Information: the silent partner of the supply chain.
There once was a time when 95% inventory accuracy was a notable achievement. Other measures of operational success included a dozen inventory turns a year and an on-time shipment rate of 80%.
That was then. This is now. And not a single one of those numbers will earn anyone bragging rights in the warehouse or on the shop floor.
What has changed are the data collection and management systems quietly working in the background to coordinate inventory and operations that deliver finished goods.
The base of these systems is formed around automatic data collection (ADC) technologies such as bar codes. They identify inventory and capture that information. It is then fed to warehousing and manufacturing software packages that manage materials flow and operational activities. Labeling and shipping systems prepare orders for shipment just before customers are notified by electronic data interchange (EDI) of what will be arriving and when.
These data collection and management systems streamline operations while improving responsiveness to demanding customer requirements. In short, information is substituted for inventory, time, and effort.
The impact also extends beyond the four walls of the plant or warehouse. It is now routine for companies to be able to electronically supply customers with all the information they want about any order including its status.
As a result, what may have started as a bar code labeling project in receiving can easily become an information system that links suppliers and their customers at every stage of the supply chain.
Putting systems of this scale in place requires considerable planning, of course. But where do you start? The answer depends, in large part, on where you are now.
Libbey-Owens-Ford, for instance, started by looking at its known trouble spots. While many orders were filled routinely, others were delayed because of numerous inventory discrepancies.
The company proceeded to further evaluate current operations and its options for meeting goals such as reducing order turnaround time while increasing completeness and accuracy. Today, LOF is the only company in its industry able to manage all of its warehouse operations and transactions in real time with bar codes, warehouse management software, and radio frequency communications.
The box on the last page of this article lists common trouble spots in the flow of information at warehouses and manufacturing facilities. Try using it early in your planning process and be on the lookout for other trouble spots.
Another common starting point is top management's strategic goals. Lucent Technologies plans to manage production at multiple facilities with a single, distributed information processing system. Use of RFDC and bar codes in the same departments at all facilities is considered the groundwork for that system.
Regardless of the goals and scale of the data collection and management system, it is critical not to lose sight of its integrated nature. The planning process should include input from people in operations and IS as well as top management and all departments affected by the system.
The diversity of this group is its strength. While top management will keep a focus on overall goals, operations people will tend to the capabilities and functionality they need to better manage the plant or warehouse. The IS people, of course, will ensure that new hardware and software are compatible with existing systems, maximizing the flow of data.
With the goals of the project in front of the group, it is time to get. down to core data collection and management issues. These include:
* What data is needed?
* Who is requiring the collection of that data?
* How will the data be used?
* Who will collect it and where?
* How will the data be managed?
* Who needs to have access to different types of data?
* How will the data become useful information for decision making?
Discussions about these questions may well cover various views and priorities. However, this step of the process is essential to resolving issues that should not be a distraction after the system is installed. This is also when "wish lists" (often grand and costly) can be boiled down to "must haves."
The specifics of data collection and management hardware and software will then begin to fall into place.
You will want to evaluate the appropriateness of various ADC technologies and consider real-time vs. batch-mode data communication issues. Also important is the decision whether a warehouse management system or manufacturing execution system belongs in the plan. And later, how will that software interface with order management software and related systems? Beyond the four walls, you need to plan data interfaces (EDI, for instance) with suppliers and customers.
As you read through the following pages of this planning issue, look for tips on how these and other information system technologies can improve operations.
RELATED ARTICLE: Top five reasons industrial companies adopt EDI
Customer request 32% Speedier delivery of data 21% Less room for data errors 20% Reduced paperwork 16% Supplier request 8%
Source: Business Research Group, Newton, Mass.
RELATED ARTICLE: Seven steps to success with automatic data collection
At first, key managers at the retailer Value City Department Stores were skeptical that bar codes would improve their efficiencies at their three warehouses. Today, those centers use 30 fixed-position scanners and nearly 100 RFDC terminals to speed shipments to 78 stores. Here are some thoughts they have on why their system works.
1 Get the right people involved. Generally include someone from each department affected by the addition of automatic data collection.
2 Fix the right problems. Evaluate your operations, find the weak spots, and set the objectives at the start of the project.
3 Start small. The first ADC project has to be sized to available resources to ensure that it meets expectations without crippling setbacks.
4 Plan for growth. Size the hardware and software to accommodate increasing activity levels and inventory variety over the next few years.
5 Test the system before it goes live. Know that all the right links are ready to collect and manage the information that will become essential to meeting your customers' needs.
6 Train people as the system is debugged. Don't wait too long to make people comfortable with the system and how it changes the way that they do their jobs.
7 Expect the system to fail at least once. It's part of the startup mode and contingencies should be place to deal with a temporary blip in system operation.
RELATED ARTICLE: Beware of these red flags
If you answer Yes for many of these information flow trouble spots, then it is time to evaluate your data collection and management practices.
* Inventory arrives at the dock without advanced notice  yes  no
* Receipts are recorded manually  yes  no
* The inventory data base is updated hours after receipt information is collected  yes  no
* Putaway instructions are slow in being delivered to workers  yes  no
* Received inventory is not considered available to fill orders at the time of receipt  yes  no
* Assignment of storage location is manual  yes  no
* The central database is notified of the location of inventory long after putaway  yes  no
* Inventory slated for storage cannot be easily redirected to orderpicking or the shop floor  yes  no
* Quantities and location(s) of all SKUs are not available for production planning and order fulfillment  yes  no
* Inventory accuracy is less than 98%  yes  no
* Location of all work-in-process is known some of the time  yes  no
* Scheduling decisions are made without the benefit of real-time data  yes  no
* The wrong parts arrive at the wrong workstations at the wrong times  yes  no
* Production is consistently delayed because needed inventory and/or work-in-process cannot be located  yes  no
* It is difficult to alter the day's production schedule to accommodate unexpected events  yes  no
* Orderpicking is not computer directed  yes  no
* Routes consistently involve backtracking and deadheading  yes  no
* Orderpicking accuracy is less than 99%  yes  no
* Replenishment is initiated primarily by worker request  yes  no
* Rush orders cause a great uproar and conflict with scheduled order processing  yes  no
* Contents of a shipment cannot be confirmed  yes  no
* Customers frequently complain or file chargebacks for inaccurate shipments  yes  no
* Only standard shipping labels can be printed  yes  no
* Customers find out about a shipment only when it arrives at their dock  yes  no
* On-time shipments are a cause for celebration  yes  no
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|Title Annotation:||includes related articles on automatic data collection and trouble spots in information systems; automated data collection systems in the warehouse supply chain|
|Publication:||Modern Materials Handling|
|Date:||Apr 15, 1997|
|Previous Article:||ADC system trims warehouse costs by $350,000 a year.|
|Next Article:||Starting off right in receiving; streamlining the inbound flow of materials and data will help improve efficiency of downstream operations.|