Driving Labor Efficiencies with a Multi-tenant WMS

I’ve been paying attention to multi-tenant Warehouse Management Systems (WMS) ever since they appeared in the market about five years ago. A multi-tenant system has an architecture where users from different companies and different parts of the world access the exact same Internet-based software. Salesforce.com is the best known enterprise solution based on this architecture.

Historically, multi-tenant WMS was an extremely low-cost solution – in some cases as low as $500 per month for an unlimited number of users – which had a fast payback period, usually less than a year. However, the payback came in a different manner compared to a traditional WMS. The payback from a multi-tenant WMS came from the cost savings associated with almost perfect inventory accuracy, not from increased operational efficiencies. These solutions were simple and used primarily at small warehouses that had previously been paper-based.

RedPrairie, a leading WMS supplier and an ARC client, acquired SmartTurn, the best known of the multi-tenant WMS vendors, in 2010. In a briefing RedPrairie gave me in November, the company talked about the enhancements it has made to the solution, which is now called On-Demand Warehouse Management. RedPrairie mentioned that it has added waving functionality, a key feature necessary to drive labor efficiencies. When I mentioned that I would be interested in talking to one of its customers using waving, RedPrairie introduced me to Tim Markley, the CEO of Markley Enterprises.

Markley Enterprises, headquartered in Elkhart Indiana, is a manufacturer with annual revenues of $7-8 million. The company designs, produces and distributes sales and marketing support products. Historically, Markley Enterprises differentiated itself on service, particularly its willingness to take last minute orders. However, doing distribution well while being part of a manufacturing company was difficult, so the company split off the distribution arm. The distribution side of the business has a 20,000 square foot warehouse with a five person workforce. Tim says that the distribution arm has allowed the company to entrench itself more deeply into its customers’ business.

Despite the company’s small warehouse, this is an interesting operation. Picking is a manual operation using carts. Every cart has an iPad attached to it, which pickers use to get directions and input data instead of using a handheld barcode scanning gun. Scanning would require a higher-end server in the warehouse that the company did not want to invest in. Its floor-level personnel are connected to the iPads via a standard wireless server.

Even before RedPrairie added waving, Markley Enterprises had figured out how to do it, but its solution involved a workaround. In addition to receiving and inputting data into the WMS solution, the pickers were also entering data into iForm, a low cost, SaaS application sold online at the Mac App Store. It brings business grade, offline data collection to iPhones, iPads and iPod Touches. Markley Enterprises had each of its workers wear a mechanical pedometer that counts the number of steps they take. After each pick, the pickers capture the time and the number of steps taken. This data is later exported to a spreadsheet.

Using this data, the company was able to prove to itself that intelligently grouping orders by aisle or customer (creating a wave) was more efficient than just dropping orders to pickers in the sequence in which they first appear in the WMS. In short, to accomplish waving, the company needed to export orders from the WMS, massage them, and stick them back in the system in logical groupings by picker.

Now RedPrairie has added templates to its WMS that automates waving. The waving workaround, which required about an hour of effort a day, has been eliminated. Further, the company has proven to itself that waving allows it to be about 30 percent more labor efficient. One proof point is that the warehouse is still employing five people despite significant growth.

Markley Enterprises is still using iForm to capture start and end times by task as well as the number of steps taken. Tim feels that this keeps efficiency top of mind for their distribution labor force.

Finally, Tim is very, very happy with RedPrairie. He says the support has been great, and the new functionality has come as a standard part of their existing SaaS contract; they have not had to pay extra for it.