A warehouse management system (WMS) has the potential to minimize an organization’s cost of inventory control. Inventory control is the process of protecting the material that is contained in your warehouse and minimizing the cost of filling orders. The savings provided by a properly implemented “best practice” WMS system can far exceed the cost of the hardware, software, and training. Over the next several months, we will explore some of the benefits a distributor can realize from a WMS system and how to evaluate if it would be a good investment for your company. Let’s start on the receiving dock where incoming shipments arrive from suppliers.

Receiving Department Efficiencies

Every time material is handled a distributor’s costs increase. On the receiving dock:

• Handling the same package two or three times before it gets to its normal storage location doubles or triples the distributor’s costs

• Every time a piece or package of an item is handled there is a chance that the inventory will be misplaced or damaged resulting in “lost” material

A WMS system can minimize these costs by:

Cross Docking Material – Cross-docking is the process of filling existing sales, transfer and production orders while the material is still on the receiving dock.
• Labor is not wasted by putting the material away and then immediately pulling it out of stock to fill orders.

• The risk of damage is also reduced as the inventory used to fill the outgoing orders is handled fewer times.

• Incoming stock is used to fill the intended outgoing order. If incoming material that is committed for a specific customer is put away in the warehouse, there is always the chance that it will inadvertently be given to another customer.

• A good WMS system notifies the receiving clerk of the quantities of items on an incoming order that have been reserved for specific customer orders.

• It will create the picking orders and packing slips to fill these orders.

• Afterward, the system will notify the receiving clerk of other existing orders that can be filled from the portion of the incoming shipment that remains on the receiving dock. The orders to be filled are listed in the priority previously determined by the distributor’s management.

Receipt Verification – Many products are similar in appearance to other items. When a receiving clerk uses WMS technology to scan the barcodes on incoming packages, the system will verify that the products being received match those listed on the purchase or transfer order. Automatic assurance that the “right” products are being received prevents the “waste” of time and labor of dealing with the unwanted material.

Directed Putaway – One of the goals of effective inventory control is to store products to minimize the cost of filling orders. State of the art WMS systems will direct receiving personnel where to put each piece of each product received on an incoming shipment. It will then verify that the material was placed in the right location by having the putaway clerk scan both the barcode on the material and the bin location. By directing material putaway, the WMS system:

Minimizes the risk of loss – The WMS system remembers where each piece of each product has been stored

Maximizes the use of available storage space – The system not only tracks how much space is available but also determines the accessibility of each location. Best practice WMS systems ensure that items that are pulled most often are located in the most accessible bin locations. Slower moving products and material that needs to be placed in overstock or bulk storage is directed to less accessible bin locations.

Next month we will discuss how a WMS system can improve material storage efficiencies.