Should you Invest in WMS?

A warehouse management system (WMS) is software that is designed to support and optimize multiple elements of warehouse operations and distribution center management. As a major component of enterprise resource management, most types of WMS are comprehensive solutions that streamline warehouses' abilities to manage, record, measure, and concatenate:

  • Inventory
  • Order volume
  • Backorders
  • Receiving
  • Inventory reorder levels
  • Shipment schedules
  • Delivery status
  • Shipping history
  • Sales data
  • Marketing reports
  • and more – all in real-time

Now typically, WMS implementation is customized to the unique requirements of an ecommerce business or fulfillment center's supply chains and/or distribution channels (especially when the related workloads are too large to reliably deal with via spreadsheets or other forms of manual input). In other words, they've traditionally been utilized by very large and complex operations. According to a study from the Warehousing Education and Research Council (WERC), 35% of the fulfillment centers surveyed said they currently do not use a WMS. But like all technology, WMS’s are becoming more affordable even for small-to-medium-sized ecommerce businesses thanks to the increasing variety of, not only providers, but WMS service structures like subscription, cloud-based, and Software as a Service (SaaS) models.

So, WMS are relevant to more businesses than ever before. How can you tell if it’s worthwhile for your business to adopt a WMS? It depends on your long-term performance goals, current operational pain points, and what WMS features you'd use to address them. If your facilities are challenged by any of the following, it may be time to seek help from a WMS vendor:

Less than 99% inventory/order accuracy: More errors in your fulfillment operations equals more returns, chargebacks, and lost revenue. The accuracy and insight provided by a WMS could remedy these issues.

Inefficiencies with warehouse space utilization or picking systems: Many WMS solutions include slotting optimization features that are especially helpful for growing/evolving inventories.

Rising operational costs: WMS's streamline multiple fulfillment processes – contributing to time and cost savings.

Inventory Slotting, Part 2: Best Practices

In our previous blog post, we pointed out how strategically optimized slotting in fulfillment centers contributes to multiple gains in operational efficiency. To realize these gains for yourself, you'll start by collecting and analyzing various data points about your inventory such as sales velocity, order frequency, size, weight, etc.

This inventory data will inform your slotting strategy moving forward – enabling you to slot all your SKUs in a layout that 1) shortens picking times and reduces the frequency of replenishment trips by providing sufficient space for extra stock (informed by sales and order frequency data), and 2) allows pickers to quickly and easily access them with limited bending, reaching, or equipment required (informed by product volume and weight).

In addition to those primary goals, there are additional "best practice" considerations that should be guiding your re-slotting decisions. Address the following aspects as early as possible to maximize the effectiveness of your slotting strategy:

Storage areas and product types

Do certain types of storage areas in your warehouse work better for certain product characteristics? Are changes to the warehouse's layout needed to truly benefit from re-slotting? For example, you may want to store paper products away from high-humidity areas, or reorganize the layout to promote better airflow.

Product cubic velocity and slot sizing

The product cubic velocity refers to the amount of units picked from a location, multiplied by the product's cubic dimensions. Accounting for the cubic velocity will ensure that the SKU's slot size and number of picking locations are optimized to reduce replenishment trips and overall congestion.

Safety

Consider how slotting changes may impact workplace safety. For example, are there SKUs that should be at lower levels or in forward pick areas instead of requiring ladders or forklifts?

The future

A lackadaisical approach to slotting is detrimental to overall throughput and efficient space utilization in your fulfillment center. To gain the benefits from slotting, the process needs to be addressed continually as product assortment or sales by product change. Prioritize slotting assessments in your warehouse operations to ensure that your facility is always running at peak efficiency.

Inventory Slotting, Part 1: The Benefits of Strategic Slotting

In fulfillment centers, "slotting" is the process of assigning the designated storage and picking locations for each SKU in your inventory. For most facilities that decide to reevaluate their approach to slotting, the goal is usually to bolster picking times. However, what many don't realize is that slotting improvements can also yield operational advantages that impact the entire warehouse, such as:

  • Operating costs – Effective slotting can improve intra-warehouse transit times across the board, lowering the net costs of any SKU moving activities.
  • Overall space efficiency – optimized slotting improves warehouse space utilization, which in turn can often delay an expensive facility expansion or move.
  • Picking accuracy – reevaluating your current slotting arrangements is also an opportunity for better delineation of similar products or variants to reduce picking errors.
  • Picking efficiency – optimized slotting is not only about shortening distance; accessibility improvements should also be considered. Slotting fast-moving SKUs into locations that are easier to pick from (i.e. with no bending or reaching) can reduce replenishment trips and speed up put-away and picking times.
  • Equipment demand and personnel routing – better slotting can help reduce traffic congestion in your warehouse's active zones and contention for material handling equipment.

