This discussion is oriented towards small to medium sized (SMB) wholesale distributors and manufacturers. It is intended to help business owners and executives provide answers to questions such as:
- Are you spending too much on your warehouse processes?
- Would you like to explore new ways of increasing your bottom line?
This is a warehouse technology and process selection roadmap, giving SMB distributors insight into initial investments that they can afford. Additionally, it outlines an upgrade path with incremental investments that result in greater operational sophistication and savings.
Analysts are predicting significant growth in the SMB warehouse management software market‐space through the next decade. We can attribute this growth to several market driving catalysts:
- Tier‐one market saturation
- The commoditization of wireless technologies and PDA devices
- The .NET evolution and the development of open inter‐software communications standards
- The availability of low‐cost reliable database software
- Major retail’s pursuit of RFID to replace the barcode in warehousing, distribution and stores
- Lower total cost of ownership
Tier‐one Market Saturation
The Fortune 1000 market have all purchased WMS applications. Because the customers are literally “running out,” technology vendors are now focusing on delivering scaled down solutions to the mid‐market.
Commoditization of Wireless and PDA devices
Consumer adoption of the wireless 802.11b/g standard has shifted the industrial market for wireless technologies into the mainstream. The same holds true with PDA devices.
Many companies are currently using wireless PDA type devices connected to their local area networks to bring real‐time computing and increased productivity to the workplace.
Industrial wireless PDA devices for warehousing and distribution differ from their consumer grade counterparts to accommodate requirements for improved battery management ,integrated barcode scanners, durability and easy keyboard input.
The .NET Evolution
Installing “bolt‐on” warehouse solutions to standard business applications is now cost‐effective, more user friendly and is a common occurrence due to the evolution of interface standards. They have allowed developers to focus more energy and time on developing complementary features and functions.
Reliable Database Software
Mission critical applications like warehouse software can now be implemented on cost effective, “safe” database platforms. Applications like Microsoft SQL have outpaced rivals DB2 and Oracle in the SMB market because of low cost of ownership, robustness of architecture, low‐cost hardware platform, security andup‐time.. Microsoft SQL can now be installed with Small Business Server in under twenty minutes and runs effectively without a database administrator.
The Wal-Mart Effect
Major retail is driving vendors to comply with technologies like barcode and RFID to reduce supply chain costs. Barcodes allowed Wal‐Mart to eliminate accuracy problems and to streamline processes while minimizing human interaction with the data collection process. In constant pursuit of additional savings from their supply chain, Wal‐Mart settled on RFID technology to further shave precious seconds per transaction. Products can be automatically identified anywhere within the supply chain without pallets being broken down or being stopped for scanning.
While saving Wal‐Mart many millions of dollars in supply chain costs, barcode and RFID technologies represent an additional cost burden to manufacturers and distributors unless leveraged to their own advantage. The same product codes that are required by Wal‐Mart can be used to automatically and accurately identify products within the vendor’s distribution center.
Lower total cost of ownership
In addition to the aforementioned technologies and market conditions, software value has increased substantially over the past decade. The cost per feature is at an all‐time low. Many warehouse automation technologies have matured enough to offer robust, out‐of‐the‐box software providing quick implementation methodologies at a reasonable price.
The cost of outfitting a warehouse employee with a solution that includes wireless PDA devices represents between 2.5% and 25% of employee burdened costs in the first year, not including the asset value of the infrastructure and the tax implications of asset depreciation. Technology‐based tax incentives may be available in countries looking to affect workforce productivity.
Companies implementing warehouse automation solutions can expect productivity increases in the first year that result in a return on investment (ROI) in as little as 6 months. Of course, the rate of ROI depends on the size and scope of a technology purchase and how it is put to use.
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