Order Processing is one of those key factors that greatly influence the future state design of a new Warehouse Management System (WMS). Whenever we start a new WMS project with a client, we like to create models and methodologies for several of those key items including what we call the Order Processing Methodology.
First, let’s get some assumptions out of the way. Let’s assume that we are implementing a modern WMS connected to a modern ERP or OMS. Therefore, we are ideally in an execution mode vs. an order management mode and this means we are not considering back orders, prioritizing orders, or soft allocating stock to orders (inventory reservation). These functions will be handled by the ERP or OMS. Typically 80% or better of our implementation projects are in this mode.
If your WMS is going to be in an execution mode, then generally your operations are going to fall into 1 of 2 kinds of methodologies:
- Batch Mode – Are you going to process yesterday’s orders today?
- Real-Time Mode – Are you going to process today’s orders today?
This can also be restated as either processing the orders that are required to ship tomorrow today or processing the orders that are required to ship today, today.
The key differentiator is that in batch mode there is a static target to work towards. With real time there is a moving target (i.e., new orders are arriving and you have to continually plan and re-plan your work).
There is always a huge difference in the “feel” of operations between batch mode and real-time mode warehouses. The batch mode warehouse feels very structured and orderly and the real-time warehouse usually feels chaotic and busy. We say usually because with excellent slotting and replenishment and tight inventory control, shipping today’s orders today can be done well.
It is very easy to plan your labor for the batch mode warehouse. Labor planning for the real-time warehouse is very challenging and very dynamic.
How you configure your WMS will vary greatly on which order processing methodology you have. The batch mode is very conducive to waving your work and batching up like shipments to be processed together for efficiency. The real-time mode is generally better served by working on a shipment-by-shipment basis for speed and flexibility, with the ability to quickly react to a change in plans.
The batch mode is generally well suited to triggered or top off replenishment methods since the quantity of inventory to be turned is predictable. The real-time mode is usually served by demand-based or emergency replenishment, however trigger is still applicable, useful, and recommended.
The batch mode works well with drop trailers and yard management. The real-time mode typically has a lot of live loads, LTLs or Parcels, and little or no yard management.
We hope these tips will help you choose your configuration options once you consider your order processing methodology. We also encourage those who are in the real-time mode to ask if they really need to be. Sometimes previous systems forced you into a methodology that is no longer required when you are replacing your WMS with a modern system with more configuration options available.