On March 7, 2023, Cornerstone Edge Principal, Brian Carlson, sat down with Dennis Heppner, Accelerate Practice Lead principal for JBF Consulting, and Brad Forester, CEO of JBF Consulting to discuss warehouses, WMSs, TMSs, and how they all come together. So, what do Whiskey & Warehouses have in common? Nothing! But the guys sat down over a glass of bourbon to discuss some differences they see in implementations of WMS and TMS, respectively, particularly related to retailers and shipment planning and execution. Cornerstone Edge had the WMS perspective; JBF had the TMS perspective.
You can watch the video, or see the transcript below which has been edited for clarity and length.
Dennis Heppner 00:09
Welcome to Whiskey & Warehouse webinar. I’m your guest emcee Dennis Heppner with JBF Consulting. Today we have two leaders in the supply chain. Brian Carlson, Principal of Cornerstone Edge. And the CEO of JBF Consulting Brad Forester. Welcome!
Dennis Heppner 00:45
So we’re gonna have a short conversation today about some of the differences that Brian and Brad see when they’re doing implementations of WMS. Specifically, Brian’s area is WMS and TMS is Brad’s primary area. And talking specifically about retailers, because that’s where we have a lot of experience around shipment, planning, and execution.
Dennis Heppner 01:10
So guys, as you sip on your bourbons, consider this first question: why do traditional brick & mortar retailers feel forced into a WMS-first mindset model that prioritizes facility throughput in labor optimization, versus transportation optimization?
Brian Carlson 01:33
I’ll take that one first Dennis. Thank you. So as we look at the executives analyzing whether they implement the warehouse management system or the transportation system first, a lot of times they feel like whether it’s accurate or not, that there’s a tangible value in their budget, labor cost.
Brian Carlson 01:51
And many people know, labor costs are escalating. Labor costs have been increasing over the last several years. Finding labor right now is extremely tight. And a lot of times, that’s the driver. We just spent some time the last week looking at a company where they’re cutting out 20 people and some changes that we’re making in the warehouse management transportation systems.
Brian Carlson 02:13
The reason they’re doing that is not to cut people out, but to know that they can’t grow because they can’t find people in their market. And so because the labor market is so tight, a lot of times there’s this challenge, that, “hey, we want to go with the WMS first so we can focus on that?”
Brad Forester 02:32
Yeah, I’ll take that a step further. It’s not just the implementation sequencing of WMS to TMS, but also the integrated design. The order flow from ERP to WMS to TMS is also really problematic, especially in retail, and to Brian’s point about labor savings and labor optimization. On the transportation side, we also have goals and objectives to hit from a freight cost reduction.
Brad Forester 03:04
Our clients want to implement a TMS to save money on freight spend, which in the past three years has been a very volatile market from a pricing perspective, no different than labor, but they’re not necessarily correlated. And designing a system that flows from ERP to WMS to TMS is always going to prioritize labor first, as opposed to freight spend.
Brad Forester 03:30
And these things aren’t easy to change, right? So it’s very difficult to change it from an ERP TMS WMS.
Brad Forester 03:38
We don’t see that happening a lot in retail. I think a lot of that is driven based on if you are a brick & mortar retailer, you’re not necessarily getting orders from your stores. You’re pushing out an allocation of inventory to the stores.
Brad Forester 03:53
And that’s where I think, historically, we’ve seen ERP pushing allocation down to the WMS. They weigh, plan it, they pick it, they execute it, and then they send back whatever was actually shipped to the TMS.
Brad Forester 04:07
What our constituents on the logistics side don’t necessarily realize at the time when they’re investing into TMS is that it neuters a lot of the return on investment that you could possibly get from freight cost reduction through optimization and consolidation of orders.
Brian Carlson 04:26
Well, in a lot of that challenge, I think that’s a good word. The neutering of the savings. The excuse that the warehouse management system and the project team focus on is, “how are we going to handle parcel shipments”?
How are we going to handle the freight charges for that? If you’re dealing with parcel shipments, you really don’t know the exact dimensions and weight of each box that’s cartonized You really don’t have a complete understanding of how many boxes are being shipped.
Brian Carlson 04:53
And so the excuse is you really can’t do transportation planning on the parcel side, because you really don’t have all the information.
