How warehouse management system deliver ROI?

How warehouse management system deliver ROI?

In this intense competitive business environment, many companies are planning to upgrade their existing warehouse management system (WMS) or planning to adopt WMS for the first time. So the decision makers want to evaluate the return of investment before their technology selection.

Through this blog we are trying to explain the methods to calculate the probable ROI opportunities:

1. Managing inventory.

Distributors who lack inventory and warehouse accuracy often carry more safety stock than necessary. Using a WMS allows them to gain inventory and warehouse accuracy so they can reduce safety stock levels. It also provides visibility to real-time inventory, which can potentially eliminate lost product and reduce overstocks.Warehouses with high levels of inventory accuracy cut costs by not purchasing product until it is needed; earning price breaks by ordering in larger quantities; and consolidating orders to vendors, which limits inbound shipments.

2. Saving space.

Warehouse management system allow distributors to define storage areas and bin locations in the warehouse. The system then manages product storage using the rules established for the facility. A better organized warehouse yields space savings.

3. Getting the most from labor.

A big part of any ROI, labor savings come in numerous forms. Using a warehouse management system can deliver benefits including gaining productivity, reducing and potentially eliminating costly physical inventories, and absorbing business growth and increased volume in the warehouse with existing resources. It also makes training new employees easier.

4. Satisfying customers.

Customer satisfaction is often hard to measure, but it is valuable. Having the right product to deliver to customers at the right time and to the right place helps increase sales by reducing short ships, shipping errors, and missed deliveries.

Service-level agreements (SLAs) with customers often have strict guidelines and penalties in place if the distributor fails to satisfy ship completes, on-time delivery, shipping accuracy, labeling, and packaging requirements. Warehouse management system provides the tools to help properly manage SLAs and avoid stiff penalties.

5. Reducing wear and tear.

Pallet jacks, forklift trucks, man-up trucks, and other materials handling equipment experience tremendous wear and tear. Using a warehouse management system provides benefits such as:

  • Efficient routing of activity throughout the warehouse.
  • Consolidated activity, such as wave order picking and zero bin cycle counts.
  • Associating equipment to areas of the warehouse and to appropriate work.
  • Managing and enabling pickup and delivery, also known as drop points.
  • Reducing time spent locating product as a result of accurate inventory.

The time period for gaining ROI depends on the company size, some can get ROI in just 3 to 6 months and for others payback will be longer between 12 to 18 months.

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