Order picking is one of the most important activities in a warehouse operation and has traditionally been highly labour intensive. If a warehouse is not efficiently laid out, if stocks are not easily located or retrieved, and if the order fulfilment cycle is particularly demanding to complete, picking can easily become a chaotic process. It needs to be carefully managed and the right investments made to ensure it is optimally efficient. This article explains how to evaluate different technology driven picking systems, to identify which one is most suitable to your type of warehouse.

 

Avoid costs of picking getting out of control

Given its significant impact on costs, optimising order picking is essential for improving warehouse efficiency and for meeting key performance indicators (KPIs) like on-time and in-full (OTIF) delivery targets. When the pick process is finely tuned, it reduces errors, increases throughput speeds and enhances overall productivity, leading to many cost savings and improved customer satisfaction levels.

 

Not surprisingly, many companies invest large amounts of resources into their picking activities. For instance, in some warehouses, between 50% to 75% of the total warehouse operating expenses are allocated to picking tasks. This high cost can be the result of having to employ large numbers of operatives – especially during busy periods – and the cost of time wasted when pickers are travelling between warehouse locations. Costs can also be generated by investing in technology to automate as many picking tasks as possible, although this will continue to deliver a return on investment, whereas the cost of labour is always a one off, sunk cost.

 

Integrate with a WMS whatever picking system you use

Regardless of the order picking system you choose, by investing in a warehouse management system (WMS), you can introduce a seamless layer of automated operational management into your picking processes. This can be achieved if your WMS is fully integrated with whatever picking system your business will benefit most from.

 

When the WMS is fully integrated with an order picking system, you can reap the benefits of:

  • Automated task allocation, because the WMS can dynamically allocate tasks to different pickers based on workload levels, skills levels and real-time location data showing proximity to the item, ensuring optimal use of resources;
  • Real-time inventory updates to avoid issues with out of stocks and overstocks, reducing errors and enhancing inventory accuracy. For instance, by requesting automated checks to confirm that the correct items and quantities are picked, thereby minimising errors;
  • Optimised efficiency and productivity because a fully automated picking operation driven through a WMS will streamline workflows, reducing travel time and improving efficiency. For instance, order picks can be prioritised based on delivery schedules and customer importance, ensuring timely dispatch to meet OTIF targets.

How to evaluate the order picking system your business needs

Let’s explore the different types of order picking systems and the pros and cons of each.

 

Barcode Scanning. This is a picking system whereby pickers use handheld scanners to scan item barcodes in the warehouse, ensuring accuracy and real-time inventory updates. It is flexible and easy to implement and is suitable for many types and sizes of warehouse. Warehouse barcode picking is a good option for bulk picking, whereby large quantities of single items are collected in one go. For example, barcode scanning works well in beverage warehouses fulfilling large orders for supermarkets.

 

Voice Picking. This is a technologically advanced picking system whereby the pickers receive instructions about what to pick and where to find the items through headsets. Voice picking offers many advantages including hands-free operation and reduced errors because the operative has to perform an item check to move onto the next task. It is very effective in large, complex warehouses and environments where the types of stock sold varies significantly or where the item shelf life is short because it is very efficient.

 

Pick to Light exists in many forms. It can utilise coloured lights and displays to guide pickers to the correct items for an order, enhancing working speeds and accuracy. These pick to light methods are well suited to e-commerce environments using wave picking, where multiple orders are picked simultaneously, and in environments requiring quick, accurate order preparation. It is ideal for high-volume, fast-paced environments and for warehouses where the types of products being sold does not vary too frequently with seasonality. It is also an ideal system in a warehouse where many operatives do not speak English as a first language because workers are guided to the right locations. Pick to light systems have been shown to increase picking speeds, reduce errors and significantly improve productivity, making this an ideal choice for small, high-turnover items.

 

Paper Sheets. Strictly speaking, paper-based picking list sheets is a ‘process’ although it is rather inefficient and outdated for the majority of warehouses today. It is a traditional method and tends to be found in small operations with low order volumes and very limited budgets.

 

Efficient order picking is always the goal in any business, and a WMS will provide previously unseen levels of visibility to the process. This is absolutely crucial for warehouse managers to get right if they are aiming to meet and exceed KPIs – like shipping orders on time and in full. There are various order picking processes and technologies to choose from and each will cater to different warehouse scenarios, such as bulk picking, e-commerce picking and the handling of heavy goods.

 

Whatever picking system your business decides to use, the most important aspect is to properly integrate with a WMS. This will create a unified platform that provides comprehensive visibility into the entire operation, helping warehouse managers make informed decisions and quickly address any issues that may arise.

For many companies, bringing in a Warehouse Management System (WMS) to replace very well entrenched, paper and spreadsheet-based processes can often be a big change. It is likely to affect workers, managers, customers, suppliers and any existing technology systems in place.

