Executive Briefings

How Investing in Automation Can Cut Your Costs

Dan Kaplan, president of New York-based SMC Data Systems, a provider of supply chain management solutions, says that many companies and their WMS providers are not properly utilizing advances in warehousing and inventory technology to optimize their supply chains.While today's competitive business environment dictates that companies should be lowering their operating costs to increase productivity just to survive, many are reluctant to upgrade their warehouse computer systems, remembering past experiences and not wanting to incur new expenses. What they fail to realize, he says, is that having aging software will result in higher operating costs companywide and excess inventory in the warehouse--meaning a decrease in profits.For example, he cites one company president of a midsize distributor who informed him that he does not trust software houses due to his previous bad experiences. In discussing the business issues resulting from his outdated software, the president cited three major problems caused by insufficient technological updates:Wrong credit issued. Rather then invoicing $1 million to a major chain store, his computer had issued a credit instead. The accounting department did not catch the mistake in time, and it took nine months to get the credited funds back and the invoice paid.Inventory issues. Having an unautomated warehouse resulted in poor inventory control, incorrect shipments, and large number of returns. When new inventory was received, shelves were consolidated and the computer records were not properly updated. This resulted in inventory being misplaced and new inventory being bought. The company ended with $2 million in excess inventory that could not be sold.Charge backs. His company had been hit with $45,000 in charge backs from a major department store due to incorrect shipments and EDI errors.Fortunately, says Kaplan, all of these problems can be resolved or even eliminated. But improvement requires investing in automating your warehouse.

By relying on new technologies:

Newly received inventory will be scanned and computer files updated in real-time mode, resulting in data being instantly available company-wide.
Consolidating shelves will be easier and more efficient as your real-time computer files will reflect both the consolidated and new inventory location and quantity.
You will be able to find misplaced inventory and prevent it from collecting dust.
Fewer shipping mistakes and returns will be made, as picked inventory will be scanned for accuracy.
At the staging area before being packed it will be scanned again to confirm that the correct products and quantities are being shipped to the right customer.
Labor costs will be dramatically reduced. Because automating your warehouse will create a more efficient and effective inventory environment, you can quickly reduce the size of your inventory management department or transfer staffers to areas of the company where they are much more needed.
All it takes to optimize your warehouse and inventory system is a little trust in newly developed technology, a wise investment in software and choosing the correct WMS partner, says Kaplan. For more on this article:
http://multichannelmerchant.com

Dan Kaplan, president of New York-based SMC Data Systems, a provider of supply chain management solutions, says that many companies and their WMS providers are not properly utilizing advances in warehousing and inventory technology to optimize their supply chains.While today's competitive business environment dictates that companies should be lowering their operating costs to increase productivity just to survive, many are reluctant to upgrade their warehouse computer systems, remembering past experiences and not wanting to incur new expenses. What they fail to realize, he says, is that having aging software will result in higher operating costs companywide and excess inventory in the warehouse--meaning a decrease in profits.For example, he cites one company president of a midsize distributor who informed him that he does not trust software houses due to his previous bad experiences. In discussing the business issues resulting from his outdated software, the president cited three major problems caused by insufficient technological updates:Wrong credit issued. Rather then invoicing $1 million to a major chain store, his computer had issued a credit instead. The accounting department did not catch the mistake in time, and it took nine months to get the credited funds back and the invoice paid.Inventory issues. Having an unautomated warehouse resulted in poor inventory control, incorrect shipments, and large number of returns. When new inventory was received, shelves were consolidated and the computer records were not properly updated. This resulted in inventory being misplaced and new inventory being bought. The company ended with $2 million in excess inventory that could not be sold.Charge backs. His company had been hit with $45,000 in charge backs from a major department store due to incorrect shipments and EDI errors.Fortunately, says Kaplan, all of these problems can be resolved or even eliminated. But improvement requires investing in automating your warehouse.

By relying on new technologies:

Newly received inventory will be scanned and computer files updated in real-time mode, resulting in data being instantly available company-wide.
Consolidating shelves will be easier and more efficient as your real-time computer files will reflect both the consolidated and new inventory location and quantity.
You will be able to find misplaced inventory and prevent it from collecting dust.
Fewer shipping mistakes and returns will be made, as picked inventory will be scanned for accuracy.
At the staging area before being packed it will be scanned again to confirm that the correct products and quantities are being shipped to the right customer.
Labor costs will be dramatically reduced. Because automating your warehouse will create a more efficient and effective inventory environment, you can quickly reduce the size of your inventory management department or transfer staffers to areas of the company where they are much more needed.
All it takes to optimize your warehouse and inventory system is a little trust in newly developed technology, a wise investment in software and choosing the correct WMS partner, says Kaplan. For more on this article:
http://multichannelmerchant.com