Each year, global business life accelerates. Industries expand, production increases, and so the demand for transporting goods and other resources rises. Third-party logistics (3PL), companies that specialize in third-party logistics, must continue optimizing enterprise data warehouse software to remain competitive and relevant.
This chain includes warehouse processing. The warehouse can be a bottleneck in the supply chain if it is not properly organized.
The traceability of shipments is vital to maximizing the warehouse’s capabilities. Recent research by OptimoRoute states that 34.7 percent of customers said they are more likely to return if the brand provides real-time tracking information for their goods — it looks like customers tend to purchase again from companies with traceable shipments.
Let’s take a look at a real-life example of traceability’s cornerstone importance.
Nature’s Best Case: Optimizing Product Traceability For A Large Location
Nature’s Best is one of the largest US wholesale distributors of natural food products. It offers specialty products and organic foods to retailers in over 12 states, including the Midwest and the West Coast.
Four separate buildings were used to store and distribute cargo. Three of the four buildings were temperature-specific storage units for dry, chilled and frozen products. Clients could pick up their cargo in any of the four warehouses, which was a competitive advantage.
However, the warehouse design had a serious flaw. The warehouse was too large and required too many workers in order to deliver products to customers. Before the final delivery, each unit had to be moved up to 18 times among different employees or places within the warehouse.
It was difficult to trace the origin of a product and who made it. This led to high labor costs, slow flow, and increased cost of production.
Besides, Nature’s Best had some serious growth plans that required a general overhaul of the warehouse distribution system and facility.
Warehouse traceability was a huge problem. The solution needed to be complex and incorporate several warehouse optimization techniques. Here are the measures Nature’s Best has taken:
- Analyzed material flow in warehouse and redesigned internal processes
- Changes to the functional design document. This included replacing the WMS solution.
- Implemented the WMS Solution with a new facility design that included a single distribution centre. This centralized all operations.
The company did the following.
- Their WMS was replaced, which covered interface design modifications, configuration, facility preparation and development of labor standards. Staff training and testing were also included.
- Automated shipment handling has been replaced by mechanized
- Transformed from paper-based systems into radio-based, voice-based devices
- Constructed new facility
Efficient execution of the company’s global upgrade worked wonders. The optimization of distribution centers helped to refresh the workflow. Smartly introducing each change one at a while allowed the company to keep its operations running and maintain sales levels.
Product tracking transparency was increased by the improved WMS. Clearer responsibility transfer made the workflow more efficient.
These are some of the results from the traceability upgrade
- A reduction of more than 33% in labor costs
- 100% increase in warehouse productivity
- Full-time employees were retained at 97 percent
- Successful transition to automation from paper-based processes, and replacement of the mechanized with a non-mechanized system
Large corporations do pay attention to warehouse traceability. We need to examine the warehouse structure in order to better understand traceability.
How warehouse workflow is improved by traceability
Warehouse traceability starts at the receiving stage. It is crucial to ensure that cargo is processed quickly and efficiently. Avoid crowding the docks.
Inbound logistics traceability also includes the transfer of responsibility during receiving. To avoid being held liable, the facility owner is responsible for cargo condition up to the shipping stage.
Technology for the receiving stage must focus primarily on speed and precision when processing. For example, RFID-reading gates or sorting conveyors would be great options.
The putaway stage is when goods are transported to their destination. The required storage conditions, priority levels, and so forth will determine the exact location. The following benefits can be derived from high levels of goods traceability during this stage:
- Cargo is being stored more efficiently Software such as WMS or IMS can automatically identify and assign optimal cargo locations. The cargo size, the ABC (based on how often it needs to move) and any storage requirements (temperature or light exposure, etc.) are all taken into consideration. All of these factors are taken into account.
- Provision of security to goods and employees Warehouse managers can view in real time where cargo is stored to reduce the risk of placing incorrectly and subsequent shelf overloads leading to potential crashes.
- Travel time can be minimized Employees and forklift drivers
- Storage space can be optimally used
- Rapider retrieval
This stage can be the most costly in a warehouse and accounts for between 50-60 percent of overall operating costs. Good traceability can reduce picking costs. Besides, accurate pickup can boost the satisfaction of the company’s customers.
Consider mobile and wearable devices as a first step for workers. They can speed up the process, and wirelessly register every action in the warehouse.
