Three Steps to Justifying a WMS Budget

by Luciano Cunha

Global Industry Director,
To-Increase
12/19/2011

Modern, integrated warehouse management systems (WMS) are critical to maintaining order and streamlining processes throughout the supply chain. However, some organizations have held back from investing in an integrated system because of perceived disadvantages–including the belief that these systems are too complex and not worth the investments in money, time and training.

Are these disadvantages valid? Without proper implementation and training, certainly. But the most commonly-perceived WMS disadvantages are easily overcome with the right budgetary expectations, a system that fits the warehouse’s current workflow, proper training, a positive vendor relationship and the right service level agreement.

To help ensure that warehouse managers can effectively justify a budget, here are three steps that warehouse managers should follow.

1. Rationalize the Purchase

In the 2011 Market Trends Report on Warehouse Management Systems, Michael Koploy wrote, “Companies will soon have the capital to either upgrade their outdated systems or invest in warehouse management system software for the first time."

While it may still be true that warehouses are among the last in line for funding, this line can become much shorter if you are able to prove how a WMS will lead to increased efficiencies and cost savings. Without inadvertently throwing your warehouse operations under the bus, find a way to highlight the costliness of warehouse errors. Through better automation and more accurate data entry, new WMS systems can eliminate these costly errors and directly impact the organization’s bottom line.

More WMS systems are offered through subscription-based deployment models, eliminating the costly up-front investment that deters many decision-makers. If Software-as-a-Service (SaaS) or Web-based deployment are viable options, this route may be more reasonable and lead to increased consideration.

2. Find a Product to Match Your Workflow

Warehouse managers must find a solution that can adapt to the user’s workflow. This is where the bulk of the evaluation should take place–sifting through your options to find the solutions with the features and functionality that your warehouse needs. It’s time that will be well spent. For example, managers should evaluate if the system has the correct picking functionality (e.g., wave picking or zone picking), if the system integrates with transportation management systems (TMS), or if it supports portable radio-frequency identification (RFID) collection terminals for the warehouse floor.

With little more than a 30-minute demo, vendors can provide an illustration of the solution and its features. These demos can not only help you get a feel for the system, but solidify the proof-points needed to justify the investment. Researching how the new system can help eliminate receipt and picking errors while fitting into your warehouse’s current workflow can show how the investment will benefit the warehouse.

3. Allocate Time and Capital for Training

For better or worse, legacy warehouse technology is known and trusted. A new system can greatly benefit your operation, but the correct allocation of time and training will be essential to realizing these benefits. The key to effectively deploying a modern WMS is justifying the allocation of the time and capital needed to train your team.

Arm yourself with facts and figures regarding how much time and capital is currently being spent correcting receipt or picking errors. Then, compare this to how many hours will be required for training. If the time needed is the same or less, you have a compelling case for how this training will contribute to both process improvements and cost savings going forward.

As Mary Shacklett writes in Warehouses Go High Tech,

"Technology that is available today can solve most of the pain points standing in the way of warehouses transforming themselves—but there are barriers to getting there, and many of these barriers exist in the mindsets of warehouse decision makers themselves."

Making the case for upgrading your warehouse management systems will require time, energy and preparation. But the outcome will be vast improvements to your warehouse operations that directly increase your efficiencies–and improve your bottom line. Following these three steps will help improve the likelihood that your pitch is well received, as well as guide your evaluation process to select a solution that will benefit your warehouse.

Luciano Cunha, Global Industry Director, To-Increase, contributes retail supply chain management insight regularly to To-Increase blog.

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