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Systems and Cost Savings
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Warehouse Management Systems and Cost Savings
Theres more to implementing a warehouse management system than meets the eye. Often, the savings that a company can realize from that implementation are often not readily apparent. Companies often complain that they have implemented systems thinking they have gone through all the proper steps, made all the proper decisions, and yet have not realized the promised cost savings. The traditional wisdom calls for due diligence in selecting the best software package for a particular type of business, extensive employee training, integration with other systems, and gathering information from other companies, particularly ones with similar functions and needs. That is all wise and good, but it may not be enough.

The payback for implementation of a warehouse management system will likely be realized over time, but it may not be realized as quickly as most people would like. In fact, it may be up to two years, before a company can recognize a cost savings and then it may come in the form of a cost avoidance, rather than a cost savings. In other words, during the two year period costs are probably increasing, so if a business experiences level or only slightly increased costs - less than the average, for example - then that should be recognized as a savings. Experts say that many companies start estimating the cost savings too early and expect them to happen too early. Companies which have implemented a warehouse management system and feel that they are not benefiting from any cost savings need to ask whether their initial expectations were too aggressive and therefore unrealistic.

Often times warehouse management systems are also implemented without sufficient preparation, despite a companys best efforts in that direction. Just knowing how to run the software, get printed reports, and gather data are not necessarily the key to really putting a warehouse management tool to its best use. Being familiar with the software and the way it operates is not necessarily the same as knowing how to use the same software to run, change and improve an operation.

It may be necessary to examine where the system and physical processes on the shop floor do not mesh. The areas where errors occur must be addressed aggressively. When errors are occurring in inventory, they are also reflected in all of the businesss other processes like purchasing and order processing - clear up the line to customer service.

Flawed business rules and faulty processes can contribute to the warehouse management systems lack of success. Even comrehensive transition training and management can play a role in keeping WMS from performing up to its full capabilities. Factors like validity of data, timing of inputs, interfaces to other systems and operational processes must all be considered and perhaps improved.

Experts agree that warehouse management systems are not just a benefit in todays economic conditions, but pretty much a necessity if a business is to keep functioning and even prosper. Whether a cost savings is realized right away or not may not even be the right question to ask. The more appropriate question to ask may be is the WMS system streamlining operations, making work easier and more effective, and at least keeping costs static over time.

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