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REFERENCE NOTES:

INTRODUCTION TO E – PROCUREMENT

E-Procurement is using the internet to operate the transactional aspects of

requisitioning, authorizing, ordering, receiving and payment processes for
the required services or products. OR

Is the business-to-business or business-to-consumer or business-to-

government purchase and sale of supplies, work, and services through the
Internet as well as other information and networking systems, such as
electronic data interchange and enterprise resource planning. AND

E – Procurement systems are the means by which organizations and people

utilizing appropriate technologies to gather, process, store, use and
disseminate information.

Benefits of E – Procurement

i. Reducing purchasing cycle time

ii. Enhancing budgetary control
iii. Eliminating administrative errors
iv. Increasing buyers’ productivity
v. Lowering prices through product standardization and consolidation of
purchasing power
vi. Reduce ‘maverick buying’ (the procurement of goods and services by
non – procurement personnel without using official order forms or
contracts)
vii. Access to new suppliers, products and services
viii. Better information management

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Challenges of E-Procurement

i. High cost of setup

ii. Security/Lack of Trust

iii. No legal framework

iv. Staff redundancy

v. Risk of return on investment

vi. Lack knowledge and technical skills

vii. Non-supportive Organizational/Management decisions

5 Rs of E – Procurement

According to Baily, there are five rights of e-Procurement that can reduce
costs and increase profitability, which are:

i. Right Price
By conducting an e-procurement, companies are able to have an idea
for a right price. By having e - procurement, companies should be
able to look around which price is suitable for their budget and big
possibilities of getting the specific products with a cheap price.
Companies who join the e-procurement are enthusiastic bidding to
win the procurement. The lowest evaluated bidder will win the
procurement.

ii. Right Time

Another benefit from e-procurement is that an organisation will have
their goods on time. Joining an e-procurement especially from big
companies will have a quite big impact for the winning supplier. It’s

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like catching the "Big Fish" so it is important for them to deliver the
good at the right time.

iii. Right Quality

E-procurement is one way to ensure that the goods that organisations
want to buy is in good quality. Joining an e-procurement from big
companies is a gold opportunity so for sure this supplier doesn’t want
to ruin the opportunity by selling poor quality products.

iv. Right Quantity

Sometimes when we order a certain products from our supplier, they
make errors in the quantity. If this happen, each parties will blame
each other. E-procurement will prevent this error to occur. By
avoiding this types of error, company can reduce cost and also at the
end increase profitability.

v. Right Source
Conducting an e-procurement will enable company to make sure that
the goods they're about to order come from the right source. Usually
when it comes to purchasing, companies especially those big
companies have strict policies to buy goods only from reliable
sources. Sometimes, those big companies saying that they don’t mind
to pay a little bit higher than usual but they know where their product
are coming from rather than getting a cheaper price but they don’t
know where it come from. This happen because big companies will
have an auditing team that will checking and clarify all the purchasing
documents including checking the background of the stores that we're
buying those goods from.

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E – PROCUREMENT TOOLS

Electronic data interchange (EDI)

Is the technique based on agreed standards, which facilitates business

transactions in standardized electronic form in an automated manner directly
from a computer application in one organisation to an application in another
OR

Is the linking of computers between specific organisations so that

documents, such as purchase orders and invoices may be transmitted
directly by electronic means.

How EDI works

i. Company A creates a purchase order using its internal business

software
ii. EDI software translates the order
iii. Company A sends the purchase order to company B over a third – part
value added network (VAN)
iv. Company B receives the purchase order document and will translate it
from EDI to its proprietary format and then company B will send an
acknowledgement to company A

Advantages of EDI

i. Replacing the paper documents

ii. Reduction in lead time
iii. Reduction in the cost of inventory and release of working capital
iv. Promotion of strategies such as JIT
v. Better customer service

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vi. Facilitation of invoice payments by the computer – to – computer

transfer of money which eliminates the need for the preparation and
posting of cheques
vii. The integration of functions particularly marketing, purchasing,
production and finance
viii. It tends to promote long – term buyer – supplier relationships
and increase mutual trust

Limitations of EDI

i. Expensive
ii. Initial setup is time consuming
iii. EDI standard changes
iv. System electronic protection
v. Staff training cost
vi. Proper backup
vii. Limit your trading partners

Electronic hubs (E – hubs)

A hub is a device that connects several networks together. Therefore e –

hubs is a commercial website that provides coordination and synchronization
or harmonization services to electronic commerce (e – commerce) its users
or partners.

