiving, direct that inbound WMS Availability Assessment product be staged on a pre-defined movable unit based upon it’s destination zone Inbound Zone 1 Zone 2 Zone 3 Level: 1  If available at all, customization is required  Might not be currently in use by any companies | 25
  • 26. 4. Clustered put-away  Definition: allow multiple SKUs to be put WMS Availability Assessment away in the same trip through the warehouse in a logical pick path Level: 2  Available but often with some customization required  Might not be currently in use by any companies | 26
  • 27. 5. Put-away by movable unit  Definition: allow multiple SKUs to be placed WMS Availability Assessment on a license plated movable unit; allow the movable unit license plate to be scanned once at put-away, and direct put-away of all SKUs on that movable unit in a logical pick- path MU # T-745 Level: 2  Available but often with some customization required  Might not be currently in use by Zone 1 any companies | 27
  • 28. 6. Implement specialized packing process  Definition: separate the less skilled packing functions from the more skilled manifesting functions  10-step process | 28
  • 29. 7. Pre-shipping  Definition: Calculate weight and quantity of WMS Availability Assessment all the multi-SKU pallets on an order before picking Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 29
  • 30. 8. Dynamic label application  Definition: Apply a retail-compliant (or WMS Availability Assessment other) label to cases at time of picking with scan confirmation Case label Level: 2  Available but often with some customization required  Might not be currently in use by any companies | 30
  • 31. 9. Cartonization  Definition: determine the optimal size WMS Availability Assessment shipping container based on the cube and longest dimension of the items which are to be picked for an order Level: 2  Available but often with some customization required  Might not be currently in use by any companies Image source: Tetris | 31
  • 32. 10. Palletization  Definition: prior to case picking, determine WMS Availability Assessment the number of cases to be picked to each pallet based on cube Level: 1  If available at all, customization is required  Might not be currently in use by any companies | 32
  • 33. 11. Seal cases more quickly  Definition: speed up the case sealing process without adding excess labor Image sources: Betterpack, 3M | 33
  • 34. 12. Weight-based accuracy confirmation  Definition: weigh a carton or a pallet and WMS Availability Assessment compare it to a database of the actual weights - verify if the carton or pallet is within tolerance Level: 1  If available at all, customization is required  Might not be currently in use by any companies | 34
  • 35. 13. Create a forward pick area  Definition: stock a smaller supply of many SKUs in a high-density area of the warehouse 8 SKUs stored on 8 pallets = 32 walking feet vs. Smaller supply of the same 8 SKUs stored in carton flow rack 8 SKUS = 8 walking feet* *(Can be increased to 32 SKUs per walking foot) | 35
  • 36. 13. Create a forward pick area  Storage mediums include: – carton flow – static shelving Image source: Borroughs Corporation, Frazier Industrial Company | 36
  • 37. 14. Two-tier bin system  Definition: the same SKU can exist in two WMS Availability Assessment different bins in the distribution center Overstock Level: 3  Generally available Forward pick with minimal customization required  In use by at least some referenceable companies | 37
  • 38. 15. SKU Mirroring  Definition: the same SKU can exist in two WMS Availability Assessment different bins in the same ZONE Overstock Level: 3 Forward pick  Generally available with minimal customization required  In use by at least some referenceable companies | 38
  • 39. 16. Pick restriction  Definition: the system can limit picking only WMS Availability Assessment to bins designated as "forward pick bins" Overstock Level: 3 Forward pick  Generally available with minimal customization required  In use by at least some referenceable companies | 39
  • 40. 17. Large quantity override WMS Availability Assessment  Definition: if a single pick exceeds x quantity and will drastically deplete the forward pick area, the system will direct the pick to be made from the overstock bin Level: 2  Available but often with some customization required  Might not be currently in use by any companies | 40
  • 41. 18. Min/max replenishment  Definition: replenish to a bin if the quantity WMS Availability Assessment falls below a pre-set minimum level Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 41
  • 42. 19. Demand-based replenishment  Definition: proactively replenish to a bin if WMS Availability Assessment known demand for the item will exceed the quantity in the bin, EVEN IF the bin is not currently below it’s minimum stocking level Level: 1  If available at all, customization is required  Might not be currently in use by any companies | 42
  • 43. 20. Slot the warehouse more effectively  3 Methods of Slotting:  Slotting Tools: – Level 1: Determine the correct – Spreadsheet tools STORAGE MEDIUM – Level 2: Determine the correct BIN – Specialty slotting software # – Level 3: Dynamic slotting  Factors influencing slotting methodology: – Demand volatility – Product lifecycle – # of new product introductions per year – Stackability requirements – Segregation rules – Family grouping rules Image source: Rubic’s | 43
