In the ever-evolving world of just-in-time purchasing
and materials requirements planning, today’s customers demand efficient
cost effective supply chain management. The most costly resource in supply
chain management is “space” or the cost of the warehouse. Real estate
costs continue to rise. Warehousing environments generally do not have
very strong forecasting systems so purchasing departments typically overcompensate
so that customer demand can be met. As a result, the warehouse contains
too much inventory, which means warehouse turns are much more infrequent.
Higher inventories use more cash, leaving less capital to fund the business.
Space is often underutilized or inefficiently managed.
In order for businesses to reduce internal costs in supply chain management,
more efficient systems are needed to reduce space requirements, increase
warehouse turns, and decrease the amount of inventory kept on hand. To
obtain these results, companies should consider using a warehouse management
What is a Warehouse Management System (WMS)? The textbook definition
is “the management of warehouse resources (materials, supplies, people,
space, equipment) from the point of acquisition to the point of disposition
– efficiently and accurately.” (Webster’s 2099 Unabridged Dictionary via
Google online) WMS systems that are integrated with accounting and business
analytical systems allow companies to efficiently manage inventory, personnel
Dan Schell was quoted in saying that “the Holy Grail of distribution
center operations still is a framework of an integrated ERP, WMS and transportation
management system.” (~ Integrated Solutions, December 2001). The dilemma
faced by businesses today is that most companies are currently operating
front offices with 21st century technology (email, high-speed internet,
etc.) but are managing back-end operations (like the warehouse) with outdated
“horse and buggy” systems.
Let’s talk about other benefits of an integrated WMS solution. Do your
customers return their orders because of inaccurate shipments? Do your
customer service representatives spend time resolving short-shipped order
problems? Can you currently identify your most productive warehouse employees?
How much time is wasted in the warehouse because products can’t be quickly
located? Do you know exactly when your peak warehouse order fulfillment
happens during the day, for scheduling personnel and shipments? Are the
fastest moving products in the warehouse arranged so orders for those
items can be picked, packed and shipped quickly? How much training time
is necessary before new warehouse employees can function independently
In conjunction with an integrated WMS system, inventory and purchasing
management becomes the strongest tool in internal cost reduction. Is it
time that your company looks at improving its efficiencies and reducing
overall costs of operation while delivering top notch service to that
most important asset, your customers? Let us know how we can help you
achieve these goals.