 

Workers may be accustomed to setting their own schedules for the day based on paper pick sheets whereas with a WMS, they will be assigned their tasks for the day. Suppliers or customers may be accustomed to a different style of paperwork or being able to circumvent routine systems to accelerate a shipment. This will be pre-scheduled with a WMS.

 

Existing technology may be in use that needs to be integrated with the WMS to maximise efficiency. For example, some warehouses have mechanical sorters and conveyors in place to deliver items to operatives on the packing bench and if this is left operating in isolation after a WMS is introduced, you will be missing out on many opportunities to tweak productivity levels.

 

The best way to ensure your WMS project delivers on all fronts is to follow a tried and tested approach to the implementation process.

 

This is why change management is such an important element of every WMS implementation and something to consider carefully when you select a software vendor. WMS roll outs will frequently share common characteristics, especially if they are in similar industry sectors. Having a consulting team that understands your industry and can manage the change with a sensitivity to your market specifics is a significant benefit, so we always advocate that companies search for a WMS vendor that has direct experience of working in your industry.

 

Best practice change management

When you engage Indigo Software to implement your WMS, we follow a proven, best practice approach to change management, following a well honed process.

 

This begins with a Foundation stage, where we collectively select the best project team comprising our own technical consultants and supply chain specialists, plus key users within your organisation. We advocate having a range of internal champions including management and users, with a representative from each department that will be using the new WMS in one way or another. A typical project team will include representatives from warehouse operations, IT, finance, and human resources. Within the team, it is important to clearly define individual roles, including the project manager, change champion, communication lead, and training coordinator.

 

Once the project team is in place, we collectively plan implementation, mutually agreeing realistic timeframes to ensure you have ample opportunity to refine existing processes before they are automated. Our consultants work with many leading organisations, and bring a best practice eye to each project, helping you to get the very most out of your investment in a WMS.

 

Defining your WMS vision

The most important part of the Foundation phase involves defining your objectives. This needs to clearly articulate the goals and benefits of your WMS implementation, including your expectations for increased efficiency, better inventory management, improved accuracy and enhanced customer satisfaction. Part of the visioning process also includes outlining the different steps required to transition from your original (paper-based) operation to a future proofed, technology-controlled warehouse operation. The detailed plan generated will include timelines, milestones, resources needed, and key performance indicators (KPIs).

 

The foundation stage also includes a full review of all your existing hardware and software, after which we can make recommendations about whether you can use existing servers or should consider a hosted implementation. Wherever possible we will always advocate making use of existing technology investments, possibly with the addition of new rugged devices for automatic data capture.

 

Detailed project education

The next stage of the implementation focuses on Education, ensuring that everyone involved with the project fully understands each element of the planning and delivery process. This includes analysing how the implementation is likely to impact the organisation, from processes and job roles to future systems. We will help you to outline the steps required to transition from the current state to the future state. This plan will include timelines, milestones, resources needed, and KPIs.During any user acceptance trialling we will provide collateral to help you in scenario testing and also provide an audit trail of what tests have been completed and how far through the UAT process you are.

 

We also work closely with users, helping them to become as familiar as possible with their new WMS software system in advance, identifying any customisation required and gauging likely training requirements. It is imperative that stakeholders are always kept well informed about the project, progress made, plus the benefits, and changes they can expect, across a broad range of communication channels.

 

Maintaining ‘business as usual’

Once you are ready for the implementation we work towards the Solution Delivery Phase, during which we plan for Pilot Testing, before we proceed to the Final Migration and System Cut Over. In the Pilot phase, we will test your WMS in a controlled environment and the feedback we obtain will inform any necessary adjustments to be made before the final rollout. During this final stage, your existing system is ‘shut down’ and use of the WMS begins. In some cases, we will run both systems concurrently (even if the original system is paper based), allowing you to identify any issues and also, to observe instant efficiency improvements you will benefit from in the future. Whichever approach is ultimately taken, we will be completing your roll out in carefully controlled phases, to ensure that any issues can be addressed with minimal disruption. Our goal is always zero impact on ‘business as usual’.

 

Although we conduct end user training throughout the implementation, once the system is live, we complete the final stages of end user training during the Solution Delivery Phase. Typically, users find our WMS software so intuitive and easy to use, training requirements are minimal.

 

The final Go Live phase involves us ensuring that you have maximum support to stay fully operational throughout the transition to WMS assisted working. We will establish a dedicated support team involving the supply chain consultants who worked on your implementation. They are available to assist your users both during and after the implementation. We will be continuously monitoring early feedback and ensuring that any issues are identified and resolved promptly.

