Automate Your Warehouse!
Competitive business environments require companies to lower their operating costs and increase productivity just to survive. However, many companies are reluctant to upgrade their computer system, because of a past bad experience, and/or to not incur additional expenses.
Great tools and technologies exist, but fear of change prevents some Manufacturers, Distributors, and Retailers from making the cultural change that’s needed to use a new technology and to improve their operation. What they fail to realize is that having an aging platform will result in higher operating costs, along with excess inventory in the warehouse…this will decrease the bottom line profit of your organization.
The story goes like this…a company will not trust software houses due to previous bad experiences, and will inform most providers that the only reason they will see your organization is because a consultant recommended the meeting.
Discussing real business issues resulting from this outdated platform can be summarized via these three major issues:
1. Wrong credit issued: Rather then invoicing $1,000,000 to a major chain store, the computer issued a credit instead. The accounting department did not catch the mistake in time and it took nine months to get the money credited back, and the invoice paid.
2. Inventory issues: Having an un-automated warehouse resulted in poor inventory control, incorrect shipments, and massive 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. As a result of these issues, the company ended with $2,000,000 in excess inventory that cannot be sold. This inventory will have to be sold on the Web in a “fire sale,” trying to salvage as much as possible.
3. Charge backs: Its common to get $50,000 “charge backs” from major department stores due to incorrect shipments and EDI errors.
If any of the above business problems seem all too familiar to you, don’t worry there is light at the end of the tunnel. Poor invoicing, excess inventory issues, charge backs, and many other unnecessary business consequences can be a thing of the past. But, you must first learn to embrace a cultural technological change and invest for the future. This includes automating your warehouse.
Upgrade Your Warehouse – This will Reduce Operating Costs and Improve Your Bottom Line Profit
Computer software is the warehouse is one of the most crucial areas of investment, and opportunity for savings. Not having an automated warehouse will result in additional personnel, higher labor costs, misplaced inventory, incorrect shipments and high rates of returns. Often the misplaced inventory will not be found until the next physical inventory. This will result in excess inventory that may be obsolete when found, and will be bound for the outlet store or clearance retailer.
Positive aspects to automating your warehouse:
1. Newly received inventory is scanned and your computer files are updated in “real-time mode,” resulting in instant data availability.
2. 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. Dynamic slotting…if you don’t know the term by now…you better read up.
3. You will be able to find misplaced inventory and prevent it from “collecting dust,” and get some inventory to the discounter quicker.
4. Shipping mistakes and returns will be reduced, as picked inventory gets scanned for accuracy. At the staging area, before being packed, it gets scanned and verified confirming that the correct products and quantities are being shipped to the right customer.
5. Labor costs will be dramatically reduced. Since automating your warehouse will create a more efficient and effective inventory environment, you can quickly reduce the size of your inventory management department.
6. Forecasting can finally be done, so your order quantities will be based on real historical data…not wild guesses.
Nobody likes change, but today’s reality dictates being as efficient as possible. As we have discussed before via this blog – the tools and technologies exist to make your business life easier. You must also add to this mix good people and solid processes.
Higher operating and labor costs, poor invoicing and mismanaged inventory operations, and other unnecessary business disruptions that affect your bottom line can be a thing of the past.
As we close out January 2007, we will move away from my “back-to-basics” posts and get into new stuff.