Implementing a new WMS across a network of DCs carries big risks and big rewards. Two shippers that are going through it tell how they're avoiding pitfalls and achieving success.
Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
It's hard to imagine a more daunting prospect than implementing a new warehouse management system (WMS) in more than two dozen warehouses and DCs, some company-owned and some outsourced. And it's all the more intimidating when each facility has its own approach to doing business, not to mention a unique combination of software, material handling equipment, products, and customers.
Yet more companies are doing just that. After taking a hard look at their operations, they've decided the potential benefits—accurate data, consistent service levels, and big cost reductions across an entire distribution network—outweigh the challenges and risks.
Two such companies are Kimberly-Clark Corp. and Loblaw Companies Ltd. Both are in the midst of projects to standardize their warehouse management systems across complex distribution networks. And while each has encountered a few hiccups along the way, they now have implementation down to a science. Here's a look at some of the steps they've taken to ensure success.
A "proven, repeatable implementation model"
Kimberly-Clark (K-C), the consumer and medical products titan, is in the middle of a major software upgrade—one that entails switching 21 sites over from a 12-year-old version of RedPrairie's WMS to the current version (v. 2011.2) over a period of 20 months. Of those 21 sites, 10 are field DCs run by third-party logistics companies (3PLs), and 11 are plant-attached DCs, two of which are run by 3PLs.
The facilities themselves range in size from 300,000 to 1.6 million square feet. Many were using automated storage and retrieval systems at the time of the go-live, some have multiple floors, some include co-packing operations, and, depending on the location, there can be multiple languages in use. In all, there are more than 2,000 named WMS users.
One of the first steps K-C took was to switch from local servers to a centralized server, a move aimed at simplifying programming and minimizing risk of disruption. Previously, if something went wrong, an entire facility could be out of commission while technicians tracked down the source of the problem and made repairs. In addition, code revisions had to be carried out facility by facility. With the centralized approach, that's no longer the case. "There is now a single set of code, with no unique codes at any facilities," says WMS Project Manager Bob Polar. "When there is a change, only one person approves it so we have standardization."
K-C and RedPrairie put together a corporate oversight team, with representatives from information technology (IT), distribution operations, sourcing and supply chain management, and finance. They also created multifunction "core" teams of about 10 people at each site that included distribution staff, hourly workers, and inventory control.
Once the first site was running satisfactorily, members of that DC's team went to the next implementation site to talk about their experience and offer advice. At the same time, team members from the site that was scheduled to go third came to observe and ask questions. This process will continue for all 21 sites, so that each team can learn from its predecessors and pass on accumulated knowledge to the next two down the line.
Every software implementation carries with it the risk of an operational disruption. To prevent delays in order fulfillment, the company arranged to have some of the work shifted to other DCs when the first few sites went live. But K-C was soon able to dispense with that precaution, Polar says. As the team gained experience, the need to shift volume was virtually eliminated.
On-site support has played a big role in ensuring everything goes smoothly, not just during implementation but for weeks to come. Several people from RedPrairie and Kimberly-Clark remain on-site for four to seven weeks, depending on the individual facility's needs.
Ultimately, Kimberly-Clark's aim is to have a "proven, repeatable implementation model" that results in uniform practices in all of its DCs, Polar says. "I could take someone from Paris, Texas, and ship him up to New Milford, Conn., and he could be loading trucks with the WMS in five minutes," he says. "The processes are that standardized."
A "cookie cutter" approach with flexibility
A true conglomerate, Canada's Loblaw Companies Ltd. manufactures consumer products and operates conventional and discount grocery stores under 22 banners, among other business lines. After a decade of store expansion that pushed up supply chain costs and stretched Loblaw's logistics network to the breaking point, the company in 2008 launched an initiative to redesign its warehousing, distribution, forecasting and replenishment, labor, and inventory and order management processes, supported by new software and IT infrastructure.
As part of that program, Loblaw is rolling out a new WMS from Manhattan Associates at about two dozen regional and national DCs across Canada, some company owned and some operated by third parties. Currently, 13 are running on the new WMS. The project is scheduled for completion by the end of 2012.
