Efficient Warehousing – Introduction

During the course of the year, we will be writing a series of articles to address how companies can improve their warehouse efficiencies.
These articles are based on “real world” experiences our consultants have gained performing numerous implementations and from the publishers
of the warehouse management solutions we implement.

These articles will provide you with a warehouse technology and process selection roadmap, giving SMB (Small & Medium Business) distributors
insight into initial investments that are affordable. Additionally, it outlines an upgrade path with incremental investments that result in greater
operational sophistication and savings.
Why Now?
Analysts predicted double-digit growth in the SMB warehouse management software market-space through 2005. Not only has the growth rate been sustained
but even more growth has been fostered by FDA compliance (cradle to grave lot tracking) introduced in June 2006. The growth rate is forecasted to
continue on the upswing in 2007. SMB warehouses who do not offer automation software, ASN compliance, and instant perpetual inventory reporting
are being forced to look at software solutions to stay competitive in the market place.

This growth can be attributed to several market driving catalysts:

  • Tier-one market saturation
  • The commoditization of wireless technologies and PDA devices
  • The .NET evolution and the development of open inter-software communications standards
  • The availability of low-cost reliable database software
  • Major retail’s pursuit of RFID to replace the barcode in warehousing, distribution and stores
  • Lower total cost of ownership

Tier-one Market Saturation – The Fortune 1000 have all purchased WMS applications. Technology vendors are now focusing on delivering scaled
down solutions to the mid-market.

Commoditization of Wireless and PDA devices – Consumer adoption of the wireless 802.11b/g standard has shifted the industrial market for wireless
technologies into the mainstream. The same holds true with PDA devices. Many companies are currently using wireless PDA type devices connected to
their local area networks to bring real-time computing and increased productivity to the workplace. Industrial wireless PDA devices for warehousing
and distribution differ from their consumer grade counterparts to accommodate requirements for improved battery management, integrated barcode scanners,
durability and easy keyboard input.

The .NET Evolution – Installing “bolt-on” warehouse solutions to standard business applications is now cost-effective, more
user friendly and is a common occurrence due to the evolution of interface standards. They have allowed developers to focus more energy and time
on developing complementary features and functions.

Reliable Database Software – Mission critical applications like warehouse software can now be implemented on cost effective, “safe”
database platforms. Applications like Microsoft SQL have outpaced rivals DB2 and Oracle in the SMB market because of low cost of ownership, robustness
of architecture, low-cost hardware platform, security and up-time. Microsoft SQL can now be installed with Small Business Server in under twenty
minutes and runs effectively without a database administrator.

The Wal-Mart effect – Major retail is driving vendors to comply with technologies like barcode and RFID to reduce supply chain costs. Barcodes
allowed Wal-Mart to eliminate accuracy problems and to streamline processes while minimizing human interaction with the data collection process.
In constant pursuit of additional savings from their supply chain, Wal-Mart settled on RFID technology to further shave precious seconds per transaction.
Products can be automatically identified anywhere within the supply chain without pallets being broken down or being stopped for scanning.

While saving Wal-Mart many millions of dollars in supply chain costs, barcode and RFID technologies represent an additional cost burden to manufacturers
and distributors unless leveraged to their own advantage. The same product codes that are required by Wal-Mart can be used to automatically and
accurately identify products within the vendor’s distribution center.

Lower total cost of ownership – In addition to the aforementioned technologies and market conditions, software value has increased substantially
over the past decade. The cost per feature is at an all-time low. Many warehouse automation technologies have matured enough to offer robust, out-of-the-box
software providing quick implementation methodologies at a reasonable price.

The cost of outfitting a warehouse employee with a solution that includes wireless PDA devices represents between 2.5% and 25% of employee burdened
costs in the first year, not including the asset value of the infrastructure and the tax implications of asset depreciation. Technology-based tax
incentives may be available in countries looking to affect workforce productivity.

Companies implementing warehouse automation solutions can expect productivity increases in the first year that result in a return on investment
(ROI) in as little as 6 months. Of course, the rate of ROI depends on the size and scope of a technology purchase and how it is put to use.

Hopefully this article has provided some insight on why now more and more business are moving to improve their warehouse operations to gain efficiencies.
Future articles include:

  • Feb 2007 – Warehouse Efficiency Strategies Pyramid and introduction to Level 1 – Current Process Automation
  • Mar 2007 – Warehouse Efficiency Strategies Pyramid and introduction to Level 2 – Business Process Re-engineering
  • Apr 2007 – Warehouse Efficiency Strategies Pyramid and introduction to Level 3 – Infrastructure & Business Process Re-engineering
  • May 2007 – Warehouse Efficiency Strategies Pyramid and introduction to Level 4 – Integrating Warehouse Automation Equipment into Business
    Processes
  • June 2007 – How to Choose a Warehousing System
  • July 2007 – Essential Warehouse Management System Features
  • Aug 2007 – Warehouse Management System Key Feature Check List
  • Sept 2007 – Picking a Software Vendor and Solution Provider to implement a Warehousing System
  • Oct 2007 – Planning a Warehouse Management System Implementation
  • Nov 2007 – Implementing a Warehouse Management System
  • Dec 2007 – Utilizing your Warehouse Management System to increase efficiencies.

If you need assistance or if you have any questions relating to how a warehouse management solution can help your organization reduce costs, increase
productivity and be more competitive, contact us at info@axisglobalpartners.com.

1 Four Ways To Efficient Warehousing, Version 1.3, Radio Beacon Inc., Copyright © 2004 Radio Beacon Inc.

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