Warehouse Technology in the Supply Chain Management Systems

Ralph L. Harper, Jr., DBA, CISM, Florida Institute of Technology

Key Words: Distribution Requirements Planning, Integration of SCM, Management Information Communication Systems,
Material Requirements Planning, Ware House Management Systems, Standard Army Maintenance System.
SUMMARY AND CONCLUSION businesses. A warehouse may also be called a distribution
center, Warehouse management is the process of coordinating
The linkage between communication technology, the
the incoming goods, the subsequent storage and tracking of
supply chain environment and end-consumer needs assists in
the goods, and finally, the distribution of the goods to their
better communication between all activities across supply
proper destinations.
chain tiers. Successful supply chain management depends on
When the supply exceeds demand, a warehouse will store
tight coordination between supply chain partners. The Internet
product in anticipation of customer requirements, the
provides the perfect communications channel for the
warehousing process may smooth out market supply and
information, decisions, transactions, and processes that form
demand fluctuations. A classic example is the build-up of
supply chain management. It is a journey of change that is
retail inventory in anticipation of the Holiday season.
already under way. To keep up with the evolution of supply
Warehousing can link the production facility and the
chain management, and remain competitive in their markets,
consumer, or suppliers and production facilities information
future supply chain leaders will need to simultaneously exhibit
with today’s Communication technology. Warehousing
tight coordination in all areas: integration, collaboration, and
supports production by consolidating inbound materials and
synchronization with a better understanding of
distributing them to the production facility at the appropriate
communications systems function. Integration is the
time. The use of warehousing communication can reduce time
coordination of supply chain activities such as purchasing,
needed to transport spares for maintenance action as well as
manufacturing, distribution, spares management needed for
increase operational availability (A’O) in the military system.
maintenance and operational availability of military systems,
Warehousing also helps marketing to serve current
and customer service within a single enterprise of
customers and expand into new markets. Outbound
technological readiness. Many leading companies have made
warehouses help consumers buy on demand without a nearby
great strides with internal integration of their communication
production plant.
systems. This is just a beginning. The future will see an
Warehousing is a key component of the overall integrated
accelerated development and rollout of these tools and
supply chain. The supply chain consists of the facilities and
techniques, which soon will become common place in all
distribution options for the procurement of materials from
aspects of managing the supply chain.
manufacturer to customer, and all points in between. It
Supply chain management will continue to have a
includes the production of materials into components and
significant influence on company success and shareholder
finished products, and then distribution to customers. Basic
value. Supply chain disciplines and Internet communication
functions of warehousing include movement, storage, and
innovations will combine to synchronize all supply chain
information transfer. To store a product properly, movement
activities tightly to best satisfy customer needs. Leaders who
is necessary. It takes place in four distinct task areas.
enhance their supply chain prowess with e-commerce
Receiving inbound goods from transportation carriers
capabilities and bring supply chain skills to bear in the e-
including quality and quantity checks; transferring goods from
economy will be unstoppable.
the receiving docks and moving them to specific storage
World-class product quality, accurate inventory tracking,
locations throughout the warehouse; order selecting the
lean operations, customer-focused service, and a rationalized
products for filling customer orders including checking,
supply base will all be expected as the entry price to
packing, and transporting to the outbound dock; shipping
synchronization. Companies striving to master these techniques
goods outbound to customers by some form of transportation.
have looked to supporting changes in technology platforms.
The information can be used to assess warehousing
Enterprise Resource Planning Communication technology
effectiveness by examining equipment utilization rates, labor
systems and best-of-breed software packages such as
productivity, and space utilization (Bloomberg 2002, p345).
warehouse management systems and transportation
A warehouse plays a multifaceted role in the integration
management systems are helping to define, standardize, and
of Supply Chain Management (SCM). It can serve as a
automate operational processes at world-class levels. transportation consolidation facility. Companies can transport
less than loads into a warehouse, consolidate them into full
1.0 INTRODUCTION
loads, and then transport them out again. Warehouses act as
A warehouse is a storage facility that receives goods and safety valves in plant strikes, supplier stockouts, or
products for the eventual distribution to consumers, or other transportation delays. If a carrier strike is likely, the

978-1-4244-5103-6/10/$26.00 ©2010 IEEE

warehouse can store extra inventory to reduce the chance of a
stockout at the consumer level.
