Issue Date: 22 May 2009
Ref: CHE09/03

By Alex Mills, Sales & Marketing Director, Chess Logistics Technology Limited

The suggestion to invest now in warehouse applications may not seem wise. But there are good reasons why improving systems during a downturn could help your business in the short and medium term and leave it more efficient and better organised to cope with economic recovery.

We make an assumption here that your business has the financial reserves to consider such a move. There are attractive tax efficient leasing options that allow such projects to proceed if the business is stable with a reasonable cashflow. The key message is that improving warehouse efficiency by advancing existing solutions will save money. The questions you’ll need to answer are: how much and how soon?

It is generally accepted that successfully implemented WMS delivers the better accuracy, productivity and efficiency that impact positively on physical operations and have a significant effect on cost reduction. High error rates alone can represent a large element of cost, which if saved can contribute substantially to WMS payback. Labour costs, when compared to rent, rates and utilities, are one element of operations over which you can exercise some control. Manpower is one thing that cannot be outsourced so systems designed to promote efficient processes and improve productivity can have only positive effects on bottom line profitability.

Not all these benefits and savings can be delivered overnight and some of the rationale for any WMS project is based on an eye to the future. But it is possible to focus on areas where improvements deliver maximum punch. Implementation often takes a phased approach, and a good warehouse systems company will help you decide where key benefits can be realised fastest. These might be in obvious areas like pick performance or in fringe areas such as EDI links with customers or suppliers that reduce manual data input and paperwork.

Another good reason for considering the WMS implementation in quieter times is the lessening of the negative, though short term, impact of change. Going ahead while lower volumes are being processed means people can become practised in the new systems and technology and ‘cut their teeth’ under less pressure.

Timescale is important. But if we expect a WMS to provide tangible benefits within the timeframe of the recession then an expeditious implementation is paramount. Typically, speaking from my company’s standpoint, an implementation can be achieved within 3-6 months depending on the nature of the operation. This relies on choosing the right supplier and having a full awareness within your organisation of the work involved. But broadly we are talking about realising potential benefits within months not years. Those who grasp the opportunity may find it easier to withstand the recession and emerge stronger than their competitors when the economy recovers.