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    Warehouse Management Systems: Why they make sense

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     Warehouse management solution is an essential component, says, Souma Das, VP (Sales) and MD, Infor India which is needed to ensure timely availability of products, reduction in costs and continued customer loyalty.

     
    The Indian retail industry in recent years has witnessed the entry of a number of brands, primarily due to the ever-evolving consumer tastes, the limited opening up of the retail segment to foreign investors and the introduction of modern organised retail. Factors such as urbanisation, credit availability, government interest in infrastructure and the increasing disposable income of individuals have further contributed to the unprecedented growth of the retail segment in the country.
     
    However, the increasing demand and the changing preferences of consumers make the task of the  retailer even more challenging. The complexities increase further due to a retailer’s association with multiple suppliers, vendors, manufacturers and so on. At the same time, managing the inventory and resources involved in the operation of a warehouse brings up challenges that retailers have to address to ensure timely availability of products on the shelves.
     
    Enterprise applications such as supply chain management (SCM) have become a key component that drives the supply chain function for retailers. However, merely having a SCM in place does not ensure timely availability of products, reduction in costs and continued customer loyalty. Warehouse management solution is an essential component needed to ensure all of these.
     
    Utility of WMS
     
    The role of warehouse management system (WMS) is expanding to include light manufacturing, transportation management, order management and complete accounting systems. WMS continues to gain added functionality. One of the major leaps forward in WMS has been the voice recognition-based system. This consists of WMS software, headsets, voice-pick terminals with the related software and an RF network. Employees in the warehouse have a headset to receive and acknowledge orders through spoken language. This means they have their hands free and data does not have to be entered, nor the articles scanned. The result: boosted productivity, enhanced process quality and reduced errors.
     
    Simplifying WMS
     
    The primary task of a WMS is to manage the resources involved in the operation of a warehouse. This includes space, labour, equipment, tasks and material flows. The issues concerning WMS are:
     
    •• Ineffective order management
     
    •• Excessive labour costs
     
    •• Improperly managed compliance
     
    •• Inefficient asset use
     
    •• Inventory integrity
     
    Need for WMS
     
    The preferences and requirements of customers have their repercussions on a retail organisation and the related processes, and that includes the warehouse too. For example, one of the current trends is the increasing prominence of “Express” stores. These focus on consumers who do small, frequent shops, but value the convenience and proximity of a store. A number of adjustments must then be made to WMS to cater to this trend. For example, the European retail giant Carrefour uses Infor WMS to optimise depot management for these types of local stores by applying the principle of ‘multipicking’. This means that three Express stores are simultaneously prepared during one picking instance through roller containers. This is in stark contrast with hypermarkets where one forklift truck packs one full pallet for the outlet.
     
    It should also be understood that retailers are unlikely to implement a WMS in isolation. It will penetrate through the entire supply chain. Big retailers such as Wal-Mart and Home Depot are pushing for the perfect order. They want orders delivered quickly, accurately and customised to their needs – all at lower cost.
     
    Manufacturers and distributors are expected to turn around orders and deliver in 12- to 24-hour cycle time as compared to the earlier 36 to 48 hours. They are punished with fines and charge-backs if orders are improperly labelled, packaged or delivered. Elaborate packaging has become common as retailers demand more in terms of boxing and delivery formats. Managing these changes effectively demands WMS.
     
    Retailers are recognising these challenges as an opportunity to strengthen their operations and increase profitability. These top performers are meeting today’s warehouse visibility, agility, and productivity challenges by investing in advanced WMS solutions. 
     
    For a country like India, a vital point to bear in mind is the logistics costs. These are very high compared to other developed countries, accounting for around 14 per cent of the country’s GDP. The constituent costs break down into: transportation: 35 per cent; inventory: 25 per cent; losses: 14 per cent; packaging: 11 per cent; handling and storage: 9 per cent; and 6 per cent for the remainder. WMS plays a major role in reducing these costs. As margins continue to be squeezed, it is critical for retailers to identify and strip out inefficiencies to provide the right platform for growth.
     
    Benefits of WMS
     
    WMS applies right across manufacturing, distribution, logistics and retail. The specifics of implementation will change from industry to industry but they can all benefit. The analyst house ARC ranks the “logistics” vertical as the biggest area of WMS growth (by CAGR) between 2009 and 2014, followed by food and beverage manufacture.
     
    In an increasingly crowded retail market, it is important that companies manage high-volume SCM processes from beginning to end meet consumer demands and improve their bottom line. To do so, they need to address the complexities of the market such as meeting industry compliance mandates, sustaining reliable inventory visibility and managing tracking processes.
     
    The benefits of WMS include:
     
    •• WMS systems can satisfy government and industry compliance requirements, automate inbound and outbound processing, and improve process, location and inventory visibility through efficient tracking procedures.
     
    •• The implementation of a WMS along with automated data collection increases the accuracy of stock, reduces labour costs and improves service by reducing cycle times.
     
    •• Better accuracy means that inventory reduction will follow a reduction in the level of safety stock required.
     
    •• WMS provides the tools for organised storage, which leads to increased storage capacity. 
     
    The functionality of WMS is critical.It is essential to serve the customers and remain competetive.
     
     
     
    This article was originally published in July 2011 issue of Images Retail.