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
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.
Find out more about Warehouse Management Systems by contacting us here:
Shipping accuracy to some companies is an oxymoron and to others a solid part of their business. So what causes some to struggle and others to excel? The accuracy of their pick and verification process. Lets look a little closer.
I was talking with a prospect recently who shared with me that they shipped an average of 600 orders per day and 800 boxes. He was very proud to tell me that they were 98.6% accurate on their shipping. Now 98.6% sounds pretty good (especially in a busy disorganized paper driven warehouse) when you think of the fact that they ship 600 orders per day right. I pointed out to him that means that about 8 orders go out wrong every day. Industry statistics show it costs $200.00 to fix each mis-shipped order. So if you do the math that’s $1600.00 per day for this prospect to cover the cost of their mistakes. If you look at that over the course of one year the total is $83,200. That’s a Problem.
A WMS will virtually eliminate the potential for making these mistakes. By providing an accurate way to pick orders by scanning the barcodes and verifying the product being picked is correct you gain tremendous accuracy. By using a WMS to consolidate orders you can send fewer boxes and save shipping costs. By creating efficient pick paths and picking processes accuracy is increased dramatically. Many companies find they can eliminate costly, time stealing check processes once a WMS has been implementing without increasing mistakes. If the shipping process is integrated into the WMS shipping accuracy is improved and much more efficient.
Eliminating mistakes that go out the door to your customers will offset a large portion of the initial investment in a warehouse Management system like Accellos One Warehouse. To learn more about how A1W can help a business be more profitable check out our dedicated website http://www.warehouse-management-systems-us.com/wp-admin/post-new.php.
This is part 3 of my 5 part series on the four simple ways to pay for a warehouse management system. In the first part I listed the four ways and outlined each one. In part two I covered how better control and accuracy of the inventory can save money and help pay for a WMS. In part three I will discuss what is arguably your most important asset, your employees.
Here are a few points for you to consider; effectively managing labor costs in most businesses is difficult. Labor costs account for a huge portion of your cost of doing business. Arguably your staff in the warehouse can/will make or break your business.
Reducing or reallocating labor is the primary driver for finding the money to pay for a warehouse management solution. A properly implemented WMS like Accellos One Warehouse can reduce your labor needs, help you reallocate staff and or keep you from needing to bring on more staff to meet growing sales or seasonal fluctuations. More people mean more problems most of the time. There is a long list of labor areas that are strongly impacted by the implementation and use of best practices while deploying a WMS.
From the moment product hits your receiving dock until the invoice is sent for the shipped out items people are involved. By using a WMS you increase the efficiency and accuracy of the work they do while eliminating the mistakes they will make. A best of breed WMS should provide useful labor reports that can help you determine who your best people are and who needs help. When the WMS is integrated tightly to your ERP/accounting/business management software you can eliminate the costly clerical work. This allows the people doing this manual data entry to be re-positioned into areas that will help the company make money not just spend it. Another plus here is the accuracy factor a WMS provides. You can also speed up the invoices process which gets you paid in a more timely manner.
Here is an overview of areas of improvement;
- Lines picked per shift are improved
- Fill rates increase
- Inventory accuracy is dramatically improved
- Reduced staff and increased work volume
- Higher pick/pack rates
- Reduced shipping department needs
- Shift elimination and or hour reductions
- Transportation cost are optimized
It is not unusual for a WMS to reduce labor costs by 20 to 30 percent. Lets look at a simple example. If your annual labor cost for a staff of 15 warehouse employees including clerical support is $561,000.00 (18.00 per hour loaded, X 2080 per year, X 15 employees) and you save 20% with the implementation of a WMS you would save $112,000.00. That is huge! Of course every business is different but I have seen this kind of savings by many of our customers. Maybe its time you took a good look at what you could save.
My next post will how cover how a WMS saves money by improving shipping accuracy.
Learn more about iCepts Technology Group and the many ways we work daily to help our customers improve their businesses.
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!!
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.
With costs and competition rising faster than ever, only businesses that find new ways to improve and increase value to both their customers and shareholders will survive let only thrive in today’s market. Only certain activities within a business represent opportunities for adding value to the product or service the business provides. In general, these activities are profit-generators that can be distinguished from the overhead and support functions of commercial/wholesale distributors web-based retailers and company warehouses.
Value added functions often relate the specifics of a particular business. The following are some value-adding functions that are common to most business and should be familiar to anyone who depends on their warehouse as a critical part of their operation:
- Kitting Services
- Marketing and sales
- Inbound logistics
- Outbound processes
Warehouses are generally seen as cost-centers to a business and rarely are considered as an area for profit creation. Yet some businesses have discovered ways to turn their warehouse into a significant competitive advantage. Of the value-adding functions listed above, inbound/outbound processes relate directly to wholesale distributors or distribution centers. In addition the quality of these processes along with storing, delivering and moving inventoried products can impact sales, production and services in a positive or negative manner. In my next post I will discuss warehousing practices in the value chain and how a warehouse management system plays a significant role in creating revenue inside the warehouse.
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??
Learn more about electronic warehouse management solutions by visiting http://www.warehouse-management-systems-us.com
Learn more by reading this white paper on How Goods move through an Accellos One managed warehouse
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 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.
- Maximum Functionality; will the WMS streamline operations and provide improved productivity Read more
- 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.
- 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.
- 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.
- 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?
- 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.
- 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