Software Teams Up for Assault on 9-11
Here’s how
warehouse, manufacturing and maintenance software vendors are responding to the
rippling inventory and logistics problems created by September 11. Learn how to
minimize the downside of supply-chain disruptions and the economic recession.
by Christopher Trunk, managing editor
“After 9-11, logistics will never be the same,” says Scott Rishel,
vice president, market development for Irista. “There’s going to be
tighter security on the movement of goods across borders and throughout the
country. Companies must move from a just-in-time mentality to a just-in-case
attitude toward inventory,” he predicts. That translates into more
inventory and higher carrying costs, but it’s not an excuse to just stock
10 percent more of everything.
“A company has to evaluate the most critical SKUs and
hold those SKUs in a lowest-common-denominator state, postponing value-added
services and manufacturing until the last moment,” says Rishel.
But you won’t likely be building a new warehouse to
store this extra safety stock, so that means squeezing more out of your
available cube with help from warehouse and slotting software. These examples
are just the beginning when it comes to the creative mindset you’ll need
for distribution after 9-11.
New strategies for global distribution
There’s a huge fallout from the slowing traffic at
international borders, and it’s demanding new approaches for business
survival. Safety stock springs to mind. “It’s our belief that
companies won’t want to buffer their own safety stock. Rather,
they’ll insist their vendors locate safety stock close-by to deal with
unforeseeable disruptions,” says Chris Heim, CEO, HighJump Software.
“This will lead to more satellite warehouses being located near key customers.
These tiny warehouses will likely be connected via the Internet to the main
distribution hub, becoming extensions of warehouses in many respects,”
adds Heim. You’ll need warehouse software that effectively manages
multiple-warehouse sites.
An unintended consequence of shipments stuck at the borders
for hours or days is its impact on your warehouse staff. “One of our
clients had critical inbound shipments of overseas raw material and components
languishing in customs,” says John Clark, marketing manager for Provia
Software. Upon release from customs, the client had to quickly increase
warehouse staffing to meet the pent-up demand from customers to distribute that
material. “Another unintended consequence of the situation is that this
customer, and others, are now looking for import/export compliance software to
speed customs paperwork,” adds Clark.
Now is the time to list your most critical parts, where the
vendors are located, and re-examine how sensitive your operations are to those
parts being delayed. “Issues raised by sourcing from Mexico are very
different from those in Canada. Companies should consider sourcing critical
parts from domestic sources, and even regional suppliers, to minimize the
chance for border delays,” reports a recent study by Mercer Management
Consulting.
The report emphasizes that most truckers are allowed to
drive 10 hours a day, so if truck drivers spend half those hours idling at the
border, it can easily add another day to delivery.
Minimizing transport, information bottlenecks
The grounding of all planes and shutting down critical air
transport pathways was enough to convince every shipper that it’s time to
broaden shipping options, says Mercer.
Transportation delays by air and on the ground at international borders
are inextricably linked with your company’s style of managing production
and spare parts inventory.
Companies now realize after September 11 that shutting down
an entire transportation system for more than just a couple of hours is far
more likely than before. “In the past, such shutdowns were the work of
Mother Nature. If a storm dumped snow in the North, truck shipments could be
rerouted around the storm. But the possibility of again shutting down the
entire shipping system requires everyone to carry more inventory for
safety’s sake,” says Clark of Provia.
Jan Young, director of business development for Catalyst
International, sees hope for improvements to warehousing and retail data as a
result of 9-11. “The issue of universal electronic data interchange [EDI]
standards has been around forever. Many of our consumer products goods
customers have been frustrated by negotiating ANSI EDI standards with each
trading partner. Now that business is down in the retail sector, in part
because of 9-11, retail may be more proactive about resolving this problem and
finally get some real value out of EDI.”
New rules for managing stock
The first new 9-11 rule for inventory management is:
“The Uncertainty Principle.” Future disruptions, like those of
September 11, will rarely be uniform, points out Leo Schmidt, senior project
manager and marketing strategist for HighJump Software. “Only some
shipments will be affected, and a two-day delay on shipments of raw material
may or may not create a crisis. If you buy the kind of supply chain event
management software available today, you can pinpoint actual crises in the
making and arrange for reallocation or substitution from another warehouse or
another vendor,” suggests Schmidt. He says the solution is not filling
your warehouse with excess inventory, rather to improve your inventory
visibility through software that delivers better monitoring, control and
decision support.
Old solutions just won’t work anymore. “For
example, picking waves were once released in the warehouse, and changes were
practically impossible,” relays Irista’s Rishel. “Post
September 11, warehouse software must be event-driven, taking into account
unexpected exceptions that occur from beginning to end during the fulfillment
process.”
