5 Examples of Warehouse Management Systems (WMS) Cost Savings

Investing in Warehouse Management Systems (WMS) Help You Save Money and Make Money

Warehouse Management Systems (WMS) help growing distribution companies streamline the movement of inventory in and out of the warehouse more efficiently than possible with outdated manual processes. An investment in a WMS such as Accellos offers advanced functionality to meet the demands of a growing business. WMS provides benefits such as different inventory picking options, lot and serial management, cycle counting, bin placement, space management, ERP to WMS integration and others. A robust WMS helps with warehouse management improvements which results in significant savings from having increase accuracy, fewer errors and reduce labor cost.

5 Cost Saving Benefits of Warehouse Management Systems (WMS)

1. Increased Accuracy:  If the physical inventory “on the books” and the physical inventory in a warehouse do not match, the situation is often chaotic. When a warehouse picker goes to retrieve a part and it is not there (or not enough is there), a series of manual checks and back tracking must be completed to fix the problem and get the order out the door. Inaccurate inventory results can have broad consequences including:

• Poor buying practices and excess safety stock associated to buyers lack of confidence in record accuracy
• Delays in order fulfillment associated to lost or misplaced product
• Lost sales due to stock outs and over commitments
• Costs associated to placing and managing back orders
• Lower labor productivity associated to searching for lost product
• Potentially higher freight costs resulting from expediting shipments to customers

Example: These issues could result in excess inventory, which ties up capital and negatively impacts capacity. The results are higher costs, low productivity and bad customer service. The self-checking nature of a WMS, in addition to a good cycle counting program, ensures inventory accuracy of 99.9%. This high level of inventory accuracy is the foundation for a majority of the other benefits realized in using a WMS. Inventory may be the highest asset in your company. What is the financial impact of 95% inventory accuracy compared to 99.9% over the course of a month or year?

2. Fewer Errors:  A real-time Radio Frequency (RF), ie. Hand Held Bar Code Scanning driven WMS is self-checking. As transactions occur, the system verifies the activity and may even prompt the user with a question if the system detects a potential problem. In a paper-based environment, errors are common across all functional areas. The impact of an error in one function is amplified throughout the overall operation. An error in receiving (wrong product number, wrong quantity, etc.) will create potential delays across many operations.

Example: Let’s assume 20 cases of part A are received as 200 cases, a put-a-way operator may spend considerable time searching for the extra 180 cases. In a non-automated environment, it is common to have operators putting away whatever product is in a staging queue without checking product numbers or quantities. In this instance, the quantity error in receiving will get pushed even further downstream as operators are sent to pick 40 cases from the load with only 20 cases physically on hand. Also, if an automatic payment correction is generated, you may end up requesting approval for payment of an additional 180 ghost cases.

3. Automation Reduces Errors:  In a paper based manual data entry environment, there is also an increased chance of data entry error. Humans make mistakes; WMS doesn’t. Studies have shown, on average, one out of every 300 keystrokes is an error. The cost of even one such error can be significant.

Example: What would be the effect of a missed product of some value, such as the cost of miss shipping a piano to Albany, Oregon, instead of Albany, New York, could easily run in the thousands of dollars. And, this does not take into account the added cost in damaged customer relations. The automated data collection nature of an advanced WMS results in process efficiency and data integrity. The benefits of data integrity are numerous.

4. Reduced Labor Cost:  By eliminating manual data entry, associated fixed labor costs are immediately reduced. These reductions alone can justify an investment in automated data collection which is a key component of WMS. But other labor costs are reduced as well.
Example: Administrative labor is reduced as less time is spent correcting errors. Fewer errors and timelier, accurate information also mean fewer, more productive meetings for managers and executives. In general, automated data collection lowers labor costs by reducing overall setups, idle time, cost of expediting, and time spent correcting errors.

5. Increased Productivity:  The more manual processes are replaced with WMS, the more you can focus on streamlining additional factors that help boost productivity such as the movement of inventory in the warehouse.

Example: It is reasonable to expect up to a 20% improvement in direct labor productivity. Direct labor is better utilized due primarily to a WMS’s ability to provide specific task assignments based from a concise picture of inventory availability, inventory positions, and the overall movement activities to be accomplished. System directed activities minimize operators time spent identifying what actions need to be accomplished and planning the activities once they have been identified.

Download the complete Business Case for Warehouse Management Systems

Contact us about questions on Warehouse Management Technology

About iCepts Technology Group, Inc. Middletown, PA

We are a Microsoft Dynamics NAV Partner offering implementation, service, and support for Microsoft Dynamics NAV in: PA, DC, DE, MD, NC, NJ, NY, OH, VA, WV, and the entire Mid-Atlantic Region. We also offer implementation, service, and support for Accellos One Warehouse Management Systems in: PA, DC, DE, MD, NC, NJ, NY, OH, VA, WV, and the entire Mid-Atlantic Region.

As experienced SCM, WMS and ERP consultants and value added resellers (VARs), we provide start to finish services for the solutions we represent Microsoft Dynamics NAV for Distribution and Manufacturing, Accellos Warehouse Management System (WMS), Server virtualization, open source VOIP phone systems and infrastructure and security. We provide services that cover process analysis, implementation, training, security and networking. Naturally, we also provide full ongoing support for years after implementation to help our clients succeed. We are your one stop shop for your business technology needs.

Contact us for additional information by clicking HERE or...
Phone: 717.704.1000
Email: info@icepts.com

Another version of this article was previously posted by iCepts Technology Group, Inc. on February 28, 2017 - Warehouse Technology Cost Savings Examples

Photo courtesy of freedigitalphotos.net by Graphical Mouse