 

Throughout every stage in the process, we employ mutually agreed KPIs to monitor your implementation’s progress and impact. Flexibility is key to a successful implementation and our consultants will regularly review these metrics to ensure the project stays on track.

 

What to expect when you implement Indigo WMS

 

Proven industry experience

Our team of consultants brings specialised expertise that will significantly enhance the operational efficiency and overall profitability of your business. Using their in-depth knowledge of warehouse operations, technology, and best practices, a WMS consultant will add value in the following key areas:

 

Process optimisation advice

Our consultants will analyse existing warehouse processes and identify inefficiencies and bottlenecks that are potentially holding the business back. They will then design and help you implement new streamlined workflows that maximise productivity, reduce errors, and minimize handling times. This leads to faster order processing and improved service levels.

 

Inventory management advice

Effective inventory management is crucial for reducing costs and meeting customer demands. As part of a WMS implementation project our consultants will help you implement advanced inventory tracking and management techniques, such as real-time data analytics, automated replenishments along with simple and enhanced multi order picking processes. All of these can effectively reduce excess inventory, help you minimise stock discrepancies, and improve cash flow.

 

Cost reduction review

By identifying areas where waste can be reduced, and resources can be utilised more efficiently our WMS consultants will help businesses lower operational costs. This will include optimising storage space, improving labour productivity through better task and resource management, and reducing the costs associated with errors and returns.

 

Scalability and flexibility review

As businesses grow, their warehouse operations must scale accordingly. Indigo Software’s consultants ensure that the warehouse management system is scalable and flexible enough to be able to accommodate growth and changes in your business models. This future-proofs the business against evolving market demands and technological advancements.

 

Compliance and risk management review

In today’s busy world navigating the complexities of regulatory compliance and risk management can be challenging. A WMS consultant ensures that warehouse operations adhere to relevant regulations and standards, such as health and safety protocols and environmental regulations. They also implement robust risk management strategies to mitigate potential disruptions.

 

Having successfully implemented numerous WMS solutions globally, your warehousing consultancy project is in a tried and tested, safe pair of hands, resulting in a smooth and efficient process. Indigo Software’s consultants have extensive real-world experience in a warehouse setting, ensuring a practical and business process focused solution, rather than just an IT led solution.

 

Implementing a WMS involves a not insignificant degree of effort on the part of the customer, but it will deliver outstanding business benefits that continue to achieve a financial return on investment for many years.

 

Our consultants have decades of experience between them and are ready to introduce automation into your warehouse.

There are nearly 50 countries that have a national tax on vaping products, targeting liquid as the tax base. The UK government has recently published a consultation which sets out proposals for how vaping products duty will be designed and implemented. It is now seeking views on the impact of these proposals to help determine the final design of the duty. If this is legislated, it means that vaping products will be treated in the same way as cigarettes and alcohol. Vaping products will be taxed and will therefore need to be stored in a bonded warehouse. Any movements into and out of the warehouse will need to be strictly controlled, to ensure that all the duties payable can be accounted for.

 

Keeping a detailed audit trail of bonded inventory in a warehouse with spreadsheet reporting will be extremely time consuming and it is also prone to errors. Where HMRC is involved, you don’t want to be making any mistakes, as any shortfalls in tax or reporting errors could result in a penalty charge.

 

How a WMS can support a bonded warehouse

One good way to keep tight control of bonded warehouse operations is with a warehouse management system (WMS). This benefits everything from cashflow to cycle counting, as this article explains.

 

An immediate boost to cash flow levels

Using a WMS will significantly improve cashflow because vape goods can be stored in the warehouse and any duties will only become payable when the goods are actually sold on. Many of the most popular vape brands are imported into the UK and a bonded warehouse means import duties can be waived while the items are sitting in a warehouse and will only become due when a wholesale customer orders them.

 

Automated reporting for bonded warehouses

Bonded warehouses need very detailed reporting showing stock movements, often across hundreds of different SKUs and customer locations. WMS software will automatically keep track of all the inventory entering and leaving the four walls, making this much easier to track. Being independently controlled by a software system also means the traceability is much tighter and because the system comes pre-configured with inventory reporting, any information submitted to compliance regulators like HMRC will be irrefutable.

 

Eliminate admin and manual paperwork

Using a WMS also helps to minimise warehouse management costs, by eliminating time-consuming paper administration. This ensures that the amount of duty paid is accurate, that it is only paid when it needs to be, that there is no stock shrinkage and that no reporting errors have occurred.

 

See ongoing financial returns

Investing in a WMS will deliver a rapid return on investment often within 12 months, but in the long term, the benefits are even greater. Other Indigo Software customers using a WMS in their bonded warehouse have shared that their investment saved tens of thousands of pounds in the first year alone, through time saved on ongoing stock checks. In addition, they have continued to save money, as a result of seeing further operational efficiencies from avoiding errors on orders. Over time, these savings will multiply year on year.

