The right warehouse management system (WMS) will link up diverse operational functions seamlessly to drive efficiency, and strengthen your business. But in extreme circumstances, buying the wrong WMS system can embarrass even blue chip companies to the tune of millions of pounds.
In a recent YouGov survey, 58% of respondents reported that their business management software, which integrates both back and front office activities, did not match their business processes. Some 18% of interviewees could not extract the information needed: 79% reported that the information they could extract was inaccurate. That meant 37% believed their business management software was not fit for purpose.
As if that damning indictment weren’t enough to put people off investing in WMS, especially SMEs, concerns over the cost factor mean many smaller firms don’t move beyond a basic stock location program. But it would be wrong to be swayed completely by these negatives and ignore warehouse software’s power to improve your business performance and help you stay competitive in a fast-changing world. A good stock forecasting program, for instance, can pay for itself in a matter of weeks by cutting inventories by a third without harming customer service levels.
Fortunately, there are opportunities to reduce the upfront costs of WMS and to make systems provide the timely, accurate information needed to transform efficiency. A key factor to bear in mind when considering a new WMS is flexibility to support unplanned changes within a business. As businesses grow or contract, their business processes change. But all too often the business management software systems in place cannot adapt to meet the new requirements without requiring costly upgrades. So it’s crucial to push business management vendors to provide a system flexible enough to grow with the business and easy to customise as requirements change.
In our cost conscious climate there’s a lot of talk about Software as a Service (SaaS). An attractive proposition on the cost front, this is a version of WMS that replaces upfront hardware and software costs with a pay-as-you-go model. Companies avoid being locked into a three to five year payback period typical of conventional software. And because SaaS costs are related to the level of usage they can be scaled according to business conditions. Training needs are much reduced and upgrades are automated. Once all the infrastructure, maintenance, support and implementation costs have been calculated, SaaS should offer a lower total cost of ownership. One crucial point to bear in mind when choosing a SaaS provider is to examine the contractual arrangements on ownership of data. Data confidentiality, integrity and availability must be maintained wherever the data is hosted or accessed.
There are two types of data management that affect warehouse efficiency and costs: the antenatal data that goes into shaping how a new warehouse should look and be kitted out, and the operational data once the warehouse is up and running. Good warehouse ‘sim’ packages examine and test all the what-if scenarios of various warehouse layouts, their locations, types of racking and shelving, order picking methods and the mobile handling equipment, based on the expected stored products’ dynamics. Mistakes made at this point will harm any subsequent WMS operational data, no matter how well the system may have been chosen.
Finally, don’t neglect the human factor! What both types of data will not highlight is the importance of warehouse staff training. Given that labour costs in non-automated warehouses account for around 50% of total warehouse costs, it would be foolish to ignore this crucial area.
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