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Driving the future of transport and warehouse management

The Logistics software industry is having to offer broader, flexible solutions and more innovative value added services, driven by the demands of retailers.

The current trading environment is proving challenging for retailers, as consumers demand more product variety, competitive pricing, immediate availability and are increasingly opting to make purchases online, typically worth between 8 and 12% of total sales.

These dynamics, as well as inflationary growth, rising fuel costs and increased regulatory compliance, put significant pressure on the structure of supply chains and the software, services and processes that support them. At the same time, retailers are under continued pressure to keep cost down in order to remain competitive, so there is no open cheque book for investment; often, the answer is to work smarter with third party logistics (3PL) partners.

Technology is increasingly seen as a driver to greater efficiency and 3PL, transport and warehouse services providers are coming under pressure to have integrated systems to support core management functions – warehousing, transport planning, transport execution and financial settlement, to drive down back end costs and to ensure delivery against customer promises across multiple channels.

Ten years ago, warehouse management was less sophisticated in terms of the service options available, its use of turnkey technology solutions and 3rd party warehousing was less common. Today it is a very different picture, reflecting the evolution of the industry – with the majority of retailers choosing to outsource their services to 3&4PL’s, relinquishing the burden of managing operations in-house while keeping the costs down –and the need to satisfy the demands and growth in multichannel sales and distribution.

With retailers demanding visibility and better control of orders and inventory, there is a need for 3PL’s to implement integrated warehouse management system (WMS) and transport management systems (TMS), providing a central hub for operations that include warehousing, transportation management, track and trace, order management and financial settlement.

Current trends in warehouse and transport management are being driven by the need to fulfil across all channels. Growth for many retailers is coming from a multichannel strategy, encompassing the traditional own store, in-store concessions, franchises, catalogue and web as well as new emerging channels, including click and collect and Mcommerce. There is a necessity for 3&4PL providers to get new customers up and running quickly when a logistics contract comes in. With retail contracts typically only lasting three – four years and the need to provide high customer delivery performance and to be competitive on price, it’s imperative that the logistics service provider not only delivers on the agreement but promptly gets the service functioning to ensure customer KPIs are met and to start generating a profit. 

Traditional deployment of WMS and TMS has tended to be through a distributed or central model, where the logistics service provider has their own servers on site and is responsible for all infrastructure and IT support.

To reduce upfront capital expenditure, logistics companies are increasingly looking at adopting Hosted or SaaS (software as a service) models deployed over the internet using a managed service or rental agreement.

These type of solutions not only have the advantage of being more affordable, but provide flexibility and scalability beyond an in-house system and can also be deployed quickly– an important factor for businesses looking for a short time to benefits. Many retailers are using hosted solutions as a means of relinquishing the burden of managing the IT in-house, so they can focus on their core business.

Services such as click and collect and next day delivery, which are being demanded by consumers, put increased pressure on supply chain systems. The WMS has always been able to adapt to the rapid pick, pack and ship methodology, but in the retail world where the priority has also been to minimise inventory levels, the demands on systems are even greater, requiring stock visibility across the organisation including interaction with their clients’ ERP systems and eCommerce.

While the majority of logistics services providers now employ web-based order management systems to streamline the way that information is exchanged internally and external, there are often a series of manual processes between systems and between third parties, leading to delays, errors, higher costs and ultimately a loss of customers. Tighter integration between systems gives better visibility of stock and enhanced business agility, so that retailers can in turn respond more quickly and efficiently to their end consumers’ needs.

Further integration will be boosted by greater adoption of mobile devices to link retailers to their back end systems. In store, for instance, the sales team will have the ability to interrogate multiple systems through a mobile device, gaining visibility of warehouse inventory and transfers between warehouse-to-store, store-tostore etc. This level of insight will put further pressure on the supply chain to be responsive, flexible and fast.

A typical WMS distribution model will ship from the warehouse, by adding an ‘order management’ facility to the WMS, this provides the ability to track a product and pick them from locations other than the warehouse, whether that be from in-store or through direct despatch from the supplier. So if a product is registering out of stock in the warehouse, the retailer can react quickly by sourcing it from other areas. 

WMS meets TMS The beauty of WMS is that it manages all warehouse transactions, but the additional value comes from the marriage and interaction with other systems, specifically TMS. When the WMS is integrated with the TMS it gives value in terms of precise vehicle fill. Orders sent from the WMS to the TMS to optimise the delivery route, while the WMS picks and packs the product before sending the final shipping information back to TMS, which then configures the ‘actual’ size of the order (which could originally have been ten pallets, but due to stock availability could work out as eight). The system then optimises the vehicle fill and offers capacity for other customer orders on a similar route to be shipped within the same load. It’s having the knowledge, communicated between the systems and real time data that facilitates this type of precise vehicle fill, saving on journey’s made and reducing fuel costs.

Integrated solutions with maximum automation provide better visibility into logistics and better control of transportation networks through track and trace functionality, determining the location of a shipment where ever it resides in the supply chain.

Therefore, there is a demand for integrated business applications and a system that includes TMS, WMS and financial settlement makes sense for 3&4PL logistics companies.

The future will see the integration of Customer Relationship Management (CRM) and financial systems. In this way, client details entered into one system will automatically be shared across the entire business, which not only better manages the transport management process but also strengthens client relationships because every business division has direct access to any client issues so they can be quickly rectified.

The logistics market is highly competitive and as a result, margins are tight, so effective warehouse and transportation resource utilisation is critical. Protecting and boosting margins depends on systems and processes that enable logistics services providers to guarantee their customers service levels of 99.8% or greater and no damage. However, because service providers cannot compete on price alone, they need solutions that provide control and visibility to all parties in the supply chain, and in so doing, enable them to provide a more competitive and differentiated service to their customers.

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