ROI for Warehouse Management System: The Business Case for a WMS
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The Business Case for a Warehouse Management System Learn the business case and operational benefits for procuring and implementing a warehouse management system (WMS). We’ll explore how a successful WMS implementation can provide a rapid return on investment through streamlining compliance, efficiency, shipping and accuracy in your warehouse.
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ROI for Warehouse Management System: The Business Case for a WMS
- 1. Start Time: 2:00pm EST Welcome! Webinar Audio: You can dial the telephone numbers located on your webinar panel. Or listen in using your microphone or computer speakers.
- 2. Webinar Details • Presentation is roughly 1 hour • All phone lines are muted • If anyone has any questions during this webinar – please type them in your Questions Box located at the bottom of your webinar panel
- 3. Today’s Presenters Kelly Hummel | Net@Work Sage 300 Practice Director Chris Barnes| HighJump Solution Consultant
- 5. #SageBeTheDriver @HighJump@SageCustomers SOLUTION COMPLEXITY / FUNCTIONALITY WAREHOUSE USERS Bar Coding / Data Collection Low Functionality 1-5
- 6. #SageBeTheDriver @HighJump@SageCustomers “Efficiency is doing the thing right. Effectiveness is doing the right thing.” Peter F. Drucker
- 7. #SageBeTheDriver @HighJump@SageCustomers SOLUTION COMPLEXITY / FUNCTIONALITY WAREHOUSE USERS Enterprise / Tier 1 Hybrid / High Functionality 200+ Bar Coding / Data Collection Low Functionality 1-5 Warehouse Advantage
- 8. #SageBeTheDriver @HighJump@SageCustomers Warehouse Advantage SOLUTION COMPLEXITY / FUNCTIONALITY WAREHOUSE USERS Enterprise / Tier 1 Hybrid / High Functionality 200+ Full-Featured AccellosOne WMS Configurable / High Functionality 5 - 250 Bar Coding / Data Collection Low Functionality 1-5
- 9. In the mid 90’s - mid 2000’s WMS was considered a “We had to implement a WMS to keep our key customers” Director Distribution, Industrial Products Company Competitive Advantage 9 @SageCustomers#SageBeTheDriver @HighJump Status quo is no longer an option.
- 10. In the mid 90’s - mid 2000’s WMS was considered a Now WMS is considered by some to be a “We had to implement a WMS to keep our key customers” Director Distribution, Industrial Products Company Cost of Doing Business. Competitive Advantage 10 Status quo is no longer an option. @SageCustomers#SageBeTheDriver @HighJump
- 12. • Order volume • Inventory value • Customer service • Inventory/order accuracy • Employee turnover Space Full Time Equivalents Active Dock Doors SKUs Lot/Expiry/SN 12 > 50,000 ft2 > 5 Yes > 10 WMS Fit @SageCustomers#SageBeTheDriver @HighJump > 5,000
- 13. 13 @SageCustomers#SageBeTheDriver KPIs @HighJump Measure Z BP Median On time shipments >= 99.8% 98.5% Order picking accuracy >= 99.9% 99.50% Location utilization >= 92% 85.0% Annual Workforce Turnover < 0.8% 6.8% On time ready to ship >= 99.9% 98.6% Peak warehouse capacity used >= 100 97.0% Fill rate – Line >= 99.8% 98.0% Dock to stock cycle time < 2.3 hours 9.1 hours Inventory count accuracy – bin >= 99.8% 98.5% Fill rate – Order >= 99.83% 98.7% DC Metrics Report, Dr. Karl Manrodt
- 14. 14 @SageCustomers#SageBeTheDriver KPIs @HighJump Measure Z BP Median On time shipments >= 99.8% 98.5% Order picking accuracy >= 99.9% 99.50% Location utilization >= 92% 85.0% Annual Workforce Turnover < 0.8% 6.8% On time ready to ship >= 99.9% 98.6% Peak warehouse capacity used >= 100 97.0% Fill rate – Line >= 99.8% 98.0% Dock to stock cycle time < 2.3 hours 9.1 hours Inventory count accuracy – bin >= 99.8% 98.5% Fill rate – Order >= 99.83% 98.7% DC Metrics Report, Dr. Karl Manrodt
- 15. 15 @SageCustomers#SageBeTheDriver KPIs @HighJump Measure Z BP Median On time shipments >= 99.8% 98.5% Order picking accuracy >= 99.9% 99.50% Location utilization >= 92% 85.0% Annual Workforce Turnover < 0.8% 6.8% On time ready to ship >= 99.9% 98.6% Peak warehouse capacity used >= 100 97.0% Fill rate – Line >= 99.8% 98.0% Dock to stock cycle time < 2.3 hours 9.1 hours Inventory count accuracy – bin >= 99.8% 98.5% Fill rate – Order >= 99.83% 98.7% DC Metrics Report, Dr. Karl Manrodt karl.manrodt@gcsu.edu
