Understanding Warehouse

Management Systems and Automation

Understanding Warehouse
Management Systems and Automation
Allan Kohl
Senior Partner
KOM
International
(514) 849-4000
October 23, 2005
10:30AM 11:30AM EST
October 23, 2005
Page 2
Session Abstract
Session Abstract
Warehouse management systems (WMS) and other types of warehouse
technologies offer distributors many opportunities for improvingproductivity
and customer service.
This session, presented by a neutral third party, will provide tips on how to
manage the WMS selection process and insights on what a WMS can and
cannot do. Participants will hear about the factors a distributor has to
consider when justifying a WMS installation and help attendees answer a
number of important questions:
What do you want a WMS to accomplish in your distribution environment?
What are the most important factors in the decision process?
How can you find out what other companies have accomplished in the
installation of similar systems?
Can you expect the same results?
This session will also provide an overview of the market and a background on
major vendors.
October 23, 2005
Page 3
What Do Food Distributors Want?
Why Invest in a WMS?
What Do Food Distributors Want?
Why Invest in a WMS?
Drivers to invest in a WMS
More efficient use of space and racking
Improved labor productivity
Better selection accuracy
Better product rotation
Minimal dock crowding and congestion
Improved work prioritization
On-time truck departures
Improved labor control
Elimination of lost product
Clean Invoices
Better warehouse integration with Purchasing and the
rest of the supply chain
Ability to measure results to continuously improve the
operation
October 23, 2005
Page 4
What Makes Food Distribution So Different?
Unique Functional Requirements From a WMS Perspective?
What Makes Food Distribution So Different?
Unique Functional Requirements From a WMS Perspective?
Requirements Contd
FIFO & FEFO Tracking
Multiple Pick Strategies
Regulatory Compliance
Catch-Weights
Customer-specific item-
specific shelf life
requirements
(wholesale)
Configurable
putaway/letdown
optimization centric to
the pick slot
Aisle Flooding Controls
Requirements
Appointment
Scheduling
Cross Docking
Labor Standards
Load sequencing
Slotting
Voice Integration
Yard Management
Mixed Pallets
Mixed Products in
Slots
October 23, 2005
Page 5
What a WMS Can Do
Standard Features in a WMS
What a WMS Can Do
Standard Features in a WMS
Receiving
Directed Putaway
Directed Replenishment / Letdown Order
Selection
Inventory Control
Loading / Shipping
Task Interleaving
Labor Management
Management Reporting
Radio Frequency for all Functions
October 23, 2005
Page 6
WMS Features or Add-Ons
Depth of These Features Will Vary by Vendor-Solution
WMS Features or Add-Ons
Depth of These Features Will Vary by Vendor-Solution
Cross Docking or Flow Through
Appointment Scheduling
Engineered Labor Standards
Slotting
Yard Management
Voice Interface or Integration
Interfaces to material handling
subsystems (e.g. automation)
October 23, 2005
Page 7
What a WMS Can Not Do
Other Solutions Typically Required
What a WMS Can Not Do
Other Solutions Typically Required
Transportation Planning,
Optimization & Execution
Labor Force Scheduling &
timekeeping
Outside Storage Optimization
DC Capacity Planning & Forecasting
Warehouse Layouts
EDI
Labor Incentives
October 23, 2005
Page 8
WMS Complexity Pyramid
Solutions Will Vary in Depth & Breadth
WMS Complexity Pyramid
Solutions Will Vary in Depth & Breadth
Unit Load License Plates
Receiving Putaway Tracking Shipping Tracking
Stock Locator Compliance Shipping Labels
Inbound Order
Planning
Compliance Forms
Load Creation Advice
Order Wave Planning
Loading Mgmt
System-Directed Putaway
Opportunity X-Dock
Stock Location Mgmt.
RF Task I nterleaving
Wave Planning
Support
System-Directed
Replenishment
Outbound Order Management
Auto Wave
Planning
Planned
X-Dock
Physical Automation Support
Value
Added Services
Cycle Counting
Suggested Shipping
Cartons
Engineered
Labor Standards
Voice
Technology
Transportation
Management
Tier 1
Tier 2
Tier 3
SCE Events
Slotting
Yard Management
Labor Planning
SC Visibility
WMS Market Overview
WMS Market Overview
October 23, 2005
Page 10
WMS Market Size
WMS Market Size
WMS Market has been relatively flat since 1999.
The market was $1.067 Billion in 2004
