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The evolution of warehouse management systems WMS is very similar to that of many other software solutions. Initially a system to control movement and storage of materials within a warehouse, the role of WMS is expanding to including light manufacturing, transportation management, order management, and complete accounting systems.
To use the grandfather of operations-related software, MRP, as a comparison, material requirements planning MRP started as a system for planning raw material requirements in a manufacturing environment.
What is clear is that the expansion of the overlap in functionality between Warehouse Management Systems, Enterprise Resource Planning, Distribution Requirements Planning, Transportation Management Systems, Supply Chain Planning, Advanced Planning and Scheduling, and Manufacturing Execution Systems will only increase the level of confusion among companies looking for software solutions for their operations.
Even though WMS continues to gain added functionality, the initial core functionality of a WMS has not really changed. The primary purpose of a WMS is to control the movement and storage of materials within an operation and process the associated transactions.
Directed picking, directed replenishment, and directed putaway are the key to WMS. The detailed setup and processing within a WMS can vary significantly from one software vendor to another, however the basic logic will use a combination of item, location, quantity, unit of measure, and order information to determine where to stock, where to pick, and in what sequence to perform these operations.
At a bare minimum, a WMS should: Have a flexible location system. Utilize user-defined parameters to direct warehouse tasks and use live documents to execute these tasks. Have some built-in level of integration with data collection devices. Not every warehouse needs a WMS. Certainly any warehouse could benefit from some of the functionality but is the benefit great enough to justify the initial and ongoing costs associated with WMS?
Warehouse Management Systems are big, complex, data intensive, applications. They tend to require a lot of initial setup, a lot of system resources to run, and a lot of ongoing data management to continue to run.
Often times, large operations will end up creating a new IS department with the sole responsibility of managing the WMS. WMS will reduce labor costs!
WMS will increase storage capacity! WMS will increase customer service! WMS will increase inventory accuracy! The implementation of a WMS along with automated data collection will likely give you increases in accuracy, reduction in labor costs provided the labor required to maintain the system is less than the labor saved on the warehouse floorand a greater ability to service the customer by reducing cycle times.
Expectations of inventory reduction and increased storage capacity are less likely. While increased accuracy and efficiencies in the receiving process may reduce the level of safety stock required, the impact of this reduction will likely be negligible in comparison to overall inventory levels.
The predominant factors that control inventory levels are lot sizinglead times, and demand variability. It is unlikely that a WMS will have a significant impact on any of these factors. And while a WMS certainly provides the tools for more organized storage which may result in increased storage capacity, this improvement will be relative to just how sloppy your pre-WMS processes were.
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Beyond labor efficiencies, the determining factors in deciding to implement a WMS tend to be more often associated with the need to do something to service your customers that your current system does not support or does not support well such as first-in-first-out, cross-docking, automated pick replenishment, wave picking, lot tracking, yard management, automated data collection, automated material handling equipment, etc.
The characteristics of each item and location must be maintained either at the detail level or by grouping similar items and locations into categories. An example of item characteristics at the detail level would include exact dimensions and weight of each item in each unit of measure the item is stocked eaches, cases, pallets, etc as well as information such as whether it can be mixed with other items in a location, whether it is rackable, max stack height, max quantity per location, hazard classifications, finished goods or raw material, fast versus slow mover, etc.
Although some operations will need to set up each item this way, most operations will benefit by creating groups of similar products. For example, if you are a distributor of music CDs you would create groups for single CDs, and double CDs, maintaining the detailed dimension and weight information at the group level and only needing to attach the group code to each item.
You would likely need to maintain detailed information on special items such as boxed sets or CDs in special packaging. You would also create groups for the different types of locations within your warehouse. An example would be to create three different groups P1, P2, P3 for the three different sized forward picking locations you use for your CD picking.THE TRAGEDY OF THE COMMON REVISITED by Beryl Crowe () reprinted in MANAGING THE COMMONS by Garrett Hardin and John Baden W.H.
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