Keeping a manufacturing facility running smoothly used to be a fairly simple operation. Like a board game, the objective was as simple as moving inventory from Point A to B.
These days, it's more like a game of Jenga: You have to pull single pieces at a time while keeping track of what's going on with the rest of the inventory in a carefully balanced supply chain. Not so simple anymore, right?
That's where warehouse management systems (WMS) come in. Manufacturing isn't totally new territory for a WMS—some manufacturers integrated the systems into their warehouses as long as 10 or more years ago. But a WMS is rapidly moving from a nice-to-have technology to an absolute must-have as the upstream expectations in the supply chain grow more and more complex.
Still, 35 percent of warehouses of all stripes (manufacturing and otherwise) still rely on manual methods in their operations in lieu of a WMS, according to a recent Software Advice study. That means more than a third of warehouses aren't functioning as efficiently as they could.
Here are three factors that make a WMS a smart addition to any manufacturer's warehouse.
1. The SKU Explosion
In the past few years, the average manufacturing environment went from having just a couple of hundred stock-keeping units (SKUs) to several thousand. That exponential growth radically transformed the complexity of the environment and made efficient picking that much more difficult.
There are multiple variations within a single product, which means there's variety within a particular SKU. For manufacturers, that translates into additional raw materials, a multitude of assembly options and a diverse range of packaging possibilities. As customers demand greater variety from retailers, the retailers are pushing it back on the manufacturers to create it.
Rather than creating large batches with just a few SKUs, manufacturers must now make small batches with a huge number of different products—and distributors want it fast. They're squeezing everything they can out of manufacturers by pushing the cost of the complexity upstream.
As a result, manufacturers need much tighter inventory control. They can achieve this with the help of a WMS. The software, for example, can combine replenishment with put-away or picking tasks based on rules that they establish. To ensure accuracy, they can use a variety of counting strategies, whether they want to document inventory by location, product or rotation class. If the software finds a discrepancy between what it knows should be there and what actually is, it can automatically trigger an investigation. It can also track inventory by item revision level, expiration date, lot code or serial number so it can follow product as it moves through the warehouse.
All of these capabilities create greater efficiencies and give manufacturers total control of the manufacturing environment. Just as the explosion of SKUs adds complexity, the WMS strips complexity away by simplifying and automatically monitoring activities for every single SKU they are now tasked with producing.
2. Picking at the Piece vs. the Pallet Level
Tied into the SKU explosion is the fact that where once manufacturers picked at the pallet or case level, they now must often pick by the individual piece. A manufacturer of hospital beds and gurneys, for example, had three different colors of beds that, respectively, required three different colors of washers—silver, white and yellow. Because it made medical equipment, the company was regulated by the Food and Drug Administration (FDA) like a pharmaceutical company would be. When it has all of these different washers stored next to each other, it requires much tighter control to pick the correct product. And when it’s regulated by the FDA, it's not just customer service the company has to worry about; it's compliance with the agency's rules, too.
All of this requires much more careful orchestration than when manufacturers could simply pick at the pallet level. They have to get the right part to the right manufacturing line to the right product at the right time. The connections are much more tightly coupled than they used to be.
A WMS lets manufacturers track inventory at the piece-by-piece level so they know exactly where it is, how much they have and where it needs to go. This allows them to replenish parts efficiently when running low, ensure that those parts end up in the right place (the yellow washers end up on the yellow beds, for example—they can even be tracked to the serial number level, if necessary, to comply with regulations), and keep the operation running as efficiently when they’re picking one part as they could when they could pick an entire pallet.
3. Synergies between the Manufacturer and the Distributor
When evaluating where the industry is going—faster fulfillment, more diverse products, more complicated channels—it's becoming more important than ever that the manufacturer does not become a choke point in the supply chain. Manufacturers sit right in the middle between producers of raw materials and distributors of the final product, with an equal gaze both upstream and downstream. It's critical for them to find greater synergies with distributors, in particular, so manufacturing is a point that enables the efficient flow of products to customers rather than causing delays.
Manufacturers and distributors used to function in silos without much interaction beyond the transfer of goods. But now that relationship is becoming much more symbiotic as both sides seek a more streamlined supply chain.
We already looked at how a WMS can provide greater inventory control. But it can also help eliminate waste and provide an integrated platform between manufacturers and distributors, so each can monitor the flow of goods in real time between their operations. As operators mine the data, the channels can make spontaneous adjustments to account for material consumption, setup and processing time, machine performance, inventory counts and more.
The bottom line is that, if manufacturers are not already using a WMS, they’re not taking advantage of all that it can do to boost efficiency within a manufacturing environment. But by integrating the software, they can keep their operations—and all of their relationships with distributors—balanced in a perfectly winning combination.