 

What are you waiting for?

The consultation into whether vaping products duty is still underway and there’s no guarantee that it will result in new legislation. We have a general election coming up very soon and who knows what the future will bring. But there are two things you can be pretty certain of. Firstly, vaping products will be an easy target for increased tax, regardless of which political party is in power.

 

Secondly, there is a well known saying among tax accountants… “never let the (tax) tail wag the dog” and this applies here. Simply waiting for potential new tax legislation to be passed before deciding whether to invest in a WMS doesn’t make commercial sense. WMS software has transformed operational efficiency in warehouses right across the world. Your warehouse is no different and could be benefiting immediately.

 

To find out how Indigo WMS could transform your warehouse contact us.

 

 

Disclaimer: This blog does not constitute tax advice. Tax law is complex so speak to an appropriately qualified specialist about the relevance and appropriateness of bonded warehousing for your business.

We are always reading about the latest ways automation is transforming warehouse operations and even the adoption by some companies of “lights out”, almost unmanned distribution centres. According to reports in the Wall Street Journal, over a fifth of warehouse operators have invested in automation to help address labour shortages, particularly to handle surging e-commerce orders. Yet as much as we hear about automation and new cutting edge technologies being more widely adopted, there are still many instances where the technology of choice for managing a busy warehouse is still the humble spreadsheet.

 

We have first hand experience of this and typically expect to find spreadsheets in smaller warehouse operations. Roughly 2 in 5 of every warehouse that we first visit is using spreadsheets, which have historically been employed to manage everything from inventory management to quality control. Two very common uses are in stock management applications.

 

Spreadsheets used for inventory management

In this example, spreadsheets can be used for tracking inventory levels including stock quantities available and their locations, plus the status of items being packed in the warehouse. Warehouse managers using spreadsheets will have some visibility of stock levels to manage replenishments and restocking, but it won’t be in real-time. Once a warehouse becomes busier, this causes a lot of problems, because operatives are always working with out-of-date information. They won’t know if items have been picked already or if a location was suddenly changed and they could be wasting time walking around aisles rather than being directed straight to available stocks.

 

Spreadsheets used for goods in and shipping

Spreadsheets can be handy for tracking when incoming shipments have been received and for recording individual supplier details, stock quantities received, any special storage requirements and the relevant location for stocks to be put away. Again, problems arise because the information is not generated in real time. Operatives won’t know whether the spreadsheet records are completely accurate and this can result in mistakes or inefficiencies.

 

Common issues when using spreadsheets in the warehouse

Although spreadsheets have a low entry point, are familiar to most workers, inexpensive and widely accessible, they can create a lot of problems. As a business expands and volumes coming in and out of the warehouse increase, they may not be the most efficient or scalable solution in the long run. For larger warehouses, those supporting e-commerce or more complex fulfilment operations, they are not an ideal solution. In the manufacturing sector, this inefficiency is compounded by having to manage two sets of warehouse operations. There are incoming raw materials to manage and picks for production plus the logistics of managing outbound finished goods. A Warehouse Management System (WMS) solution will be a better alternative and over time, pay for itself many times over through improved productivity and efficiency, reduced errors and lower requirements for human resources in the warehouse.

 

Here are some common ways that using spreadsheets to manage warehouse operations can mean errors creep into processes.

 

Data Entry Errors: This is the obvious one. People can’t help but make mistakes and manually entering data into spreadsheets leaves an operation at risk of recording incorrect quantities, item codes, or locations. Multiply the propensity to make an error up through a busy operation and across multiple spreadsheets and it’s easy to see how it can lead to much bigger stock management discrepancies. Using a spreadsheet also makes it very difficult to troubleshoot and correct errors made earlier in the warehouse. With a WMS installed, the data is captured in real-time and there is no need to manually enter information on the system. It’s captured automatically with a mobile device. Errors can very quickly be eliminated completely from a warehouse before they have a chance to be made, avoiding the need to correct problems or troubleshoot.

 

Formula Errors: If you have ever used formulas in a spreadsheet, you will know how easily they can be corrupted. Spreadsheets can be used to calculate total inventory quantities or shipment volumes, but even a small mistake can result in inaccurate data and reporting. With a WMS, the system automatically calculates total quantities and volumes on an ongoing basis. There is no need for users to access the back end calculations, the system comes preconfigured.

 

Version Control Issues: In a busy warehouse it is very common for multiple users to be working from the same spreadsheet simultaneously, which can present problems for version control management. Keeping track of which versions are being used can mean making decisions based on outdated or incorrect information. With a WMS there is always one version of a report in circulation. It is updated in real time and there are never any risks of working from incorrect information.

