Yielding To The Winds of Change
SOURCE: Computerworld (Jan/Feb, 2002 issue No. 4)
Posting date: 21/01/2000

IN the late ‘90s, 40-year old Sitt Tatt Logistics found itself with a business that has steadily outgrown its warehouse management system (WMS). The decision to upgrade its WMS is simple enough, but how does a company ensure that its business operations are not disrupted in the face of a major changeover?

In the current transition to its most extensive enterprise-wide WMS system ever, Sitt Tatt is taking great care that its customers experience only the least possible business and process disruption.

"It is very important that we provide our customers with a smooth, almost transparent transition into using the new EXceed WMS," says Looi Chin Boon, senior manager of Sitt Tatt’s finance and business services.

To do this, Sitt Tatt is moving the vast portfolio of its customers to the EXceed WMS in phases, via a mechanism that starts off with customers requiring the most basic warehousing and distribution services, followed by those with more complex outsourcing needs.

This staggered deployment strategy also supports the company’s training plan for its employees to master the new WMS.

"Training is done on a train-the-trainer basis. Those who already have some hands-on experience in the earlier transition phases can teach the others, and so on," Looi explains. In fact, he adds, it is an effective method for the company’s employees to get familiarised with the new system.

Windows-based EXceed from EXE Technologies is expected to provide Sitt Tatt with real-time process visibility and inventory management that will improve its customer acquisition and retention rate.

In addition, this fulfillment, warehousing and distribution software enhances the visibility of its customers’ inventory via the Internet, by interfacing the logistic company’s central WMS with the customers’ remote systems.

EXceed is enabled for both ecommerce and traditional distribution channels, thus allowing Sitt Tatt to use the Internet, as well as traditional communication methods to manage and control the flow of inventory throughout its supply chain.

Joining the revolution

The changeover to EXceed kicked off in July 2001, when the WMS was ready for a full rollout after five months of implementation. Sitt Tatt’s decision to purchase and implement EXceed could not have been more timely, considering the recent developments in the logistics and distribution industry.

Indeed, the decision to acquire the system was already concluded some 20 months ago. A key factor behind this major IT investment was the winds of change brought about by the Internet.

"No doubt, the Internet is revolutionising the local logistics/distribution marketplace in terms of business processes and customer demands. To stay competitive, we needed to have the foresight to keep ahead with the Internet trend," says Looi.

Sure enough, customers are becoming much more demanding in their logistical needs and specialised applications other than just the basic services.

Concurrent to this development, many multinational corporations are also focusing on manufacturing and marketing, while outsourcing their warehousing and other post manufacturing processes such as sub-assembly and repacking to third parties in order to keep operations cost low.

"As a result, there is a noticeable increase in demand for new supply chain management and logistics services such as vendor-managed inventory programmes; and cross-docking services that allow for more efficient inventory flow-through process to avoid incurring extra warehouse holding costs," elaborates Looi.

Other than being a starting point for Sitt Tatt to experiment with new e-business opportunities in the b2b and b2c marketplace, the WMS is also expected to bring about improved communication and collaboration capabilities for the company to build lasting business relationships with its customers.

Expansion driven

Sitt Tatt’s move to EXceed was not due to any specific problems found in its old WMS system that had been in use since 1997. "Rather, we outgrew the previous system," Looi divulges.

The previous WMS, from an Australian-based vendor, cost Sitt Tatt approximately RM1 million to implement at the company’s main warehouse in Bukit Raja, Klang. The system was eventually upgraded to link the facility to the customers via electronic data interchanges.

However, an expansion of Sitt Tatt’s warehouse capacity soon forced the company to re-evaluate the system. At that time, Sitt Tatt was building two other warehouses equipped with modern facilities that provided close to 400,000 square feet of storage space (with investments totalling RM60 million) in Prai, Penang, in addition to the existing three warehouses in Bukit Raja, and Permatang Pauh, Penang.

This meant that combined, Sitt Tatt needed a WMS capable of supporting 650,000 square feet of both old and new warehouse sites, while linking all its customers to the respective warehouse operations.

"This is really beyond what the old WMS could do. For example, separate sets of hardware were required to extend the system to the other warehouses," Looi reveals.

Hence, the purchase of a new WMS was inevitable. Before deciding on EXceed, Sitt Tatt considered offerings from two other vendors—the Australian vendor of the existing WMS system, and MK Logistics, a unit of Computer Logistics.

The key criterion was to choose a vendor with a good, reliable and scalable WMS that is able to support all of Sitt Tatt’s future expansion. "It is of utmost importance to choose the right vendor because it would be very difficult to change vendors in the future when our operations become even more massive," says Looi.

A comprehensive evaluation process that lasted about 12 months was undertaken before the contract was finally awarded to EXE Technologies in early 2001.

Looi declines to reveal the total investment for EXceed WMS, except to say, "in general, for every Ringgit Sitt Tatt generates in revenue, about 10 per cent goes into funding its IT operating cost."