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Warehouse Information System for Jai Heng Co Ltd

VIEWS: 5 PAGES: 11

									SMRG-Faculty of Business Administration / Siam University




                                     SIAM UNIVERSITY




                   Strategic Warehouse Information
                               Systems




Dr. Nut-tapon Nimmanphatcharin (ดร   ณัฐพล นิมมานพัชรินทร์)
BB.A., GD.Mgt., MB.Mgt., MBA (Inter Bus), Ph.D. (Mgt)
Strategic Management Research Group
Faculty of Business Administration, Siam University
235 Petkasem Road, Phasicharoen, Bangkok 10163
Tel. (662) 457-0068 FAX (662) 457-3982, 467-3174




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Strategic Warehouse Information System/Dr. Nuttapon Nimmanphatcharin/2003
SMRG-Faculty of Business Administration / Siam University




                 Strategic Warehouse Information System



                   4. Innovative Warehouse Information Systems

 4.1 What EDI is?


When retailers or branches order products from headquarter, two things may happen.
First, both of retailers and branches must draft a letter, send copies to every department
and wait for management authorisation. A process that is slow, error and highly costly.
Then, the seller (headquarter) may not be able to supply the products on time because the
letter is too late or those products may run out of the warehouse stock handling.
Moreover, headquarter does not understand the definition of the products, additional
correspondence will be needed to clarify the order. What occurs is a substantial time
delay the may be avoided by using EDI.

       "EDI (Electronic Data Interchange) is paperless trading or the exchange of
       business information electronically between business partners,
       intermediaries, public authorities and other in a structure format, without
       any need for human interpretation or retying. The time and effort involved
       in typing, printing, copying, matching, verifying, correcting, stamping,
       signing, checking, archiving, and retrieving the mass of paper required for
       and trade transaction is considerable and paper transmission is slow, prone
       to error and costly". This system will be shown by the following figure:
       (Bellego, 1991) Note: This system calls EDI community system, as the data is sent once
       and is routed to partners.




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Strategic Warehouse Information System/Dr. Nuttapon Nimmanphatcharin/2003
SMRG-Faculty of Business Administration / Siam University




                                                        Custom

              Bank                                                               Exporter


                                                   Clearing Center


                                                                            Shipping Line
                Agent

                                                    Port authority


Simple understand of EDI is the exchange of business documents such as purchase order
(see example in Appendix 1), shipping notices, invoices and payment advice, which
direct from one company's computer system to that of its trading partner. It replaces
communication method such as mail, facsimile and telephone. Because the traditional
ways of sending documents were mostly paper-based, EDI is also known as paperless
trading. EDI significantly enhances the benefits companies get from scanning that it is
fast, accurate and efficient way of transferring information from one company to another.


Electronic messages are not new. In the retail industry, stock ordering has long been
carried out using hand-held terminals, which transmit the orders electronically to
wholesalers' computers. EDI is different because it uses standard formats for the
documents, which enable companies with different business and computer systems to link
into those systems effectively.


Finally, the follow example will give some ideas to the Thai Enterprises to understand
clearer of how EDI works. When the retailers or branches sending an order to the
warehouse, they must be used an electronic network or value added network (VAN)
which is usually run by a separate company in Thailand. They both must use translation
software to convert the message into and out of the standard EDI message format carried
by VAN. Additionally, item numbering is an essential key to EDI use of Thai
Enterprises, because EDI messages use item numbers to identify the goods or inventory
being traded. Item numbering thus provided a universally understood language for the
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Strategic Warehouse Information System/Dr. Nuttapon Nimmanphatcharin/2003
SMRG-Faculty of Business Administration / Siam University



electronic trading, allowing companies' computers to talk to each other, even though their
computer systems are different. For instance, if retailers are ordering televisions from the
outlet, item numbers is used in the EDI message to identify every different type, size and
model of all items required.1




    4.2 What Automatic Data Collection (Bar Code System) is


Another useful application of information technology in the warehouse that will
introduce to the Thai Enterprises is a bar code system. Bar code is a set of light and dark
parallel bars of differing widths, which can be read by a variety of scanning devices
attached to computers, and decoded into numbers (and in some cases numbers and
letters).