Brian Carlson 05:01
And, you know, there’s certainly a value in looking at it from other standpoints, but that’s the reason why, a lot of times, a warehouse management system goes first, we have all the information at shipment time as the product goes out the door.
Dennis Heppner 05:18
Well, let’s dig into that a little deeper there, Brad and Brian. We traditionally see parcel execution and WMS versus TMS. But is there a kind of a happy medium?
Dennis Heppner 05:32
Brad kind of made his case for shippers that want to focus on freight savings because traditionally transportation is a bigger spend and provides more opportunity for savings. But you can see tangible savings sooner in the WMS.
Dennis Heppner 05:48
Is there a common ground there that each camp can meet in the middle on?
Brad Forester 05:53
Yeah, I think there can be but it requires some design thinking and it requires some investment.
Brad Forester 06:01
I agree with Brian. Parcel execution, especially for retail, has been historically a WMS function. And 25 years ago, transportation systems didn’t have parcel relay capabilities. But I think what we’ve all seen and experienced in the past several years has been an explosion of E-commerce.
Brad Forester 06:25
Even for traditional consumer product companies that are shipping direct to consumer, parcel is important. Parcel freight spends are increasing dramatically. And we’re seeing a lot of desire and goal-setting from our clients on the transportation side to control costs. Let’s pick a better mode selection. Let’s consolidate where we can. Instead of shipping a parcel of five zones from Boston to Los Angeles, let’s ship it one zone from Los Angeles to Los Angeles in a zone skip, to save money.
Brad Forester 07:00
I think what retailers are going to be challenged with, and other firms with the WMS-first model, is how do we integrate a system that can capture some percentage of savings potential on the transportation side, through an aggregated volume of “here’s the replenishment amounts”. Let’s see what we can consolidate in the transportation plan first before we do a wave plan in the WMS. And we get down to labeling an actual carton with a specific dimension.
Brad Forester 07:29
But then I think the other critical requirement is whatever the WMS ships out, comes back to the TMS integrated as an actual. We need the dimensions, we need the tracking number, we need all of that information to pay the freight bills because that’s what our shippers are expecting out of their TMS as well.
Brad Forester 07:48
So it’s not just about consolidation and savings opportunities. That’s big, and it’s growing, especially for parcel. But we also need the accurate details that only the WMS can give us.
Brian Carlson 08:00
Well, and you touched on that earlier. But information going back and forth is critical. Historically, the integration between the transportation system that WMS was much less complicated than it is today, or quite frankly, than it should be today.
Brian Carlson 08:15
Making sure that there’s more real-time visibility between the systems. Making sure that the parcel calculations are done on the front end, from a transportation standpoint, for zone skipping, and for everything else that you mentioned, is critical. And historically, that’s not been included, but it’s been ignored.
Brian Carlson 08:35
And so as you go through the design process with a warehouse management system and a transportation system, you really have to have, I will I hate to call it this, but I’m gonna call it a battle. The battle is the ultimate solution.
Brian Carlson 08:49
The battle is to make sure that you don’t just optimize one side at the expense of the other. And you really need to look at how can you look at the whole system in the whole process. And yeah, you might lose a little bit in labor savings for example. But you’ll gain significantly on the transportation side. Or you might lose a little bit on parcel savings, because you made a bad decision on the front end.
Brian Carlson 09:15
But you gained significantly in efficiencies and other ways. And so having that process where you integrate everything together, having a clear conversation about it is really important as we look at the design.
Brad Forester 09:28
Yeah, that’s a great follow up, Brian. You do need to have a conversation. Those two different functions tend to have different objectives. And especially if the WMS is implemented a different time as the TMS then it just amplifies that potential for conflict.
Dennis Heppner 09:47
Okay, well, I think we’re about at the end of our time here. I’d like to thank and offer cheers to both Brad and Brian for your time today.
This was a compelling topic, and although our discussion was short I think it was very valuable for everyone that’s joined us today. For those that want additional information, please reach out on our LinkedIn profiles. Or of course, you can go to Cornerstone-edge.com or JBF-consulting.com.
Thank you again, Brian and Brad, we hope to see everyone again at our next whiskey chat.