Most companies want to improve their operations and become more efficient. The desire and need to improve is there. However, their systems are holding them back. FCBCO sees time and time again during operational assessments, the majority of the recommendations for becoming more efficient and moving to the next level operationally, cannot be implemented without implementing a new system. The right Warehouse Management System (WMS) for your company makes improvement possible through stronger functionality and improved warehousing processes.
We often get the question from our smaller clients, “At what point should we consider investing in a WMS?” WMS’s have come a long way in terms of functionality and options for deploying systems. There are many more viable financial options than ever before.
Here are the seven indicators many of our clients experienced that lead them to invest in a WMS:
1. When your order processing system starts to hold you back
Accounting, shipping systems and manufacturing systems have order processing functions for small order volumes. However, they can become a hinderance as order volumes grow and cannot scale to increased volumes.
They also were not designed to efficiently support all of the processes involved with inbound product and order picking. If these are the types of systems being utilized as the “WMS”, major issues begin to arise. It may be time to invest in a true WMS.
2. When reliant on manual, paper-based and keyed information systems
When systems and processes are dependent on writing down transactions and manual keying (e.g. warehouse replenishment moves, order picks), errors result from mis-reading handwriting, keying and transcription errors, editing errors and manual filing of paperwork. This can easily add as much as 5% error to results.
Such systems generally are not on-line, real time entry and control that WMS provides. These systems lack the timeliness needed in warehouse processing today. Additionally, this drastically drives up labor costs due to the time-consuming nature of the process. Investing in a WMS with scanning and handheld device capabilities allows for real time updated accurate information and the elimination of paper across the warehouse.
3. When barcode processes are needed
Scanning and barcoding goes hand in hand. Barcodes are used to identify physical locations, SKUs and other data entry shortcuts (e.g. box sizes). Barcodes allow for increased accuracy as well as increased speed in scanned data entry. Barcoding should be used for receiving, put-away, replenishment, picking verification, pack verification, returns and many other processes within the warehouse. Bar codes are necessary for more advanced automation and technology.
4. When you find yourself needing a robust location naming schema
Without a detailed location naming schema, it can be hard to locate product. Many companies may have “locations” that encompass a large area (such as an aisle or bay) that may have many SKUs associated with it. If you needed to quickly find a specific SKU, you have narrowed its location down to a large area. Good luck from then on.
A WMS allows for detailed location naming schemas. By having locations created with multiple levels (e.g. warehouse, zone, aisle, level, bin and slot), with each level getting more detailed to where the product is located, the inventory accuracy, integrity and ability to locate product quickly is greatly increased.
5. When labor to pick orders is growing and causing cost per order issues
When you are only able to pick one order at a time, processing more orders means using more labor. Without the ability to look at the orders from a macro level, being able to sort out express orders, segregate all single line orders, and batch orders together into one pick is not easily achieved.
A WMS allows you to organize the picking for more efficiency depending on the criteria entered and assignment to an employee. Picking multiple orders at once with order batching criteria setup within a system saves time and reduces labor spend.
6. When replenishment functionality is needed
When 100% of the product can no longer be stored in a single location, having multiple locations with the same SKU becomes essential. Systems that can only have a single stock location often require cumbersome work arounds. A pick slot with a portion of the inventory is needed with the rest in separate reserve location(s).
With this comes several different scenarios that need to be resolved. When is it time to initiate a replenishment move? Which reserve location do you replenish from first? Trying to perform these tasks manually will introduce errors and consume a lot of time. A WMS can easily control this functionality utilizing FIFO logic and different replenishment routines such as min/max replenishment.
7. When productivity tracking is required to control labor
As headcount continues to grow, it becomes more difficult to manually track how your employees are utilizing their time and how productive they are in the tasks they are assigned. Especially in picking, where typically the most amount of labor is spent, being able to track which orders an employee is picking and how long they are taking to pick them is the basis for controlling costs.
A WMS is great way to accomplish this and provide you with the information necessary to begin driving up pick rates and productivity.
Summary
It is important for companies to recognize when technology and older generation systems are holding them back and causing operations to suffer. The right WMS for most companies will take operations to the next level, allowing you to become more efficient and save on labor costs. These indicators are common for many companies investing in their first WMS. Use these as check points as you consider a WMS.
Involve key departments such as purchasing, accounting and inventory control as you consider how the appropriate WMS can improve company systems use and results (e.g. more accurate inventory, reduced errors and timely paperwork). Their involvement will improve the return on investment analysis and gain buy-in for the project.
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