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Solving Manufacturers’ Pain Points with a WMS

WMS
Archives, Global Logistics, Global Trade Daily, Warehousing

Solving Manufacturers’ Pain Points with a WMS

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Generix Group is a global leader in warehouse and logistics solutions and based on internal research of customers around the globe, the 7 most common pain points that affect the manufacturing industry are:

-Inventory Visibility
-Quality Assurance (QA)
-Risks of miscommunication and disruptions often from incorrect and incomplete data
-Recalls
-Omnichannel Distribution
-Relying on predictive data
-Just-in-time-delivery

When choosing the right WMS for your business you should consider how a WMS will resolve your particle pain point and improve the rest of your warehouse. The right WMS should be both customizable and flexible enough to resolve any pain point in your operation now or in the future. It should also provide your business with the tools and resources to increase efficiency and expand.

Visibility within the warehouse

 

An essential tool of any WMS is traceability. For inventory, QA, and recalls the ability to locate the item in real-time anywhere within the warehouse whether it is in a location or with a worker is imperative. It’s also important to trace the history of your items. If an item is recalled or on QA hold the complete history of the item should be readily available, so that you can find a solution with as little interruption to the warehouse as possible.

Traceability is also the solution to minimizing incorrect and incomplete data. By tracing inventory through the warehouse in real-time the WMS has many data points that the user can quickly and easily view. This provides a roadmap to quickly locate and fix any error.

Using Predictive analytics

 

The right WMS should be capable of expanding with your warehouse and growing into new areas. For example, if you are adding a new sales channel such as ecommerce, you will need a WMS capable of managing different vendors and workflows. In addition, a WMS capable of collecting and analyzing predictive data is important for any business relying on consumer demand. In turn, consumer demand drives the industry, any warehouse that can predict the consumer has an advantage over the competition.

Businesses utilizing just-in-time delivery should look for a WMS that has automated full cycle order management, along with the features listed above. Automated order management can greatly reduce any error in order fulfillment by quickly and automatically order items necessary to fulfill any order. Combine this feature with predictive analytics and your WMS can expand your business tremendously.

Natesan Andiyappillai published an article in the International Journal of Computer Applications. According to his research data analytics play a key role in optimizing logistics. He concluded that “Logistics business becomes complex due to globalization and ever-changing market and consumer behavior. And it is critical for the business not only to use the sophisticated IT WMS systems to capture the right data as much as possible but also to analyze the data extensively and optimize the logistics channel accordingly to be competitive in the market.”

As omni-channel driven demands become the norm, with resulting customer satisfaction harder to achieve, supply chain professionals need to leverage advanced WMS technology to keep their operations nimble, efficient, and scaling – especially in these volatile times.

Given Generix Group’s completeness of vision and ability to execute, as recognized once again by the Gartner analyst community, our Solochain WMS is well positioned to help companies needing a modern, flexible, and agile solution that can easily adapt to their changing needs.

We invite you to contact us to learn more.

This article originally appeared here. Republished with permission. 

backorders
3pls, Archives, Global Logistics, Global Trade Daily, Warehousing

3 Pros and Cons of Backorders in Ecommerce

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With the 2020 tumult disrupting global supply chains and increasing consumer reliance on online shopping, there’s a growing interest in ecommerce backorders as a way to safeguard revenue. Uncertain availability means businesses can face listing a product as either unavailable or on backorder. While backorders may seem to be a smart path because it contains potential profits, businesses may also be putting customer lifetime values at risk.

So, let’s look at the pros and cons of three critical areas governing backorders to help ecommerce businesses determine if they’re a smart path forward.

Inventory optimization potential

Backorders give you one way to maximize your revenue and inventory, even when limited space is available. It is often considered when ecommerce stores hit a growth spurt.

The Pro

Relying on backorders can help you sell a product without needing to carry a large stock volume at every moment. Companies can accrue backorders and then fill them once reaching a specific volume, making it easier to run operations in a smaller location. This can be a way to generate revenue while also minimizing rental or building purchase costs. Fulfillment may be slower, but overall expenses are generally lower.

The Con

Using backorder techniques to minimize your inventory on hand – such as setting a threshold of orders before you restock – gives your audience more time to find alternatives and ask for refunds. If the threshold is too high, you run the risk of losing revenue and getting hit with bad customer reviews that may harm future sales opportunities. If the threshold is too low, you can end up buying regularly but making a few customers wait for each cycle, which can cause unnecessary frustration and lower customer lifetime values.

