How a Warehouse Management System Will Help You Slash Labor Costs
In theory, labor is a fixed cost. A warehouse can only function with workers on the floor, managers overseeing the entire operation and an administrative staff.
But a warehouse management system bends that definition of labor as a fixed cost. A WMS can drastically reduce money spent on your workforce while simultaneously improving productivity. These factors can have a major impact on the financial health of a company. So how does a WMS hold the key to labor efficiency?
Labor can be divided into three categories: direct (receiving, put-away, picking, replenishment), indirect (supervision, training, inventory control) and administrative (inventory management, order planning, customer service, data entry). Those three groups are all tied together and the right WMS cuts costs at every tier, resulting in major labor savings throughout the operation.
This software helps workers on the floor (“direct”) because it assigns them specific tasks. It knows where all your inventory is located and assigns picking based on proximity to the item, maximizing the efficiency of receivers, pickers and others. No time is wasted planning these activities because the system handles it. A minute or two every few hours adds up over months and years, making this is an area of significant value creation for a warehouse management system.
Much of these labor savings are the product of a smarter picking process. The No. 1 labor expense is time spent traveling to gather products. A WMS reduces travel time by mapping the most efficient routes. There are a number of picking strategies that will increase the hourly and daily picking rate of every person on the floor. What’s the best strategy for your company? It depends on factors such as handling requirements and order profiles.
A warehouse management system also eliminates the paper trails that are not only a constant source of mistakes but eat up working hours. When all this information is stored electronically, there are no overstuffed filing cabinets to sort through or endless pages of paper documents to fill out. That means less work for administrators, ultimately lowering operational expenses.
Predicting how many staffers you need on different days of the week or at different times of the year is another hurdle a warehouse management system will help you clear. Order volume, inventory levels and other information the system tracks allows a company to effectively plan labor. That predictive capability keeps management from overstaffing or understaffing. It sheds light on a pitfall that is difficult to avoid without a WMS.
And these are just a handful of the benefits this solution provides. Although lower labor costs is one of the biggest reasons to invest in warehouse technology, it’s hardly the only reason. A WMS also supports better inventory management, excellent customer service and more efficient organization of the warehouse.
To learn more about how this software can provide a rapid return on investment and position your company for greater success, download Warehouse Management System Business Case Development. This white paper explains why a warehouse management system is a necessity in today’s marketplace with specific examples of how it impacts a warehouse and leads to a more efficient, profitable business.