How can a company looking to scale up operations and prepare for the future know if WMS or/Order Management System and order management system is more useful for them than ERP?
All systems should facilitate process flow, and one's process should reinforce business strategy. A balance of speed, quality and cost makes one's process unique. One's performance improvement approach, like using value stream map, should take these elements in account beyond process improvement however, how can a value stream map highlight gaps in information flow that makes software implementation imperative?
One way is to use process boxes to measure process times, quality, manpower for information flows as well. That is, rather than having process boxes at the bottom of a value stream map, have similar process boxes near information flow lines in a value stream map as well. In this way, you can use a single value stream map to pioritize software or the usually process improvement opportunities. More importantly, being clear of your current information flow process times allow you to measure new process times.
Of course, if you have a good sense of what you want, you can go ahead to implement whatever software you think is useful, it is nevertheless still very useful to have your process documented and measured for benchmark, adding new customers and development of new services. Expand your value stream to cover financial flow and sales as well so that you know clearly the trade-offs between functions.
How about cheaper alternatives to softwares? There are plenty of cheaper alternatives around, using handphones as bar code scanners, and customizing excel are some examples. Cheaper, customizable softwares is attractive in its own way compared to established systems with lots of company references.
Thursday, May 31, 2012
Frequency Of Ordering By Store versus Out-of-Stock at Distribution Centre (DC)
We know that ordering and receiving products often reduces safety stock at the store and at DC because the lead time is shorter at store, assuming lead time to DC is unchanged.
What about the cost of ordering and picking? Wouldn't it be more expensive to order and pick the same product again at the DC? Especially picking when the picker will now pick in smaller quantities.
Well, it depends on what you view as sunk cost, no cost and what is of higher cost.
If there are deliveries are twice or three times a week, and you are ordering once, you want to consider ordering your highly variable and easy to pick products, like cartons of can drinks, twice or three times a week. This is because we can consider deliveries as sunk cost. The store needs to order other products for the 2nd or 3rd delivery anyway so it is marginal cost to order one more product. Picking 2 cartons is about twice the work of picking one carton, so it doesn't matter if the picker at warehouse picks is in one day or in 2 days. That leaves cost out of stock at store to be usually higher, when you factor in loss of goodwill and customer satisfaction.
Besides inventory savings in safety stock, one will also have a higher resolution of demand variation data (2 data points a week rather than 1)to calculate safety stock by pooling variation. More variation data means more confidence in variability and consequently, the safety stock available at DC to meet demand variability from all stores.
What about the cost of ordering and picking? Wouldn't it be more expensive to order and pick the same product again at the DC? Especially picking when the picker will now pick in smaller quantities.
Well, it depends on what you view as sunk cost, no cost and what is of higher cost.
If there are deliveries are twice or three times a week, and you are ordering once, you want to consider ordering your highly variable and easy to pick products, like cartons of can drinks, twice or three times a week. This is because we can consider deliveries as sunk cost. The store needs to order other products for the 2nd or 3rd delivery anyway so it is marginal cost to order one more product. Picking 2 cartons is about twice the work of picking one carton, so it doesn't matter if the picker at warehouse picks is in one day or in 2 days. That leaves cost out of stock at store to be usually higher, when you factor in loss of goodwill and customer satisfaction.
Besides inventory savings in safety stock, one will also have a higher resolution of demand variation data (2 data points a week rather than 1)to calculate safety stock by pooling variation. More variation data means more confidence in variability and consequently, the safety stock available at DC to meet demand variability from all stores.
Wednesday, May 30, 2012
Distribution Allocation & Routing Approach For City Deliveries/Pick-Ups
Challenge: How to review delivery operations with multiple trips to minimize vehicles used
Data needed: time trends of pickup/delivery volumes (weight, if truck weigh out instead of cube out).
Step 1: Applying http://www.compareroute.appspot.com/ to find the shortest distance to route all the points for each trip. Base on the route sequence, maximize load before using another vehicle to come up with new routes with possibility lower number of vehicles.
Step 2: Repeat stage one, but do it for consolidated volumes (sum up volume from multiple trips to the same point in a day) from to try and achieve one collection at each collection point in a day (consolidate for the day before). This will try to reduce collection to once a dayrather than 2 to 3 collections daily. Only when vehicle capacity, time, or next process is a bottleneck then we allow more vehicles for 2nd/3rd collections.