The primary role of a warehouse in the Supply Chain is to
provide customer service in the Supply Chain Systems. “An
effective warehouse system means quicker delivery, fewer
stockouts, and better customer service communication. The
results are higher levels of customer satisfaction and more
sales” (Bloomberg 2000, p245). This is facilitated by
warehouse communications technology. Information transfer
occurs when management captures data on inventory levels,
locations, space utilization, and other data necessary to ensure
that a warehouse is functioning successfully. Improvements in
Warehouse Communication have resulted in dynamic new
approaches to supply chain support. A seamless supply chain
system that ties all parts of the community into one network of
shared situational awareness and unified action can be
achieved only in an environment dominated by global,
wireless, assured communications. Many world-class
commercial companies have reduced inventories significantly
and now rely on real-time information, coupled with rapid
transportation, to meet customers' demands. Much of their
inventory is in transit in the logistics pipeline. To manage
their reduced inventories, these companies employ global,
wireless communications systems that give them up-to-the-
minute status on shipments and deliveries
“A successful supply chain is one that shares assets,
processes, technologies and customers” (Sanders, 2003).
Supply-chain operation manages forward logistics, supplying
customers with materials and service requirements.
Collaborative, not combative, relationships and agreements
with suppliers and manufacturers allow both organizations to
understand costs and business structures. ”Alliance
relationships and vendor-managed inventory agreements
further reduce required stocking levels” (Sanders, 2003).
2.0 COMMUNICATION IN THE SUPPLY CHAIN
By leveraging information technologies, the SCM system
will be empowered to provide the right support at the right
time at the right place. Managers of the SCM System can no
longer rely on "historical" data. Rather, they now require real-
time, predictive information to make intelligent decisions and
optimize force readiness. Global wireless communications
will facilitate the ability to reach and see virtually anywhere in
the world.
With implementation of state-of-the-art information
systems, SCM Systems can now monitor consumption of
expendable supplies on a daily basis at the national as well as
the unit level. Fully exploited, these systems can also
automatically deliver supplies at the level required, consistent
with available resources on a competing priority basis.
“Logistics execution systems represent a fusion of the
warehouse and transportation management systems and will
eventually replace them in the logistician's lexicon as ERP is
transformed” (Trebuchon ,1998).
This link will give business the ability to plan capacity
within its distribution centers, and make available-to-promise
commitments to customers, identify the effects of labor issues
on a day-to-day basis, develop alternative service plans,
provide customer service with visibility of what's going on in
transportation and distribution, decide which customers should
get priority, and accommodate last-minute order changes even
after the transportation system has already planned it, tendered
carriers, and the warehouse management system has started
executing.
In an effect to meet these needs, “advanced planning
systems (APS) from such players as I2, Manugistics and
Logility are being overlaid on traditional ERP systems. APS
allows you to manage the flow of merchandise through the
supply chain, synchronizing demand with supply, dynamically
planning needs and determining where to deploy inventory
throughout the supply chain. To serve this lofty mission, these
systems are designed to help synchronize the use of resources,
not only in manufacturing, but also on the transportation and
warehousing sides.” (Trebuchon, 1998, p256).
ERP today is a Company's central nervous system
orchestrating many functions, including order management,
materials planning, warehouse management, payables,
receivables, and general ledger. “Companies spent more than
$70 billion on licenses for software in the ten year period from
1997 to 2007. In addition, implementation resources cost them
several times more than the license fees. Implementation time
ranged from six months to four years, depending on the
number of business units, functionality scope, and the
configuration's complexity. From the time of the initial
investment decision, it took medium-size to large companies
at least five years to achieve steady-state performance levels
and recoup their investment” (Welch, 2007,p401).
An effective ERP system requires constant support and
maintenance from the IT department, and the business itself.
