Integrating Warehousing and Transport Functions for EPC Projects

Written By Alagappan Dasarathy, DLSM

by Alagappan Dasarathy, DLSM

Integrating Warehousing and Transport Functions for EPC Projects

Written By Alagappan Dasarathy, DLSM

by Alagappan Dasarathy, DLSM

by Alagappan Dasarathy, DLSM

Warehouse inventory levels and key customer ordering patterns––and transportation management systems––within which information pertaining to the location of important supply chain assets such as products or vehicles is typically stored. These systems are key factors in integrating the physical flow of goods along the supply chain. The integration of these systems leads to global inventory visibility, which, in turn, leads to reduced costs and improved customer service by decreasing shipping and receiving cycle times, increasing shipment and inventory accuracy, and decreasing lead-time variability. The total cost benefits that can be achieved by suppliers and warehouses through the increased global visibility provided by an integrated system.

Materials, Components and Equipment for EPC Projects

The large number of materials, components, equipment and services that are required for the construction of a process plant. In this section, we briefly describe the different categories of materials and equipment.

We categorise the materials, components and equipment as follows:

• Bulks: Bulk and generic materials, requiring basic specifications, no pre-delivery checking and limited quality control. Examples include basic building materials like sand, stone, wood, cement and bricks.

• Commodities: Generic equipment, bought to specification following a visit to the suppliers site and requiring active quality control. Examples include structural steel, pipes and pipe fittings, valves, small pumps, cabling, field instruments, etc.;

• Process equipment: This category covers process equipment requiring detailed specifications, astute vendor selection, site visits and quality control. Examples include process vessels, tanks, heat exchangers, columns, and process control equipment;

• Modular plant units: Modular plant units are prefabricated process units designed, built, tested and then delivered to site. Plant modules could be anything from basic pre-assembled pipe-racks (PARs) to third generation plug-and-play modules;

• One-off high-value items: One-off high-value items are typically large high-value and long-lead items built to very strict specifications with continuous quality assurance.

• Construction equipment: Heavy equipment to be used for the construction phase of the project, including cranes, graders, loaders, excavators, forklifts, bulldozers and trucks.

Warehousing

Warehousing is part of a logistics management system, and is a key component for effective management of supply chain. The purpose of warehousing is to store materials and finished goods.The inbound functions prepare items for storage, whereas the outbound functions consolidate, pack and ship orders. The goal of warehousing is to integrate with transportation and ensure on-time delivery of goods.Inboundrefers to the flow of materials for storage and handling, as well as transportation requirements to facilitate either manufacturing or market distribution. Outbound refers to the process of storing and moving the final product and related information flows from the end of the production line to the end consumer.

Transportation

Transportation is a key node in the entire supply chain. The activity involves planning, implementing and controlling the forward and reverse flow and storage of goods, and services. Pipe rack module, vessel and concrete components are fabricated off-site or overseas and transported to the site. Thus, constructors are able to save on the materials and cost.

Reasons for Integrated Warehousing and Transportation

1. Greater efficiency

Efficiency in logistics is about meeting deadlines, managing costs and delivering quality. An efficient supply chain depends on timely delivery, highly organised storage and stock management, fast and accurate picking and packing, and shipping of the right goods to the right place at the right time.

So as well as having the physical warehouse capacity and transport infrastructure in place, real efficiency comes from seamlessly integrated systems and management reaching across both warehousing and transportation operations, meaning that cost, reliability and quality guarantees can be met.

2. Faster response times

The single point of contact at warehouse and transportation provider fronts a fully integrated, centrally managed logistics operation.

3. Overall lower costs

Using an integrated warehousing and transportation should result in greater levels of efficiency, better service and less room for failure.It should also translate into lower costs across the board, purely because of the inherent cost efficiencies of integrated systems.

