Shortening Up the Supply Chain
Parcel Shipping & Distribution Magazine
Volume 10 : Issue 7
The past few years have seen some dramatic changes in parcel shipping methods. Most have been driven by impatience, manifested in what the industry calls “the shortening of the supply chain.” This phrase sums up a wide variety of customer attitudes and business strategies.
To the consumer, shortening the supply chain means an unwillingness to accept the term “out of stock,” or delays in order processing and a reluctance to endure lengthy delivery times. To the seller, who must somehow meet these higher customer expectations, a shorter supply chain means reducing inventory turns, or cross docking, as much product as possible and having complete inventory on hand at all times. Since the inception of the dot.com era, merchants have promised 24-hour product delivery, in-stock inventories and online order tracking. This level of service is not only the norm, it is now the minimum acceptable offering.
Keeping both the consumer and the seller happy is the responsibility of the parcel shippers, who now must perform at unprecedented service levels and at constantly reduced costs. Luckily, distribution technology is now in place to support these lofty goals.
Designing a parcel distribution center to satisfy current industry demands requires a thorough review of new processes and technologies. Fortunately, the goals are clear: to route products through the distribution center as rapidly as possible, with the greatest level of accuracy, at the lowest possible cost.
Old methods and systems are simply not capable of handling the current myriad of products and order sizes in an efficient or costeffective manner. On the other hand, the new generation of distribution centers handles more products faster and cheaper than ever before, with greater levels of accountability and increased order visibility to the clients. Of course, you can’t just throw out all the old systems and purchase some off-the-shelf system to solve all your problems. It would be nice if it was that easy, but it’s not.
Most truly efficient distribution centers are designed from the bottom up. A clean slate is the best starting point, but if you are not this fortunate and must adapt a dated operation to current standards, a modular implementation of current technologies and practices will work almost as well.
One important caution, however, must be voiced: current software systems rely on technologically advanced material handling equipment and spohisticated hardware to reach industry standard performance levels. All of the components truly go "hand in hand.” In other words, you can’t just plug new software into an outdated system. Transforming a basic manual operation into a highly automated and extremely productive automated operation may require multiple systems upgrades at the same time.
Software — Current warehouse management systems (WMS) are more comprehensive than ever, supporting a myriad of automated processes with “best practice” methodology. A host of “second tier” WMS suppliers such as Radio Beacon and Softeon have developed extremely cost-effective solutions that are technologically advanced, offer modular implementation based on client needs and support the most complex distribution scenarios. Choosing the correct software systems provider is a critical-path decision when enabling current distribution processes.
Inside the distribution center, systems technology manages material movement through the facility. One recent example is voice recognition transaction software. The May Company, a major retailer in the United States, began incorporation of this technology in its distribution centers in the 1990s. At the time, this was cutting-edge and truly experimental. Now, voice recognition systems regularly manage processes such as receiving, putaway and picking with tremendous improvements in accuracy and efficiency.
Product identification — The latest product identification technology, RPID, lets users program a chip the size of a pencil tip or smaller with data capability that surpasses barcode technology by several orders of magnitude. RFID can supplement or replace barcode scanning for receiving, inventory management and shipping carton identification and will be a WAL-MART requisite by 2005 for major vendors. The Massachusetts Institute of Technology has developed a test lab specifically for the application of RFID technology in commerce.
Unit Sortation — For those operations that perform true "fulfillment," (fulfilling orders through the picking of individual units) the material handling world has now engineered systems for all demand levels. "Pick to Light" as well as "put to light" systems are the software driven equivalents of manual picking and systems are commonly available. Better yet, low-cost and moderate rate unit sortation systems exist from numerous suppliers. Unit sortation is now cost justifiable even by the most aggressive corporate ROl formulas.
Order/carton size — The elevation in customer service levels has created a trend toward more frequent, but smaller, orders. This phenomenon has generated a larger quantity of small, lightweight cartons, which must be handled somehow. The conveyable minimum size and weight of cartons has changed, and equipment suppliers have responded to meet the demand.
Older mechanical conveying systems had minimum carton weight parameters, which have become unrealistic. A handful of suppliers have developed electronically controlled accumulation conveyors that essentially have no minimum weight requirement The most sophisticated conveyors of this type feature lowvoltage, independently powered rollers for ease of maintenance and low-cost operation. This technology was pioneered by the Versa conveyor company for the U.S. Postal Service over a decade ago and remains the standard for carton handling.
Carton sortation — Increased facility throughput has affected outbound carton sortation technology as well. Most system designers realize the ability to sort cartons at high rates begins with the ability to merge product rapidly and feed the sorter at high rates. Systems suppliers such as Intelligrated have developed ultra high rate product handling solutions utilizing high-speed carton sortation systems that operate in synergy with extremely efficient merge technology. The result is a “plug-and-play” back end distribution system that will deliver high rates with anticipated product handling accuracies.
Pre-owned equipment opportunities — In this time of reduced corporate capital expenditures, there is one encouraging piece of news. There are places where a bargain can be found, where relatively new technology can be purchased for less than you might think.
The pressures on sellers and distribution centers alike to meet escalating customer expectations are great. Not everyone was careful about the promises they made or were successful in meeting those expectations. The result is a number of defunct dot.com enterprises that have abandoned millions of dollars in distribution systems, and their losses may be your gains. Find the right partner for this second-market mechanization and you could save hundreds of thousands (even millions) of dollars. It is a “right time, right place” opportunity.
Accommodating a shortened supply chain requires engineering a comprehensive and cost-effective distribution strategy, including the adaptation of moderately complex information systems and relatively sophisticated material handling technologies. This is a market requirement; your company has no real choice if it expects to remain competitive. The good news is that there is little risk, given the process involves proven technology with compelling and guaranteed returns.
Questions or comments? Contact: Frank Sterner - Senior Executive of Genesys Operations - a division of SJF. Genesys is the design and consulting division of SJF Material Handling Inc., a Winsted, Minnesota-based full service provider of new, used and "renewed" material handling equipment and services. For more information, visit http://www.genesysmaterialhandling.com
