Site Review and Sample Assessment Deliverable
Regarding
Warehouse Management Software (WMS) Project
From
Date
Mr. Client
The Client
Dear Client,
Thank you for the opportunity to come visit your operation in XYX and to assess and review your processes. In short, we are excited about the opportunity to help you improve the operation.
The Foxfire team has the experience in warehouse management software, system integration, and auto ID technologies to help The Client successfully implement the WMS project. We have deep roots in the WMS business, dating back to our company beginnings in 1985. Foxfire’s goal is to provide our clients with the best possible warehouse software, support, and professional services assistance for the money. Foxfire works with many different clients in different industries, all of which have mission critical distribution operations.
In every implementation, Foxfire has helped our clients significantly increase accuracy and reduce operating costs. We are excited about this opportunity for a partnership with you and believe that you will find Foxfire responsive, competitive, and a great fit.
1. Executive Summary
Foxfire can help The Client improve your warehouse operation. Based on our review and assessment process, our guess is that you may have a $500,000+? inventory inaccuracy problem across the business. Most of our clients go to near perfect inventory accuracy, 99%+ once the system is live. Foxfire can also help you double your labor productivity and efficiency of the warehouse team involved in receiving, picking, shipping, inventory management and data entry regarding inventory. Foxfire suggests that we proceed with deploying the new WMS to create the model warehouse for your business. Initially this will involve the finished goods inventory only, but we can utilize the same system to manage raw materials later. The solution will also involve interfacing Foxfire with your current ERP system. In summary, we expect the WMS to take between 2-3 months to implement the first site from the time we start.
Current Way of Keeping Up with Inventory and Locations
2. Our Assessment Process
On June 14, 20xx, a team from Foxfire, consisting of X, met with The Client’s team, consisting of representatives from Distribution, Finance, Customer Service, and Operations, to discuss opportunities for improvement in the areas of inventory management, distribution and logistics. The consensus of The Client team was that a well implemented WMS can help realize opportunities for business improvement in the areas of:
2. Inventory Accuracy 3. Productivity
4. Shipping Accuracy and On-Time Delivery 5. Counting Efficiency
6. Reporting and Analysis
3. Opportunities for Improvement
Some of the areas that will benefit with the implementation of a WMS include:
Inventory accuracy
– Every transaction starting from Receiving/Putaway to Shipping is scan verified to ensure the correctness of the inventory.
– Every time inventory is touched, it is logged for audit/historical purposes.
– Currently it is Foxfires estimate that the inventory is off at any given time by 10-20% ~ $500,000 or more. Productivity
– No need to keep track of inventory on an Excel spreadsheet, WMS will automatically update the inventory counts at the location level in the database.
– No need to manually update ERP for every warehouse transaction, i.e. the following transactions will automatically get updated in ERP,
Receipt confirmations Inventory adjustments Ship confirmations
– Since there is no need to prepack the inventory, and we recommend that inventory is packed at the time of picking, we suggest that users utilize some kind of powered picking cart that includes scale, work station and printer.
– Foxfire believes there is an opportunity to double your labor efficiency in all warehouse functions by eliminating much of the work caused by inaccurate inventory.
Shipping accuracy and on time delivery
– Order processing module will ensure that all items are scan picked, weighed, and ship labeled before they are ship confirmed.
– System guided picking functionality combined with accurate inventory will help ship the orders on time. Real-time data visibility
– Every transaction including receiving, putaway, adjustments, picking, and shipping are updated in the database in real-time.
In general, Foxfire suggests at focusing on one initial warehouse to vet all processes, new systems, etc. and come up with the model of how other warehouses will be managed. We suggest starting with X site and getting it right and then moving it into other locations that could take advantage of the WMS.
4. Key Measurements and Performance Indicators
TBD
5. Current Process Observations and Proposed Process Warehouse Current Process
There are about 30, 25 foot long double-sided racks, with each inventory location/shelf holding an average of 5 to 10 SKUs (items). The entire DC is segregated into 4 logical warehouses, i.e.
– 08 – Domestic stock parts – M8 – Mexico stock parts – 30 – Domestic custom parts – M3 – Mexico custom parts
Item Setup/Configuration Current Process
Most of the items are prepacked with different inner packs. All inner packs are currently being held in one box regardless of pack quantity. Inner pack quantities are mixed and are picked from. At the time of receiving, every item is prepacked into different pack configurations, i.e.