If just-in-time fulfillment is a compelling option for your company, crunch the consumer data you have and run tests. See how long people are willing to wait for your goods, and if you can fill things consistently enough to avoid buyers becoming upset.

The revenue question

Ecommerce backorders also provide companies with a chance to generate ongoing revenue. However, this comes with a risk to operations if you can’t secure it. That depends on a mix of your supply chain speed and customer service capabilities.

The Pro

Backorders allow companies to maintain revenue even when there is a disruption to inventory or restocking. Generating ongoing revenue can keep the lights on during delays, ensuring that you meet all customers’ demands.

The Con

The potential con of backorder revenue is that it is precarious. You can’t really consider it “won” until goods are delivered. If you establish backorders and rely on this revenue but then face a wave of cancellations because of delays, you may end up short and face a rising debt.

Banking on revenue from backorders puts ecommerce companies in a risky position if they are not financially secure based on in-stock products and orders they can currently fill.

Space in your space

Growing ecommerce companies often face crunches for space if they’re not using warehousing and backorder services from a 3PL. When products are in demand but space is limited, some companies feel they need to rely on backorders to protect revenue. This can be beneficial but does come with other risks.

The Pro

Backorders allow ecommerce companies to utilize some of their existing warehouse and floor space best. If you stock a good after an order or only have room for small batches, backorders allow you to accrue sales continually while working in minimal space. Organized businesses can use cross-docking techniques to fill orders rapidly once goods come in, minimizing processing, and other times. When products take up a large amount of space or a warehouse us pulling double duty for other activities, backorders add flexibility to space management.

The Con

On the other hand, backorders can create significant space concerns and constraints if not appropriately managed. A high sales volume followed by many order cancellations can mean companies have too much inventory for their space. If products are perishable or easily damaged, disruptions in backorders can lead to more spoilage or damage, harming revenue potential.

Ecommerce backorders also increase the need for space as companies try to manage fulfillment. Pre-staging orders can be necessary if you have a large volume of orders waiting on a backordered product. However, that requires space for prepared boxes, room for pickers and packers outside of typical areas, and storage for things like tape and filler.

Space constraints will drive backorder considerations. The critical thing to remember is that you’ll still need room to manage fulfillment and backorder support only delays that need at best.

How well do you communicate with customers?

Success with ecommerce backorders depends significantly on your ability to communicate. Not only does a backorder need to be clear on sales pages, but support teams need a consistent way to explain backorders to customers. You’ll need to provide updates proactively and alleviate frustrations to protect payment.

Most ecommerce companies that support backorders see an increase in customer service demands. Hiring additional team members should be part of your revenue consideration. Also, existing customer service needs to have a strong enough reputation that you can withstand any angst that comes from backorders.

Avoiding cancellations, maintaining order volume, and securing positive reviews will depend on how well your service team explains the value of backorders to your customers.

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Jake Rheude is the Vice President of Marketing for Red Stag Fulfillment, an ecommerce fulfillment warehouse that was born out of ecommerce. He has years of experience in ecommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others. 

JIT
3pls, Archives, Global Logistics

How to Combine Resilience With Just-in-Time Manufacturing Methodologies

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As the COVID-19 pandemic continues to disrupt manufacturing supply chains worldwide, even the largest companies are feeling the impact. Recently, Microsoft and Samsung joined the chorus of companies that are predicting stalled outputs and lost sales. The pandemic proved that existing methods for efficiency don’t necessarily translate into resilient manufacturing.

Many of the global supply chain issues companies are now facing can be attributed to the just-in-time — or JIT — manufacturing methodology that most of them employ. Companies kept inventories intentionally lean to reduce costs. New shipments and raw materials arrived just in time to fill a demand for new products.

Although JIT manufacturing is highly efficient in the best of times, it’s also highly susceptible to disruption in the worst. During a global pandemic, for instance, the need for more resilient manufacturing is stark. Fortunately, efficiency and resiliency aren’t diametrically opposed. With the right technology, companies can enjoy the best of both worlds.

