7 benefits of using a warehouse management
9 min.What will you find in this guide?
Warehouses of merchandise, materials or raw materials are a very important value of the company’s total assets and that is why special care must be paid to their management. Operating a warehouse efficiently provides real value, no matter how large or varied.
We tell you what are the 7 benefits of using a warehouse management system.
The key question: is warehouse management software expensive?
As the person responsible for your business decisions, you probably wonder about the benefits you will obtain if you implement a good warehouse management system or, looking at it from another side, what is the cost of not having the appropriate system to manage your stock.
Another question you may ask yourself is: will improving efficiency in my warehouse by making processes more transparent and measurable result in savings that will generate greater profitability for my company?
Here we will show you how you can optimize your current logistics operations in your warehouse or picking platform using a specialized software system.
Benefit 1: Productivity improvements
Companies need to maximize efficiency at every step of the distribution process. A warehouse management system will help you run an optimized operation. In other words, through technology, you will do more with fewer people.
Here are the benefits of this efficiency in three main areas:
- Inventory Accuracy: When you achieve true inventory accuracy greater than 95%, you eliminate most of your gap-hunting efforts. This means greater savings in time and money.
- Software-directed tasks: Good warehouse management solutions will direct staff activities and tasks, meaning you will have tracking and control over them.
- Accountability: A good warehouse management solution tracks which employee completed each task, creating greater personal accountability across the entire team.
Benefit 2: Automated data entry with barcode
Inventory tracking in all retail and distribution solutions is performed using barcodes and PDA collectors (portable data collectors) with built-in barcode scanner. These PDA collectors replace manual data entry in areas such as:
- Reception
- Collection for assembling orders (picking)
- Shipment
- Deposit transfers
- Stock count
The incorporation of PDA collectors has the following advantages for the company:
- Avoid the costs of a person by entering data into the system from spreadsheets or papers.
- Avoid potential product code errors caused by manual entries
- Data is entered on site by operations staff and information is always up to date.
For those who choose to manage their warehouse with inventory locations, existing locations in the warehouse will need to be labeled. In this way, the task is made easier for the staff and allows the inventory to always be kept organized and in its location.
Calculating stock accuracy using the total value of inventory makes it possible for surpluses to be netted against shortages. For example, if in two products of equal value, when counting one there are 3 left over and in the other I am missing 4, the net result will be a shortage of one unit. This results in a lower net difference that does not reflect the “true” level of inventory accuracy. To solve this, Solop can help you get a clearer and more accurate result.
A definition of “true” inventory accuracy translates to the right product, in the right quantity, in the right location.
To determine the true accuracy of your inventory, you simply enter your stock through the PDA collectors and the system will take care of everything else.
Companies that calculate a value-only accuracy of 95% may find that their warehouses actually only have a true accuracy of 60%, in units. Inventory Record Accuracy (IRA) is a measure of how far or close the system information is from the physical reality of the count.
If there are differences, they could originate from the records side (for example, a count typing error) or with respect to the physical quantity (for example, an erroneous location in receipts or deliveries).
The units of measurement for precision can be in money or units. Accountants and financial auditors prefer to express discrepancies in money, but this system neutralizes product shortages and surpluses, which is not helpful for a real analysis of inventory accuracy.
The true precision of inventories must show us in each count the differences in units and value of each item.
Possible causes:
- Transaction errors: whether in the entry of products, in transfers between warehouses or in the departure of products to customers or urgent withdrawals without registration. Fingering is a big source of errors.
- Product losses: either for known reasons (such as breakage or expiration of expiration dates) or unknown reasons (such as theft).
- Inaccessible or not found inventory: Non-existent locations encourage this problem.
Incorrect identification of products: products without barcodes, or not using code readers.
Manual typing is a big source of errors |
When are inventory differences detected?
In daily life they are detected only at the time of picking, replenishment or inventory counting.
Benefit 4: Accuracy in deliveries and receipts
Another tangible benefit of a proper warehouse management system is the reduction of incorrect shipments, saving the company and its customers a lot of time, hassle and tense situations.
What could be the problems for the company due to errors in deliveries to customers?
- Damaged product
- Wrong product
- Missing product
- Failure to meet delivery date
How to calculate order accuracy?
You simply have to compare the successful orders with the total orders. If your indicator is below 95%, you have a reason to consider improvements.
Automating your warehouse will make it easier for you to:
- have clear and easily controllable procedures and workflows
- faster picking process
- satisfied customers: customers who repeat purchases
In relation to receptions, a control by capturing the barcode at the time of receipt easily avoids wrong product errors.
Benefit 5: Simpler cycle counts
Cycle counting can replace traditional physical inventory counting methods when using an inventory and warehouse system.
