IDII Software Newsletter
July 26th 2007 - Volume 8 Number 7
For PROFESSIONALS in Software for Warehousing, Logistics, and Supply Chain.
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Using Store Level Demand Signals to Improve Supply Chain Performance

Having the right product on stores shelves when the consumer comes in to buy it is vitally important for retailers and all of the companies who supply them. Why? Because out of stock merchandise is a multi-billion dollar problem according to a 2003 study by the Grocery Manufacturers Association (GMA) which estimates an average out of stock rate of 7.4 percent. Another GMA study found that 40 percent of consumers will buy a substitute product from another store if their original choice is out of stock, representing tremendous lost revenue for both retailers and suppliers.

The problem is that traditional demand forecasting models used to plan inventory levels and shipments are not agile enough for today’s consumer driven marketplace. The demand latency between consumer purchases and their impact on traditional demand forecasts is 2 to 4 weeks. This causes significant risk of mismatched supply and demand. In fact, a survey of top executives by AMR Research reported July 12, 2007 found demand volatility represented the greatest risk to their businesses, and that the greatest gap between the importance of technology to their business and their current systems’ capabilities was in visibility to customer demand.

The good news is that systems have recently come on the market that solve the demand latency problem by using store level demand signals interpreted by sophisticated demand sensing and smoothing algorithms to drive supply chain replenishment and production decisions. The result is improved on-shelf availability rates, which drive higher revenue for retailers and suppliers, and better customer service.

For example, by integrating POS data directly into these demand sensing supply chain systems, a retailer running a special promotion of a CPG company’s products “sees” the products are selling faster than expected in one store (or market, region, etc.) while lagging behind expectations in others. The demand sensing system adjusts auto-replenishment orders at the CPG company’s distribution center to ship more product to the higher selling stores while reducing or eliminating replenishment at lower selling stores. It also may signal suppliers to send more product or drop-ship directly to the stores. These shipments would be planned by the transportation / fleet management system, which might even schedule store to store transfers.

This uneven demand also impacts labor resources. Along with scheduling the replenishments, re-supply and transportation, the system would schedule the workers needed at the store and the DC to pick, pack, ship and receive the orders, using advance ship notices (ASNs) to alert managers to what is coming and when to expect it.

Management can use business intelligence capabilities to interpret the demand signals to adjust current promotion plans and improve future forecasts. They can also evaluate promotion effectiveness by examining whether the promotional products and non-sales items were delivered and set up on time, whether promotion pricing was executed, and the impact on sales of promotional and related products.

None of this agile reaction to consumer demand is possible without immediate visibility to demand signals and the new demand sensing systems that turn these signals into supply chain action. This multi-echelon inventory model “pulls” the needed products from the warehouse to the store, and pulls product from suppliers to the warehouse, minimizing inventory levels across the supply chain. The bottom line is significantly reduced out of stocks, resulting in fewer lost sales, higher revenues and better customer service.

Author: Tom Kozenski, VP Product Strategy, RedPrairie Corporation. Editor's Note: RedPrairie started with a solid core of WMS, TMS, and LMS software initially and continues to expand it's footprint. One of the latest software additions to the RedPrairie footprint is called BlueCube, which helps in analytics, store management, forecasting, and more.


Maida Napolitano's "The Time, Space & Cost Guide to Better Warehouse Design" from Amazon
James B. Ayers's "Handbook of Supply Chain Management, Second Edition (Resource Management)" from Amazon


2008 WMS RESEARCH STUDY IS STARTING - ERP & WMS Software Vendors are invited to participate! - - - Download the application form at now!
Deadline for applications is next week!

New White Papers   - White Paper Index -Suggest A White Paper

Navigating the TMS Marketplace - How to select an ASP/SaaS version of a Transportation Management System - from LMS Logistics see
What Do Customers Want - from enVista - See http://www.envistacorp,com
Five Steps to a Successful ELS - from enVista - See http://www.envistacorp,com

Technology & Software Product News

The market for WMS to grow to nearly $1.4 billion by 2011, according to ARC. Also in the report it indicated that the average life span for a WMS was 11 years.

Accellos anncouned the completion of their RFID consortium initiative, which addresses the emerging RFID requirements of the third-party logistics (3PL) market in the freezer, cooler and dry warehousing environments. The purpose of the project was to develop RFID Slap and Ship capability that meets the compliance requirements of specific retailers. The RFID consortium, a “best of breed” group comprised of manufacturers, operators and system integrators was a unique approach to enhancing the Accellos Enterprise 3PL product, with each member of the RFID consortium having an equal vote in all project related decisions.

BarTender v8.0 Enterprise Print Server edition (label design software) is used for designing and printing industrial labels containing bar codes, text, graphics, and RFID tags. Through centralized print management functions, users can submit numerous network print jobs for processing with single copy of BarTender running on server. Solution also includes XML capabilities and TCP/IP socket connectivity for selecting/printing label jobs from web browsers running on any operating system.

HighJump Software announced that Lion Apparel is successfully and efficiently managing the inventory of U.S. military personnel uniforms and equipment from 17 distribution centers worldwide. With the HighJump Warehouse Advantage warehouse management system (WMS) implemented at all of these sites, Lion Apparel reports strong operational improvements, including a 30 percent increase in productivity as well as greater visibility and accuracy. Editor's Note: We do not normally announce "wins" - but HighJump in the clothing vertical (for the government) is interesting news, as clothing/retail is where Manhattan Associates started their business initially!

