Warehouse management system customization and information availability in 3pl companies. A decision-support tool
| Published date | 11 March 2019 |
| DOI | https://doi.org/10.1108/IMDS-01-2018-0033 |
| Date | 11 March 2019 |
| Pages | 251-273 |
| Author | Giulia Baruffaldi,Riccardo Accorsi,Riccardo Manzini |
| Subject Matter | Information & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems |
Warehouse management system
customization and information
availability in 3pl companies
A decision-support tool
Giulia Baruffaldi
Department of Management and Engineering,
University of Padova, Vicenza, Italy and
Department of Industrial Engineering,
Alma Mater Studiorum –University of Bologna, Bologna, Italy, and
Riccardo Accorsi and Riccardo Manzini
Department of Industrial Engineering,
Alma Mater Studiorum –University of Bologna,
Bologna, Italy
Abstract
Purpose –The purpose of this paper is to illustrate an original decision-support tool (DST) that aids 3PL
managers to decide on the proper warehouse management system (WMS) customization. Theaim of this tool
is to address to the three main issues affecting such decision: the cost of the information sharing, the scarce
visibility of the client’s data and the uncertainty of quantifying the return from investing into a WMS feature.
Design/methodology/approach –The tool behaves as a digital twin of a WMS. In addition, it incorporates
a set of WMS’s features based both on heuristics and optimization techniques and uses simulation to perform
what-if multi-scenario analyses of alternative management scenarios. In order to validate the effectiveness
of the tool, its application to a real-world 3PL warehouse operating in the sector of biomedical products
is illustrated.
Findings –The results of a simulation campaign along an observation horizon of ten months demonstrate
how the tool supports the comparison of alternative scenarios with the as-is, thereby suggesting the most
suitable WMS customization to adopt.
Practical implications –The tool supports 3PL managers in enhancing the efficiency of the operations and
the fulfilling of the required service level, which is increasingly challenging given the large inventory mix and
the variable clients portfolio that 3PLs have to manage. Particularly, the choice of the WMS customization
that better perform with each business can be problematic, given the scarce information visibility of the
provider on the client’s processes.
Originality/value –To the author’s knowledge, this paper is among the first to address a still uncovered
gap of the warehousing literature by illustrating a DST that exploits optimization and simulation techniques
to quantify the impacts of the information availability on the warehousing operations performance. As a
second novel contribution, this tool enables to create a digital twin of a WMS and foresee the evolution of the
warehouse’s performance over time.
Keywords 3PL, WMS, Information availability, Decision-support system, Digital twin,
Warehousing operations
Paper type Research paper
1. Introduction
Third-party logistics (3PL) providers have come a long way since their dawning in 1980s.
The types of services that companies entrusted to 3PL providers were limited to transport
and storage operations. In the last decades, with the increasing trend to outsourcing, the Industrial Management & Data
Systems
Vol. 119 No. 2, 2019
pp. 251-273
© Emerald PublishingLimited
0263-5577
DOI 10.1108/IMDS-01-2018-0033
Received 19 January 2018
Revised 7 April 2018
14 June 2018
Accepted 1 July 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
The authors would like to heartily thank the company Due Torri S.p.a. involved in this study.
Especially in the name of Eng. Nicola Borghi, for his valuable inputs, his support and his willingness to
cooperate in this research project.
251
WMS
customization
offer of value-added logistic services has grown (Langley, 2015; Shi et al., 2016; Large et al.,
2011). These services widen the business opportunities for 3PL providers but require
continuous review of the provided processes to meet the clients’requirements. Particularly
in warehousing operations, enhancing efficiency and service level is increasin gly
challenging given the large inventory mix and the need to manage many clients
simultaneously (Hilmola and Lorentz, 2011).
The warehousing operations are generally aided by the warehouse management
system (WMS). This enterprise resource planning (ERP) module controls the flows of
goods and information as well as the personnel tasks, supervising the operations
within a warehouse (Ramaa et al., 2012). The introduction of WMSs at the different
levels of a supply chain facilitates the creation of information infrastructures that
enterprises exploit even in procurement, production, storage and distribution activities
(Tan, 2009).
In view of this, an increasing number of 3PL providers are investing in WMSs. The
19th annual report on the logistics outsourcing (Langley, 2015) shows that the 58 percent
of companies have already purchased a WMS and the 33 percent have invested in
WMS customization (e.g. functionalities for the labor management, analytics).
Nevertheless, among the jungle bid of WMSs that sees hundreds of standardized
solutions, the identification of the most suitable WMS customization for each specific
business is challenging.
This choice is further complicated by the scarce information availability along the
supply chain (Selviaridis and Spring, 2007; Karagiannaki et al., 2011), which affects the
visibility on the operations to be managed. Although the crucial role of the information in
operations management is unanimously stated (Cantor and Macdonald, 2009; Mandal and
Bagchi, 2016; Ruel et al., 2017), the 3PL providers usually make decisions with partial
visibility on the client’s processes, especially during the tender of new clients. The
competition among 3PL providers and the high turnover in their clients’portfolio reduce the
opportunity for long-standing and trustworthy partnerships, and discourage data and
information sharing. The schedule of the incoming trucks, the loads of these trucks, the
changes in the inventory mix, and the orders forecasts are examples of this unknown
information (Accorsi et al., 2018a).
Three main issues in the design of WMS motivate this paper:
•Issue 1 –costs of information technologies (IT). Both scientific literature and
industrial practice highlight the positive effects of IT on the 3PL provider’s
performance (Evangelista et al., 2012). Nevertheless, four cost drivers should be taken
into account (Chen and Tsou, 2007): the IT infrastructure, the alignment between the
IT and the business strategies, the re-organization of the organigram and the
communication procedures (e.g. acti vities coordination, communication rules,
procedures) to meet the IT capabilities, the workers training.
•Issue 2 –partial information availability. The lack of visibility on the characteristics
of the inventory (e.g. weight, volume, safe conservation conditions per each stock-
keeping-unit SKU) or the clients’targets (e.g. demand forecast, products life cycle)
limit the benefits resulting by a WMS.
•Issue 3 –uncertainty on the benefits. The long-term benefits resulting from the
implementation of a WMS feature are hard to be predicted because of the level of
achievable customization and the unexpected changes in the business operational
conditions. This often discourages the 3PL providers to invest in WMS’s features.
This paper aims to support the 3PL managers to design the proper WMS customization. To
this purpose, we illustrate a decision-support tool (DST), named Store Simulator, that is
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