Warehousing (Inventory) is one of the most important parts of the supply chain. It can also be one of the most underserved when it comes to technology investments. The case for purchasing a warehouse management system (WMS) or updating an outdated solution is strong, yet justifying the investment is a major challenge for many businesses.
Research from Gartner shows that in 41 percent of cases, those in the market for a WMS solution have no existing solution. The remainder of organizations interested in warehouse management technologies have some type of older system with limited capabilities that cannot be scaled or adapted to meet growing warehouse complexities and changing customer needs.
In making the case to invest in a WMS, whether as a standalone solution or as part of an enterprise resource planning (ERP) offering, a well-rounded approach is required. That means taking a good look at changing business and market requirements and how a modern WMS can help meet them. Operational improvements should also be clearly outlined, as well as long-term financial benefits.
A Shifting Market Landscape
Customers are becoming an increasingly powerful part of the supply chain. Customer engagement and service is a serious competitive differentiator for businesses, and consumers have very specific expectations and demands. They also generally have a low tolerance for fulfillment errors.
The Amazon Effect and general rise of e-commerce have raised consumer expectations for speedy order fulfillment and shipping of small, specialty orders. Warehouses must be able to fulfill those expectations to meet customer demands and remain competitive.
A WMS solution will go a long way toward ensuring the warehouse is optimized to meet those needs. That means keeping warehouse space maximized and inventory logically organized for speedy picking and fulfillment. This will lead to improved and more accurate order processing, and ultimately faster turnaround times. A WMS also can handle the growing need for features like custom labeling and packing.
Having too much product on hand taking up excessive storage space can be a risk and liability for any business. A WMS solution will be able to track and forecast needs as well as perform more accurate inventory management, ensuring the right amount of products are in the warehouse during specific time periods.
Operational Improvements
Customers and competitors aren't the only reason to invest in a WMS solution. The large number of operational benefits and improvements are a compelling reason to take the plunge. Immediate improvements include inventory accuracy, control and validation, which are helpful from an operational standpoint as well as for serving customers.
Employees also will benefit from a reduction in manual jobs and paperwork, as many routine and repetitive tasks will be automated by the WMS. That will free up staff to focus on more important work, like long-term business optimization and growth.
There are a number of long-term operational benefits to be gained from investing in a WMS, too. These include improved management control and oversight, as well as the ability to easily scale and adapt as customer needs and market demands shift.
A WMS is a major asset for meeting regulatory compliance mandates, as well. This is especially useful for industries like life sciences, healthcare and consumer electronics. Most solutions have built-in capabilities for auditing, security and quality control, ensuring businesses remain compliant even as government and industry regulations change.
Financial Incentives
Cost will be a major factor in the decision to invest in a WMS solution. Businesses that already have an ERP in place or are looking to purchase one will want to research a WMS module or functionality. A standalone WMS offering may be a better fit for other organizations. Either way, WMS is a substantial investment but will also help businesses save money over time.
Most modern WMS solutions are cloud-based or delivered as-a-service, and may be budgeted as an operating expense. That's a major differentiator, especially when considering upgrading from an older legacy system. Many of those solutions required a serious initial capital investment along with additional charges for management and maintenance. Some are no longer supported by older manufacturers and are reliant on IT departments to spend money and time to keep them running.
A modern WMS provides an excellent return on investment over the long term. An optimized warehouse means the sales and marketing teams can better target customers and sell quickly and more accurately. Faster order fulfillment and shipping will result in fewer errors and less time spent troubleshooting issues and trying to placate unhappy customers.
Even with all the compelling benefits outlined above, making the case to invest in a WMS solution won't be easy. According to Gartner's research, many companies are simply resistant to change and willing to accept the status quo. When the status quo fails to meet customers' demands and is not able to keep up with competitors' warehousing solutions, it's time to consider an investment. So pay attention to those complains, and lagging marketshare. This can also help with the case for a WMS.
To learn more about the importance and value of investing in a modern WMS solution, check out our recent blog post on the topic.