Step by step:
1. First: planning
Establishing a cycle counting plan that defines the frequency, methodology and resources necessary to carry out the process is key.
2. Inventory Segmentation
It is essential, then, to divide the inventory into categories or zones to facilitate the execution of the count, ensuring that all stocks are regularly reviewed by the team of collaborators.
3.Resource Allocation:
Designate work teams responsible for cycle counting, ensuring that staff are trained and have access to tools such as barcode scanners (PDA) or mobile devices.
4.Use of Technology:
Implement automation technologies, such as inventory management systems (WMS) and scanning devices, to streamline the process and minimize manual errors.
5. Sample Selection:
Select representative samples of products in each category for counting, ensuring that all items have the opportunity to be verified over time.
6. Real Time Registration:
Record counted quantities in real time using computer systems connected to the central inventory management system to maintain data accuracy and integrity.
7. Analysis of Discrepancies:
Analyzing discrepancies between counted quantities and recorded quantities, investigating the reasons behind the differences and taking corrective action is another critical step.
8.Updating Records:
Lastly, update inventory records based on cycle counting results to accurately reflect the actual stock in your warehouse.
Here’s why and how you benefit:
- Simple and Real-Time: It’s easy to cycle count and track your valuable inventory as often as needed, as data is entered via mobile devices in the warehouse or yard and updated into the system in real-time.
- There is no need to suspend activities to perform the count: with frequent cycle counting, you can be sure that your stock levels will always be accurate.
Benefit 6: Reduced labor and training costs
It is important to be able to train and monitor the performance of team personnel efficiently. Modern systems ensure that your team works not only faster, but better. When your ERP system integrates all aspects of your business,
You can monitor the results without problems, as well as control the performance of the operation.
Why does warehouse management software reduce personnel costs?:
- generates the tasks to be performed (reception, picking, delivery confirmation)
- assign tasks to the operator
- measures the execution times of each task
- measures picking errors detected
- reduces errors due to the use of collectors and barcodes
- reduces staff training due to the use of collectors that guide their work
- It is important to be able to train and monitor the performance of team personnel efficiently. Modern systems ensure that your team works not only faster, but better. When your ERP system integrates all aspects of your business, you can seamlessly monitor results, as well as control the performance of the operation.
Why does warehouse management software reduce personnel costs?:
- generates the tasks to be performed (reception, picking, delivery confirmation)
- assign tasks to the operator
- measures the execution times of each task
- measures picking errors detected
- reduces errors due to the use of collectors and barcodes
- reduces staff training due to the use of collectors that guide their work
t is important to be able to train and monitor the performance of team personnel efficiently. Modern systems ensure that your team works not only faster, but better. When your ERP system integrates all aspects of your business, you can seamlessly monitor results, as well as control the performance of the operation.
Why does warehouse management software reduce personnel costs?:
- generates the tasks to be performed (reception, picking, delivery confirmation)
- assign tasks to the operator
- measures the execution times of each task
- measures picking errors detected
- reduces errors due to the use of collectors and barcodes
- reduces staff training due to the use of
- collectors that guide their work
Locations + PDA Collectors = Lower cost personal training
Our system increases productivity at every stage of the process:
- Integrating the workflow from procurement to shipment to the customer
- Prioritizing tasks to optimize order fulfillment
- Predicting and determining the amount of product needed and suggesting the requisitions and purchase orders to be placed.
- Generating requests, tasks and lists automatically
When a user logs in to perform a certain task (storage, replenishment, picking, cycle counting, charging, etc.), the system prompts them for specific tasks to perform. A new employee can be productive in days instead of weeks, saving your company time and money.
Benefit 7: Proactive management team
Finally, well-implemented software helps even managers do their best every day. Workflow, query tools, and dashboards and indicators built directly into each role create a framework of parameters so they can establish and maintain controlled processes.
With a proper warehouse management system, in short, you will be able to:
- Track your team’s performance in real time
- Handle exceptions efficiently
- Improve efficiency of both stock and order fulfillment
- Improve management costs
- Warehouse, platform and operations managers will have what they need to be effective and efficient.
Summary
Most of the problems your employees face on a day-to-day basis are due to inventory discrepancies and lack of visibility. Do these problems sound familiar to you?
- Frequent calls from sellers to the warehouse to check stock
- Incorrect shipments due to wrong product in wrong location
- Countless hours spent trying to find lost or misplaced products
- The orders were delivered in several shipments due to stock shortages or backorders.
And this causes significant losses for companies along with a drop in team morale.
Is a warehouse management system too expensive?
As a decision-maker in your business, you must ensure that the benefits of each investment you make exceed the costs. When you weigh all the benefits and a short payback period, the real question is: “What is the cost of not having an efficient warehouse management system?”