Warehousing is one of the most critical functions in supply chain as it acts as a node in linking the material flows between the supplier and customer. In today’s competitive market environment companies are continuously forced to improve their warehousing operations. Warehouses have been going through various challenges such as supply chains becoming more integrated and shorter, globalized operation, customers are more demanding and rapidly occurring technology changes. In order to cope with these challenges, organizations are investing in specialized Warehouse Management Systems (WMS) to manage their In-house (Private) warehouses and improving integration and collaboration with Third Party Warehouse partners (3PL)..
Need for Integration
Warehouses can be of various types like production warehouses, distribution centres etc., depending on their role and function within the supply chain. However most of them share some of the general pattern of material flow and typical operations include receiving, put away, order picking, packing, sorting and shipping. Whatever may be the warehousing strategy of an organization, integration automation is required between business management software or Enterprise Resource Planning (ERP) and the systems managing the shop floor warehouse operations.
People in back office who manage sales, procurement, order processing, production planning, financials etc. in ERP system have to communicate the expectations and instructions to warehouse operators in real time and need to receive timely updates on status of activities performed and change in inventory.
Fig: Need for Warehousing Integration
Expectations and Instructions from ERP include Sales Orders, Purchase Orders, Delivery Instructions (Inbound & Outbound), Advance Shipping Notices etc.
Operation Confirmations from Warehouse include Goods Receipts, Goods Issues, Activity updates like Picking/Packing/Putaway confirmations, Stock Adjustments during cycle counts etc.
Master data and Inventory levels also have to be periodically synchronized between both systems.
Automating data flow through integration helps to eliminate manual data entry, human error, catch problems early, reduce lead times and improve customer service.
In-house or Private Warehouse Integration
Organizations who manage their own warehouses not only have to select and implement the best-fit WMS software, but, in addition, also face an even bigger challenge of making sure any WMS integration works with other systems, particularly any existing ERP software. WMS software package falls under the following three categories:
Native WMS module from current ERP vendor – In this case, the WMS module is designed and developed by the ERP vendor with the rest of the ERP system in mind. Therefore, the WMS is inherently and truly integrated because it uses technologies common to both systems. So there is no need for additional integration.
WMS add-on package offered by current ERP vendor – In this case, the WMS software is sold as an independent bolt-on package by the ERP vendor. Since both the software are provided by the same vendor, the integration solution is generally provided out-of-box through direct systems connection or via preconfigured content in middleware (generally from same vendor or partner vendor). So there would be very few custom interface programs during implementation. But it might not be truly plug and play as vendor advertises.
WMS from a third-party vendor – The best-of-breed WMS systems often fall into this category. For the organizations that need high end software capabilities, this may be the only valid option. Implementing this stand-alone WMS solution requires complex integration which has a tremendous impact on overall system stability and the efficiency of day-today work.
Below are some of the common challenges faced in this integration:
- Time & Cost – Time and costs to integrate a proposed WMS software should also be a major consideration while evaluating TCO. Warehouse operations can be pretty complex in nature and integration needs to support different business documents and various business scenarios & rules involved. Gathering requirement, mapping in system, thorough testing and deployment can take a lot of effort & time.
- Business & Time Critical – Warehousing transactions are very business critical and time sensitive. Any loss of data or delay in data transmission can have a major impact on other related business functions. For example, transactions such as PO goods receipts can affect the available to sell value in the ERP, and thus affecting potential sales.
- Large Volumes – Daily volume of warehousing transactions can be pretty huge with demand for large number of order fulfilments and frequent real time updates. Integration should be capable to handle such volumes also scalable enough to manage higher loads in future with growth in business.
- Application Standards – WMS software in the market come with different capabilities to communicate with other applications. Format of data exchanged is generally specific to each WMS like Text files etc. and multiple modes of transmission may exist like File transfer, Web services, Application Queues, Direct communication with underlying database etc. Due to lack of any specific standards or guidelines, it is imperative that integration takes a lead in analysing and deciding on the optimum solution to meet business needs.
- Error Handling – Complexities in warehousing integration generally add to delays in identifying, monitoring, and addressing issues. Errors can come from multiple sources like bad or incomplete data from upstream system (Business users), failed jobs, logic errors in integration systems, logic errors in processing end systems. These can prove to be very costly if not corrected in time which may lead to returns, covering costs for overnight shipments to avoid deliver delays etc. So there is a need to have proactive monitoring capability in place to identify issues and communicate to business users immediately. High level of traceability has to be built in to seamlessly track business data flow in all systems involved.