As with the receiving stage dock clogging must be addressed. Software systems can simplify many tasks. An application that integrates into global warehouse management software can, for instance, be used to quickly identify and further process cargo.
This is also the point where the second transition of responsibility takes place. Once the cargo has been removed from the warehouse, the warehouse manager no longer takes responsibility and is able to focus on other shipments and tasks.
So far, we’ve discussed how traceability helps and how real companies are fixing the lack of it. Let’s get closer to the tech side of this topic and review what technologies make enhanced traceability possible and how they do so.
Technologies to Ensure Warehouse Traceability
Traceability-ensuring technology can be divided into three categories:
- Software for traceability, such as WMSs or IMS
- Tools for marking and identifying products
- Radiofrequency identification (RFID) devices
Software to trace warehouses
Traceability-empowering software provides enterprises with benefits that would be otherwise unattainable:
- Access to information The software provides complete information about each item, including its location, characteristics, and position in the warehouse flow. The software can detect any impracticalities and weed them out.
- Quality control Since the warehouse owner usually takes full responsibility for the condition of a product when it’s in the warehouse, it’s crucial to maintain constant awareness of possible changes to the product’s status. Besides manual updates by warehouse employees, visibility can be increased with IoT elements introduced into the management software system (which we’ll talk about in detail later).
- Faster actions You can respond to incoming inquiries faster if you have better traceability. Operators can locate and order the item they need instantly with real-time inventory tracking.
- Compliance with law Some countries have established traceability standards in their laws for certain products and industries. For example, after the Bioterrorism Act back in 2002, US legislation required food supply chain participants to maintain strict traceability of products in “a step before/a step after” fashion. In such cases, traceability software is a must.
- Consumer trust has increased. The more trustworthy a company projects, the more it controls its property and processes.
[IMG: Traceability software benefits]
We won’t consider Enterprise Resource Planning (ERP) systems as viable alternatives for ensuring traceability here because they are too generalized to do that effectively. ERPs have certain tools for inventory management; however, they can’t deal with managing operations within the warehouse.
We’re going to review the two most common options on the market: IMS and WMSs. We’re also going to describe the functionality they must possess to provide traceability.
Inventory management systems
IMS is the first type of software specifically designed for inventory management. At their core lies a set of instruments for tracking several aspects of a company’s activity, such as:
- Stock levels
A typical IMS includes tools for creating material bills and work orders.
IMSs are often too simple for warehouse optimization. They lack the functionality of more complex systems. For example, there’s no possibility to compartmentalize the location of products in the warehouse using an IMS. It is also not possible to create SKUs or check product statuses. You will need a WMS to achieve this functionality.
There are still ways to improve traceability using an IMS. An alternative solution is to install an automated storage and retrieval system (AS/RS), to your warehouses. This could include a horizontal/vertical carousel, or a vertical lift. IMS can track inventory in AS/RS’s hold (such as serial/lot/batch number) and create reports to provide additional traceability to warehouse flow.
Warehouse management systems
At first glance, WMSs are just like IMS — both are warehouse operations monitoring systems used for managing the amount of product in a warehouse and the processes of receiving, putaway, picking, and shipping. WMSs provide a wide range of functions. A WMS is designed specifically for warehouse use, and can handle large quantities of facilities.
Here are some functions of a typical WMS that provide benefits for warehouse traceability that an IMS can’t provide:
- Quantity buffers and real-time updates in quantity. Stock shortages can pose a serious problem in fast-moving companies. This risk can be avoided by keeping track of product quantities in real-time.
- Product statuses, such as “Available,” “Dispatched,” and “In Processing”
- SKU creation. An IMS cannot register the shipping and receipt of SKUs. A WMS, however, can create new SKUs for specific purposes.
- Responsibilities of the user The WMS not only tracks the movement of products through warehouses but also the activities of employees. It provides full visibility into who is responsible for each stage of product movement.
- Kit creation. A WMS can create new SKUs and organize SKUs into kits. It can also assign new SKUs for newly created kits. This gives warehouse workers more flexibility.
Depending on a warehouse’s specialization, a WMS can include features to deal with industry-specific challenges such as:
- FIFO rotation. The first in, last out principle (FIFO) is a warehouse stock rotation principal used in food transportation and storage. FIFO must be achieved by having a precise layout of storage areas and visibility of product receipts and conditions.
