With each passing year, the tempo of global business life increases. Industries grow, production grows, and the demand for transportation of goods and resources rises accordingly. This constant process of growing and evolving compels third-party logistics (3PL) companies to keep optimizing their enterprise data warehouse software in order to stay relevant and competitive.
Warehouse processing is a crucial step in this chain. If shipment handling is poorly organized inside the warehouse, it can render the whole supply chain inefficient.
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 provides organic and specialty products to retailers in 12+ states in the Midwest and on the West Coast.
The company used four separate buildings to store and distribute cargo, three of them being temperature-specific storage for dry, chilled, and frozen products. The warehouse flow allowed clients to case pick in each of the four buildings, which was considered a competitive advantage for the company.
The warehouse design, however, suffered a serious flaw: the location was too expansive and required too many workers to get products to customers. Each unit had to be transferred up to 18 times between various employees and places inside the warehouse before the final delivery.
Such many interactions made it hard to detect where a specific product was at each moment and, more importantly, who was responsible for it. This lack of traceability led to high labor costs and made the flow cumbersome and slow.
Besides, Nature’s Best had some serious growth plans that required a general overhaul of the warehouse distribution system and facility.
The problem with warehouse traceability was massive, so the solution had to be complex and include several warehouse optimization techniques. Here are the measures Nature’s Best has taken:
- Analyzed the material flow in the warehouse and redesigned internal processes
- Made changes to their functional design document, which included replacement of the WMS solution
- Complemented the WMS solution with a new facility design, with a sole distribution center that consolidated all operations
The company did the following:
- Replaced their WMS, which included interface design changes, configuration, facility preparation, development of labor standards, staff training, and testing
- Transitioned from mechanized to automated shipment handling
- Shifted from paper-based systems to radio-based and voice-based devices
- Constructed a new facility
Efficient execution of the company’s global upgrade worked wonders. The distribution center optimization refreshed the workflow, and a smart approach to introducing changes one by one allowed the company to stay operational throughout the process and maintain its previous level of sales.
The improved WMS increased product tracking transparency. The process of responsibility transfer became clearer, which speeded up the overall workflow tempo.
Here are some results of the traceability upgrade:
- More than 33 percent reduction in labor costs
- 100 percent increase in warehouse productivity
- 97 percent of full-time employees retained their positions
- Successful transition to automated processes from paper-based and replacement of the mechanized system with a non-mechanized
Large corporations indeed pay ensuring warehouse traceability a lot of attention. To better understand the specifics of traceability, we need to review the structure of warehouse activity.
Warehouse workflow and how traceability improves it
The receiving stage is where warehouse traceability begins. The most crucial thing here is to make sure that cargo is processed in a fast and efficient manner. It is also important to avoid crowding at the docks.
Traceability for inbound logistics also includes the transition of responsibility during receiving. The facility owner is held responsible for the condition of cargo up until the shipping stage, so to avoid liability they must identify cargo units that were damaged in transit.
When it comes to technology for the receiving stage, it must be mostly focused on the speed and precision of the processing. RFID-reading gates and sorting conveyors, for example, would be good options.
During the putaway stage, goods are transported to their optimal destination. The exact location depends on the required storage conditions, volume, priority level, etc. A high level of goods traceability at this stage provides the following benefits:
- Cargo is being kept more efficiently. Management software such as a warehouse management system (WMS) or inventory management system (IMS) automatically detects and assigns optimal cargo locations. The size of the cargo, the ABC category (based on how often the cargo needs to be moved), and any special storage requirements (temperature, light exposure, etc.) are all taken into consideration.
- Provision of security for goods and employees. When warehouse operators can see in real time where cargo is stored, it diminishes the possibility of incorrect placement and subsequent shelf overloads with potential crashes.
- Minimization of travel time for employees and forklift loaders
- Optimal use of storage space
- Faster retrieval of goods
This stage is the costliest process in a warehouse, amounting to between 50 and 60 percent of global operating expenses. Ensuring good traceability can really cut the picking costs. Besides, accurate pickup can boost the satisfaction of the company’s customers.
