Logistics
Logistics is an essential function of many organizations today. All companies look to minimize the cost of attaining logistics objectives. Logistics deals with moving goods from one place to another, handling and storing them. Primary logistics functions include warehousing, inventory management, transportation, and logistics information management (Kotler & Armstrong, 2009)
Warehouse Management System
As mentioned above, one of the functions of logistics is warehousing. One must wonder just why warehousing is that important anyway. It seems like it is only about storing goods in a prominent place. There is much more to it in the background. It involves all the other functions of logistics; that is, all processes are interrelated and affect each other. For example, effective inventory management is essential for minimizing warehousing costs.
This is where Warehouse Management System, or WMS, comes in – to achieve logistics functions in the most efficient and cost-effective manner.
WMS – What it is
A Warehouse Management System is an information system that, in its most simple version, controls the movement and storage of materials within a warehouse and process-related transactions such as shipping, processing, receiving, etc. However, more advanced systems are now including manufacturing, accounting systems, transportation, and order management also (Piasecki, 2007).
The way a WMS works is based on real-time information. This dynamic information is given by Auto ID Data Capture (AIDC) technologies such as Radio Frequency Identity (RFID). These chips are placed on goods that monitor their movement and send back information when they are read through a transmitter.
Any WMS must have a flexible location system, user-defined parameters to assign warehouse tasks, and integrated technology to collect data (Piasecki, 2007). For example, at Toyota, data is captured from the parts, and an associated tag label is created, which gives part details and locations. This information is then stored on the mainframe to meet the order of Toyota dealers (Modern Materials Handling, 2002).
The Importance of WMS
Toyota set up its spare part distribution facility in the UK to supply spare parts to the dealers. It realized the need for a WMS that would supply the right parts to the right dealers. After having implemented a Warehouse Management System, it declared that the WMS had resulted in a 99% picking accuracy! (Modern Materials Handling, 2002) This indicates the importance of a state-of-the-art Warehouse Management System for an organization.
A modern warehouse needs to be operated in a way so that costs are minimal and the inventory brought in is the inventory that should be brought in. Also, it must be received in good condition, without having been damaged. A good, effective WMS is critical to the operation of a modern warehouse because it brings with its many advantages. These include (Ayub, 2007):
- Faster Inventory Turnover – A WMS limits inventory movement and improves the accuracy of inventory records. This results in lesser problems, lower lead times, and, therefore, a JIT system.
- Efficient Use of Warehouse Space-A WMS locates items more efficiently in the warehouse. This leads to better utilization of the space that is available. Even at Toyota, the warehousing software automatically allocated locations for every part according to the size and frequency of demand (Modern Materials Handling, 2002)
- Reduction in Paperwork – Like any other Information System, the WMS also results in automation and therefore requires lesser paperwork to be carried out. This also leads to improved accuracy due to minimal human data entry errors.
- Reduced dependency on Warehouse Personnel – Again, automation leads to standardization of picking, locating, and moving items. This results in the need for lesser human resources in the warehouse.
- Improved Customer Service – a consequence of all the functions of a WMS is streamlining the order fulfillment process by reducing cycle times. This results in happier, more satisfied customers.
- Better Cycle Counting – At the end of a specified period, counting is done to match inventory records. This becomes more efficient with a WMS that captures data pertaining to such activities so that staff can be scheduled for the counts.
Conclusion
In conclusion, it is important to be aware of reality. A state-of-the-art Warehouse Management System promises several claims, some of which also include enhanced customer service and happier customers. It is true that an effective, well-implemented system will result in efficient inventory management and reduction in labor costs, but it is important to stay focused on the core functions of WMS and expect only that. The major factors that control inventory are lot-sizing lead time management and demand variability, and WMS has little effect on this (Piasecki, 2007). Also, better utilization of storage space is relative to how your processes were before implementing the WMS.
References
(2002). WMS drives efficient parts distribution. Boston: Modern Materials Handling.
Ayub, N. (2007). What is Warehouse Management System. Web.
Kotler, P. & Armstrong, G. (2009). Principles of Marketing. India: Prentice Hall.
Piasecki, D. (2007). Warehouse Management System.