Today, most companies face three basic questions when
considering purchasing a warehouse management solution:
- Why buy anything? (the tactical decision);
- Why buy now? (the strategic decision); and
- Who to buy from? (the personal decision)
Why buy anything? Individuals within your company
must recognize needs and be able to sell those needs to management before
a project will be approved. Companies need to purchase new systems for
several reasons. Some of these reasons can include the following:
- Managing an increase in sales and inventory volumes;
- Reducing training of new or temporary personnel;
- Improving accuracy of pick/pack/ship operations;
- Moving to a new warehouse or adding locations; or
- Encountering new customer requirements.
When considering a purchase, a company should analyze the Return on Investment
(ROI) for the project. The real needs of the company need to be stressed
during the project definition. Establish the expectations of the project
up front. When preparing the ROI, consider items such as a cost reduction
by taking cycle counts versus shutting down for a full physical inventory.
Think outside the walls of the distribution center to include areas of
improvement from product flow to customers and stores. Also, consider
supply chain efficiencies that can be achieved with the implementation
of a new system.
Tailor the solution to the needs of your company. Figure out the decision
makers within your organization need in order to obtain “buy-in”
on the project. A warehouse manager should consider partnering with the
CFO of the company. The CFO is responsible for the financial security
of an organization. The CFO will be more willing to budget this investment
if you can clearly justify the benefits and payback of this project. It
is much easier to gain acceptance for projects that are backed or championed
by a corporation’s financial gatekeeper than without them. Be prepared,
however, to be held accountable for ROI calculations.
Also be prepared to do battle for resources or funds for your project.
Every department within an organization battles for funds and resources
to support the organization. Sometimes, the person whom complains the
most gets the most attention. In order to beat out those whom seem to
carry the loudest voices in the corporation, you will need to document
existing processes in the company and outline benefits from changing those
Derive a list of requirements that are based on cold hard analytical
facts from your business processes. Develop a base line for areas of improvements.
Calculate these improvements as part of the overall project. Claim them
as part of the project. Detail business processes for each individual.
If not done well, this can cause problems with the implementation. Be
prepared to define how are you doing business today and what is the cost
of doing business that way?
Before entering into a project, an organization’s project sponsor
should have a total understanding of the processes needed to run the company.
Eighty (80) percent of these processes should be well documented. Companies
should leave twenty (20) percent for wiggle room to implement best practices.
Why buy now? Or, in other words, “How
to persuade people in your organization that they should consider purchasing
a system now?” Typically, the decision process takes a compelling event, such as a new warehouse or new customer requirements.
If you need a system and do not have a compelling event, then you need
a selling event – which will provide
incremental value over time. If you have a selling event, it is imperative
to have a well defined plan, project sponsors, and an ROI to move a project
forward within your organization. Be prepared to explain why the company
should invest in upgrades for additional efficiencies.
Who to buy from? If you are unsure on how to
proceed with any of these tasks, engage with or ask your current software
vendor for assistance. They should be a key player in providing information
to the project sponsor. Business advisors should introduce ideas to improve
current operational processes as well as providing a solution to the organization
whether software is involved or not.
If you are in need of assistance of a trusted business advisor or would
like some help in creating a project to implement a warehouse management
solution, please contact us immediately for our support at firstname.lastname@example.org.
We’d love to help you!