Warehouse management systems may well be the cool technology to have in 2006, according to a recent Distribution Digest survey. A significant percentage of the respondents are considering a WMS implementation in the coming year. With that in mind, Distribution Digest shares the following advice on building a business case for a WMS:
Although WMS software is becoming more of a business requirement for many warehouse operators, there is still a strong focus on return on investment when purchasing a new system. To build the business case for a new WMS, you need to identify all of the benefits it will provide, and try to put a dollar value on as many of these as possible. That requires looking beyond just the obvious benefits, such as error reduction, to identify the ancillary benefits that also impact the bottom line.
For instance, consider the sales function. Can the overall profitability of the company be improved by maintaining better fill rates? You generate profits from each item sold, so if you can quantify sales improvements resulting from better fill rates, you may be able to include this in the business case for the WMS. These improvements are typically intangible, meaning it is more difficult to put a dollar value on them than on a tangible benefit like labor savings, but they can still be quite significant. For example, two other areas potentially affecting sales are increased customer satisfaction and improved cost data for bidding or pricing.
* Increased customer satisfaction: This is a major side benefit of the numerous other benefits the WMS offers—faster response time, more accurate billings, less damage to product, etc. Increased customer satisfaction means more repeat business and more word-of-mouth sales.
* Improved cost data for bidding: This is a less obvious but still significant benefit of a real-time WMS. The ability to make bids based on accurate, up-to-the-minute data enables you to minimize overbidding and underbidding. The result is not only more successful bids but more profitable ones.
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