Shall We Dance?

What do ex-NFL running back Emmitt Smith and professional dancer Cheryl Burke have in common? Before they sambaed their way to the 2006 crown on “Dancing with the Stars”…not much. Transportation and warehouse management are no different. They seem to be strange dance partners at first glance. But, when the music is right and their steps are in synch, they can trip the light fantastic.

As transportation and warehousing expenses continue to increase, companies are reevaluating these key logistical components. Severely impacted by fluctuating fuel prices, transportation costs alone, for example, typically amount to approximately 50% of total logistics expenditures.

And, as demand softens, supply chain professionals across the country are reporting fewer inventory turns, resulting in products spending more time in warehouses and larger, less frequent shipments. This, in turn, causes logistics professionals to increasingly evaluate inventory and warehouse costs in addition to transportation expenditures. After all, companies do not make money when goods sit idle in the warehouse.

Gone are the days when retailers and wholesalers could allow their warehouse management systems (WMSs) to operate in isolation from their transportation management activities. In today's demanding consumer environment, companies cannot afford to lose the gains they have built in other areas of their supply chains because of inefficient execution on the road or in the warehouse.

Companies can make better logistical decisions by using the right technology system integration between warehouse and transportation management. By integrating WMS and transportation management systems (TMS), companies can enable real-time visibility and create cross-departmental workflows throughout the supply chain, significantly improving supply chain execution and profitability.

Away From Silos

Managing all aspects of a supply chain network can be a juggling act, with multi-channel distribution, multi-modal needs and high service requirements. Today's companies require greater visibility and control than ever before so customers are assured the right products will be delivered exactly when and where they need them.

To adapt to this ever-changing marketplace, it has become an imperative for companies to know where their inventory is and how to move it to the right spot. To accomplish this, companies should take a holistic view of their supply chains, starting with a more centralized logistics outlook. With full visibility into the activities and information that drive execution, companies not only preserve sales and revenues with more accurate orders, but also control and manage costs by improving the way they organize operations, labor, transportation and inventory. Major retailers, such as The Home Depot, The Men's Wearhouse and Tesco, have already recognized this value.

Unfortunately, traditional operations still have transportation and warehouse management broken down separately, or siloed. In reality, the two are closely intertwined. It is difficult to manage warehouse inventory without the insight into the flow of products in and out of a distribution facility. For example, if a distribution center does not have visibility into inbound transportation, then it makes it hard for the warehouse manager to plan for people and equipment to unload trucks.

Integration Models

Creating a single-source engine to share data, foster communications and provide visibility between transportation and warehouse management systems can enhance the performance and benefits of each solution beyond implementing each as a stand-alone. However, much like the successful duos on “Dancing with the Stars,” where one partner takes the lead while the other reacts, companies must determine where their priorities lie.

In order for companies to reap the full benefits of this type of integrated solution, they must first determine which model — transportation-driven or warehouse-driven — will best suit their business needs and objectives. The following is an overview of the operational characteristics that would indicate a certain propensity for each model.