First and foremost, consider wearable and/or mobile devices for workers. They speed up the process and register every move and action within the warehouse wirelessly.
Just as with the receiving stage, dock clogging is an issue to be dealt with. For that purpose, many tasks can be streamlined with the right software systems. A special application integrated into global warehouse control software, for example, can be used to quickly identify cargo and process it further.
The second transition of liability also occurs at this stage. After the cargo is out of the warehouse, the warehouse operator no longer bears responsibility for it and gets more time and resources to handle 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 That Help Ensure Warehouse Traceability
Traceability-ensuring technology can be divided into three categories:
- Traceability software, such as WMSs and IMS
- Tools for identifying and marking goods
- Radiofrequency identification (RFID) devices
Software ensuring warehouse traceability
Traceability-empowering software provides enterprises with benefits that would be otherwise unattainable:
- Access to information. The software can deliver complete data about an item to the operator: location, characteristics, and real-time position in the warehouse flow. Therefore, any impracticalities of the flow are easy to detect and weed 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).
- Quicker actions. The better your traceability, the faster you can react to incoming requests. Real-time inventory tracking allows operators to instantly locate the required item and order pickup.
- Legal compliance. Laws in certain countries establish traceability standards for certain industries and products. 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. Traceability software becomes a necessity in such cases.
- Increased consumer trust. The more thorough the control a company demonstrates over its processes and property, the more trustworthy the image it projects.
[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 are the first kind of dedicated software created specifically for inventory management. At their core lies a set of instruments for tracking several aspects of a company’s activity, such as:
- Inventory levels
An IMS also usually includes features for creating material bills, work orders, and similar documents for the production workflow.
The problem with using an IMS for warehouse optimization is that IMS is usually too simplistic. They also do not include many useful features of more sophisticated systems. For example, there’s no possibility to compartmentalize the location of products in the warehouse using an IMS. You also cannot create SKUs in it, check product statuses, or get real-time quantity updates, which is really important for traceability. To get that functionality, you need to use a WMS.
Still, there are ways to increase traceability while using an IMS. One such solution is to add automated storage and retrieval systems (AS/RS) to your warehouses, such as a horizontal/vertical carousel or a vertical lift. IMS can both track specific information about inventory currently in the hold of an AS/RS, (such as serial/lot/batch numbers) and create reports, providing additional traceability to the 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. However, the set of functions a WMS provides is much wider. A WMS is specifically designed for warehouse use and is capable of dealing with multiple large facilities.
Here are some functions of a typical WMS that provide benefits for warehouse traceability that an IMS can’t provide:
- Real-time quantity updates and quantity buffers. Running out of stock can be a serious problem for companies with fast operations. Tracking product quantities in real-time eliminate this danger.
- Product statuses, such as “Available,” “Dispatched,” and “In Processing”
- SKU creation. While an IMS can only register the receiving and shipping of SKUs, a WMS can create new SKUs and designate them for specific purposes.
- User accountability. A WMS tracks not only the movement of products through the warehouse but also the activity of employees and provides complete visibility as to who is responsible for each part of the product movement cycle.
- Creation of kits. Besides creating new SKUs, a WMS can also arrange SKUs in kits and assign new SKUs to freshly created kits, providing more flexibility to the warehouse workflow.
Depending on a warehouse’s specialization, a WMS can include features to deal with industry-specific challenges such as:
- FIFO rotation. The first in, first out principle, or FIFO, is a warehouse stock rotation principle used in food transportation and storage. Ensuring FIFO requires a specific layout of storage zones and good visibility of product receipt and conditions.
- Dynamic stock quarantine. You might need to isolate a certain batch of products due to various reasons: your QA staff might need to perform an unscheduled product check, or if a company encounters a short stock situation, the management might want to hold a certain amount of stock out of the flow chain, etc.
