Last year something else caught my attention. Our end user research showed that the number one reason companies purchased Production Management solutions was the need to comply with ever more stringent compliance regulations.
Production Management and Warehouse Management Systems are both execution systems. Further, few industries have compliance regulations surrounding Environment, Health and Safety (EHS) that are more onerous than the Chemical industry (and these regulations are in the process of becoming even more burdensome). Could a WMS be used to both drive operational efficiencies as well as help to comply with EHS regulations? Could this drive more WMS purchases for operators of Chemical warehouses? ARC did some background research, interviewed a number of suppliers of software and AutoID solutions to this industry, as well as operators of Chemical warehouses.
In Part 1, let's tackle the question of whether a WMS could be used for both operational efficiencies and enforcement of EHS compliance regulations. Certainly WMS drives operational efficiencies. Historically, higher end solutions' main payback was in the area of improved labor productivity and lower cost. Simpler solutions' primary payback was from improvements in inventory accuracy.
WMS, however, has not historically been much used for enforcing compliance. That does not mean it could not be used in this way in this industry. Here are a few places where WMS could play a role:
The Yard: A Yard Management module, which many WMS solutions have, could help to monitor entry and exit to the facility of vehicles, and potentially even site personnel and visitors.
Receiving: In receiving, a WMS could prevent products not listed in the operating permit from being stored in the warehouse. If suppliers use ASNs, the system could prevent the wrong products being sent to the warehouse in the first place. The WMS can ensure that the storage limits by law or operating permit are not exceeded, that certain classes of chemicals (for ex. flammables) are designated to be received at certain dock doors, and could help to enforce certain unloading requirements (that certain flammable chemicals not remain too long on a hot dock for example).
Put-away: In a chemical warehouse, different classes of chemicals need to be segregated, so flammables need to be stored in a different zone than oxidizers, corrosives, etc. A WMS can be set up to enforce these put away locations fairly easily. Similarly, a WMS can insure that products are stored with regard to temperature and ventilation requirements that rack weight limits are understood and respected during put-away.
Value Added Services (VAS): In certain types of warehouses, chemicals are stored in large tanks. Then when a customer order comes in the appropriate container is filled. Warehouse workers are required to wear the correct Personal Protective Equipment (PPEs). WMS solutions that have task management logic could enforce this requirement.
Equipment Management: In this analyst's view, a true WMS uses RF scanners or other forms of AutoID to insure that inventory accuracy is virtually perfect. In flammable sections of the warehouse, the RF scanners, and other equipment as well, needs to be spark resistant, even if dropped. There are hazardous environmental ratings that these devices must pass to be used in these sections of the warehouse. A WMS with task management functionality could help to enforce this.
Complex VAS: In some cases, chemicals are blended. Many WMS solutions have simple Bills of Materials as an add-on module for Value Added Services. But these BOMs are typically based on the logic of discrete products rather than the simple recipes used in chemical warehouses.
This analyst does not know of a WMS solution that contains recipe logic. However, ERP solutions for the process industry could contain both recipes and WMS.
Shipping: When chemicals are shipped, there is a need to ship Material Master Data Sheets with the shipment. WMS solutions have long been integrated with manifesting solutions to print the proper shipment documents. A similar form of integration would make this a fairly easy requirement to enforce.
Cycle Counting/Inventory Control--Certainly the sooner a leak is discovered, the less onerous clean up will be. If a container appears to be damaged, you might prevent a leak in the first place. Considering the amount of compliance bureaucracy a leak can generate, that should warm the heart of the Compliance manager. Some WMS solutions could be configured for container damage or leakage alerts. Further, the WMS could help with stock rotation/shelf life issues.
Reporting: Companies that store chemicals are subject to various government reporting requirements. SARA requirements allow local community emergency response units to know what chemicals they need to deal with in the event of a spill and how those chemical should be dealt with. The Department of Homeland Security has put in place a new Top Screen requirement designed to know which facilities have the most dangerous types of chemicals and therefore would be more likely to be the target of terrorist attacks. The same product logic that facilitates putting chemicals in the correct zones, could be used to create to create these reports far more quickly and using far less valuable labor.
There are many places where regulations are not best enforced using a WMS. For example, in the areas of ongoing training that operators need to get, that is probably better tracked in an EHS or Human Resources system. There are layout concerns, how thick reinforcing walls should be, how many sprinklers, etc are needed, and other similar considerations, that are clearly out of scope for what a WMS should do. A WMS cannot solve all EHS requirements for a warehouse.
However, it is also clear that a WMS could drive both operational efficiencies and better compliance to a variety of EHS regulations. So how widely is WMS used for these purposes? That will be part 2 in this series.
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