What are Inventory Management Systems?

While different organisations provide blueprints for key processes using barcoding and radio frequency controls, these standardised methods only apply to reading and recording data. The actual handling of physical materials and the specific procedures followed in each warehouse are distinct and tailored to the individual business. This is driven by factors including:

 

• The magnitude of the warehouse operation.

• Storage capacity.

• Temperature.

• Order profiles.

• Legislative requirements.

• Organisational culture.

• Volume of goods moving through the facility.

Warehouse Operations

The different processes that occur within a Warehouse Management System are fundamentally the same across many Warehouse Operations and typically consist of:

Receiving: Handling products in a warehouse and through a mechanical handling system. Receipts may be for single or multiple products. Items such as pallets or small split pins may be significant. A supplier's Advance Shipping Notice (ASN) is the best way to receive products. With this information in a system, staff can scan barcoded consignment notes to bring up the ASN on the Warehouse Management System (WMS).

If the delivery matches the ASN, the goods can be system-received. However, at this point, they are still at staging, albeit ready for put-away, although some systems allow goods to be received into inventory. In contrast, others require products to be delivered to a specific stock storage location before inventory is updated.

Put-Away: A WMS system will prompt warehouse receipt staff with a put-away note indicating that stock is in the staging area waiting to be transferred to a stock storage location. The process commences when staff accept the put-away task from the WMS, which scans the relevant barcode of goods to be put away.

If there is no barcode, a manual entry can be input to confirm that the goods have been identified. At this point, the system will direct the put-away staff to deliver the goods to the relevant storage location.

Once at the location, staff may scan the relevant stock storage location barcode or confirm manually that the correct storage location has been found, then place the goods in the storage location before confirming that the put-away process is complete.

Picking: There are two main ways of picking:

 

• Primary: This is the leading way of picking goods. The goods are delivered directly to a staging area or packing bench for consigning and dispatching. Thus, the first pick becomes the last pick.

• Secondary: This is a second-picking process. Some primary picks are subject to a secondary picking process, mainly where picked goods must be allocated to numerous or discrete orders via a sortation process. With increased online sales across many industries, more organisations are conducting secondary picking processes than ever.

Once orders are received, they are commonly released 'in real time' or waves. Real-time orders are processed as they are received from customers in a natural environment. Orders can be accumulated in waves for specific picking times and transport routes.

Packing: There are numerous ways that goods are packed, but organisations typically follow the five rules identified below to maintain successful Order packing processes:

• Picked goods must be traceable to the location from which they were picked, with relevant ‘use-by’ dates or ‘batch’ dates and codes. 

• Accuracy and quality assurance checks must be included in the process.

• Goods picked from different zones within the warehouse must be easily 'combined', and the system must be managed to ensure Order completeness.

• Products must be packed according to size, quantity, volume, temperature, toxicity, value, fragility, hygiene and legislative requirements.

• Consignments must always be system-traceable to documents or invoice numbers for future traceability and to ensure the customer is correctly billed for the goods supplied.

Dispatching: Successful dispatch lies in an organisation's ability to have Orders ready for departure just as the Distribution vehicle arrives to collect the day dispatches for balance and forecast packing and dispatching according to carrier pick-up times.

Orders that are ready too early will clutter staging areas. At the same time, late dispatches will delay loading and potentially cause late deliveries. Many organisations use their systems to release orders for picking in waves aligned to specific delivery routes or carrier types.

Returns: Returns are an intricate part of most organisations. The volume of product returns is growing for many organisations, mainly due to the e-commerce revolution. The complexity around handling returns mandates the following rules:

• When customers return goods, they should seek and be given Return Management Authorisation, which outlines what is being returned and why.

• All returns must be traced to their order document and invoice.

• Organisations must have a pre-determined returns process that delineates what to do with the goods once they are returned to the warehouse, such as returning them to stock, repairing them, destroying them, discarding them, recycling them, or returning them to the manufacturer.

• Credits for returned goods must be system-recorded to show why the goods were returned.

• Inventory must be updated where goods are returned to stock or held for further action.