4. Improve customer service

Customer service can be improved through visibility on orders, products and stock, as well as reliable service levels and lead times. This also includes proactive exception management

5. Realise cost savings

Cost saving can be realised through creation of synergies in the network, consolidation and load optimisation, as well as efficient utilization of logistics resources

Warehouse Management System (WMS)

A warehouse management system (WMS) is a software application, designed to support and optimize warehouse functionality and distribution center management.

Transportation Management System (TMS)

A transportation management system (TMS) is a subset of supply chain management (SCM) that deals with the planning, execution and optimization of the physical movements of goods. In simpler terms, it’s a logistics platform that enables users to manage and optimize the daily operations of their transportation fleets.

Software’s Integration of WMS & TMS

In the past retailers and wholesalers could allow their warehouse management systems (WMSs) to operate in isolation from their transportation management activities. In today’s demanding consumer environment, companies cannot afford to lose the gains they have built in other areas of their supply chains because of inefficient execution on the road or in the warehouse. Companies can make better logistical decisions by using the right technology system integration between warehouse and transportation management. By integrating WMS and transportation management systems (TMS), companies can enable real-time visibility and create cross-departmental workflows, such as: cross-docking, throughout the supply chain, significantly improving supply chain execution and profitability.

TMS–WMS Integration Models

Creating a single-source engine to share data, foster communications and provide visibility between transportation and warehouse management systems can enhance the performance and benefits of each solution beyond implementing each as a stand-alone. However, companies must determine where their priorities lie.

Transportation-Driven Model

Product profile is weight or volume sensitive (e.g., bowling balls, styrofoam cups, reels of paper); Creating the right routes and fully using transportation capacity are priorities; Significant investments in sophisticated software that provides strong capabilities to assign routes dynamically.

Warehouse-Driven Model

Facilities typically run at high capacities with physical space constraint. The link back from an efficient route to the efficient sequence in which orders need to be assembled in the WMS is becoming much more ‘real time’. One common mistake of many companies is that they tend to select the same cheap carrier to decrease costs and avoid the reality of that carrier only getting the parcel on time to the customer 50-70% of the time. Increased customer satisfaction is a further benefit from a WMS/ TMS integration.

Conclusion

Transportation and warehouse management do not have to operate in silos. The idea of a fully integrated WMS/ TMS suite has progressed from concept to reality. When the two systems act as one, they exchange information and provide companies with more flexibility to determine how their supply chain processes are executed. The synchronisation of warehouse and transportation information, layered with the power to manage exceptions, keeps companies in step with supply chain visibility, increased flexibility and the ability to optimize workflows across departments.


References

Sivalingam,M. (2018). “8-p-effective-delivery-integrated-logistics-operations”. Retrieved from SIPMM: https://sipmm.edu.sg/8-p-effective-delivery-integrated-logistics-operations, accessed 30/08/2018.

Hassan, H. (2018). “Effective-warehouse-storage-for-shipment-efficiency”. Retrieved from https://sipmm.edu.sg/effective-warehouse-storage-for-shipment-efficiency, accessed 30/08/2018.

Steyn, J.&Lourens, D. (2017). “An Introduction to Project Logistics Management”. Retrieved from http://www.ownerteamconsult.com/an-introduction-to-project-logistics-management, accessed 30/08/2018.

Hayes, B. (2018). “WMS-TMS Integration”. Retrieved from https://www.flo-group.com/about-us/whitepapers/wms-tms-integration-paper, accessed 30/08/2018.

Jeffry, M. (2016). “6-reasons-why-integrated-warehousing-distribution-works”. Retrieved from https://www.linkedin.com/pulse/6-reasons-why-integrated-warehousing-distribution-works-jeffery, accessed 30/08/2018.

About the Author: Alagappan Dasarathy has substantive years of experience in EPC projects, specifically new piping, steel structure installation and mechanical works. He is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). He completed the Diploma in Logistics and Supply Management (DLSM) course on September 2018 at SIPMM Academy.

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