Undoubtedly you are familiar with Web 2.0, the new phase of the development of the internet which transformed the electronic superhighway from one-way street into a two-way street. In Web 2.0 visitors of Wikipedia, Youtube, Linkedin and Twitter are more than just readers, they also provide the content of the web pages. We plead for the logistical counterpart of this idea: Warehouse Management 2.0.

What is Warehouse Management 2.0?

In many companies we see that the distribution center plays a subordinate role. Internal departments like purchasing, marketing and sales, as well as external parties like suppliers, transporters and customers, decide what the distribution center should do. A typical example of one-way traffic that creates a lot of unnecessary costs in the distribution center and the supply chain. Warehouse Management 2.0 aims for two-way traffic. The distribution center obtains an equal role in the supply chain in order to optimize integral logistics in cooperation with other parties.

How to move from Warehouse Management 1.0 to Warehouse Management 2.0?

First of all, a strong internal organization is needed. Many distribution centers still find themselves in the phase of fire fighting. Each day, re-occuring problems have to be tackled. Such a distribution center will never become an equal partner in the supply chain. Therefore it is important for the logistics manager to break through this vicious cycle by means of transparent processes and intelligent IT systems. Of course this cannot be accomplished overnight, only by means of a clear vision, a step-by-step improvement plan, inspiration on the workfloor and a decent portion of perseverance the goal can be reached in a period of one to two years. The distribution center provides reliable services against competitive prizes and manages fluctuations in demand and supply. In short, the warehouse has become a strong link in the supply chain.

Is the warehouse ready for Warehouse Management 2.0 now?

Yes it is, however the two-point-zero-phase demands a different mindset. We should forget about one-way traffic, in which other parties determine what the warehouse should do. Where the one-point-zero manager desperately tries to tackle fluctuations in demand and supply, labor-intensive order patterns (an order of 26 pieces, while 30 fit a carton) and unnecessarily tight delivery schedules, the two-point-zero manager solves these problems in collaboration with other parties. Using solid numbers on cost and performance, the right incentives and regular supply chain reconstruction together with the parties involved, we find the right balance between service and costs for the entire company.

Does Warehouse Management 2.0 provide any benefits?

Absolutely! Warehouse Management 2.0 makes the distribution center perform amongst the best-in-class. International research shows that professional logistics management makes the difference. Systematically, research identifies a small number of companies that provide competitive service levels against 30 percent lower costs than a large group of laggards. Sales volumes and profit margins of the best-in-class companies differ with a similar amount. In short, a profound logistics performance has a double impact. A nice reward for the hard work!