Warehousing

How to Select the Right Warehouse Management System (WMS)

A successful warehouse depends on employees implementing storage solutions, and the success of these employees depend on system support. A Warehouse Management System (WMS) is a key system requirement in a warehouse to collect and track data, standardize processes, and execute efficient operations. WMS vary in precise functionality but will typically manage several supply chain operations within the warehouse with the objective of boosting productivity, optimizing costs, increasing customer satisfaction and creating data visibility.

There are many different factors to evaluate when choosing the right WMS for a company’s business and processes. The right WMS should be able to:

  • Support current warehouse functions

  • Support desired functions the warehouse plans to implement

  • Integrate with systems that will not be supported by the WMS

  • Grow with the company and future improvements

Tier 1 versus Tier 2 versus Tier 3

Warehouse Management Systems are typically classified in 3 tiers; Tier 1 being the most sophisticated and Tier 3 the least, with associated costs following the same pattern. The standard costs will consist of startup and implementation in addition to monthly operational costs. The decision on what kind of WMS is needed comes down to balancing costs with required or desired capabilities. The line between a Tier 1, 2, and 3 WMS is becoming less defined – a Tier 1 WMS can turn functions on or off to provide custom applications on an individual customer level to accommodate specific needs.

Tier 3 WMS are usually an enterprise resource planning (ERP) system that has WMS capabilities, but there are also basic WMS programs. The Tier 3 functionality will cover standard receiving, putaway, inventory, picking, packing and shipping. These usually are the lowest cost and popular for clients looking to develop and implement a WMS with minimal capital costs.

A warehouse operating with a Tier 2 WMS is likely to have more complex processes that require more advanced and custom functionalities. Tier 2 systems support multi-warehouse businesses, enable greater automation and can integrate with multiple systems like ERP and Transportation Management Systems (TMS). These can range in costs and clients favor these for the expanded functionality and better integration options than a Tier 3 system.

Tier 1 WMS deliver comprehensive functionality to any business operating a warehouse. These enterprise-grade systems include the most advanced functionality and can be multi-site and global installations. They provide a complete integration of the supply chain, fully automated warehouse operations, and additions like labor management, yard management and task management. Tier 1 systems are usually the priciest, but also have the broadest support and the most flexibility of all the systems. As mentioned before, most of these systems can only offer certain aspects of the software to help align costs with customer requirements.

WMS Selection Steps

When it comes time to select a WMS, the main process steps are as follows:

  1. Recruit an internal WMS selection team, potentially with the addition of an external specialist, for example a WMS consultant or supply chain consultant.

  2. Create a timeline and budget for the WMS search and implementation, including a forecast ROI.

  3. Gather WMS requirements.

  4. Create a vendor list based on WMS requirements.

  5. Compile an RFP using a vendor template or custom outline.

  6. Send RFP to vendors.

  7. Analyze vendor responses to produce a final shortlist.

  8. Schedule demos with top vendors to evaluate system performance.

  9. Negotiate contracts with vendors where desired.

  10. Make final WMS vendor decision based on capabilities and cost implications.

  11. Schedule training and implementation.

At the end of the process, you will be going live with what is the right WMS for your business.

Declining Business: 3 Key Ways to Save in Warehousing Costs

A financially stable business with declining demand is a situation in which. Do not be alarmed as there are many ways to help cut warehousing costs to prolong your positive cash flow. Here are 3 key ways:

1: Data-Driven Forecasting

Completely accurate forecasting is hard to achieve, but frequent, data-driven forecasts with informed strategic adjustments are the key to determine how much product nee on-hand inventory is needed. Being able to plan for While this seems basic, there are other areas where accurate forecast can help save money in the future. For example, if you are using a 3PL and can say that your inventory levels will drop x amount each year, your footprint in their warehouse should drop as well allowing the 3PL to fill that space with other clients thus saving you money.

