Understanding the challenges of connecting outbound and inbound logistics activities while connecting the frontline with the rest of the enterprise and making the most of digitization tools: Part 1
As with most organizational projects, digitization has clearly defined priorities. Manufacturers tend to focus their digitization efforts on the production process and only move toward other functional areas after they have been able to establish a clear digital baseline for their operations. For functional areas beyond the shop floor like sales, marketing, customer service, supply chain, purchase, finance, and administration, there are software applications to partially, if not fully, control activities. However, even in highly digital value chains, logistical functions are either overlooked or kept at the end of the line for digitization.
A lot of work goes into getting material and finished products to and from a manufacturing unit. Depending on the nature of the goods transported, products manufactured, and type of business (B2B or B2C or hybrid), the structure and combination of warehouses and distribution centers used can vary. A lot of digital work is being done to manage material within warehouses and DCs. Software applications help create trends and patterns for more efficient and faster storage and retrieval of material, and automation through AGVs makes the operation of physically moving products far more efficient. But there isn’t enough being done to ensure that the personnel responsible for the movement of goods to and from these storage and shipping locations are connected digitally and can leverage digital solutions to improve their jobs.
In this two-part blog series, we will explain the nature of modern warehouse and logistics management and the challenges therein for manufacturers. Further explanations and digital tool recommendations will ensure that the best form of logistics management for any given process technology and automation strategy is put in place.
Warehouse Management in the Digital World:
A recent post from Forbes explains how the future of warehouse and DC management will look very different. This post identifies the advent and popularization of e-commerce as the primary motivator for changes in the way companies manage their warehouses. It further explains what factors can help service providers and companies improve the way material is handled, managed, and optimized within a value chain. Let’s take a look at what is changing and why focusing on logistics in the context of these changes is necessary. Another important consideration for manufacturers is that Webalo recommends a complete and end-to-end digitization of the frontline workforce, which entails using a Lighthouse approach to the deployment of a digital platform. But more on that later.
Forbes explains that material tracking, the use of paper-based tools, a lack of automation, and a lack of specific software applications in warehouses and DCs create efficiency and cost challenges for companies. All of these factors, from the stacking of SKUs to the mismanagement of goods due to manual oversight, are impediments to the smooth functioning of a warehouse.
Proposed Solutions for Warehouse Management: Software and Automation
The Forbes post further explains how software can help warehouse personnel effectively stock, store, and move SKUs. It also explains how AI can provide combinations of fast-moving items and pair them based on incoming orders and seasonal consumption trends. Digital oversight also means that nothing is missed and everything is always accounted for on the warehouse or DC floor. With the right software, workers on the warehouse floor can do their jobs better, faster, and with greater ease, since they are aware of both where to place a particular SKU and where to retrieve it from in real time.
Automation involves the use of cobots and AGVs to make an operation faster and safer and to reduce the overall TAT (turnaround time) for material movement within a warehouse and beyond. With automation tools, personnel count can be optimized and employees can focus on packing and shipping goods retrieved safely and intelligently. As the Forbes post points out, the combination of software and automation will change the way warehouses are managed forever.
Note to Manufacturers:
There are two vital takeaways for manufacturers from the Forbes post. The first is obvious and can be applied to warehouses or DCs irrespective of their participation in an e-commerce business. Manufacturers stand to gain when the activities in their storage locations are digitized and automated. The key is to ensure that digitization in warehouses or DCs is aligned with their overall automation and digitization strategies.
The second takeaway is perhaps more important: the post’s lack of digital logistics business cases. Logistics, which involves the movement of material-laden trailers to and from manufacturing plants and the receipt, inspection, handling, and movement of said material to and from a plant, also needs to be digitized. Manufacturers need to understand the importance of digitizing this aspect of their value-delivery systems. Let’s consider a simple example of trailer delays and the impact it has on the whole value-delivery process.
Consider a food-packaging plant, which receives perishable goods and processes them, repackages them, and ships them to distribution centers for final consumption. To simplify the example, let’s consider a local operation, which owns all the trailers bringing and shipping raw material and finished packaged goods. Now, since the goods being shipped to this particular processing plant are perishable, it is vital that trailer movement is optimal, that each incoming trailer is assigned a dock to unload goods, and that each trailer spends minimal time waiting. Similarly, the packaged goods ready for consumption need to be moved out of the plant in a very planned and organized manner to retain freshness and allow for the best possible end-user experience.
If trailer management is not digital in such a scenario, workers need to move back and forth to fixed stations each time a trailer arrives to check that the dock is ready for unloading. This creates a small and unplanned delay. When this phenomenon is scaled to multiple delivery vehicles, there is always a chance of raw material going bad just because the inbound logistics activity is manual and paper or spreadsheet based. Furthermore, since all vehicles delivering raw material and finished goods in this example are owned by the company, each delayed trailer visit means underutilization of trailer capacity and wasted driver and warehouse staff hours.
Now, simply increase the scale of the example to that of a national food-packaging and distribution company with multiple inbound and outbound vehicles. All trailers carrying perishable goods need to arrive at plants just in time and leave just in time for the business to generate requisite profits. It becomes clear as day that if the company’s entire logistics process is not digitized, the chance of losses may be much higher and possibly something that the company must incorporate into their costing strategy to sustain business.
On the flip side, if such a process is controlled by a platform that not only tracks each delivery but also equips the personnel in charge of material movement and handling with mobile-based apps to ensure everything is pre-planned and correct from receipt to inspection, chances are that there will be minimal losses and the company can better predict its output and provide customers better price points while increasing their own margins.
Connecting the worker frontline is essential to making logistics as efficient as the other functional areas of any given operation. The platform a company chooses to make this connected, intelligent workforce will decide whether or not they can remain competitive or lose out just because their logistics management isn’t up to scratch!
In our next post, we will address the specific challenges of managing logistics digitally and the solutions Webalo proposes. Stay tuned!