Some companies spend huge amounts of money on new websites every couple years. However, the backend operations are running the same way as they were years ago, with conventional, manual processes and systems.
With e-commerce’s small orders, companies need to be extremely efficient so that profits are not eroded by operational costs that don’t improve on a cost per order basis as order volumes increase.
As we consult with omnichannel companies, sometimes we see companies wanting to know what benefits there will be from automation, but they don’t have solid warehouse processes and systems as a foundation. Warehouse Management Systems (WMS) and automation are not an “either/or” decision. There are dozens of benefits to WMS and automation when considered separately. To get the highest benefits you need to consider the synergy of the two together. This blog illustrates the primary synergy and discusses a plan for evaluating for your business.
Synergies Created By Combining Warehouse Management Systems and Automation
Here are seven categories of benefits:
1. Efficiency and cost reduction
Management, direct labor, indirect labor and benefits are 60% to 80% of the cost per order, not including facility/occupancy costs and packing materials. Efficient automation will allow you to process more orders with less people, and at a lower incremental cost. The design of the automation will reduce steps in the process. Automation increases the work pace.
Automation can make multiple shifts more efficient; or it may reduce hourly employees required and supervision required to one shift. Reduction in overtime and shift differential pay are possible.
From a human factors aspect, automation can lower the risk of injury and decrease physically repetitive activities that can lead to injury.
Automation is the delivery mechanism to lower costs, but a WMS with Labor Management modules will be required to plan, schedule, manage, measure productivity and control labor costs throughout.
2. Optimizing Throughput
Planning automation deployment requires you to reconsider all the processes and streamline them. Automation will speed up order fulfillment and lead to the optimization of human and automation assets.
WMS will give you the visibility of the production line and all the processes for incoming product; product put away; picking, packing and shipping processes; and return processing.
3. Order accuracy
Conventional warehouses with minimal use of barcoding and automation may have an order accuracy of 98% or less. However, deploying automation in concert with WMS will achieve 99.99%. Consider the cost of an error at $35 to $50; or worse, losing a customer from errors.
Read: 9 Questions About Fulfillment Center Automation
4. Reducing order cycle time
Reducing order cycle time with near perfect accuracy strengthens the customer relationship.
5. Control of warehouse inventories
Both WMS and automation require bar coded inventory throughout the processes, on all products, locations, etc. Online and real time processing will eliminate human errors in tracking warehouse inventory. Automation uses and provides data, but WMS provides the trackability.
6. Product storage and space savings
Automation and WMS both help better manage the product locations. Automation will allow you to optimize the space required in the warehouse. Examples include automated sortation, automated box machines, overhead scanners, weigh-in-motion and robots in picking for instance.
WMS will improve inventory turnover, provide inventory audit trail by product and location, optimize inventory levels and give visibility throughout the Supply Chain.
7. Improved management planning and control
Visibility throughout warehouse processes and across the Supply Chain will be the WMS orientation. It allows for historical analysis of inventory and processes, and shares data across Supply Chain partners. In an integrated and automated warehouse environment each movement is tracked and visible. In conventional warehouses, assembling data for planning and analyses is largely manual and spreadsheet oriented.
Read: Assessing and Applying the Proper Level of Automation in Your Warehouse
Developing a plan
- Conduct an assessment. Start with an operational assessment across the Supply Chain from purchasing product, receiving product, tracking inventory, order fulfillment, returns processing, adjustments within the warehouse, planning and control of labor through the processes, etc. Where can your business benefit from WMS and automation?
- Determine phasing of technology implementation. What are the foundational technologies that you must have in place in order to further deploy automation? For example, full implementation of bar code technology is needed to introduce WMS and automation. Do you have solid operational information systems such as WMS or ERP as a foundation?
- Develop high level schedule. Recognize that depending where your company is in the WMS and automation curve, it is typically a multi-year process to implement.
- Develop a high level annual investment budget to implement.
- Determine ROI based on tangible savings and itemize the intangibles to be gained.
Synergistically, warehouse management systems and automation will bring great benefits to your operation. It’s a major project to plan and manage. Each company needs to assess how efficient and operationally competitive they are and will remain.
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