How big must my warehouse operation be to use a warehouse management system?

A warehouse management system is crucial to many businesses to help order fulfillment, control and manage inventory and reduce logistics costs. So is it the right solution for every manufacturer that holds stock or has a warehouse?  This blog examines some questions that will help you decide.

What are your logistics costs and how do they benchmark?

A simple analysis and benchmarking exercise will tell you if your logistics costs are too high compared to industry standards.  By logistics we mean stock handling, picking packing, despatch and shipping.  For purposes of this blog however we are not considering shipping so this can be removed from the analysis.  If your benchmark costs and costs per unit shipped are to high then again a simple return on investment (ROI) model will help you understand how worthwhile a warehouse management system will be.  Remember this is also a useful exercise for organisations currently with a warehouse management system too as a greater ROI can be achieved by switching vendors.

A warehouse system can help your ROI in a number of ways too, including helping to save on storage space and therefore the number of warehouses required, labour productivity planning and therefore saving labour hours, overtime and shift payments, inventory control including order fulfillment improvement and stock adjustment reduction.

Is your order fulfillment accuracy not measuring up?

Firstly do you even measure this accurately?  If you are not convinced that you are then we recommend reviewing your processes since you cannot manage what you do not measure.  Secondly if you are happy that your measurement process is accurate then are you happy with the results?  If not then you need to understand what is going wrong and again a warehouse management system will help you.  Whether you suply food, drugs, fast moving consumer goods or any type of product, asset or stock type a warehouse management system will control and measure your order fulfillment, picking and packing processes.  Again if you are unhappy with the results that your current warehouse system is giving you then review your current processes, benchmark and consider a vendor switch if you do not see improvements.

Are you losing stock?

Tracking different types of inventory can be a complex task, especially when you consider the different units of measure you have to manage e.g. from barrels, drums and boxes to individual components and rolls of labels.  Then add in the complexity of volume, throughput speed, levels of incoming stock, quality requirements ranging from batch control to temperature measurement.  Suddenly managing your stock can be a daunting task as different people are involved throughout the entire logistics process and therefore it is easy for stock to suddenly “go missing” as it can be mis-placed, stored in locations and areas and not communicated effectively, wrongly picked or used, damaged and not recorded as such or consumed without being tracked.  If you are losing stock then a warehouse management system may be for you.  Again if your stock accuracy is not as high as you’d like and you do have a warehouse control system then review your processes or consider switching vendor.

Can you handle larger volumes and achieve economies of scale?

If your costs constantly rise in line with increasing volumes and you think they ought to reduce as you should be benefiting from economies of scale, then review your current processes as a warehouse system can help you. From layout planning through to picking and packing strategies a warehouse system will help you get more benefits from increasing throughput volumes.

Product and batch recalls are too time consuming

If batch recalls are becoming a difficult and overly complex process then a system will help you.  Using a warehouse management system this process can be drastically streamlined and improve accuracy over manual processes.  No matter whether you have 1 or multiple warehouses in your supply chain.

These are just some reasons to show if you need a warehouse system or require switching vendors.