Managing a warehouse can be a logistical nightmare between inventory control, organizational layout, staff, accounting, incoming and outgoing shipments. Thankfully, with the age of technology warehouse management systems have become smarter, more comprehensive, better integrated, and increasingly cost effective.

There are a lot of factors that cause money to flow down the drain in a warehouse, but a good WMS solution will help to fatten your bottom line in the following ways.

1. Dramatically Increased Accuracy:   Accuracy within the warehouse is a huge contributor to costs. Whether it is due to mistakes in keying in order or inventory information, misplacement of products, incorrect picking or packing, mismanagement of inventory, incorrect data can seriously affect operating costs that cut into profit margins. Having an automated data collection system that digitizes inventory management and assists pickers and packers within the warehouse can increase accuracy to 99.9%

2. Driving Efficiency: Increasing warehouse efficiency can have a big impact on costs. With automated data collection, there is no more data entry from paper, no re-keying of info into a system and all data is real-time. This allows staff to do more productive things with their time in addition to needing less staff overall. Access to data is more readily available as well so that inventory counts are automatic rather than having to shut down the warehouse for days at a time to count products.

3. Managing Labor Cost Better:  There are several factors that influence labor management within the warehouse including data entry, picking, and packing. Data entry is digitized, picking is made easier with more efficient routes that require less walk-time and warehouse crossing, and packing is more accurate with scanning. All of these factors contribute to more effective use of labor in addition to a happier workforce because of less movement and potential for mistakes.

4. Boosting Customer Service Levels:  Whether your business sells directly to consumers or to retailers or both, being able to provide quality customer service is the deciding factor for repeat business for many customers. With a warehouse management system orders are more accurate, they are filled faster and there are less back-orders. Advance ship notices and EDI compliant labels can be automatically created and sent. Specific customer needs can be noted and fulfilled by the system. All of these contribute to less shipping errors and service level improvement, which translates into happy customers.

5. Accounting/ERP Integration:  A warehouse management system that integrates with your ERP makes business flow much smoother, and allows for easier and more accurate tracing of costs. The system can be customized to your accounting methods so that inventory can be tracked and the re-ordering process can begin when necessary. Orders can be tracked as well, so invoices can be sent to customers at the appropriate times. This eliminates the question whether inventory was accounted for, if orders were paid, and the possibility for revenue loss due to the misplacement of physical pieces of paper for orders.

6. Effective Inventory Management:  With digital tracking of products inventory management is made much easier. Exact locations of products are known, as well as the number of products available for order fulfillment. If inventory is low for a product the system can automatically re-order the product up to quota. In addition, location of inventory can be managed so that fast-moving products are in more convenient warehouse slots and slow-moving “dogs” can be placed in more strategic places. This also makes for faster dock-to-stock for incoming inventory. The combination of tracking to eliminate misplacement and loss, prevention of back-ordering, and more efficient order fulfillment all contribute to cutting inventory managements costs.

7. Eliminating Stock-Outs:  Avoiding stock-outs can contribute a lot to the bottom line. The more often you have orders fulfilled quickly and the less back-ordering your customers experience, the more likely they will be to keep returning. If customers get frustrated waiting for their order to be filled they many go elsewhere for that product or simply move to another provider altogether. It also contributes to less wasted time and space holding orders, splitting orders, paying for shipping, and time wasted by an employee travelling to an empty bin.

8. Reducing Chargebacks and Penalties:  In working with a large retailer, being able to comply with their EDI requirements, including advance shipment notices, it is necessary in order to avoid orders being sent back, and being liable for all the chargebacks and penalties associated. A warehouse management system with EDI capabilities eliminates all of those costs by creating retailer-specific labels and ASNs for every order automatically.

9. Better Planning and Forecasting:  Being able to plan ahead in the warehouse and forecast inventory demands is one of the biggest cost reducing benefits of a warehouse management system. By keeping track of the inventory and sales data, you can plan ahead for high volume products or times of the year, and forecast what areas of the warehouse need to be freed up, or what additional staff will be needed. Knowing your costs before they occur is a huge factor in cash flow management, budgeting, and bottom line profit.

10. The Potential to Work with More Customers:  With a better managed and more efficient warehouse, you can accommodate more inventories, more orders, and more customers. A warehouse management system can also help you grow without having to add exorbitant costs for more employees as you would have without one. The math on this one is quite simple: more customers equals more orders, equals more revenue, equals more added to the bottom line.

Learn about all the Benefits of Warehouse Management Systems