For any company that warehouses and ships items to customers, the first signs that there is a problem with warehouse systems will probably be voiced by either customers or company executives looking to decrease warehousing costs.
A dissatisfied customer is a potential lost customer. When shipments arrive late, wrong items are delivered or the packing slip and invoice figures don’t match the items received, customers have a right to complain.
Warehousing is a significant expense to a company. Unless you are in the business of storing and fulfilling orders for customer tenants, the warehouse function is an expense generator, not a profit center. Efficiency in storing, picking, and shipping items is the key to reducing costs. Equipment, manpower and warehouse management are three areas that should be reviewed when deciding if you need to invest in a new warehouse management system.
Today, the demand for speed, efficiency and accuracy supersede the old warehouse standard of quantity of shipments. If your trucking costs, usually up to 60% of overall warehouse logistics expenses, are exceeding known industry standards, it may be time to look for an improved management system.
If labor costs in relation to inventory levels and shipping quantities are rising beyond standard levels, a new system of labor management might be called for. And the human element of the warehouse management personnel themselves could also be a signal new systems and equipment need to be looked at.
Here are five warning signals that indicate a company needs to examine their warehouse procedures and possibly revamp the operation by installing new warehouse management systems:
Labor costs – The cost of labor in a normal warehouse environment is one of the highest costs of doing business. It is also a cost that can be quickly adjusted if need be via employee terminations, furloughs and temporary layoffs. The usual result, of course, is a reduction in service because of lack of help.
Late deliveries – In today’s business world, customers expect timely service. If your level of late deliveries is creeping upward, your transportation management systems should be looked at with the possibility of installing new procedures.
Accounting errors – When shipped and received numbers don’t match, there’s usually a problem with human error in picking the orders and being shipped without being checked at the dock for accuracy. If this is a continuing problem, a new inventory management system might be in order.
Inventory control – Maintaining accurate warehouse inventory numbers is essential in any warehouse environment. When actual numbers are less than the book numbers, shortages can occur that result in costly backorders. Excessive inventory numbers to book numbers can cause reordering too soon and costly inventory buildup. Customers don’t like back orders and company accountants don’t like excessive inventories.
Space utilization – To maximize profits, the warehouse cube must be used efficiently. If you are continually running out of storage space, the answer might lie in a new storage management system rather than in an expensive program to expand the size of the warehouse.
Warehouse Management Systems
Generally, warehouse management systems (WMS) is the term used for the software that governs, monitors, and controls all the warehouse functions including the tracking, storage and movements of all items in and out of the warehouse.
Along with the software, there are a number of devices that help improve efficiency and accurate data transmission. Stationary or wrist-mounted scanners and radio frequency identification (RFID) sensors can generate a constant update and review of warehouse processes.
Sometimes an installation of a device to improve one warehouse function can create efficiency throughout the entire warehouse. For instance, a checkweigher is a machine used at the offloading end of a production line to weight and check packages for accuracy and to insure that they fall within specified limits. This device increases efficiency in the production standards and helps insure that customers receive what they order and pay for.