Y2K and Warehousing
' May 1, 1998
Y2K and Warehousing:
Could this lead to out-of-this-world storage charges?
Steve Salkin, Web Editor
For some businesses, the issues that arise with the turn of
the century are just entering the minds of top executives.
For others, the issue was recently resolved or a process
to become Year 2000 (Y2K) compliant has begun. For
most in the warehousing industry, however, the process is
already finished -- or at least should be.
Failure to be compliant could result in a warehouse
management system (WMS) interpreting a contract that
began in 1999 as 99 years old in 2000, which could lead
to out-of-this-world storage charges and a lot of unhappy
customers. The WMS may also designate certain
inventory as obsolete due to the large time lapse (or
vice-versa). Add in the fact that 2000 happens to be a
leap year, and the potential for trouble multiplies.
"For warehousing and logistics, 2000 isn't the magic
date," says International Warehouse Logistics Association
(IWLA) President Mike Jenkins. "The magic date has
come and gone due to the number of customers with
date-sensitive products that expire after 2000."
Warehouses storing products such as food or
pharmaceuticals fall into this category.
There are also warehouses that store products that cannot
be sold until a certain date. Certain chemical products
need time to incubate before they can be sold. Margarine
is one example of this type of product. Instead of an
expiration date, these products have a "first sell" date.
Regardless of what they store, warehouses that store and
distribute date-sensitive products should have already
addressed the Y2K issue. Those that haven't will need
"some sort of heroic intervention," Jenkins says.
Handling It All
Warehouses have Y2K considerations absent in other
industries. Warehousing managers not only need to worry
about whether their own systems are compliant, but their
customers' as well.
Warehouse Education and Research Council (WERC)
Executive Director Tom Sharpe says that while
warehouses may be ready, it's only half the battle: "A
warehouse could have a totally compliant system, but
interface with customers who aren't, which still means
trouble for the warehouse. I'm not convinced anyone can
say `If I take care of all my systems, I'm safe.' It won't
do any good if you're isolated."
Warehouses have to be ready for anything. This is
especially so for the public and contract warehouses that
make up IWLA's membership. "Most public and contract
warehouses are ready while their customers either aren't
or haven't even thought of it yet," Jenkins says.
A warehouse also has to consider contracts and
agreements it is involved with, such as real estate,
equipment and inventory deals. A warehouse may have a
lease that runs month-to-month. There may be an
agreement to house a customer's inventory indefinitely, or
buy a certain number of a manufacturer's lift trucks for the
next 10 years. These sort of agreements need to be
reexamined to ensure that they do not reflect a 1999
expiration (unless of course they're supposed to).
If You're Not Ready.
But what about those warehouses that have not yet dealt
with Y2K issues?
IWLA is working with a few WMS providers to keep
informed of what they are doing to retrofit and upgrade
their systems. Most software developers are including a
Y2K fix with a generic upgrade. Some are charging more
for these upgrades because of the fix, but those in it for
the long-haul "are being heads-up and classy about it,"
Jenkins says. "But there are always companies out there
trying to make a buck."
WERC has made Warehouse Systems and the Year
2000: What You Need to Do Now!, a special report
authored by Dr. Kevin Boberg, associate professor of
marketing and transportation at New Mexico State
University, available for free on its web site
(www.werc.org/year2000). The report details the
dimensions of the Y2K problem and sets out some key
dates and transactions warehouses need to know. WERC
is offering this report, initially available only to members,
to the general public, "because our board felt we have an
ethical obligation to share this information."
Warehousing as a whole is on top of the Y2K problem.
But then again, staying on the leading edge of technology
is nothing new for warehouses. Jenkins compared the
Y2K situation with other technologies that saw initial
acceptance in the warehouse, such as barcoding and
radio frequency identification. While less than half of
IWLA members' customers are barcode-capable, he
says, most of the warehouses are.
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