Organizations that operate either a warehouse or distribution center understand the complexities that can accompany increased customer demand. They need to maintain inventory levels that accommodate a jump in purchase orders but avoid overstocking, which leads to cost overruns and wastage. It's a difficult balance that requires strong solutions. Manufacturers that partner with retailers especially need the right tools to keep up with a steady onslaught of promotions and sales that can quickly deplete a company's inventory.
What Causes Fluctuating Demand?
Whether a manufacturer or distributor works with an ecommerce enterprise or a wholesaler with a large brick-and-mortar presence, there are a number of variables that can belabor inventory management. The first is seasonal demand.
Logistics Management, an online source for industry news and analysis, cited the example of United Stationers, a business and industrial product supplier and distributor with more than 60 warehouses. Bill Stark, vice president of engineering for the organization, explained there would be spikes in activity depending on the time of year, during which he'd see a 25-percent rise in commercial orders. Typically, the back-to-school season and the beginning of the fiscal year were the busiest times.
However, demand has become less predictable for United Stationers. Because of its e-commerce presence, consumers are able to order items at virtually any hour of the day. At the same time, the company offers same-day or next-day delivery, which complicates matters further. The business and industrial supplier must fulfill orders, manage inventory and ensure timely distribution, often within a fairly limited window of time.
Other retailers with fulfillment and distribution centers feel the same crunch, especially during holidays like Halloween and sporting events, including the year-end NCAA basketball tournament. Demand for orders can jump significantly. Logistics Management indicated one particular distributor sees orders spike from 50,000 to more than 500,000 in the span of 24 hours.
How Can Organizations Manage Variability?
One way that manufacturers and distributors can handle fluctuating demand is to invest in automated data collection. In particular, picking strategies that leverage automation can help organizations maintain a firm handle on their inventories and adjust to increased work orders with greater agility. For instance, voice picking has helped United Stationers maintain optimal performance, Logistics Management wrote. This solution gives employees in different areas of the warehouse the flexibility to collect data quickly and enter it into a central system.
Mobile data collection is another key resource for organizations looking to streamline their inventory management and distribution. Texas-based retail display manufacturer Madix operates three geographically disparate facilities and had issues with inventory accuracy. Although it operated within an SAP enterprise resource planning system, there was a time lag between the moment data was collected and the moment it was updated in the SAP software. The ultimate goal was having real-time visibility into inventory levels, and the solution was mobile data collection alongside wireless scanning technology.
Manage Inventory with Powerful Automation
Madix partnered with RFgen to implement these solutions within its SAP environment, with the hope of aligning all data from its three manufacturing facilities. Since RFgen is a certified SAP partner, it has the ability to help manufacturers modify transactions in-house using drag-and-drop technology that allows companies to rapidly develop mobile applications. At the same time, RFgen's software includes inventory, order management, purchasing and plant maintenance transactions, which eliminates the need for internal scripting.
Prior to working with RFgen, Madix relied on a manual, paper-based system to monitor production. The shop floor controller would walk around and retrieve paper tickets from each machine operator and used a magnetic board to track data. This was problematic for a number of reasons. First, information is accessible only to those with a clear view of the public board and there was ample room for human error.
With mobile data collection integrated with the company's SAP system, employees can use wireless scanners to track inventory and machine production is displayed in real-time on roughly 30 monitors spread across the organization's facilities. Live production snap shots include the number of employees on the shop floor, the total number of jobs in process, start and expected end time for each job and a number of other operations. All of this information is collected in a central location so managers can perform analytics to make better decisions about manufacturing processes.