Why Invest in a WMS?
Inventory accuracy is one of the primary reasons to switch from a paper-based operation to a warehouse management system (WMS). Inventory is one of the biggest costs that comes with operating a warehouse, meaning it’s also a potential area for substantial savings. Improvements in inventory accuracy will bring a quick return on investment and position the distributor for long-term success.
When a warehouse does not have a reliable record of what is in every aisle, it presents a laundry list of problems – poor buying practices, excess stock, delays in fulfilling orders, declining labor productivity, lost sales and more. These are all issues that can make or break an entire organization – it should be a top priority for any business.
Mistakes often start in receiving. Something as minor as an erroneous keystroke immediately after product arrival could result in the system thinking there is more product available than there actually is. This could create major issues down the road when an order is received and there is no stock to fulfill it. What if you request payment for a product that is not actually in your distribution center? Not only will valuable time be wasted resolving the problem, but it will damage your company’s reputation and negatively impact your vendor scorecard. Additionally, the distributor may need to pay more for expedited shipping to meet a guaranteed delivery date.
Inventory problems are a source of endless headaches, but they have a relatively simple fix.
A WMS self-checks in real-time and alerts the user if it detects a problem. It almost completely eliminates the mistakes made by humans – inventory accuracy typically climbs to more than 99 percent. The issues listed above nearly disappear.
And this leads to increased revenue for the company. The “carrying costs” of inventory – storage space, inventory service, capital costs and inventory risk – can account for 25-35 percent of the total cost of that inventory. So any extra or lost inventory in the warehouse is hurting the bottom line in a big way.
The cost of labor will also fall with the dependable, detailed inventory information provided by a WMS. Time will not be wasted searching the warehouse for missing items. Employees will not spend hours every day manually entering data – data that may be wrong, anyway — saving major dollars every year.
There are less tangible benefits that come with inventory accuracy, as well. For example, relationships with customers will improve when their orders are always delivered on-time and the correct items are inside the box. This is extremely important in today’s marketplace because consumers are demanding and do not forgive easily. The proliferation of online vendors that offer fast shipping and exemplary customer service has changed expectations. Competitors are always ready to swoop in and take that person’s business, even after just one sour experience.
Download Warehouse Management System Business Case Development today to learn more about inventory accuracy and the other advantages provided by a WMS. This detailed white paper from recognized supply chain thought leader Chris Barnes walks the reader through building a plan that will convince decision-makers they need a WMS.