– 9 bags of 10 – 10 bags of 100
– Balance in bags of 1,000
Inventory is prepacked and repacked into bags and relabeled in multiple situations, i.e. during receiving, every time an item is picked for an outbound sales order. This is a very time consuming and labor intensive process, since
prepacking inventory takes at least a few minutes, depending on the number of units. Based on our observation, order quantity is generally not in the multiples of prepack quantity, so users are forced to break open the prepacks and count the units to pick, defeating the purpose of prepacking on many occasions.
Item setup/configuration Proposed Process
Foxfire suggests that you consider not prepacking if you are going to break the packs. This defeats the purpose of the prepacking. Foxfire suggests that you only hold prepack quantities that you are going to pick and ship without handling and packing again. We suggest splitting your inventory into lose quantities in a box that are weighed, picked and counted during picking, and prepacks in another box that will not be broken. As an example, for item # 123, you would have one box of lose inventory and one box of prepacks sitting in close proximity to each other in the
warehouse and prepacks would only be picked from if the order quantity called for that specific quantity (or a derivative thereof) for each order.
The WMS would handle the allocation of eaches vs. prepacks based on what inventory and pack quantities are available. Foxfire can control how the system allocates inventory. If we need 127, we can direct the user to go pick and count 127 eaches or 1 prepack of 100, 2 prepacks of 20 and 7 eaches. The box of prepacked inventory will be a skid in Foxfire with a license plate label for each individual package unless you have an entire box of one pack quantity (i.e. all 10 packs). We would also suggest not prepacking anything in the US. Only deal with prepacks that are coming in from overseas but do not prepack in the warehouse. You could also consider complexly eliminating all prepack quantities and just pick from loose inventory. Once we have a system that can track this process and direct it, you will be able to perform a time study on these options.
Receiving/Putaway Current Process
The current receiving and putaway process is manual and requires user intervention multiple times during the receiving and put away process. The details of the receiving product are entered in a receiving log book. The details include Stock Code, Job Number, the appropriate box is identified to pack the springs and the quantity of springs is determined by setting up the scale, weighing and figuring out the quantity that fits in the box. A label is printed from
the scale and applied to the box. Many items are prepacked manually, labels are created for each prepack and then the inventory is placed in the box and the box closed for storage. The box is placed on a putaway cart and an open location is looked for in an external spreadsheet and hunted for manually until found. Then the location is written on the box and someone manually updates the receiving log book and eventually the spreadsheet is updated with the location.
Paper Receiving Log, Repack/Prepack Process, Box w Multiple Pack Quantities
From here, inbound paperwork is updated and given to the front office, where she processes the data by logging into ERP. In the ERP, the manufacturing job is closed out with quantity received (by thousands). This ensures that the lines are received against the Purchase Order in the material master. Inventory gets transferred from make warehouse to shipping warehouse. An Excel spreadsheet is used to maintain the specific inventory locations. Even though inventory is posted in ERP, there is no location information, so the location information is updated, manually, in a separate Excel spreadsheet.
Receiving/Putaway Proposed Process
The ERP will send the Purchase Order and Manufacturing Order information to Foxfire. Inventory will be counted in the boxes, but not prepacked unless packs are not going to be broken and picked from. Inventory will be received and one barcode license plate label printed for each box. If there are prepacks of multiple pack quantities in one box, a license plate label will be printed for each package inside the box and then a skid label will be applied to the box with the prepacks. The inventory will then be put away by using the RF handheld device Putaway function.
The user will scan the barcoded label and WMS will find an appropriate putaway location. After scanning the suggested putaway location, a receipt confirmation will be sent to ERP automatically. This process will be completely paperless and all systems will be updated automatically with the right quantities, etc. This process will take some work to get it correct between Foxfire technical resources and someone that understand the The Client ERP’s set up,
interface capabilities and how to make changes (as needed) in the ERP. Many times our clients will be able to provide this expertise or they ask us to work with their ERP provider or ERP consultant. In this process, the external Excel spreadsheet of inventory will go away and the double entry of receiving info on logs, in the ERP and the warehouse transfers should be able to be automated between the WMS and the ERP. These changes should double the productivity of receiving and put away personnel as well as free up some time for your team that does data entry.
Cycle Counting/Physical Inventory Current Process
Since there is no real inventory system to understand what is in each location, there are constant inaccuracies in what the spreadsheet says is in stock and where it’s located. Currently in location a, the warehouse manager has to verify where inventory is for every pickticket before he gives the pickticket to his picker. This is double labor to do the pick. The warehouse team also mentioned that more than 50% of the time, the inventory quantity that the label says is in the prepack is wrong so they have to stop and count the inventory while picking, fix it. Site A facility takes about 15 days (6 to 7 weekends) to reconcile the inventory. Generally 10% plus or minus inventory quantity and value is acceptable. The Client currently holds between $5M and $7M in inventory at any given time in us locations. After 2011 cycle counting results, physical inventory may have been off by more than 10%. Inventory accuracy is a big problem and it has a big negative impact during order picking. Every time a user cannot find the product he is looking for, he has to spend anywhere from 5 minutes to 30 minutes searching, which greatly impacts the productivity not to mention customer dissatisfaction for not shipping the requested product.