Bar codes have become by far the most common way to collect and input information
into a computer, because scanning bar codes is much more accurate, faster and easier
than entering data manually or scanning human readable information like Thai
Enterprises’ warehouse doing at a moment. Significantly, a single pass of a light beam
across a bar code can read 20 or more characters of data, whereas human-readable
characters require 20 to 40 individual scan lines across each character. (See types of bar
codes and scanners in Appendix 2)


By the way, it found that this type of information technology (bar code) would help Thai
Enterprises’ warehouse to achieve more productivity and profitability because of the
advantages that had mentions before. In addition, the reasonable of introducing bar code
system to the warehouse is the related system to EDI. For instance, when the
warehouseman go to check the inventory or pick some inventory from the warehouse for
delivery as scanned the bar code number. It will transmit the information directly back to
the company's computer system in terms of the exchange information between
headquarter and warehouse's computers of Thai Enterprises and its retailer's computers

1
    Note that: The Enterprises can use a consultant company (the expert of create a warehouse technology system) in Thailand.
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Strategic Warehouse Information System/Dr. Nuttapon Nimmanphatcharin/2003
SMRG-Faculty of Business Administration / Siam University



(including its branch's computer). This will help the company, its retailers, and its
branches to know the total number of inventory out and carrying in the warehouse,
whereas it will be an advantage for the company to know the inventory needs quickly.




 4.3 What Radio Frequency System is


Another information technology that will introduce to the Thai Enterprises is a radio
frequency (RF). The most recent technology to be used in conjunction with bar code
scanning is RF transmission. RF operates in advanced warehouses to transmit data from
hand-held, or fork lift-mounted, terminals to a main computer. These are also called
"paperless warehouse system", because warehouseman no longer rely on paper picking
slip. Information about goods or inventory in the warehouse is stored in and retrieved
from the computer.


RF devices scan bar codes on stock and transmit the information directly back to the
computer. This keeps a constant, accurate tally of what stock is in the warehouse and
precisely where it is located. Assembling and dispatching order using the system is fast
and virtually error-free.


Finally, the follow example will give some idea to the Thai Enterprises to understand
clearer of how the radio frequency and barcode work together in the warehouse. That is,
if order taken by Enterprises’ outside sales representatives are transmitted to the
warehouse electronically from a portable computer, using a modem (a coupling device
which links one computer to another to another over a telephone line). Enterprises’
computer then transmits the order to an operator packing goods in the warehouse. The
order may up to 15 orders at a time is sent to a hand-held device, which the operator also
uses to scan bar codes on each product packed. Scanning confirms, by matching the bar
code numbers, that the product is correctly identified as part of the order being
assembled. If a mistake is made when packing an order, the hand-held device alerts the
operator.
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Strategic Warehouse Information System/Dr. Nuttapon Nimmanphatcharin/2003
SMRG-Faculty of Business Administration / Siam University




     5. Advantages/Benefits of Innovative Warehouse Information
                                Systems

 5.1 Advantages/Benefits of EDI to Thai Enterprises


It found that EDI has quickly become a standard operation in warehouse management on
this day. It refers to the exchange of machine-readable data in a standard format between
headquarter and warehouse's computers of Thai Enterprises and its retailer's computers
(including its branch's computer). In such, it creates a paperless transaction. By doing so,
a number of advantages are available.


First, money can be save simply by reducing the amount of paper used. Second, time is
saved because EDI transactions are nearly instantaneous and computers instead of people
are involved such warehouseman and other staff in the warehouse. Another major
advantage is improving customer service that is the data is transferred quicker, the order
cycle time is reduced and the product arrives faster.


A fourth advantage is the prevention of errors that are computer will transfer data not
people (warehouseman). Fifth, there are substantial savings in warehousing operations
and delivery costs. That is EDI is ready-made JIT (just-in-time) environment.
Enterprises’ warehouse can be bettered scheduled with supplier and customer orders. By
ordering product closer to supply and demand timing cycles, inventory-carrying costs are
reduced.


Sixth, is saving effort that is using EDI means that data need to be inputted only once into
the system. After that, computers are interfacing with each other without additional
human intervention in the transfer of data.




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Strategic Warehouse Information System/Dr. Nuttapon Nimmanphatcharin/2003
SMRG-Faculty of Business Administration / Siam University




 5.2 Advantages/Benefits of Bar Code and Radio Frequency Systems to
 Thai Enterprises

There are many advantages/benefits accruing to the Thai Enterprises that applies RF and
bar code into the warehouse as will be listed by the following:


 Having for the first time precise data on what the retailers have actually sold and
     hence knowing better both what customers want and when they require serviced,
 More rapid efficient ordering and stocktaking, which ensures that products are rarely
     out of stock and therefore sales are not lost,
 Overhead costs will reduce by saving in labor and productivity gain,
 Customer service will improve through greater accuracy in stock receival and storage,
 Errors in stock delivery will reduce,
 As retailers and Enterprises’ branches will get products onto the shelves faster,
     customer can be sure of finding goods they want and fewer are lost through goods
     being out of stock, and
 Enterprises’ warehouse could dispatch goods to the retailers and Enterprises’
     branches faster than the past.