- Touch Points – Deciding on integration touch points is one of the important considerations during WMS implementation. There are some obvious candidates like item master data, orders, stock adjustments, receipts etc. but more exotic transactions need some thought. For example, Customer and Supplier returns, typically these are handled manually as the volume and workflow complexity usually means the cost for integration outweighs the benefit.
- Resilience & ROI – For new warehousing requirement, ad hoc integration solutions may seem very appealing due to shorter deployment cycle. But they become hard to maintain and counterproductive should integration needs grow. Integrations need to be highly flexible, scalable and reusable. Deploying solutions with EAI (Enterprise Application Integration) best practices & future ready technologies, even though time taking, help to provide the required resilience & better ROI for warehousing implementation in long run.
- WMS Vendor lock-in – Organizations only realize the dangers of lock-in once they are trapped with rising support and maintenance costs, slow and expensive change processes, and the prospect of prohibitive costs to develop an equivalent solution from scratch. Integration solutions can help to prevent vendor lock-in by avoiding short term vision. This can be done by documenting the processes clearly, retaining business logic at ERP end as much as possible even if it might be more convenient to move it to WMS end, preferring to add extensibility features from the beginning.
Fig: Challenges in Warehousing Integration
Third Party managed Warehouse Integration
Organizations who outsource warehousing operations to focus on their core competencies need full-scale business to business (B2B) collaboration with their 3PL Warehousing partner. This involves building and maintaining solid B2B integration strategy to support the business needs. While the challenges that are faced in In-house warehouse integration are still very much relevant here, the Business to Business nature of communication adds its own set of complexities.
Below are the additional challenges impacting integration:
- Industry Standards – Communicating with 3PL partner using B2B standards (industry common language) can be very challenging for an organization due to lack the budget, resources and expertise to implement sophisticated technologies such as EDI and XML. To support B2B technologies companies might need to purchase specialized integration software. Additionally, they need to train or hire someone with B2B skills to support integration.
- Security – Security is one of the biggest concerns in B2B integration. Business sensitive warehousing data should not be transmitted over open networks (internet) in an insecure manner. To meet the security compliance standards for B2B integration, organizations need to invest in systems capable of secure communication using protocols like SFTP, FTPS, HTTPS, AS2 etc. Data is transferred by secure authentication using certificates/keys and encryption-decryption mechanisms.
- SLA Compliance – Service level agreements (SLAs) are a staple of customer and service provider transactions. SLAs establish objective criteria for assessing the performance of business-to-business (B2B) processes and operations. Several aspects of performance are measured with SLAs including the accuracy and completeness of data exchanged between businesses, timeliness, responsiveness, and visibility of processes that manage data exchange, how available and dependable B2B infrastructure services are etc. Compliance with SLAs governing B2B integration performance is important to nearly all businesses. Business activities can be obstructed if they fail to comply.
- Partner Management – Exchanging B2B information effectively is only part of trading with a new partner. It is important to ensure that the physical supply chain can be monitored end-to-end and in real time. When onboarding new trading partners, it is worth considering how to achieve this level of visibility and how to deploy the information captured to improve the service companies receive from suppliers and provide to customers.
- Auditing – B2B integration requires a centralized audit trail to facilitate regulatory compliance, risk management and customer service. As soon as an error or inconsistency occurs, history that led to point of failure is of immediate interest. It is important that a compete history complete history is available so that every single action in B2B server that led to failure situation can be reviewed and there is no ambiguity between company and 3PL partner.
- Slow Maturity – Implementing Integration solution using B2B industry standards cannot be done in an ad- hoc manner. There needs to be comprehensive B2B strategy in place with a roadmap which complements long term vision of the organization. The true ROI and cost savings can only be realized once the model matures and adoption rates improve among the trading partners, which might take many years.
The integration of disparate best of breed WMS solutions to ERP platforms is an increasingly common trend in the emerging enterprise market space. This poses a major challenge and risk and having the right strategy and integration partner can make or break the success of Warehousing implementation.
HOW BRISTLECONE CAN HELP?
Bristlecone has solved integration challenges across industries like CPG, Retail, Automotive, High-Tech, Chemicals etc. Our Integration services have enabled customers to build a clear integration strategy and helped them reduce integration costs and reduce time to rollout of critical business applications. Our Supply chain experience helps us see business processes end to end and helps us see the picture that many vendors can’t, the need of the business.