- 16. 16
- 17. x 111,111,111 = 12,345,678,987,654,321 17 111,111,111 Speaking of numbers… @SageCustomers#SageBeTheDriver @HighJump
- 18. 18 Hard and Soft Dollars #SageBeTheDriver @HighJump IntangibleTangible “On-time delivery performance improved to 97%. Our order accuracy went from 75% to 95%. We were very pleased with our results.“ VP IT, Industrial Products Manufacturer
- 19. • Real-time and accurate • Costs of Inaccurate Inventory: – Poor Buying Practices – Processing Delays – Lost Sales – Excess Inventory – Low Productivity – Increased Freight Costs Improved Inventory Accuracy Expect 99.9+% 19
- 20. 50+% of the project benefits • Direct & Indirect ‒ Adding Value ‒ System Direction ‒ Online Reports • Administrative Savings Reduced labor costs by 20-30% Improved Labor Productivity 20
- 21. Storage 20% Receiving 15% Shipping 15% Order Picking 50% Source: Logistics Resources International, Inc. Reduce inventory search time by 50-100% 21 0% 10% 20% 30% 40% 50% 60% Travel Search Pick Other Operator Time Improved Labor Productivity
- 22. Improved Labor Productivity 22 “The type of pick process you use is driven by cost, handling characteristics and order profile.”
- 23. Thank You! 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1 2 3 4 5 6-10 11-20 >20 Lines Per Order 30% of Orders are Single Line 75% of Orders are 5 or Fewer Lines Improved Labor Productivity
- 24. Thank You! Type Description % of Orders I Single Line, Single Unit 50% II Large multi-line (100+) 35% III Mid range multi unit 15% Improved Labor Productivity
- 26. Improved Labor Productivity 26 Batch Pick
- 29. 29 “We doubled our volumes with 25% fewer people.” Director IT, Packaging Supplier Improved Labor Productivity
- 30. Improved Labor Productivity 30 Zone Pick
- 31. Thank You! Pre-routing is the process of mapping out the pick travel path to reduce wasted motion and travel during the pick tour. Improved Labor Productivity
- 32. Thank You! Pre-posting is the process of making certain the inventory is available in the bin prior to sending the operator to pick. Improved Labor Productivity
- 33. Thank You! Grocery List Milk Pickles Bread Eggs Soda HighJump WMS Improved Labor Productivity – Pre Route
- 34. Thank You!CheckOutAreaEntrance Grocery List Milk Pickles Bread Eggs Soda HJ WMS As-Is Improved Labor Productivity – Pre Route
- 35. CheckOutAreaEntrance Grocery List Milk Pickles Bread Eggs Soda HJ WMS As-Is Improved Labor Productivity – Pre Route
- 36. Thank You!CheckOutAreaEntrance Grocery List Milk Pickles Bread Eggs Soda HJ WMS As-Is Improved Labor Productivity – Pre Route
- 37. Thank You!CheckOutAreaEntrance Grocery List Milk Pickles Bread Eggs Soda HJ WMS As-Is Improved Labor Productivity – Pre Route
- 38. Thank You!CheckOutAreaEntrance Grocery List Milk Pickles Bread Eggs Soda HJ WMS As-Is Improved Labor Productivity – Pre Route
- 39. Thank You!CheckOutAreaEntrance Grocery List Milk Pickles Bread Eggs Soda HJ WMS As-Is Improved Labor Productivity – Pre Route
- 40. Thank You!CheckOutAreaEntrance Grocery List Milk Pickles Bread Eggs Soda HJ WMS As-Is Improved Labor Productivity – Pre Route
- 41. CheckOutAreaEntrance Grocery List Milk Pickles Bread Eggs Soda HJ WMS As-Is Improved Labor Productivity – Pre Route
- 42. Thank You! Grocery List CheckOutAreaEntrance Pre- Routed Improved Labor Productivity – Pre Route
- 43. Thank You! Grocery List Soda CheckOutAreaEntrance Pre- Routed Improved Labor Productivity – Pre Route
- 44. Thank You! Grocery List Bread Soda CheckOutAreaEntrance Pre- Routed Improved Labor Productivity – Pre Route
- 45. Thank You! Grocery List Pickles Bread Soda CheckOutAreaEntrance Pre- Routed Improved Labor Productivity – Pre Route
- 46. Thank You! Grocery List Pickles Bread Soda Accellos WMS CheckOutAreaEntrance Pre- Routed Improved Labor Productivity – Pre Route
