In the past, the supply chain was undervalued, with effort concentrated more on manufacturing processes and marketing. In a much-changed market with new channels of supply opened up by online shipping it is clear that optimising the supply chain process is critical to achieving competitive advantage, an issue that was laid bare by wrong-footed reactions to Black Fridays and Cyber Mondays.
Never before were supply chain issues so critical to surviving in a frenetic retail environment.
That said, how do SMEs go about deciding what to do about adoption of a warehouse management system (WMS), which may also include hardware investment like automated handling equipment and connectivity with stock/demand forecasting programs and ERP software. And what are the main reasons for adopting a WMS?
Should one go down the consultancy route to find the bestof- breed solutions? Or if one’s needs are not very special and specific should one go for a packaged configurable solution?
One should be prepared to spend several months gathering information about what is available on the market and not be surprised that most solutions will involve high initial set-up costs – a problem that could lead to looking at cloud-based solutions. Some system providers, like Snapfulfil, have a No Capex model well suited to potential buyers concerned about up-front heavy capital outlays.
There are many reasons why adoption of a suitable WMS is so important and they revolve around the cost of holding stock and customer satisfaction. Warehouses put money to sleep and if the amount of stock held runs into many millions of pounds then the cost of holding that stock can dwarf all other warehouse running costs combined. That is where a good stock forecasting program that reacts in real time to, say, daily weather forecasts can be so valuable. Typically, they can cut stocks held by one third without harming customer service, and payback on these programs can be as little as two weeks.
Other reasons for justifying a WMS include: lost sales due to stock-outs, wasted money through overstocking, improved accounting accuracy, identification of hidden problems, improved customer service and reordering process, reduced theft and losses, lower warehouse costs through improvements in picking, packing and despatch and savings on stock audits. A WMS will identify slow, medium and fast movers so that stock can be positioned in the most advantageous ways for the quickest picking. It will also give management decision guidance on issues of dropping slow movers entirely.
WMS packages have reached a mature development stage but they can still fail or meet the desired goals, resulting in critical stockouts and non-existent inventory visibility. Software-based projects can falter when there is a disconnect between the perception of the requirement, the capabilities of the product and the truth about the processes used in the customer’s business at an operational level. The need to overcomplicate the solution arguably is the single most often cited issue of failure. To ensure success it is important to fully communicate not just what your operation does but the way in which that process must be delivered to fit in with the normal operations of the business, and how it is going to achieve on time and in full for its customers.
An effective WMS is, of course, only one part, albeit an important one, of a reaction to the changing supply chain world that demands same-day or next-day delivery. As time to market is crucial, it is vital that other systems, like paperless order picking such as voice and pick-to-light are in place to deliver high picking accuracy rates and swift despatch. Given that online shopping often involves high returns, there should also be an effective reverse logistics set-up in place.
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