Pop quiz: Is radio frequency identification an important technology in warehouse management? Not yet, say users and analysts, who point to cross-docking, floor-ready merchandise and visibility into transportation as the three biggest trends in the distribution center.
“Lots of warehouses are taking on additional responsibility for value-added services,” said Jeff Woods, an analyst with Gartner Inc. in Stamford, Conn. Merchandise that is ready to hang helps reduce labor in the store, and it can help improve presentation because quality control is centralized, he said.
Although many of these processes are handled manually because automated equipment is costly, warehouse management software is evolving to support them. For instance, software from Manhattan Associates can create a bill of materials that will be needed to handle such activities as ticketing and kitting accessories with a garment, he said.
The Fort Worth-based warehouse of Haggar Clothing Co. specializes in floor-ready requests and replenishment, which means picking and packing individual store orders. The challenge is to constantly reconfigure operations and make sure Haggar’s nearly 400 associates are updated with the latest instructions for ticketing, hanging, bagging and removing pins and cardboard, said Steve Bernier, vice president of logistics. Most of the picking and packing is done by hand.
Two years ago, Haggar replaced its paper-based instructions with a voice-controlled picking system from Voxware Inc. of Lawrenceville, N.J. Pickers wear headsets and bar code scanners on their wrists. The new hardware has sped operations by about 10 percent, reduced errors by more than 50 percent, reduced labor costs by eliminating the preparation of paper instructions and allowed pickers to have both hands free.
Woods noted that using handhelds, voice commands or lights to replace paper-based instructions and speed picking is not new, but can significantly increase efficiency. Pick-to-light systems show workers what to grab by turning on a colored light (usually an LED, or light-emitting diode) above the merchandise. When orders are grouped together, a pick-to-light system can allow one worker to pull 15 orders on one trip through the warehouse, said Jack Peck, chief executive officer of Foxfire Technologies Corp. of Six Mile, S.C. Accuracy is near 100 percent and speed can improve by 80 to 300 percent, according to the company’s own tests.
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Cross-docking and visibility into transportation are also helping warehouses speed goods in and out — a particularly helpful development for companies that want fresh fashions in short order.
Cross-docking means moving goods directly from receiving to shipping without storing them. It reduces handling and eliminates put-away and picking. The process demands a lot of last-minute coordination, as well as advance notice of where goods are in the shipping process and when they will arrive.
“The changing marketplace, which seems to be rather unpredictable, has demanded that our time between factory and in-store needs to be collapsed so that we could have the most flexibility in the factory,” said a technology and process expert who works for a large chain retailer based in New York. (Company policy prevented him from being identified.)
In the last three years, the vertically integrated retailer has gone from almost no cross-docking to cross-docking more than 50 percent of the time at its one national distribution center. The benefits have been many: greater flexibility, a reduction in the non-selling ownership of inventory by 35 percent, a reduction in handling costs and less exposure to damage and loss, he said.
The process has necessitated some changes. The product arrives closer to its expected market date, so the company creates its allocation and distribution plan while the product is in transit, rather than after it arrives at the warehouse. The company requires greater visibility into its supply chain and transportation systems, which it has achieved largely through homegrown software. “If anything, the challenge has been that we have not found any software or service providers that provide the timeliness or quality of information that we can get through our own channels,” he said.
The cartons are not repacked at the distribution center, but arrive from the factory with a standard run of sizes and ready to ship. The warehouse doesn’t do much replenishment, which requires custom packing orders for individual stores. “We don’t run a basic product. So much of it is fashion that for a lot of it, we sell straight through and then we’re done,” he said.
Cross-docking is spurring makers of warehouse-management software — from companies such as Retek, Manhattan Associates and New Generation Computing — to integrate their software with transportation-management applications, said Woods. It’s not yet a fait accompli, but will happen in three to five years, he said.
Other warehouse concerns are labor management, such as scheduling, tracking and retaining employees, and the recent acquisition of Retek by Oracle. Warehouse experts said they are worried Oracle might replace the software with an application less suited to the apparel industry.
More retailers and wholesalers are outsourcing their warehouse operations to third-party vendors, said Rudi Lueg, vice president of software development for Real Time Integration Inc., a maker of hardware to control warehouse equipment, based in Melbourne, Fla. Haggar, for example, takes care of its initial shipments (not replenishment) in two warehouses run by third parties in New Jersey and California, said Bernier.
While some companies are consolidating their warehouses or moving warehouse activities offshore, there is no general trend in this direction because every company has to do what’s right for its situation, said Woods.
As for RFID, warehouse experts agreed that it’s not useful to replace bar code systems that are already working well. However, Liz Claiborne Inc. is one company that is using radio frequency in its factory for routing. The tags are embedded in trolleys that carry hanging garments around the center. Each tag costs $3.50 and can be rewritten 100,000 times, said Brian O’Donnell, director of technical operations and planning for Claiborne. Each tag is programmed with a destination, and as the trolleys pass by fixed RFID readers, the reader scans the tag and determines if the trolley should exit.
Claiborne has been using the system, from SDI Industries of Los Angeles, for three years. The RFID setup replaced another system with a mechanical switch that frequently broke and misrouted trolleys, said O’Donnell.