Cycle Counting/Physical Inventory Proposed Process
Cycle counting will be paperless and completed with barcode scanners and inventory updated in real-time as it is being cycle counted. Inventory adjustments will be uploaded to ERP in real-time. NOTE: One of our biggest clients used to spend an entire week with 40 people to perform year-end cycle counting. Since Foxfire WMS was
implemented, they are able to accomplish this in just 2 days. Inventory values will be correct and accurate. Most clients run in 99%+ accuracy levels with Foxfire in regard to what the system says is in the bin.
Picking/Shipping Current Process
The current process is completely manual from the time the order is issued to the warehouse to the time it is shipped out of the door. The Sales Order is printed on paper as a pick slip. For each SKU on the pick slip, the picking
supervisor looks for the pick location in the inventory spreadsheet and writes it down manually. To make sure that inventory is physically available, the supervisor checks the location. Pick slips are handed over to the pickers; for big orders, the picker picks one order at a time. The user goes to the location and brings the whole bin to the pack station. Since inventory might be in different pack quantities, the user will manually count and pack the order
quantity. In some scenarios, if the order quantity requires the user to break open a bag, the open/partial bag needs to be repacked before it is put back in stock. The scale is used to count the quantity just like it is used during receiving.
Some pickers recount the entire bin location and then re-label all the packs in the storage bin. The shipping carton is then labeled and, when applicable, each bag being shipped is labeled. The new quantity in the location bin is entered in the inventory paper log. The user returns the bin to the storage location (this is a complete manual process and is completely dependent on the user remembering the location).
All the outbound bags for the order are put into the box, and then the box is taken to the shipping station. The shipping operator puts the outbound box on the scale and the order number is typed into Fast Ship. Two copies of the contents labels are printed – one goes on the packing slip to the customer and one goes on pick slip for accounting. Fast ship should automatically launch World ship, populate the Sales Order information, and pull up the order information, but most of the times this does not work. The user manually enters the Sales Order again in either UPS World ship or FedEx. The shipping label is printed, and UPS updates ERP on what was shipped. Fast ship writes weights and tracking numbers into ERP. At this step, the inventory status is changed to shipped in ERP.
Picking/Shipping Proposed Process
Sales Orders will be automatically downloaded to Foxfire. Foxfire will reserve the inventory against the Sales Orders and create pick tasks. Pick tasks will be picked using RF handheld devices, and users will be able to pick one Sales Order or multiple Sales Orders at a time. Foxfire suggests you consider picking multiple orders at one time to a picking cart to minimize travel time and maximize efficiency.
The system will allow the option to preprint the labels, like shipping carton labels and packing slips, and will guide users to pick one Sales Order line at a time until all the lines are picked. The user will be required to scan confirm each pick by scanning the location barcode and shipping carton barcode.
After items are picked, the shipping carton will be dropped at the shipping work station. The user will scan the barcode on the shipping carton, enter the weight from the scale, and print the shipping label. As a last step in processing the Sales Order, user will be required to ship confirm the shipping carton, generating a ship confirm transaction to ERP, and ERP will generate the invoice and adjust inventory.
Mobile powered picking cart example, example Mobile PC/Barcode Scanner:
When a bin becomes empty it is turned upside down as an indication that it needs to be replenished. The
replenishment crew manually looks for any bins that need to be replenished and gets the product from over storage area.
Replenishments Proposed Process
Foxfire will completely automate this process by constantly monitoring bins for min/max replenish levels and creating a replenish task from the over storage location to the corresponding bin location when the quantity goes below the minimum replenish level. Using the RF handheld device replenishment function, users will replenish the bins from over storage area. NOTE: This process will be completely paperless.
Other Challenges
Problem# 1 - Sometimes the same SKU can exist in multiple logical warehouses. In this scenario, the same Sales Order is picked from multiple warehouses separately and shipped in multiple cartons.
Foxfire Solution - WMS can automatically identify picks across multiple logical warehouses and ensure that the entire Sales Order is picked together in one carton.