Value-adding: This is the part of the organisation where products are produced, kitted, assembled, relabelled, modified, or subject to some other value-adding process. It is about performing work on the product to make it ‘ready for sale’. This value-adding process can be complex, particularly when combining many items to form a new product.

The complexity around handling value-adding processes and the changing nature of component products in and out-of-shelf locations can be daunting. Over the years, systems have evolved to assist. Yet, many organisations find that recording value-adding components may be incompatible with how their logistics system or WMS is set up.

Warehouse Management Systems

A warehouse management system (WMS) encompasses a series of procedures and protocols designed to streamline the operations of a warehouse or distribution centre, ensuring optimal functionality and goal achievement.

Previously, the term 'warehouse management information system' was used to differentiate software fulfilling this role from theoretical systems. Some smaller facilities resort to manual methods like spreadsheets or pen and paper for documentation, which also falls under the WMS umbrella.

The term predominantly refers to computerised systems that track inventory arrivals and departures. Additional features are incorporated, such as pinpointing stock locations within the warehouse, maximising space utilisation, and coordinating tasks for enhanced efficiency.

Establishing or updating an organisation's WMS is justified by five key factors. It can yield numerous advantages that contribute to business expansion and customer loyalty. The foremost benefit is real-time inventory management, which aids logistics service providers and clients in effectively planning resources and inventory.

Implementing a new WMS can help organisations experience substantial growth and foster customer trust through improved operational processes and enhanced service delivery. Effective product management and inventory control are crucial for any organisation, and implementing a WMS system can significantly improve these aspects.

By screening and scanning products at every stage of movement within the facility, the organisation gains clear visibility into the location of products and can ensure proper inventory control. This significantly reduces the chances of mishandling inventories, improving operations' efficiency and accuracy.

Another critical advantage of advanced WMS systems is the ability to achieve faster product delivery, which holds immense value in today's fast-paced and highly competitive business environment. By tracking, tracing, and monitoring products throughout the supply chain, organisations can streamline their processes and expedite the delivery of goods to customers. This enhances customer satisfaction and gives the organisation a competitive edge in the market.

The benefits of implementing a WMS system extend beyond outbound logistics. When managing returns, a well-implemented WMS system can significantly simplify and make the process more effective. By monitoring and tracking returned inventory, organisations can efficiently handle customer returns, ensuring timely resolution and minimising any potential disruptions in the supply chain.

Enterprise Resource Planning

Enterprise resource planning (ERP) is a crucial process that organisations utilise to manage and integrate essential components of their operations. ERP software applications play a critical role in resource planning by consolidating all necessary processes into one system. This integrated system encompasses planning, purchasing, inventory management, sales, and marketing, streamlining organisational operations.

An ERP system is a cohesive force that combines the various computer systems within a large organisation. Without an ERP application, each team within the organisation would have its IT system tailored to its specific tasks. However, with ERP software implementation, each team retains its system while gaining access to all systems through a single application and interface. This integration facilitates a comprehensive planning and operating system.

ERP applications are crucial in enhancing communication and information sharing among different teams within an organisation. By collecting data on the organisation's activities and the status of various teams, the ERP system makes this information readily available to other teams, enabling them to utilise it effectively.

Implementing ERP applications can significantly contribute to an organisation's self-awareness by connecting information related to production, finance, distribution, and human resources. This integration bridges the technological gaps between different parts of the organisation, eliminating duplication and incompatible technologies. It often integrates systems such as accounts payable, stock control, order monitoring, and customer databases into a unified system.

Over the years, ERP offerings have evolved from traditional software models reliant on physical client servers to cloud-based software that offers remote web-based access. While an ERP system does not entirely eradicate inefficiencies, it prompts the organisation to reconsider its structure and operations to maximise the benefits of ERP technology.

Despite the potential advantages, ERP systems often fail to achieve their intended objectives due to organisations' reluctance to abandon outdated processes incompatible with the software. Additionally, some organisations are hesitant to let go of old software that has proven effective in the past. To ensure the success of ERP projects, it is crucial to keep them distinct from numerous smaller projects, which can lead to product and service cost overruns.

