Is Just-in-Time order fulfillment the answer to beating the supply chain trucking crisis?

just-in-timeAs consumer demand continues to escalate, and especially in view of the modern day’s efficient supply chain system, it has become standard practice in the warehouse industry to pick and palletize orders prior to the truck’s arrival, in order to minimize loading time. Most warehouses now aim to carry out this procedure typically 24 hours in advance of the truck’s arrival. When it works, it can be extremely effective; the problem however, is that it doesn’t take into consideration the fact that trucks are sometimes late, or sometimes don’t even put in an appearance at all.

What happens when collections are delayed?

In a typical warehouse supply chain situation, once an order has been picked packed, palletized and placed on the loading bay or staging area ready for collection, if it does not get collected at its appointed time, the load will sit there within the facility, taking up valuable, limited space, and thereby incurring costs to the warehouse.

Typically, when a truck arrives at its collection point, most of the carriers responsible for the trucks insist on a two hour turnaround period for loading. If the loading process is delayed and the truck goes past its two-hour window, the warehouse may then be charged with a so-called “detention fee.” This can not only play havoc with the supply chain collection window, but with its finances too.

Shortages have led to rising costs

In recent years the trucking industry has suffered a reliability crisis because of the industry’s inability to employ enough drivers to cater for the high rate of activity. It has long been a bone of contention for supply chain operation. According to a recent report issued by the ATA (American Transport Association) the so-called “turnover rate” for most large trucking corporations has reached 96%. The inevitable results of this situation have been a rise in the costs of transportation and logistics. What this boils down to is that businesses need to be able to negotiate larger and more favorable deals with trucking companies if they are to secure a more dependable delivery system within their supply chain.

On top of this there are the supply chain challenges that are being posed in terms of the increased complexities of orders. All in all it adds up to a never ending battle to try and complete orders in a timely manner, and keep the consumer content.

The timely arrival of trucks and the reliability of that arrival is essential in order to keep warehouses and distribution centers moving freely. One way of achieving this improvement to supply chain logistics would be for warehouses and distribution centers to incorporate JIT (Just-In-Time) strategies with regard to order fulfillment.

The need to facilitate Just-in-Time order fulfillment management

The idea behind “Just-In-Time” philosophy is that orders would be picked and collated there and then when the truck arrives on site. Of course it is essential that the picking/loading is done as quickly and efficiently as feasible. However, the problem is that with manual labor and standard warehouse racking system deployment, operating a JIT order fulfillment system in any supply chain is nigh impossible.

But the truth of the matter is that throwing money at the problem to increase staff, or expand the existing storage area will not cut the mustard. Instead, companies need to be looking at employing the latest supply chain automatic warehouse technology.

Supply chain automated storage and retrieval systems

One of the best solutions for obtaining JIT order fulfillment status is to install an automated storage and retrieval system (AS/RS). These specialized supply chain systems comprise of robots that can store and retrieve products (on and off pallets) from the shelves with the best possible speed and efficiency. If warehouses and all distribution centers can also install WESs (Warehouse Execution Systems) then AS/RS allows the warehouse to exercise full control across material movements.

The beauty of AS/RS is that with a fully automated system, warehouses should not have to pick their orders so far in advance. They can keep the items on the shelves until the last possible moment. When the truck gets to site to collect its load, warehouse operatives put the picking order into place via the systems software interface. This then sets off the S/RMs (Storage and Retrieval Machines) whose job it is to pick the various components and deliver them to a specific area set aside for the loading of the order.

Just-in-Time in action

Because of the fact that these automatic systems supply chain picking systems work so quickly and are so efficient, it no longer becomes necessary to pick orders and place them adjacent to, or on the loading bay. The products are delivered there as and when needed. This not only frees up an enormous amount of warehouse space, but it also keeps things flowing quickly and smoothly. It’s a much more efficient use of time within the supply chain.

No blockages – no detention fees

The great attraction with this JIT system is that if the truck doesn’t arrive when it is scheduled to do so it is no longer a major problem for the warehouse and/or distribution centre. There is no blockage. If the truck then shows up sometime later, it can be fitted in with only minor adjustments to the warehouse’s schedule, thus decreasing the possibility of detention fees. In the meantime, as there is no blockage, the warehouse is able to continue its operation unhindered. The supply chain flows. It’s especially advantageous for companies operating in the food and drinks industry; companies that are dealing with frozen and refrigerated units. It means that these items can be kept fresh in their respective temperature controlled environments until picking is required.

Doing more with less

The huge advantage that AS/RS technology offers warehouses and distribution centers over standard warehousing methodology, is its in-built ability to help warehouses to do more with fewer resources. It’s a radical imprudent in supply chain warehouse technology. Thanks to the high density principle that these systems are configured with, it leads to improved floor space and racking utilization, and ultimately a better design of warehouse.

In essence, warehouses don’t need such a large footprint area. They need less in the way of loading bay space, and they can employ fewer people. The end result is that truck collections are turnaround much more quickly meaning that more trucks can be loaded in a shorter space of time; all advantageous to the supply chain as a whole.

Once the system is installed, the costs remain stable in terms of volume. An increase in costs that follow on from increased in volume.

There is also another advantage to warehouses, which is that they will find it easier to select trucking companies to work with because they no longer have to do worry about getting the most efficient carrier at the cheapest price, helping to keep supply chain costs stable.

Switching to JIT order fulfillment to weather the storm

In the short-term future, the transport and trucking industry will carry on facing severe challenges and the supply chain will continue to feel the effects. According to the ATA, the industry could be facing a shortage of up to nearly a quarter of a million drivers by the year 2022. The impact on warehouses and distribution centers is plain to see. Switching over to JIT order fulfillment methodologies courtesy of installing AS/AR has got to be worth considering if they are to weather the storm.

Is JIT a feasible installation for warehouses and distribution centers to consider? If they do decide to invest, how long will it take them to recover their investment and who should be expected to underwrite it?

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