Loblaw has WMS implementation down to a science—it's now able to complete a rollout in 12 hours or less, including a preproduction dry run. "Early on, we diverted a lot of shipments to other DCs, but now the teams have gotten so good at this, that the last two implementations had no impact at all on operations or orders," says David Markwell, vice president information technology�business solutions delivery.
Careful planning, testing, and oversight together with a formal governance structure have been key factors in the project's success. At the top is a national WMS oversight team that's responsible for activities that are "global" rather than site-specific. That team is made up of representatives from Loblaw, Manhattan Associates, and related vendors, such as the voice system provider Vocollect. Participants include functional and technical experts in WMS and labor management software, industrial engineers, data and business analysts, reporting specialists, warehouse slotting specialists, and quality-assurance experts. Among their responsibilities are system design, environment management (ensuring the new software doesn't compromise other areas' performance), code base/release management (tracking code versions and release timing to ensure consistency), and defect management.
In the second tier are three deployment teams whose responsibilities include DC-specific design and configuration, site visits and change management, preparation and training, environment preparation and setup, data conversion, readiness testing, implementation, and warranty support. The three teams work concurrently on separate implementations, each of which takes approximately 20 weeks from planning through decommissioning of the old system. This method allowed the company to go live at nine DCs in 2010.
Although Loblaw has adopted a "cookie cutter" approach to WMS implementation for the sake of consistency and speed, its process does allow for some variations in execution. These variations may be necessary to accommodate differences in building size, number of stock-keeping units, material handling configurations, magnitude of a DC's IT and facility infrastructure upgrade, and training requirements. As the project has progressed, the teams have made changes based on what they've learned. For example, the makeup of the teams evolved over time to reflect the many functions that are affected by an implementation. "We recognized that we need to approach [the project] from a holistic view," Markwell says.
Loblaw made managing risk a priority for the WMS rollout. For example, operational risk and contingency options influence the order in which warehouses are chosen to implement the new WMS. (Other factors include the line of business serviced by the DCs and alignment with other delivery programs Loblaw has under way.)
Another example is "regression testing," or running scenarios in the new software against existing functionality "to make sure everything else still does what it's supposed to do," Markwell explains. In addition, he says, the implementation teams always have a live copy of the production database, so if needed, they could shift production over to another site with minimal downtime.
For all its technological precision, the WMS project's success also depends on individuals' expertise and sense of ownership. Loblaw's regional vice presidents and the sites' general managers are deeply involved in change management and training at the facilities. Some DCs have engaged in friendly competition, vying to be the first to meet operational goals.
Markwell says a positive attitude and desire to work collaboratively are among the reasons why the WMS rollout exceeded expectations in its very first month. There were a few glitches early on, and the teams have encountered a bit of resistance here and there, but he has no doubt that there's smooth sailing ahead. "Everyone has come to understand that we should leverage this tool that we've been given to improve our performance," he says.
Jeremy Van Puffelen grew up in a family-owned contract warehousing business and is now president of that firm, Prism Logistics. As a third-party logistics service provider (3PL), Prism operates a network of more than 2 million square feet of warehouse space in Northern California, serving clients in the consumer packaged goods (CPG), food and beverage, retail, and manufacturing sectors.
During his 21 years working at the family firm, Van Puffelen has taken on many of the jobs that are part of running a warehousing business, including custodial functions, operations, facilities management, business development, customer service, executive leadership, and team building. Since 2021, he has also served on the board of directors of the International Warehouse Logistics Association (IWLA), a trade organization for contract warehousing and logistics service providers.
Q: How would you describe the current state of the contract warehouse industry?
A: I think the current state of the industry is strong. For those that have been focused on building good client relationships over the years, I think it’s a really exciting time. Coming out of all the challenges of the past few years, I think there’s a lot of opportunity for growth and deeper partnerships. It’s fun to see the automation and AI (artificial intelligence) integration starting to evolve [in a way that’s] similar to what we saw with WMS (warehouse management systems) in the early 2000s.
