Managing zero inventory may sound like an oxymoron but it is a concept that is wreaking havoc among bricks and mortar retail selling and so any warehouse that neglects efficient inventory management faces “interesting times” as the old Chinese curse goes. In a zero inventory model, stock is pushed back up the supply chain by the retailer who does not want the risk or cost of holding inventory. That retailer could be just a one-man and his laptop working from home using his/her own impressive website who channels orders from the public to the manufacturer, who in turn delivers them directly to the consumer, bypassing conventional distribution set-ups, except, possibly, the depots of the distributors.
There is, therefore, a need for the manufacturer to become directly involved with B2C orders. That means taking on responsibilities they never had before, like serial number capture to record goods distribution, warranty claims and packaging. Such changes emphasise the need for agile WMS capabilities with connectivity to best-of-breed stock forecasting programs and ERP software.
Owing to the ever-more stringent delivery demands from consumers order picking speeds and accuracy are critical and may therefore require investment in pick-to-light or voice-picking systems, and the time issue does not end there.
Much time, for example, is still wasted at goods-in and despatch because either the right kind of flexible forklifts are not being used or they are not equipped with onboard scanning devices so that they can go directly from the lorry to the designated racking aisle pallet location, and vice versa, avoiding delays caused by a two-truck type arrangement of, say, counterbalance and reach or VNA trucks, something articulated trucks are eminently suited for.
Choosing a slick WMS, however, is not a quick and easy solution, which could take months and so one may wish to go down the consultancy route. Key initial points to consider include: 1) The current handling cost that the warehouse incurs as a percentage of the total cost of sales, 2) The ontime- and-in-full ratio that the operation routinely achieves and at peak operating volumes, 3) The pick accuracy rate which warehouse staff are able to average, 4) How many despatch failures are there and how much does it cost to rectify the failures, 5) The number of customer complaints. With such information a WMS supplier/partner, who should be more than just a software supplier, like offering services to redesign and optimise warehouse processes, should be able to estimate resourcing costs and show where and how much one can improve the KPIs. The initial resource set-up costs can be high, but this can be lessened if one chooses to adopt a cloud-based solution.
Achieving a zero inventory goal for a manufacturer is, of course, a chimera, particularly if stocking goods from the Far East, but great moves towards it are available, especially if the best stockforecasting programs are in place, which typically can cut total stocks by one third without harming customer service. It is also important to foster good relationships with logistics providers, including even courier companies. Some increases in justin- case stock may be necessary when sourcing products from Asia, but also to cope with sudden demand spikes from irritants like manic Fridays and cyber Mondays product promotions.
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