Despite the current global economic climate and increased concerns over variable inventory levels, 3PL warehouse providers should not be hesitant to invest capital in software solutions to optimise their operations.
Andrea Robinson, Business Development Manager-UK for CargoWise® edi, a leading provider of integrated international supply chain logistics management systems, says many companies are realising the benefits of new technology that helps maximise warehouse management systems (WMS) at this time.
"Despite the recessionary nature of the global economy, many freight forwarders and logistics providers are increasingly seeking value-added software solutions in order to boost warehouse operating efficiencies and better control inventory levels to meet demand variability," says Robinson.
"Integrating technology solutions into the warehouse function is enabling many companies to operate leaner, provide improved storage capacity and reduce overhead and operating costs significantly.
"While current inventory levels are lower across the globe, proactive forwarding companies are finding that technology can be an invaluable tool in warehouse optimisation and can significantly help position companies to better compete when consumer demand returns and inventory volume levels return to normal."
For many small to medium-sized enterprises (SMEs) finding the right IT solution isn’t always an easy task.
"Often good WMS options seem to trend toward stand-alone solutions that can be costly and offer no integration with internal or external systems," Robinson says.
"Also, the stand-alone option may not provide a computerized warehouse function at all; it may simply run on paperwork and spread sheets.
"There are potentially huge overheads incurred in these situations, with administrative work, operational expenses, transport planning and inventory management.
"Processing errors, time delays, high costs and general confusion are the usual symptoms of a disorganised warehouse and can suggest that the actual cost of units coming through the warehouse is providing only marginal profits."
"Robinson suggests that with a few simple but critical changes, smaller 3PL warehouse operators can realize significant gains throughout the warehousing operation with a software solution that is tailored specifically to its business.
"Taking ownership of a company's WMS system without incurring lengthy development, implementation and training delays while minimizing running costs is possible with some careful planning and the right software provider that understands your business and offers an integrated and diverse range of services," she explains.
Therefore, to achieve maximum benefit, promote efficient inventory control processes and improve productivity, companies must select a WMS software program designed to integrate with internal operating systems.
A thoroughly integrated WMS process will ensure a positive effect on cost reductions and bottom line profitability.
A significant element of payback with investment into WMS software can be found in the reduction of errors, reduction in labor costs and a maximizing of warehouse floor space.
The introduction of electronic data interchange (EDI) into the warehousing process can also help reduce manual data entry, reduce duplication of paperwork and enable a more efficient inventory management process that reduces labour costs by optimising picks, locations and release of stock from storage.
"While companies can utilise software technology to streamline their warehousing process, they can also better meet customer demands and improve customer service by establishing and meeting key performance indicators (KPIs) that will ensure the warehousing business sustains the current economic climate for both parties," says Robinson.
"Product tracking, stock visibility and traceability, along with automated data collection throughout the warehouse system should be standard features accessible to customers."
Utilising RF technology is another initiative that can cut down on labor and data entry efforts while providing real-time information and complete stock visibility, she suggests.
With RF technology, on-line receipts, locations, movements and dispatches can be instantly applied to the back office warehouse management system without the need for rekeying information.
Location management, automated billing, optimising stock replenishment -- even yard management and the improved utilisation of warehouse space all contribute to maximising profits and ensuring that improved ROI is achieved in a very short time.
"Ultimately, SMEs, in particular, can benefit from evaluating their warehouse processes in this economic climate by strategically identifying the actual unit costs across the entire warehouse process," Robinson adds.
"By identifying where WMS performance can be enhanced through the implementation of an enterprise software system, they can identify the greatest areas of expenditure in relation to inventory, space and transport planning and reduce costs in order to justify the initial and ongoing management expenses involved.
"The results may initially seem alarming; but with a strategic focus on why overheads are high, companies can determine how the inventory management process can be controlled with automated systems without adding to outlays, and take the necessary steps to improve warehouse efficiencies without reducing the value-added services that customers expect now and in the long term."