As most supply chain directors will agree, the warehouse is a critical component of the supply chain and the epicentre of where things can go right or wrong. A poorly run warehouse with weak systems and processes will lead to severe problems both upstream and downstream.
The end result of any warehouse mismanagement is late or missed deliveries, poor customer service, inefficient space utilisation, high labour costs and - most critical of all - high inventory levels with too much of the company's cash flow tied up in the wrong place.
Few supply chain decisions will dramatically impact day- to-day business, overall company financial health and customer relations more than selecting and implementing an effective warehouse management system (WMS).
The key steps that need to be considered and some tips for a successful WMS implementation include:
Key steps
Assemble a project team
Prior to the selection of a WMS, you will need to assemble a project team that can evaluate the different systems available on the market and identify your key selection criteria. This core team should consist of a project manager (preferably an operations person) and others expected to serve on the project team during the WMS implementation. A member of your IT team can help quantify the benefits of the improved technical management of a new system. It's also a good idea to include a representative from finance who can assist in identifying the preferred economic justification tool and identify the company's acceptable level of cost/savings classifications, risk, and rate of return. The finance representative will not likely follow through on the implementation, but plays a very important role in developing the business case and in obtaining buy-in from the financial side of the business.
Build a business case
Here you will need to identify the requirements of the WMS and what benefits you expect to achieve. Development of the business case is generally a completely separate part of the WMS project, and can be done several months before a project is started. The selection process must focus on delivering key performance goals and enhancing business value. Long-term business objectives and functional requirements for the system need to be clearly and completely defined. Key considerations include the ability to respond to changing customer requirements, compliance issues, the internal technical environment, and new industry or company standards as an example.
Establish the total cost of ownership
The total cost of ownership (TCO) is determined by all costs associated with initial system implementation as well as ongoing maintenance and support. Initial implementation costs include not only licence fees, hardware and technology costs, but also fees for modification and integration. Ongoing costs include standard maintenance and service fees, upgrades and the ability to scale and adapt the system as the business evolves.
Determine the best fit for the organisation
When evaluating a best-of-breed WMS you need to accurately determine exactly what functionality is critical to your business growth and how much you are prepared to spend to achieve that added functionality. There are a range of options out there with varying levels of sophistication and it is important that you distinguish between what you 'absolutely have to have' and what would be a 'nice to have'. This will help you decide what you are willing to spend to get the right system for your needs. In other words, you need to determine the extent to which you are willing to compromise in terms of functionality as opposed to how much extra you are willing to spend to gain that added functionality. If the additional features like real-time visibility are critical to your future business growth then you are more likely to invest in a best-of-breed WMS.
Perform a cost/benefit analysis
A cost/benefit analysis aligns the project's goals, costs and risks with the company's business objectives and financial expectations. The bottom line is that the value of the benefits over the life of the project (normally three to five years) should exceed the total investment of the project over the same planning horizon.
Narrow down your search list and select a partner
Once you have identified what you are looking for, you then need to narrow down your search list to a shortlist of the top providers. Insist that all the companies tendering for your WMS demonstrate their ability to meet your list of absolutely critical functional and business requirements. Do not rely entirely on sales pitches and PowerPoint presentations - insist on live demonstrations at customer sites. Conducting site visits to existing operational customer sites is a powerful tool where you can see the WMS in action and how it would apply to your business needs. If a vendor is unwilling or reluctant to show you an existing customer site then questions must be raised as to their ability to fulfil their promises. Clients should also consider how familiar a WMS provider is with your particular industry as you need to partner with a technology provider who understands your industry. So if you run an FMCG or cold chain warehouse you need to select a partner who can demonstrate expertise in that area.
What to look for in a WMS
* Ease of integration to ERP, automation and other systems
* Best-of-breed technology that is scalable, flexible and adaptable
* The ability to add new functionality that will improve customer service offering
* The level of operational consulting and support provided during the project
Successful WMS implementation
* Understand the current needs and what future requirements will be
* Identify the key outcomes and benefits achievement targets
* Map out current processes and what will change
* Perform a wall-to-wall physical inventory prior to go-live
* Get staff buy-in for the new WMS and prepare them for a cultural change
* Effective training of supervisors and operators is key
* Perform thorough testing before go-live
* Have a contingency plan in place so that operations can continue if technical problems arise. This could be as simple as a manual pick-and-ship system * Inform trading partners about go-live schedules and manage their expectations throughout the process
* It's a good idea to set up a Help Desk during the initial go-live period. This should ideally be staffed by members from the project team who have expert knowledge about the system and can respond swiftly to resolve customer queries
Benefits from a best-of-breed WMS
* Improved productivity: real-time control of equipment and personnel
* Greater accuracy: real-time verification eliminates errors
* Reduced inventory: accurate information permits lower safety stocks
* Optimum use of space: put-away rules allow stock to be efficiently stored and instantly located anywhere in the warehouse
* Improved management and control: strong planning and monitoring capabilities
* Improved customer service: order-fill rates improve due to accuracy and speed
* Reduced handling: cross-docking and dynamic pick faces optimise material movement
* Reduced paperwork and administration
* Greater supply chain visibility
VSc Solutions is the official South African reseller for RedPraire, a global leader in WMS.
Share
Editorial contacts