“Support must include the right processes and organizational
models, backed by the appropriate governance and
championed by the executive team. Clearly, an ERP system
isn't simply another complex solution to hand off to the IT
department and to a few tech-savvy business users. If the ERP
system is to deliver a consistent performance advantage, it's
also the responsibility of senior business leaders to see it
through” (Welch, 2007, p401).
“A 2005 study of 60 companies showed that having an
advanced ERP system won't necessarily lead to better results.
In fact, advanced systems tend to magnify process
deficiencies. And while mature business processes are
necessary for achieving desired business results… they are in
themselves insufficient. To achieve repeatable results,
companies must master business process management and IT
tools (both software and hardware), thus establishing
themselves in Quadrant I… in the mature processes and
mature systems” (Welch, 2007, p401).
“Even without advanced ERP systems, Companies with
mature business practices are 38% more profitable, have 22%
less inventory, and achieve 10% better delivery performance
than companies with less-mature business processes.
Companies combining mature business processes with
advanced ERP systems achieve a further 27% profitability
advantage and as much as a 40% gain in performance across
the full range of supply chain metrics, including delivery
performance and inventory” (Welch, 2007, p401).
These types of communications systems are being
developed for a global commercial market; also have broad
applications for military use at the strategic, operational, and supply chain optimization techniques have become the catalyst
tactical levels. These technologies can provide the capability for integrating each functional area of the enterprise into a
to receive, transmit, store, and retrieve information in a single finely orchestrated operation. The ultimate goal is to
seamless logistics. “synchronize the activities of all supply chain participants,
both within and outside the company, to the demands of the
3.0 MANAGING INFORMATION IN WAREHOUSES
end-consumer” (Bauknight, 2000). Using the enhancements
Today’s supply chain environment involves the flows of made possible through applications conducted over the
material, information, and finance in a network consisting of Internet, leaders are introducing “new business models that
customers, suppliers, manufacturers, and distributors. take advantage of the most dramatic of all new technological
Information flows involve order transmission and delivery innovations – the World Wide Web” (Bauer, 2001).
status. Financial flows include credit terms, payment
schedules, and consignment and title ownership arrangements.
These flows cut across multiple functions and areas both
within a company, across companies, and sometimes
industries. Coordination, integration, and communication of
these flows within and across companies are critical in an
effective supply chain management system. Managing these
flows effectively is a daunting task, particularly for global
corporations. There are complex relationships such as
multiple suppliers, serving multiple customers, and suppliers
who may be both customers and even competitors in different
parts of the chain. “The network complexity, communication
between entities, and accurate and timely transfer of
information can be extremely difficult. The multiple layers in
a supply chain can distort demand information and lead to
excessive inventory, idle capacity, high manufacturing, and
transportation costs, not to mention increasingly dissatisfied
customers. Achieving supply chain efficiency requires
accurate and timely information” (Lee, 2000, p234).
Information integration is the foundation of broader supply
chain integration. For companies to coordinate their material,
information, and financial flows, they must have access to
information reflecting their true supply chain picture at all Figure 1: Ware House Management Systems (WMS) Keymas
times. Without information being relayed at the right time Ltd, Pensnett House, Pensnett Estate, Dudley Road,
and to the right place, there would be no purchase orders, no Kingswinford, Dudley, West Midlands DY6
shipment messages and no payments resulting in a collapse of
The Internet provides a new platform and system of
the supply chain. Managing the flow of information in the
global communication that has dramatically “shrunken” the
supply chain may be as important as managing the flow of the
planet and all of the traditional cycle times required for
products. Technology is the enabler, and the backbone of
business commerce. The key to success will require
most corporate supply chains. Information technology is at
communications of data across the full supply chain network
the center of virtually every aspect of business, especially in
that connects suppliers, manufacturers, distributors, business
today's dynamic, uncertain, and highly competitive
customers, and the ultimate consumers (Bauer, 2001, p6 ).
environment. The rate of technological innovation has never
Wireless devices and mobile business solutions are another
been greater, and is expected to continue to accelerate. “E-
option to improving supply chain management.
