I would share with you, in a series of article, here on WebWMS website what are the benefits of a WMS solution and how you can quantify financially this benefit. Finally, I want to give you the information to be able to calculate a ROI of a WMS solution and can compare different WMS solution on the market.
Some of the benefits of a WMS solution can be quantified easily some of them are not very easy to be quantified, but I will give you some hint how to approximate the financial benefits of this.
A WMS solution have benefits for all company departments not only for logistics department and some of the benefits are transfer to the clients and to the business revenue and business growth.
First of this benefit is the service level. A parameter like this is not define in the company it uses in informal taking, but not all the company define and quantify this parameter. I advise you to define this parameter and also quantify him. Even if you do not have all the data basic quantification is better that zero quantification of this parameter.
The service level can be defined like this: how good is you company in offering service associate with products sales to your customers. Service level quantify more activities and logistics is a important part of this.
Let’s see how a WMS solution can improve you service level.
Fist I start with the order for the products. If you receive an order this order must be validated before to be executed. This validation has 2 stages: first stage is a commercial one and, in this stage, you will validate the client creditworthiness and the second stage is to validate the existing stock for each order product. Validate stock for products is a very difficult job if you do not have WMS solution. Even if you have an ERP solution this task cannot be perform well, because all the time will exist difference between the ERP stock and the real stock witch you have into the warehouse.
This difference between ERP stock and real stock can create frustrating situation when the order will be executing because you confirm the order quantity of the products based on the information that you have in the ERP and when the picker goes to the selves to pick the products he saw that it is not enough quantities to fulfill the client order. In this case you will unable to deliver clients order or you postpone the order till you have the right quantity to fulfill the order. In any cases this situation creates frustration to your clients.
Stock difference between ERP and real stock makes you to lose sale because the sales man d not have correct stock information and he take the order based on the wrong information. If the sales man has the right information and a client order a product which has no stock, and sales man knows this information on real time he can suggest replacement product for that product who do not have stock.
Why is difference between ERP stock and real stock? Most of the time this situation appears because on processing document delay and also because of picking mistakes. If you have a WMS solution the document will process in the same time with the products and the picking mistakes are reduces almost to zero.
As you see the WMS solution can increase your sales and also increase the service level to your client. I will continue in the next articles with other WMS benefits.