Mining bottom line cash from integrated TMS and WMS solutions

Mining bottom line cash from integrated TMS and WMS solutions
During tough economic times, products that offer tangible and immediate returns on investment are especially attractive. Two such products in the supply chain sector are transportation management (TMS) and warehouse management (WMS) systems.

When implemented separately, each of these software product types can typically add 1-3% percentage points to the bottom line. TMS savings are usually based on a variety of rate/service shopping, external routing, and internal labor-saving activities. WMS products drive costs out of the warehouse by dramatically increasing inventory accuracy, space utilization, and by reducing labor consumption. These factors work together to elevate customer order fill rates to over 99.5%. When the two packages are used in conjunction, their multiple effect can be greater than their sum.

This white paper does not explore the process for cost justification of the WMS and TMS packages as individuals. Each could be the subject of future reports. The assumption here is that the purchase decisions have already been justified. Proceeding from that basis, ten real-world examples are presented of how TMS and WMS products can be co-configured to return cash to the corporate bottom line.

Mode Switching
WMS packages employ logic to combine multiple orders that are destined to a single final destination into a "shipment." Orders are then released to the warehouse floor for fulfillment. The data from WMS can be passed to TMS to evaluate whether several small orders may be combined into a single larger departure. The mode of transit is thus switched from the original carrier to another, which costs less per pound. The WMS package defines the shipment while the TMS package uses the rate/service shop engine to evaluate the most efficient mode of transit. Mode switching can reduce the net transit cost per pound by 25-40%.

Carrier-compliant pre-container labels (CPRE)
WMS packages often are configured to calculate the correct shipping container to used for each order and to print a label for each box. However, WMS CPRE labels can not customarily be used for final shipping if carrier-compliant shipping labels are required. This is normally the case for most small parcel, air, and some LTL carriers. TMS systems print carrier-compliant labels at the point of shipment. Integration of the TMS carrier-compliant labels into the WMS pre-container selection process eliminates the need for manual processing of the parcels for shipment. The last time a box needs to be handled is when the last unit is placed inside and the box is sealed. Integrating the two labeling processes can potentially eliminate all packing and shipping system labor in many warehouses.

Sequential loading of trucks
TMS packages include logic to plan stops along a prescribed delivery route. WMS packages employ a similar logic within the warehouse; organizing individual activities into the most efficient work path. WMS commands can be reordered to model the most efficient internal pick-path and achieve the optimal staging for the delivery route. Hence labor and damage from extra handling is reduced, both in the warehouse and on the delivery route.

Directional load building/pool distribution/ and skip zoning
The same kind of logic mentioned above can be used to plan departures headed in different directions. The internal cost to load an eastbound truck versus a westbound truck is nominal. However, additional motor carrier discounts can be negotiated for spotted trailers and for avoiding break bulk handling facilities. Likewise, entire truckloads can be built to pool delivery partners. The freight travels most of the distance to the customer as part of a truckload, at a much-reduced rate per pound. Upon arrival at the pool distribution center, the pool-partner breaks the freight for final delivery to the customer by a less expensive, local mode of transit. Service is generally improved and damage reduced.

Workload leveling
The affects of lumpy customer demand and the need to level the warehouse workload are mitigated by the ship and hold feature within TMS. Ship and hold allows orders to be picked and staged in advance. TMS then prompts warehouse personnel when to physically ship the order for proper customer service. Invoicing takes place on the physical ship date. Warehouse physical and available inventories are updated when the orders are picked. Net warehouse labor costs are reduced, while inventory records remain intact.

Reporting
Carrier-compliant labels from WMS form the basis for shipment tracking activities stored in TMS (and order entry system OMS). TMS reports accumulate data to support carrier rate negotiations. TMS reports provide a basis for accurate month end freight accruals.

Improved fill rate = less returns.
Over time, improved warehouse inventory accuracy levels up to 99.99% increase the customer order fill rate. Less fulfillment errors reduce absorbed freight for customer returns.

Container content data.
WMS creates a container content file that can be stored in TMS. The container content data validates the items which the picker placed in each carton and supports the data by shipment weight validation. Improved container validation capabilities reduce the number of disputed customer returns and returns deductions against accounts receivables.

Improved motor carrier rate negotiation tools
Both sections mentioned above: Sequential loading of trucks & Directional load building/pool distribution/ and skip zoning , suggest the use of spotted trailers at the warehouse docks. Warehouse personnel can directly load customer orders into these trailers, increasing available dock space. Also, task sequencing ensures that orders are loaded in the proper delivery sequence. Reductions in motor carrier labor at the warehouse, at the local truck terminal, and on the delivery route translate into increased discounts from motor carriers.

EDI uplinks
TMS EDI links to carriers automate updates to WMS carrier-compliant CPRE labels. EDI capabilities are usually rewarded by a 1% increase in motor carrier discounts for the shipper. TMS supports end of day shipment pricing as is used with UPS and RPS HundredWeight programs.

How well do these ideas deliver cash? While directing various warehouse and transportation operations in the consumer products, textile, and manufacturing industries, the author used a combination of most of these techniques. In every case, net savings equal to about 30% of the combined transportation and warehouse budgets were realized. In at least three cases, these results were achieved by adding staff to monitor rudimentary TMS and WMS systems. With more modern TMS and WMS systems, the extra labor would not be needed and even better returns are possible. The actual benefits obtained are directly related to the status of the current operation, the profitability of the company, and the overall economy.

TECSYS in the Distribution Industry
TECSYS is an industry-leading software company that provides powerful business and logistics software solutions that can be deployed as an integrated suite or as stand-alone best-of-breed components. TECSYS' suite of distribution, warehousing, transportation, e-commerce and business intelligence solutions power hundreds of successful world-class distribution operations around the globe by enabling supply chain excellence.

TECSYS is renowned for delivering successful software implementations in highly complex multi-company projects and in highly complex distribution environments. Since 1983, hundreds of distribution operations with thousands of facilities have deployed TECSYS' software solutions and have realized significant efficiencies and savings as a result.

TECSYS is strategically poised to become the leading software provider of enterprise and logistics applications to distribution operations. TECSYS solutions are currently managing high volume transaction processing environments that ship up to 500,000 order lines per shift. TECSYS software is based on the foundation of scaleable open systems technologies and is powered by the Oracle and IBM/Informix relational database management systems.

With corporate headquarters in Montreal, Canada, TECSYS has sales and professional services offices throughout the United States and in Latin America.