Most people assume barcode scanning is a requirement for a well managed distribution center.  While it may be true that many world-class DCs have locations and SKUs barcoded, it certainly doesn’t follow that all DCs that use barcoding are world-class.  Many DC managers feel the need to implement barcoding and RF terminals because it’s the “in” thing to do.  But is it really necessary?  Will it really provide a ROI?  Here’s some potential reasons why you should think carefully before implementing barcoding.

1. Your inventory isn’t barcoded

It’s common for the inventory in your DC to be sourced from hundreds or thousands of independent suppliers.  If there hasn’t been any prior effort to enforce labeling standards on these suppliers, don’t expect inbound inventory to have anything useful embedded in a barcode.  Often product is barcoded on the wrong level.  Perhaps each SKU is barcoded but you perform warehouse handling on a pallet level and never see the inner cases.  Or perhaps the information encoded in the barcode can’t be utilized to connect back to an ASN or reduce data entry.  Of course you can barcode all inbound orders yourself but don’t underestimate the huge labor cost to do this. 

2. Your WMS solution doesn’t effectively utilize barcodes

Most warehouse management software includes RF (radio frequency) terminal support with the ability to scan barcodes.  But what can you really do with whatever is encoded in the barcode?  For inbound orders if you are not receiving EDI ASNs or Order data, how can scanning an order number from a barcode save you time?  Sure you can scan the order number instead of typing it on a PC but what about the other 50 data entry fields on your receiving screen?  Since picking and shipping is usually first prepared on a PC prior to executing the picks there is more chance barcode scanning can be utilized for outbound processes.  However the benefits here tend to be error reduction rather than productivity improvements.  If you aren’t utilizing task management features like task interleaving in your WMS, the odds are picking from paper pick lists may be just as fast or faster than reading picks from an RF device and scanning barcodes over and over again.

3. Barcode scanning and RF terminals can increase the risk of accidents

RF terminal suppliers may take issue with this statement but I’ve found this to be true in my experience especially early in implementation.  When forklift operators are busy fiddling with RF terminals and focusing on barcode labels they tend to be distracted and less aware of their surroundings.  More than once I’ve seen guys speeding around on forklifts while trying to type something on the keypad of their RF terminal.  Of course safety training can and should address this but it’s something to consider.

4. Inventory velocity and data accuracy requirements don’t justify barcoding

Although transaction volume has a big impact on your consideration to do barcoding, I think it’s more important to look at inventory velocity.  If you have an lot of pick contention on particular SKUs, an RF-based system can help coordinate multiple users.  If you think about a paper-based system, there is a pretty significant delay between the time a pick is set up in the system and when the physical pick is confirmed.  If you have hundreds or thousands of transactions hitting your inventory in a small amount of time this time lag is very problematic.  You can probably benefit from the speed and accuracy of RF terminals and barcoding.  However if you have very slow moving inventory or work in an environment where small accuracy problems are tolerable, it may be difficult to justify the cost of setting up barcode labels and associated RF equipment.

5. There may be better technologies suited to your requirements

Before committing to barcoding check out other technologies like RFID, pick to voice and pick to light.  Depending on your requirements these types of technologies may supplement an RF/barcode solution or even replace them.  These technologies have the ability to dramatically increase productivity and accuracy. 

Of course there is nothing wrong with barcoding so don’t let me try to talk you out of it.  However just beware of anyone dogmatically advocating barcoding as the solution to all the evils in your distribution center.  It could easily end up being a complete waste of your precious resources.

It’s Feature Day!  Today’s WMS feature is Receiving Against an ASN.

Although it’s often hard to get them, supplier generated ASN’s can offer key productivity gains for inbound logistics.  What’s an ASN?  It’s an Advance Shipment Notification which is frequently formatted (although not always) as an ANSI X12 856 message.  It’s basically an EDI document that tells the receiving distribution center what’s inside a shipment and when it can be expected to arrive.