 

Lack of Data Validation: A spreadsheet is typically a static, printed document and users will not have the ability to validate their actions. They could select the wrong items on a pick, go to the wrong storage location or input invalid data. There is no way of checking things until it’s too late and the transaction has been completed. With a WMS, it is possible to build quality checks into each process beforehand. Users have to validate every transaction before starting another and the system checks and approves it before the next task can commence.

 

Complexity Management: Spreadsheets are fine in a warehouse that’s shipping 50 or fewer orders a day, or in an operation that’s entirely bulk order based. These environments are usually uncomplex and using paper based systems is often adequate. As a business scales, if it introduces e-commerce and B2C deliveries, or if warehouse operations grow in complexity, managing all aspects solely through spreadsheets can become very challenging. Trying to manage multiple and often interconnected spreadsheets to control different tasks will rapidly increase the level of inefficiencies and errors. For example, when using a spreadsheet, it’s tricky to coordinate multi-order, batch picking or to introduce perpetual inventory management. With a WMS, the system offers a single integrated view of operations and can aggregate orders for the day so that the same item can be picked in bulk and packed into the appropriate order later in the day. Pickers can also be tasked with checking stock levels as they move around the warehouse and recording it in the system, eliminating the need for a stock count.

 

When it comes to investing in your warehouse, there is a point at which it becomes uneconomical to continue working with spreadsheets. If you are employing just a few operatives, or if you are shipping less than 50 orders a day, perhaps there is an argument that you could ‘get away with’ using spreadsheets for a while longer. As soon as your business starts to expand, you may struggle to handle the volume of data processed and the number of transactions needing to be completed. Over time, this can lead to performance issues and an increased risk of errors as we have explained.

 

If you are not quite at the stage of investing in a full WMS but would like to consider improving warehouse efficiency, one good option is to consider a rapid access solution like Indigo QuickStart. This will provide all the key benefits of using a WMS, but with more limited functionality. It’s just enough to see improvements. Then as your business continues to expand, you can upgrade to the full solution once the investment is warranted.

 

To discuss how to ditch the spreadsheets, remove these islands of data and overhaul your warehouse operations, contact Indigo Software.

 

Author

Mark Leavy, CSO, Indigo Software

UK inflation has finally started to fall, with the Financial Times reporting it has just dropped to the lowest level since 2021. This suggests that interest rates could be cut in the coming months resulting in a rise in consumer confidence. That means consumer demand could likely rise too and it could be an indication of increasing business confidence and investment levels. Is it also a sign that now is a good time to be evaluating a warehouse management system (WMS) solution? We think so.

 

If consumers are spending more, they are probably ordering more goods online. More orders mean busier warehouses. Busier warehouses, if they haven’t already, need WMS systems, to streamline their core picking processes. Without the right support during busy periods chaos can quickly ensue, but when systems are in place, it is a very different picture. This example at one of our customers, a major online retailer selling activewear, illustrates the massive difference a WMS can make. They have done what we describe as ‘scaling for success’.

 

Let’s go back in time by six months, to last year’s Black Friday week. There was a perception among the senior leadership team at this company, who were walking the warehouse floor on the day and supporting the business, that Black Friday sales levels might have been a bit disappointing. There was an assumption that because processes were running so smoothly (a.k.a. nobody was running around like a headless chicken) they couldn’t be selling as much as expected. In actual fact, business levels were 10% higher than in the previous year.

 

This particular customer has a very sophisticated warehouse operation and they use automation technology extensively to run core processes. Indigo’s WMS software is one key piece of their complex logistics jigsaw. It ensures that all the stock sold has been put into the right place. The software helps operatives to pick consolidated orders simultaneously, bringing them into a central sortation point to be batch sorted into component elements and then pushed through an automated bagging system. The whole operation is so slick, it made their very busy Black Friday look like a non event.

 

You might be wondering how does Indigo’s WMS software support the batch picking of hundreds of orders at once? How does it work? When stock is batch picked, one person is responsible for gathering all the relevant stock items in a picking trolley and then bringing it to a central sorting bench for onward processing. Our software can sort thousands of SKU items based on shared attributes in the order and it supports the adoption of multiple picking styles. This feature is significant, because it allows users to easily separate orders that can be grouped together logically. From experience, any order containing more than six items is most efficiently picked in batch – you could have 60 orders with six items in each one. Less than six items and it is probably more efficient to be picking the items sequentially.

 

The apparel industry brings further complexity to picking optimisation because retailers have to manage seasonal stock variations and different ‘winners and losers’ in their ranges. These are the stocks that they need rapid access to. Retailers move their stocks around in the warehouse to place winners (fastest movers) in the best places and they’ll populate their picking locations with an appropriate amount of stock. This ensures that expected demand on any given day, week, month or year can be pulled straight from that location, with a minimum amount of replenishment activity. It is especially important on a day like Black Friday, when a very large number of items can go out in one day. Indigo WMS supports scaling an operation, but with built in flexibility.

