Pace of Change

The design and layout of Australia’s warehouses and DCs is evolving to accommodate greater vol­umes and faster flow through of inventory in a broader range of industries.

“Where before you might’ve mainly seen the classic receive, put away, store, pick and ship model, there’s an increasing focus on cross-dock,” says Manhattan Associates managing director for Australia New Zealand Chris Stephenson.

“While organisations are much more conscious of the cost of inventory, they’re also high­ly motivated to improve service levels to their customers.”

“They’re taking a long, hard look at where inventory is carried and manufac­tured. The increase in offshore sourcing has resulted in greater use of cross-dock and flow through.”

“We’re also seeing an increase in ‘flow management’,” Stephenson says.

“Full range distribution cen­tres, all in mainland Australia have given way to a combination of national distribution centres with a full range and regional distribu­tion centres which carry a smaller, higher volume range.”

Despite the speeds required, Chris Stephenson says a good lay­out is still the backbone of every distribution centre.

“Slotting to engineered standards is still very important, especially as volumes increase in the larger facilities.”

RedPrairie managing director Mark Skipper points to higher, more versatile racking and an improvement in fork lifts and RF devices.

“Apart from a few very large facilities, we’re seeing less heavy use of automation such as ASRS and cranes,” he says.

“Heavily automated sites have proven to be while elephants in Australia. The ROI on those sites did not warrant their rollout beyond a couple of test sites.”

Super Cheap Auto Group general manager Group Logistics Graham Chad agrees, pointing to the intro­duction of partial material han­dling mechanisation, including the use of conveyor and automatic scanning equipment.

“It is now common place to use radio frequency personalised equipment, so our individual team members in DCs have the ability to communicate with each other, and RF barcode scanners for key activi­ties, such as picking.”

Chad believes there’s been a massive improvement in the key building blocks of supply chain engineering over the past five years, including domestic transport performance and supplier collabo­ration.

“Forward planning and key performance indicator (KPI) align­ment can now be enhanced in the retail sector,” he says, “along with developing joint market share growth plans that include logistics development agendas”.

“One of the greatest improve­ments is the use of an e-commerce interface to facilitate greater trans­parency of both expected stock arrivals and order management through to accounts payable.”

“So, the secret is out! You can replace inventory with quality and timely information from supply source through to a clean receipt at a retail store.”

According to Mark Skipper, Australian companies are not just looking to optimise inventory in the warehouse but also labour.

“Companies want to ensure that they have the right number of staff per shift to meet demand, rather their being short staffed or over staffed,” he explains.

“To do this they are increasing using a mix of full time staff and capable contract staff that can be called in with 12 — 15 hours notice.”

“We’re seeing more of our cus­tomers moving towards the ability to forecast labour requirements and to plan the short term against the work that’s in front of them,” concurs Chris Stephenson, “espe­cially as volumes and complexity increase in distribution centres.”

Stephenson also points to a more widespread adoption of voice tech­nology. Where previously it was restricted to very high volume dis­tribution centres, he says voice is now finding its way into mid-sized operations.

“Pick to light is really dead in Australia,” argues RedPrairie’s Mark Skipper.

“It’s expensive, costly to maintain and fails the ROI test in many cases. Many sites have now tried voice and the cost per user will continue to come down as other vendors release capable products.”

Managing director, Sage Business Solutions, Australia and New Zealand Mike Lorge maintains that in the past few years, orgnisa­tions have been combining voice, radio frequency, RFID and other hardware systems to improve real-time data collection.

“This in turn has been enhancing Warehouse Management Solution (WMS) per­formance, increasing accuracy and efficiency and leading to dramatic gains in overall supply chain oper­ations and cost reduction,” he says.

“There is a trend to integrate GPS systems into WMS so cus­tomers can log onto a portal and track and trace where their goods are in the supply chain. As it gets cheaper, these solutions will become more popular.”

While many clients tend to have RFID on their shopping list in the initial purchasing phases, Mike Lorge admits mid-sized businesses, typically find it’s beyond their price range when they begin to analyse the opportunity for ROI and value.

Mark Skipper says RFID is still experiencing a very slow adoption rate in Australia compared to the US and Europe.

