Posted 15 December 2016
Growing customer requirements are putting pressure on the warehouse to perform, making fulfilment operations ever more complex and varied. But traditional manual and paper-based control systems are no longer fit for purpose: responsiveness, agility and levels of compliance now demanded are increasing costs in staff, assets, overheads and inventory.
Investment in an advanced Warehouse Management System increases efficiency and reduces direct and indirect costs, and helps you meet SLAs on service and compliance.
Get fit for the future: the value of Warehouse Management Software
For the owners of many small and medium sized businesses, it is not immediately obvious why they should consider installing a sophisticated warehouse management system (WMS).
Warehouses and stores are very visual places. It is often quite easy to spot a developing shortage, or excess, of a particular item. Many firms manage replenishment with some variant of a Kanban system – and Kanban just means ‘signboard’ in Japanese.
But we argue that investing in a good WMS can not only add considerable value but be vital for the continued prosperity of the business. With the right WMS in place, the warehouse can become the ‘value powerhouse’ of the enterprise.
A report published by analysts, Aberdeen Group, on Inventory Optimisation ‘Juggling the trade-offs between service level and inventory’ in June 2016 highlights that “64% of all companies identified the need to improve service levels as their top business pressure, an increasing challenge due to the growth in customer options.”
In an increasing number of industries suppliers have to meet exacting standards just to be considered as a business partner. These high levels of compliance apply in food, retail, pharmaceuticals and medical, defence, aerospace and many other sectors, and are not just about product quality and service level. Customers expect complete and accurate traceability at batch and item level, a life history of the part or product - including how, when and where it has been stored, handled, picked, packed, and transported. The way in which this information is given to the customer is also part of the requirement. Rekeying data from paper files into customer systems isn’t acceptable any more – it is too slow, too costly, too prone to error, and lacks a robust audit trail.
Customers may not be the only ones with compliance issues. Firms dealing with bonded goods, such as spirits or tobacco, will be aware that HMRC takes an increasingly rigorous approach to documentation and record-keeping – and if your system ‘loses’ ten pallets of vodka, you are still liable for the duty.
Fit for the future
So for many companies, the value of a WMS is simply staying in the market. And as the market changes, a WMS helps future-proof the company.
A major consideration for any company using a manual system is, how well would the warehouse cope with any change in business needs? Just how adaptable and agile would it be? What would fulfilment performance look like?
A WMS can make staff more productive, for example by enabling more efficient picking and put-away routines and by reducing or eliminating manual data recording and other functions. Warehouse management software can also help the firm take full advantage of technologies such as bar code and RFID scanning, and voice directed operations.
How to get more from less
A WMS also helps a company sweat its physical assets. The system can arrange stock in ways that use warehouse space as efficiently as possible, including height as well as floor area. Locations are held in the computer, not in the storekeeper’s head, so they can be organised to be efficient, not just easily remembered. This goes for multiple sites too.
For example showering, daily living and kitchen solutions company AKW uses Access Delta WMS as a single graphical warehouse map, bringing both of its warehouses on to one site map. This has delivered huge value for the company by simplifying its processes, making it easier to transfer stock between warehouses. Instead of having to do goods-out and goods-in, AKW uses a drag-and-drop facility to transfer stock between sites. This has reduced picking errors and increased service to its customers. The single map system also enables AKW to take more orders, with greater efficiency, and achieve better recording of stock and traceability.
Additionally, the right software provides better visibility of incoming stock. So the common situation of excessive stocks being ordered, because nobody is quite sure of the status of current orders, is avoided. It also guards against the opposite problem – the risk of a stock-out because goods are leaving the warehouse faster than the Kanban is being returned.
The Aberdeen Group report finds that “Best-in-class companies have 5.5% better service level improvement and a cash-to-cash cycle that is 45% lower than the competition.”
Often, a very significant one-off reduction in inventory levels can be realised on implementing a WMS, simply through achieving higher visibility. The reduction in working capital requirements can be of great value to the business, but it also frees up more warehouse space for future growth. WMS users frequently find that they can plan for considerable growth without the need for additional investment in warehousing staff and assets.
Ollie Marshall, technology lead at trade electronics distributor Direktek says that Delta WMS has made the company “far more advanced in our capabilities”. He cites the ability to organise multiple picks, integration with third party carrier software, and the way Delta has enabled Direktek to lead the market in offering drop shipment. Efficiency has risen, orders are shipping much more quickly, and all with a slimmed down warehouse workforce.
Warrens’ Warehousing and Distribution believes its massive growth would never have been possible without Delta. The UK specialist in storage, despatch and delivery of baker products for major retailers including Tesco and Sainsbury had growth of ten per cent per annum over the four years after its installation. IT Manager Antony Glen says that Delta was also essential in helping Warrens meet customer requirements for Advance Shipping Notification and use of the Serialised Shipping Container Code system. A further benefit has been a reduction in costly disputes about whether and when deliveries were made as Delta provides a complete trace.
Creating value from change and complexity
The challenge for many companies may not be growth so much as change. For example, your customer may have been buying your products by the pallet or case, but now says “We’d like you to supply us with kits of parts in sequence”. A very simple task now becomes seriously complicated.
Many warehouses are becoming more like factories as final configuration of products is postponed and customers look for a range of value-added services. To provide these in any sort of efficient manner a good WMS is essential.
Customers are looking for added value in other directions too, in reliable service and consistent and timely information, and WMS helps ensure this. A WMS-controlled warehouse can offer faster and more accurate picking and fulfilment.
Perhaps more importantly, if something does go wrong it is known immediately, rather than twenty-four hours later when the paperwork has been filed. The value to the business is in preserving good customer relations, by being able to warn the customer and take early mitigating actions.
The management of returns is another growing complex issue. It is not unusual for a warehouse operation to be faced by more potential channels for the handling of returns than there are for the original sale. Managing this complexity is a sure way for a WMS, linked to ERP and financial systems, to earn its value stripes.
Customers expect a steady flow of information – order confirmation, advanced shipping notices, confirmation that the order has been picked or despatched. A WMS can generate all these responses consistently and automatically. It is possible if desired, to share appropriate WMS screens and dashboards with the customer so that they can see progress for themselves. Customers value the open and consistent service that WMSs can facilitate – conversely, a reputation for inconsistent service and poor communication can be highly damaging.
Of course, retail customers are not the only ones to value service. The pallet network, Palletways, has found that the value of being able to give its customers ‘true’ remote access to their stock via its WMS should not be underestimated. It has given the company a real point of difference ensuring its clients are in-touch with all inbound and outbound stock movements along with real-time actual stock held in various locations.
Similarly, the third party logistics services company, NX Group, had serious issues around stock allocation in the warehouse which was affecting service. Now, says Sebastian Huizeling, Operations Manager, “the difference using Delta has been immense. It has become very easy to serve our customers through our online portal and the ROI has been very good”.
Any good warehouse software should supply the above benefits but the best system can take you further. Although a WMS can be operated as a stand-alone system, the benefits are multiplied when it is linked to other systems. There are obvious benefits in tying a WMS to Payroll and Time & Attendance systems, but also by linking it with manufacturing, sales and order processing, planning and scheduling, accountancy and finance, and other systems.
These other systems may not figure in your current investment plans, but surely will as your company grows. Your initial investment in a WMS will provide value in compliance, future-proofing, improved customer service, greater efficiency and productivity of both staff and assets, and lower overheads and working capital requirements. But as you grow, quite small investments will unlock a whole range of further benefits.