At a time when some companies are better controlling and lowering costs, improving their order fulfilment and raising their customer service levels, all by implementing new and more effective warehouse management systems, should your company also benefit?
Making the decision to invest in a warehouse system including radio frequency (RF) networks, barcode scanners, voice picking technology and other supply chain hardware and warehouse automation equipment is important. Capital expenditure, on-going support costs plus investment in time and resources can be all significant challenges, so should your business also invest and reap the benefits?
1. What does your business want to achieve?
ERP, finance, email and office administration systems are all common technology employed by businesses with supply chains. Company boards recognise their importance and seldom have difficulty acknowledging their importance. On the other hand, a warehouse system isn’t always viewed in the same way. Warehouses can be left to get on with the job in hand of moving materials, stock and boxes and there can be harder discussions at board level about the timing of when a business should invest money in this type of technology. In the current economic climate tight cash flow or unsteady profit growth can make the decision about a warehouse management system investment harder. To overcome this the company’s strategy and business goals must be considered as well as looking at the potential return on investment.
2. Will you get the right return on investment?
As consultants we are employed to help companies understand the hard and soft benefits of any supply chain technology solution, including warehouse systems. There can be a number of elements to understanding what this can be:
- Reviewing current working procedures and company practices to see where gains can be made
- Considering business goals, strategy and where the business wants to go
- Understanding current and forecast resource levels, constraints and capacity
- Managing workload peaks and troughs
- Looking at the company’s appetite for supply chain technology including hardware devices, management information and communication interfaces, including those with third parties
A rough cut financial return on investment will help you determine the need for a warehouse solution however sometimes working out these numbers is not clear cut. Hence the need to draw upon third party and vendor advice. This can include specific information about how individual products work and services operate, to help you realise how far you want or need to go with a warehouse project. It will also guide you on who you want to work with.
3. What do you want to automate or control?
Having realised an ROI potential and your company’s appetite for supply chain technology, how many systems and pieces of equipment and hardware should you use? In what part of the warehouse should they be employed and for what purpose? What is useful now and what will be required in the future?
A good example is voice technology. Many companies use this for picking activities to improve productivity and quality, however do benefits exist for your organisation using voice in other non-picking areas and jobs? If this is the case, can you work out the benefits and can your IT teams or technology partners create a solution and if so, at the right price? Similarly how flexible will your warehouse system be if you want to:
- Improve picking layouts?
- Speed up stock flow and throughput?
- Have faster goods receipt and despatch processes?
- Make stock counting more accurate by changing working procedures?
- Test new picking strategies, etc?
Now having worked out what you require almost to the point of having specific requirements, what is the best implementation plan in terms of upgrading, development, vendor cloud or local installation?
4. Upgrade, develop or purchase? Cloud or local installation?
Each option must be considered based on where it adds the most value for your company both for now and potentially in the future. Considerations can include:
- Understanding the added value an upgrade brings to the party against your requirements, goals and ROI?
- Whether your company has the resource and time to develop a warehouse system in line with what it strategically wants to achieve?
- Reviewing resource availability, security, redundancy, resilience, data backup options and ROI when considering cloud, SaaS or local installations
Each of these options must add value to your organisation and in the case of SaaS and Cloud, must work to the service levels you require and satisfy your security requirements.
Over and above all of this, there are other important factors to consider.
5. What other factors must you consider?
Even after completing the steps above, the benefits and ROI you want could be restricted by factors on the checklist below:
- Integration with in-house and third party systems
- Regulatory compliance
- Enterprise-based IT management and governance
- Information security management
- Disaster recovery/business continuity
- Challenges of managing IT risks
- Vulnerability management
- Continuous process improvement and business agility
- Managing future vendor costs
So should your company benefit from new warehouse management systems? The answer is yes, if you manage the entire process correctly and carefully.