The concept of the supply chain execution system has grown out of the warehouse management system. There is general agreement that an SCE must cover the fundamental of receiving, inventory management, all aspects of picking, replenishment and shipping.
Per Norling, president of CDC Supply Chain, highlights the importance of enabling centralised visibility across the whole supply network providing earliest possible awareness of operational progress and the ability to meet the requirements of existing plans.
“This would include electronic Advanced Shipping Notifications, real time receipt updates, notification of inter- or intra-network movements, as well as transport information, cross docking capabilities and other schedules.
“SCE delivers a tool kit that enables strategic decisions and tactics. For example demand planning, single point supplier deliveries, direct delivery from supplier, dynamic sourcing of inventory, load merging, synchronised cross docking planning, co-ordinated wave picking with transport planning, labour and resource management.”
Norling points out that further SCE applications can support operational efficiency such as dynamic transport route planning, labour management, slotting, yard operations, transport management, bay appointment diaries, cross-dock execution / synchronisation, shipping documentation and courier / carrier interfacing.
“More advanced SCE systems can deliver flawless optimised execution, including interleaving, cartonisation, multiple picking options, secondary picking capabilities, pallet/cage and trailer consolidation and sequenced loading.”
Jeremy Clouston Jones of Savoye believes an SCE must enable a company to progress on five performance axes: physical storage optimisation, productivity optimisation, quality improvement, multi-level traceability, and improving activity by decision-making control.
On productivity optimisation, he says: “The warehouse’s overall performance depends on efficient well-designed processes. The optimisation starts with the reception of the goods, for instance by scheduling bay activity and by a pre-planned integration of the goods coming in. Once the product is identified in the warehouse, the automatic and efficient management of the stock movements allows the optimisation of the operator movements.”
Overall quality is primarily based on a complete and well organised product database. The products must be efficiently checked at goods-in including full features and strict supplier quality control. The conformity of the stock is also important for good warehouse operation. This is ensured by regular stock reports and continuous stock input and output control.
The complexity of SCE systems means that selecting the right product is a major business decision. Clearly, the functions of an SCE need to meet the user’s current and future business process requirements.
Leo Valentin, general manager EMEA for 3M Supply Chain Solutions, recommends that users should request evidence from existing clients of a prospective vendor to demonstrate their aptitude, performance and experience in the field.
“When deciding whether to choose an SCE system, users are likely to be facing frequently changing and complex business processes. Perhaps they are struggling to cope with e-retailing demands, increases in volumes and mounting customer demands. They could be running a legacy system that is neither flexible nor maintainable.
“Most vendor systems offer core processes that will help address the above issues but the recommended strategic selection criteria would be system flexibility first and foremost, followed by vendor responsiveness, vendor references and system functionality,” says Valentin.
Per Norling of CDC says: “Companies need to have a good knowledge and understanding of the enterprise wide potential of an SCE system. They also need to see the real benefits that can be achieved through the logistics and IT divisions working together. These benefits can include the reduction of inventory, improvement in service rates, support for multiple sales/delivery channels, ability to promise (inventory and delivery), reduction in costs to serve, savings on store process, faster availability of inventory on-shelf, more frequent store replenishment and single on-time complete delivery.
Achieving the required return on investment is a significant challenge. Leo Valentin, general manager EMEA for 3M Supply Chain Solutions, says: ” Users should look beyond the initial costs to overall lifetime costs. An initial purchase cost might appear attractive but could prove to be more expensive than alternatives over the longer term. Users should evaluate the total cost of ownership and demand a multi-year view of the costs from their vendor. Users should also be very clear on what their business case is and make sure that, at every opportunity, they refer back to this so as to avoid the “nice to have” syndrome.
And Tim Williams of Business Computer Projects points out that: “The before and after measurement of key success factors is a standard approach that is no different for SCE. A key measure is stock levels, or stock turns, or customer SLA achievement. Benefits can be measured in terms of working capital reduction (less stock), or more simply using existing warehouse space for longer, postponing an expensive warehouse extension. If you can reduce your stock with an effective SCE implementation, then you may not need to move so quickly as you expand.”
For Clouston Jones of Savoye, the five performance axes mentioned above provide an effective route to achieving a good RoI. “A complete functional analysis permits you to identify the most important RoI sources in a logistics organisation,” he says.
“Companies need to establish key performance indicators and deploy real time, enterprise-wide monitoring and reporting on these KPIs, says Per Norling of CDC, who goes on to point out that RoI can be quickly achieved “by fully exploiting the functional capabilities of superior warehouse management, which rapidly enables greatly reduced stored inventory”.
Software vendors can help improve RoI by adding value to the product. Norling says: “Software vendors can share the knowledge and experiences gained in many previous implementations. Companies should actively encourage the suppliers to participate in the enterprise planning process and bring their experience to the table when planning new systems.”
And Savoye’s Jeremy Clouston Jones says there are suppliers that can provide a complete service of expertise and consultancy, and turn-key solutions including hardware components, backup solutions, added value partners’ offers, logistic tools and terminals.
“Vendors that can help leverage techniques such as Six Sigma and project management will ensure a user gets the best RoI,” says Leo Valentin of 3M .
A note of caution is sounded by Alex Mills of Chess Logistics Technology, who points out that warehouse management systems are reaching serious levels of complexity.
“More and more is going into them and this is reflected in the price end users are asked to pay. But can customers expect to use every part of any system they buy? If you buy a certain word processing product for around £200 it barely matters if you use all the features. But with a WMS the outlay can be tens or even hundreds of thousands…
“The industry adage that ‘new users make it complicated, experienced users keep it simple’ is very apt.
“The key point is to find a solution that meets current and foreseeable future specifications, but to be very realistic about the requirement. Nice-to-haves that are never used are a waste of money,” says Mills.
As logistics operations come under ever more intense pressure on sustainability and environmental performance, the need for IT systems to help deliver the green agenda is bound increase.
3M’s Leo Valentin says: “Understanding and reducing variation in a supply chain operation plays a major role in the development of an environmental strategy. Faster and improved information accuracy and information flow provides a greater opportunity to manage inventory levels and therefore reduce waste. Also, implementing more efficient transport management processes with a supply chain operation can help reduce environmental impact.
And Tim Williams of BCP says: “The environmental mantra of reuse, recycle and reduce can be boosted in the reduce area. By having appropriate stocks instead of excessive stock, to meet a customer SLA, then less stock is moved in, stored, and scrapped if not sold – all elements reducing the carbon footprint of the supply chain.”
The capabilities offered by SCE systems deliver resource optimisation and efficiencies to the enterprise and thereby to the environment says CDC’s Per Norling.
“These include improved vehicle utilisation, which reduces empty mileage running and trailer positioning movements and thereby a reduction in packaging and consolidation of deliveries. They also create a reduction in hours worked, which results in savings on power, resources and emissions. SCE systems can also reduce the number of returns, by increasing overall efficiency and reducing errors.
“Waste and recycling procedures using pre-existing untapped capacities can now be built into SCE systems, enabling companies to meet any legislations on waste management, while use of RF equipment, gauges, dashboards and alerts minimise printing and need for hard copies. SCE systems are able to keep track of materials, such as pallets and load carriers, throughout their operational lifespan. This can create a foundation to implement procedures to re-use materials throughout operations.”
For example, says Norling, many RFID implementations involve the tagging of boxes which are then being destroyed. “However, systems are in place to make sure these materials are used more than once. By tagging recyclable warehouse tools they have an identity throughout their lifetime.”