- 47. Thank You! Grocery List Milk Pickles Bread Soda Accellos WMS CheckOutAreaEntrance Pre- Routed Improved Labor Productivity – Pre Route
- 48. Thank You! Grocery List Milk Pickles Bread Eggs Soda Accellos WMS CheckOutAreaEntrance Pre- Routed Improved Labor Productivity – Pre Route
- 49. Thank You! Grocery List Milk Pickles Bread Eggs Soda Accellos WMS CheckOutAreaEntrance Pre- Routed Improved Labor Productivity – Pre Route
- 50. Thank You! Grocery List Milk Pickles Bread Eggs Soda Accellos WMS CheckOutAreaEntrance Pre- Routed Improved Labor Productivity – Pre Route
- 51. “The process of identifying the most efficient placement for each item in a distribution center.” Improved Labor Productivity – Slotting
- 52. • ABC • 80/20 • Cube Movement • Golden/Strike Zone Improved Labor Productivity – Slotting
- 53. • Improved pick productivity • Better pick accuracy • More efficient replenishment • Workload balancing • Ergonomics and safety Improved Labor Productivity – Slotting
- 54. C = Slow Movers B = Medium Movers A = Fast Movers Shipping Improved Labor Productivity – Slotting
- 55. A = Fast Movers B = Medium Movers C = Slow Movers With the ABC slotting design theory in mind, what is the best shape of a warehouse? Improved Labor Productivity – Slotting
- 56. C = Slow Movers C B = Medium Movers B A = Fast Movers ADocks Improved Labor Productivity – Slotting
- 57. Improved Labor Productivity – Slotting 1,000 ft Shipping
- 58. Improved Labor Productivity – Slotting 1,000 ft 500 ft Travel w/o slotting = 1,000 ft Shipping (500 + 500) X 1.0 = average travel point w/o ABC
- 59. Improved Labor Productivity – Slotting % of SKUS % Activity % Area A Items 20 80 20 = average travel point using ABC 1,000 ft Travel w/o slotting = 1,000 ft Shipping 200 ft = average travel point w/o ABC
- 60. Improved Labor Productivity – Slotting % of SKUS % Activity % Area A Items 20 80 20 1,000 ft 100 ft Travel w/o slotting = 1,000 ft Shipping 160 ft (100 + 100) X .8 = average travel point using ABC= average travel point w/o ABC
- 61. Improved Labor Productivity – Slotting % of SKUS % Activity % Area 1,000 ft B Items 30 15 30 Travel w/o slotting = 1,000 ft Shipping A Items 20 80 20 500 ft = average travel point using ABC= average travel point w/o ABC
- 62. Improved Labor Productivity – Slotting % of SKUS % Activity % Area 1,000 ft B Items 30 15 40 Travel w/o slotting = 1,000 ft Shipping (350 + 350) X .15 105 ft 350 ft A Items 20 80 20 160 ft = average travel point using ABC= average travel point w/o ABC
- 63. Improved Labor Productivity – Slotting % of SKUS % Activity % Area 1,000 ft B Items 30 15 40 Travel w/o slotting = 1,000 ft Shipping A Items 20 80 20 C Items 50 5 10 750 ft 75 ft (750 + 750) X .05 105 ft160 ft = average travel point using ABC= average travel point w/o ABC
- 64. Improved Labor Productivity – Slotting % of SKUS % Activity % Area 1,000 ft B Items 30 15 40 Travel w/o slotting = 1,000 ft Shipping A Items 20 80 20 C Items 50 5 10 750 ft 660 ft savings = $$$ w/ slotting = 340 ft 75 ft105 ft160 ft = average travel point using ABC= average travel point w/o ABC
- 65. Improved Labor Productivity – Slotting
- 66. Thank You!Improved Labor Productivity – Putaway
- 67. Thank You!Improved Labor Productivity – Putaway Labor Productivity Improvement Directed Putaway Suggested Bin
- 68. Thank You!Improved Labor Productivity – Putaway Receiving Secure HazMat Cold Storage
- 69. • Can inventory be reduced? ‒ Demand Variability ‒ Lead Times ‒ Lot Sizing ‒ Corporate Policy ‒ Other Projects This could be a slippery slope. Target 15-30% reduction 69 Inventory Reduction
- 71. Capital Costs INVENTORY CARRYING COSTS Inventory Risk Costs Storage Space Costs Service Costs Inventory Investment Insurance Taxes Plant Warehouses Company Owned Warehouses Rented Warehouses Public Warehouses Obsolescence Damage Pilferage 71 Inventory Reduction
- 72. Today Future Improvement Program Carrying Cost Benefit One Time Benefit On-Going Benefit Inventory Time Inventory Reduction - Working Capital Benefit 72 Inventory Reduction
- 73. 73 Improved inventory accuracy results in potentially better inventory turns.