To start making improvements to your warehouse's slotting, there is information about your SKUs you should collect first. Product criteria such as sales velocity, order frequency, size, weight, and other data points will all help inform how products should be slotted in relation to each other and in relation to your warehouse's major activity zones.

By aligning that data with your operational goals, you'll have necessary information to revamp your slotting assignments. In our next blog post, we'll go over some best practices to keep in mind for developing your slotting strategies.

Inventory Dimensioning, Explained

When it comes to order fulfillment, the weight and volume measurements of products are a major factor that affects shipping costs, warehouse capacity planning, and more. With this in mind, more and more fulfillment centers are "dimensioning" their inventory – using specialized technology to determine the exact cubic and weight measurements for each SKU, recording that data, and incorporating it into a warehouse management system (WMS). After dimensioning each SKU in your inventory, you'll have valuable data for optimizing your facility. By leveraging your dimensioning data strategically, you can greatly improve areas such as:
    

Shipping cost estimates

Because the process provides exact data, dimensioning can dramatically improve the accuracy of your shipping cost estimates - making them more akin to shipping cost quotes. By eliminating the inaccuracies of manual measurements, you may also see a decrease in accessorial fees and other freight charges (even on small packages).

Order packing efficiency

With the dimensioning data loaded into your WMS, cartonization functions can be used to instantly determine the best box (carton) size, rather than relying on a human's best guess. In addition to saving time by eliminating the trial and error of finding the correct size shipping boxes, this can also reduce the waste from large, air-filled parcels and unnecessary dunnage.

Slotting optimization

Similar to the advantages of cartonization, dimensioning can make your slotting process simpler and more efficient. If your WMS also knows the dimensions of the facility's product storage areas, it can recommend the most advantageous location.

Capacity & expansion planning

Dimensioned inventory greatly assists in planning for capacity changes or future expansion. Whether you need to determine the design of a conveyor system, or what types pallet racks will best meet your needs, having your inventory's dimensioning data on hand can be an invaluable time-saver.

Check out these Statistics on Warehouse Technology

Emerging technologies are a hot topic in the world of distribution and fulfillment operations. From advancements in mechatronic picking to new types of cloud-based WMS software, it's easy to come away from an industry conference feeling awestruck at what the future might hold. However, the recent DC Measures Study from the Warehousing Education and Research Council (WERC) indicates that the actual adoption and integration of these technologies is slow, with little signs of popularizing any time soon.
    
According to WERC's survey of 549 industry professionals, more than two-thirds of warehouse managers said people (not technologies) are the most important assets in their operations. Reflective of that, 35% of the fulfillment centers surveyed said they currently do not use a warehouse management system (WMS) – instead relying on "manual means such as Excel and disparate modules" to handle typical WMS functions. When asked about technologies they expected to implement over the next 10 years, more than 25% of those surveyed said they were “not likely to incorporate” sensors (e.g. RFID) or robotics/automation equipment. More than 50% said they were not likely to incorporate 3D printing, blockchain, drones, or driverless vehicles.

So, what types of technology are warehouses using? According to WERC’s survey,

  • 25.8% have installed voice-directed picking (up from 5.7% in 2008)
  • 18.3% use radio frequency identification (RFID)
  • 12% use pick-to-light
  • 11.1% have installed automated storage and retrieval systems (AS/RS)
  • 75% use some type of barcode and RF scanning system
  • 42.7% plan to implement “some form of real-time data and analytics” in the next 1-2 years (it’s worth noting that certain types of WMS, like the one we offer, have these features built-in)
  • 33% plan to implement mobile technology within 1-2 years
  • 26.6% plan to implement Internet-of-Things (IoT) technology within 1-2 years

While warehouses’ adoption rate of technology has certainly not been fast, it may not be as slow as this report indicates. After all, technology that is growing, like WMS solutions and IoT technology, are prerequisites to successfully deploying more advanced systems like robotics and automation equipment. Perhaps this is a case of “learning to walk before you run.”