commerce applications and e-enabled capabilities that rely on
The supply chain is transformed from a reactive, digitally
efficient information transfer have the potential to completely
enabled, linear process to a proactive supply web that acts
revolutionize the existing business environment” (Meltzer,
much like a nervous system. Web, wireless, and satellite
2000). There are many goals in making investments in new
communications allow the supply chain to sense requirements,
technology. Improved inventory management, reduced cycle
problems, and changes throughout the network instantly. This
times, improved fill rates, and increased visibility of
access to real-time information will enable faster decision-
information on production, delivery, and shipment and of
making and greater communication among all parts of the
course to remain competitive, maximize shareholder profit”
supply chain. It is not simply an add-on to the e-supply chain,
(O’Brien & McNerney, 2002, p18). Companies striving to
“wireless devices, also known as mobile business solutions,
improve their supply chain management functions will have to
have the fundamental capability to reshape supply chain
support changes in their technology platforms.
management” (Shankar & O’Driscoll, 2002, p 86).
The widespread introduction of Enterprise Resource
Companies adopting leading communication business
Planning (ERP) systems has provided shared data and
practices consistently improve their performance. Supporting
operational processes across the supply chain functions which
technology is a critical success factor for performance, usage
are the bedrock of integration. Building on this foundation,
of supply chain software, while not the most critical part of the
supply chain improvement, is a first-order accelerator. As
strategies and processes increasingly depend on underlying
systems, business leaders must consider the technology
component earlier in the performance improvement planning
process. Strong business process plus technology wins”
(Gens, 2003, p5).
The concept of integrated communication system
support, its eagerness to maximize readiness and optimize
costs influences the data exchange requirement, and is part of
designing a system for reliability, maintainability, and
supportability as can be seen in Figure 2. The
communication and information transfer systems are primary
components of the Supply Chain Framework.
Supply Chain Framework
R PRODUCT-
PRODUCT-SERVICE VALUE FLOW
E MARKET ACCOMMODATION FLOW
S D
O BEHAVIORAL CONTEXT
Relationship
U C
PLANNING AND CONTROL CONTEXT
R U
C Measurement Technology and Planning
E OPERATIONAL CONTEXT
Material and
Service Supplier
Internal Customer
Operations Integration
B Integration
A INFORMATION FLOW
S FINANCIAL FLOW
E S
Figure: 2. Mentzer 2000 Supply Chain Management
Wal-Mart distributes the freight through a network of 20
regional distribution centers (DC's) across the country. Wal-
Mart and Retail Link were responding to the customers and
their needs. The Wal-Mart warehouse management system
uses a flexible location system in a user-defined warehouse
management system with a built-in level of integration and
data collection system. The strength of the system is that
about 5,000 manufacturers are tied into it through the
company's Retail Link program, which is accessed via the
Internet. Pepsi, Disney, or Mattel, for example, can tap into
Wal-Mart's data warehouse to see how well each product is
selling at each Wal-Mart store. Wal-Mart can look at how
things are selling in individual areas and make decisions about
categories where there may be opportunity to expand. This
tight information link helps Wal-Mart work with its suppliers
to replenish stock of products that are selling in high volume
and to quickly pull those that are not. Since the
manufacturers are so deeply involved, in some cases Wal-Mart
even has them handle their own distribution, saving the
retailer big bucks and increasing profit margins on cheaper
goods. “Clearly, Wal-Mart's investment in information
technology will be shaking up the retail industry long after the
holiday rush is over” (Holstein, 1998,p 2). Synchronizing and
optimizing the supply chain relies on real-time availability of
ever-changing information for decision making, and constant
flow of information between applications.
It is critical that data integration be both effective and
efficient. “The foundation for Supply Chain Management has
always existed, but today's technology and business
philosophy are responsible for its mainstream adoption and the
success it has achieved” (Holstein, 1998) with communication
up and down the supply chain. The Wal-mart system was the
benchmark used by the Department of Defense (DOD) in
development of their systems. Time-Phased Planning (MRP,
MRPII, DRP, DRPII) are forward-looking and demand-based
management tools used in the SCM systems. Software
providers such as QAD Enterprise, SSA Global, ORACLE,
and SAP Business solutions are the major sources of MRP
and MRPII software.