Obviously this data can be very useful to the receiving process:

1. It may not be necessary to enter an Inbound Order in your WMS.
2. If the outer packaging is bar coded it may be possible to receive the order with a single scan.
3. The ASN data can be used for planning purposes.  If you accurately know shipment contents and arrival time, you can better schedule resources like people, docks, yard space, pallet positions, etc.
4. Pipeline / Replenishment Visibility – Knowing what SKUs are on the way can make easier to deal with backorder situations and better plan for cross-dock opportunities.  3PLs can use ASN data to provide in-transit inventory visibility to customers as well.

With an EDI translator it’s not all that difficult to receive and parse an ASN.  There are plenty of solutions on the market for this.  The key question is can your WMS utilize the ASN data to achieve the above mentioned productivity gains?  Most WMS providers say they can.  However you may need to dig a little deeper. Can they support receiving against ASN on all levels including eaches, cases, and pallets?  Is the ASN data utilized for inbound logistics query screens and reports?  Does the data integrate with their web-based customer visibility tool?  Does the picking function look at ASN data to identify cross dock opportunities? Depending on your requirements you may need a lot more than a basic scan against ASN feature.

Your business depends on your warehouse management software so it’s rather alarming when many industry analysts think that quite a few of the smaller WMS providers will disappear during the next year.  Why is that?  For the last several years market share has been consolidating away from smaller WMS vendors to the larger players.  The top 5 WMS providers now have something like 50% of the total market.  This doesn’t bode well for the niche players in the industry which focus on the SMB market.  What can you do to mitigate the risk of your software solution disappearing overnight?

1. Don’t Panic – Even if you are noticing signs that your software vendor is in dire straights financially, it doesn’t mean you need to immediately replace your solution.  More often than not failing software vendors tend to be acquired by what I call “maintenance milkers”.  That means companies that acquire struggling vendors to get their hands on the annual software maintenance stream.  However if this happens, don’t expect a whole lot of software updates in the future.
2. Ascertain Your Provider’s Financial Situation – Most WMS providers are privately traded companies so you will have to rely on 3rd party services like Dun and Bradstreet to check financial health.  A great way to get inside information is to talk to tech support staff.  These are usually lower level people who are in risk of losing their job.  They have little to lose by being loose-lipped.  Or why not just have a frank conversation with your sales contact?  Of course they will spin the situation but they will drop many useful clues.
3. Build Relationships with the Vendor’s staff – Are you heavily dependent on the vendor because their people have skills and knowledge your company doesn’t have internally?  Well it’s time to develop a special relationship with the people that do.  If your vendor is really going down, odds are that their people are looking for new opportunities.  Perhaps you can hire the person as a part-time independent contractor or even full-time employee if appropriate.  Often the agreement you signed with the vendor will prohibit this but if they are going into bankruptcy they may be perfectly happy for you to help them with free outplacement services.
4. Look for Alternatives – If you are convinced your current provider is not long for this world, it’s time to make a contingency plan.  Can you keep the software alive yourself without updates and support from the vendor?  Pretty much all WMS packages use a SQL database that you can access with any popular development tools.  Perhaps you can build your own UI into their back-end database.  Lastly start looking at replacement WMS solutions.  There are still plenty of providers in the market.  The problem is that when smaller providers start to drop away, your only option will be to go with the larger more stable providers.  This means much higher licensing and maintenance fees than you were previously paying. 

It may be a good idea to view the failure of your provider as an opportunity instead of an obstacle.  If you purchased your current WMS solution many years ago you should realize that there have been huge advancements in WMS feature sets.  Replacing your WMS may result in a huge upfront cost.  However, it’s feasible you can achieve long term ROI from newer features like labor management and slotting which are typically available in the higher-end solutions.  You may also have the opportunity to move from a legacy platform to newer technology that is less expensive to manage.  What may seem like unnecessary pain in the short term may turn out to be a blessing in disguise several years down the road.