Numerous benefit categories result from successfully using a warehouse management system (WMS). The categories have varying levels of savings associated with each and can be characterized as tangible or intangible. A tangible savings is a quantitative dollar figure directly related to a specific action or process impacted by the WMS.
For example, hardware for a new system will cost 50% less to maintain than the existing system hardware. Intangible benefits are much tougher to quantify. A challenge to justifying systems is maintaining credibility and uniform buy in to the benefits associated with the project. When it is difficult to define certain benefits in specific dollar figures, the credibility issue is severely challenged.
What dollar value do you put on a 10% improvement in customer service? Is it reasonable to expect better decision-making based on real-time access to activity performance measures? What dollar value does better decision-making bring to the company? Will improved inventory visibility allow the company to reduce inventory levels, or do other departments control inventory levels? If benefits are “created” or the associated savings are overly aggressive, they may be met with skepticism during leadership review. Much of the information required to develop a credible business case is information that can be collected from reports and information generally available to the warehouse. However, obtaining financial business parameters and detailed benefit assumptions may require support from other sources (normally, the accounting representative on the team can provide the financial parameters).
Depending on the level of detail required in the investment and benefit assumptions, you may need to get assistance from software vendors, internal engineering support staff or external consultants.