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Is it Time for a WMS?

Advice from true warehouse experts

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Here's what you should examine: Labor. Labor costs represent the largest expenditure in warehouse operations, and they are the most difficult to manage. At the top of the priority list of Key Performance Indicators (KPI) should be productivity in terms of Revenue per Employee (RPE). Take a look at your current workforce: do you know who the most efficient, accurate and speedy workers are, and can you prove it? If you use their pick rate statistics as a benchmark, for example, how poorly are other workers performing? Is there is a training issue? Are your workers relying on tribal knowledge? And finally, take a look at the newly hired worker. How long does it take for him/her to become productive? If current processes are so convoluted that weeks of training must be calculated into the cost of adding labor, this may justify the purchase of a WMS. Errors. There are a number of opportunities for errors in the warehouse/order fulfillment arena, all of which are costly. Examples include reduced profits due to resending orders, and the time and cost of issuing and processing RMAs. Just the lost revenue around mis-picks (wrong item or wrong quantity that result in shipping errors) could be enough of a reason to purchase a WMS. According to a survey conducted in 2013, mis-picks cost the average distribution center nearly $400,000 annually. That same survey found that a mis-pick costs anywhere from $22-$100 each, resulting in an overall industry loss of up to $4.8 million annually. Efficiency. Is your stock organized to maximize put-away/pick efficiencies? If not, your business is being financially impacted. In the same survey stated above, the average 50-person warehouse or distribution center lost 3,000 annual labor hours due to inefficiencies. One way to address this loss with a WMS is to institute optimized work flows that reduce product handling, eliminate unnecessary travel, simplify the number of steps in any process and kick paperwork to the curb. 2) Do you control your inventory, or does your inventory control you? If you're trying to determine whether or not you need a WMS, taking a closer look at your inventory controls might deliver the answer. Do you regularly over-buy stock because that's better than living in fear that you might run out? This practice will lead to an increase in inventory carrying costs, space constraints, and result in a loss of profits (not to mention the risk of obsolescence or expiration). Missing the mark? Take the time to consider these top 3 questions. Then start talking.

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