Electronic exchanges (E – exchanges)

Is a business – to – business (B2B) website where purchasers and suppliers

meet and transact business. It can be either private or public exchange.

Private exchanges also can be either one – to – one (1T1) or one – to –

many (1TM) connections. 1T1 is the direct connection while 1TM exchange
connects all the actors through the central internet hub. Private exchanges

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are normally specified by a single operation and available by invitation only

to the organisation’s suppliers and trading partiners.

Public exchanges often referred to portals, extend outside the boundaries of

the company and involve many – to – many (MTM) interactions. It may be
run either by consortium of big players within a specific industry (consortium
portals) or by independent entity starting up its business as an intermediary
(independent portals).

Electronic marketplaces (E – marketplaces)

Is a website that enables purchasers to select from many suppliers. With e –

marketplaces, the buyer is in control as open marketplaces enable
purchasers to evaluate all potential suppliers for a particular product or
service and make informed decisions regarding what and where to buy.
Conditions for e – marketplaces to operate
i. Markets are large and the search costs to find suppliers are high
because of the large number of potential suppliers
ii. Product specifications and information are subject to rapid change
iii. Buyers have difficulty in comparing similar products from different
vendors because of excess of features and characteristics that may
not clearly indicated
iv. Internal costs of such processes as locating, appraising and evaluating
the performance of suppliers are high

Electronic catalogues (E – catalogues)

An electronic catalogue is a web page that provides information on products

and services offered and sold by a vendor and supports online ordering and
payment capabilities. There three types of e – catalogues which are:-

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Sell – side catalogues

These provide potential purchasers with access to the online catalogues of a

particular supplier who provides an online purchasing facility.

Buy – side catalogues

These are catalogues created by purchasing organisations. Normally, such

catalogues are confined to goods covered by prenegotiated prices,
specifications and terms and run by a program that is integrated into the
purchasing organisation’s intranet.

Third – part catalogues

This can be done by linking the in – house e – procurement catalogue to a

master catalogue administered by the marketplace.

Advantages of e – catalogues

i. Facilitate real – time two – way communication between buyers and

sellers
ii. Allow for the development of closer purchaser – supplier relationships
due to improved vendor services and by informing purchasers about
products of which they might otherwise be unaware
iii. Enable suppliers to respond quickly to market conditions and
requirements by adjusting prices and repackaging
iv. Virtually eliminate the time lag between the generation of a requisition
by a catalogue user and the issue of the purchase order
v. Maverick or off – contract purchasing is reduced because it is simpler
and quicker to purchase from contracted suppliers than to go outside
the official system

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Electronic auctions (E – auctions)

Is an electronic market, which can exist in both businesses – to – business

and business – to – consumer contexts. Sellers offer goods or services to
buyers through a website with a structured process for price setting and
fulfillment. Web auctions may follow; English, Dutch, sealed bid and reverse
bid processes.

English bid process

In this process, bids are successively replaced by higher bids to obtain the
highest price for a given item

Dutch bid process

This is suitable for selling thousands of items to a number of different

buyers. With dutch auction, the auctioneer starts at a higher price and then
descends by steps until a bid is received. The successful bidder then decides
whether to buy the whole or portion of the items on offer at that price. The
auctioneer increases the offer price for any items remaining in the current
lot and then again descends by steps and continues in this manner until
either all the items comprising the lot are sold or a reserve price is reached.

Sealed bid process

This is broadly similar to tendering. A potential purchaser issues a request

for bids to be submitted by a prescribed date and time according to a sealed
format. At the specified date and time, the purchaser’s representatives will
evaluate and compare the bids according to a rating grid. The winning bid is

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the one that achieves the maximum score. Should several bids obtain the
same score, the bid offering the best price is the winner.

Reverse bid process

In a reverse auction, buying organisations post the item(s) they wish to buy
and price they are willing to pay while suppliers compete to offer the best
price for the item(s) over a prescribed time period. This auction is structured
using the lowest price or most economically advantageous tender (MEAT)
options

INTERNET TOOLS

Electronic sourcing (e – sourcing)

Is using the internet to make decisions and form strategies regarding how
and where services or products are obtained. It covers the parts in the
buying process which are at the discretion of the specialist buyers, which
include knowledge, specification, request for quotation, e – tendering, e –
auction, evaluation and negotiation of contract. Good e – sourcing practice is
essential to make e – procurement work.

