Warehouse management is by far one of the most extensive and complicated processes in business. Handling tasks such as equipment maintenance to inventory control and distribution optimization proves that warehouse management is crucial for any warehouse business. Today we’ll look at what warehouse management is, the benefits, the use of a warehouse management system and what that could mean for your company’s success.
The term warehouse management really refers to several processes concerning maintaining and controlling a business’ warehouse. It’s carried out through every step of the process and is normally facilitated by warehouse managers. This type of management encompasses everything that takes place in the warehouse, starting from incoming freight all the way to asset tracking and logistics. Warehouse operations take quite a lot of time and effort, specifically seen in the important, heavily time-consuming processes. Basic operations often include:
- Arranging the warehouse along with its inventory.
- Having and maintaining proper equipment.
- Handling new cargo that is received by the warehouse.
- Picking, packing and shipping orders.
- Tracking and improving performance of the warehouse overall.
Measuring Warehouse Performance
All aspects of supply chain management need that you track performance and work on improving it. Warehouse management is the same and is measured through the accuracy and speed of fulfilling customer orders without damage. Here are the main KPIs that are generally tracked to specifically measure the success of the warehouse management process.
Receiving efficiency
In other words, how long it takes for your team to complete receiving and putting away a newly delivered purchase order. In this process you record exact timestamps for new stock being delivered; when it’s ready to be put away; and when it has finally been put away. The difference in time between each point is then calculated and an average is worked per month; enabling insight into how performance is trending in a certain area of your warehouse operations.
Rate of return
At times, having an order returned may purely be out of a customer’s buyer’s remorse and not be because of a problem in the warehouse. That is why the crucial way to make the best use out of this element is to categorize by reason for return. The warehouse or operations manager then analyzes the exact reasons why this KPI may be high and puts into place specific strategies to resolve. After determining several different return reasons, the equation used for analysis –
Picking accuracy
Tracking and segmenting rate of return appropriately then lets you analyze picking accuracy, which crucial data. Calculating picking accuracy is carried out by using the total number of orders in a period along with data from the rate of return KPI, using this equation:
Order lead time
This is also known as average order processing time and it basically describes how long it takes for a consumer to receive an order. Such is often divided into various categories and examples of these are international orders, Amazon Prime orders or orders for special or larger products. The lower the order lead time, the happier the customers become; provided it also arrived in good condition.
Warehouse Management Software
Warehouse Management Software is a software system that has been specifically designed to streamline and automate your inventory, delivery and data systems. An effectively implemented system is what sets your business apart from its competitors and assists in attaining a reputation of excellence and quality. Investing in Warehouse Management Software (WMS) enables you to integrate and synch each aspect of your business together, starting from the beginning of the process; progressing right through shipping and delivery.
Benefits
Staying Compliant With Customer Requirements
A lot of customers command that distributors meet certain criteria, such as supplying particular electronic inventory data or electronic data interchange to assist the company to handle shipping more accurately via an industry-supported system. Many logistics managers decide to install WMS because they come across requirements from customers that cannot be met by current systems. Customer expectations will only increase with time, causing WMS to be flexible in order to embrace these requirements. Many major distributors are investing in a WMS that will handle ongoing customer needs and create profit while at it.
Tracking Employee Metrics
Having a WMS allows you to understand how employees perform when doing their jobs. Managers are then able to use this information to reward high performers and identify those that are not doing so well. Employees feel secure and validated knowing that managers rely on real data instead of subjective feedback from others. At times you even find instances where customers also use these metrics to encourage team building by publicly charting team and individual performance using a centrally located screen in the warehouse. It was found that this encouraged friendly competition between employees and brought everyone to work together as a team. Additionally, it has also helped teams improve and pick up their pace because they know and can see how many orders remain to be filled.
Keeping Up With Competitors
Purchasing a WMS is also a way to stay ahead of your competitors. When you have a proper warehouse management system in place, you are in a position that allows you to achieve what other companies can’t. Your business is able to perform better systematically and financially. Forward-thinking distributors want to plan ahead so they can be the first one to achieve a substantial return on investment.
Reduce Employee Theft
Warehouse-related theft has increased and has cost the industry major loss. Employee theft more especially affects distributors who deal with copper pipe, wire or other accessible high value items that are easy to sell. A WMS can help combat this problem by assisting management to keep track of what exactly has gone missing and when in order to respond early.
Improving Supplier Confidence and Warehouse Appearance
A warehouse that is disorganized does not make a good impression on potential customers or suppliers. Distributors at times implement a WMS because they know that it attracts potential future partners who will want to be part of operations so planned and organized. An environment that seems like it has everything in place can go a long way towards impressing suppliers and maintaining trust. A supplier that walks through your warehouse and sees a cluttered mess will be under the impression that you don’t represent their product well and may assume that you don’t meet any of their strict requirements or get orders done accurately, on time.
Accurate stock control
Managing stock using traditional manual methods leaves much room for error and huge potential for losses. Specialized warehouse management software automates much of the procedures, ensuring a well-run operation. These systems give accurate real-time information enabling staff members and management to keep track of where the inventory is in the production line and warns when stock is needing to be replenished.
Increased warehouse productivity
An effective WMS will maximize your existing workforce because time is no longer wasted on manual checks and stock ordering becomes a faster process. The ease of use of the WMS system also means new employees are quickly trained and are up and running in a few hours instead of a few weeks.
Lower Operating Costs
The efficiency of the right Warehouse management software results in needing fewer staff to carry out the duties of a warehouse. A WMS will streamline the production process, reduce picking errors and speed up order fulfilment, slashing operational costs.
Integrates with ERP systems
If you have an Enterprise Resource Planning system in place, Warehouse Management Software can easily be integrated into the existing infrastructure, providing a single effective production process for all staff members.
How To Select a Warehouse Management System
As discussed, the right Warehouse Management System will save you time and money and ultimately increases your customers’ satisfaction. The decision of the right WMS cannot be taken lightly and one needs to do extensive research when choosing the right one for your business. The first step an organization should take when choosing a WMS is to evaluate your needs and determine which WMS best addresses them.
The aspects to consider are:
- Maximum functionality
- Seamless integration with ERP
- Flexibility
- Scalability to accommodate future growth
- Ease of use
- Advanced reporting capability
- Real-time inventory updates
When upgrading your Warehouse Management System, the questions to ask are:
- Is your current process achieving a 99.9% picking accuracy rate? If not, how costly is each incorrectly picked order to the business?
- What are your other warehouse KPIs looking like? And how beneficial would improving each one be?
- How many team members is it taking to run your current operation?
- And would it be more economical to replace some with a Warehouse Management System or piece of software?
- How many orders are you dealing with each day? And how much annual turnover is this generating?
- Have you been achieving growth targets? And how quickly do you plan to grow in the short to medium future?
Having insight to the rising costs that distribution and manufacturing businesses experience, Dovetail offers a refined, leading Warehouse Management Software system that will increase your efficiency and revenue, decrease errors, and cut down on losses. Contact Us for a leading solution in WMS.
References
Glover, M. 2018. Veeqo. What is Warehouse Management? A Complete Guide | Veeqo. [ONLINE] Available at: What is Warehouse Management? [Accessed 26 September 2018].
Pontius, N. 2018. Camcode. What is a Warehouse Management System (WMS)? – Camcode. [ONLINE] Available at: What is a Warehouse Management System (WMS)? . [Accessed 26 September 2018].
SelectHub. 2018. Warehouse Management Definition & FAQs | SelectHub. [ONLINE] Available at: Warehouse Management Definition & FAQs . [Accessed 27 September 2018].