“It’s being used on roll cages and expensive assets, but its use at car­ton and SKU level is almost non existent,” he observes.

“It will come. Electronic Shelf Labels have taken over 20 years to become affordable and their adoption now is still low.”

“RFID is similar, but its adoption will eventually be quick­er.”

Although currently unpopular in Australia, factory gate pricing is another worldwide trend gaining local traction.

“One of the direct benefits of factory gate pricing is a reduction in total industry fuel costs and carbon emissions,” Stephenson says.

“There may be a need for adjustment initially, but in this age of high fuel costs, factory gate pricing will drive down supply chain costs and increase efficien­cy.”

“At the end of the day, factory gate pricing is all about lowering the cost per case in the supply chain,” Skipper affirms.

“That will result in the lowest, most competi­tive price for the consumer. Factory gate pricing will lower fuel costs, carbon footprints, truck traffic and pollution.”

But what are customers really looking for in a WMS?

Chris Stephenson argues demand is rising for systems that are con­figurable in the hands of the user.

“Clients want less customisation, less configuration by the IT depart­ment and more flexibility for the DC or transport user,” he says.

“They definitely expect to keep up with emerging technology.”

“We’re starting to see a lot more interest in what we call ‘trading partner management’, which is a web-based application enabling the entry of purchase orders and advanced shipping notices.”

“In the 3PL stakes, the portal capability allows a 3PL customer to enter information about deliveries and customer order requirements.”

According to Sage’s Mike Lorge, customers primarily want freedom of choice.

“They understand that stand-alone and fully integrated solutions offer different advan­tages and disadvantages and they want the freedom to choose the best option for their business,” he says.

“A single, all-encompassing warehouse management solution that is fully integrated with each of an organisation’s key databases has definite appeal but there are serious implications.”

“If the server hosting the solution goes down, it brings the entire warehouse opera­tion to a grinding halt.”

“As warehouse operators become increasingly tech-savvy, we are finding they’re seeking out ware­house management solutions that offer the best of both worlds,” Lorge says.

“They want a solution that offers best of breed integra­tion capabilities but can also oper­ate as a stand alone solution if required.”

“WMS solutions offering this flexibility are currently viewed as best practice options by most organisations.”

Vendors agree other key factors in the purchase of a WMS continue to revolve around scalability, relia­bility and accuracy.

“Solutions that can deliver on these promises as the business grows are popular, as are tailored solutions that offer specific capabilities for particular industry segments, such as fuel and liquid storage distribution,” Lorge says.

According to Lorge, some of the most sought after functionalities include carton-splitting and multi-tenancy warehousing capabilities, picking and receiving, inventory and stock-take abilities.

“Companies are also looking for ERP integration and increasingly CRM integration to help them deliver more effective customer service, order request/entry and improved delivery times,” he says.

Looking to the future, Chris Stephenson says the ability to han­dle a multi-channel environment will be necessary.

“We haven’t seen multi-channel scenarios on a large scale in Australia, but in the US and Europe it’s particularly com­mon in retail,” he explains.

“It involves traditional distribution combined with web shopping where you’re shipping cases or pal­lets to the retail store but also pro­cessing small, mixed orders from individual retail customers across the web.”

Mark Skipper believes a strategic opportunity for RedPrairie is the truly integrated WMS/TMS, where­by the transport plan is created to meet customer demand and drives the warehouse pick/ship plan.

“This will enable both inventory, labour and transport to be highly tuned to meet customer demand and keep costs to a minimum,” he says.

Essentially, organisations are looking at optimising the whole supply chain from source to store rather than dealing with DC or transportation efficiency individu­ally.

“Mike Lorge says further down the track, transport optimisation will be a key to warehouse data centre technology of the future.

“Apart from enabling vehicles and drivers to be used more effectively, the benefits extend to other parts of a business.”

“For example, an organisation that has implemented complete end-to-end transport optimisation realises improvements to accounts.”

“As notification following the com­pletion of a delivery is instant, invoices can be entered and issued without waiting for paperwork to be returned.”

Leave a Reply

Send this to a friend