Electronic tendering (E – tendering)

An internet based process wherein the complete tendering process; from

advertising to receiving and submitting tender-related information are done
online. This enables firms to be more efficient as paper-based transactions
are reduced or eliminated, facilitating for a more speedy exchange of
information.

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Electronic ordering ( E – ordering)

Electronic ordering is a more efficient way of placing orders. In the past, you
might have phoned or faxed your orders but with electronic ordering, you
place orders via the Internet or by using a more structured order system
such as Electronic Data Interchange (EDI).

Web based enterprise resource planning ( ERP)

Web based enterprise resource planning (ERP) is a category of business-

management software typically a suite of integrated applications that an
organization can use to collect, store, manage and interpret data from many
business activities, including:

i. product planning
ii. manufacturing or service delivery
iii. marketing and sales
iv. inventory management
v. shipping and payment

Electronic information system (e – information system)

A system which stores information from internal and external sources to
facilitate better decision making. The data is collated in a database and the
user can access the files to glean better information as a basis for decision.
The system may include fiscal, social, economic, scientific or technical data
geared to support a firm's operations

Electronic mails (e – mails)

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E-mail (electronic mail) is the exchange of computer-stored messages by

telecommunication or is defined as the transmission of messages over
communications networks.

World Wide Web (WWW)

The World Wide Web (WWW) is an open source information space where
documents and other web resources are identified by URLs, interlinked by
hypertext links, and can be accessed via the Internet.

Enterprise Resource Planning System (ERP System)

Is a set of software applications that organize, define and standardize the
business processes necessary to effectively plan and control an organization.
Essentially, ERP applications are a computer model of business, embodying
the products and processes, information flow, procedures, and relationships
between functions and activities. A set of planning applications can provide
recommendations for what must be accomplished in order to meet the
forecasted demand and keep the business functioning smoothly.

Benefits of ERP System

i. Efficiency.

An ERP system eliminates repetitive processes and greatly reduces the need
to manually enter information. The system will also streamline business
processes and makes it easier and more efficient for companies to collect
data.

ii. Integrated Information

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Instead of having data distributed throughout a number of separate

databases, all information is now located in a single location. Data is also
kept consistent and up-to-date.

iii. Better reporting system

ERP software helps make reporting easier and more customizable. With
improved reporting capabilities, your company can respond to complex data
requests more easily. Users can also run their own reports without relying on
help from IT.

iv. Better customer service

It’s easier to provide high-quality customer service using an ERP system.

Sales and customer service people can interact with customers better and
improve relationships with them, through faster, more accurate access to
customers’ information and history.

v. Security

The system improves the accuracy, consistency and security of data.

Restrictions to data can also be enhanced.

E – PROCUREMENT IMPLEMENTATION

E – Procurement Systems

To implement e-procurement, the Information system manager and procurement team

must work together to find a solution that links together different people and tasks of
procurement. Historically, it has been easier to introduce systems that only cover some
parts of the procurement cycle. The different systems that need to be integrated are as
follows.

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o Stock control system

This relates mainly to production related procurement, the system highlights

when re-ordering is required i.e. when stock falls to re-order threshold or limit.

o Web-based catalogue

Paper catalogues have been replaced by electronic forms that make it quicker to
find suppliers.

o Database-based workflow systems

Integrate the entry of the order by the originator, approval by manager and
placement by buyer. The order is routed from one person to the next and will wait
in their inbox for action. Such system may be extended to accounting systems.

o Order entry on web site

The buyer often has the opportunity to order directly on the supplier’s web site,
but this will involve rekeying and there is no integration with systems for
requisitioning or accounting.

o Accounting systems

Networking accounting systems enable staff in the buying department to enter an

order which can then be used by accounting staff to make payment when the
invoice arrives.

Integrated E-Procurement Or Enterprise Resource Planning System

Enterprise Resources Planning (ERP) refers to the software that allows

companies to automate and integrate many of their business processes, share a
common database and business practices throughout the enterprises and
produce information in real time. The objective of ERP is to coordinate a firm’s

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whole business, from supplier evaluation to customer invoicing. This is

accomplished by using a centralized database to assist the flow of information
among business functions. These aim to integrate all the facilities above and will
also include integration with suppliers’ systems.

For instance with document management software as an integrated part of e-

procurement system, paper invoice from supplier is scanned into the system and
is compared to the original electronic order information.

