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The Importance of Warehouse Inventory Accuracy

As supply chains continue to get more automated to streamline inventory, through the use of technology and utilizing best practices in operations, accuracy naturally beings to improve.  However, not every warehouse is automated and for various reason, If the physical inventory “on the books” and the physical inventory in a warehouse do not match, the situation is often chaotic.  For example, when a picker goes to retrieve a part and it is not there (or not enough is there), a series of manual checks and back tracking must be completed to fix the problem and get the order out the door.   The importance of warehouse inventory accuracy cannot be underestimated when you consider that your inventory could be the largest asset to a company.  Inaccurate inventory record accuracy results in having wide impact on other system  and areas in warehousing including:

  • Poor buying practices and excess safety stock associated to buyers lack of confidence in record accuracy.
  • Delays in order fulfillment associated to lost or misplaced product.
  • Lost sales due to stock outs and over commitments.
  • Costs associated to placing and managing back orders.
  • Lower labor productivity associated to searching for lost product.
  • Potentially higher freight costs resulting from expediting shipments to customers.

These issues could result in excess inventory, which ties up capital and negatively impacts capacity. The results are higher costs, low productivity and bad customer service. The self-checking nature of  advanced warehousing technology such as Warehouse Management Systems or WMS, in addition to a good cycle counting program, ensures inventory accuracy of 99+%. This high level of inventory accuracy is the foundation for a majority of the other benefits realized in using a WMS.

Learn more about Benefits of Warehouse Management Systems


How WMS Software Can Save Money for your Company

Warehouse Technology Systems, commonly called Warehouse Management Systems (WMS), are designed to make the movement of inventory in and out of the warehouse as efficient as possible. Through advanced functionality such as different inventory picking options, lot and serial management, cycle counting, bin placement,  space management, ERP to WMS integration and others; warehouse management improvements can be realized that can offer significant savings from having increase accuracy, fewer errors and reduce labor cost.

Increased Accuracy-If the physical inventory “on the books” and the physical inventory in a warehouse do not match, the situation is often chaotic. When a warehouse picker goes to retrieve a part and it is not there (or not enough is there), a series of manual checks and back tracking must be completed to fix the problem and get the order out the door. Inaccurate inventory results can have broad consequences including:Savings

  • Poor buying practices and excess safety stock associated to buyers lack of confidence in record accuracy
  • Delays in order fulfillment associated to lost or misplaced product
  • Lost sales due to stock outs and over commitments
  • Costs associated to placing and managing back orders
  • Lower labor productivity associated to searching for lost product
  • Potentially higher freight costs resulting from expediting shipments to customers

Example: These issues could result in excess inventory, which ties up capital and negatively impacts capacity. The results are higher costs, low productivity and bad customer service. The self-checking nature of a WMS, in addition to a good cycle counting program, ensures inventory accuracy of 99.9%. This high level of inventory accuracy is the foundation for a majority of the other benefits realized in using a WMS. Inventory may be the highest asset in your company.  What is the financial impact of 95% inventory accuracy compared to 99.9% over the course of a month or year?

Fewer Errors-A real-time Radio Frequency (RF), ie. Hand Held Bar Code Scanning driven WMS is self-checking. As transactions occur, the system verifies the activity and may even prompt the user with a question if the system detects a potential problem. In a paper-based environment, errors are common across all functional areas. The impact of an error in one function is amplified throughout the overall operation. An error in receiving (wrong product number, wrong quantity, etc.) will create potential delays across many operations.

Example: Let’s assume 20 cases of part A are received as 200 cases, a put-a-way operator may spend considerable time searching for the extra 180 cases. In a non-automated environment, it is common to have operators putting away whatever product is in a staging queue without checking product numbers or quantities. In this instance, the
quantity error in receiving will get pushed even further downstream as operators are sent to pick 40 cases from the
load with only 20 cases physically on hand. Also, if an automatic payment correction is generated, you may end up requesting approval for payment of an additional 180 ghost cases.

In a paper based manual data entry environment, there is also an increased chance of data entry error. Humans make mistakes; WMS doesn’t. Studies have shown, on average, one out of every 300 keystrokes is an error. The cost of even one such error can be significant.

Example: What would be the effect of a missed product of some value, such as the cost of miss shipping a piano to Albany, Oregon, instead of Albany, New York, could easily run in the thousands of dollars. And, this does not take into account the added cost in damaged customer relations. The automated data collection nature of an advanced WMS results in process efficiency and data integrity. The benefits of data integrity are numerous.

Reduced Labor Cost-By eliminating manual data entry, associated fixed labor costs are immediately reduced. These reductions alone can justify an investment in automated data collection which is a key component of WMS. But other labor costs are reduced as well.

