June 28, 2002

The Big Buy-In

Every customer relationship begins with a positive buying experience. Intelligent warehouse management is a great way to ensure one

by Jerry Sparger

Continued from Page 1

The Ideal WMS

Several attributes would enable a WMS to serve as the heart of the order entry and fulfillment cycle. In combination, these attributes create end-to-end information exchange and control of all information necessary to provide real-time, Internet-based order entry, processing and fulfillment, and customer service:

• Tracking. The WMS must track progress of order fulfillment as items are pulled from inventory, packed for shipment, and shipped. Each item in an order must be separately tracked to allow for partial fulfillment of an order. The WMS must always know the status of fulfillment of an order. When an item is pulled from inventory, the database can be updated with no human intervention, directly from the scanner.
• Control. The WMS must be able to control the pulling of inventory against a specific order. The WMS doesn't allow inventory to be pulled or packed against the wrong order, thereby ensuring the right inventory is shipped against the correct order. This eliminates accepting an order that can't be filled.
• Communications. The WMS must communicate its real-time knowledge about order fulfillment requests and inventory status to sales, order entry, and customer service. This process keeps sales fully aware of what's available to be sold, order entry aware of what orders can be committed, and provides customer service real-time status of orders for customer inquiries.
• Integration. The WMS must be easily and tightly integrated with appropriate legacy systems, such as ERP systems, to let the ERP access inventory and maintain inventory database integrity. The WMS must also integrate with any modules not in the WMS, such as sales force automation, CRM, and shipping systems.
• Multiple distribution center support. The WMS must contain, or tightly integrate with, any sales catalogs, and order entry and customer service systems. Orders can be placed from any location against any distribution point, so the WMS must integrate all warehouses, regardless of location, into one virtual distribution center. Decisions regarding the distribution point can be made based on business logic, such as amount of an item in inventory, shipping costs, and frequency of shipment of a particular item from each location.
• Internet enabled. In the Internet environment, the WMS can generate order screens that give customers the ability to enter orders online; even payment information can be processed by the WMS. Buyers can peer directly into the warehouse to view inventory and track their own order over the Internet. Buyers can even modify orders up to the time of final packing for shipment because their input will be communicated to the warehouse floor via a barcode scanner system.
• Business logic. The WMS should contain business logic to support knowledge of alternative items or complementary items to the desired items. The WMS "knows" what's available and what's not, so it can easily be instructed to offer items similar to those desired. It can also be instructed to offer products complementary to those just ordered.

Table 1 compares the process flow associated with a WMS that doesn't support order entry and control functionality vs. one that does. As you can see, real-time inventory control provides several advantages. For example, if your order entry and control functions are integrated with your order entry function, it's impossible to accept an order without having available inventory to fulfill it. Also, changing an order is much easier if the functions are integrated.

The stovepiped processes typical of businesses today don't support e-business because information must be processed entirely by one process and its associated technology platform before interacting with the next process. In this approach, all the functions required to provide real-time exchange of information are mutually exclusive: If a function in one process needs input from another process, it can't obtain the information, except at the process interface points. This prevents accurate and timely sharing of order information with the customer, and the availability of information for decision making. However, this approach is also the easiest to implement technically because each system — sales, production, and shipping — are separate systems that pass limited information among them at selective points of interface.

In contrast, a centralized database can provide real-time status and control of the entire order entry fulfillment service cycle. As you can see in Figure 1, the systems shown in the outer circles can be either separate products or modules of a single tightly integrated product. In both approaches, a database contains all information about orders and inventory; all status and control is driven by this database. The relationship among functions, shown in rectangles, is dynamic and real time. Any function can be designed to add or receive information as needed. In this case, the interaction among processes is constant and in real time, facilitating exchanges at all levels in the organization. The interfaces are at the functional level, without regard for departmental boundaries. In this manner, interaction among functions is more efficient and timely; there are no delays between functions because they interact directly.

Two Roads

The technology associated with integrating business functions across processes can be complex. There are two possible approaches.

One approach is to use emerging technologies for automated information sharing to tie multivendor software solutions together at the interface points required by the business processes. This is a good approach if a company has legacy systems involved in the order entry processing fulfillment cycle. XML is a good choice for exchange of such information. The difficulty associated with this approach, however, is that not every system supports XML. As a result, you can encounter a systems integration problem that requires business and technical consultants to implement correctly.

Multivendor solutions tend to be flexible, cheap, relatively easy to set up and operate, and optimized for the functions they do best. But the data flows and processes must be integrated into a single architecture in order to deliver optimal business improvement.

The other approach is to implement a WMS that has the order entry, fulfillment tracking, and customer service software already integrated. Most WMSs don't, but some have emerged that in fact have this capability. This approach is usually best suited for mid-sized distributors that use the Internet as an important means of sales. Companies that manufacture and distribute large volumes of the same item against single large orders will not gain as much utility from this approach as one that distributes a lot of smaller orders dynamically placed.

What It Takes

Rate This Article Rating: 1 (best) 2 3 4 5 (worst) Comments: Optional e-mail address:

If your company takes orders for products via telephone, Internet, or wireless network, you need to tightly integrate real-time order entry, fulfillment, and status. Placing a modern WMS at the center of your distribution operation will give your customers a superior shopping experience.

At the same time, reduction of hand-off errors will reduce operating costs and allow your sales staff to spend more time taking orders than answering questions about them. Ultimately, integrating cross-functional processes and technology will make it easier for your customer to do business with you.

Jerry Sparger [jrsparg@gbsonline.net] is president of Global Business Solutions (GBS; www.gbsonline.net) in Oakton, Va. GBS applies strategy, process, and technology to improve customer acquisition and retention.

• Privacy
• Your California Privacy Rights
• Copyright © 2008 United Business Media LLC