 

So returning to our e-retailer customer, over last year’s Black Friday period they processed over 18000 orders per day. It clearly wasn’t a non-event, but there certainly wasn’t the chaos that you might have expected to see on a busy day like that.

 

If our example highlights best practice, what does chaos look like? It is having to manage customer expectations, because you have not been able to fulfil the order pool within the expected timeline. It is treading water with your customers, buying time because you have been completely overwhelmed in the warehouse. This is what happens in warehouses that have not got a WMS and are trying to do batch picking manually.

 

Imagine how difficult it is to manually collate hundreds of picking documents for large orders in the warehouse. An operative physically needs to work through these documents multiple times, grouping items together by shared attributes. It requires a large amount of product knowledge to be able to identify similarities and assess the relevant stock locations. Grouping items together using pick notes manually is a massive overhead and there is always a danger that the wrong items end up in an order.

 

What often happens in practice, is that a company can only cope without using a WMS system for so long before their systems just collapse under the strain of meeting all their orders. If your company is processing 50 or so orders a day, it is probably fine to be managing without technology, but once levels start to rise into the hundreds, a WMS becomes necessary or the business becomes completely overwhelmed. From a technology and communications point of view, they cannot keep up with what they need to be able to do.

 

We can provide many examples of businesses that have been completely overwhelmed by a rise in order volumes. Very often the company’s front office systems are so slick that orders come through thick and fast. The different e-commerce platforms available now are so advanced, any business can be live and trading in hours, but the front end is just a small part of the operation. The set up in the back office is very different and these companies may be unable to process their orders on time and manage demand levels.

 

Whatever the time of year, having an efficient warehouse operation is always essential. Indigo Software specialises in supporting growing businesses across many different industries by helping them to streamline and optimise their warehouse operations.

 

Author

Simon Parnaby, Product Manager, Indigo Software

In a recent conversation with a manufacturing company interested in introducing a Warehouse Management System (WMS), it became apparent that they had a very different understanding of what the metric OTIF, On Time In Full, means. The discussion also highlighted that in their enthusiasm to reach a common definition internally, they had excluded the audience group for whom this metric is most important – the customer.

 

When defining key performance indicator (KPI) metrics, it is so important to be using the same parameters as your customers and suppliers. There is no point in having performance measurements that are not aligned with the way that you are measured, either internally or externally. Reaching a consensus about measurement indicators requires a more collaborative approach, working in partnership with your key partners when you are establishing these measures. A supply chain is as the name implies, a chain. Every link in the chain needs to be performing and communicating effectively, because a chain is only as strong as its weakest link.

 

Using a WMS system will help you to closely monitor your KPIs and performance levels, and also hold suppliers to account where appropriate. Ultimately, whether you are a manufacturer, a supplier of raw materials, a retailer or a distributor, you are only ever as good as your last delivery.

 

What are the top warehouse and distribution centre (DC) metrics?

Here are some of the top metrics in place in warehouses currently.

#1 Putting customers first

Metrics that directly relate to ensuring customer satisfaction are often the most highly monitored, demonstrating how important it is to focus on what your customers want. Some of the measures that many warehouses benchmark their performance against include the four key components of a perfect order: delivering orders on-time, shipping them damage-free, complete and with the correct documentation.

 

Typically companies with higher perfect order rates carry less inventory, experience shorter cash-to-cash cycle times, and have far fewer stockouts. Conversely imperfect orders lead to increased shipping labour costs, the need to provide replacement products, and lower revenue due to lost sales and customers.

Interestingly, being able to attain the perfect order index measure is only possible if the warehouse has full visibility of available stock and operational performance in real-time. This requires a level of automation that can be attained by implementing a best of breed WMS solution. Using a WMS provides an instant overview of when orders were shipped against delivery targets and the immediate stock availability tracking functionality ensures that orders are either shipped complete, or customers are at least notified of any expected delays from the outset.

 

In a highly competitive e-commerce environment, where margins are ultra-thin and customers are swayed easily and free to shop around for alternatives, service is absolutely everything. The customer is always king and any systems that can enable them to feel that way routinely when they buy from your company will help ensure your brand keeps its share of wallet and stays front of mind.

 

For more information about using a WMS to track key metrics in your warehouse, contact Indigo Software.

Improved customer satisfaction is one of the most important benefits of implementing a Warehouse Management System (WMS) solution in your warehousing operations. Too often management’s emphasis is just on improving productivity and efficiency among the warehouse operatives who are picking and packing. This is critical for success, but so too is keeping the customer happy. And the best way to do this is to make sure that goods ordered do actually arrive, on time and in full. This is known as ‘OTIF’ and it has become a standard metric for measuring warehouse performance.

