Reduced Supply Chains, Increased Expectations

Over the last few years, parcel shipping methods have undergone dramatic changes. The majority of those changes have been motivated by impatience, manifested in what the industry refers to as “supply chain shortening.” It’s an intriguing phrase that encapsulates a diverse range of customer attitudes and business strategies.

To the consumer, shortening the supply chain entails an unwillingness to accept the term “out of stock” or order processing delays, as well as an unwillingness to put up with lengthy delivery times.

To the seller, who must meet these higher customer expectations in some way, a shorter supply chain entails reducing inventory turns, “crossdocking” as much product as possible, and maintaining complete inventory on hand at all times. Merchants have promised 24-hour product delivery, in-stock inventories, and online order tracking since the dawn of the “dot-com” era. This standard of service is no longer optional; it has become the bare minimum acceptable offering.

Keeping both the consumer and the seller happy is the responsibility of parcel shippers, who must now perform at previously unheard-of levels of service and at ever-decreasing costs. Fortunately, distribution technology is not yet capable of achieving these lofty goals.

To design a parcel distribution center that meets current industry demands, a thorough examination of new processes and technologies is required. Fortunately, the objectives are straightforward: to expedite product movement through the distribution center while maintaining the highest level of accuracy and efficiency.

Traditional methods and systems are simply incapable of efficiently and cost-effectively handling the current plethora of products and order sizes. On the other hand, the new generation of efficient distribution centres handles more product faster and cheaper than ever before, with increased accountability and order visibility for the client. Of course, you cannot simply discard all previous systems and purchase a “one-size-fits-all” off-the-shelf system to resolve all your issues. It would be nice if it were that simple, but unfortunately, it is not.

New Technologies That Are Available

The most efficient distribution centers are those that are designed from the ground up. While a clean slate is preferable, if you are unable to do so and must adapt an ageing operation to current standards, a modular implementation of current technologies and practices will work almost as well.

One critical caveat: current software systems rely on technologically advanced material handling equipment and sophisticated hardware to achieve industry-standard performance levels, and all of the components work in unison. In other words, you cannot simply install new software on an obsolete system. Converting a manual operation to a highly automated and extremely productive automated operation may necessitate simultaneous system upgrades.

 Software. WMS (Warehouse Management System)

Systems today are more comprehensive than ever, supporting a plethora of automated processes that adhere to “best practise” methodology. Numerous “second tier” WMS providers, including Radio Beacon and Softeon, have developed extremely cost-effective solutions that are technologically advanced, offer modular implementation based on client requirements, and support the most complex distribution scenarios. When it comes to enabling current distribution processes, selecting the appropriate software systems provider is critical.

Within the Distribution Center, material movement is managed by systems technology. A more recent example is transaction software that utilizes voice recognition. In the 1990’s, The May Company, a major retailer in the United States, began implementing this technology in their distribution centres. This was truly avant-garde and experimental at the time. Now, with significant improvements in accuracy and efficiency, voice recognition systems routinely manage processes such as receiving, putaway, and picking.

 Identification of the Product.

RF ID, the most advanced production identification technology, enables users to programme a chip the size of a pencil tip or smaller with data capability that exceeds barcode scanning for receiving, inventory management, and shipping carton identification, and will be a WAL-MART requirement for major vendors by 2005. The Massachusetts Institute of Technology had established a test lab dedicated to the commercial application of radio frequency identification technology.

 Unit Classification.

For operations that perform true “fulfilment” (order fulfilment via the picking of individual units), the material handling world had now engineered systems to handle all levels of demand. “Pick to light” and “Put to light” systems are software-based alternatives to manual picking, and both types of systems are widely available. Even better, numerous suppliers offer low- and moderate-cost unit sortation systems. Even the most aggressive corporate ROI formulas can now justify unit sorting.

 Order/Carton dimensions.

Customer service levels have increased, resulting in a trend toward more frequent but smaller orders. This phenomenon has resulted in an increase in the number of small, lightweight cartons that must be handled in some way. The minimum size and weight of cartons that can be conveyed have changed, and equipment suppliers have adjusted to meet the demand.

Earlier mechanical conveying systems imposed unrealistic minimum carton weight requirements. A few suppliers have developed electronically controlled accumulation conveyors that are virtually weightless. For ease of maintenance and low operating costs, the most sophisticated conveyors of this type feature low voltage, independently powered rollers. The Versa conveyor company pioneered this technology for the USPS over a decade ago, and it remains the industry standard for carton handling.

Carton Sorting.

Increased facility capacity has also had an effect on outbound carton sortation technology. The majority of system designers understand that the ability to sort cartons quickly begins with the ability to merge product quickly and feed the sorter at a high rate. Intelligrated, for example, has developed ultra-high-rate product handling solutions that combine high-speed carton sortation with extremely efficient merge technology. As a result, a “plug and play” back end distribution system will be developed that will deliver high rates while maintaining anticipated product handling accuracy.

Opportunities for pre-owned equipment. There is one encouraging piece of news in this period of reduced corporate capital expenditures. There are locations where you can find a bargain, where relatively new technology can be purchased for less than you might believe.

I mentioned near the beginning of this article how sellers and distribution centres alike are under pressure to meet escalating customer expectations. To be sure, not everyone was circumspect about their promises or successful in living up to those expectations. As a result, a number of defunct dot-com businesses have abandoned millions of dollars’ worth of distribution systems, and their losses may be your gains. Finding the right partner for this second-market mechanization could result in hundreds of thousands (or even millions) of dollars in savings. It is a case of “right time, right place.”

 Conclusion

To summaries, accommodating a shortened supply chain requires developing a comprehensive and cost-effective distribution strategy that includes the use of moderately complex information systems and relatively sophisticated material handling technologies. This is a requirement of the market. You really do not have a choice if you wish to remain competitive. The good news is that there is little real risk involved, as the process is based on proven technology that generates compelling and guaranteed returns.

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