Visibility: Warehouse and Logistics Excellence

These days everyone wants what they can't see. For logistics managers, "visibility" is the Holy Grail -- because it offers the tantalizing promise of better service, higher margins and fewer operational crises.

20/20 operational vision touches every point of the extended supply chain, with its interlocking networks of distribution centers, suppliers, partners and customers. Yet one "corner" of this network is often overlooked: the warehouse. Once seen as simply a place to store goods, warehouses are taking their rightful place in the supply chain. As the critical link between consumers and producers, extending the call for visibility to the warehouse is an important component in any strategy to synchronize supply and demand.

Effective supply chain visibility means more than just seeing the status reports on yesterday's shipments. According to Forrester Research, it's "a firm's ability to collect and analyze data, generate specific recommendations and match insights to strategy." In the warehouse, visibility is often categorized by "supply" (or "inbound") and "demand" (or "outbound") views.

Inbound visibility is the first critical view of inventory levels within the warehouse. It begins with a purchase order and ends after processing the receipt of goods. Information from the supplier network - in terms of lead time, delivery accuracy and reliability - is the data available in this view.

Relying on timely and accurate inbound data, outbound visibility focuses primarily on inventory, orders and shipments. Because logistics and delivery data are critical links between customers and the operating activities of the business, real time access to information generated as part of order entry, creation, fulfillment and delivery activity must be visible to boost the bottom line.

The challenge in most warehouse networks is the process by which this information is captured, stored and used. Most organizations are bound by batch-oriented snapshots of current inventory positions, in some cases with yesterday's ending balance. Today's decisions require point-in-time accuracy.

As logistics and warehousing take on a more strategic role in the supply chain, the need to overcome operational road blocks to flexibility increases exponentially. Answering a few simple questions will help determine if warehouse operations are positioned to scale for demand-driven delivery:

• Variances: How large are they, and how do they compare against industry benchmarks and world-class peers?
• Safety stock: How much is really enough?
• Order processing: Is it measured in minutes? Hours? Days?
• Inventory: At any given time, what's on the shelves? What SKUs are running low or need to move? How immediate is access to a view of the demand pipeline, orders in queue and in transit?

True Visibility Delivers

Stonewall Kitchen, the specialty food retailer and manufacturer, ran headlong into the limitations of a manually driven warehouse system. The company was shipping 8,000 products daily from two warehouses and did half of its business during the holiday season, making pinpoint accuracy essential. But inventory was monitored only quarterly, and variances ranged from fve percent to 10%, deadly in any business where margin pressures are unforgiving.

Lack of immediate visibility into what was coming in and out of the warehouse jeopardized the company's larger goals of an extremely lean supply chain that would meet the service level agreements required by retailers like L.L. Bean and Williams-Sonoma. To reach the 99.9% level of inventory accuracy that would support this initiative, Stonewall Kitchen needed to track inventory across distribution channels and partners, thereby calibrating stock-on-hand.

In less than a year, Stonewall Kitchen deployed a customized off-the-shelf WMS that added 360° real-time visibility of inventory, orders in the queue and activity analysis, intuitively recommending where products should be placed for easy accessibility. The company also relies on the solution for knowledge-based recommendations for warehouse management, including how many employees to allocate to picking, packing or shipping on any given day - vital for managing seasonal peaks.

Taking Business to the Next Level

The first step to better warehouse and supply chain visibility is gaining knowledge of your business resources. Without visibility of products, inventory, human capital, infrastructure and capabilities, you can't reasonably expect to get complete, up-to-date or even understandable data from a partner's network.

The next step is to correlate those views and metrics with specific data from both internal and external systems. Good information is based on accurate data. Selecting and accessing the right data is the key to visibility. Data needs to be formatted, aggregated and oftentimes integrated from a variety of business applications before it can be presented in easy-to-read graphs, dashboards or other analytic tools.

The final step to gaining control through visibility is integrating the data generated from daily operational activities to day-today operational decisions. The best way to do this is with an advanced WMS that monitors data within expected parameters and alerts management of problems automatically.

Many systems are available, but in most cases, a hybrid - a moderately customized, off-the-shelf application - is most effective. They should be ready to deploy in less than one year, since no business can afford any longer. Hybrids also offer customized features and reporting. The best solutions will introduce and integrate new business processes that support - and accelerate - growth.

Carl Brewer is the president of Integrated Warehousing Solutions, a leading provider of supply chain execution solutions. Brewer is available at cbrewer@irmswms.com.

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