and is forecasted to grow 5%/year to 2009.
Source :
ARC Advisory
Group
October 23, 2005
Page 11
Consolidating Market Place
20+ Recent Supply Chain Software Acquisitions
Consolidating Market Place
20+ Recent Supply Chain Software Acquisitions
Oracle
acquires TMS
vendor G-Log
Sep 2005
Francisco Partners
acquires WMS
vendor RedPrairie
May 2005
Retalix acquires
Foodservice vendor IDS
Apr 2005
Oracle acquires
Retail vendor Retek
Mar 2005
ClickCommerce
acquires WMS
vendor Optum
Feb 2005
Oracle
acquires ERP
vendor
PeopleSoft
Dec 2004
Infor acquires
ERP vendor
Lilly Software
Oct 2004
Comvest Investment
Partners acquires
WMS vendor
Catalyst International
Sep 2004
Infor acquires
Wholesale
Distribution
vendor NxTrend
J une 2004
Infor acquires
Wholesale
Distribution vendor
Daly.Commerce
Mar 2004
RedPrairie acquires
European WMS
vendor LIS Feb 2004
Retalix acquires
Grocery
Distribution/WMS
vendor OMI
International
J an 2004
3M acquires WMS
vendor
Highjump Software
J an 2004
Sterling Commerce
acquires OMS/WMS
vendor Yantra
J an 2004
SSA Global
acquires WMS
vendor EXE
Technologies
Aug 2003
PeopleSoft acquires
ERP vendor
J .D. Edwards
Aug 2003
2003 2004 2005
October 23, 2005
Page 12
When Best of Breed companies are acquired by private
investment houses or companies with few roots in the
software industry, customers can question how well they
understand software in general and their particular
industry in particular.
Depending on the research cited, 50 to 80 percent of
acquisitions never produce the anticipated benefits.
The WMS market withstood the surge in acquisitions this
year; the true test will be to see how well the acquired
companies revenues hold up in coming years.
Steve Banker ARC Advisory Group 2005 WMS Market Outlook Study
October 23, 2005
Page 13
Top 20 WMS Vendors in 2004
WMS Software Sales Only
Top 20 WMS Vendors in 2004
WMS Software Sales Only
NA NA $15 Swisslog
NA $NA $6 Yantra
(28%) $32 $23 Logility
(30%) $37 $26 Optum
(33%) $42 $28 Catalyst
3% $36 $37 MARC Global Holdings
43% $28 $40 Provia
72% $25 $43 HighJ ump Software
NA NA $50 SAP AG
110% $62 $130 RedPrairie (Including LIS acquisition)
NA NA $6 Radcliffe
NA NA $8 Foxfire Technologies
NA NA $15 Oracle
NA NA $18 Integrated Warehousing Systems (IRMS)
62% $133 $215 Manhattan Associates
$6
$8
$22
$48
~$74
2004 Revenue ($M)
NA NA Radio Beacon
NA NA Epicor
(31%) $32 HK Systems/ Irista
NA NA Daifuku
(26%) $100 SSA Global (Estimate)
3-Year Growth 2001Revenue ($M) WMS / SCE Vendors
October 23, 2005
Page 14
WMS Market Trends
WMS Market Trends
SAP and Oracle making in-roads into
WMS Market and capturing market
share
RFID adoption has been slower than
expected and has not yielded a
major windfall of revenue to WMS
suppliers
Market consolidation
Heightened competition for new
sales opportunities
October 23, 2005
Page 15
WMS Solutions for Food Industry
Key WMS Software Suppliers to Grocery & Foodservice
WMS Solutions for Food Industry
Key WMS Software Suppliers to Grocery & Foodservice
(Acquired Exe Technologies WMS, Standards)
(Acquired OMI and IDS both are food-centric
distribution packages with WMS offerings)
(Labor Standards ex-Gagnon)
(WMS, TMS, Slotting, Standards)
(WMS, Standards)
(Food-centric distribution package with WMS)
(food-centric distribution package with WMS
for smaller/foodservice firms)
October 23, 2005
Page 16
Ut r ec ht
Br ac k nel l
Dssel dor f
Nant es
Gl obal Headquar t er s
Of f i c es
Cent er of Ex per t i se
Mex i c o Ci t y
At l ant a
Sydney
Bangal or e
Shanghai
Tok yo
Si ngapor e
Manhattan Associates Offices
Manhattan Associates Offices
October 23, 2005
Page 17
Manhattan Associates
Customers in Grocery / FoodService/ Drug Distribution
Manhattan Associates
Customers in Grocery / FoodService/ Drug Distribution
October 23, 2005
Page 18
Manhattan Associates
Revenue Growth
Manhattan Associates
Revenue Growth
$214.9
$196.0
$173.4
$155.6
$133.1
$81.3
$62.1
1998 1999 2000 2001 2002 2003 2004
IPO 1998 (Nasdaq: MANH)
15 consecutive years of sales growth
Only 1 of 5 software companies profitable 10 years in a row
1400 employees
900 customers; 1,600 facilities
268 new installations & upgrades in 2004
With Evant acquisition Target revenue for CY 2005 is in the order of $235 Million
(est. only)
Revenue (Millions)
October 23, 2005
Page 19
Logistics
Hub
Management
Yard/Dock
Management
Delivery
Verification
Store
Locator
Appointment