HighJump Software announced that Star Track Express (3PL) has selected HighJump Supply Chain Advantage suite. Star Track Express, selected the HighJump solution to support its rapidly growing business. The Australian provider of third-party logistics (3PL) and express road and airfreight transport plans to use the system in warehousing operations across the country to increase productivity through greater automation and improved fulfillment capabilities. Editor's note: Another WMS player enters the 3PL WMS space! See also the other vendors highlighted in this issue.

JDA Software Group is back! Looks like the JDA/Manugistics combination is working well, as stock price has gone up with healthy numbers being hit. If you invested in JDAS three months ago - you made some money!From JDA:
June 2007 GA release of Supply Chain Planning and Optimization 7.4 product suite
- Featuring enhancements and integration among 15 leading applications. This comprehensive suite enables companies to improve performance, efficiency and decision-making in the customer-driven value chain.
- Includes JDA Promotions Management, a brand new application -- enabling retail buyers and category managers to pinpoint what products to promote, at what price and in which locations so as to meet financial plans.

Made4Net - Klaipedos Smelte to manage its new 3PL business with Made4net's warehouse management system (WMS) software, WarehouseExpert. Paramus, NJ, United States, Made4Net and its Lithuanian partner Logistikos Projektai have announced the winning of a WMS project in Klaipedos Smelte, a leading stevedoring company in Lithuania. The solution will be jointly implemented by Made4net and Logistikos Projektai in a very tight schedule, with the objective to run a high volume warehouse, early July 2007.

Klaipedos Smelte offers a wide range of services, among which cargo handling is one of the main ones. The company that handles different types of cargo, such as fish products, fruit and vegetables, grain, liquid and dry mineral fertilizers, and more, has decided to enter the area of outsourcing cold store services, thus extending its supply chain and logistics offerings. To achieve that objective, Klaipedos Smelte is currently building a 10,000 square meter automated coldstore building in the port of Klaipeda.

TECSYS (ERP with WMS, public company - Toronto stock exchange as TCS) signed seven new customers, including:
• ROE Logistics (3PL)
, a Montreal-based global provider of logistics services.
• Two major Caterpillar® dealers in the U.S.
• One import-to-retail distributor and a giftware manufacturer/distributor in Ontario.
• Terrace Supply Company, a distributor of welding equipment and supplies in Illinois.
• telent plc, a leading provider of technology services in the U.K.

Transplace (3PL) announced its selection of LOG-NET, Inc., (web-based supply chain visibility and execution solutions) as a technology partner to support its international division. Transplace is a non-asset based third-party logistics (3PL) provider
offering manufacturers and retailers the optimal blend of logistics technology and transportation management services. From complete logistics management outsourcing to intelligent transportation management systems (TMS) to supply chain network planning and design to high-quality brokerage services, Transplace has proven the ability to deliver both rapid return on investment and consistent value to customers. The company is recognized among the elite 3PLs in North America by a customer base that includes many of the largest shippers in the world.

YARD HOUND (YMS Software) - PINC Solutions ( ) is the developer of the Yard Hound a comprehensive Real Time Location System (RTLS) for Trailer Yards in a Distribution Center (DC) environment. Our Yard Hound system provides complete visibility over your yard operation and immediate cost reduction opportunities. Our RTLS system complements existing YMS and WMS, providing the accurate and automated data input needed by those systems to reach their full potential and performance.

PINC's existing customers are excited by the initial labor cost reduction, but after using the system for a few months, realized that the biggest savings are provided by being able to take Tractors, Trailers and Yard-Hustler trucks out of rotation. This due to the optimization and efficiencies made possible by having complete visibility over their yard operation. When factoring the cost of a Tractor at $100K, a Trailer at $85K or a Yard-Hustler truck at $75K, YMS pays for itself, just by retiring one of the above!

Cost savings to the Yard operation:
1) Reduced labor cost.
a) The Yard Hound system is a powerful yard automation tool, providing real-time yard checks 24/7, without human intervention. It can be web accessed with a secure username/password from anywhere
b) No need for trailer arrivals and departure information consolidation across multiple systems
c) Validation or dispute demurrage and detention charges. The system provides electronic documentation of arrivals and departures.
2) Automated check-in and check-out of trailers.
3) Automated yard checks, as our mobile RFID readers mounted on the yard trucks, maps the yard while performing their normal activities.
4) Reduced driving time - Tractors can be directed to exact parking spots.
5) Reduce Operation cost - Detailed support of demurrage and detention charges, through accurate documentation and automatic notifications for timely processing of trailers.
6) Optimized yard utilization - Through timely pick-up of empty trailers and other assets by 3rd party carriers. The system can notify 3rd party carriers via e-mail if a pick-up does not take place within a configurable interval after a scheduled time.
7) Better yard layout and scheduling - Through easily accessible visual and statistical data
8) Better equipment utilization (Tractors, Trailers and Yard-Hustler trucks) - Through analysis of visual and statistical data, either Tractors, Trailers and/or Yard-Hustler trucks CAN be taken out of rotation with the resulting reduction in capital cost investment and maintenance cost.

Scripture to Ponder - List of Scriptures to Ponder from prior issues.

"In all labor there is profit, But idle chatter leads only to poverty." - Proverbs 14:23

Famous Quotes to Ponder - List of Quotes to Ponder from prior issues.

"Be slow to fall into friendship; but when thou art in, continue firm and constant." - Socrates

Websites To Check Out

IDII Supply Chain Book Directory Over 30 Supply Chain Topics
Books on Warehousing, Inventory, Logistics, Supply Chain, Metrics, RFID, ERP, MRP, WMS, Software, Project Management, and more!
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