The concept of integrated communication system support,
its eagerness to maximize readiness and optimize costs
E influences the data exchange requirement, and is part of
N designing a system for reliability, maintainability, and
supportability as can be seen in Figure 2.
4.0 MANAGEMENT COMMUNICATION SYSTEMS
During Operation Desert Storm, about 40,000
S containers of supplies and materiel were shipped to the
T theater of operations. Shipping the containers to the
Persian Gulf was relatively easy, after all the Military
O
has been shipping supply containers all over the world for
M years. The problem was, by the time the containers arrived
E in the Persian Gulf, no one knew what was inside them.
R About half of those containers had to be opened and
manually searched or inventoried to ascertain the contents.
Radio frequency identification (RFID) technology is getting
a big push from end users, with everyone from consumer
goods manufacturers to the Department of Defense singing
the technological praises, and clamoring for better
standards. Wal-Mart and Proctor & Gamble have used their
positions in the industry to force suppliers and competitors
to adapt these technologies.
Standard Army Maintenance Information System
(STAMIS) is an Army approved computer system,
comprising both hardware and software that automates diverse
logistical supply chain functions to fulfill customer support
requirements and provide information management over
resources. Communication is an important part of the overall
SCM system support infrastructure which supports automated
critical supply and maintenance functions.
In order to support the vast number of Army systems,
logistics information and data must properly flow without fail
between each STAMIS. This becomes particularly
challenging on the battlefield. How do you maintain
communication links and connectivity in such an austere and
dynamic environment? This question has plagued
maintainers and suppliers on every deployment and military
operation. Lieutenant General Claude V. (Chris) Christianson
states that, “We will solve this problem by connecting Army
Logisticians…This connectivity will cover the battlefield, and
it will give Army Logisticians the agility and flexibility to
quickly plug into, and unplug from, a dedicated network with
an asynchronous (stand-alone) capability” (Army Deputy
Chief of Staff G-4, 2003). The supply chain is transformed
from a reactive, digitally enabled, linear process to a
proactive supply web that acts much like a nervous system.
Web, wireless, and satellite communications allow the supply
chain to sense requirements, problems, and changes
throughout the network instantly. This access to real-time
information will enable faster decision-making and greater
communication among all parts of the supply chain. It is
not simply an add-on to the e-supply chain, "wireless
devices, also known as mobile business solutions, have the
fundamental capability to reshape supply chain
management.
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BIOGRAPHY
Ralph L. Harper Jr., DBA, CISM, Professor
Nathan M. Bisk College of Business
Florida Institute of Technology
150 West University Boulevard
Melbourne, Florida 32901-6975, USA
E-mail: rharper@fit.edu
Before Dr. Harper joining Florida Institute of Technology as
the Academic Chair for Management and Professor, College
of Business, Dr. Harper had Over 42 years of experience in
Acquisition and Logistics Management focusing on product
application and development. Thirty-seven years experience
in the aerospace industry in the development and delivery of
logistics products and services to government and commercial
customers in the U.S. and overseas. He Defined and
developed a global logistics network management system,
configuration management system, and production control
management system for use in support of multiple defense
systems. Dr Harper was Logistics Configuration Manager for
Air Defense, Raytheon Technical Services Company 1967 to
2004, President of HarCon Inc. 1988-2007, Adjunct Professor
of Management, Florida Institute of Technology, 2001-2007,
Adjunct Professor, Franklin Pierce College, School of
Graduate & Professional Studies 2001-2007, Adjunct
Professor, Southern New Hampshire University, School of
Graduate & Professional Studies 2001-2007. Dr. Harper is a
member of the Sigma Beta Delta National Honor Society for
Business, Management and Administration, AAIA, SRE, and
CLEP. Dr Harper has 22 Published papers and Presentations.