2: Inventory Analysis

In a business that’s losing demand, there’s a good chance that the are certain items that maintain the demand while most others are being phased out. It is very important to keep track of the demand for each individual SKU in the warehouse. An ideal situation would be to set up all the slow-moving SKUs as direct shipments from the manufacturer while keeping only the high moving SKUs in the warehouse. While the shipment costs directly from manufacturer to customer will likely be higher, the savings from not keeping the inventory in stock will outweigh the increased shipping costs. Another option to look into would be to separate slow-moving SKUs in one smaller and centralized warehouse. You can keep the inventory levels low allowing you to lower the footprint. Staffing needs will also be reduced since the handling of these SKUs is much less than in the faster moving warehouse.

3: Inventory and Staffing Management

Proper inventory management is important for all businesses, but it is especially important in declining ones. Start by looking into any trends that might be developing in the orders. It is important to think of outside the box methods for optimizing your warehouse strategy. Instead of looking at storing the SKUs by size or product line, look to see if there are certain items that are usually part of the same order. Group these items close together in your warehouse to save on the handling costs. Instead of storing 1 small SKU per bin, store 3 in each by adding in dividers to the bins. There is also a greater need for cross training of the staff in a slower moving warehouse. There will be much more down time and you cannot afford to have employees not being productive. There will be a slight learning curve at the beginning when the employees are learning the other job functions of the warehouse, so productivity might go down. This is fine as the returns once the cross training is complete will be much greater than the lost production early on.

An Often-Overlooked Aspect of any Operation that can be Improved

As supply chain consultants, we are fortunate to be exposed to nearly every industry and have the unique opportunity to see hundreds of different warehousing and distribution operations. We get to see the different operations for exactly one reason: our clients want us to help improve them.

 

The most common item we recommend improving is the cleanliness and orderliness of a warehouse. Maintaining a clean and orderly operation is much more important than just the optics (though the optics are important - imagine taking a potential client or business partner through a dark warehouse with trash on the floor and graffiti on the wall!).

 

A clean and orderly operation drives the culture of accountability and effort. When nothing is disorganized or out of place, it makes it that much harder for someone to purposely misplace something or work inefficiently. When cleanliness is stressed, it follows to all aspects of the operation, from receiving to stretch-wrapping the pallet going out.

 

As simple as it sounds, this idea is not so simple to implement. Operators are typically evaluated on their productivity. The more you pick/put away accurately, the more productive you are. However, this leads to the little things being forgotten. Will an operator want to put an empty carton away in the corrugate bin if it slows them down? Probably not. These need to be taken into account when evaluating your warehouse personnel. Productivity is key, but not when it neglects other areas of the operation.

The Warehouse Rack Layout Aisle Width Decision

As warehouse consultants, we are fortunate to visit and improve hundreds of distribution operations. The majority, but not all, of the operations require forklifts of some sort. Upon starting my career, one of the things I expected to see in the operations was more standardization of forklift types and, by extension, aisle width. However, that is not the case. Operations of similar applications and volumes can often have different forklifts and aisle widths. Here, I’ll explore some reasons why this may be:

Facility – Oftentimes, the facility may be the constraint. When creating pallet rack layouts, column lines cannot be in the aisles and are best buried in the flue spaces. As such, sometimes the column grid guides the aisle width decision. Also, the facility could have limited height, encouraging bulk floor storage where possible, which limits the truck types used.

Warehouse Management System (WMS) – Some types of racking, such as double deep, drive-in or pushback, require additional functionality to the WMS. Without the functionality, many types of rack cannot be used optimally, which affects the truck type and aisle spacing.

Item Profile – If an item is heavy or bulky, it may require a certain type of truck (for example, a counterbalance instead of a reach) or an extra-long aisle for maneuverability. The reverse is true if an item is too small and only fits in shelving.

Inventory Profile – If the inventory profile contains many pallets of few SKUs as opposed to many SKUs of few pallets, it affects the optimal racking method, thus affecting aisle width and truck decision.

Order Profile – If items are picked in full pallets as opposed to each or case quantities, the best picking method will then drive the truck and rack selection.

Though two operations may appear similar, there are many factors that go into selecting the right aisle width and forklift type. It is not a one size fits all solution nor an easy decision - it requires analysis of several variables.