Although companies operating with paper-based systems are able to introduce
best practice into the warehouse such as improving warehouse layout and
minimizing travel time by having the fastest-selling items closest to despatch,
they can improve even further and become more productive by introducing
software technology into the warehouse.
Customers are becoming increasingly demanding and the ability to communicate via electronic data interchange, have online visibility and receive instant
replies to queries is more of an expectation than a need. A WMS can be part of
this solution.
Sales and marketing teams are also desperate for real-time information,
whilst finance departments are chasing data constantly.
Before we discuss the advantages of a WMS we need to point out that a
stock-control system is not the same as a WMS. We have come across many
companies who have purchased an inventory management system in the belief
that it will operate the warehouse efficiently. Stock-control systems will manage the inventory at stock location and quantity level, but the majority of these
systems will not manage productivity within the warehouse.
In our opinion, in order to be productive, warehouse systems need to be able
to work in real time, manage all the processes within the warehouse and have
the ability to communicate with other company systems. We will go into more
detail as to the minimum requirements of the system later in this chapter.
A WMS can process data quickly and coordinate movements within the
warehouse. It can produce reports and handle large volumes of transactions as
experienced in e-commerce operations.
The introduction of new technologies into your operation not only improves
your competitiveness in a challenging market but can also be instrumental in
meeting ever-increasing customer demands.
The potential benefits of having a WMS in place include the following:
● real-time stock visibility and traceability;
● improved productivity;
● accurate stock;
● reduction in mis-picks;
● automatic replenishments;
● reductions in returns;
● accurate reporting;
● improved responsiveness;
● remote data visibility;
● improved customer service; and
● minimized paperwork.
There is an adage that says that any IT system costs twice as much as quoted, takes twice as long to implement and produces half the benefits. In order to avoid this, there are a number of simple steps that need to be followed when choosing a WMS.
Choosing a WMs
When choosing the right WMS for a company you first need to fully understand the needs of the company and the key business requirements, not only today but some time into the future.
You need to understand your company strategy, ensure that your specific needs are met by selecting the solution that best matches your business objectives.
The solution can either be sourced internally by writing your own software or you need to ensure that you choose the right business partner to work with
to develop the most effective solution.
A final step will be to calculate the return on investment (ROI) on the purchase and ongoing support of the WMS.
the process
It may be argued that not everyone needs a WMS. In fact, one of the greatest
challenges to introducing a WMS is not choosing the right system but convincing the management team that one is required in the first place.
During a project to improve the space utilization and productivity within a
client’s warehouse we were surprised to learn that the warehouse manager had
not been fully involved in discussions regarding the new ERP system that was
going to be introduced in the near future.
The vendor was asked whether their system could run the warehouse
operation and they replied in the affirmative. Unfortunately the system being
introduced could manage the inventory but was not a warehouse management
system.
When the new system had been implemented, the finance, sales and marketing teams were very happy with it but the warehouse manager was left to operate
a manual system to manage the workflow through the warehouse. As a result,
stock visibility improved on the system but productivity didn’t change. When
we suggested that the warehouse required a WMS to integrate with the ERP
system we were told that no further investment would be made in the IT
system as the system was able to manage inventory perfectly well.
selecting the right WMs
To ensure that the system you choose is the right one for your operation, here
are some best-practice guidelines courtesy of Business Application Software
Developers Association (BASDA) (2009) and Sage Accpac (2005):
● Form a project team.
● Define, record, review and improve current processes. Don’t automate
redundant or poor processes
● Create a list of key functions required of the new system.
● Incorporate any future growth plans in your specification.
● List the benefits to your company of a WMS.
● Research and approach a select number of vendors and select a small number with experience of providing solutions for your market sector.
● Visit reference sites to look at operational effectiveness and discuss the benefits the WMS system has brought about since implementation.
● Produce a return on investment (ROI) report.
Form a project team
Assemble a team of people capable of logical thinking who will decide what your company needs from a WMS and what functionalities it must have and those it will be nice to have. The team should include members from finance, sales, production (if applicable), IT and of course the warehouse.
Appoint a project leader and define each person’s role, responsibilities and their level of involvement in terms of time and decision making during this.
Ensure that all participants are able to make available the time and resources to ensure the success of the project.
Define, record, review and improve current processes
The first stage of the design process is to collect and collate as much information as possible about current processes and procedures. Once this is done you need to go through each process to decide whether it is actually required. There is no point in specifying an IT solution for a defunct process.
Do not make the error of automating poor processes. You need to get the processes within the company right before contemplating introducing a WMS.
Use a project team and your warehouse staff to identify which processes they find frustrating, redundant and inefficient.
You need to understand which processes are going to be improved by the introduction of technology, by how much and whether it is cost effective.
Understand how the warehouse communicates both internally with other departments and externally with customers, suppliers and transport companies.
Create a list of key functions
Each project team member needs to compile a list of the key functions required of a system and rank them by importance, eg 1, 2 or 3; or essential, greatly desired or nice to have.
Produce an agreed list of the essential requirements from the ideas produced by the individual team members and document them ready to be included in a
request for information (RFI).
This list should only have the essential, ‘must have’ functions. This will enable you to quickly discard systems that do not meet your fundamental requirements.
Incorporate any future growth plans in your specification
Although difficult to forecast, you need to take into account likely future events when specifying a WMS. For example: are you looking to increase the number of SKUs significantly over the next few years; will your future operation require a ‘kitting’ operation; will you need to manage a group of warehouses; are you contemplating the use of a bonded warehouse, which systems are you likely to
need to interface with, what technology are you planning to introduce? These are just some of the questions that need to be answered prior to specifying a new system.
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