Strategies Pyramid
In light of the proliferation of WMS in the SMB market, we suggest the following pyramid as a model to consider when formulating your own strategy for implementation. This model allows you to start small, think big, and step up your savings over time while keeping business disruption at a minimum.
We selected a pyramid structure because as you ascend the pyramid, each layer of technology represents process improvement and cost savings over the previous layer. Companies may elect to skip stages in the pyramid. The appropriate approach for each
company depends on organizational resource availability, tolerance to change over time and requirements that will define the scope of the solution. This paper describes the different levels of possible incremental investment.
Stage 1 – Current Process Automation
Stage 2 – Business Process Re‐ engineering
Stage 3 – Infrastructure & Business Process Re‐ engineering
Stage 4 – Integrating Warehouse Automation Equipment into Business Processes
Stage 1 – Current Process Automation
The first level of the pyramid allows you to maintain your current processes and still realize significant improvements to your bottom line. By simply automating current processes with barcode data collection devices and software, manufacturers and distributors can dramatically increase the accuracy of inventory and order shipments.
Before wireless mobile computing, warehouse related information was communicated in “batch” to the business system through the use of paper, pencil and data entry at a stationary warehouse terminal. Instead of carrying around paper and a pencil, warehouse staff can be equipped with PDA’s to record functions performed in the warehouse. Simply “mirroring” current processes with wireless PDA devices is the premise for Stage 1 of the strategies pyramid.
The benefits of going paperless include:
Better data for the enterprise
o One time data entry – Rather than handling data twice (pencil and paper, then data entry into the terminal), scanning facilitates data entry at the time warehouse activities are performed.
o Efficient data entry – Scanning barcodes is much more efficient than writing data on a piece of paper. The time required for data entry, sending paper orders to the warehouse, searching for misplaced paperwork and filing and maintaining paper documentation are all eliminated.This alone can result in significantly increased efficiency and cost savings both in labor and paper-related expenses.
o Accurate data entry – Scanning barcodes eliminates data entry errors. Furthermore, every step through the warehouse can be interactively verified using barcode and RF technology. This ensures a high level of accuracy in filling orders, product check‐in, putting away products into the correct locations, and accurate replenishment of pick‐bins. Costs associated with shipping, receiving and inventory errors can be virtually eliminated.
o Timely information and integration of warehouse data into the ERP System – If data is captured at the time that processes are performed, the system can provide real time information back to the enterprise. At a minimum, the warehouse solution requires software that allows sales/work orders, purchase orders and inventory information to flow seamlessly between the warehouse and ERP system as processes are performed. Electronic data transfer between the warehouse and ERP system also ensures timely and accurate data for invoicing, purchase order payment and inventory tracking and management, all without manual keyboard data entry.
Optimized inventory management
o Improved inventory accuracy ‐ Inventory carrying costs have an important effect on business viability. Inventory accuracy can reach approximately 99.9% when inventory is tracked using barcodes and RF handheld inventory functions. Inventory accuracy is ensured by scanning and validating locations and product barcodes.
o Reduce your safety stock ‐ With the higher levels of inventory accuracy, a business can expect to diminish the quantities of required stock on hand and the carrying costs of that extra inventory, while at the same time maintaining adequate stock levels to fulfill orders.
o Improve inventory counting efficiency ‐ Warehouse software should facilitate ongoing cycle counts, reconciled with financial data in real‐time. This is an enormous benefit to the warehouse because the warehouse does not need to shut down operations. Performing regular cycle counts reduces the frequency requirement of full inventory counts and the cost associated with closing down the warehouse and the additional staff needed to perform the count.
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