WMS Consideration

WMS Considerationby 
Senthil Angamuthu, Steve Nation and Jeff WronaEqually, how much benefit is there in maintaining a
 winning reputation for efficiency, not just with your
When a company wants to implement a new WMScustomers, but with any person or organization
system, it is always a question of cost vs. benefit. whose business has an interface with your operation?
A company should realize that this technology could To remain focused on the operational side, and
provide significant operational and financial benefits todetermine specifically where savings will be made,
their organization. Most companies, however, areyou will need to consider these sorts of questions:
uncertain about how to cost-justify the potential-  Are your labor resources performing near
spend. We will explore cost-justification further in aoptimum productivity?
moment, but first let’s identify the reasons toIf not, then some of that resource is wasted. The
implement WMS.first priority of an efficient operation is to ensure that
 whatever resource is paid for is fully employed.
There are many valid reasons for wanting to 
implement WMS or increase the functionality and- Are certain tasks or processes inefficient?
capability of your existing WMS solution:If so, money is being wasted while staff spends time
- The need to keep pace with competitorson things that could be done more efficiently,
- Comply with trading partner requirementsespecially when they could be performing other
- Maintain customer confidenceduties.
- Move with the times by adopting new technology 
- Increased accuracy and productivity- How many put away, replenishment, and pick errors
 However, when it comes to justifying expenditure,are occurring currently?
you need to take a hard look at the way yourErrors due to inaccuracy cost dearly to rectify in
distribution centers are currently operating in order toterms of labor, management time, extra handling,
see how the increased functionality is going to repaytransport and related paperwork.
the investment. It may also be useful to consider 
what the additional functionality is intended to deliver- Are practices being supported that could be
and ask yourself, do I have these capabilities in theeliminated by the introduction of the WMS
warehouse/DC right now?functionality?
 Benefits and ValueIn a typical operation there will be activities, especially
 A good WMS should be able to:peripheral or supporting ones that could be eliminated
- Give high levels of productivity and accuracy.altogether.
- Help to achieve a consistently high level of utilization 
of manpower and equipment.- Are inventory levels too high or being held for too
- Ensure that your warehouse team works tolong?
disciplined processes.It is recognized that greater stock accuracy means
- Sustain a very high level of efficiency.stock-holding can be reduced and stock turn
 In addition, you would expect the WMS reportingimproved, so the associated cost of holding stock
and analysis tools to give you detailed managementcan be reduced.
information and historical traceability of stock These are some key areas to examine in your
movements. And you’d expect it to be able tooperation, and for each one there may be
exchange information with other softwareconsiderable detail. There could also be unique
applications, whether your own, those of youroperational considerations, where improvement might
customers, suppliers or whomever.incur major benefits for the operation. Turning the
 Inventory control is also an obvious benefit becauseanswers to these questions into meaningful figures
no business wants to be stuck with too much —will therefore involve some time and effort.
or too little — product. It also makes the best use It is likely that both high-end and low end-figures will
of employee’s time. “If you have 100be produced regarding potential savings in each area.
percent accurate reporting as to the locations ofThis is normal, as until the new functionality is
everything, and the system directs everyone onimplemented and the user learning curve has passed,
where to go to get it, staff will not be traveling upoptimum efficiency and productivity cannot be
and down the aisles of the warehouse looking forquantified precisely.
the required items.”.. Some areas will improve within expectations while
 So knowing how operations should function in yourothers may exceed it. Ultimately the preceding
warehouse is the first step to calculating your ROI. Ifexercise is very worthwhile. Its purpose is that you
you know your operations lack some of these things,can be confident, first by implementing the WMS
or that they are unsatisfactory you may have a clearfunctionality that will provide benefits for the
idea about what providing or improving them will becompany, and second, that the benefits gained result
worth to you.  If it’s not clear, then askin a timely payback and prompt return on investment.
yourself these questions: About Authors:
- What problems or pains in our warehouseSenthil Angamuthu, is an industry veteran in Supply
operations do we have?Chain Execution where he directed and worked with
- What do these problems relate to?several WMS implementations in Retail and CPG
 Remember that the system will not automaticallyindustries. He is currently working as President of
resolve all problems. Where there are operationalExxova’s Retail and SCM practice. He started his
issues, they will need to be addressed in relation tocareer with Manhattan Associates and later worked
the operation of the system. A system will improveas an Analyst at American Retail Group. He was also
many things but it needs to work in conjunction withthe founder of S3 Group, Inc a supply chain
correct operational practice.management and consulting firm and built the
 Calculating Cost and Paybackcompany with clients like Hugo Boss, Ferragamo, APL
 At this point, understanding how much the solutionetc.. 
might cost, and how soon you might expect to Steve Nation is a VP of Business Development in
achieve payback is useful. As a very simple example,EXXOVA, Inc, a management consulting firm
if a solution costs $175,000 and you want to achievespecialized in ERP implementation and Supply Chain
payback within 24 months, then you need to realizeManagement. He started his career in Supply Chain
benefits of around $7,300 per month. This is not aoperations with Georgia-Pacific Corporation and then
complex, scientific approach, merely a quick way tospent several years with Pitney Bowes implementing
look at the savings that the system needs toWMS and TMS solutions in CPG, HiTech and Food
generate.and Beverage industries. Steve also worked as a
 So how do we achieve payback? There areDirector of Business Development at S3 Group, Inc, a
different ways to look at this, but at the simplestsupply chain management and consulting firm where
level, payback is gained by increasing productivity,he directed and built the practice around CPG and
accuracy and efficiency at existing cost levels, or byRetail industries.
maintaining current productivity, accuracy, and Jeff Wrona is with Exxova, Inc as Operations
efficiency while reducing costs. Payback is the initialDirector in their Retail and SCM practice.  Mr. Wrona,
period of return on investment where directly relatedis a Warehouse Management consultant with over 25
costs are recovered. Once that is achieved, savingsyears of Industry experience in CPG, Apparel and
become a return in the truest sense.Fashion Industries. The organizations that Jeff has
 There are many other dimensions to the paybacksupported have ranged from small American
question:companies to large Japanese global conglomerates.
For example, what value can be placed on being in a  Prior to that Jeff was Director of Operations in S3
position to accept more business from new orGroup, Inc where he directed and executed several
existing customers due to the efficiency of  yourManhattan Associates implementation and upgrade
warehouse operation?  projects.