Scheduling
Warehouse
Management
Transportation
Procurement
Labor
Management/
Slotting
Optimization
Transportation
Planning &
Execution
Supplier
Enablement/
Visibility
Reverse Logistics Management
Distributed Order Management
Stores Distribution
Shipment
Management
Trading
Partner
Integration
R F I D R F I D
Manhattan Solution Map
Manhattan Solution Map
October 23, 2005
Page 20
Ut r ec ht
Br ac k nel l
Dssel dor f
Nant es
Gl obal Headquar t er s
Of f i c es
Cent er of Ex per t i se
Mex i c o Ci t y
At l ant a
Sydney
Bangal or e
Shanghai
Tok yo
Si ngapor e
Retalix Offices
Retalix Offices
October 23, 2005
Page 21
Retalix Offices:
Retalix Offices:
South Africa
South Africa South Africa
Australia
& New Zealand
Australia Australia
& New Zealand
Israel
International HQ
Israel Israel
International HQ
UK
UK & Europe
UK UK
UK & Europe
France
France France
Italy
Italy Italy
USA
American HQ
USA USA
American HQ
United States
Plano, TX (HQ) Dayton, OH
Philadelphia, PA Omaha, NB
Pittsburg, PA Tucson, AZ
Detroit, MI Phoenix, AZ
Sacramento, CA
October 23, 2005
Page 22
Retalix USA WMS Customers
Customers in Grocery / FoodService/ Drug Distribution
Retalix USA WMS Customers
Customers in Grocery / FoodService/ Drug Distribution
TRICEPS Customers
Power Warehouse
Customers
October 23, 2005
Page 23
Retalix WMS Solutions
Retalix WMS Solutions
Power Warehouse
Originally developed by IDS (Now Retalix)
Triceps
Originally developed by OMI (Now Retalix)
Warehouse Management Features:
Support for Voice, RF, Labels
Slot Optimization
Labor Optimization
Labor Management
Yard Management
Delivery Automation
October 23, 2005
Page 24
Retalix Optimization Capabilities:
Retalix Optimization Capabilities:
Computer Optimized / Directed Task
Assignment
Software knows equipment constraints
Software supports task interleaving
Software is fully real-time
Example real-time let-downs / replenishment
Computer Optimized / Directed Location
Management
Software optimizes warehouse cube utilization
closest to the pick slot or closest to the dock on
putaway
October 23, 2005
Page 25
SSA Global/EXE Grocery Customers
SSA Global/EXE Grocery Customers
October 23, 2005
Page 26
SSA Warehouse Management Capabilities
SSA Warehouse Management Capabilities
CORE WMS CAPABILITIES
EXTENDED WMS CAPABILITIES
SLOTTING
LABOR
MANAGEMENT
YARD
MANAGEMENT
TRANSPORTATION
MANAGEMENT
VISIBILITY /
COLLABORATION
ANALYTICS
EVENT
MANAGEMENT
Receiving
QA/Inspection
Putaway
Inventory
Management
Wave
Management
Replenishment
Order Picking
Order
Consolidation
Physical Inventory/
Cycle Counting
Parcel Manifesting
Truck Loading
Value-Added
Services
Cross Docking
RFID/VOICE
October 23, 2005
Page 27
Slotting and Optimization
Product placement: the most
advantageous arrangement of
SKUs within a range of pick
faces or slots
Value-Added Services
Personalization, assembly, and
kitting of products and sub-
assemblies: mass customization
of products closer to the point
of sale
Yard Management
Coordination of yard movement
with receiving and order
fulfillment: visibility into
inventory sitting in trailers
Billing for 3PLs and Distributors
Billing accuracy and service:
fulfillment billing charges and costs
Voice-Directed Distribution
Worker productivity and accuracy:
advanced speech recognition
technology
RFID for Distribution
Compliance and automated shipping
and receiving: tracking the
movement of goods with Radio
Frequency Identification
Event and Performance
Management
KPI
KEM
SSA Warehouse Management Capabilities
SSA Warehouse Management Capabilities
October 23, 2005
Page 28
United States Europe:
Waukesha, WI (HQ) Stokenchurch, UK
Eden Prairie, MN York, UK
Raleigh, NC Brussels, Belgium
Charlotte, NC Paris, France
Oosterhout, Netherlands
RedPrairie Offices
RedPrairie Offices
October 23, 2005
Page 29
RedPrairie
Customers in Grocery / FoodService/ Drug Distribution
RedPrairie
Customers in Grocery / FoodService/ Drug Distribution
October 23, 2005
Page 30
RedPrairie Growth Analysis
2001 2002 2003 2004 Projected 2005
23%
0%
70%
13%
RedPrairie Growth Analysis
2001 2002 2003 2004 Projected 2005
23%
0%
70%
13%
23%
0%
70%
13%
$62M
$130M
RedPrairie
Revenue Growth
RedPrairie
Revenue Growth
October 23, 2005
Page 31
Visibility &
Event Management
Performance
Measurement
Inventory
Management
Trading Partner
Integration
Distribution
Mobile
Resource Mgmt. /
RFID Compliance
LENS