Step 3: We will probably have a good idea (by using pareto) of which route and collection points constraints the vehicle by capacity, or if time is the constraint. If capacity is a usually a constraint, we can try the low variability collection points collected by one vehicle, and high variability collected by another. If time is the constraint, we can have some vehicles to pick up and hub to max capacity and meet time constraints
Let me know if you have a better idea to solve the same challenge
Saturday, May 19, 2012
Point-Of-Sales (POS) For Responsive Supply Chains
Most POS still send data after midnight to a warehouse or distribution centre so that pick list can be generated for the next day. Same products can be picked for different outlets can be picked together this way.
In a competitive retail environment, and dense delivery locations like Singapore, it makes alot of sense to capture sales when it is made and update the warehouse/distribution centre when per-set parameters are breached, like sales per hour for a certain or group of SKUs. Transfer from lower sales outlets can also be activated this way.
Collecting this data also allows variability and consequently, safety stock to be more accurately calculated, compared to just consolidating sales once per day.
Greater granularity of sales information also helps on relate to staffing and other costs more closely. Steps can then be taken to vary cost more closely to sales.
With data collection getting cheaper. I imagine most POS machines should have time stamps on every transaction. Companies can choose to look at daily POS data first to see how their operations can cope. Going forward, looking at more granular data is the way to go.
In a competitive retail environment, and dense delivery locations like Singapore, it makes alot of sense to capture sales when it is made and update the warehouse/distribution centre when per-set parameters are breached, like sales per hour for a certain or group of SKUs. Transfer from lower sales outlets can also be activated this way.
Collecting this data also allows variability and consequently, safety stock to be more accurately calculated, compared to just consolidating sales once per day.
Greater granularity of sales information also helps on relate to staffing and other costs more closely. Steps can then be taken to vary cost more closely to sales.
With data collection getting cheaper. I imagine most POS machines should have time stamps on every transaction. Companies can choose to look at daily POS data first to see how their operations can cope. Going forward, looking at more granular data is the way to go.
Wednesday, May 16, 2012
Paper Orders, Delivery Orders and other documents
Many small SMEs still use paper documents for transactions. Ordering on forms to pass to the salesman and wait for him to bring it to the warehouse is common. Small companies may still find it expensive and inconvenient to bring iPads and tablets to take orders, especially when some customers insist on ordering by forms. In such cases, why don't you use OCR like image to text app on iPhone (http://itunes.apple.com/us/app/image-to-text-ocr/id431757093?mt=8)? Just take a image and send it to the warehouse for pickers to act asap. Records can also be easily kept for subsequent analysis. You don't waste space and effort filing paper records too. OCR is useful for SMEs because orders and requests comes in many different forms. Since it is difficult to standardize orders, might as well standardize how information is captured and archived.
Similarly a signed DO can be OCR-Ed for billing and analysis. In this case, a picture capturing the signature may also be useful.
Let me know if you have other use of OCRs too.
Similarly a signed DO can be OCR-Ed for billing and analysis. In this case, a picture capturing the signature may also be useful.
Let me know if you have other use of OCRs too.
Reviewing Delivery/Pickup Operations
As transportation routing is a NP hard problem, heuristics is usually used to give reasonable answers.
Many heuristics nowadays still ride on lots of codes and inputs. Additionally, companies usually divide delivery by zones and am unsure how they can review their entire delivery/pickup operations.
This is where compareroute.appspot.com will be useful. I had developed this simple application to allow companies to compare their current route with another routing heuristic. The only data needed in this web application is the delivery/pickup address. It works for unlimited points and is scalable globally.
To review all routes within a state or country. Put down all your delivery points in random in the text field. Press submit and let the heuristic tell you the route sequence. Validate it using the map that is displayed in the application visually. Then take your first vehicle to go from point A to B and so forth, until capacity is reached, then you use your 2nd vehicle.
In dense cities like Singapore, clockwise and anticlockwise sequence make a significant difference in routing. In addition, it also makes sense to consider load variability into routes.
Try my other web applications like routeanalytics.appspot.com and nearmyroute.appspot.com
Many heuristics nowadays still ride on lots of codes and inputs. Additionally, companies usually divide delivery by zones and am unsure how they can review their entire delivery/pickup operations.
This is where compareroute.appspot.com will be useful. I had developed this simple application to allow companies to compare their current route with another routing heuristic. The only data needed in this web application is the delivery/pickup address. It works for unlimited points and is scalable globally.
To review all routes within a state or country. Put down all your delivery points in random in the text field. Press submit and let the heuristic tell you the route sequence. Validate it using the map that is displayed in the application visually. Then take your first vehicle to go from point A to B and so forth, until capacity is reached, then you use your 2nd vehicle.
In dense cities like Singapore, clockwise and anticlockwise sequence make a significant difference in routing. In addition, it also makes sense to consider load variability into routes.
