Ok, your wholesale business is starting to sell lot’s of product through your channels. Now what? It’s likely in the earlier stages of wholesale distribution you would use Quickbooks and/or Excel sheets to track inventory. However, at some point, you will wonder what are the advantages of a WMS? This post will explore the advantages of a WMS. We’ll also look at the right time to implement a WMS.
Starting off it might be helpful to provide a bit of a definition for what the WMS is. Similarly, why do all reasonably sized wholesale companies have them in place? The below quote is from Quora and serves as a good high-level overview:
A warehouse management system (WMS) is a software application designed to manage and support warehouse functionality and distribution center management.
It supports warehouse managers with their day-to-day operational tasks, including planning, organizing, staffing, directing employees or the movement and storage of inventory into, within, and out of a warehouse.Quora Answer
With that broad definition, we can see how a WMS starts to differ from the defacto Quickbooks or Excel documents that many companies use entirely during their initial growth. For most wholesalers, they can get away with some simple spreadsheets and an accounting system up until the $3m-$4m in annual volume. At this point, it becomes very difficult to be efficient. To have data syncing between the warehouse and admin system. Or, to know what you have on stock at all times, along with when to reorder that stock. In large part, these are the advantages of a WMS. What becomes tricky is when you dive into the particulars. Looking at exactly what you’ll need with your WMS, how it will integrate, and how you will operationally use the WMS can be more tricky.
Let’s look at some of the advantages of a WMS:
Advantages of a WMS primarily come in two categories, efficiency and time-saving. You can add in the third being improved sales. The efficiency you will experience will come down to:
Picking – Guiding pickers around the warehouse in a wave picking manner will dramatically reduce the amount of time spent searching for, selecting, and properly allocating the product for customers orders
Product Check-In & PO Accuracy – Don’t you hate when a vendor ships items and the order is incomplete. One of the advantages of a WMS is that when a new product comes in, you can scan the items into the system, and it checks quantity received vs. quantity ordered so you can deal with this properly. It will also allocate the product to it’s appropriate warehouse location for simplified retrieval later.
Redundancy Reduction – In most cases, especially for a smaller warehouse, you probably take inventory counts/picks on a spreadsheet. Then you have to go into the main system to re-enter the quantity picked/packed etc. which is very time-consuming. With a mobile WMS you enter it one place, and it syncs to the other
Shipping and Routing – If you are having to package the product and ship it or deliver it, the big advantages of a WMS come into play. Box-sizing can be auto-calculated, as can the shipping label be auto-printed. In addition, if you service a local area, some WMS, like dHUB, will automatically allocate orders and route your trucks to customers in the most efficient manner.
Tracking Information – Tracking product details, customers, warehouses and beyond gets MUCH more complicated if you don’t have a WMS. Things like product SKU, product sizing, locations etc. become much easier to manage and track as one of the advantages of a WMS
Product Relationships – If a product is available by individual, case, pallet and beyond, you need to track these relationships and automatically calculate the product on-hand
Loading/Unloading Dock Management – Taking the guess-work out of an arrival or where to load the product into should come quite easily through the mobile WMS app
Labor Productivity – This could just as easily fall into the cost-saving category. In this case we are enabled through the WMS to chart which employee is assigned to what warehouse/truck/customers etc. and we can plug in what the productivity of that employee task should be to track it
This is where the ROI comes into play. The advantages of a WMS here primarily revolve around reducing inventory carrying costs, saving on labor costs, or simply cutting the amount of paper used to track movement.
- Minimize Inventory Carrying Costs – This is one of the primary advantages of a WMS since extra inventory means extra handling, and extra labor. Having just in time inventory or as close as you can to the median inventory level will keep costs of product allocation low
- Cut Labor Staff – In one case, our client was able to cut 1.5 employees per warehouse, and we’ve seen it as high as 3-4 employees for a large warehouse. But how? They simply did not need to pay someone to settle up on invoices or PO’s at the end of the day. They did not need the extra staff to help load items because it was done quicker. They didn’t need an admin person just making sure records were up to date. The list goes on.
- Routing & Last-Mile – Best guess delivery is costly. Having the advantages of a WMS which also functions as your fleet routing software will save tons of driving time, fuel costs, and inaccurate deliveries
- Cut Software Costs – Combining and eliminating software systems is another major advantage of a WMS. This happens when you realize you simply do not need a particular software. This could be that old system which held all customers, or it could be an EDI module that now is included in your WMS
Faster Revenue Growth
- Product Recommendations – If you have salespeople either in-house, or on the road, they will benefit with the advantages of a WMS. Being able to clearly see past customer orders. Understanding what the customer is also likely to need to purchase. Cross-selling items. All of these things are enabled in a quality WMS.
- Customer Portal – In some ways this one goes outside the traditional WMS. This does not mean it shouldn’t be factored in. Giving your customers a simple, easy way to purchase is paramount. You will get paid faster, you will enable easier re-orders, and gain customer satisfaction
- Product Subscriptions – In this case, you can even get customers on a recurring schedule for shipment or delivery. This will steady revenues, make it easier on customers, as well as improve inventory turn
That’s quite a few advantages of a WMS. Should you have one? That again is up to you. Some of the challenges for smaller firms is that a WMS can be a rather significant investment. Oftentimes, you will have a time cost to implement. You will also have a cost to train employees. However, when you factor in the advances you may experience, you should evaluate whether you will get an ROI within 1 year. If you believe it will be hard to get a true ROI on the advantages of a WMS in year one, probably wait. If you are on the fence, it’s likely a better position to invest earlier. Get a system in place, then grow with that. The opposite way of doing it becomes much more challenging to grow from, and harder to move away from.
Our team created the dHUB mobile WMS and distribution system. It provides the advantages of a WMS that you are expecting, at a price you can afford. It is one ofthe few systems that has the mobile app, admin panel, and routing all-in-one. If you are evaluating a system like this, check out the overview. Or, you can directly reach out to a firstname.lastname@example.org.