Thursday, February 18, 2010

Three Steps to Increasing Profit with Help from a Warehouse Management System

You don't need to read an industry report to know that times are tough.

But did you know that difficult economic times can afford substantial business opportunities?

Businesses across many industries are focused on maintaining and increasing profitability in times of modest revenue. The typical response is to stop all process improvement and technology projects and concede that "we just can't afford it now." This line of thinking is a trap. The best time to focus on customer satisfaction, process improvement and perfect order performance is when business conditions require strong profitability.
Perfect order performance is tightly tied to profitability metrics. Improvements in order performance - percentage of orders fulfilled on time, complete, and of the highest quality - yield financial improvements in return on assets and operating margin. The best way to achieve desired levels of profitability is through strong supply chain processes supported by flexible technology.
The fact is supply chain management is a long-term strategy. Smart companies find ways to use technology to do more with less in their supply chain management processes. A 2008 study of executive supply chain management technology buyers reveals that 88 percent of respondents expect to increase or maintain their technology investment in the next year, regardless of whether they expect to see growth in their business. This study highlights the fact that many businesses see technology as a way to increase productivity and operating efficiency. The centerpiece for supply chain execution - the warehouse management system (WMS) - is an excellent place to start planning your strategy.

Those who manage successful warehouses and distribution operations invest in WMS technology in good economic times to manage growth, and in a down economy to cut costs and gain competitive advantage. A well-tuned WMS can help your business reduce labor costs, improve inventory management, attain more accurate shipments, improve space allocation and increase customer satisfaction.

Develop Your Action Plan

Learn how a three-step action plan can help your warehouse or distribution center prosper through a lean economic period.

Step One: Determine if an Outdated WMS Is Dragging You Down

You rely on a WMS to maintain ongoing operations, support changing customer requirements, keep up with new industry regulations and simply get product out the door on a daily basis. But a faltering system may also be constraining your potential. Consider the following examples:
  • Do you find yourself creating workarounds for new business requirements that your WMS cannot support?
  • Does your WMS support a variety of languages for global supply chain deployment?
  • Does your WMS provide the opportunity for robust interoperability of systems worldwide via a services-oriented architecture (SOA)?
  • Are support and upgrades of your WMS becoming increasingly expensive?
  • Can your WMS vendor be relied upon to support your growth over the next five years?
Businesses choose to replace their existing WMS for a variety of reasons. But at the most elemental level, the question is whether your current system strengthens or hinders your ability to execute business strategies necessary to building competitive advantage, responding to constant change, and growing your business. If it doesn't, consider replacing your WMS with an adaptable, flexible system that can help position your business to better leverage your supply chain and take advantage of new business opportunities when the economy recovers.

Step Two: Put Extended WMS Capabilities to Work for You

Following initial implementation, many businesses allow their WMS to fall into neglect. A WMS is not an "install-and-forget" application but rather one that must adapt to changing business conditions in order to remain an effective tool. As customer demands change, WMS capabilities also need to be updated and added in order to stay in step with operational processes. What better time to examine ways to better utilize your WMS than when operations demand has slowed?
Consider which functions within the distribution process could benefit from advanced WMS functionality. Here are just a few key areas to consider:

Labor Management

Did you know that labor is typically the number one cost in warehouse and distribution operations? Periods of diminished product demand present an ideal time to think about adopting a labor management system (LMS) to work in concert with your WMS. Traditional estimates for productivity gains resulting from a labor management program typically range from 10 to 30 percent - which is in addition to existing WMS process improvements. And most companies see a return on an LMS investment in less than a year.
Here are some other key areas in which an LMS can help you cut costs and increase worker efficiency:
  • Improve labor utilization - An LMS enables you to objectively measure employee performance and identify those whose performance consistently exceeds the standard, as well as employees who need assistance. Look for an LMS that provides real-time data on actual employee utilization and performance against your own established standards, so that you can detect inefficiencies and take corrective action.
  • Institute incentive-based work plans - A labor management system can allow you to create individual performance goals tied to incentives, enabling employees to take greater ownership of their own work and benchmark their improvement.
  • Get more out of your WMS - Integrating labor management with your WMS provides you with a comprehensive labor management and planning solution. You'll be able to leverage pre-defined work within the WMS to calculate time and resources required.

