Warehouse Management Systems
versus Extended ERP for Manufacturers

Any manufacturer that has a substantial number of shipments from a distribution facility has likely at least considered bringing some degree of automation to their warehouse and shipping functions. For some companies, a full blown warehouse management system (WMS) is almost a necessity, particularly if the operation relies on an automated racking system, perhaps housed in a rack-mounted structure with its own track-mounted materials handling system. However, for the vast majority of manufacturers, even those that complete a large number of shipments every day, a WMS that is separate and distinct from their other business systems will be counterproductive.

Even a full integration of WMS with an enterprise application like enterprise resources planning (ERP) designed to eliminate duplicate data entry will result in redundant systems and substantially greater expense than a unified system. Moreover, WMS/ERP integrations that rely on batch updates will create opportunities for inaccurate information and will often slow operations down rather than expedite them.

In this whitepaper, we will explore the drawbacks of integrating standalone WMS and ERP systems, and make a case that for many companies it makes more sense to extend the manufacturing application used by the organization as a whole as opposed to integrating with an entirely new technology stack. We will also offer advice for selecting and implementing a warehouse automation solution that works well with a manufacturing enterprise suite.

 

Basic warehouse management vs WMS

At a certain point in a manufacturing organization’s development, management will begin looking for ways to automate the movement of materials from manufacturing, into distribution and into the customer’s hands. A broad spectrum of WMS can in fact help them better utilize their workforce by automating the picking, staging and shipping processes. The ultimate goal of course is to increase the speed and reduce the cost of getting the right product to the right customer at the right time. The primary business trigger that often prompts a company’s management to begin considering some type of WMS solution is the sheer number of shipments handled each day. As the number of shipments increase, it becomes more attractive to move the distribution process from an order-by-order environment towards an arrangement that makes better use of labor in the warehouse. Rather than sending someone into the warehouse for each individual order, warehouse management technology can make it possible for them to pick multiple orders in a single pass through the warehouse, bring those orders to a shipment staging area, crate them up appropriately for each carrier and see that they are in the right place for pickup.

Warehouse management can also help automate the work of a number or workers in the warehouse that might each be picking different things that are all part of the same order. Through automation, these workers can reliably be directed so that these items are staged at the shipping area for proper inclusion in the combined order. Moreover, it should be the goal of managers planning a warehouse management project to allow warehouse workers to receive instructions on what to pick on handhelds or other mobile devices. This eliminates the need for workers to travel repeatedly to and from a centralized dispatch station, where pick lists are printed as hard copies and distributed. Most manufacturers are producing a product that is then moving into an on-site or closely-located warehousing or shipping area. If they are already running a modern enterprise suite like IFS Applications, they have access to some pre-existing logistics functionality which is tightly integrated with inventory functionality and information on the customer orders to be fulfilled.

Extended ERP

Extending that existing enterprise suite with straightforward technology designed to direct workers in the warehouse can be easily achieved without a standalone WMS solution. Moreover, the extended ERP approach can enable the more challenging approaches to picking and warehouse management including:

• Both batch and wave picking. Batch picking involves combining the picking requirement for several orders and then sort the materials for individual orders as the picker goes along. Wave picking entails accumulation of a large number of orders for picking as a batch and then sending picked items to a cartons through an automated sorting apparatus that separates materials for each order. • Voice-directed and light-directed picking. Voice and light inputs can both instruct workers what to pick, and extended ERP strategies will easily accommodate these methods.

• Picking by carrier. For some companies, it will make sense to pick by carrier, particularly if there are a large number of small shipments that need to be packaged accordingly for UPS or FedEx while other larger shipments are treated much differently for shipment by the pallet or truckload. • The ability to drive picking information to warehouse workers over handhelds in multiple languages. Even companies that are strictly domestic in their footprint likely employ people for whom English is a second language, and can benefit from making Spanish or other languages available in the warehouse. Global companies obviously need broad language support in their enterprise suite and in their warehouse solutions, including through handhelds.

• The ability to accommodate requirements to pick and ship items according to first-in, first-out (FIFO) or in accordance with expiration dates.

• Revision level – which presents warehouse workers with the challenge of looking at two of what appears to be the same but in fact differ on the basis of detailed revisions or engineering change levels that are tracked in the manufacturing system. While these revisions are notated in inventory records, they can not be noticed visually. Picking products that are subject to revision levels requires warehouse workers to look into bus inventory system to locate product characteristics and pick by specifications for that customer.

At Radley, we believe that most companies will benefit more from a unique approach of extending the logistics and shipping functionality within an enterprise environment like IFS Applications than they will from rolling out a full-blown WMS. After working with a number of companies that have integrated full-blown WMS systems with ERP systems, we have found that there is certainly a gap between ERP distribution capabilities and WMS distribution logistics. But that WMS probably duplicates a lot of the systems within an ERP environment and delivers a lot of capabilities that most manufacturers will not use.