And don’t lull yourself into thinking your company can
single-handedly protect itself from supply chain breakdowns. Rishel warns that
you need real-time data from your supply chain partners and more closely
integrated e-commerce information sharing with your business-to-business
partners to overcome September 11-type disruptions.
“Mind-Altering Handling Opportunities” is the
second new 9-11 rule. Sophisticated warehouse management software allows you to
take into account capacity, capabilities and crossdocking opportunities across
multiple warehouses. This shows managers the condition of inventory, its
availability, cost of various shipping options and possibility for
substitutions. “In a world of unpredictable shipments, global
distribution will demand more flexible approaches to inventory, crossdocking
and multinational warehousing. That’s the only way to keep inventory on
the low side and service levels high,” says Rishel. In fact, creative
approaches to crossdocking and increasing your facility’s order fulfillment
velocity may be your only options for staying ahead when shipments are delayed.
Maintenance software as front-line defense
9-11 instantly retooled all thinking about spare parts
inventories, says John D’Anna, public relations coordinator for Eagle
Technology Inc. “Our customers have recast their ironclad just-in-time
and zero-inventory policies. Carrying inventory costs money, but not nearly so
much as a plant shutdown forced by a lack of spare maintenance parts and
assembly parts,” reports D’Anna. He finds that customers who left
fallow their computerized maintenance management software (CMMS) are now
activating it with bar code scanning and interfacing maintenance parts data
with their ERP software. These companies are trying to fend off disruptions
common to today’s jittery supply chain.
Manufacturing software takes charge
Manufacturing software has become even more critical as your
company looks for new business while keeping current customers supplied with
on-time product. You can bet that companies will be competing to take a slice
out of the government’s pie of overseas and homeland security money. To
pursue those contracts, you may need some of the many resources that
manufacturing software provides, including:
• Managing the complex requirements of government
paperwork and inventory tracking (See “Aerospace/Defense Software Targets
Defense Dollars”;
• Simulation that can predict the impact of several
scenarios to eliminate bottlenecks before they occur, and increase your current
production and handling methods to allow for sustainable increased capacity;
• Scheduling and transaction tracking to give managers
real-time access to production status, raw and finished goods inventories and
work-in-process reporting.
Rockwell Software is offering its RSBizWare that improves
communication between the shop floor and business management software. It helps
manufacturers manage the day-to-day flow of orders and is useful for handling
rush orders and the kind of unexpected schedule changes that 9-11 has wrought. “Our
Automation Arena simulation software helps demonstrate, predict and measure
your system’s performance. It can reduce the risk of adding new
business,” says Mark Moriarty, director of marketing for Rockwell
Software.
“September 11 proved that companies have to be
vigilant over food, pharmaceutical and chemical contamination,” says
Moriarty, “and these public safety issues are pushing companies to
electronically document their manufacturing control and maintenance
processes.” He maintains this is one way to ensure that products have
been processed safely and cleanly.
Rockwell also offers Maintenance Automation Control Center
software that gathers and manages information needed by maintenance engineers
to track maintenance tasks and to predict machine failure. This software is
helpful in keeping manufacturing machinery up and running.
Buy stock in human decision-making
Mercer Management Consultants warns that an over-reliance on
software and other technology can be a downfall in unpredictable times like
these. The consultants find that logistics and business software typically
makes forecasts based on historical averages, making it unable to accommodate
every unforeseen shock to the post-9-11 supply chain. That is why human
decision-making remains an important partner with software for global
distribution.
Success requires better personal ties among manufacturers,
retailers and distributors as they collaborate with information about logistics
problems and changes to customer demand. Better communication between your
company’s staff of risk management, procurement, production, warehousing
and sales workers can afford the best decision-making possible when the next
upheaval strikes. MHM
Resources
Clark, john.clark@provia.com
D’Anna, johnd@eaglecmms.com
Heim, chris.heim@highjumpsoftware.com
Manhattan Associates, www.manh.com
Mercer Management Consultants, www.mercermc.com
Moriarty, msmoriarty@software.rockwell.com
Rishel, scott.rishel@irista.com
Schmidt, leo.schmidt@highjumpsoftware.com
Young, jyoung@catalystwms.com
Aerospace/Defense Software Targets Defense Dollars
Due to the September 11 events, the U.S. defense budget for
2002 was ratcheted from $295 billion to $330 billion. That’s a big stack
of money, and it’s bound to attract a great deal of attention from
companies looking to add paying customers like the U.S. government to their
existing customer portfolio.
Lilly Software Associates now offers the Visual Enterprise
Aerospace & Defense software module. “This software is targeted at
Tier 2 and Tier 3 manufacturers, helping them break into the government
marketplace by managing complex requirements for tracking components, labor,
manufacturing processes and compliance reporting,” says Scott Rich, vice
president of marketing for Lilly Software Associates. As the software is geared
to the small- to medium-size manufacturer, it can have from 10 to hundreds of
concurrent users, with radio frequency data communications and bar coding.
