The automotive aftermarket, like other industries with a heavy retail and distribution component, has increasingly shifted to an e-commerce model. With that shift have come changes in the way warehouses operate.
Warehouses are doing more piece picking and less pallet-based shipments. Retailers expect to see an average of 40 percent growth in online sales over the next five years, according to ARC Advisory Group.
“Because of the shift to online purchasing, warehouses have altered their processes, their order profile, their picking processes, volumes and even their physical layouts,” says Clint Reiser, director of supply chain research at ARC. ARC recently released its more recent market analysis research on the warehouse management systems (WMS) market.
Prep For The Future Today |
|
|
Be a part of the inaugural Business Outlook Conference this July. For only $99, you will hear about the future of automotive and how it will affect your business from executives with IBM, AlixPartners, ETI, CCAR and much more! |
|
|
“Global adoption of WMS is being stimulated by a number of factors, most notably the global transition from traditional brick-and-mortar retail to increased prevalence of e-commerce and omni-channel commerce,” Reiser says. “This widespread transition is changing fulfillment requirements and the WMS requirements of those fulfillment organizations.”
Most companies expect to see an increase in throughput and a need for more storage capacity over the next five years, along with an increase in order complexity. In a 2016 ARC survey of warehouse operators, respondents also indicated that they expect to see an increase in direct-to-consumer shipping and drop shopping (shipping goods directly from a manufacturer). There will be more piece/each-level shipping, as well as an increase in case picking for many retailers and distributors.
Because this type of fulfillment is more complicated and expensive, warehouse operators are increasingly turning to technology to help improve productivity and reduce costs. “In general e-commerce fulfillment is costlier than pallet in/pallet out,” Reiser says. “In a traditional warehouse, the value of each shipment is greater, the volume is greater, and the variety of each shipment is lower. E-commerce shipments have a lower value and much higher variety. Warehouses also have to ship it out in a more expensive manner because the end customer wants it more quickly.”
A modern WMS can reduce those fulfillment costs. “The WMS vendors have had to adjust some of the functionality in their solution sets,” Reiser says. “For example, there is a greater need for marrying up orders. They have picking waves and throw the goods onto conveyors, and then all of those items need to be married to orders for packing and shipping.”
The use of a WMS reduces errors and improves shipping accuracy, which in turn can lower costs, eliminate the need to address errors, reduce the time spent looking for shipping documents, and improve service levels – which can lead to more business.
“In aftermarket spare parts, there are more companies getting orders online and fulfilling orders directly,” Reiser says. “There are WMS companies, particularly in Europe, that have seen their automotive business pick up because manufacturers are selling parts in other regions.”
The shift to e-commerce has led to changes in how retailers, distributors, and logistics providers handle fulfillment, which has been good for WMS software vendors. The software providers are expanding their feature sets to meet this new demand.
According to Reiser, there are number of areas of technology innovation in the WMS space:
• Automation: With the increase in each/piece picking, ARC expects (and their survey data backs this up) that there will be an increase in investment in pick to light/pull to light systems in order to increase efficiency – it was the second most popular investment choice for automation after conveyors/sorters. Interestingly, 15 percent of respondents also indicated they consider autonomous mobile robotics a practical option for their warehouse. Newer WMS solutions support these automation solutions.
• The Cloud: Cloud solutions can help warehouse distributors overcome some of their objections to automation investments, in that these solutions can be deployed quickly, with minimal infrastructure investment and at a lower cost (in most cases).
Numina Group, for example, launched a cloud-based WMS in October for mid-market users. It includes voice functionality, cycle counting, pick-to-light support, and logistics tools from the company’s German partner Ehrhardt + Partner Group. More specific to the aftermarket, Epicor provides cloud-based versions of its software suite, and Green Team Technologies offers its Fuse5 WMS product via the cloud as well. MAM Software, which offers a WMS module that is fully integrated with its Autopart POS and inventory system, also provides cloud-based options for its customers.
However, WMS has been something of a laggard in terms of cloud adoption, Reiser says. “One reason is that a WMS is a real-time system,” he says. “Customers also want functionality that is specific to meet their needs, and they are generally not as willing to adjust their operations in a multi-tenant solution scenario. Adoption of the cloud is growing, but it’s fairly limited.”
• Slotting Optimization: The shift to e-commerce has also put more emphasis on real-time communications, high velocity bar code scanning and features such as improved slotting optimization.
Market leader Manhattan Associations has upgraded its offerings with new slotting optimization capabilities, as well as new mobility features.
Respondents to the ARC survey in 2016 also indicated that slotting optimization was a high priority when it came to technology investments. Slotting features are important because slotting requirements have changed dramatically in response to e-commerce. New items are introduced and promoted constantly (as opposed to seasonally), so inventory has to change more frequently. Compressed slotting schedules have put more pressure on warehouse processes.
Manhattan’s new solution uses an enhanced algorithm, and allows managers to execute re-slotting requests directly from the warehouse floor.
• Mobile Apps: According to ARC, mobile apps are receiving “substantial R&D dollars” from WMS vendors, including solutions for Android-based devices.
Zebra Technologies and several other vendors have released rugged Android devices to meet this need, but according to Reiser there are companies exploring the use of consumer-style smartphones and tablets in the warehouse.
That’s because these devices are less expensive than their rugged cousins and have familiar, easy-to-use interfaces that can reduce the need for extensive technology training in an industry that often sees high employee turnover and large hiring swings during peak periods. In fact, one large user in Asia developed a warehouse picking and packaging app for Android mobile devices using WMS vendor HighJump’s platform to address the need for temporary workers during seasonal peaks. Manhattan Associates also has a mobile picking application that can run on Android and iOS devices.
“There is a definitely an increase in interest in developing applications for common smartphone platforms, with Android being the most common,” Reiser says. “The average guy on the street is familiar with Android. The hardware isn’t as good as the rugged devices, and the scanning may not be as efficient or effective, but you can get new employees up and running really fast. That’s become a major trend.”
Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.