Operational Flexibility Is the Missing Link

In 2019, McKinsey conducted a study that examined the performance of companies following the financial crisis of 2008. It found that the most resilient companies did something different than the others: In addition to efficiency, they built their business models around financial and operational flexibility. By quarter one of 2008, they had cut costs by 1%, and by the time the crisis reached its trough in 2009, they’d boosted earnings by 10%.

Cutting costs and focusing on growth are the traditional pillars of resilience. Today, however, a new wave of resilient manufacturing has emerged in response to COVID-related restrictions. The manufacturing workforce, supply chains, and product demand have all been affected while socializing and shopping are restricted.

In this new environment, being operationally and financially flexible is not enough. Before the pandemic, digitization was a huge accelerator to efficiency and resilience. Companies that digitized early could cut costs and increase revenues; now, they’re much further ahead than companies that are still struggling with resilience.

Being digital is a critical component of resilient manufacturing, which is why some of the larger tech companies have been slower to feel the supply chain drag. In fact, many have grown significantly faster due to their heavy reliance on digitization. For example, Tesla, which has always been entirely digital, recently reported its fourth consecutive quarter of profit.

Digitization made Tesla super resilient from the start. The entire workflow is digitized, and its people know to communicate with customers digitally — including taking, fulfilling, and delivering orders. In the industrial space, efficiency and resiliency are built by companies that invest in these same elements.

Why Resilient Manufacturing Isn’t a Lost Cause

Resilient manufacturing is essential in the current environment, and building it will provide manufacturing facilities with significant flexibility beyond the pandemic. To create a complex JIT supply chain, things need to combine and work together in a highly efficient manner. Companies have to cut out the fat by optimizing every system for efficiency.

The assumption is that each component of a product will be delivered just in time for it to be assembled on the factory floor. When a local, regional, or global crisis introduces systemic risk to any part of the supply chain, that link in the chain is lost. The component may never reach the factory floor because optionality and buffers have been optimized out.

Manufacturers must combine JIT manufacturing with resilient manufacturing methods. That requires a digital thread running through the entire operation, with end-to-end operational visibility across the whole supply chain. With greater visibility, companies can predict shifts in demand with much more flexibility.

Operational visibility also creates a wider base of optionality and suppliers. Digital visibility shows, in real time, what components or raw materials manufacturers need, how their supply chain is providing them, and how they’re manufacturing with them. Companies can efficiently switch suppliers or products in response to, or even before, major disruptions.

Operational Flexibility Combines Efficiency and Resiliency

For manufacturers to effectively combine efficiency and resilience, they need enough data, knowledge, and understanding of what their supply chains look like at any given moment. They can predict major events to reduce or completely avoid disruptions to their manufacturing processes.

To achieve this combination, companies need three important digital threads:

1. Total visibility into financial and operational flexibility: The most important digital thread is a digital space where key people in the supply chain can see it all. They can understand demand, sales, and metrics, as well as analyze production, assets, delivery networks, logistics, and supplier bases. Ensure that sales, marketing, production, and all other departments can see the same numbers in real-time and make decisions together based on that single truth. This will be the supply chain control tower.

2. Real-time machine health monitoring in all factories: In a JIT manufacturing model, efficiency is based on meeting production needs. As the primary source of that production, machines are a company’s biggest assets, and a company needs full visibility into its machines’ health and performance at all times. That includes predictive knowledge about how they’ll perform under different conditions. Machine health monitoring platforms can gather data from IoT networks and use AI algorithms to deliver predictive knowledge based on that data, creating greater visibility in every factory.

3. Remote collaboration through a connected worker platform: How machines will perform under different conditions is an important aspect of operational flexibility, but most operations rely as much on people as they do machines. It’s just as important to know how employees will work together when they can’t be near one another. Connected worker platforms allow them to work remotely, collaborate, and share operational data and insight so they can become more autonomous in the face of disruption.

JIT manufacturing methodologies have traditionally lacked this level of visibility, insight, and flexibility, which hindered many supply chains amid the pandemic. By introducing technology to boost real-time visibility and remote collaboration, however, companies can combine JIT efficiencies with an unprecedented level of operational resilience.

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Artem Kroupenev is VP Strategy at Augury, where he oversees Augury’s AI-based machine health, performance, and digital transformation solutions. He has over a decade of experience in building products and ecosystems and bringing technological innovation to market in the U.S., Israel, and Africa.