There’s little question that a well-designed warehouse management system (WMS) can be one of the most significant investments you can make in the overall operation of your distribution centers. For some, however, the thought that it might also be one of the most expensive upgrades causes them to avoid the purchase, leaving them dependent on manual, paper based systems. This can be a costly mistake, as a full-featured, well-designed WMS can produce substantial savings in distribution costs.
For those considering the move from either paper or manual spreadsheet-based tools to a cloud WMS, here are a few key areas that should start showing substantial cost savings soon after implementation.
Labor costs remain the single most expensive element of warehouse operating expenses. Anything that can substantially shrink the human capital required to keep the warehouse operating at a high efficiency level is worth serious consideration. The best warehouse management software will help you trim costly labor expenses in two ways. First, by installing automated processes that make operating staff more productive. Automating tasks throughout the receiving, put-away, pick, pack, ship and returns processes can significantly improve order fill rates and accuracy, speed order processing and reduce the need for additional staff to maintain warehouse performance levels.
Once automation is in place, the WMS can assist with optimizing labor schedules. When it comes to managing needed staff, abandoning paper or spreadsheet labor management processes in favor of accurate WMS-driven strategies – based on accurate trending data – can have a dramatic impact on labor costs. Schedules built from real-time order trending data will give a much more accurate view of exactly when and where staff is needed and when you can operate at lower levels. This can lead to more flexible and cost-effective workforce planning and reduce employee downtime.
Warehouse management software that deliver a common data stream across warehouse operations and automate order pick systems using barcode and RFID scanners can eliminate mistakes through the entire pick, pack and ship processes which can significantly improve order accuracy. This can reduce or eliminate costly replacement orders that disrupt normal warehouse operations – and impact overall customer satisfaction.
A WMS software’s ability to provide better real-time visibility into inventory levels can give you a significantly more accurate accounting of required inventory. That, in turn, should allow you to reduce safety stock. As warehouse operations become more complex – with multiple distribution points and higher store inventory deployed to meet expanding omni-channel requirements – maintaining a true accounting of what is actually in each distribution center and the minimum needed to maintain on-time order fulfillment is critical to reducing cost. Paper-based manual systems and spreadsheet-driven inventory management systems seldom have the capability to offer the detail or accuracy required.
Moving from a paper-based inventory system to a cloud WMS can save your company money.
Better return processing
The unpredictable nature of returns processing often makes it one of the most challenging and costly processes in the distribution center. Without a firmly established, automated inspection and dispositioning process in place, proper customer credit reconciliation and final product dispositioning can be a time wasting, inefficient process plagued with missed opportunities for cost recovery. On the other hand, a well-designed, comprehensive returns management operation, fueled by the right technology and process, can lead to significant savings from products that can be resold or returned to the original manufacturer for credit.
Pulling it all together
While actual cost savings vary and are somewhat dependent on business trends and operating dynamics beyond software, British energy company SSE plc was able to generate substantial tangible savings by implementing a cloud-based WMS. The company, one of the six dominating energy companies in the United Kingdom, took on Snapfulfil’s cloud-based WMS system to improve operations. And the savings generated have been rapid and impressive.
Using Snapfulfil, the company has seen an overall 46 percent efficiency improvement and a 10 percent order fulfillment improvement. They have been able to reduce staffing levels by 15 percent while actually improving throughput by 4 percent. As a result, they were able to show an ROI within nine months of go-live and have now achieved an annual payback equivalent to five times the running cost of the system.