With new system (e-procurement), employees act as purchasing agents,

ordering directly via their desktop Personal Computers. The system runs on the
buyer intranet and enables staff to access a simplified catalogue of office
supplies and technical equipment. Although the supplier post its entire catalogue
at an electronic marketplace, buying firm’s employee only see a subset of
relevant products for which special prices have been negotiated. Once the items
have been selected, the system automatically produces a requisition that is
electronically routed to the person who approves it. Then it is converted into a
purchase order without the intervention of purchasing staff.

E – PROCUREMENT CYCLE

Diagram 01

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Diagram 02

1. Electronic requisition (e – requisition)

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E-requisition is used to request procurement of goods or services, defining the

specifications and covering other details such as what is needed, when it is needed,
and where it is needed. From the e-requisition, the buyer will source the necessary
goods or services, evaluate the offers of the relevant suppliers, and conclude the
process by placing a purchase order with a specified supplier.

Once general planning for procurement is complete, an e-requisition for goods or

services is raised by an organisation employee and submitted for approval to the
appropriate authority.

E-requisition should include, at a minimum:

● Item number and description of goods and services sought, based on selection
from the Procurement Catalog

● quantity of inputs to be procured

● unit of measure

● required delivery date

● delivery location or location of civil works/services to be performed

● estimated price or cost

● Supporting documentation such as the Terms of Reference (TOR) or

specifications.

2. Electronic sourcing (e – sourcing)

The Sourcing process enabled with the appropriate web-enabled, collaborative
technology to facilitate the full life-cycle of the procurement process for both buyers and
suppliers. E-Sourcing is the strategic activity conducted by the procurement
professional to establish, manage and monitor a compliant contract. These contracts
are made available and accessed through the use of tactical Purchase 2 Pay (P2P)

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solutions generating transactional management information. It covers those parts of the

buying process, which are at the discretion of the specialist buyers, which includes
Knowledge such as competence analysis, spend analysis, specification, Request for
Quotation/ e-Tender / e-Auction and contract evaluation and negotiation, tracking,
forecasting and monitoring savings. OR

A form of sourcing where the purchase of goods and services are coursed through the
Internet. Since the Internet enables firms to have access to a wide variety of goods and
services, e-sourcing can help managers make better decisions in terms of costs and
quality. Electronic sourcing can be effected through:-
Electronic tendering (e – tendering)
This is achieved through the use of e – PPs portal to facilitate the complete tendering
processes which include advertising, submission, evaluation and award of contract for
supply of goods or services. e – PPs portal means a single web portal from where and
through which procuring entities perform all or some of their e – procurement related
functions which include; publishing of annual procurement plans, invitation of tenders,
request for quotation, tender proposal submission, tender opening, evaluation, auction,
contract award notices, contract management and e – payments.

Electronic catalogues (E – catalogues)

An electronic catalogue is a web page that provides information on products and
services offered and sold by a vendor and supports online ordering and payment
capabilities

3. Electronic evaluation (e – evaluation)

Electronic Tender Evaluation (E - TE) is a web based method developed to facilitate
tender evaluation processes based on best tendering practices to save time and money.

4. Electronic ordering (e – ordering)

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Electronic ordering is a more efficient way of placing an order. With electronic ordering,
you place orders via the Internet or by using a more structured order system such as
Electronic Data Interchange (EDI).

5. Electronic receiving (e – receiving)

Electronic receiving is a way for the suppliers to supply details of shipment to the
customer who is receiving a shipment in an electronic format. If you are using mod2
software, you want to manage and know the details of your inventory in detail. Rather
than manually typing in roll yardages for each shipment from your supplier, you could
automate the task by asking your supplier to send you the spread sheet file using any
available method, such as emailing, burning on CD, copying on a floppy disk or any
other suitable electronic storage media.
Benefits
i. To speed-up data entry
ii. More accurate data entry
iii. Easier to use.

6. Electronic payment (e – payment)

An electronic payment is any kind of non-cash payment that doesn't involve a paper
check. Methods of electronic payments include;

i. credit cards
ii. debit cards
iii. The ACH (Automated Clearing House) network. The ACH system comprises
direct deposit, direct debit and electronic checks (e-checks).