Example: Administrative labor is reduced as less time is spent correcting errors. Fewer errors and timelier, accurate information also mean fewer, more productive meetings for managers and executives. In general, automated data collection lowers labor costs by reducing overall setups, idle time, cost of expediting, and time spent correcting errors.

Example: It is reasonable to expect up to a 20% improvement in direct labor productivity. Direct labor is better utilized due primarily to a WMS’s ability to provide specific task assignments based from a concise picture of inventory availability, inventory positions, and the overall movement activities to be accomplished. System directed activities minimize operators time spent identifying what actions need to be accomplished and planning the activities once they have been identified.

Download the complete Business Case for Warehouse Management Systems 

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Four Simple Ways To Pay For A WMS (Part 2)

In my last post (which I admit was a while ago) I outlined four simple ways a WMS solution can be paid for.  In this post I will discuss the first way, reduced stock.

It may seem obvious that if you reduce your stock levels you would probably save money.  But how to do this without causing disruption to fill rates and customer service is a key issue. With real-time and online data collection that a WMS like Accellos One Warehouse provides, inventory accuracy can be drastically improved.  This leads to a significant improvement in stock location, quantity and lot/serial number accuracy, as well as reduced “buffer” or “safety stock” levels.  If you reduce your inventory value while maintaining adequate stock levels to meet order demand you can save a tremendous amount of money and in addition reduce carrying costs as well.

Lets take a look at a simple example.  Let’s say you carry 5,000,000 dollars of inventory.  And you find a way to reduce that by 4% to 6% Industry average range when implementing a WMS) you could save $200,00 to $300,000.  Carrying cost range from 15% to 25% so if yours is say 20% you will pocket $40,000 to $60,000 dollars.  This will go a very long way in helping you invest in a system that will produce for you these kind of results.

In my next post I will discuss how reducing or reallocating labor will help you pay for a WMS solution.  stay tuned!!


4 Simple Ways to Pay for a WMS

Implementing a warehouse management system is one of the biggest “bang for the buck” things a business engaged in the distribution of products can do for their business.  The profits that can be re-captured when a business becomes more efficient and productive can be staggering.  Like wise when a business is not operating at top efficiency, is making to many shipping mistakes and is having problems with inventory accuracy and control it is most likely leaking profits.  Sadly this can happen without knowing it.  If you think all is well because products manage to get out the door in the warehouse it may be time to take a hard look at the warehouse operations.

Many times when talk with a business, they seem to understand the value in a WMS but can’t seem to see how to make the investment needed to pull the trigger and implement a solution.  Here are four areas where a WMS makes a serious impact and can quickly create the return that will pay for a WMS

1. Reduced Stock (Inventory)

2. Reduced or reallocated labor

3. Improved shipping accuracy

4. Reduced space requirements

In the next series of posts we will dig into each of these areas and explore where the money can be found to pay for a WMS solution. For information on our WMS solutions click here.  For more information on iCepts Technology Group and our other technology offerings click here.  


Which 30% Is your Company In?

Less than 30 percent of warehouses are efficient, according to “Benchmarking Warehouse Performance,” a study by Georgia Institute of Technology in Atlanta GA Efficiency translates directly into money. You may have been wondering if a WMS system could make your warehouse more efficient. Interestingly, about 30 percent of the warehouses in the United States have a WMS system installed. What are the numbers telling us? Only 30 percent of warehouses are efficient, and less than 30 percent of warehouses have a WMS system installed. Which 30% does your company fall into?  If you are in the under 30% group that does use a WMS good for you.  Most likely you are many times over more efficient than those not using a WMS to manage their warehouse operations.

Those numbers are telling me we can fix the inefficiencies or “lost revenues” taking place in over 70 percent of warehouses. These leaks involve serious money being lost and customers being poorly serviced. My point is this: There’s a lot of information out there on how to make your warehouse more efficient, but what you needs to realized is, “It’s not what you know that counts, it’s what you do with what you know.” Many companies already know their warehouse is inefficient, but are reluctant to make the move to improve due to what they perceive as a high cost to purchase and install a WMS.  I would suggest they should take a very close look at the ROI that a good WMS can achieve.  It might surprise many to find out that the initial investment can be recouped in a very short amount of time.  If you own or manage a business that operates a warehouse which 30% do you want to be in??


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Learn more by reading this white paper on How Goods move through an Accellos One managed warehouse

It’s Time to Retire the Pencils and Paper

I am astonished on a weekly basis by the number of businesses I encounter that are still managing their warehouse operation with paper and pencil.  In most of these companies I see well thought out processes to handle the many functions and activities in the warehouse.  And while these processes do work and the products manage to get out the door,  they are holding back the business from making higher profits.  Why?  Because they are extremely inefficient and inefficiency robs the company of hard earned revenue.