Q: You are now president of your family firm. Is it an advantage having grown up in the business as opposed to working elsewhere?
A: I definitely believe it was an advantage growing up in the business. Whether it’s working with family or someone else in the industry, there’s always an advantage when you have mentors[to guide] you. I’ve been blessed to have several mentors, some in the industry, others just in life, and I’m thankful that they were willing to mentor me and that I was willing to listen to them.
Q: What are the biggest challenges currently facing 3PLs, and how are you addressing them?
A: Labor and legislation are both tough right now. The two seem to have a lot to do with each other, and it can make it tough to find and retain people. So I think we’ll see more and more automation of processes industrywide.
Q: Third-party service providers often must handle a wide variety of products for a lot of different clients. Does this variety make it difficult to invest in automation and other new technologies?
A: It can make things more difficult when looking at certain automation, but it’s in the “difficult” that a lot of opportunities lie. It would be tough to find a single solution that fits every client’s needs, but there are always opportunities to improve in certain areas. It just takes a bit of vision and commitment, and a willingness to invest in your own long-term success.
Q: As a 3PL, what do you look for when selecting the clients you work with?
A: Quality relationships that will last a long time. When both parties are happy and working together in the same direction, everyone wins.
Q: You’ve been a board member of the International Warehouse Logistics Association since 2021. Why is your involvement with this organization important to you?
A: I think it’s important to understand what’s happening in the industry. IWLA is a great resource for staying up to date and getting a solid education when it comes to the latest logistics trends. I also think it’s important to give back and pass along what we’ve learned to those just getting started in the business. As important as it is to have a mentor, it’s just as important to mentor and help others.
“While there have been some signs of tightening in consumer spending, September’s numbers show consumers are willing to spend where they see value,” NRF Chief Economist Jack Kleinhenz said in a release. “September sales come amid the recent trend of payroll gains and other positive economic signs. Clearly, consumers continue to carry the economy, and conditions for the retail sector remain favorable as we move into the holiday season.”
The Census Bureau said overall retail sales in September were up 0.4% seasonally adjusted month over month and up 1.7% unadjusted year over year. That compared with increases of 0.1% month over month and 2.2% year over year in August.
Likewise, September’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.7% seasonally adjusted month over month and up 2.4% unadjusted year over year. NRF is now forecasting that 2024 holiday sales will increase between 2.5% and 3.5% over the same time last year.
Despite those upward trends, consumer resilience isn’t a free pass for retailers to underinvest in their stores by overlooking labor, customer experience tech, or digital transformation, several analysts warned.
"The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value. Promotions in general will play a larger role in the 2024 holiday season. Retailers are dealing with shrinking shopper loyalties, a larger number of competitors across more channels – and, of course, a more dynamic landscape where prices are shifting more frequently to win over consumers who are looking for great deals,” Matt Pavich, senior director of strategy & innovation at pricing optimization solutions provider Revionics, said in an email.
Nikki Baird, VP of strategy & product at retail technology company Aptos, likewise said that retailers need to keep their focus on improving their value proposition and customer experience. “Retailers aren’t just competing with other retailers when it comes to consumers’ discretionary spending. If consumers feel like the shopping experience isn’t worth their time and effort, they are going to spend their money elsewhere. A trip to Italy, a dinner out, catching the latest Blake Lively and Ryan Reynolds films — there is no shortage of ways that consumers can spend their discretionary dollars,” she said.
Editor's note:This article was revised on October 18 to correct the attribution for a quote to Matt Pavich instead of Nikki Baird.
The market for environmentally friendly logistics services is expected to grow by nearly 8% between now and 2033, reaching a value of $2.8 billion, according to research from Custom Market Insights (CMI), released earlier this year.