Electronic payment is very convenient for the consumer. In most cases, you only need
to enter your account information, such as your credit card number and shipping
address. The information is then stored in a database on the retailer's Web server.
When you come back to the Web site, you just log in with your username and

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password. Completing a transaction is as simple as clicking your mouse: All you have to
do is confirm your purchase and you're done.

Benefits

i. Electronic payment lowers costs for businesses

The more payments they can process electronically, the less they spend on
paper and postage.

ii. Help businesses improve customer retention

A customer is more likely to return to the same e-commerce site where his or her
information has already been entered and stored.

Drawbacks

The main drawbacks to electronic payments are concerns over privacy and the
possibility of identity theft. Fortunately, there are many safeguards available to protect
your sensitive personal information from falling into the wrong hands.

You can defend yourself against identity theft by using virus protection software and a
firewall on your computer. You should also make sure that you send your credit card
information over a secure server. Your Internet browser will notify you when a server is
secure by showing a lock or key icon. In addition, the URL on a secure site is usually
designated by the prefix "https" instead of "http." Retailers do their part by using data
encryption, which codes your information in such a way that only the key holder can
decode it.

E – WAREHOUSING AND STORAGE

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Warehouse Management System (WMS)

Is a software application that supports the day-to-day operations in a
warehouse. WMS programs enable centralized management of tasks such as
tracking inventory levels and stock locations.It carries out functions such as
planning commands and running day to day operations of a warehouse. This
system covers areas such as receipt of goods, allocation of storage locations,
and inventory replenishment of picking locations, generation of picking lists,
order picking and issue of goods. These systems also keep track of inventory
in warehouses.
Warehouse management systems often utilize automatic identification and
data capture technology, such as barcode scanners, mobile computers,
wireless LANs and potentially radio-frequency identification (RFID) to
efficiently monitor the flow of products.

BARCODING
A barcode is an optical, machine-readable, representation of data, the data
usually describes something about the object that carries the barcode. The
most familiar example of the use of barcodes is electronic point of sale
(EPOS), which is when retail sales are recorded by scanning product
barcodes at checkout tills. An EPOS system verifies, checks and charges
transactions, provides instant sales reports, monitors and changes prices
and sends intra and inter store messages and data.
Also this technique facilitates material entry or supplies tracking where a
scanner can read about the materials details for purpose of identification,
tagging, tracing and tracking. It aids faster entry of material, reduces traffic
congestion at material inward gate, and reduces errors made during manual
entry of material.

Uses of Barcode in Warehouse Context

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i. Transmitting information to the inventory systems

ii. Tracking deliveries in transit
iii. Recording issues of items from stock
iv. Recording outgoing deliveries

Uses/Applications of Production Barcoding

i. Counting raw materials and finished goods inventories
ii. Automatic sorting of cartons and bins on conveyor belts and
palletisers
iii. Lot tracking
iv. Production reporting
v. Automatic warehouse application, including receiving, put away,
picking and shipping
vi. Identification of production bottlenecks
vii. Package tracking
viii. Access control
ix. Tool cribs and spare parts issue

Benefits of Barcoding
i. Faster data entry
ii. Greater accuracy
iii. Reduce labour costs
iv. Better decision making
v. Faster access to information
vi. Ability to automate warehouse
vii. Greater responsiveness to customers and suppliers

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RADIO FREQUENCE IDENTIFICATION (RFID)

Is an IT technology that is used in manufacturing, logistics, supply chain
management and inventory control. They are used for automatic object
identification. The RFID systems have radio frequency tags that are used for
transmitting resident data; the tags have a unique serial number for identify
each product. The data transmitted in the RFID can be read automatically.
RFID tools are very common among airports, shipping companies,
transporters and manufacturing firms that have high value items. RFID
assists in providing operational efficiencies and improved stock level
transparency in short shelf-life products distribution. RFID also assists in
managing cargo that travel by air. Freighters are able to know where their
cargo is due to the tags attached to the pallets and containers and a logistic
manager can easily monitor and control cargo movement. There is also less
delay and avoidance of misplacing items thus providing efficient and high
quality service

Uses of RFID
i. Captures goods inward information accurately
ii. Records stock movements
iii. Maintains stock balances
iv. Can trigger automatic replenishment

Benefits of RFID

i. Line of sight tags can be read without being visible to the scanner
ii. Range tags can be read over a very long range – many hundreds of
metres in the case of specialized tags.
iii. Bulk read within short period of time
iv. Selectivity
v. Durability