Advanced Facility Slotting

Looking to positively impact your fulfillment and distribution activities? Start by looking for ways to maximize your staff productivity, equipment, products and available storage space. Two components critical to this optimization are where products are slotted and the distance people have to travel to pick them-especially when it comes to fast-moving items. Here are just a few ways advanced facility slotting can boost your efficiency levels:
  • Maximize space utilization - Slotting products according to the way inventory flows in and out of your warehouse operations helps to ensure no storage space is wasted.
  • Improve worker safety - Slotting products in the "golden zone" reduces visual search time and minimizes the amount of movement required for retrieval.
  • Minimize travel to maximize efficiency - By reducing the distance your pickers travel on a daily basis, you can improve fi ll rates and increase accurate shipments.

Yard Management

Considering the significant efficiencies to be gained through a yard management project, it's unfortunate that the yard is often one of the last areas to be addressed after an initial WMS implementation. Better managing your yard operations can help ensure the continuous movement of goods needed to achieve strategic cost savings. Here are just a few examples:
  • Visibility of trailers and their locations - Tracking trailers at any point in the process helps you avoid detention charges for overdue equipment, proactively identify and resolve bottlenecks and locate empty trailers and containers for quick turnaround.
  • Maximize yard space utilization - In many ways, the trailers in your yard are like the inventory in your warehouse: you need to know the exact location of what you have on hand as well as how much space it requires. Reducing wasted space gives you additional room for temporary and permanent trailer storage-and can eliminate the need for facility expansion.
  • Leverage a single point of yard command and control - Look for a yard management system that features a graphical, Web-based interface to enable you organize inbound and outbound shipments easily with drag and drop trailer moves that generate RF-directed work dispatched to yard drivers.

Voice Picking

Voice picking opens a dialogue between your WMS and your pickers. Instead of using a handheld device display screen or paper for instructions, your team leverages the most natural form of communication - voice - as they go about their everyday tasks. Utilizing voice picking can result in:
  • Greater productivity
  • Increased workplace safety
  • Increased focus and fewer picking errors
  • Reduced training time
  • Rapid return on investment

Step Three: Integrate Your Extended Supply Chain

Economic downturns create tremendous business opportunity for forward-thinking companies. During these times many businesses embark on strategies to acquire competitors, identify new low cost suppliers and enter new geographies with more favorable competitive dynamics. If your business executes on these strategies, will your supply chain operation be able to support it?
A global economic downturn is arguably an ideal time to align your global supply chain operations with new business strategies. Too often firms concentrate on supply chain execution only as it relates to internal locations, without considering their opportunities over a much larger geography.
Most supply chains today consist of complex global relationships. Perhaps this is the time to look outside the four walls to address weak links within a larger supply chain which will, when acted upon, increase the overall efficiency of your supply chain.
Better enabling suppliers, improving vendor performance programs or updating advanced transportation and last-mile delivery strategies are but a few examples of creating an improved, extended supply chain interfaced to WMS.
Here are some common solutions that provide additional supply chain visibility:
  • Supplier enablement
  • Advanced transportation management - inbound / outbound
  • Advanced "last mile" delivery management
No single component of your supply chain operates in isolation. This is especially true for the WMS, as it is both a contributor to, and beneficiary of, improvements made to the extended supply chain affecting global collaboration, transportation and last-mile delivery. While enacting one-off point solutions for business goals may provide some improvements, you will achieve the greatest value by adopting a comprehensive, integrated strategy that optimizes the entire supply chain.


We may be in a period of challenging economic times, but smart businesses will use this as an opportunity to scrutinize operational efficiency and best practices in order to both weather the current economic downturn, and reap substantial benefits once the bull market returns. Your WMS, an established and vital component of the supply chain execution suite, should be a key contributor and starting point in the search for cost saving efficiencies as well as the integration of your global supply chains.

About HighJump Software

Forward-thinking companies entrust HighJump Software to power their supply chains. HighJump Software simplifies the art and business of creating, selling and moving products across global networks. HighJump Software helps more than 1,300 customers worldwide drive growth and manage change.

About Cornerstone Solutions, Inc.

Cornerstone Solutions, Inc. is an independent supply chain management consulting firm, specializing in supply chain planning and execution. With over 200 years of combined distribution experience, Cornerstone has the expertise to help you significantly improve customer service and reduce supply chain costs.

source: TEC

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