We’re going to discuss another best practice that you can implement in your distribution center (DC). These practices need some more work to implement, like you have to design your systems, your process and so forth. This is not something that you can implement tomorrow or day after tomorrow, without process changes, systemic changes. But this is good to know because when you’re upgrading next time or when you’re implementing a brand new WMS for your distribution center this is something definitely you want to think about.
This is about the best practices in using ASN. An ASN is called an Advance Shipment Notice, that means you are getting a notice ahead of time that what is going to come to your Distribution Center (DC). It means what are the benefits of knowing what is going to hit your DC, your receiving dock. There are a lot of benefits when you have that information in prior, you can plan better in terms of receiving, have people ready to receive the product and you can plan an ‘inventory surviving’, and you can plan your order fulfillment to some extent.
An ASN stands for advanced shipment notice that means ahead of time you know what’s coming by date, sometimes by time, that’s not always available. But at least by date you know what is hitting your receiving dock door, so what does that is mean is you know what is the product that’s coming and how many of them are coming. It works very typically, as a retailer, as a distributor, as a wholesale distributor, or as a E-comm order fulfiller. You would place orders to buy your merchandise, your product from the Far-East right from China, India, Taiwan, Bangladesh and Indonesia. For example, you are placing an order for apparel from a country.
You would place an order to your vendor that’s based out of those places and they would ship against that purchase order (PO). You would place a purchase order with them saying “hey I want this SKU A -1000 units, SKU B – 2000 units, SKU C – 3000 units, which could be like a blue shirt, red shirt, and then khaki pants.
You would place an order to that vendor and the vendor would ship against that PO let’s say blue shirt – 1000 units, red shirt – 2,000 units, and khaki pants 3,000 units. That is the purchase order you’re placing and the vendor is shipping against that right, so whatever you place is this the purchase order, that gives them legally to ship against that.
That is a legal document that you have agreed to pay, as long as all the conditions, the quality and all that are met. Against that purchase order they are shipping and they are telling “hey I am shipping all these product inventory in three containers or four container or five containers”, if it’s coming from over the seas then they are saying “hey in container 1 which would be hauled by truck 1, I have let’s say 500 of SKU A, 500 SKU B, and 500 SKU C”.
This is the shipment that’s coming to your distribution center and you will now know this shipment that has already departed the vendor facility and these many days it’s going to take to hit your port. From the port it has to be hauled to your DC, now you will be able to find on what day this thing is coming. There are a lot of benefits if you know what’s coming.
- You can plan your personnel at the receiving dock and also for put-away purposes which are now known really well, because now you know hit date, and the product that will be hit your facility.
- There is something called cross-docking. Cross-docking is another best practice we’ll talk about in detail in this series of article that is coming soon. Now, as you have this information you can allocate the inventory, whatever is going to hit in your receiving dock against an order that’s going to hit-up against your distribution that’s going to a retail store. That gives you the ability of not need to pull it all the way into the DC, put it away and then run your allocations against the distributions that have to be shipped to the store. After which you would move that product to the outbound dock and then ship it after knowing the reservations from the stores all the time. Generally from a retail perspective it’s pretty regular, and that said after you know this much inventory is hitting your dock, you can easily cross-dock, that means you don’t have to go through all theses processes inside the DC. Instead from the receiving DC, received dock, you can directly ship it to the shipping dock that makes it so much easier to ship to the retailers and eliminates all the unnecessary touches.
- Then the third thing is if you have a really powerful order management system you can allocate the inventory while it’s on the boat, while it’s on the boat based on the time, based on the travel time, based on the time it’s going to take to hit your the receiving dock door you can allocate that product and you can even commit that to somebody else.
If you know an order is coming, then there are order managers that are very powerful that can do that, but also you can plan automation to some extent. I mean, we have this customer, these guys get a lot of these product from Thailand and that’s where all the manufacturing happens. We all know that there is a big difference in terms of labor availability between the US and in the Far-East India, China, Thailand there are a lot of people available.
What they will do to get the best cube of the truck is they would just floor-load every single carton and when you open the truck here in the DC, in the States you would see everything is floor-loaded and fully packed with the boxes and also the boxes are fully packed. What these guys will do obviously here in the States is completely different. We don’t have that many people, so we don’t, got many people to unload it.
So we will palletized it nicely, shrink wrap it or if it’s going to the customer we will just unload it, build the pallets and then we will use the forklift to move the product. The first thing that needs to happen is palletization. There has to be some kind of automation to palletize so all those things you can plan in a much much better fashion. When you have an ASN then you will get to know all these information is obviously already available in your ERP systems. Usually the 856 is what the shipment status EDI transaction and many people exchange the transaction today between themselves through EDI.
By the looking at 856, you can figure out what is the shipment and further you can match that against the PO 230 and you can figure out “hey what is being shipped, what is in that shipment and what is going to hit my receiving doors”, so based on that you can create an ASN and push that in the WMS so people know “oh oh tomorrow I have this ASN that’s hitting my shipment, that’s hitting my DC, so I got to be prepared and day after tomorrow next week you know I have all this merchandise product that’s coming to my facility”, and it just when you have information, you’re able to plan everything in a better fashion and optimize your labor and you don’t have to go running to find labor at the last minute.
So those are some of the benefits and I’m sure you would find even more benefits once you are able to visually see that in your system, so you know would love to hear your thoughts and again remember this is not something that you got to do, some work you got to plan like setting up your WMS to receive against ASN’s and have that ASN’s downloaded. There is some integration work for getting the information from your ERP which maybe SAP or JDA or JD Edwards or Oracle. Whatever it is that’s something to think about and bring it up with your consultant or with your implementation partners next time, “hey what about ASN and if you don’t have one hey about doing an ASN”, and actually it will be interesting to talk about blockchain because you know blockchain could even enhance this whole ASN concept, which we’ll talk about it later so hopefully this is helpful and we’d love to hear your thoughts and please share your comments below.