R&FF Retailer: Can You Be ‘Too Just-in-Time?’
By Dan Raftery, President, Raftery Resource Network
Through a special arrangement, what follows is an excerpt of a current article from Refrigerated & Frozen Foods Retailer magazine, presented here for discussion.
The good news: New technology allows third party logistics (3PL) providers to be incredibly efficient. The bad news: potentially not enough docks, or hours in the day.
Warehouse management systems that connect between supply chain partners’ systems are the cutting edge of inventory efficiency improvements. For example, the internet front-end system at United States Cold Storage (USCS), provides access into all 30 of the company’s warehouses, down to the SKU level.
“Most of our major customers are connected into our proprietary WMS for real-time access to all information about orders, shipments, billing and inventory,” said Jerome Scherer, VP of national sales, marketing and government affairs at the company.
USCS is not alone. Another 3PL provider, RedPrairie, is working on a new program for a retail customer that focuses on improving management of slow-moving items. The program involves consolidation and storage at the 3PL to ship slow-movers and seasonal products closer to “just-in-time.”
“Buyers can see as much detail as the manufacturer allows in this glass pipeline,” observed Dan Grimm, VP, solution consulting for RedPrairie,
Although companies have invested in increasingly sophisticated information systems, a big opportunity remains: to “bridge these islands of automation and move toward more coordinated solutions,” according to Mr. Grimm. The USCS integrated system is one example, and a few others exist as well. However, the bulk of the supply chain still operates and protects its information system islands.
“Transportation traffic congestion is another big supply chain opportunity,” observed Mr. Scherer. Traffic congestion is so bad in major metro markets that USCS is building new facilities far outside the traffic jams so it can at least keep cross-country trucks moving.
“Receiving dock practices such as appointment scheduling is another area of opportunity,” according to Andy Janson, EVP of business development, Hanson Logistics Group.
He pointed to a disconnect that can occur between what the buyer wants and what the DC can handle. As inventories deplete, buyers set delivery dates timed close to the theoretical shipment of the last case. Trouble is, other buyers do the same thing, and the warehouse has only so many doors and so many hours in the day.
Mr. Grimm’s “glass pipeline” sounds like the solution here, because Mr. Janson thinks the industry as a whole does a great job with labor functions at the dock. The real problem is coordination throughout the supply chain with all the players who need receiving docks to function smoothly.
Tony Lucarelli, EVP at Henningsen Cold Storage Co., would like to see fewer last-minute change orders, and Mr. Scherer thinks manufacturers might be under-producing somewhat. Both observations, from people positioned firmly in the middle of the supply chain, indicate the industry could be approaching a critically sensitive level of inventory reduction. As companies work to lower their requirements for operating capital by increasing inventory turns, among other tactics, they run the risk of increased out-of-stocks without one of those “glass pipelines” Grimm espouses.
Certainly, it’s important to continue improving efficiencies. Comments by these industry players indicate that the next big wave could come after bridges are built between the islands of information automation.
Discussion Questions: What do you see as the biggest challenges within the retailing industry when it comes to achieving more efficient warehouse operations? What particular warehouse management solutions have you seen to address traffic congestion, receiving dock bottlenecks and/or managing last-minute orders?