When it comes to the changes wrought by September 11, The
Visual software can be key to scheduling and delivering goods quickly and on
time to our overseas military personnel and to homeland security forces, says
Michael Matechak, senior manager and a consultant for T.A. Carlson &
Company. Lilly and T.A. Carlson have joined forces to help manufacturers adjust
to the kind of cost accounting, contract administration, manufacturing and
distribution processes the government requires.
“With the mountain of funding that’s been
released for military purchasing, a vendor’s promise of delivery and the
ability to schedule effectively will be key to obtaining those
contracts,” he adds. You need to minimize the effect that delayed
components, labor or tooling might have on timely delivery. The
software’s scheduling capability can also allow defense and aerospace
contractors to increase the number of orders they can take while still
servicing their existing customer base.
Matechak says that tracing parts is a key factor in
aerospace and defense contract work. “The FAA requires extensive lot-tracking
capability by work order, by purchase order, by worker. Government requirements
dictate an accounting of all labor and material information, including raw
material needed for a subassembly. This makes a complicated business of
tracking work orders, buying and purchasing components for defense
projects,” he says.
These contractors typically use government-furnished
equipment or GFE. GFE can be subassemblies that other contractors have sold to
the government. The Visual Enterprise Aerospace & Defense software tracks
the GFE and makes those parts available only for certain projects and not
others. “GFE creates interesting requirements for the defense contractor
because the physical inventory and work done to handle and install the GFE has to
be tracked while keeping the value of the GFE off the contractor’s
books,” says Matechak. Software to manage this tracking is especially
important for goods that are progressively assembled by various contractors.
Reach Rich at srich@lillysoftware.com and Matechak at
mmatechak@tacarlson.com.
Preparing for the Economic Upturn
“When the economy was booming, companies could ignore
inefficient or ineffective maintenance operations and spare parts management.
But when companies move into the recovery mode, undoubtedly maintenance
improvements will top the list,” says John D’Anna, public relations
coordinator for Eagle Technology Inc.
He says that the last time the country went through a major
recession, maintenance software was in its infancy. But now the software has
proven itself to manage and minimize spare parts inventories and coordinate
maintenance tasks across warehouses, across borders.
“In this recession, reducing machinery downtime and
consistently producing at capacity will be key to being ready when business
improves,” says Mark Moriarty, director of marketing for Rockwell
Software.
“Despite September 11, most of our customers have a
positive outlook,” says Jan Young, director, business development for
Catalyst International. “In fact, if their warehouses are relatively
quiet, companies are seeing an opportunity to fine-tune their material handling
and supply chain strategies.”
Young says that Catalyst’s Cat-Sim simulation software
is helping customers reconfigure their warehouses and picking strategies with
equipment upgrades and more efficient throughput in mind.
Warehouse software will play a big role in a recovering
economy, says Chris Heim, CEO, HighJump Software. “Warehouse software
helps manage the problem of a shrinking pool of qualified skilled warehouse
workers as the recession ends. The software helps make each worker you have
more efficient, cutting the number of laborers you need overall,”
predicts Heim.
In a resurgence, it’s common for interest rates to
rise, making carrying costs for 9-11-related safety stock more expensive. Heim
says you’ll need warehouse software to help determine where that excess
inventory is and how much should be cut when the recovery arrives.
And, of course, as any economy strengthens, competitors
emerge. Having a well-managed warehouse is a great tool for keeping current
customers happy and reducing overall costs. That’s the kind of
competitive software edge you’ll need.
Help in Selecting Warehouse Management Software
Eskay offers a new, interactive software worksheet to put
together a checklist of those features you’ll need for a future warehouse
software purchase. Armed with this checklist, you can more easily compare among
various WMS packages. The software also helps you determine whether an automated
or manual handling system will work best for your warehouse.
The worksheet lists 19 warehouse functions, offers a
description of that function and tells when you would need it.
Here are some examples:
• Feature: Full Pallet Picking. Description: Used if
SKU is designated for full-pallet delivery only. Quantity can be overpicked to
the next full palletload. Otherwise, pick quantity is a mix of full pallets,
cartons and pieces to fill the quantity requested. Needed if: Customer wants
only full pallets of an SKU.
• Feature: Paper picking. Description: Workers pick
items from a printed list, noting completed picks and any quantity of changes
on the list. When the pick list is completed, it is passed along to key entry
operators who update the computer’s database. Much less efficient than
RF-directed or pick-to-light picking. Needed if: Picking low volumes and when
RF-directed or pick-to-light picking is impractical.
To use this software for free, visit
www.MaterialHandlingInfo.com. For questions, contact Gary Dulude at
gary@allredmark.com.