Event Management
Integrator
Scorecard
Reporter
DLx

Supplier
BillingCtl
DLx

Warehouse
SourceCtl
DLx

Transportation
DockCtl
COPLEX

Carrier
Tracker
FreightPayCtl
Yard
ParcelCtl
DLx

Mobile Resource
RFID Igniter
RFID Accelerator
DataCtl
DLx

Warehouse
SourceCtl
Yard
ParcelCtl
SlottingCtl
DeliveryCtl
QualityCtl
DutyMaster
BillingCtl
Workforce
Performance
Management
DLx

Labor
TimePayCtl
ModelingCtl
SlottingCtl
Transportation
& Global Trade
Management
Workforce
Performance
Management
DLx

Labor
TimePayCtl
ModelingCtl
SlottingCtl
Enterprise
Process
Management
Supply
Chain
Execution
Workforce
Management
RedPrairie Solution Map
WMS Selection Process
WMS Selection Process
October 23, 2005
Page 33
WMS Selection Process
WMS Selection Process
Standard Approach to Selecting a
Solution:
1. Gain executive commitment
2. Business Process Reengineering
3. Business Requirement Definition
4. Vendor Solution Research
5. Product Demonstrations
6. Vendor Solution Evaluation
7. Test driving the software
8. Due Diligence
9. Final Negotiation
October 23, 2005
Page 34
Building the Business Case
Building the Business Case
J ustifying a WMS through savings:
Code date losses
Damages
Fork Labor
Chase Labor
Data Entry / Clerical Functions
Energy Consumption
Lost Sales
Miscellaneous Assignments
Reduced Dock Congestion
Free whitepaper on cost justifying a WMS available at
http://www.komintl.com/pub/eng/WPapers/WPoverview.htm
October 23, 2005
Page 35
Business Process Reengineering
Business Process Reengineering
Preparatory Steps
Document and map a thorough study of your
current operations
Business reengineering process review
Define where you want to get to
Develop the RFI and RFP to reflect realistic
needs not a universal wish list
Interview prospective vendors to gain insight
Get help if you need it this is time
consuming!
October 23, 2005
Page 36
Business Requirements Definition
Business Requirements Definition
Establish a team of empowered change
agents
Include Sales, Procurement, Finance,
Merchandising for political buy-in
Develop process flows
Especially exception handling
Dont automate the bad
Allow vendors to visit your operations
Invest time up front to prevent back-end
scope creep
October 23, 2005
Page 37
Vendor Solution Research
Vendor Solution Research
Rules of thumb:
Software sales reps are not the most reliable
source of accurate information
RFP responses tend to be wildly exaggerated
Promised future releases of functionality may
never happen dont buy into them
Steps to take before signing:
Get all commitments in writing
Insist on system documentation
Conference room pilot to test drive the
software
Basically be paranoid at all times!
October 23, 2005
Page 38
Manage the Demo
Manage the Demo
Steps to take:
Do not allow the software vendor control the
agenda
Provide scripted demos with your data
Videotape the demo
Take notes on all issues
Watch presenter behavior patterns
Watch for multiple sessions being open
Expect the vendor to use their top talent
therefore too many I dont knows is not a
good sign
October 23, 2005
Page 39
Research the Vendor
Research the Vendor
Steps to take:
Evaluate the software development
methodology and release cycle
Visit their office and review support
desk logs
Service and support meet your staff
Investigate implementations done by
VARs
Check for user groups, user
conferences
