Do I need a Warehouse Management Systemby Brooke Anderson on 2010-07-04
If you are looking for figures and pie charts there are plenty on the internet for this subject. Google “WMS Case Study” and you’ll see more percentages than an ASB front window. Let’s get down to discussing real-world options. I get two to three businesses a week coming to us to overhaul their supply chain process; from Micro-Scooters to Pharmaceuticals and there is BIG opportunity to leverage new technology for a leaner, meaner supply chain. WMS effectiveness and therefore return on investment will vary wildly and usually on the following businesses variances;
Is it your own stock or someone elses?
Are you managing your own stock or that of others (AKA ‘3PL’ or Third Party Logistics)?
You own stock…
If you are managing your own stock, even across multiple locations you don’t necessarily need a WMS.
Top end accounting systems such as Oracle, SAP Business One (Most likely for the NZ Market) and the most prolific worldwide, Sage Accpac are known as ‘ERP’ systems or ‘Enterprise Resource Planning’ systems. ERP is an integrated information system that serves all departments within an ‘enterprise’ or business e.g. payroll, general ledger, customer services and the manufacturing dept. are connected from a data point of view.
Many ERP systems come with extensive Inventory Management Systems (IMS) for tracking location, bins, serial and batch. Unlike a WMS an IMS can be lacking in activity tracking such as billing for devanning, pick/pack, line charges and replenishment locations – but if it’s your own stock this may not matter.
Even better invoicing is connected and therefore simple and you can avoid having to double enter orders. ERP inventory management is the cheapest way to go and using systems like Sage Accpac you can get into their ERP 100 software for as little as $5,000 plus install. ERP’s like Sage Accpac have been around since Bill Gates was in a garage so there are literally hundreds of 3rd party plug-in software’s to help as you expand… including believe it or not warehouse management systems that can plug in should you expand beyond Accpac’s capabilities.
Contract and Third Party Logistics (3PL)…
If you are stocking items for other people it’s a different story. If you are bulk only and the stock moves on fast rotation then you can ‘tick along’ quite nicely on excel spreadsheets. In fact in this market you may need to. The margins on bulk are being squeezed so tightly right now that the ROI on a WMS could be too long to justify.
If however you are going down to carton pick – or as our clients do – down to individual item pick then a WMS is essential.
If you are in this space you need a WMS with these features;
The ability to associate charges to activity; devanning, put-away, storage (variable), pick & pack, line charges, packaging costs and ‘special costs’ like urgent picks. It may sound obvious but many WMS’s don’t have these and clients are becoming less tolerant of ‘service charges’. These are generally fees charged by 3PL’s ‘gestimating’ what these combined monthly costs are and then averaging them per order are to make up for not tracking these incidental costs.
Web or Integrated Commerce
The last thing to consider is for future proofing. A new wave of software is coming through called ‘Integrated Commerce’. ERP software connects your internal business processes; Integrated Commerce software uses the internet to connect your clients to your business, essential unless you are a bulk only carrier. For everyone else your ability for clients to order direct from the warehouse will be critical. Even if your industry isn’t doing this currently (Aviation and Automotive are notoriously slow to adapt) it’s not a matter of ‘if’ but ‘when’.
The print industry is the best example; if you can’t provide full online ordering of stock through a website that can restrict stock access by their login, track orders and report on stock levels online, then you have one hell of an uphill battle winning any RFP’s or retaining business – no matter how cheap you are.
So why bother with the investment?
Customers don’t want a quarter inch drill bit… they want a quarter inch hole.
There is huge opportunity (and money to be made) by providing customers with the ‘whole product’.
For 3PL’s; devan it, store it, provide the website access to manage it, order it and have the systems so they can see how much they have, who has the rest and where it is.
If it is your own stock; let your customers order direct from the warehouse online. When they order show their contract pricing and what the shipping will cost. Let them track their orders and check their credit limits without having to call your Customer Service center.
Make it easy and give customers every opportunity to stay with and do business with you, and they will.
Brooke Anderson - www.xmdevelopments.com