Warehouse management systems to-day have gone far beyond the four warehouse walls, and the hardware needed to run them continues to be faster, cheaper and more nimble. Unfortunately, the grocery industry—retailers, wholesalers and distributors alike—have not kept pace.
Many in the industry are still using 20- and 30-year-old home-grown and legacy systems to run their warehouses, and, as a result, are losing out on the functionality that more modern systems offer, according to many experts.
The use of home-grown warehouse management systems is more prolific in the grocery industry than one might think. "My gut tells me that half [of the industry] is still using home-grown systems," says Marc Wulfraat, a senior partner at KOM International, a global logistics and supply chain consulting firm based in Montreal. "I'm amazed at how many antiquated, highly customized applications are still out there. In grocery, it's not uncommon to have a system for 20 years.
"They've done nothing for 25 years, and are now wondering why the world is passing them by," he observes.
That's because many of these old systems were never designed to handle the hardware or software needed to run modern applications like scanning, voice, inventory tracking, radio frequency identification and the like. In fact, many of those technologies did not even exist when many systems were installed in the late 1970s and early 1980s.
Nor do these older systems provide the real-time access to data that is required by law today. The federal government, under provisions contained within the Bioterrorism Act, is now requiring that companies involved in the production, distribution and sale of food to keep strict records for up to two years regarding the source and destination of all shipments.
Those records must include vendor and supplier contact information, date received and released, route of movement and transfer points during shipment and specific information about the type and quantity of all food handled. They will have to be able to produce those records within 24 hours of a request or they could face severe civil or criminal penalties.
"Because of this, even the smaller companies are going with some form of WMS. Manually doing this on paper is very difficult and time-consuming," says Kurien Jacob, CEO of Advanced Foodsystems, Phoenix. "Up until last year, there were a lot of legacy systems out there. Now, most companies are being forced to get rid of them."
Bioterrorism has been among the biggest drivers toward new WMS implementations, admits George Marin, product solutions manager at Retalix USA, the Israeli firm with U.S. headquarters in Dallas. "The move is to buy solutions that give greater controls over tracking and tracing," he says. "Older databases have limited capacity and there are a lot of timing issues. A lot of the older systems are still using end-of-the-day batch updates, and it takes a large amount of time to enter the data and put it into the system."
"We're getting a lot of activity in terms of replacements of old systems," says Howard Hargrove, a major account executive with Manhattan Associates in Atlanta. "Many need new systems for the bioterrorism regulations and tracking and tracing. They're not replacing their old WMS systems just because they're old, but because they have to."
Problems With Interactivity
Among the other problems with existing legacy systems are an inability to interact with other supply chain and financial applications that are now becoming a standard in food distribution.
"With the old-model WMS, the whole purpose was to optimize activities within the four walls of the warehouse, and they did a good job of it," says Hargrove. "The new WMS has to look at what's beyond the four walls.
"The prospects that we're talking to are trying to maximize their capital to compete with the likes of Wal-Mart. The new distribution model looks at the whole supply chain to maximize every piece. The WMS has to be aware of inventory in transit, in the yard and on order, to know what's coming in and what's in inventory now.