Seek out as many discussions with
customers as possible
October 23, 2005
Page 40
Test Drive the Software
Test Drive the Software
Steps to take:
Insist on a conference room pilot at your
place at your expense
You should enter your data into into their
system
Flow through a scripted set of processes
Document all bugs and issues in writing and
include this in your contract
Only you should man the keyboard!
Would you buy a car without a test drive
first?
October 23, 2005
Page 41
Due Diligence
Due Diligence
Steps to take:
Investigate open litigation
Recognize most site visits are loaded
Reference calls many, detailed and
prepared
Demand detailed company financials
(e.g. DSO)
Study the revenue breakdown
Evaluate head count distribution
Visit head office meet executive team
October 23, 2005
Page 42
Negotiation & Contract Closure
Negotiation & Contract Closure
Steps to take:
Everything is negotiable license fees,
services rates, custom enhancements,
support costs, warranty, legal, down-
payment, etc.
You are only in a position of power
prior to contract signing
Research quarter-end or year-end
milestones to increase your leverage
Minimize your up-front skin in the game
in case you have to back out (e.g.
down-payment)
October 23, 2005
Page 43
Work To Be Done Before Go-Live
Work To Be Done Before Go-Live
J ust a few examples of the work that has
to be done before go-live
Develop a cutover strategy
Develop a system failure strategy
Reengineer existing operating methods
Document warehouse procedures for the new
system
Capture or validate product Hi x Ti data,
dimensions and weights with a CubiScan
Train Super Users (i.e. dedicated resources)
throughout the project
Integrate Purchasing people before the
cutover
Train the warehouse crew (e.g. 2 weeks
before implementation)
Warehouse Automation
Will New Automation Solutions Change the WMS Landscape?
Warehouse Automation
Will New Automation Solutions Change the WMS Landscape?
October 23, 2005
Page 45
Automated Food Distribution
Automated Food Distribution
Full Case Grocery Automation at
Albert Heijn in Netherlands:
ASRS Putaway
Automated Depalletizing
Automated Replenishment
Automated Order Selection
Only Receiving and Loading are
done by people
70% Workforce Reduction
100% store-specific sequenced
output
October 23, 2005
Page 46
The Albert Heijn (Ahold) Case
The Albert Heijn (Ahold) Case
504 Lanes per Module
7 Levels per Module
1800 Dry Grocery SKUs per
Module
4 Modules Per DC
10,000 cases/hr Output per
Module
Case Loading at 700/hour
October 23, 2005
Page 47
Automated Food Distribution
Sample Facility Layout
Automated Food Distribution
Sample Facility Layout
October 23, 2005
Page 48
Automated Food Distribution
Automated Food Distribution
Automated Retail Grocery
DCs are now at work here
in North America
As these facilities become
more affordable, more
companies will deploy them
for strategic advantage
European firms are now migrating automation solutions
over to North America.
Reduced building footprint and labor forces will be required in
future as more companies buy into this strategy.
October 23, 2005
Page 49
Thank You
Questions /
Comments?
Understanding Warehouse
Management Systems and Automation
Understanding Warehouse
Management Systems and Automation
Allan Kohl
Senior Partner
KOM
International
(514) 849-4000
October 23, 2005
10:30AM 11:30AM EST