- Client-tailored stock selection. This is a tool that allows for the selection of specific goods with certain parameters in accordance with client requests and organizes 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 older WMSs lack some of these functions, so it might be a good idea to consider upgrading them.
Tools For Identifying And Marking
In a modern warehouse, identifying and marking individual items and batches of products is done with codes, imprinting, and reading devices.
Two universally accepted code options for warehouse use are stock-keeping units (SKUs) and 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. While small enterprises can avoid using SKUs, the need for increased traceability will force any company that works with a big inventory to implement them in the warehouse flow.
An SKU usually consists of several letters and numbers and can be identified and interpreted by warehouse workers visually. Using a special scanner, however, is a much more traceability-savvy approach because it drastically reduces the number of mistakes.
A company can create new SKUs and organize them as it sees fit; WMS software usually provides functionality to do so.
In contrast to SKUs, UPCs are universal and are used throughout the whole supply chain. They are administered by GS1 US, the American successor to the Uniform Code Council. UPCs are assigned to a product and follow it through its whole lifecycle. The UPC usually comes with a barcode that can be scanned for fast product identification.
Another contemporary option is to tag products with QR codes. They are two-dimensional, can contain much more information about the product than UPCs, and are considered a more secure option. They are also more convenient to use in systems for automated product tracking and transportation, and they are widely used in conveyor systems.
Radiofrequency identification (RFID) is the latest solution for product tagging and tracking. The decrease in production costs of RFID tags has promoted their worldwide adoption, and they are currently gaining popularity as the quickest tracking tool for automated parts of the warehouse flow.
Integrating RFID technology in the warehouse tracking process creates countless possibilities for organizing smart IoT warehouse systems. As stated in the Smart Warehousing Market Global Forecast by Marketsandmarkets, between 2021 and 2026, the smart warehousing market is expected to grow from $14.8 billion to $25.4 billion, with its CAGR (compound annual growth rate) amounting to 11.5 percent.
There are other technological solutions that can take your warehouse traceability to a higher level. One of them is using RFID tags and building IoT systems around them. Let’s take a look at how such systems are organized and what traceability benefits they bring to warehouse owners.
Integration of RFID-based IoT system in a WMS for enhanced traceability
An RFID-based IoT system would provide warehouse owners with numerous benefits, such as:
- Enhanced safety of goods and labor. 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.
- Faster warehouse flow processes. No need for manual scanning and checking means less time spent at all stages of the in-warehouse supply chain.
- Theft prevention. 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 whole process more transparent.
- Minimization of labor costs. As with any automation, the more processes are done without the need for manual intervention, the less staff you need to hire for maintenance.
- Better decision-making due to real-time information flows and comprehensive WMS representation of this information.
A successful smart warehouse system would require the following:
- RFID tagging of products. RFID tagging requires special equipment for installing RFID tags in product packaging. RFID beacons can be active (and therefore contain a small battery) or passive (being activated via an incoming signal from other equipment), with the latter being arguably more widespread.
- Installation of RFID-reading gates at key points of the warehouse: the reception dock, entrances, shipping docks, etc. Gates can automatically read data from RFID tags of products passing through them, process this data through a gateway device, and send it to management software such as a WMS.
- Reading devices on forklifts and shelves, providing the instant detection of products being transported from place to place. Such devices also detect at which particular part of the warehouse framework the product currently is.
- Warehouse condition monitoring devices to monitor the environment and control its compliance with predetermined parameters such as temperature and humidity.
Of course, no technological novelty is perfect, and RFID IoT warehouse monitoring solutions have their share of problems, the most prominent being certain cybersecurity dangers associated with any internet-connected activity. If something is on the web, it can potentially be hacked. Within the realm of warehouse management, however, this problem can be solved by implementing an RFID-based solution as an isolated system limited to a specific warehouse or location.
Improving warehouse traceability is an ongoing struggle for any big company that tries to stay competitive. 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.