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INNOVATION: The future of the warehouse

05.14.2010

By Steve Epner

Supply chains today require more technology than ever before to operate efficiently. One critical requirement is that the operations staff knows where every product is at all times. Without restriction, the management team must know what inventory is on the shelf, what is committed (and to which customer), what is on order (and for which customer), and what is back ordered (and for whom).

Often this is called transparency and it can take many different forms. In a perfect world where not so perfect things happen, transparence provides an improved ability to react to any situation as it occurs. For example, if a product is ordered for a future delivery date and the system knows the shipping lead time from the supplier, it can generate an automatic request to verify that a shipment is scheduled two days before the deadline.

The supplier’s computer should be able to determine if the proper product is on the shelf and available for shipping when promised. If there is any problem, an electronic notice would be sent indicating that there will be a problem with an on-time delivery. If this is known in advance, it is possible to either make other arrangements or to at least call the customer and let them know a delay is expected. Eliminate the surprise and customer service is enhanced.

The future is even brighter. While the following scenario may not be ready for implementation, the pieces are available and it will be possible in the near future. What is important is to understand the potential so that when it is released, it can be used to the greatest advantage.

In our future distributorship, the purchasing agent will source product on the internet. When the required item is located, availability and lead times will be reviewed online. Once the right item is found at the right price, it can be ordered. All orders to be shipped to a single location can be tracked and internet based applications will consolidate LTL shipments to maximize shipping effectiveness.

All products will have RFID (radio frequency identification – think barcodes that can be read without having to be seen) type labels. The readers of the future will be able to differentiate between many such labels within a box, pallet or even a truck. Through the use of Advanced Shipping Notices (a standard Electronic Data Interchange transaction), a company will be alerted to what products and quantities to expect on any given shipment.

When the truck backs up to the dock, a RFID reader will have identified all items on that truck that are to be delivered. Before the back door of the truck is opened, the entire shipment will have been received into inventory and marked for put-away, inspection, or cross docking.

Not only that, but if a pallet is accidentally left on the truck, the system will alert the warehouse and the driver can be stopped before leaving the parking lot. On the other hand, if a pallet is removed from the truck that is not to be delivered, it will cause an alert to be sounded before it is set down by the fork lift driver.

With more sophisticated tools, it will be possible to track all inventory movements as they occur. It is not much of a leap to foresee the day when a complete inventory can be taken every evening by allowing the RFID scanners to search the warehouse and identify everyproduct, where it is, and how many there are. Discrepancies will be known the day they occur.

The same equipment will be able to identify any inventory leaving the premise that has not been attached to an order, or paid for by a customer. Salesmen’s samples will be easily tracked and every car trunk can be treated as if it was a warehouse.

The tools of the future that will be available sooner than you expect. Now is the time to start thinking about what you might use and how. There is competitive advantage to be gained by the proper use of new technologies.

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