With WMS, Small Businesses Can Do It All
Q: How can smaller companies respond to the supply chain demands of their large customers?
A: The best way for suppliers to respond is to manage their own segment of the supply chain as efficiently as possible. They must optimize their inventory and distribution operations by applying the proper resources—human, financial, and technological—to drive excellence in their execution. This means implementing tools that provide visibility up and down the supply chain, such as enterprise resource planning solutions with adaptive forecasting and tightly integrated warehouse management systems (WMS). Well-trained teams can use these tools to respond to customer demands.
These systems—once cost-prohibitive to all but the largest enterprises—have come down-market, and are now available to small and mid-sized companies.
Q: What methods are smaller companies using to finance supply chain solutions investments?
A: Most companies don’t realize they have capital and liquidity sitting right in their warehouses. They can achieve high returns on investment by implementing WMS and adaptive forecasting tools.
A WMS that uses directed activities and storage optimization usually generates 30-percent labor savings; nearly eliminates shipping errors, which industry experts value at $200 to $300 per error; and improve inventory accuracy to 99.9 percent, thereby increasing fill rates.
Adaptive forecasting takes into account minimum stock levels, lead times, forecasts, seasonality, and service levels to calculate the optimal level of inventory needed to meet customer demands. These tools continuously monitor demand versus forecasts and stocking positions to adapt to the most current information.
This approach drives down required inventory levels by a minimum of 10 to 20 percent. When properly configured and implemented, these two tools generate savings that more than pay for themselves within one year.
Q: How do cloud-based technologies impact wholesale/distribution companies?
A: Cloud-based computing is a concept of moving internal information technology infrastructure to a hosting facility with many other companies running the same software. They are the same tools—the cloud just runs them in a different place. Most software publishers provide their solutions across multiple platforms, so if your company possesses an aging IT infrastructure that needs to be replaced, consider a cloud-based version of the software solution you need.
When evaluating cloud-based tools, remember to focus on substance, not style. Carefully analyze the costs and benefits over a three- to five-year window to make the best decision for your organization.