  • 44. How to slot with a spreadsheet…  Create Item Master – SKU – Description – Length Item Master – Width – Height Qty. on Hand, – Overall Non- Overall cube SKU Description Current Location Cube Conveyable? 2008 – Conveyabiility – Pack size info TG511A1000 THERMOSTAT GUARD -05050C0601 CLEAR COVER 176.83 N 189  Determine Current Quantity on SC16124 HGM-SZ AT150F1022 16X12X4 SCREW COVER ENCLOSURE 10040E0101 SINGLE ZONE REFRIGERANT MONITOR 08010D0202 50VA TRANS 120/208/240V C BRK 08010E0101 835.52 5,751.18 76.62 N N N 46 14 197 Hand 220B RIB2401B BRASS FLOW SENSOR 07010B0601 SPDT POWER RELAY 24VAC/DC,120V 03070B0601 444.35 73.32 N N 47 306 UCP-422-43 MA/PSI XDUCER W/PSI07020E0601 IND. 193.69 N 124  Determine rationalization T-PB202-0 24VAC POWER SOURCE,4A,PNL 03040B0601 161.76 N 180 strategy for current QOH | 44
  • 45. How to slot with a spreadsheet…  Define variables: – Velocity Variables – Growth Rate Variables – Bin Variables, Primary Pick Area – Bin Variables, Overstock – Tote Variables – Current Storage Capacity – Current Bin Box Used by Client – Pallet Rack Bays Available | 45
  • 46. How to slot with a spreadsheet…  Establish multiple replenishment intervals… | 46
  • 47. How to slot with a spreadsheet…  Create storage medium rules  Calculate theoretical qty on hand  Rationalize against actual qty on hand  Determine optimal storage medium  Summarize results: – # of units of each storage medium required – “walk-back” bays required – Impact of various replenishment intervals – Changes over time | 47
  • 48. 21. Basic Productivity Tracking  Definition: Track lines picked per hour by WMS Availability Assessment worker regardless of pick type Level: 2  Available but often with some customization required  Might not be currently in use by any companies | 48
  • 49. 22. Advanced Productivity Tracking  Definition: Track lines picked per hour by WMS Availability Assessment worker by pick type (i.e. distinguish between piece picks, case picks, pallet picks) Level: 2  Available but often with some customization required  Might not be currently in use by any companies | 49
  • 50. 22. Advanced Productivity Tracking  LMS on Demand? YES. | 50
  • 51. 23. Task interleaving  Definition: combined WMS Availability put-away/picking cycles - when full Assessment pallet is put-away, search for full pallet 2. Put- 3. Pick picks which need to away inbound outbound occur in proximity to pallet pallet the put-away bin and place this pick as the next task in queue 1. Pickup inbound pallet 4. Stage Level: 1 outbound If available at pallet all, customization is required  Might not be currently in use by any companies | 51
  • 52. 24. Pick confirmation  Definition: using some form of automatic WMS Availability Assessment data capture technology to confirm that the correct item was picked (at the time of pick) Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 52
  • 53. 25. Cycle counting  Definition: counting portions of the WMS Availability Assessment inventory each day to ensure bin and item- level accuracy Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 53
  • 54. 26. Track product by lot # WMS Availability Assessment Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 54
  • 55. 27. Pick product by lot WMS Availability Assessment Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 55
  • 56. 28. Track serial numbers WMS Availability Assessment Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 56
  • 57. 29. Track country of origin WMS Availability Assessment Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 57
  • 58. 30. Improve storage density 3 Under-Utilized Storage Double-deep storage Systems… Mobile storage rack Push-back rack | 58
  • 59. On-Demand WMS: What does it cost?  Cost estimates… – Vendor #1 • Ongoing monthly cost: Averages $3,000-$4,500 per month, but could be as much as $6,000. • Implementation cost estimate: $20,000 - $40,000 – Vendor #2 • Ongoing monthly cost: Averages $1,700 – 2,500per month • Implementation cost estimate: $4,000 (editorial note: Commonwealth feels this is a significant under-estimate) – Vendor #3 • Ongoing monthly cost: $0 • Implementation cost estimate: Under $100,000 for license and implementation for a moderate-complexity project  Hardware: The above prices do not include: • Installation of wireless network in the DC • Handheld computers • Bar-code printers | 59
  • 60. WMS: Keys to success  Don’t rush it! – Allow 12 – 18 months for selection and implementation  Evaluate all the options (even Tier 1!)  Document EVERYTHING about the current state – Al normal processes – All exceptions  Test thoroughly  Train  Assign ownership  Ensure visibility & reporting exist  Conduct an honest readiness assessment | 60
  • 61. 18 Steps to Success Strategy Solution Execution Selection Management Distribution WMS Vendor WMS Optimization Selection Implementation V Detailed Discovery with Data Analysis RFI: Determine Vendor Pool Functional Alignment i Define Current Round 1: RFP Build State (Written Bids) s Design Future Round 2: Scripted Test i State Demos Project Future Train o Savings Round 3: Site Visits Estimate n Implementation Costs Negotiation & Selection Convert Build Business Case Go-Live Optimize | 61
  • 62. In Summary…  Improved distribution efficiency IS within reach, providing a company is willing to make at least SOME investment in processes or technology  Savvy companies who conduct a thorough evaluation of technology can often find that improvement is not as expensive as they thought  Don’t rush the process – take the time required to design the solution correctly the first time. | 62
  • 63. Thank You 20 Park Plaza, Suite 400 | Boston, Massachusetts 02116 (O) 617.948.2153 | (F) 617.507-6112 www.commonwealth-sca.com Distribution Optimization | Transportation Optimization | Supply Chain Planning | 63