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The Warehousing Distribution Factor

by David Cullis, MD XeBusiness Ltd

It has often been said (and with good reason) that UK retail management is probably the best in the world. Underpinning unmatched value for money, choice and quality offered by high street retail chains like Marks & Spencer Plc, are sophisticated supply chain management systems that ensure the right variations of garments on the hanging rails in stores, in terms of colour, size and style combinations, to minimise non availability to the retail customer who might quite literally make the purchase elsewhere if the variation of the garment he or she wishes to purchase is out of stock.

Three partners in the logistics mix make this possible, namely the retailer, the garment manufacturer and in an increasing number of cases, an independent distribution and warehousing company operating between the retailer and the manufacturer.

Three separate management information systems have to interact to ensure not just replenishment of fast and slower moving stock, bit that the right variation of product is replenished to minimise 'stock-out' situations at the high street customer end of the chain.

The three key components in this supply chain stock replenishment cycle are:

• EPOS - Electronic Point Of Sale systems (computerised tills) that capture details of products sold via the scanning of product bar codes and pass this stock movement information including colour and size, where appropriate, automatically to the retailer's computer system that initiates re-ordering from the supplier/manufacturer utilising sophisticated re-ordering algorithms that can even take account of weather forecasts in recommending a re-order quantity for appropriate variations of the product.
• EDI - Electronic Data Interchange which enables the order and other distribution and despatch information to be electronically sent to the manufacturer and possibly also the third party distributor/warehouser to initiate either a manufacturing run or a "call-off" from stock.
• Warehouse Management - Fast moving garments whose sales are relatively easy to predict and which are less vulnerable to sudden fashion changes within a season are either warehoused on behalf of the manufacturer by a third party warehousing/distribution company, or manufactured and warehoused by the supplier.

Effective warehouse management is therefore crucial to enable quick and accurate response to replenishment orders and "call-offs" from retailers, to properly record and put away stock coming in, to minimise time required to subsequently locate and despatch and to optimise use of expensive warehouse space.

In a nutshell, effective warehouse management and distribution is a major customer service and cost reduction issue, with the organisations doing it right gaining considerable competitive advantage. As the only specialist software house operating in the apparel manufacturing and distribution sector that supplies business management systems fully integrated with EDI products, XeBusiness has developed a Warehousing Management System (with fully integrated EDI links) aimed at the following categories of organisation:

• Apparel manufacturers who supply Marks & Spencer and other apparel retailers.
• Distribution companies who warehouse and distribute on behalf of the manufacturer and the retailer.

The functionality components of the system are as follows:

The warehouse configuration is defined as a number of zones, faces, bays and levels. Each location has a rail height (to restrict the types of products placed in the location) and a rail length (to define the maximum number of garments placed in to location).

Product definition covering products that are defined as a combination of department and stroke. Each product can be classified over a variety of colour, size and length combinations. Each product also has a set size (for determining despatch labels), a number per metre (for determining maximum number of garments per location), a preferred 'putaway' location (used for picking and putaway algorithms) and where appropriate, a product height for restricting storage locations. Each product variant is also identified with a unique UPC (unique product code).

Stock details are held at location level, with products in each location being identified by their product definitions (see above) together with a supplier series number (for third party distributors) identifying the supplier of the product.

Quantities of stock in these locations can be marked as 'quarantined' or 'export reserved', which will prevent the product from being picked unless overridden.

Audit trails are extremely comprehensive and log all stock transfers with an electronic date, time, initiator and reference stamp. This transaction information is archived for the life of the product and can easily and flexibly accessed for management information reporting purposes.

Customer/Retailer orders and call offs can either be directly transferred from an EDI system or entered via a computer terminal. The system comes with a wide-ranging series of reports and enquiries geared to highlighting exceptions (e.g.; shortages).

Picking instructions can be generated from customer orders, allowing selection of specific customer depot destinations and order references, utilising parameters like picking algorithms that can be customised to reflect the user's warehousing environment. Picking instructions produced by the system (available in both summary and/or in detail form) are passed to warehouse staff to pick the required products and then returned (with annotations) to the system for confirmation entry.

Despatch documentation (consignment notes and bar coded despatch labels) is automatically produced and audit trails are available for electronic archiving or for hard copy printing. A delivery advice EDI message can also be automatically sent to the customer to facilitate receipt into stock at the store or customer warehouse. Bar coded labels produced by the system and affixed to consignments, also facilitate fast and accurate recording into stock at the customer end.

Goods receipts are entered by quantity and a unique 'putaway' algorithm is employed by the system to determine an 'ideal' location for the products in terms of optimal access for despatch later. The 'putaway' algorithm can be manually overridden to provide additional flexibility. Other features of the system allow stock adjustment, stock movements, export, stock allocations, quality assurance returns, and quarantined stocks to be processed within a comprehensive security and audit trail framework.

Management information availability was a major design criterion for the system from the outset. A large number of reports (geared to highlighting exceptions) are available as standard and a generic report writer is also available for use by users to produce customised reports and enquiries.

An integration mapper is available as standard, to quickly link (if required) the system to other software applications, modellers, databases and word processors. Whereas the system was originally developed to handle hanging goods, it can also be quickly adapted to warehouse operations that manage boxed goods. Companies that are using the system, include Transcare Distribution (Tibbett & Britten), Dewhirst. Bentwoods and JRL (Joint Retail Logistics).

So what are the benefits of using the system?

• Customer service: A better service to the major customer (retailer) by providing a tool that supports quick and more accurate response to customer orders and 'call-offs'.
• Cost reduction: Within the warehousing operation arising from greater accuracy in managing finished goods and time savings in both administration and goods movement within the warehouse.
• Warehouse space utilisation: More efficient use of expensive warehouse space.
• Cash flow: Providing major customers with accurate despatch and delivery information will enable suppliers to get paid for the goods more quickly and save administration time in responding to delivery and invoicing queries.

Clearly any company with a warehousing requirement in the apparel sector should evaluate this new product for the reasons defined above and last but not least, Pay back on investment in the system could be within three months following implementation.

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