Space management is a big deal! Your warehouse (or vault as I like to refer to it) has only so many square feet. You need to utilize the space to its fullest potential. In part 5 of my series of blogs on the 4 simple ways to pay for a warehouse management system I will discuss how a WMS (warehouse management system) can help you use your space and save you money.
A WMS should improve space usage through improved inventory placement and tracking. Because the WMS gives you a full view of your warehouse and where your items are, which ones are moving and which ones aren’t you can manipulate your stock with ease. Putting the fast items in locations that are readily available for picking and replenishment. You will have full visibility of where empty slots or bins are in order to put products away. You can mix pallets and use pallet license plates to identify with one scan what is stored on the pallet in the slot it is assigned to. This can be a big space saving technique. Here are some other areas where savings can be derived
- Eliminate existing overflow space (this is usually a second location used solely to store items that won’t fit in your main location)
- Reduced transport costs with elimination of overflow space
- Avoid or greatly delay new construction of additional space or move to bigger space
When you can use the space you have more efficiently this allows you to reduce the space used for existing inventory. Because a WMS allows you to reduce your on hand inventory levels this saves you money in carrying costs and purchases.
We had one customer put off the need to build on to their distribution center by nearly 4 years. And when they did it was in order to do more fulfillment work which had a very positive impact on their profits. Warehouse space is expensive so use what you have in the best possible way. A WMS will certainly help you do this.
It a Matter of Time
Over the last 5 posts I have reviewed the 4 simple ways a WMS can be paid for. The time for achieving a return on investment (ROI) of an investment in a warehouse management solution should be very short. Many companies find that the system can pay for itself in as little as 6 to nine months. A good average to plan on is 12 to 18 months. Once you have reached the break even point all the found money flows directly to your bottom line and it can be thousands of dollars each month. What could you do to grow your business with an extra 5 or 10 or 20,000 dollars each and every month.
Wouldn’t You Like to Know
As you can see a warehouse management solution reduces labor costs, improves space utilization and reduces inventory cost. The big question to ask yourself is “By how much”. Each business is different, you should investigate how a WMS would fit into you business. We recommend that you work with a company with a great deal of experience in how a WMS works and how a warehouse operations functions. We suggest engaging with a organization that will collect, compile and total all the information and provide you with a sound useful and believable ROI. Once you have done this the decision to purchase and implement a WMS should be very clear.
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