Problem# 2 - There are several occasions where duplicate shipments are sent out to the customer. In this scenario, if the in-process Sales Order is not shipped at the end of the day, the inventory status is not marked as shipped, the Sales Order will remain open, and it may be re-printed the next day and shipped out again.
Foxfire Solution - Foxfire has thorough order tracking functionality where every step from the time the orders are downloaded until they are shipped is logged. This will prevent duplicate shipments. For Example – The status of an order during its processing life cycle is… Initial Waved Allocated Picking Picked - Staged Ready To Ship Shipped.
Raw Materials (Manufacturing) – Not part of Phase One Scope - Current Process
Raw materials are received and manually entered in the ERP. The following steps are used to make the finished goods; Coils identified, Heat process, Set process, Grind process, and then Inspect. Finished goods are sent to the DC. Inventory is received and put away using process outlined later in this document.
Coils will be received in WMS and one barcoded label will be applied to each coil. The coils will be put away in locations using RF handheld devices and receipt confirmations will be sent to ERP automatically. Before each process is started, the appropriate LPN (example Coil) will be identified and brought to the processing area. The LPN will be scan moved to the designated location, and then the LPN will be consumed. After processing is complete, a new LPN will be produced with the new WIP product. This process will be repeated until all the steps are completed to make the finished goods. NOTE: We need to revisit this process to
6. WMS Implementation Process
FOXFIRE PROJECT MANAGEMENT APPROACH
Foxfire utilizes an efficient and proven methodology that insures projects are completed on time, on budget, and exceed the customer’s expectations. During the implementation Foxfire will focus on the following key areas:
People. User comfort with Foxfire is key to the success of the system. One of Foxfire’s primary goals is to ensure that users are well trained, well informed, and comfortable with the new software tool.
Processes. In the initial stages of the project, we will work with the client to develop goals, objectives, and metrics by which we all will measure success. In order to meet established goals, business processes will be reviewed and recommendations will be made. Standardizing business processes will provide a methodology to attaining project and overall management goals.
Data. The key component to our implementation is based on the idea of using information to make better management decisions; the foundation of information is accurate data. To speed implementation and contain costs, the team will look to leverage the most data possible—that is deemed valuable.
Methodology Overview
The TrailBlazer Project Implementation methodology employed by Foxfire has six major phases: Sales, Define, Design, Develop, Implement, and Improve. An outline of the proposed method is provided below, with descriptions of the key steps following.
The TrailBlazer process was founded on principles of the Project Management Institute (PMI) and includes best practices extracted from hundreds of WMS implementations.
Five phases of the TrailBlazer implementation methodology are:
Define. The parties involved in the definition phase are the Foxfire Project Manager and the client project representatives. Eventually the client will need to choose its own project manager to serve as the Foxfire contact for the project. The Definition Phase incorporates the initial kick-off meeting between the Foxfire Project Manager and the client representatives.
The meeting will begin with discussions of the tasks that need to be completed on the Foxfire side and on the client’s side for the project to be successful. Upfront key decisions will need to be made, such as the need for a data conversion or the need to incorporate financial integration into the initial phases of the project.
The final result from the Definition Phase will be a Project Plan that defines each phase of the project and a detailed Gantt chart specifying the dates when each project phase will occur. The Project Plan will also incorporate and document the project’s budget.
Design. The Design Phase of the implementation methodology consists of an introduction of the features and functionality of the system, and the establishment of how Foxfire will work for the client. During this phase the interfaces are defined and initial design of the interfaces is documented.
The Business Process Review task is the key piece of the Design Phase, consisting of many sessions in which the client and Foxfire will analyze business practices and make key decisions on how Foxfire will be
configured to meet them.
Develop. The Development Phase serves as the final product configuration of Foxfire. The methodology and documentation defined in the Design Phase will now be incorporated into the live Foxfire system. This live system will once again be validated to be sure all business practices and rules are applied correctly and the configuration is ready for use in a live environment. Data cleanup and entry is performed during the Develop phase of the project, either by Foxfire or the client, in preparation for go-live of the new system. If needed, the data can be converted to the new system.
The Development Phase also consists of the creation of standard operating procedure that end users will utilize as “how to” manuals. Meetings will be held to discuss each group of end users and their Foxfire tasks. The tasks will then be documented and once again validated to be sure they follow all of the client’s needs.
Implement. Implementation of Foxfire begins with training end users on how to use the system. Foxfire typically develops a schedule of classes for specific groups of end users and focuses each class on what the users’ specific day-to-day involvement will be.
Once end users are trained, the site is prepared for go-live. All workstations are tested and all documentation is distributed. During go-live, a Foxfire representative is on-site to monitor system use and field end user questions. Once go-live is completed, a formal project turnover meeting is held to officially designate the project as complete.