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E-RECEIPTS
The e-Procurement system must also be capable of automatically producing
and delivering goods and services receipts upon delivery when appropriate.
To enable this, the system should integrate with barcode or RFID scanners
to allow for automatic recognition of delivered goods. This system should
support the following functions;
i. Receive goods from upstream suppliers
ii. Identification of goods, matching them to orders and finding their
intended use
iii. Unload materials from delivery vehicles
iv. Assemble goods in goods receipt area
v. Check quantity, quality and condition
vi. Label materials/goods/pallets (bar codes etc.)
vii. Sort as needed
viii. Move to storage location/holding area (e.g. quarantine)/any cross-
docking activity

AUTOMATED LOADING/UNLOADING SYSTEMS

These are automated systems available that can unload and load all the
pallets on a vehicle simultaneously. These require special trailer units (e.g.
fitted with rollers or tracks) and are therefore best suited to shuttle
journeys, for examples between a manufacturing plant and its associated
distribution centre.

SORTING

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If goods have batch-picked, then they will need to be sorted into the
relevant customer orders. This may be undertaken manually (e.g. sorting to
pigeon-hole or to roll-cage pallet) or by automated sortation equipment.
Similarly, goods that have been zone-picked will need to be brought
together into the relevant orders. This may be a much simpler operations
(i.e. depending on the number of zones) but may still be undertaken either
manually or with the assistance of some form of conveyorized sortation.
Sortation may occur immediately after picking so that items can be
assembled into the appropriate orders may ready for packing or dispatch.
Where there is a separate packing operation, sortation may also occur after
packing so that the packed goods can be assembled into vehicle loads.
Mechanized sortation can be undertaken as an integral part of conveyor
systems. For example, a conveyor may sort to different packing stations by
means of pop up wheels that are raised when the required case goes past a
conveyor spur. The wheels are then powered at that moment and the case is
diverted down that spur.
High-speed sortation systems normally use a continuous loop conveyor
moving between off-take chutes or conveyors set around both sides of the
main conveyor. Items for sortation, or for routing to order accumulation
points, are fed on to the continuous conveyors, and as they arrive opposite
off-take point are automatically diverted to link up with other items for the
same destination. These systems are computer-controlled and depend on
some form of machine-readable coding systems, such as bar codes, to
identify individual items or groups of items as they move round the
conveyor, so that they can be diverted down the correct off-take lines.
Alternatively, there can be manual in-feed stations where goods are placed
on to the conveyor and data concerning the SKU are fed in manually.
Sortation systems give very high rates of sort/pick, and are used in some

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cross-docking applications. These are a number of such systems available

including;-

i. Sliding shoe sorters

There are ‘shoes’ located at the edge of the conveyor. When the goods
reach the appropriate destination point, the shoes slide across to
divert the goods down that spur. These are suitable for cartons and
tope bins of regular shape and reasonable rigidity. Typical operating
rate are 4,000 to 6,000 sorts per hour.

ii. Bomb-bay sorters

Theses hold goods in receptacles that opening bottom releasing the
goods in the same way as a ‘bomb-bay” on an aeroplane. These are
suitable for goods that may be dropped vertically, for example, small
packages into mail bags for postcode sortation. Advantage of this type
of sorter is that less space is needed as there are no chutes or
conveyors to either sides of the sorter. A typical throughput rate is up
to about 6,000 sorts per hour.

iii. Tilt-tray sorters

Tilting conveyors are usually laid out in horizontal carousel
configuration, with a series of tilting trays or slats fitted to a conveying
chain, and capable of tipping loads off or right to branch conveyors to
off-take chutes. The slats can be tilted singly or multiples according to
sizes of load being handle. Tilting conveyors are used for high-speed
sortation operations, such as parcel distribution, and for some cross-
docking installations. The effectiveness and speed of these applications
depend on information technology and coding systems such as bar

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codes. Each load is identified as it enters the system, which then

instructs the conveyor to discharge the load to its designated
destination. Sorting rates typically quoted are between 10,000 and
15,000 units per hour per installation, but the rate is dependent off-
take chutes or conveyors. The sorters are suitable for a wide range of
products with non-stick bases, although normally the items conveyed
should be of a similar weight.

iv. Cross-belt sorters

These comprise a series of mini-conveyor belts aligned at 90 degrees
to the direction of the travel. The appropriate mini-conveyors belt
starts up when the item reaches the required off-take destination
point. This forms a positive movement and is therefore suitable for a
wide range of items. Sort rate are similar to those of tilt-tray systems.