We have found that most manufacturers simply need a few pieces of key automation, logistics support and labor and productivity enhancing features but don’t need all of the bells and whistles of WMS. In our experience, we have had success extending the warehousing capabilities of IFS Applications by blending our automated workforce productivity suite which includes data collection, mobile devices, truck mounted devices and the ability to direct workers to the next task. This approach delivers functionality for picking and warehouse automation, driving efficiencies and automation to the work of people performing those functions.

A WMS might accomplish some of the same things, but brings the added cost of additional licenses for the application and database, additional server hardware, additional support and maintenance fees and additional staff time to maintain expertise on two disparate systems. Moreover, the integration of the ERP and WMS will add cost not only in the initial implementation but during each upgrade as the integration will need to be “uplifted” to accommodate new software for both the ERP and WMS.

Furthermore, integrating a WMS technology stack with a pre-existing enterprise suite like IFS Applications can effectively slow down processes and sabotage lean inventory initiatives. When a WMS and a manufacturing system are integrated, the typical means of doing that is to periodically refresh data in the WMS in a batch process from the manufacturing software. In situations when product must be shipped literally right after it comes out of manufacturing, that batch integration is often not fast enough. In these situations, an up-to-the-minute snapshot of the manufacturing system is important. Furthermore, many companies today are turning inventory too quickly to accommodate a batch process update to a WMS, and can experience even more problems when it comes to visibility from the manufacturing side of what is currently in inventory in the warehouse.

In a make-to-stock environment, manufacturers are always trying to make just enough product and have the correct amount of finished goods in inventory. Lacking up to date visibility of what is in the warehouse, it is harder to manage that lean inventory, and a manufacturer might make excess of a product. Moreover, product that according to the manufacturing system is still available in the warehouse may have been shipped, making it impossible to make good on promised delivery times.

These dynamics are illustrated by our experience with Richco, a global manufacturer of quality plastic fasteners, wire management devices, circuit board hardware, and custom components headquartered in Morton Grove, Ill. Richco had implemented IFS Applications, and also had a standalone, paperless WMS. When they started implementing IFS Applications, they found that there were some things in their pre-existing WMS that weren’t inherent in their new enterprise suite, but there were also some overlaps and redundant functionality. In order to bridge the gap between the two systems, it seemed like they would have to go back to a paper-driven picking process, which would have represented a step backwards. We were able to implement extensions we had developed cooperatively with other IFS customers to deliver the warehouse automation functionality Richco required, eliminating the need for a separate WMS.

Planning the Project

When preparing to implement warehouse automation technology – be that a full-blown WMS or tools to extend existing ERP functionality – there are a number of hard questions to be asked. Making all of the decisions necessary to chart a course of action should not be rushed as the results of these decisions impact the business for many years to come. Handling diverse customer needs Understand clearly what their customer requirements are.

Many organizations believe they have a single, static process they follow when serving all of their customers. Yet upon examination, most business customers have varying needs. Understanding and categorizing the varying needs of different customers can allow a company to create a more flexible solution as opposed to a rigid warehouse solution that meets 100 percent of the needs of 50 percent of your customers.

Consider for a moment that a business has high volume customers, high financial reward customers, demanding customers and low-volume customers. A manufacturer may have customers in different industries that need for things to be done in a slightly different way. In some cases, the expectations of, or regulatory demands placed on, the customer’s customer may impact the shipping process. In situations like this, integration not only with the manufacturing and inventory systems but customer relationship management systems may be critical. Diversity in order size alone may require parallel picking and shipping systems. Some customers you may order by the hundred gross while others order by the dozen. In such a situation 50 percent of orders might be packaged for delivery by UPS while others are palletized and prepared for intermodal transport.

Respecting the nature of the workforce

In planning a warehouse automation project, it is critical that management understand the capabilities of their workforce. Can they handle the learning curve presented by various automation solutions, and will they be receptive to the resulting change? Remember that, particularly if warehouse staff are performing manual processes, they may need a very concrete overview of how automation will affect them and benefit the company. Interdepartmental cooperation While warehouse automation is facilitated by technology, it is not strictly an IT-driven initiative.

The ultimate solution must be driven not only by customer needs, but by the business intelligence needs of manufacturing, which involves knowing what is in the warehouse at any given time, and by senior management who need to assess inventory levels and monitor business performance. Senior management must be directly involved at the early stages of a process to establish goals and deliverables. Once the goal is identified, it is essential that key and knowledgeable members of manufacturing, distribution and IT departments work closely to achieve that goal. In most cases, a lot of the information necessary to achieve warehouse automation resides in the manufacturing and customer relationship management systems, so a thorough audit of existing systems and functionality should be performed prior to selecting additional technologies to add to the mix,   ...end.

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