The “green logistics services market” encompasses environmentally sustainable logistics practices aimed at reducing carbon emissions, minimizing waste, and improving energy efficiency throughout the supply chain, according to CMI. The market involves the use of eco-friendly transportation methods—such as electric and hybrid vehicles—as well as renewable energy-powered warehouses, and advanced technologies such as the Internet of Things (IoT) and artificial intelligence (AI) for optimizing logistics operations.
“Key components include transportation, warehousing, freight management, and supply chain solutions designed to meet regulatory standards and consumer demand for sustainability,” according to the report. “The market is driven by corporate social responsibility, technological advancements, and the increasing emphasis on achieving carbon neutrality in logistics operations.”
Major industry players include DHL Supply Chain, UPS, FedEx Corp., CEVA Logistics, XPO Logistics, Inc., and others focused on developing more sustainable logistics operations, according to the report.
The research measures the current market value of green logistics services at $1.4 billion, which is projected to rise at a compound annual growth rate (CAGR) of 7.8% through 2033.
The report highlights six underlying factors driving growth:
Regulatory Compliance: Governments worldwide are enforcing stricter environmental regulations, compelling companies to adopt green logistics practices to reduce carbon emissions and meet legal requirements.
Technological Advancements: Innovations in technology, such as IoT, AI, and blockchain, enhance the efficiency and sustainability of logistics operations. These technologies enable better tracking, optimization, and reduced energy consumption.
Consumer Demand for Sustainability: Increasing consumer awareness and preference for eco-friendly products drive companies to implement green logistics to align with market expectations and enhance their brand image.
Corporate Social Responsibility (CSR): Companies are prioritizing sustainability in their CSR strategies, leading to investments in green logistics solutions to reduce environmental impact and fulfill stakeholder expectations.
Expansion into Emerging Markets: There is significant potential for growth in emerging markets where the adoption of green logistics practices is still developing. Companies can capitalize on this by introducing sustainable solutions and technologies.
Development of Renewable Energy Solutions: Investing in renewable energy sources, such as solar-powered warehouses and electric vehicle fleets, presents an opportunity for companies to reduce operational costs and enhance sustainability, driving further market growth.
A real-time business is one that uses trusted, real-time data to enable people and systems to make real-time decisions, Peter Weill, the chairman of MIT’s Center for Information Systems Research (CISR), said at the “IFS Unleashed” show in Orlando.
By adopting that strategy, they gain three major capabilities, he said in a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI.” They are:
business model agility without needing a change management program to implement it
seamless digital customer journeys via self-service, automated, or assisted multi-product, multichannel experiences
thoughtful employee experiences enabled by technology empowered teams
And according to Weill, MIT’s studies show that adopting that real-time data stance is not restricted just to digital or tech-native businesses. Rather, it can produce successful results for companies in any sector that are able to apply the approach better than their immediate competitors.
“ExxonMobil is uniquely placed to understand the biggest opportunities in improving energy supply chains, from more accurate sales and operations planning, increased agility in field operations, effective management of enormous transportation networks and adapting quickly to complex regulatory environments,” John Sicard, Kinaxis CEO, said in a release.
Specifically, Kinaxis and ExxonMobil said they will focus on a supply and demand planning solution for the complicated fuel commodities market which has no industry-wide standard and which relies heavily on spreadsheets and other manual methods. The solution will enable integrated refinery-to-customer planning with timely data for the most accurate supply/demand planning, balancing and signaling.
The benefits of that approach could include automated data visibility, improved inventory management and terminal replenishment, and enhanced supply scenario planning that are expected to enable arbitrage opportunities and decrease supply costs.
And in the chemicals and lubricants space, the companies are developing an advanced planning solution that provides manufacturing and logistics constraints management coupled with scenario modelling and evaluation.
“Last year, we brought together all ExxonMobil supply chain activities and expertise into one centralized organization, creating one of the largest supply chain operations in the world, and through this identified critical solution gaps to enable our businesses to capture additional value,” said Staale Gjervik, supply chain president, ExxonMobil Global Services Company. “Collaborating with Kinaxis, a leading supply chain technology provider, is instrumental in providing solutions for a large and complex business like ours.”