- 74. • Balance Sheet Impacts • DC Shutdown • Overtime Labor • Delayed Shipments 74 Eliminate Physical Inventory Count
- 75. • WMS helps you get it right the first time • Are you being penalized for mis-shipments? • Are you losing business due to poor customer service i.e. wrong items shipped? Research indicates the typical error averaged $200 to correct on both the shipping and receiving ends. Expect Shipping Accuracy up to 99.9% 75 Improved Shipping Accuracy
- 76. Thank You! Reduce Ship Station Requirements Ship on Mobile Device
- 77. Release Order X X Pick to Ship Label
- 78. • Better space utilization may delay the need for a facility expansion • Re-warehousing can help free space by consolidating partial loads • Better planning and SKU information will allow for using different location sizes Improved Space Utilization 78
- 79. Thank You!Improved Space Utilization
- 80. Thank You! Shipping Bulk Over stock Replenishment Days on Hand Picking Reserve Storage Zone Forward Pick Zone Improved Space Utilization
- 81. Thank You! Forward Pick Reserve Storage Improved Space Utilization
- 82. Thank You! Sometimes, you just don’t want to be out of stock…
- 83. Thank You!
- 84. Thank You!
- 85. Thank You!
- 86. Thank You!
- 87. Thank You!
- 88. Thank You!
- 89. Thank You! Storage Putaway Receive Ship Pick Cross Dock X X X Cross Dock Save Time and Space
- 90. • Is the correct type of storage equipment and material handling equipment being used? • Is excessive space being consumed to store and/or maintain equipment? • Is your equipment properly maintained? Improvement in equipment utilization can range from 5-20% Equipment 90
- 91. Equipment 91
- 92. • Sales • Demurrage • Expediting • Paperwork Other Tangible Benefits 92
- 93. • Pythagorean theorem: 24 words. • The Lord's Prayer: 66 words. • Archimedes' Principle: 67 words. • The 10 Commandments: 179 words. • The Gettysburg Address: 286 words. • The Declaration of Independence: 1,300 words. • The US Government regulations on the sale of cabbage: 26,911 words Intangible Benefits- More is not always better
- 94. • Forced accuracy and self-checking • Data entry / keypunch errors 1 wrong key per 300 strokes 1 miss-read per 1,000,000 scans 94 Reduced Errors
- 95. % Orders shipped on schedule % of ordering periods not out of stock % of line items shipped on schedule % of total units shipped on schedule WMS Impacts • Pre-posting • Operator Directed Activities • Efficiently Managed Replenishment Process • Inventory Visibility • Workload Management • Order Planning • Shipping Lane Management • Parcel Manifesting Interface • Load Planning • Services Selling Point Customer Service Level “It costs us approximately $600 per order error. And that is just the internal costs. When you add in the costs to our customers the number nearly doubles.” Customer Service Impacts VP Distribution, Auto Parts aftermarket95
- 100. Performance Measurement 100 – Reactive – Proactive – Mobility
- 101. • Wave management plans processing hours. • Are bottlenecks expected based on the forecast? • Every transaction is recorded; “who, what, when and where” of each activity is known. Workload Management 101
- 102. • Value Added Services • Postponement • Cross Docking • Supply Chain Visibility • Supply Chain Event Management Support of Other Initiatives 102
- 103. • Shared Support • Employee Satisfaction • Misplaced Orders • Order Cycle Time • User Networking Other Intangible Benefits 103 “I like being able to tell the COO we can incorporate a new company into the operations.” VP Ops School Supplies Distributor
- 105. 105 Minimize B: Severity of performance drop-off during assimilation period – increase Proficiency Minimize A: Duration of performance drop- off during assimilation period – Increase Speed of Adoption Maximize C: Performance level after implementation – Ultimate Utilization Maximize D: Continuous improvement Engage E: Engage with stakeholders earlier to get a bump optimize project performance earlier – Transparency and Engagement Managing Expectations
- 106. Thank You!
- 107. Start Time: 2:00pm EST Please type in your questions
- 108. Thank You! For any questions or information contact: Kelly Hummel | Net@Work Sage 300 Practice Director Phone: 636-362-6621 khummel@netatwork.com