What is Warehouse Management System?
Warehouse management systems (WMS) have been around since some caveman came home with a dead bison and said “Honey look what I killed, where do you want me to put it?” Every household has a space dedicated for a particular purpose. The fridge is for your perishable food stuffs, cupboard for canned food, and fruit in a bowl to grab when you are on the run. Every now and then you would check the expiry date of certain items, and if overdue, throw them in the rubbish bin which would then be collected once a week to be removed from the home and destroyed. This, creates more space for fresh items to take their place as items are consumed. It’s a continual process of restocking items as they are used and disposed of as they are no longer needed.
How does it work, an everyday example.
On a grander scale that is how businesses handle their stock. Whether a corner store, or a multinational distribution hub, the principle is the same. Bring in items that are to be consumed, manage where they are to be stored, deliver goods once sold and get rid of stock that is no longer required or damaged. Before computers all these tasks would be recorded on paper with signed off despatch notes, a stock registry of ins and outs, and regular stocktake sheets. The accuracy of maintaining records this way was extremely problematic as even though the amount of items being received would affect the stock levels you would have to update both sets of books manually, which is admin heavy and leads to human errors. There was no way to track things in real time and at high volumes, practically impossible to have reliable records so the business had to embark on constant stocktakes to know where they were. Quite often this would be a rule of thumb or best guess at most.
How WMS affects your sales channels ?
With the advent of computerised systems, particularly relational databases, this allowed for one point of entry, that could update all other records that depended upon that information. Imagine updating stock via receivables note by 20 units, that would then automatically update stock levels in the warehouse, calculate the increase in stock assets by the cost in the balance sheet, register that there is a liability as an accrual for an expense to pay the supplier. This information could be mission critical as the increase in stock levels allows the organisation to sell that item. If you sell an item that is out stock, then you get a very disgruntled customer. If you can say to your customer that “we don’t have enough in stock, but we have a delivery next week would you still like to place your order”, then you have potentially rescued that sale and prevented your customer from going to a competitor all because you have reliable, up to date information. This is where dull warehouse management affects the sales pipeline which in turn has a direct impact on turnover. Everything is interlinked. A warehouse management system, that is embedded in your organisation can not only increase efficiencies but have an immediate improve your bottom line.
Next in the series: Warehouse management system and picking list.
