A Tale of Two DCs for Supply Chains: Distribution and Data Centers

There is a need today for efficiency in all segments of a business. One area that is always highly focused on this need is the line of business operations and inventory management. I know this as I have spent the bulk of my career as an engineer in the supply chain automation space. This is an area that is going through incredible innovation.

The best way to put it is that today it is really the tale of two DCs: The data center and the distribution center. These two critical business functions are more connected than ever and the last thing that organizations need today are silos, political barriers, and operational disconnection between the two groups.

Sounds great, but how does one get started in this regard? Like anything, it always works best to put forth business benefits. One area that can get everyone excited immediately is focusing on reduced costs (both operational and capital expenses) by working to standardize systems on each end. One example of an inefficiency is multiple warehouse management systems (WMS) in place for different supply chains and lines of business. This can come about for a number of reasons, most frequently due to mergers and acquisitions. But from an IT and a warehouse and supply chain perspective, is this right approach? Having two WMS implementations does not lend well to a standardized approach – which is an attribute observed in the data center and distribution center in most situations.

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Another example of how to motivate an organization to introduce positive change into the supply chain is to show operational benefits. This can be achieved by proving reduced operational expenses in the distribution center via investments in the data center; improved customer satisfaction by increased order accuracy; and enhanced times related to employee utilization, activities per hour, and more efficient workflow. These types of benefits come from a combination of both investments in the distribution center as well as investments in the data center that go about as a joint motion.

IT organizations who are part of companies that have a supply chain and distribution center network need to realize that this is that bloodline of the company. Having the right view of how the distribution center is powered by the data center will set the larger company up for success. In my experience, I’ve seen organizations look to this as a “black box” solution. To an extent that is true, as some of the most cutting-edge implementations are a complete solution from some of the leading vendors in the distribution space – but they have to be embraced by the IT organization as well. The right approach here will lead to better availability, improved supportability and advanced execution as an entire organization.

Having the right approach with data center professionals, distribution center professionals, and the solutions in play will also lead to a more complete approach around emerging technologies such as the Internet of Things (IoT) in the industrial space. IoT for distribution centers can be a big deal. For example, single digit efficiency improvements from IoT solutions integrated with distribution center solutions can make a huge difference in the bottom line. These are effectively all data-driven solutions that learn and adapt to distribution center behavior, but the IT team needs to be part of the solution. Specifically, nobody wants to see a bad certificate on an IoT device that can shut down an entire warehouse. This is the type of thing that could potentially erase any IoT gains.

Automation’s role

One area that is not new but continues to develop is automation. For distribution center and supply chain functions, this is an opportunity to modernize any manual process. It does not necessarily mean that it is no longer a human function, but how is every step data-driven?

Take order fulfillment – one of the most common areas that sees a lot of innovation. Gone are the days of paper pick sheets. Modern solutions favor light or voice-directed picking or automated order fulfillment systems. This is a progression of what we've seen in many industries – the manufacturing process is very data-driven and automated, but that historically stopped at distribution and the supply chain. Successful strategies today can bring automation, data-driven approaches and modern solutions across the organization.

But how do we get there? How can significant change be made confidently? Organizations today need to be very particular when it comes to making changes to one of their key engines: the distribution center. The reality is that the data center can help the distribution center today in this process. Technologies exist that make it easy for key application alterations, new equipment changes, and more to be tested and verified with confidence to make the journey comfortable.

Going forward, the cloud will inevitably become part of the discussion in driving supply chain solutions today. What are the best approaches? Where should these services run? These are questions that IT decision makers should make in agreement with operational counterparts. In any situation, start with the point I raised at the beginning on how to get started: what business benefit can be gained by a change in process or technology? From there, it becomes a question of what it means to the business and how to get there.