A good warehouse management system (WMS) is the glue that holds together diverse operational functions seamlessly to drive efficiency but some glues are not so sticky as they should be and, in extreme circumstances, can embarrass even blue chip companies to the tune of millions of pounds. In one recent survey undertaken by YouGov, for example, 58% of respondents reported that their business management software, which integrates both back and front office activities, did not match business processes. Some 18% could not extract the information needed and 79% reported that what information they could extract was inaccurate. That meant 37% believed that their business management software was not fit for purpose.

As if that damning indictment were not enough alone to stymie WMS take up, especially among SMEs, there is concern over the cost factor and so, therefore, many smaller firms do not move beyond a basic stock location program. It would be wrong, however, to use these impressions to ignore the ability of warehouse software to improve business performance and so stay competitive in a fast-changing world. A good stock forecasting program, for example, could pay for itself within weeks by cutting inventories by up to one third without harming customer service levels.

Fortunately, there are opportunities to reduce upfront WMS costs and make them 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, its business processes will also change. Far too often, it seems, the business management software systems in place are unable to adapt to meet the new requirements without requiring costly upgrades. It is crucial, therefore, to push business management vendors to provide a system that is flexible enough to grow with the business and be easy to customise to its specific requirements.

On the cost front, Software as a Service (SaaS) is a version of WMS which replaces upfront hardware and software costs with a pay-as-you-go model. Companies avoid being locked into a 3-5 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 simulation packages like those supplied by Cirrus will 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 that may have been chosen.

What both types of data will not highlight, though, is the importance of warehouse staff training, and 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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