The Value of a WMS
From the Point of View
of Its Warehouse
by Don Benson
There are many ways to look at the value of a warehouse management system (WMS). Accounting looks at WMS as the backbone of the stock ledger. Inventory managers look at WMS as the inventory tracking, and sometimes demand aggregation source. Primarily, the point of view that matters most is that of the warehouse and its managers, the viewpoint of this article.
As a company's distributing materials and merchandise grows, a WMS becomes necessary as a consequence of that growth. The WMS becomes necessary for the effective management of the functions of the warehouse.
Managing a warehouse has two dimensions:
1. Looking outward to understand customers’ needs and requirements and manage the flow of information and materials to those customers—thereby satisfying their requirements over time.
2. Looking inward at the functions of a warehouse (receiving, stocking, picking, shipping, etc.), in order to efficiently use warehouse resources (building, labor, equipment and inventory) to maintain quality and reduce the costs associated with the movement of material.
Looking Outward to Customers
To be effective, a warehouse must satisfy two types of customers.
1. Customers within the company—e.g., Accounting, Sales, Purchasing, etc.—who need accurate and timely exchange of information regarding the storage and movement of merchandise or material in the warehouse.
2. Customers outside the company who ship, carry, or receive merchandise or material, and need accurate and timely information about its movement into and out of the warehouse. This includes manufacturing and wholesale companies whose customers are other companies, and retail companies (including online stores) whose customers are retail stores and end users.
As warehouses are required to serve several channels of distribution—e.g., wholesale, retail, e-commerce, etc.—they need to efficiently handle orders with significantly different characteristics, and they need to be able to adapt to daily variation in workload. The workload includes the movement of inventory and the exchange of information about its movement into, within, and out of the warehouse. Warehouses need to respond to very different customer- and channel-specific requirements.
In addition, each customer has a unique set of requirements—to successfully fulfill their individual responsibilities, compete in its marketplace, or satisfy their personal desires. Customer requirements provide daily criteria that enable a manager and a WMS to plan and organize warehouse services and quality in order to avoid penalties and returns, to adapt quickly to changing needs and wants, and to respond to fluctuation in order demand.
Received daily as order information, the WMS translates the requirements into plans for physical inventory movement. These plans include operating decisions, such as the scheduling of the work that connects the warehouse to the resources. This work includes:
⦁ Scheduling of staff capable of completing the daily workload with a minimum of overtime
⦁ Scheduling of movement of merchandise and materials
- ⦁ in the receiving activity to maintain outbound order fill rate and minimize demurrage charges
- ⦁ in the shipping carrier equipment with the capacity to handle the volume requirements and arrival/departure times, etc.
⦁ Communications with customers regarding that inventory movement.
This outward focus begins to clarify the importance of the WMS to the management and performance of a warehouse, to satisfy the requirements of its customers within and outside the company.
Looking Inward to Warehouse Operations
WMS functionality to support the internal warehouse operations is equally dynamic and challenging.
To satisfy customer requirements, a WMS is designed to support management in directing and controlling the staff in the several functions within the warehouse—receiving, stocking, picking, shipping, etc.—and to maintain and potentially improve the throughput, quality, and productivity results over time.
While the daily input and output of a warehouse can be defined, and the future requirements can be forecasted, the staffing, the variety of methods and procedures, and material handling and storage equipment can vary considerably over time and from one warehouse to another.
The WMS becomes the method for creating and communicating the structure for sequencing the workload and instructions to direct and control inventory movement, to maintain a continuous flow across the receiving and shipping docks and through the internal processes, every day.
Each warehouse operates with a unique set of methods and procedures. Still, the design and configuration of the WMS must support management in at least the following tasks:
1. Organize the daily workload into short-interval periods (waves) to guide the flow of inventory movement and labor assignment throughout the day
2. Separate the work into unique and coordinated tasks to optimize resource productivity, including less-than-case, case, and other units of measure for simultaneous picking
3. Direct and control the movement of material throughout the warehouse
4. Direct and control the picking of orders as individual orders or as batches with subsequent sortation to reestablish orders
5. Assemble orders for loading
6. Direct other tasks to ensure the uninterrupted flow of the work and the material into and out of the warehouse, and prepare the merchandise or materials and information regarding them in a manner that is consistent with the customers’ requirements.
The directing and control of staff often can include their movement from one task to another throughout the day, to maintain the coordinated inventory flow through the warehouse and effectively use all resources.
These warehouse tasks and the configuration of the WMS allow it to support the management of resources, to productively handle the daily dynamic demand, and illustrate the value of a WMS in directing, controlling, and reporting the work transactions data.
This inward focus begins to clarify the value of the WMS to the management, effectively use the resources within the warehouse to satisfy customer requirements.
Don Benson, also known as The Warehouse Coach, is a systems thinker, bringing ideas, people and organizations together to achieve their desired outcomes with Warehouse Management Systems for over 35 years. You can reach him at www.wmssupport.com.
Articles in This Series
Call Us! 877-674-7495 info@dksco1.com