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Good shipping news: warehouse management systems promise improved control and efficiency.

No technology is a perfect solution to any problem. Human ingenuity is an important part of any business, but the right technology can help a business substantially. For instance, a good warehouse management system (WMS) gives a company better control of its stock and decreases errors, optimizing processes and the use of space. This increased efficiency can be critical for survival in the distribution industry, since warehouses today make their money by driving their costs down and moving inventories faster.

In a hectic warehouse environment, an increasing number of smaller, customized orders can result in inefficient warehouse processes and make it difficult to fix common problems -- wasted time looking for items, dead inventory or empty bins wasting space, duplicated information, etc.

A WMS has an active database that keeps track of inventory by assigning items to zones and then individual bins within those zones -- basically like call numbers on a book in a library.

With a WMS system you can allow some inventory to be assigned to non-discriminatory "floating" bins, so that when those particular items are received, the WMS finds the most convenient empty bin for them -- instead of workers wandering around looking for a vacant location. This is just one way that a WMS optimizes space in a warehouse and increases efficiency.

A good WMS gives a complete overview of a warehouse at all times -- in real time. It determines where to put items away and how to store them. The system also improves receiving and shipping information accuracy, in turn reducing ordering and billing errors. Companies can realize a savings of 30 to 50%, depending on the state of the organization before implementing the system.

A WMS alerts users when an item has reached a preset minimum amount so that it can be replenished, avoiding the common problem of having either too much or too little inventory. Instead of the annual, mammoth inventory count that can paralyze companies for days at a time, a WMS facilitates inventory checking any day, any time at whatever frequency a user programs it to do.

When processing incoming and outgoing orders, the WMS directs workers to the exact zones and bins to pick up or put away items. It can process several orders at once and provide an efficient path for workers to take through the aisles for picking or putting away, saving time and energy. Workers can even receive instructions (via radio frequency) on small screens mounted in their trucks or on their hand-held scanners.

A WMS highlights opportunities to move items directly from the receiving area to the shipping area to speed up order handling and avoid putting items away unnecessarily.

The visibility provided by a WMS provides a constant overview of inventory levels and your commitments to customers and vendors, allowing for more confident planning. It also allows you to analyze statistics with timely, accurate information. You can register every single move in the warehouse, create reports on warehouse processes, making it easier to see how these processes should be handled. Suppliers and customers can be approached to discuss how processes can be improved in cooperation. If you know more precisely when and how much your customers need something, you can plan better -- this saves you money and you can offer better prices.

Radio frequency (RE), Extensible Markup Language (XML) and bar code scanning technology, which includes a wide range of hand-held or truck-mounted bar code scanners and ways to send information from the scanner to the central system via RF, turns a warehouse into a "real time" enterprise.

When an item is inbound, you can scan it to transfer details to your system. Then, when it comes to shipping, you just scan it again and ship it out. The WMS database instantly updates the item info when it's been scanned. This gives a company the ability to trace an item through the warehouse from the minute it is first scanned on the receiving dock.

The use of RF, XML and bar coding technology with a WMS reduces the chance for input error to less than one per cent.

When a WMS is an integrated part of a company's complete enterprise resource planning (ERP) system, everyone in the organization -- from purchasing to manufacturing to sales -- has the same real-time overview of inventory and movement in the warehouse. When the system is synchronized 100% of the time, then five to ten seconds after a truck driver has put away a pallet, its location and availability is visible for every employee in the company.

There's no room for lost pallets in today's market. Having control over warehouse inventory can save money and increase productivity. A WMS helps a company gain control of its inventory, which helps improve customer service and optimize warehouse space.

Karim Budhwani, CMA, ( is regional sates manager at Microsoft Business Solutions.
COPYRIGHT 2003 Society of Management Accountants of Canada
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2003 Gale, Cengage Learning. All rights reserved.

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Author:Budhwani, Karim
Publication:CMA Management
Geographic Code:1CANA
Date:Apr 1, 2003
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