Need logistics insight? Consider analytics

For logistics managers facing never-ending pressure to find distribution efficiencies, one solution could be software that can provide insights into their operations. That's why when it comes to buying execution software for warehousing or transportation, these managers should make it a point to look for packages that offer analytics.

Most of the better-known warehouse management (WMS) and transportation management systems (TMS) now come with some form of analytics. Even the transportation and warehouse software offerings from the big enterprise resource planning (ERP) vendors provide this type of intelligence these days.

Right now, the type of analytics most commonly offered is what's known as descriptive reporting. In other words, it details what happened in the past. "Virtually all WMS and TMS have this capability to one degree or another," says Gartner analyst C. Dwight Klappich.

But descriptive analytics are just the jumping-off point for software intelligence. Software vendors are working on analytics that can prescribe courses of action and even offer predictions as to where things are headed. Despite the work being done in those areas, Klappich says WMS software is still limited in that regard. "We do see some vendors like Manhattan investing more in this around areas like labor and resource planning, trying to identify future problems before they occur. For example, they might be looking at the work for the day and identifying the need for more people in receiving or value-added services to prevent a bottleneck in one process area or another."

Klappich says vendors are also working on analytics that predict the level of labor resources required to address workflow spikes, such as those that occur during the back-to-school or pre-holiday shopping seasons. Software development is not just focused on labor, though. Predictive analytics could also be used to help users reconfigure their distribution operations to optimize throughput. "I believe this will be one of the major areas of innovation in WMS over the next several years," says the Gartner analyst. "We will begin to see adoption of constraint-based optimization concepts, long used in manufacturing, in warehousing, but clearly, it will be a different application of the concepts [tailored to] the unique needs of warehousing."

At the moment, transportation management systems are ahead of their WMS counterparts when it comes to robust prescriptive analytics. "Transportation has long had some prescriptive analytics because most were built on an optimization foundation," says Klappich. "Systems were good at operational planning within the delivery time horizon, but what we see now is more of a focus on tactical planning outside the execution time horizon."

In addition to making recommendations for improvements—say, suggesting the use of an alternative carrier to cut costs or improve service—some TMS packages can look ahead and evaluate possible future scenarios. For example, the solutions can assess the potential implications of moving customers from pre-paid to collect freight. They can also assist with risk scenario contingency planning (e.g., What happens if there's a port strike in a particular city? What happens if you have to change your source for a part? What if leadtimes were affected by a major weather event?). Although some of this modeling capability exists in network design tools, Klappich says they often lack the level of granularity required for modeling a shipper's transportation network.

Given that so many WMS and TMS packages now come with built-in analytics, logistics managers should consider taking advantage of those features. After all, analytics just might provide critical insights into how to save dollars in distribution or transportation.