 

Regardless of industry sector, whether a warehouse is dealing with end user customers (B2C) or other businesses (B2B), companies often report that issues they would have experienced relating to missing orders greatly diminished once they had implemented a WMS. For example, one Indigo Software customer, a well known manufacturer and distributor of garden and leisure equipment, reported a significant reduction in the number of customers who had been ‘getting in touch and saying that they hadn’t received parts or their goods’. This company provides a huge array of spare parts to its customers as part of an after sales care service and previously experienced a lot of issues with items not arriving. Due to a lack of a WMS, they could not fully confirm what had been shipped and when. It meant they had no option but to resend whatever had been ordered. Apart from satisfaction levels among customers being adversely affected, this situation also meant they were losing money. Constantly sending out replacement parts is costly – there’s the cost of the items, the labour costs to process the order and the shipping costs to factor in, plus the implications for customer goodwill. After introducing a WMS, these customer issues dropped significantly.

 

We all understand that manual warehouse systems are rife with problems. This is not just due to the inefficiencies created, but manual processes and paperwork both introduce a greater potential for shrinkage. For example, if paperwork is missing, or if there is a lack of reconciliation with goods receipt processes, stock transfers and shipment processing, it means a company could be left very exposed – to fraud and theft as well as genuine mistakes.

 

Integrating a WMS with your main ERP software makes it far easier to track exactly what has been dispatched from the warehouse and to whom. Plus, when taking into consideration having to hold hundreds of SKUs in spare parts, as was the case for this company, using software to manage the warehouse means it will be properly organised. All inventory parts will be stored in the correct locations and all available space will be used to maximum efficiency. Research shows that when a WMS is installed, space utilisation levels can increase by up to 30% in a typical warehouse.

 

In another project for a manufacturing customer, Indigo Software needed to integrate a new WMS with a weigh scale to create an instant validation check. This provided an accurate way of ensuring that finished products were always being shipped completely intact, with no missing elements. Having this quality check in place meant that the company could always verify the correct items were being sent, based on the individual weight of each product. At shop floor level, the factory knew for a fact that a fully equipped piece of equipment would be going out the door and each shipment stage was fully documented throughout the whole process.

 

In this instance, Indigo Software was able to achieve this integration by modifying the standard pick process within the WMS software. It would allow users to issue commands to weigh scales which would instigate measurement functions and then receive the returned weigh values. The weight value for each pick was then validated against the actual item weight, which was already stored within their ERP system. Provided the weights recorded fell within a pre-agreed tolerance level, the picker was able to proceed with the order. In the event of a discrepancy, controls were put in place to invalidate the pick and prevent dispatch until the issue was resolved. Clever eh!

 

This solution devised by Indigo Software in partnership with the customer was designed to prevent the occurrence of customer issues about not receiving parts that should be included with the actual product. It meant that customer orders would always be fulfilled as OTIF. It also reduced the burden on the customer services team, which is responsible for processing complaints and shipping replacement parts, along with the associated costs.

 

Being able to achieve OTIF and maximise customer satisfaction will always translate into better customer retention levels. Customers are more loyal if their orders are always delivered accurately and on time. Plus, if customers know that you’ve got measurement systems in place, there tend to be fewer complaints and queries being made in the first place. We know this because our customers have told us.

 

If your company wants to guarantee customer satisfaction and meet service level agreements, using a WMS is an excellent way to ensure this is achieved. It’s the best way to build automatic quality checks into your dispatching process, and you will see a whole host of other benefits too.

 

About the author

Jacky Farrington is Global Customer Success Manager at Indigo Software. She works closely with all our software users, to ensure they get maximum value from their investment in a WMS solution.

In just a few months, on 1 April 2024, the UK government will introduce the largest ever increase to the minimum wage in cash terms. It will have significant implications for logistics operations, at a time when inflation continues to increase the overall cost of doing business. Our advice to warehouse managers is to act quickly and explore how adding a Warehouse Management System (WMS) solution to your logistics operations can help to reduce the negative impact this rise will have on business profitability.

 

We all agree that no one should be forced to live in poverty and that employers should be paying a fair wage that allows all people to live a decent life. The government has recognised this and legislated that the National Living Wage should be increased and that the rises should apply to all workers aged 21 and over. The annual increases to the minimum wage and national living wage with effect from 1 April 2024 are as follows:

 

  • 21 and over – £11.44 (increase of £1.02)
  • 18-20 – £8.60 (increase of £1.11)
  • 16-17 and apprentices – £6.40 (increase of £1.12)

 

These wage rises are very positive for millions of workers across the UK who have been struggling with the cost of living crisis. At the same time, many businesses are struggling for cash and finding it increasingly difficult to hire and retain good workers – especially in a fast moving environment like the warehouse. But what if you didn’t need so many people to run an efficient warehouse operation, because it was being supported by technology? Here are some of the ways a WMS will help you to rein in the rising costs of employing warehouse operatives.