DATA CAPTURE AND TRANSMISSION

Data capture is also termed as Data collection. Normally data originates in
the form of events transaction or some observations. The data is then
recorded in some usable form. Data may be initially recorded on paper
source documents and then converted into a machine usable form for
processing. Alternatively, they may be recorded by a direct input device in a
paperless, machine-readable form through scanning, taping or recording.
An integral part of exploiting the benefits of computer packages is the data
capture and communication systems to which they are linked. Data capture
and transfer can be accomplished by a number of techniques. These
techniques are;-

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i. Bar codes
The most widely used technique in warehousing is bar-coding, which
represents number and letters in printed bar form and is machine-
readable by appropriate scanning equipment. It is a fast and accurate
technology, and fairly robust. There is various different bar-code type or
‘symbologies’. In warehousing, bar- coding is used to identify goods and
verify stock locations.
It allows goods to be sorted and routed through a handling system,
and enables them to be tracked as they move through the system. It
simplifies stock checking and many other data input and capture
requirements. Bar code labels are cheap, although they can be damaged
by scuffing and the technology is established, reliable and fast. Normal
bar codes can only provide a few digits of data, such as a product code or
a pallet identification code.
There are two-dimensional bar codes available and as the name
suggests, there are scanned in two directions simultaneously. These can
hold hundreds of numbers or characters, but their use is not widespread,
as special scanners are required at each stage in the supply chain and
commonly standards are not fully established. There are, however, used
in ‘closed-loop’ situations.

ii. Optical character recognition (OCR)

OCR technology uses labels that are both machine and end human-
readable. It is appropriate in applications such as documents handling
and interrogation and text scanning.

iii. Radio frequency identification (RFID)

RFID is being applied increasingly in supply chain for tracking of unit
loads (such as roll-cage and tote bins), for cartons identification (eg in

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trials food retailers and parcel carriers) and for security and other
purposes at item level (e.g. for high-value goods). As the name
suggested RFID is basically the identification of items by means of radio
waves.
There are normally four components of such system;-
A tag
Which is affixed to the goods or container-this normally comprises a
microchip and an antenna and May, or may not, contain a battery
(depending on whether it is ‘active’ or a ‘passive’ tag.

An antenna
Which receives the data from the tags (and may also emit to it).

A reader
Which reads the data received by the antenna.

A host station,
Which contains the application software ad relays the data to the server
or middleware.
iv. Voice data recognition-
Is a system of data capture in which the sound of operator’s voice are
recognized and interpreted by the system. The system presents.

STOCK HANDLING AND RETRIEVAL

AUTOMETED STORAGE (AS) AND RETRIEVAL SYSTEM (RS)
AS/RS systems are devices designed for automated storage and retrieval of
parts and items in manufacturing, distribution, retail, wholesale and
institutions. They focus on bringing "goods to the man" rather than manual

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walking and searching. It consists of a variety of computer-controlled

methods for automatically placing and retrieving loads from specific storage
locations.

Benefits of AS/RS
i. Space savings
ii. Increased productivity/reduced labor
iii. Increased accuracy
iv. Reduced inventory levels

Store Requisition Generation

Generate requisitions from low stock levels to automatically create

requisitions based on a stock replenishment method and specified generation
options. The system provides four stock replenishment methods: Min, Max,
Reorder Level, and On-Demand.

To generate requisitions from low stock, the system examines current stock
levels in stores, reserved items and items specified on requisitions, purchase
orders, and in transit. The system then generates a default requisition for all
items below the acceptable level to reach the specified stock level for the
items. The system will either generate a requisition for a standard order
quantity until the specified stock level is reached, or it will simply order the
necessary number of items depending on the information you have specified
for the stock record.

Note: If you are using the On-Demand method, there is no minimum

quantity of the items to maintain. The system generates a requisition for the

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item when there is demand for the item or there is a reservation for the
item, but there is no enough items in stock to fill the reservation.

