Much has been written about the potential return on investment that a warehouse management system can offer companies in the wholesale distribution business.  This includes virtually all types of distributors.

Recapuring Lost Profits in Warehouse White Paper

It can also include manufacturers that make stock and sell products.  This white paper will review the three key areas of warehouse activity and how money (profits) can be recaptured.  These three areas are;

  1. Warehouse activities
  2. Receiving activities
  3. Picking/shipping activities.

1.  Warehouse Activity:

In the first part we’ll look at inventory and the many ways what your stock and sell can be optimized to improve your revenue.

 Inventory Reduction

With real-time and online data collection, inventory accuracy will be dramatically improved.  This allows for a reduction in “buffer” stock and provides for better use of space through reduced inventories.

Let’s say your inventory value averages $5,000,000.  If you could decrease that by 5% because you have substantially greater inventory accuracy and your inventory carrying costs average 20% you would save an estimated $50,000 dollars annually.

Inventory Control 

When you have a thorough knowledge of what is in your warehouse and where it is chances are very good you will save money.  Driving your inventory accuracy up to 99.97% has a very positive effect on profits.  If your business requires lot control or serial number tracking a WMS can provide the ability to handle these needs and direct the warehouse staff to pick and ship the correct items in the correct order.  This greatly improves the integrity of your inventory and bolsters customer satisfaction which will have a positive impact profits

Physical Inventory

This activity is extremely costly to a business.  Bar coded data collected on a real-time basis will produce inventory accuracy up to levels of 99.97%.  Errors in writing, ‘reading, and keying of information will be virtually eliminated.  The need to do a physical inventory is reduced and in many cases eliminated.  A recent example of this at a local business looked like this.  Twice a year at least 10 employees were instructed to do a physical inventory of the entire warehouse.  These folks came in over the weekend spent two days counting and fixing the inventory.  This costs the company nearly 20,000 dollars to perform.

Cycle counting time and costs are also reduced significantly. The elimination of keypunch and verification processes reduces overhead in many cases by thousands of dollars.

Reduction of Paperwork

The transposition to electronic data eliminates forms and paperwork procedures and as mentioned greatly reduces manpower needs which in turn reduces overhead costs.  Many companies are amazed by the cost savings in just paper and printing costs.

Intangible Benefits

  • More efficient use of lift trucks will preclude the need to purchase additional equipment.
  • Cycle count routines will be more accurate and less time consuming
  • Improved customer service as a result of accurate, real-time data
  • Improved space utilization will allow you to use the space you have more efficiently

Request the full white paper: Recapturing Lost Profits in the Warehouse 

Visit our Warehouse Management Systems information page here

Posted by iCepts Technology GroupA Pennsylvania Partner for Accellos One Warehouse Management Systems