Utilising data in the materials handling industry

How effective is the use of data? Materials handling businesses could do much better, according to a recent report, and save a lot of money in the process.

The phrase ‘if you can’t measure it, you can’t manage it’ is so widely known that it is almost a cliché – but it is true, nonetheless. The source of the ‘measurement’ is data and there are so many ways of collecting it that barely a single byte escapes being captured somewhere, sometime. The question is: what do businesses do with information once they have it?

The answer seems to be – not as much as they either could or should. According to a recent report, businesses across Europe could be losing Billions of Pounds or Euros through inaccurate data.

The report, by GS1 UK and Cranfield School of Management, identified an 80% level of data inconsistency between UK retailers and their suppliers. This is huge, especially in the light of the scale of investments that have been made in business systems, as well as the context of an increasing culture of ‘Lean’ management, Six Sigma and other quality assurance schemes.

“According to a recent report, businesses across Europe could be losing Billions of Pounds or Euros through inaccurate data.”

“As we showed in the paper, the accuracy issue hits companies all the time,” said Prof Alan Braithwaite, of LCP Consulting and one of the authors. “The cost has been estimated at £200 million (€240 million) a year but we believe it could be £1billion (€1.2 billion).” GBP Systems that are not properly primed affect availability on the shelf and the opportunity cost may affect margins. Further expense is incurred because of the cost of putting things right. But how is this still happening, given the widespread ‘lean culture’ and investment in IT? “Lean management has not stretched into warehouses,” he said. “The implications of data inaccuracy are felt in warehouses – if it gets really bad, it becomes unmanageable.” Unfortunately, while the warehouse manager may be spending all his time sorting out the problems, he or she may not have much influence in the company as a whole. The technology that companies have invested in over the past 10 years or so has had a transformational impact, there can be little doubt, but it is where it has had that impact that may be part of the problem.

Why not ERP?

“With ERP (enterprise resource planning) systems, for example, businesses are more interested in getting the fi nances and purchasing right,” said Martin Elliott, head of Savoye UK, a warehouse integrator company that has worked with the likes of Chanel, Amazon, Britvic and Next. “They want to get the invoices and VAT right; warehouse and distribution is at the end of the line. How many businesses have a business plan for fi ve years – and, on the other hand, for their warehouse and distribution?” To be fair, he said that large companies, which show large profits, invest significantly in their warehouses and distribution – but it can be much better.

“Effective data management systems enable a business to know exactly how many SKUs (stock-keeping units) it has, how many of each,” he said – and that is to be expected but it must go further in the quest for effectiveness. ‘What about their ‘nestability’, ensuring the right size of parcel, how they fit better into vans, and so on? Reducing the number of vehicles, their journeys, the amount of cardboard used, filling voids better requires accurate data.” Existing systems may not being used properly – and currently-deployed solutions are often of the ‘old-fashioned’ sort.

“Effective data management systems enable a business to know exactly how many SKUs (stock-keeping units) it has, how many of each,”

“In a lot of warehouses and distribution centres, they throw labour at the problem,” Elliott said. “That is putting costs back in and efficiency decreases tremendously. The technology is there, it is a question of how it is used, how you step up from a manual system with paper. Training, service and maintenance are key areas and they need to work more closely.” Tony Leach, Critical Path General Manager at logistics specialist SBS Worldwide, has a different perspective but also recognises the depth of the problem.

Supply chain complexity

Companies tend to be very focused on their customers and have an understanding of their immediate operations,” he said. However, as more companies source from overseas and the supply chain becomes a complex, global activity, part of the solution has been to engage third-party logistics providers – but they have to work with the same data as well. “Generally the data is pretty accurate but not applied correctly. For SBS the data is captured at source on submission of the purchase order and carried through all stages of the supply chain, be it vendor management, freight services, inventory control, added value services or last leg deliveries.” While SBS is constantly seeking to drive efficiencies and improve data integrity, it cannot do everything itself.

“Engage in supply chain consultation and system review to connect the links in the chain and best utilise data,” Leach recommended.
Unconnected or inefficient links have negative implications for the business. “As in any network, transition handovers are the weakest points of a supply chain. Goods, information, and funds can all be greatly reduced or lost entirely, at hand-off points between service providers.” One of SBS’ solutions has been manifested with the application of a bespoke software programme, eDC, which uses data management to cut costs and delivery times for book publishers.

“As in any network, transition handovers are the weakest points of a supply chain. Goods, information, and funds can all be greatly reduced or lost entirely, at hand-off points between service providers.”

Effective fleet control

In France, Cat Lift Trucks dealer Aprolis has implemented a new data management system in order to better control its fleet – which is increasingly critical, given customer demands for more flexibility, the rise of short-term leasing and the virtual elimination of a ‘standard model’ of fleet supply. The system incorporates CRM (customer relationship management) and MMS (maintenance management). The third leg is a management system that has a number of functions. It drives short-term rental activity, which includes planning for the rental of equipment; management of rental records and processing; machines preparation; transport; and pricing management. It also drives long-term fleet management, including financial contracts on the client side or external leaser; service contracts; control of the fleet and associated internal reporting tools. Aprolis’ customers are mainly from industrial, logistics and distribution markets. The company consolidates summaries, statements; the monitoring of contracts and hour meters, the economic monitoring of billing, and the performance analysis. Data accuracy is clearly essential, both to manage the fleet effectively and to identify and capitalise on opportunities.

Cat Lift Trucks dealer Aprolis has implemented a new data management system in order to better control its fleet – which is increasingly critical, given customer demands for more flexibility, the rise of short-term leasing and the virtual elimination of a ‘standard model’ of fleet supply.

“Several problems emerged in the search for data accuracy,” said Emmanuel Dartis, who identified three categories. “The first is consolidation of data from different information systems, which can be variable. The second is the sharing of all or part of the data with partners, who may be operating different systems themselves. The third is the continuing effort that should be made to maintain the highest data accuracy in each system and to automate the loading procedures of available data for completely dynamic reporting tools.” Aprolis brought together all its operational divisions (sales, finances, services) with IT division to identify, organise, create or update, and validate the data necessary for operational monitoring. Partners were also involved and each Aprolis division has appointed a data accuracy pilot whose role is to maintain the level of accuracy in the information system. Not everything can be fixed with software but what is clear is that there are massive savings to be made from accurate data collection, management and use, particularly in warehouse and logistics management.