All-Seeing Eye Saves Inventory Millions

A remarkable inventory management system for Heathrow's Terminal 5 construction project, the first of its kind in Britain, has saved inventory millions.

A remarkable inventory management system for Heathrow's Terminal 5 construction project, the first of its kind in Britain, has so transformed building workers' supplies efficiency that contractors who ignore it do so at their peril.

Its power to control waste, "shrinkage" and inefficiencies, which on any major construction sites would cost millions of pounds annually, is breathtakingly impressive.

Moreover, its information control will have enormous value in curtailing the accident/illness claims culture now so virulently spreading throughout UK business and unfairly costing employers vast sums.

Called DC21 - IMS, it is a sliced version of the DC21 - WMS, (warehouse management system) marketed in Britain by systems integrator, ITS, and was installed last year to replace a paper-based system.

Its success has been staggering.

Instead of having nine proposed on-site stores there is now only one very modest store of 250 mt2, staffed by five, through which between £10m and £15m of workers' supplies pour each year.

According to ITS's software manager, Tim Roberts, the IMS saves £1.4m annually but cost only £150,000 for the software and about £20,000 for all the IT hardware, including hand-held RDTs.

Over 8-10 years, the system should deliver savings between £10m and £14m, estimates Tim.

Key savings derive from "shrinkage" elimination, better discounts through increased buying power and much lower stock levels, currently down from £400,000 to £150,000-£200,000.

Used by Laing O'Rourke, principal contractor for the £5bn Terminal 5 project, the IMS is a demand fulfilment strategy based on a kanban system to initiate stock replenishment.

Its supplies 500 work teams, about 5,000 workers, with personal protection equipment, consumables, like nails ad screws, and small tools.

The workforce is expected to rise to 10,000.

The original, paper-based system, however, had numerous, costly shortcomings.

Call off orders for replenishment stock had to be keyed into the PO system manually.

There was no real time stock visibility, so staff were unable to discern current stock levels, resulting in over and under stocking.

Picking was inefficient because staff were unable to identify stock location easily.

Informative business decisio ns could not be made, as there was no way of capturing data for analysis.

Staff, therefore, could not reduce stock levels, monitor usage and predict peak demands, improve and monitor performance of suppliers, and increase picking efficiency.

There was no record of warehouse transactions so there was a blank over issuing of stock, recipients of stock and picking history.

Chosen from among several other contenders, whose offerings lacked far-reaching functionality, the IMS system has receiving, picking and putaway results easily selected and changeable by the client himself to adapt to varying needs.

There is simple location management and no control modules, except radio frequency, i.e no mechanical handling control system.

Yet its simplicity still allows stacking of, say, 100 different products on one pallet, which can lead to efficiency gains both in storage space and item handling.

Few other IMS packages can cope with that and none can match its scaleable functionality.

Helped by barcoded stocks and hand-held, spread spectrum, radio data terminals, warehouse staff scan and send out empty, traced totes to suppliers for milk run replenishment.

On arrival, usually within hours of ordering, barcoded stocks will be scanned in and then picked and tracked to the final, named user on the building site.

Stock returns are also handled.

Stock arrivals are the flags for paying suppliers because there is instant update of the host system.

Real time data allows full management reporting for all the 1,000 SKUs, which along with all the other functions, explains Tim Roberts, is only 25% of what the DC21 full WMS package will do.

Tailored for the construction industry in particular, but also highly relevant to the print industry, where waste is also heavy, the IMS will control all the spend on building workers' supplies, which in the past builders had no control over, claims Tim.

Without control, workers could draw identical supplies repeatedly for storing in their lockers, to be subsequently sold off nefariously.

But another dubious activity which the IMS could scotch through its remarkable track and trace facility is spurious or unfair health and injury claims.

There is a permanent record of what every named site worker has received, when and where so that in subsequent years workers claiming that they have suffered work-related injuries or illness, like deafness, for example, would find it hard to claim compensation when the IMS could prove that the claimant had received ear protection equipment with safety/operating instructions.

What the future holds for Laing O'Rourke, believes Tim Roberts, "is ultimately we will be able to control all of this on a global basis from Dartford, where we have installed the software." Laing O'Rourke are hoping to put the system to work for a Dubai airport contract.

Like an all-seeing, invisible eye, the web-enabled IMS will be able to control all workers' supplies for every single construction site around the world.

Other major builders should ask themselves if they could afford to be without such a powerful, competitive tool.

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