For  companies that are in warehousing, distribution or manufacturing it is time to retire the pencil and paper and move into the 21st century.  Today, with profit margins being razor thin and customers looking for the very best prices and added services you need to be as efficient and productive as possible.  Your warehouse has to be profitable.  No longer can you subscribe to the notion that if the products get shipped out then all is well.  It is time to automate as many  processes as possible.

Its starts with  barcoding and with automating the receiving, put-away, replenishment picking and shipping functions by moving to an electronic warehouse management system.  WMS solutions are no longer just for the big guns in the 3PL, wholesale distribution or manufacturing business segments.  It is time for small and mid sized companies to adopt this technology.  Frankly your customers demand it.  It is my opinion (backed up by a plethora of industry statistics from the Aberdeen Group, Gartner and Supply Chain Management to name a few) that those that do not step up their game will be left behind.  They will wonder where their customers have gone and why they are losing money.

I said earlier it starts with the barcode because the essence of a WMS is tracking very item in the warehouse and every task performed by scanning the barcode that is on nearly every product produced today.  And should you actually have products without a barcode you can create one.  In your warehouse you add barcodes to every storage location where product could be stored.  The combination of scanning the product and the location of that product begins to create an efficiency and accuracy not possible in a paper and pencil, manually operated warehouse.

So take those well thought out processes mentioned earlier that you have been operating with and  automate them through the use of a warehouse management system that best fits your companies needs and watch your profits rise.  Small percentage gains in efficiency, accuracy and productive will add up to a significant return on investment.

To read more on optimizing ROI in the warehouse click here.

To Read a recent case study on how one company has improved their operation through the use of a WMS solution click here



Not All Are Created Equal

Not all warehouse management solutions are created equal, the right WMS saves you time and money and ultimately increases your customers’ satisfaction.  The key to choosing the right WMS is, will it help in maximizing customer service and satisfaction. A Best in Breed WMS will provide a spike in customer service, leading to greater customer satisfaction and increased profitability. Not having a WMS or one that is not meeting your changing needs means constant struggles to keep a stable customer base.

So, what should a best in breed WMS offer and what should you look for?  Here is a list of things to look for.

  1. Maximum Functionality; will the WMS streamline operations and provide improved productivity Read more
  2. Ease of Use; if the WMS is easy for the warehouse staff to learn and use they will not look for ways to not use it or find work-arounds.
  3. Transaction Management; You want the WMS to track everything from the moment product hits your receiving dock until it is shipped out the door.  And you want to be able to get easy instant reports on everything that moves and who is moving it in the warehouse.
  4. Flexibility; a good WMS will be able to grow with you and be able to meet new and changing requirements.  Be sure to review what the plan is for future upgrades.  Make sure the WMS can interface with today’s well known ERP solutions.  One day you may want or need to move to a new ERP and not want start over with your warehouse management system.  This is important.
  5. Useful Reports; data is important.  Review the way the WMS provides that data to you.  Are their easy to access reports?  Does it provide a way to easily create your own ad-hoc reports?  Does it have a business intelligence capability?
  6. ROI; this seems to be a horse that gets ridden too much.  But, ROI for a WMS can easily be established and should be investigated and analyzed.  Good WMS solutions can provide solid, real results from existing customers. Read more about ROI.
  7. Proven Track Record; a good WMS provider should be able to provide you with a viable list of references that are in the same or similar industry as you.  If possible go for a tour of a business using the WMS and if possible one that in seamlessly integrated to the same ERP solution.  Make a list of questions and get answers on the points I have listed.

The right WMS will save you time and money and ultimately increases your customers’ satisfaction and profits. The difference between purchasing the right WMS and the wrong WMS is simply a matter of knowing which questions to ask.

Read more on how a warehouse operates using a best in breed WMS

4 Simple Ways

Implementing a warehouse management system is one of the biggest “bang for your buck” things a warehousing or distribution company can do for the business. Although I only list four in the post there are many other ways a WMS can pay for itself.  These four are simple ideas, however many operations choose to continue running their warehouses with pen and paper even though their most successful competitors have made the investment done the work and are now reaping the rewards.

1. REDUCE STOCK.  This may seem pretty obvious but many companies carry to much inventory in order to meet customer demand.  This is caused by not knowing how much really is in the warehouse or where it is.  Nor do they have an accurate idea of how fast they are turning over their products.  With real-time data collection inventory accuracy will improve dramatically.  This leads to improved item location, quantity etc. etc.

