Over the past few decades, logistics professionals have overwhelmingly turned to software when they wanted to give their warehouse and transportation operations a boost. But what types of software tools are they using? Are they sticking to such traditional applications as warehouse management systems (WMS), transportation management systems (TMS), and labor management systems (LMS)? Or are they venturing into new territory, embracing the powerful new tools developed for big data analysis?
To get a better sense of software's role in distribution today, DC Velocity conducted a survey of its readers earlier this year on their use of supply chain applications. Two hundred and thirty readers took part in on our research, which centered on the types of software deployed in distribution centers. When it came to the type of business they worked for, survey respondents covered the gamut, with 32 percent hailing from wholesale distribution, 29 percent from manufacturing, and 14 percent from the third-party logistics side. Another 11 percent worked in retail and 6 percent in transportation.
So what applications are readers using? Not surprisingly, warehouse management software (WMS) topped the list, with 65 percent of respondents using this type of solution. For the most part, these users are opting for the traditional approach to WMS deployment, installing the software on the company servers; only 8 percent of respondents deployed their WMS in the cloud.
The respondents were no newcomers to the WMS world. Of those survey participants using a WMS in their DCs, 59 percent had been using that type of software for more than 10 years. Another 25 percent had used a WMS between five and nine years, while 16 percent had used the software for one to four years. Only one respondent said his/her company had been using a WMS for less than a year.
What functions do readers use WMS for?
|Overseeing warehouse inventory||91%|
|Directing receiving, putaway, and picking||82%|
|Managing business rules for task/inventory customization||46%|
|Serving as an interface with automated equipment||44%|
|Managing warehouse labor||36%|
When asked what they used their WMS for, 91 percent said it was to oversee warehouse inventory—no surprise, given that this was what the application was originally designed to do. Eighty-two percent said their WMS directed receiving, putaway, and picking, another predictable response. What was interesting was the extent to which logistics managers are starting to use their WMS for more than basic activities. Forty-one percent said that the application did analytics, enabling the company to glean insights into ways to improve throughput. (See Exhibit 1.)
The survey responses provided a strong indication that many readers are operating automated warehouses. When asked if their WMS worked in conjunction with a warehouse control system, 48 percent said yes. Warehouse control systems serve as a type of "information bridge" between a WMS and the facility's automated material handling equipment, transmitting instructions from the WMS to the automated devices.
STICKING TO THE TMS KNITTING
Despite the widespread availability of transportation management systems (including low-cost cloud-based versions), only 38 percent of respondents reported that they were currently using this type of software. As was the case with WMS, most of those deploying TMS were long-time users. Thirty-eight percent had used a TMS for more than 10 years. Twenty-six percent had used a TMS between five and nine years, and 31 percent had used this type of software for one to four years. Only 5 percent had used a TMS for less than a year.
When asked what they used their TMS for, 84 percent of respondents said it was to schedule domestic shipments, which is precisely what the software was originally designed to do. Another 79 percent said they used it for tendering loads to carriers, while 57 percent used it for freight bill audit/payment and 46 percent for tracking carrier performance. Only 31 percent used their TMS to schedule international shipments. Although some industry pundits predicted that shippers would use their transportation management systems to help carriers comply with the new truck driver hours-of-service rule, only 33 percent indicated they planned to use the software for that purpose.
Despite talk of more companies using software solutions to improve workforce efficiency, the survey found that only 39 percent of respondents are using labor management systems—either on a standalone basis or as part of their WMS. The results also showed that just 12 percent of respondents had deployed a yard management system, which is used to coordinate the movement of trailers and trucks at a DC site.
GROWING INTEREST IN BIG DATA
In the past year, there's been considerable talk about the use of big data analysis to fine-tune supply chain operations. As the name implies, big data analysis involves sifting through millions of bits and bytes of information for new insights into their business practices. Typically, the information comes from diverse sources—anything from telematics and sensors on carriers' equipment to radio-frequency identification (RFID) tags affixed to cases or items to social media chatter. The idea is that by analyzing these disparate sets of information, the software might detect hidden connections or patterns that could ultimately be parlayed into supply chain operational improvements.
Why companies use big data analysis ...
|To better understand our supply chain||13%|
|To recommend solutions to problems||17%|
|To examine hypothetical situations||3%|
|All of the above||68%|
... and why they don't
|No perceived value||40%|
|No time for additional work||19%|
|Lack of IT support||14%|
Despite all the hype, only 43 percent of survey respondents said they were engaging in big data analysis right now. When asked about their reasons for doing so, respondents indicated it was to better understand their supply chain, examine hypothetical situations, and to obtain recommendations for solving operational problems. (See Exhibit 2.)
The flip side, of course, is that 57 percent of respondents are not engaging in big data analysis at this time. When asked why, 40 percent said they perceived no value from it. Another 19 percent said they didn't have the time for additional work, and 14 percent said they lacked IT support, generally seen as critical for this undertaking. Another 7 percent said this type of analysis was too expensive. (See Exhibit 3.)
Yet despite the relatively slow uptake, many experts still believe that supply chain and logistics operations are good candidates for big data analysis. Based on reader responses, it appears software vendors may have to develop more low-cost, intuition-based products and then demonstrate their value before logistics managers will be persuaded to take the plunge.