ERP vs. WMS
An Enterprise Resources Planning system plans and manages the logical business activities of a distributor (e.g., working up a quote, sales order entry, generating recommended purchase orders, doing accounting).
A WMS is a separate, optional software package that plans and manages the physical arrangement and activities of a warehouse. Bar code readers or other reading devices are not strictly needed for a WMS to function properly, but as a practical matter, some devices must be used or productivity would be abysmal. (These devices are described in another article). Printers are needed. A WMS must be interfaced with the ERP to exchange transactions that are used to initiate warehouse activities (e.g., picking an order) and update WMS data, and update ERP data (e.g., quantity received on a PO) and initiate ERP activities (e.g., generating invoices).
What is a “Warehouse”?
The first step in installing a WMS is to define the ID of each bin (aisle, bay, level and bin), and then define “zones”: name and ID numbers of the aisles in each zone. For example, a bulk zone is where full pallets are stored. Zones can also be defined as “required” OR “prohibited”; e.g., items with an MSDS code, must be stored only in zones defined as MSDS.
And, there are several other characteristics that can be defined for each zone.
For each bin ID, capacities and several characteristics can be defined. For example, the weight capacity, to preclude WMS-recommendations that would overload a shelf.
For each item that might be stored in the warehouse, characteristics can be defined (e.g., store serial number while item is in the warehouse).
Capacities can be defined for each type of truck, forklift, pallet jack, etc., as they can for each type of shipping pallet, carton, etc.
Most WMS allow more than one item to be stored in a given location, which can reduce storage-space requirements. Based on bin characteristics and zone requirements/restrictions, and item data and characteristics, a WMS determines which items can share which bins.
Planning for Receipts
Some WMS can store a vendor-transmitted EDI transaction called an Advance Shipping Notice (ASN), that is sent before the order arrives. And, by day, these WMS use ASN data to determine which receiving dock will be used by each inbound truck, and where each item in each receipt will be put away. Some WMS can create an hour by hour dock-assignment and put away plan (if an ASN contains the expected time of arrival).
Receiving and Put Away
Because not all items are received via an ASN, every WMS can accept data on each receipt, at the time of receiving, and determine if there is a problem. And a WMS also uses this data to determine where each item will be put away. This may seem elementary, but a warehouse can be defined with “floating” storage locations -- subject to prohibitions or required-storage, bin availability, and other factors, the put away location for an item is determined by the WMS. Even in a fixed storage-location warehouse, there can be overflow and pick zones, so the dynamic assignment function could be helpful.
Furthermore, a WMS can generate a "license plate" label for each pallet received. Each label shows the location ID(s) and quantity for each item; data that is also stored in the WMS, and used to validate the reported put away locations.
If there is a QC process, it actually occurs before put away takes place. If an inspected item is found to be defective, a WMS can store data about the defective item. And a WMS would determine the temporary storage location of that item – subject to the prohibitions, requirements and other factors mentioned earlier.
If bar code reading is in use, this is the step where codes are read for readability and validity. And this is the place where new or replacement pallet-level, carton-level and unit-level bar code labels would be printed.
This function is used only in warehouses with separate bulk/overflow and picking zones -- items are moved from the bulk zone to the pick zone. (Its called pull down, because overflow quantities are often stored on the top shelves right above the corresponding pick bins). Based on bin data and replenishment parameters, the WMS determines when to pull down items. It prints tickets that define what and where to pull from, and where to put each pulled item. If the labor management function is in use, the WMS determines who gets which tickets. Some WMS can use sales order data , bin data and replenishment parameters to print the tickets in advance of a need.
Unlike an ERP, a WMS can also “pick to truck” – for each delivery truck, generate one or more pick tickets. And a WMS can generate a “mini-wave” pick ticket(es) for picking a few individual orders with items in common, such that all the items to be picked would not exceed the capacity of the forklift or pallet jack to be used. After the items are brought to a staging area, they are segregated by individual order. Furthermore, a WMS can determine when an item for an order should be picked from bulk/overflow, not the picking zone (and generate separate pick tickets).
A WMS can assign orders/tickets to specific pickers, based on real-time availability or projected availability.
Pack, QC, Load
By order, a WMS can determine the kind of shipping carton(s) needed, and calculate the quantity needed. And, as each carton is packed, the WMS can store data on the items in each carton/pallet – which requires the use of RF guns to read bar codes. Data on items rejected at this point is also stored.
Where there is more than one truck that can deliver to a given route, a WMS can determine which orders should be loaded on each truck, and print a loading report for each.
And as trucks (including common carrier) are being loaded, a WMS can store data about the truck and the orders loaded on to it – enabling customer service people to quickly respond to the question “Where’s my order?.”
(Re)Determining the Bin Arrangement
A possible step in installing a WMS is to use it to determine where each item should be stored, initially or “permanently.” This can be done for warehouses that involve fixed locations, and must be done for those that involve floating locations.
Regardless of initial use, this function can be used annually to try to increase productivity.
Labor Management, Standards and Productivity
A WMS can be used to store standards by type of task: receiving, picking, etc. And, it can be used to store data on task times and quantities involved; e.g., start and stop time for picking an order, and the quantities picked. Then it can generate a productivity display (e.g., lines picked per hour), and if standards are in use, also show the variance; then print a report.
Obstacles To Success
First the possible benefits: not having to add on to the warehouse, or move to a larger one; reduce errors, which results in happier customers (and less lost business); increase productivity and reduce lost time, perhaps to the extent that staff can be reduced. “Possible“ because the warehouse must be arranged and now function in a way that doesn’t prevent obtaining the benefits; and good procedures and controls must be in place in the warehouse.
Cost is the reason that many warehouses do not install a real WMS. And some of the distributors that do install a WMS learn too late that “cost” includes many things that the WMS vendor “forgot” to mention – cash costs and time costs.
An unbiased estimate of specific, attainable benefits and savings, and projection of all the costs (including any warehouse changes and interfacing to the ERP system), should be made before getting quotes or seeing demos. For some warehouses, many of the benefits of a WMS can be obtained by using cheaper technologies or other measures not involving much expense.
©2009 General Business Consultants, Inc.
About the Author
Dick Friedman is a recognized expert on warehouse operations, WMS and warehouse technologies for foodservice distributors. He is a Certified Management Consultant and is unbiased, so he does NOT SELL computer systems, WMS or warehouse technology. Dick applies more than 30 years of experience to help distributors objectively determine if a WMS or warehouse technology would be worthwhile. He also helps prevent warehouse errors and increase productivity, often through inexpensive, quick changes that don’t require a WMS or any technology. Call 847 256-3260 for a FREE consultation, or visit www.GenBusCon.com for more information or to send e-mail.