Try my other web applications like routeanalytics.appspot.com and nearmyroute.appspot.com
Tuesday, May 8, 2012
Using iPhone as bar code scanners
Wondering if you can use your smartphone as bar code scanners in warehouse? After all, warehouse management systems is all about associating location bar code with product/carton/pallet bar code. Now, do we need ruggardized, industrial grade scanners and software? Maybe yes, but maybe not, depending on scale of operations and product one is handling.
Try Kinoni or Tapforms.
Kinoni is available in all smartphone platforms and connect via wifi to a desktop or laptop. I should try how it works on 3G.
Tapforms is very interesting too as it allows one to save bar code scans into local smartphone memory for sync-ing later.
Of course, there are refinements like autoline feed capabilities you can use with Kinoni. For example, you can to receive my scanning two bar codes - product/carton/pallet bar code and location bar code, whereas for picking, you want to be directly to pick and scan the product/carton/pallet bar code to deduct inventory.
Best of all, these 2 apps are free! So this option is at least worth a look for most small and medium sized enterprises.
Try Kinoni or Tapforms.
Kinoni is available in all smartphone platforms and connect via wifi to a desktop or laptop. I should try how it works on 3G.
Tapforms is very interesting too as it allows one to save bar code scans into local smartphone memory for sync-ing later.
Of course, there are refinements like autoline feed capabilities you can use with Kinoni. For example, you can to receive my scanning two bar codes - product/carton/pallet bar code and location bar code, whereas for picking, you want to be directly to pick and scan the product/carton/pallet bar code to deduct inventory.
Best of all, these 2 apps are free! So this option is at least worth a look for most small and medium sized enterprises.
Sunday, May 6, 2012
Quick Wins in Process Improvement
I have shared how overworked SMEs can improve their internal operations by incentivizing ordering from customers and changing ordering quantity, frequency and consolidating deliveries suppliers earlier.
We all know ideal, technology driven solutions for companies, but it is the quick wins for companies that helps them get buy in for longer term supply chain performance improvements. Below are some common quick wins:
In terms of internal operations, many improvements can be gotten from imposing cut off times or ordering so that picking can be done in a consolidated manner.
Cost of picking if the cut-off time is not adhered to is additional time the picker goes to pick. Company can measure the additional cost of picking with the profits they are making so make sure that it makes business sense. Of impose additional charge of late orders.
Related improvement with cut-off time would be to reduce many points of contact with just one or two. In this way, there will be less need for communication between many parties over the same processes. Communication between too many parties wastes time and increase opportunities for misunderstanding.
Multiple entries of the same data is also another quick win. Setting up email ordering template and most often ordered items (with empty rows below for ad-hoc items) reduces multiple entries by encouraging right information from the source itself. It can also be sent to suppliers for their reference and record.
Another quick win would be to try to have quality control at source instead of at the end. We all know costs are high for low quality product to end customer. Quality control at source encourages staff in line to check and be responsible for their work. Very often, getting staff to sign on their work or sheet for a product helps improve quality. Any complaints later on can be traced to the staff in the related process for improvement instead of the end QV staff who probably do not know better what to improve.
Lastly, information flows can usually be streamlined. Whether it is duplicate forms to make it clearer for operations, writing or attaching needless information, time saved from quick wins can usually be gotten.
We all know ideal, technology driven solutions for companies, but it is the quick wins for companies that helps them get buy in for longer term supply chain performance improvements. Below are some common quick wins:
In terms of internal operations, many improvements can be gotten from imposing cut off times or ordering so that picking can be done in a consolidated manner.
Cost of picking if the cut-off time is not adhered to is additional time the picker goes to pick. Company can measure the additional cost of picking with the profits they are making so make sure that it makes business sense. Of impose additional charge of late orders.
Related improvement with cut-off time would be to reduce many points of contact with just one or two. In this way, there will be less need for communication between many parties over the same processes. Communication between too many parties wastes time and increase opportunities for misunderstanding.
Multiple entries of the same data is also another quick win. Setting up email ordering template and most often ordered items (with empty rows below for ad-hoc items) reduces multiple entries by encouraging right information from the source itself. It can also be sent to suppliers for their reference and record.
Another quick win would be to try to have quality control at source instead of at the end. We all know costs are high for low quality product to end customer. Quality control at source encourages staff in line to check and be responsible for their work. Very often, getting staff to sign on their work or sheet for a product helps improve quality. Any complaints later on can be traced to the staff in the related process for improvement instead of the end QV staff who probably do not know better what to improve.
Lastly, information flows can usually be streamlined. Whether it is duplicate forms to make it clearer for operations, writing or attaching needless information, time saved from quick wins can usually be gotten.
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