How does a Warehouse Management System (WMS) help companies increase their profitability? If you think about it, the warehouse is the nerve center of a wholesale distribution company. The company exists to buy and sell inventory, and to do it is such a way as to produce a profit. Seems like a simple business model, doesn’t it?
Well, add into that simple business model the concept of a supply chain that extends halfway around the world, customers that have increasing expectations of service, the need for competitive pricing and an internal operation that can handle only so much volume before it appears to be operating in reverse. All of a sudden that “simple business model” starts to feel far more complex.
The Enterprise Resource Planning (ERP) system world has focused for years on efficiently handling accounting transactions, getting Purchase Orders and Sales Orders entered and processed, integrating with Planning and Forecasting systems and connecting to the eCommerce and EDI worlds. If you think about it, for the last 30 years there has been a focus on making everything that surrounds the warehouse more efficient, and not enough time looking inside the warehouse to see how to make it more efficient.
There are four key features of a properly configured and implemented WMS that will increase a company’s profitability:
- Inventory Accuracy – not just at the quantity level but also on a location level. Being able to find a product in the warehouse, because knowing the item’s location ahead of time, is far more efficient than looking around for it.
- Real Time Transaction Processing – using Bar Code Scanning on wireless handheld scanners provides instant inventory visibility and availability to the customer service team as they are trying to meet their customers’ needs. It will also improve fill rates on sales order shipments since the system has the most up to date availability information to commit to customer orders as they are processed. This improves customer satisfaction.
- System Directed Activities to Improve Labor Productivity – using a properly configured warehouse layout with the travel routes optimized to minimize travel time, a WMS will direct and guide the warehouse personnel through their inventory put-away, picking and cycle counting activities in the most efficient way possible. Using this approach, it is possible to pick up over 25% to 30% in labor savings in the warehouse.
- Eliminate Shipping Errors – since the WMS confirms picking and shipping against the Sales Order that the customer placed, the possibility of picking and shipping the wrong items is virtually eliminated. Industry standards state that a shipping error can cost up to $300 per occurrence to remedy … and that doesn’t include the hit to customer service that the company takes.
Think about these four areas of your company. What would an improvement in each one of these areas mean to your bottom line? Contact us and we’ll help you mine the profits hidden in your warehouse.