How is your warehouse performing? Are your workers able to locate the stock easily in the warehouse or do they spend huge amounts of time locating or sorting out items? These are the probable questions one needs to ask when evaluating the efficiency of an organization’s warehouse. A warehouse is not just an organized pile of items on shelves; it’s much more, requiring a structured methodology to organize, evaluate, and locate the items.
If not organized properly, it can significantly waste your resources. With expenditure rising exponentially due to labor costs, inventory management, and timely fulfillment of customer expectations, your return on investment (RoI) is quite significant. Towards this end, automating cumbersome manual processes in your warehouse is the best bet in enhancing your overall warehouse efficiency, while empowering your workforce to make the right decisions.
A good warehouse management system (WMS) or precisely a mobile WMS provides a powerful means to improve your overall warehouse efficiency and profitability. However, to exploit the full potential of such a system, you need to evaluate the right costs and benefits, apart from understanding certain parameters like inventory accuracy and order fulfillment speed in contributing to its overall value.
Many companies are in a hurry, expecting immediate benefits after investing in a mobile WMS. However, deriving the best value out of your investment is not just about tracking metrics and enhancing systems; it’s about understanding what you shouldn’t expect from WMS and how to effectively plug such gaps.
In this blog, we will understand the top benefits you can derive from a good WMS, apart from understanding the key concepts of WMS RoI – tangible and intangible returns. As part of this discussion, you will also gain some basic knowledge to measure and maximize your WMS investment that helps in improved warehouse efficiency and profitability.
A conventional ERP warehouse management system though offers a lot of benefits by automating most of the manual processes, still remains an unpopular option across an organization’s warehouse or a multitude of warehouses (for a large-scale manufacturing organization). This is because most of the warehouses are located remotely, where internet connectivity is a challenge, apart from workers, who are constantly on the move.
For such personnel, being tied up to desktop systems poses a disadvantage. On the contrary, having a mobile warehouse management is best suited for them, who can easily access the inventory data, process transactions, or even submit reports on the go, anytime, anywhere. Hence, a mobile WMS that seamlessly integrates with your in-house ERP system (Oracle or SAP) eliminates the need to access cumbersome desktop-based solutions, offering a value-added experience for your warehouse personnel.
Now let’s delve into some of the key advantages that you can derive by using such a system:
Minimize error percentage: Using advanced technologies like barcode scanning and GPS, you can minimize errors in picking, packing, and shipping, saving time and resources.
To comprehend the real value of your mobile warehouse management RoI, you need to understand and track the right metrics. Here are some of the key metrics that you need to take note of:
This metric determines how much time it will take to recover your initial investment. Hence, to calculate the break-even point, divide the total investment cost by the expected annual cash inflows from cost savings.
NPV:
Net Present Value (NPV) is an important metric to assess the profitability of your investment. You can derive this metric by calculating the difference between the current value of cash inflows and outflows, using a discount rate. When you derive a positive NPV, you refer to a good investment. On the other hand, if you derive a negative NPV, it refers to poor investment.
NPV = Rt / (1+i)t
Here,
Internal rate of return (IRR) refers to the discount rate at which the NPV of all cash flows from a project becomes zero. This metric enables you to evaluate the potential profitability of your investments. A higher IRR means that the investment is attractive. Also, IRR is mostly used to compare multiple investment opportunities.
0=NPV=t=1∑n(1+IRR)tCt−C0
Financial benefits of mobile WMS adoption
A mobile WMS adoption can positively impact your finances in several vital areas as follows:
Cut labor costs by over 70% by streamlining picking routes, automating task assignments, minimizing training costs, and balancing workload distribution.
Enhance inventory accuracy by 100% using barcode scanning that lets you systematically track the inventory, ensuring real-time visibility of your stock levels. With strong inventory optimization, you tend to minimize carrying costs.
Optimize storage space by over 80% through strategic placement that includes dynamic slotting, automated put-away assignments, maximization of vertical space, cross-docking opportunities, and dynamic seasonal inventory management.
In this context, leverage the right mobile warehouse management solution like that offered by Propel Apps which offers several value-added features and fits within your pocket. This solution integrates with your in-house ERP systems like Oracle SCM Cloud or SAP S/4 HANA, automating their entire gamut of warehouse operations – right from inventory procurement to final dispatch of products. The solution is user-friendly and offers the best ROI. To know more about this solution, schedule a free demo with us.
Managing a warehouse is quite daunting involving a web of interconnected processes. While manual processes are fraught with errors, leveraging an automated warehouse management system or precisely a mobile WMS will work wonders for a warehouse. By rightly comprehending the key benefits and tracking the right metrics vis-a-vis a macro ecosystem of warehouse management, you can exploit the full potential of WMS and enjoy a good ROI. So, it’s time to take the right direction by investing in a good mobile WMS like that offered by Propel Apps to make your warehouse a powerhouse of efficiency – no errors, swift inventory tracking, balanced workload distribution, and timely delivery of customer orders.
