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September  2004

AMD Headlines

 

Enter the Technological Age
Implementing a Warehouse Management System
by Mike Walsh

Editors note: While the following column features one of AMD’s manufacturer members which offers software solutions, AMD is not endorsing a particular software company. To find out about AMD manufacturer members that offer software, please attend the AMD Convention in Salt Lake City in October.

Eighteen months ago, I sat in a meeting as a result of a Warehouse Management System (WMS) implementation study. It was clear to those present that I was very conservative in my approach to WMS and didn’t care to spend time analyzing any “blue sky” cost justification. If the savings and payback truly existed, it would be evident.

The inventories of The Radford Co. (of which I am president), you see, traditionally are very accurate, and we’re very proud of that. We have always cycle counted religiously on a daily basis. Our employees are seasoned veterans. They know the product: how to receive, put away, select for the customer trucks, select for our shops and how to load trailers accurately. So, it’s like having the ground shake beneath you when somebody suggests that you can do better.

I quickly realized implementing WMS would necessitate a thorough analysis of the entire Radford Co., its operations and its processes. DMSi, our millwork software partner, and Majure Data our millwork WMS partner, helped us collect and analyze our performance and assess potential savings relative to results from elsewhere in the industry. But, the question remained for us, as I’m sure it does for you now: how much efficiency can really be gained when you already have very accurate inventories and very productive employees?
Questioning Radford’s proven processes, it turned out, was and eye-opening experience for our investigative team, and it was the start to transforming a rock-solid business into a first-class operation. We can prove it by assessing a value to each step in our day, and I can walk you through the thought process.

An independent implementation study through our software partners provided me with some challenging cost-payback analysis. It forced me to think “out of the box” relative to changes that might be made within our operation. It left me hopeful yet skeptical about the projected return on investment (ROI).

For example, just how accurate was our cycle counting and what was its true cost? How much additional labor was spent at the time of receiving, since a higher percentage of our product was becoming special order products?

Embarrassingly, I had to admit that some non-stock items had to be re-ordered because they were lost in the warehouse only to be found after the re-order was placed, received and shipped to the customer. Our process of picking product for the shop was accurate; however, on occasion we did spend time putting items back into stock if selected incorrectly for the shops. It then became evident there was a real opportunity to be had both in time and accuracy.

After further discussion, we organized an implementation team and prepared to proceed with the WMS implementation. Assembling the right team was critical to the overall success of the project. My role was to help drive the project throughout the company. Another manager assumed the role of implementing WMS, and this person was responsible for overseeing the training of employees, hardware, signage and warehouse re-organization. Five total employees trained at Majure Data headquarters in Atlanta, and this team was instrumental in preparing our company for going live with WMS.

At our company headquarters, we started by training each employee. This provided more benefits than just the obvious one of learning how to use WMS, and it was the “buy in” point where everyone became excited about the project. The training program was uniquely tailored around our products, our warehouse and our vendors. We utilized a layout of Radford’s shop and warehouse and enabled employees to actually operate hand-held barcode scanners and fulfill orders in a test environment. Gradually, confidence grew as each employee became involved with the implementation.

After spending a long weekend physically counting our inventories with the radio frequency (RF) scanning equipment, we were ready to go live the following Monday. Our WMS and system software partners both had employees on site for support and training during the initial days of using the WMS. The preparation paid off as the first day passed without any major catastrophes. By the second day, we were loading our entire routes for the day. The “on the job” learning curve was in place and would continue for many months. Frustrating at times, yes, but never overwhelming.

As of June 2004, it has been three and one-half months since we began running on our WMS. Our employees have embraced this technology and have done a great job allowing this tool to make them more productive and accurate. In the past, we would gauge the productivity of our shops only against “bill of material” standard labor rates. Now we are able to measure productivity throughout the entire warehouse operation using the data collected and reports provided by WMS.

We find our overall inventory accuracy rising today. Before WMS, products on orders that we couldn’t find quickly became a “zero ticket” and required research the following day. Today, we utilize time better. Lost items are rare. Our cycle counting is still completed daily, but in much less time, and with a real-time warehouse system, cycle counting is done at any time, regardless of material movement.

The effects of re-thinking our business processes continue. No doubt, we will see our learning curve continue for some time. And, we have benefits yet to be experienced on the horizon as we become better in utilizing the overall system. Although not there, my early skepticism about the projected ROI is becoming increasingly optimistic. Implementing WMS requires careful thought, and if done right, will change the standards inside many millwork operations, as it has at The Radford Co. 


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