Let's talk about software. When that topic comes up at Modern, we're generally talking about warehouse management systems. And for good reason. During the late 1990's, when I began writing about materials handling automation, end users were making big investments in WMS and automatic data collection technologies like bar code scanning and voice recognition technology.
Today, there's a shift underway. That's not meant to be a swipe at WMS. It's difficult to imagine a state of the art facility without a best-of-breed WMS system from RedPrairie, Manhattan, SAP or Oracle. However, much of today's action inside the four walls is focused on order fulfillment solutions that build aisle ready mixed SKU pallets, fill ecommerce orders or manage store replenishment and ecommerce in one facility. This is complex stuff. It can't be managed without a sophisticated warehouse control system. As a result, talk to a leading materials handling OEM or systems integrator, and they're as likely to tell you about their new software as they are about the speeds and feeds of their conveyors and sorters. In a sense, we've reached that point where we don't necessarily need to work faster in the DC. We need to work smarter. That's a software play.
That point was driven home to me during a conversation with Jerry Koch, director of corporate marketing and product management for Intelligrated, at the MHIA fall meeting last month. As we talked about market trends and multi-channel retail distribution, Koch emphasized the importance of software to Intelligrated's road map going forward.
A week later, I received a press release from Dematic announcing the formation of a software and supply chain intelligence unit. "At Dematic we understand that our equipment can only support industry trends if it's united with state-of-the-art software," the release read in part. Dematic went on to say that 1/3 of its R&D group is focused strictly on software development.
Last week, I had a chance to talk to both Koch and Robert Nilsson, vice president and general manager of Dematic's new software unit, about the changes they're seeing in the market.
"Software is allowing us to make decisions at a much more granular level," Koch told me. "For instance, we've long had an interest in balancing the workload in a building based on how we route cartons to work stations. Now, we can route based on item level information about what's in a case and what is required to pack that order and not just on a carton." After all, how the number of items in a carton or tote, along with the value added services that accompany that order, will determine how much time and work is involved in packing an order for shipment.
More importantly, Koch added, smarter software allows the facility to make decisions about how to fill orders in real time and not just execute against a plan. "In the past, we started out with a plan for the day," Koch said. "Now, we can make decisions in real time as the plan changes. That's a significant difference."
According to Nilsson, the conversation with end users is changing and those changes are highlighting the importance of software. "We're no longer just talking about what happens in one facility, where speeds and feeds was important," Nilsson said. "End users are looking for solutions to ship pallets to the store and fill ecommerce orders. They are rethinking their distribution model so they can optimize their routing and shipping. They're looking for intelligence about how a pallet will be received at the retail store level. These kinds of conversations can only happen if you're looking at your overall supply chain. Software intelligence is what allows you to make smarter logistics decisions."
Nilsson pointed out that Dematic has added over 200 employees in the last few years to work on software. "That's what's driving our R&D today," he said.
As our upcoming December system report featuring Kenco will demonstrate, there are still many very successful conventional distribution centers that deliver real results with basic materials handling tools. But at the top tiers of our industry, software is making all the difference in the world.