- Dynamic stock quarantine. There are many reasons why you might need to isolate a particular batch of products. For example, your QA team might need to do an unscheduled product inspection, or if a company has a shortage of stock, the management might want stock to be kept out of the flow chain.
- Selection of stock that is custom-made for clients This tool allows the client to choose specific goods and arrange them in batches. A stock selection tool is useful when a company’s clients tend to order an array of diverse products in a single shipment.
Some WMSs from older times lack certain functions. Therefore, it may be a smart idea to upgrade them.
Tools for Identifying and Marking
Modern warehouses use codes, imprinting, reading devices and other methods to identify and mark individual items and products.
Two codes that are universally accepted for warehouse use include stock-keeping units, (SKUs), or universal product codes (UPCs).
SKUs are codes created for a company’s internal needs and, if we’re talking about warehouses, are used only by warehouse workers. SKUs can be avoided by small businesses, but companies with large inventories will need to use them.
An SKU is usually made up of multiple letters and numbers. Warehouse workers can identify and interpret it visually. The use of a scanner to scan the SKU is much easier and more traceable. This drastically reduces the chance of making mistakes.
A company can create SKUs and arrange them however it likes. Most WMS software allows this.
UPCs, unlike SKUs and can be used across the entire supply chain. They are managed by GS1 US, which is the American successor to Uniform Code Council. UPCs can be assigned to products and tracked throughout their entire lifecycle. The UPC is usually accompanied by a barcode that can easily be scanned to identify the product.
You can also tag products with QR codes. These codes are more secure than UPCs because they are two-dimensional and can include more information about the product. They can also be used in automated product tracking and transport systems.
Radiofrequency identification (RFID), the latest technology for product tracking and tagging, is now available. They are now being used worldwide because of their low production costs.
RFID technology can be integrated into warehouse tracking processes to create a variety of possibilities for organizing smart IoT warehouses. According to Marketsandmarkets’ Smart Warehousing Market Global Outlook, it is projected that between 2021-2026, smart warehousing will grow from $14.8 billion up to $25.4 billion. Its CAGR (compound annual rate of growth) will be 11.5 percent.
There are many technological options that can increase your warehouse traceability. RFID tags can be used to build IoT systems around them. Let’s take a look at how such systems are organized and what traceability benefits they bring to warehouse owners.
Integrating RFID-based IoT in a WMS to enhance traceability
Warehouse owners would enjoy many benefits from an RFID-based IoT solution, including:
- Safety of goods and workers is improved Better traceability allows management to be more informed about what’s going on around the warehouse, therefore providing better predictions of dangerous situations and quicker reactions to them.
- Facilitate warehouse flow. There is no need to manually scan and check, which means that you will spend less time at each stage of the in-warehouse supply chains.
- Prevention of theft. A theft prevention system allows remote monitoring of current product’s whereabouts and provides information about who is responsible for each specific step of a product’s movement. This makes the entire process transparent.
- Minimizing labor costs As with all automation, the more automated processes you have, the fewer staff you will need to maintain them.
- Better decision-making Because of real-time information flows, and comprehensive WMS representations of this information.
To have a successful smart warehouse system, you will need the following:
- RFID Tagging of Products RFID tag installation in packaging requires special equipment. Active RFID beacons (which contain a small battery and are activated by an incoming signal), can be used to tag products. The passive version is more widely used.
- Installation of RFID-reading gate At key warehouse points: entrances, shipping docks, reception docks. Gates are able to automatically read the RFID tags of products passing by them, process these data through a gateway device and send it back to management software, such as a WMS.
- Reading devices for shelves and forkliftsIt allows you to instantly detect products that are being transported from one place or another. These devices can also identify which part of the warehouse structure the product is currently located.
- Monitoring warehouse conditions devices that monitor the environment and ensure it meets predetermined parameters like temperature and humidity.
There are many technical innovations that can be improved, but RFID IoT warehouse surveillance solutions can have their own problems. One of the biggest is cybersecurity threats associated with any internet-connected activity. There are many ways to hack something that is online. This problem can be solved in the area of warehouse management by using an RFID-based solution that is only applicable to a particular warehouse or specific location.
Any company looking to remain competitive must improve warehouse traceability. As we’ve mentioned, demand for the most innovative solutions in this field is likely to continue increasing in the foreseeable future, and being at the forefront of adopting such solutions will mean a lot for a company’s success.