A Warehouse Management System (WMS) is a foundation for improved operational efficiency, providing a series of building blocks that will act as a basis for efficient warehousing operations. Today we will look at one of the primary building blocks a WMS provides; Improved inventory record accuracy and the reduction in data processing errors that result when inventory records are accurate. A managers confidence in operational management information can lead directly to more productive operations.
When physical inventory “on the books” and the physical inventory in a warehouse do not match, a variety of expensive mistakes and . When a picker goes to retrieve a part and it is not there (or not enough is there), a series of manual checks and back tracking must be completed to fix the problem and get the order out the door. Inaccurate inventory record accuracy results in other system-wide impacts including:
- If buyers lack confidence in inventory levels, the buyers will engage in poor buying practices and will end up purchasing excess safety stock
- The picking staff will experience delays in order fulfillment caused by lost or misplaced product
- Sales staff will lose sales opportunities when there are stock outs and over commitments against existing inventory
- Placing and managing back orders drive excess costs and lead to reactive purchasing
- Warehouse staff that cannot instantly find product will experienced reduced labour productivity each time they search for lost product
- Shipping staff will spend more on expedited shipments to customers
The above issues are primary drivers of excess inventory, tying up capital and negatively impacting warehouse capacity. The results are higher costs, lower productivity, and additional customer service. The self-checking nature of a WMS, in addition to a good cycle counting program, can ensure inventory accuracy of 99+%. This high level of inventory accuracy is the basis for many of the other benefits you can realize by implementing a WMS.
Next month, we will review the benefits of a second building block; reduced errors.