Improve. Constant improvement is key to maximizing Foxfire’s total value. After three-months, a TrailBlazer Project Manager schedules an audit with the client to evaluate the initial startup and determine what other improvements can be made to maximize the benefits of Foxfire.
Post-Implementation Support
At Foxfire we believe our customers are our greatest asset. We are dedicated to building a long-term partnership in your business through providing a quality product and standing behind that product with timely resolution to any problems that may occur during its use.
When you call our support hotline you will most likely be transferred to the consultant who worked with you during your system implementation. He/She will have will have a complete understanding of your system(s), setup, and use of the Foxfire product. This will allow the consultant to solve your problem quickly and with as little disruption to your business as possible.
As part of the standard software support agreement with our customers, Foxfire provides telephone support assistance between the hours of 8:00 am and 6:00 pm, Eastern Time, weekdays, excluding national holidays.
We also have available special support services, such as 24 hour support, on-call support or on-site support. These options can be contracted at project inception or added later as needed.
Education and Training
Foxfire believes training is an integral part of any successful project. As part of our Foxfire project methodology we will provide end-user and administrator training during the deployment phase of the client project.
After the initial project is complete we offer several continuing education options for Foxfire's WMS users.
Product Documentation
Foxfire provides electronic documentation in the form of a User’s Guide, Administrator’s Guide and RF User’s Guide. These documents contain detailed explanations of the features and functionality of the Foxfire WMS, along with real-world examples of how this functionality is applied and used.
Onsite Training Classes
A Foxfire consultant will come to your facility and hold training classes on Foxfire's WMS. The consultant will work with you to prepare an agenda focused on the areas you want to address. Foxfire can also present one of several pre-defined three to five day training classes targeted to new or experienced users.
Foxfire Education Center
Foxfire holds periodic training classes at the Foxfire Education Center located in Greenville, SC. These classes are held at various times during the year and are three to five days in duration. A few of the classes that are offered are:
Introduction to Foxfire's WMS Inbound Operations
Outbound Operations
Integrating with Foxfire's WMS Web Training
Individual Web training seminars of any length can be scheduled for individual or group training on the functionality of Foxfire's WMS.
Testing
Testing is a key component to any project’s success. As part of the master project plan we will build in the following testing milestones.
Individual Test Plans
Foxfire develops custom test plans to verify the functionality of your system once it is configured.
Interface Simulation
We will create test files to simulate the exchange of data between the host system and Foxfire's WMS, allowing us to individually test each touch point in a controlled environment.
Test Installation
The purpose of the test installation is to validate the software application against the business processes, by allowing end-users to use the software to carry out typical or key business processes using the new software.
Project Team Bios (sample team)
Senior Project Leader and Lead WMS Architect Anand Peddi
Anand Peddi is Client Services Director, and has been employed at Foxfire for 11 years, implementing WMS systems. Anand has directed the implementations at some of Foxfire’s largest clients, including A Beka Book,
Alltel, Ramp, and Glamorise. Before coming to Foxfire, Anand operated his own consulting company specializing in inventory and supply chain projects. Anand attended Osmania University in Hyderabad, India.
Project Consultant Brandon Herring
Brandon Herring has been with Foxfire Software as a project consultant and developer for three years. In his current role at Foxfire, Brandon is responsible for the development and maintenance of new features for the Foxfire Warehouse Management System. He also supports new and existing customers with configuration and implementation of new processes and functionality. Brandon holds an AAS degree in Software Applications and Programming from ITT Technical Institute.
7. Estimated Level of Work and Project Timeline to Implement Foxfire in Greensboro, NC
Project Plan Task Estimated Start Estimate Completion Foxfire Hours Location
WMS Business Process Review 7/9/2012 7/13/2012 24 Foxfire onsite and remote
Inbound Build/Configure, WMS 7/16/2012 7/27/2012 32 Foxfire remote
Inbound Test / Train / Go Live 7/30/2012 8/10/2012 60 Foxfire onsite and remote
Outbound Build/Configure, WMS 8/13/2012 8/24/2012 48 Foxfire remote
Outbound Test / Train / Go Live 8/27/2012 9/7/2012 80 Foxfire onsite and remote
Interfacing Assistance w ERP 7/16/2012 8/24/2012 40 Foxfire remote
Software Install Server and RF Install Assistance 7/9/2012 7/13/2012 24 Foxfire remote
Project Management 7/9/2012 9/7/2012 32 Foxfire remote
Project Resource Total: 340