2.  REDUCE OR RELOCATE LABOR. Overhead is costly.  A WMS will help you see what work is being done, how fast and accurately it is happening and who are your stars.  So much more will get done when you throw away the paper and pencil and use real time information to receive put-away replenish pick and ship your products.

3.  IMPROVE SHIPPING ACCURACY.  It is not uncommon to see a company using paper and pencil technology to have a high error rates on the orders they ship out.  Even a company that boats 98% accuracy is paying a lot for that 2% error rate.  Not just in the hard dollars it costs to fix the problem but also and potentially more hurtful in customer dissatisfaction.  A warehouse management system is design to eliminate costly shipping errors and help you improve customer satisfaction and even obtain new customers..

4.  SPACE UTILIZATION.  A WMS will allow you to use the warehouse space you have more efficiently by helping you store your product better.  Because you can see where all your product is and you can better decide how to use your racks and floor space.  Wasted space and empty racks are used properly keeping you from having to add-on which saves thousands of dollars.

The time for achieving a return on investment (ROI) in a warehouse management system should be relatively short.  Many companies find that the system can pay for itself in 6 to 9 months however 12 to 18 is a good rule of thumb.

So consider putting done the paper and pencil for a minute and find a company that will work with you to analyze your particular situation and see if it makes sense for your company to consider a warehouse management solution.

Download our complete whitepaper on <a href=”” title=”4 Simple ways white paper”>4 Simple Ways to Pay For A Warehouse Management System </a>

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What is Your Biggest Problem?

I recently read a discussion board on LinkedIn that asked the question, what is your #1 problem in managing your warehouse?  Answers I saw included;

  • Aligning staff with work (labor management)
  • Irregular inbound shipments & deliveries (receiving)
  • Inventory mistakes (inventory management)
  • Human errors (picking, put-away replenishment)
  • Quality of workforce (employee accountability and productivity)
  • Late and incomplete deliveries of products (shipping mistakes)

What I thought was most interesting about all the issues was these are the exact problems that a best in breed warehouse management system is designed to address and eliminate.  The creation of a more efficient warehouse operation is the ultimate goal.

I have heard from many operations  and warehouse managers that the fear they have is that all the processes  that have been created to run their manual, paper driven warehouse will be tossed out when a WMS is introduced.  This is not the case nor does a WMS just magically create processes for handling the work done in the warehouse.  The goal in buying and implementing a WMS is to take the good processes already in place and make them more efficient, reshape the ones that are not as helpful and drop the ones that are causing profits to leak out of your operation.

If you compare the return that a WMS can give you against the investment you would make in purchasing and implementing a WMS solution you will see why successful, growing distribution companies are investing in this technology.

Read more on how a WMS operates inside a warehouse.

Lets Talk Green!

There is a lot of talk and so much written about the many ways a warehouse management system can help a warehouse or distribution center be more efficient.  It is also true that a WMS can help a company gain better more accurate control of their inventory.  The number of ways a  WMS can help a company save money are quite numerous and I have addressed many of them in previous posts.  One area that is overlooked quite often when reviewing the cost savings a WMS can provide has to do with the environment.  Lets discuss the green savings a WMS will provide.


In most cases when a WMS is implemented the amount of paper  used by the warehouse is reduced significantly.  Think about it there is no longer a need to print;

  • PO’s to receive products
  • Reports to do cycle counts or physical inventories (really the need for Physical inventory disappears but I digress)
  • Pick tickets
  • Replenishment or stock move reports

Your particular operation may produce special needs reports as well.  By uses the RF handhelds this data is transmitted electronically to and from the WMS  and in and out of the ERP solution that the WMS is tied to.  Paper use is virtually eliminated. Less paper means more trees are saved from the axe.  Your helping to save the environment and oh by the way you are also saving a wad of money.

Then there’s the actual printing aspect.  What goes on the paper, ink.  Where does most ink come from, that’s right oil.  Then you have the power needed to run the printers.  This adds up to more savings for the environment and for your bottom line.


Most warehouses or DC’s use a few or many forklifts.  Think about all the travelling these things do in a days time.  By implementing a WMS you can reduce the travel time of your powered equipment substantially.  This saves both the energy usage and cost associated with the use and also reduces the pollutants emitted by these machines.  Again both the environment and the business win when these things are reduced.

I have listed a few things in this post where a WMS can help your operation become more environmentally sound.  I’m sure with a little more thought many other areas of savings can be revealed.  One more that comes to my mind is paper waste removal and how it effects our landfills and the related costs to our environment and  the bottom line.

Click here For more information on how a WMS can help a company be more profitable.