E-Commerce

Electronic commerce, or E-commerce, refers to any commercial activity or financial transaction that involves exchanging information over the Internet. It encompasses the buying and selling of products and services between individuals or organisations. The activities focus on conducting internal and external business processes as a continuous stream of product and data flows upstream and downstream of the supply chain, utilising cloud-based internet-based technologies across many different IT networks and platforms.

E-commerce encompasses the capability to exchange products or services by leveraging computer networks like the internet or mobile technology such as "Apps" on mobile phones. The realm of electronic commerce relies on various technologies to facilitate its operations. Electronic commerce draws on technologies such as:

• Mobile commerce.

• Electronic funds transfer.

• Supply chain Management.

• Internet marketing.

• Online transaction processing.

• Electronic data interchange (EDI).

• Inventory management systems.

• Automated data collection.

Organisations have faced challenges due to the disparity between the advantages of supply chain technology and the means to actualise those advantages. Nevertheless, the growing adoption of e-commerce technologies has offered a streamlined and productive method of realising the benefits of modern supply chain technologies. This can unify all internal and external organisational operations encompassing the tangible, monetary, and informational movements of products, services, and data across the supply chain.

Furthermore, the influence of e-commerce on supply chains is considerably more advanced. By utilising electronic solutions, organisations can now pinpoint discrepancies between various levels of supply chains, thereby eliminating the performance gap. The advent of e-commerce has also facilitated the implementation of ERP and WMS systems, enabling organisations to enhance the efficiency and effectiveness of their supply operations with customers and suppliers.

These new capabilities still need to be fully exploited as technology organisations invest in new e-commerce software solutions and expect greater investment returns. E-commerce helps solve many issues that organisations may need help coping with, such as political barriers or cross-country changes, and it provides organisations with a more efficient and effective way to collaborate within the supply chain.

The emergence of e-commerce has created job opportunities in information-related services, software apps, and digital products. However, e-commerce has also resulted in job losses, especially within the retail, postal, and travel sectors, which are expected to experience the most significant job losses due to the increasing reliance on e-commerce and customers' self-sufficiency in using online services provided by organisations.

One of the main advantages of e-commerce is its convenience to customers. They can now shop from home and easily browse through an organisation's online shopping portal. This is especially beneficial when purchasing products or services that are not available locally. By shopping online, customers can access a broader range of products, saving them time, money, and effort. Additionally, online shopping gives customers purchasing power as people can research products and compare prices among multiple retailers.

E-commerce technologies have also helped reduce transaction costs by eliminating the need for intermediaries. Organisations and end users can now directly engage in online product or service searches, which has contributed to the success of e-commerce at both urban and regional levels. However, the success of e-commerce relies on how effectively local organisations utilise it and how well local end users adapt to its use.

Despite e-commerce's advantages, human interaction is still needed, especially for customers who prefer face-to-face contact. Many customers are concerned about online transactions' security and integrity and remain loyal to well-known retailers. To address these concerns, some clothing retailers, like Tommy Hilfiger, have introduced "Virtual Fit" platforms on their e-commerce sites to minimise the risk of customers purchasing ill-fitting clothes. However, the effectiveness of these platforms varies significantly.

While e-commerce has created new job opportunities and increased customer convenience, it has also led to job losses in specific sectors. The success of e-commerce depends on the proper use of local organisations and the adaptation of local end users. Additionally, human interaction is still needed to address customer concerns regarding online transactions.

The rise of e-commerce has been identified as a principal and significant factor contributing to the decline of brick-and-mortar retailers, a phenomenon often dubbed the "Retail apocalypse". The proliferation of online shopping platforms like Amazon has posed challenges for traditional retailers in retaining and attracting customers, prompting them to revamp their sales tactics.

As a result, many businesses have resorted to implementing sales promotions and intensifying their digital presence to entice consumers, leading to the closure of physical store locations. This shift in consumer behaviour has compelled some traditional retailers to prioritise their online operations over their traditional storefronts, ultimately reshaping the landscape of the retail industry.

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