WMS ROI: Is a New WMS Worth the Investment?
When deciding to implement a new warehouse management system (WMS), there will come a point where the return on investment (ROI) is questioned.
The right WMS can save you thousands per month, thus it should be viewed as an investment and not as a cost—an investment that protects your inventory, manages labor costs, and streamlines warehouse operations.
Q. What are the costs to evaluate?
A. TCO is a well-established practice that provides a holistic view of all the costs associated with the new investment.
WMS costs to evaluate are related to:
- Tangible costs: Costs for physical goods or things you can see, feel, or touch.
- Inventory: The stock you have and how you can minimize it.
- Labor costs: Employees’ cost and the man-hours logged.
- Productivity: Optimize your operations and shorten tasks.
- Existing technology: Your new WMS must easily integrate with your other software such as ERP, e-commerce platform, etc.
- Equipment and automation: If needed invest in additional material handling equipment (MHE) or light automation; your WMS must seamlessly integrate with them and drive them.
- Intangible costs: More difficult to measure and important to consider for any WMS implementations.
Further costs to examine are support requirements and employee satisfaction.
Q. What are the 3 steps for a company to begin with a reliable WMS ROI analysis?
A. The best WMS providers show a return in about a year or less because a WMS eventually saves a company more than it costs. Here are the steps to begin your WMS ROI analysis and sell the platform internally.
- Evaluate current operations: Do an analysis of your operations. It can be beneficial to work with a consultant or ask the vendors you are exploring to guide you.
- Needs assessment: Find a WMS that can help you improve the most challenging areas while not creating burdens. You should also look for a WMS that can scale with your company as it grows and will work with your existing systems.
- Crunch the numbers: There are many ROI calculators online. However, it is best to work with each vendor individually on the ROI of their WMS.
Q. Is a new WMS worth the investment?
A. If the monthly costs of the WMS bring enough savings, then yes, it is worth the investment. Still, not every WMS will be suitable for every business. Finding and partnering with a trustworthy WMS provider that has a proven track record of success is a great way to ensure you get the results you need.
Logistics Vision Suite (LVS) WMS: Regardless of where you are in your search for a new WMS, check out our Logistics Vision Suite. It is used by more than 700 companies worldwide because it is advanced, adapts to your needs, integrates well with existing technologies, and delivers results.