In golf, the difference between a birdie and a bogey often comes down to the effectiveness of your short game. You might have Tiger Woods-grade driving skills, but it won’t matter without an efficient short game.
The same is true for inventory optimization. Logistics and supply chain management help greatly with inventory optimization, but they can’t save a business that misplaces stock or struggles with accurately managing the warehouse.
That’s why a warehouse management system (WMS) is such an important component of an effective inventory optimization strategy. WMS is like your short game in golf. It isn’t all that you need, but it plays a crucial role in the inventory process where it matters most.
What’s a Warehouse Management System?
WMS is software and processes the enable a business to more precisely control and administer warehouse operations from the time goods and materials enter the warehouse until they depart. The overall goal of a WMS is optimizing warehouse operations so goods and materials move through an organization’s warehouse in the most efficient and cost-effective way possible.
This is achieved by more precise handling of key warehouse functions such as inventory tracking, picking, receiving, and putaway. Central to this effort is the enhances visibility and automation made possible by WMS solutions.
Basic Solutions or Purpose-Built?
Most modern warehouse operations already have the foundation for warehouse management built into their enterprise resource planning solution (ERP). What comes standard in most ERP offerings sits on the basic side, however. You can putt with an ERP system alone, to use the golf analogy, but it won’t help you fit the swing to your shot.
“As the size and complexity of a distribution center (DC) increases, there is a need for more labor optimization and far more flexibility to manage operations,” noted Marc Wulfraat in Logistics Management, president and founder of supply chain consulting firm MWPVL International. “And, with e-commerce causing operations to be drowning in one-line orders, many DCs are utilizing more automation. Once you start marching down that path, the WMS functionality provided by some ERP vendors may lack the needed capabilities.”
That’s where purpose-built WMS solutions come in. They take the general business management functionality of an ERP and extend it with purpose-built warehouse management and optimization functionality for tier-1-level inventory control.
Some of the deeper functionality that comes with the use of a WMS include advanced picking and packing options, staging and planning optimization, embedded label printing, integration with RFID scanners, APIs, and eCommerce platforms, interconnected logistics with 3PL and EDI systems, real-time analytics, and of course deep automation support.
Why Do Small Businesses Need a WMS?
The advantages of a WMS solution are many, even for small businesses that lack a multi-warehouse footprint.
Better Inventory Management
First and foremost, WMS solutions help create healthier inventory by reducing lost products, shrinkage, and misplacement. Businesses have a granular level of management when it comes to inventory control, which translates into fewer fulfillment and shipping errors.
Efficiency Gains through Automation
Warehouse process automation enabled by WMS solutions streamline receiving, picking, and storage for faster turnaround and reduced errors. Automation is at the core of inventory optimization, and it takes a WMS to make it possible.
Increased Worker Productivity and Reduced Turnover
WMS solutions help eliminate many mundane and repetitive manual tasks, both from a business process and physical labor standpoint. This frees up workers from the accounting and management departments all the way down to the warehouse floor to focus on more challenging tasks, which helps with job satisfaction and overall retention.
Reduced Operating Expenses
There is a significant return on investment from WMS solutions because this greater inventory and warehouse management optimization reduces unnecessary stock overhead, increases worker productivity, and drives process efficiencies.
Improved Customer and Partner Experiences
With more accurate and efficient inventory management, customers and partners benefit from improved inventory status and faster ship times. That improved customer satisfaction boosts both brand and reputation.
Where to Start with Inventory Optimization
While WMS solutions help businesses throw themselves into the short game of inventory optimization, mastery still requires the basics and a solid overall systems foundation. You can’t putt before you can drive.
As noted in Industrial Distribution, there are four foundational elements necessary for inventory optimization even before bringing engaging the power of a WMS.
- Create a single source of truth that connects operations, sales, marketing, and finance for collaboration and optimal decision-making.
- Integrate data across upstream and downstream networks to provide a real-time picture of the supply chain.
- Digitalize assets to create a digital mirror of the operations.
- Use predictive analytics for automation of real-time supply chain planning.
Is your business ready for tier-1 inventory optimization? If so, we can help. Just like your golf game, your inventory management can benefit from the advice of a pro.
We’ve been helping small to mid-sized businesses with inventory management and ERP integration for more than 17 years as an SAP Gold Partner. Contact one of our consultants by phone at (801) 642-0123 or email us at email@example.com for guidance on how to take the next step.