These are just some advantages/benefits of using RF and radio frequency systems that
will help the Thai Enterprises and their warehouses to achieve more productivity and
profitability of the operating.




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Strategic Warehouse Information System/Dr. Nuttapon Nimmanphatcharin/2003
SMRG-Faculty of Business Administration / Siam University




                           6. Recommendation (How and where to start)


Bar code, Radio Frequency system and EDI supported by the new ways of doing business
that the Thai Enterprises and their consultant2 could generate, are critical in order to
realize the much-discussed benefits of approaches such as JIT inventory control, Quick
Response or Efficient Consumer Response. At the same time, there are three starting
points for implementing the innovative technologies, as will be shown by the following:


 Implementing innovative technologies in response to a request from trading partner.
        Here the project is typically fairly clearly defined from the outset, e.g. a retailer
        requiring product identification.


 Implementing innovative technologies in order to improve efficiencies in particular
        areas, e.g. warehouse control and production. Here the project needs to be defined,
        planned and cost before implementation.


 Implementing Supply Chain Management supported by innovative technologies
        throughout the organization and its supply chains. Here a detailed business case and
        project planning are critical.


Since there are different starting points, there is no definitive list of chronological step for
implementing the technology. What follows is a checklist, in no precise order, of issues
to consider and action step involved in implementing standard innovative information
technology.




2
    The consultant is the expert of warehouse information technology particular in EDI, RF, and Bar Code Systems
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Strategic Warehouse Information System/Dr. Nuttapon Nimmanphatcharin/2003
SMRG-Faculty of Business Administration / Siam University



 Thai Enterprises should join Consultant Company in Thailand who can help them to
     create those innovative systems, as receive the consultant company number.


 Allocate the consultant company item identification numbers to the Enterprises’
     retailers, branches, and warehouse.


 Apply consultant bar code symbols to the Enterprises’ retailers, branches, and
     warehouse.


 Integrate the consultant company numbers into the Enterprises business's IT systems.


Supplementary Information


 Thai Enterprises should analyze its business processes to determine the benefits and
     thus its needs to identify supplementary information about products and services.


 Choose the appropriate the consultant application identifier numbers e.g. batch
     numbers, serial numbers etc to carry the supplementary


 Determine best method to apply Application Identifier Information


Distribution, Transport and Inventory Management


 Thai Enterprises should analyse its business process to identify the benefit of standard
     numbering and bar-coding to manage logistical information (i.e. distribution,
     transport and inventory management)


 Introduce logistic information management using the consultant numbering




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Strategic Warehouse Information System/Dr. Nuttapon Nimmanphatcharin/2003
SMRG-Faculty of Business Administration / Siam University



Counting and accounting for items


 Thai Enterprises should analyze its business processes and determine any other point
     at which they count and or account for items


 Determine Enterprises’ hardware requirements and identify appropriate suppliers
     (reference list will available from the consultant in Thailand)


 Introduce numbering and automatic identification to handle those process


Electronic Data Interchange


 Thai Enterprises should analyze its business processes to determine the benefit to be
     gained from electronic commerce, including EDI


 Introduce EDI and other electronic commerce tools using standard of consultant
     numbering


Negotiate with trading partners


 Thai Enterprises also needs to negotiate with its suppliers to reduce handling and
     logistics costs by supplying goods using consultant numbers and bar codes.


 Finally, Thai Enterprises should negotiate with its trading partners to reduce
     administrative costs and working capital by utilizing consultant numbering and EDI
     in all business communications.




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Strategic Warehouse Information System/Dr. Nuttapon Nimmanphatcharin/2003
SMRG-Faculty of Business Administration / Siam University



These are just some of implementing steps that Thai Enterprises must consider when they
would like to introduce EDI, Bar Code, and Radio Frequency System to their
organisations. It may look very complicate, but the Thai Enterprises can get an advice
from the consultant company who already prepare those system for the business use. Also
to be considered is financial requirement, the innovative technologies will require a high
cost of implementation, therefore the Thai Enterprises’ Corporate Management and
Warehouse Manager must consider the cost of operation before making any decisions.
Finally, this could be a long-term plan.




                         TO BE CONTINUE!




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Strategic Warehouse Information System/Dr. Nuttapon Nimmanphatcharin/2003

								
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