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How to up your warehouse IQ


Johannesburg, 16 Jan 2004

Many companies do not understand the difference between warehouse optimisation and warehouse management. To some it might seem a subtle difference, but Mark Lilje, MD at RangeGate, will tell you it is not and why you should know about it.

A warehouse management solution manages how much stock you have, where it is, where to pack it on receiving, where to fetch it from to fulfil a customer order, what your minimum re-order levels are, pick-face replenishment management, and more.

A warehouse optimisation solution, on the other hand, tells you who should do the work, how they should do the work, what they should do in terms of verifying that they have completed the work and reports back on staff performance.

Measurement is a basic key to proper warehouse management, not only of the stock or goods in a warehouse, but also, of the performance of the warehouse operations.

ERP systems generally have a warehouse module that handles its management of inventory. The problem is that they are expensive and where recent implementations have occurred, there is little benefit gained because processes and methods have remained largely unchanged over older implementations. This limits the payback of the system.

The first step to optimisation and getting some return on investment would be to integrate materials handling into the forecasting, planning and order processing information stream, which would result in cost reductions, service improvements and lower stock levels. Some sources suggest that that alone can result in efficiency enhancements of between 20% and 70%.

Ultimately, though, the best solution is to garner real-time information for the business in conjunction with a properly structured physical layout. A point solution such as wireless, mobile technology at the coalface of the business would reduce information capture errors, resulting in more accurate information for the business.

More importantly, it would provide the business with information about, and hence the capability to measure, warehouse resources. Often people believe that real-time is simply faster, but linking physical actions to data transactions brings many potential benefits.

These include:

* Service visibility on stock levels and accurate stock reservation;

* Workflow methods that link different tasks and workers for efficiency;

* Automated verification of information;

* Operation selection for new tasks using the nearest, most reliable and speedy resource;

* Operation productivity tracking using date and time stamps;

* Reduced cost of data capture because all information transactions are reduced to one function;

* Improved utilisation of expensive assets like fork and reach trucks; and

* Improved efficiency of warehouse staff due to a reduction in dead-time tasks.

The reality of the warehouse environment is that optimisation thinking is about reaching across functional divides and focusing on creating and moving product. Anyone can receive, pack, pick, despatch and count goods or materials, but are they doing it efficiently and how do they improve it?

A proper optimisation toolset will lead and control the processes around traditional methodologies, improving where it can, suggesting alternatives where necessary and allowing for and suggesting continual improvement.

Users and potential users need to realise that optimisation systems do not impede or duplicate their existing ERP components or standalone warehouse management tools. Those systems remain a necessary component and will continue to deliver accurate reports and stock level overviews.

But the moment a request is made to move stock within or without the warehouse, the optimisation solution will take over and ensure that it is moved at best speed and efficiency, considering predetermined business rules.

Effectively, optimisation tools are an additional layer to management tools and systems, with all the supply chain rules and extended methodologies required to imbue the system with the capability to extract greatest efficiency from resources.

So no inventory system is replaced; it is optimised to give the business the freedom to perform with intelligence to ensure better throughput than its competitors.

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RangeGate - www.rangegate.com

For over 14 years, RangeGate, 83.6%-owned by JSE-Securities Exchange listed DataTec, has focused on leveraging mobile technologies to give its customers a competitive-edge - a Mobile Edge - in their supply chain and service operations.

The company helps its customers take advantage of the real-time data capture capability of wireless mobile technologies in order to optimise business processes and accelerate the return on investment from back-end systems.

RangeGate`s MOBILE-EDGE solutions provide supply chain execution spanning manufacturing, warehouse control, electronic proof of delivery, in-store fulfilment and field service enablement. RangeGate is an accredited mobile partner of major IT vendors including Microsoft, Symbol Technologies and SAP. RangeGate`s blue-chip clients include Sainsburys, Scottish Courage, Exel, Daimler-Chrysler and Johnson & Johnson.

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