MMD

WMS as change agent

How software can transform the warehouse from cost centre to profit centre


Cycle count operations can be interleaved with day-to-day picking and replenishment activities.

January 16, 2017
by Eric Allais

How is your warehouse or distribution centre perceived within your organization? Is it seen as a costly overhead, a drag on the P&L statement, a necessary evil? There are many parts of a distribution operation that do not make an obvious revenue contribution.

Let’s put this into the correct perspective. There’s certainly an investment in employees to ensure that a warehouse runs efficiently. And of course, there are physical space challenges that come with a growing, changing business.

Introducing a suitable Warehouse Management System (WMS) can help drive the productivity of a given warehouse and provide managers with much-needed visibility about what’s happening in their operation. With the right leadership, warehouse throughput (eg lines shipped per person) can greatly increase, leading to improved profitability.

As in most things today, technology is driving a great deal of change. Choosing and deploying the right technology in the right places can contribute just as much to the success of a company as recruiting the right people.

With warehouse operations, there is enormous pressure to improve productivity and meet or exceed customer expectations. Investment in IT solutions is also trending upward.

Eric Allais, president and CEO of Washington-based PathGuide Technologies, Inc, has over 30 years of experience in product management, sector analysis and marketing in the automated data collection industry, including warehouse management practices in wholesale distribution

Eric Allais, president and CEO of Washington-based PathGuide Technologies, Inc, has over 30 years of experience in product management, sector analysis and marketing in the automated data collection industry, including warehouse management practices in wholesale distribution

So how can a WMS help? Implementing a WMS most often results in streamlining processes, finding efficiencies and sharply reducing shipping errors. Most distributors are seeing new opportunities thanks to e-commerce, but it goes beyond just finding new ways to sell. The ability to tightly manage inventory needs to start well before the product hits the receiving dock and must continue until the customer gets their order.

1 Receiving, storage and inventory management.
One of the key features of any effective WMS is its ability to track and manage resources within the warehouse. If you’ve ever done a manual cycle count using pen, paper and clipboards, then you’ll appreciate what a time-consuming, disruptive and non-value-add task it is.

Having to shut a facility for a cycle count seems ludicrous, but it is still a fact of life for many warehouses. The lingering problem with manual cycle counts is that the numbers aren’t always reliable, leading to potentially inflated values, possible write-downs or the accumulation of unnecessary stock.

Today there is a growing awareness that a WMS can actually help warehouse employees cycle count more efficiently and systematically. It is possible to ‘interleave’ cycle counts by combining them with other day-to-day activities in the warehouse, such as slotting or picking. An employee may simply be prompted by a handheld terminal to confirm the number of items in a certain bin, which then allows the WMS to validate or update its figures for that SKU.

To give you an example, one of our newer clients, PaulB Wholesale, uses a cycle-count module for inventory control. At last count their warehouse had an inventory error rate of just 0.06 percent in 2016, an almost tenfold improvement since implementing the module.

Speaking of slotting and picking, these processes are becoming more automated and flexible. And that’s an important consideration, because up to 70 percent of a warehouse’s operating costs are spent on order picking and replenishment tasks alone, according to a recent Zebra Technologies white paper.

Ensuring that employees have the right tools for the job goes a long way to making teams faster and better suited to the needs of that specific warehouse environment and its inventory. Helping employees work smarter and more efficiently sets up the company to absorb temporary spikes in volume, and allows each employee to generate more revenue for the business.

2 Better shipping and outbound processes
As items get ready for shipping to a customer, a WMS offers many advanced features that can greatly improve the packing, staging and loading processes. The best WMS solutions integrate with ERP systems, providing greater synergies between the warehouse, the yard and the transportation links of the supply chain.

As an example, the WMS can help reduce transportation costs by automating the choice of carrier based on the item being sent, its shipping address and other available services from the carrier. This can be a relief for warehouses that are already experiencing huge growth in the number of smaller, individual parcels thanks to the popularity of direct-to-customer e-commerce. The WMS will help ensure that the shipping errors are minimized to protect their customer service reputation.

3 Streamlining inbound transportation
A whiteboard and an Excel spreadsheet are useful for a lot of things, but they aren’t great tools when it comes to managing inbound transportation. When you consider how many separate moving parts there are in a warehouse, it is little wonder that schedules are constantly being adjusted.

That’s why streamlining warehouse operations starts with the ability to properly manage and direct the flow of inventory in receiving. This requires intelligent inbound transportation management tools that work seamlessly with your WMS, allowing for easy scheduling and rescheduling deliveries, and the assignment of the right people at the right bays to unload quickly and efficiently.

Putting a WMS in charge of inbound transportation allows managers to track the performance of their various shipping companies. Does a particular vendor arrive habitually late? Is inventory often damaged when it arrives? This information not only helps a warehouse save money, it can also help it optimize the use of material handling equipment as well as staffing when and where employees are needed.

4 Reducing training time while increasing labour visibility

Employee training can often be reduced from weeks to days through the use of WMS technologies

Employee training can often be reduced from weeks to days through the use of WMS technologies

As we’ve seen, a WMS makes a lot of sense for inventory management, shipping and inbound transportation, but it can also contribute to faster employee training times and provide a window into employee performance. In fact, it is common for companies to reduce training time for new employees from two weeks of supervision down to only one day of training using RF scanners.

This is especially beneficial for warehouses with a high turnover of employees due to seasonality. Workers can easily be trained to cover multiple tasks within the warehouse, and management can reduce costs by not having employees idling. This ties directly to the final benefit.

The result: exceptional customer satisfaction
At the end of the day, the customer is the one paying the bills. Having a well-run warehouse that facilitates delivery of the right items to the right place, on time, goes a long way to ensuring happy customers and repeat business.

As the demand for personalized orders through ecommerce continues to grow, warehouses are naturally being forced to carry a larger number of SKUs, which in turn puts pressure on operations to increase space efficiency and fulfillment accuracy.

The visibility and accountability offered by a WMS is the only sure-fire way to keep all of the trains running on time, and making a profit.