Order Receipts and Picking Slip Document Generation (E-PICKING)

Manual picking systems require a person to pick the individual items that
make up an order. This is not surprising the range of items that may need to
be picked and the different ways in which they may rest in the picking
locations. However, there are automated picking systems available that are
suitable for certain applications. These include the following;-
i. Layer pickers
Cases are normally stacked on to pallets in layers. In some industries, such
as fast-moving consumer goods, price differentials are offered to customers
based on whether they order in pallet layer or case quantities. In such cases,
it may be beneficial to automate the picking of layer quantities. Typically, a
pallet is brought forward from the reserve pallet store (AS/RS and
conveyors) to a layer picking machine. This machine would lift the top layer
off and place it on to a pallet that is being assembled for the customer order.
The product pallet would be returned to the reserve store and another pallet
would be brought forward and the process repeated until the customer pallet
is filled with all the layers required.

ii. Dispenser
These typically comprise two lines of near- vertical magazines positioned
over a conveyor in the shape of ‘A’- hence, the common name of a-frame
dispensers. Each magazine contains a single SKU with the individual items or
cartons stacked vertically. This equipment is well suited to small items of a
regular shape or size (small pharmaceutical cartons, toothpaste in cartons
e.t.c). The item may be dispensed automatically from the magazines into a
tote bin as it passes on the conveyor below. This tote bin may represent a

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customer orders and then be conveyed directly to packing. Alternatively, the

items may be dispensed directly onto the conveyor, either for subsequent
sortation or a specified length of conveyor belt may be reserved by the
computer system for an order and items are then dispensed onto this length
which then tips them into a packing case or similar receptacle at the end of
conveyor. Although the picking is completely automatic, the replenishment
operation, to refill the magazines, is manual.
iii. Robotic applications-Robots are not commonly used for actually picking
goods from pallets, cases or tote bins, although there are some
equipment types on the market generally using gripper or sanction pads
to do this. A more common use in supply chains is at the of production
lines to stock cases onto pallets in line with designated patterns that
maximum the pallet space and provide good stability during transit. A
similar application that may be found in warehouses is to stack tote bins
onto pallets ready for dispatch.
iv. Voice directed picking
With this technology, the picker can hear voice instructions from the
computer through a headset. The picker then selects the required items and
speaks through a microphone to confirm the pick. Frequently, a check digit
located at each location needs to be repeated by the picker to ensure that
the goods have been picked from the correct location. As with pick by light,
this system completely frees the picker’s hands and thus facilitates high pick
rates. This technology offers improvements in productivity while maintaining
high levels of accuracy.

v. Pick by light
Normally in this system, every picking location is fitted with a light-emitting
diode (LED) display pane, controlled by computer. A common application is
for a plastic tote bins, representing a customer order, to be taken by
conveyor to a specific zone of warehouse. The bar code on the route tote bin

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is read, and the appropriate LED panels illuminate, showing the quantities of
items to be picked for all Store-Keeping Units (SKUs) required for that order.
Having picked the items, the picker presses a cancel button and then uses
the conveyor to pass the bin to the next zone. This process continues until
order completion. This method can give high pick rate and very high levels
of picking accuracy.

E- Labeling
Is the provision of information relating to the product through the software
rather than etching labels containing certification information on the outside
body of the product/item.

Benefits of E- Labeling
i. More information to the customer
ii. Details regarding warranties and recycling can be easily added by
manufacturers
iii. E- labels can be updated remotely to address any inaccuracies e.g.
typographical errors
iv. Cost saving

E- Kitting

Kit is a set of things, such as tools or clothes, used for a particular purpose
or activity. Kitting is the process of producing "Production Ready" kits of any
components required to manufacture a predefined quantity of a component.

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Paragon delivers a unique approach to electronic component kitting services

and is the acknowledged market leader in electronics supply chain
management. They take responsibility from bill of materials (BOM) inception
to the supply of assembly ready kits all the way to the machine feeder and
beyond. They deal with all aspects of procurement and component
preparation, including Moistures Sensitive Devices and have developed
vigorous processes to identify counterfeit component.

With their proprietary Total Component Management™ service (TCM®)

they have taken the concepts of electronics supply chain management and
kitting to a whole new level, ensuring that their customers receive complete,
assembly-ready kits when and where they are needed.

Starting with a customer's BOM they load this on to their sophisticated

computer system and commence their verification processes where they can
check things like component lifecycle information, supersessions and/or
obsolescence notifications, plus typical availability, manufacturers lead-times
and supply chain options.

E- Invoicing

Electronic invoicing (also called e-invoicing) is a form of electronic billing. E-

invoicing methods are used by trading partners, such as customers and their
suppliers, to present and monitor transactional documents between one
another and ensure the terms of their trading agreements are being met.

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