 

Improved inventory visibility and accuracy

Real-time inventory tracking helps prevent problems associated with having too much or too little stock. By overseeing the inventory management function, a WMS will reduce the need for manual intervention and any reworking of tasks. Overall, by operating with improved accuracy levels as standard, your warehouse will be reporting fewer errors in order picking, packing, and shipping. This further improves efficiency by reducing the need to manually correct mistakes. Implementing automated cycle counting processes using a WMS reduces the need for extensive physical inventories, saving time and labour expenditure, while maintaining ultra accurate inventory levels.

 

Automates workflows to limit manual intervention

The need for manual intervention is minimised when using a WMS, because the software automates all routine tasks – everything from order processing and picking to packing and shipping orders. The WMS guides workers through every stage in a process and is set to automatically verify that each element was properly completed in a sequence. Over time you will notice you can run to maximum efficiency without needing to increase your head count, even during peak periods.

 

Optimised workforce management

If you are heading for a busy time, a WMS will ensure you don’t over staff the warehouse unnecessarily. It will optimise recruitment and workforce management by identifying priorities and workforce requirements in advance, with the required skill sets. This means warehouse managers can allocate human resources more effectively, avoiding overloading specific areas or unnecessarily hiring in expensive contract workers.

 

Streamlined order fulfilment

Picking and packing orders – especially for e-commerce sales – is time consuming and accounts for a large proportion of workforce costs in a warehouse. Using a WMS streamlines the entire order fulfilment process, reducing the time and labour required to pick and pack orders accurately. More advanced features like support for wave picking of multiple orders and pick route optimisation further enhance warehouse performance, ensuring efficiency levels are always maximised.

 

Reduced paperwork

A warehouse that is run with paper requires a high level of manual data inputting and administration – which is costly and time consuming. Added to this, the data being manually input is almost always out of date by the time it hits the back office database. By automating documentation and record-keeping with data captured at source and in real-time, a WMS saves on resource time and cuts the risk of errors.

 

Many companies that have introduced a WMS into their warehouse operations report significantly reduced labour costs as a result. Automating manual processes, optimising workflows, and achieving all round improvements to productivity and workforce efficiency can lead to significant cost savings in terms of reduced manual labour requirements and all the associated expenses of employing warehouse operatives. Even in a short to medium term timeframe, users will see a rapid payback on their investments.

 

To discuss how a WMS can help your company to mitigate the costs of increased wages contact Indigo Software.

Around three quarters of business executives admitted that they do not have a high-level of trust in their data, according to a study compiled by HFS Research. 89% of the same survey respondents also admitted that having a high level of data quality was absolutely critical for successful decision making.

 

Quality is multi dimensional and includes many variables. Data needs to be accurate. It needs to be up to date and timely. It needs to be easily accessible and shareable. A best of breed Warehouse Management System (WMS) improves all these factors, ensuring that the data you need to rely on is dependable, always available and of the highest possible quality.

 

Over time, when data is consistently poor quality, it leads to poor data trust, which can become a very significant problem inside organisations. It undermines confidence that individuals within an organisation have in their abilities to do a good job and over time, it erodes confidence in the organisation as a whole.

 

Take accuracy as a starter. Accurate data is one of the critical success factors in any warehouse, because incorrect information really does cost money in the most basic sense. For instance, if stock availability data is wrong and the items showing as available have actually already been sold, how can orders be dispatched to a customer on time? The same applies for manufacturers needing to pick for a production line. And there are plenty more instances where inaccurate warehouse data creates problems.

 

During our project work with warehouse managers, we encounter frequent problems with data trust. It typically occurs inside warehouses that are managed without a dedicated WMS solution. The company concerned might be using spreadsheets, or a legacy ERP system that relies on batch updates. In most cases, the data is being entered manually, which results in human error and delays in updating the back office systems. It means the information that sales operations and warehouse managers are using for their decision making and resource allocation isn’t up to date. If employees cannot rely on the accuracy of their data, it can lead to them by-passing business systems and creating their own alternative reporting or management systems. We see these problems all the time before companies start to use their WMS system.

 

Another issue contributing to poor data trust is the existence of data silos. These arise when business systems are not properly integrated and different departments or teams maintain separate databases. Introducing a WMS helps to break down data silos, because up to the second information, captured at source, can be shared across several business functions.

 

Here are six more ways a WMS helps to build data trust and why it is so important in a warehouse:

 

Inventory management – Data trust is essential for maintaining accurate inventory records. Inaccurate data can lead to discrepancies between the WMS records and the actual physical inventory in the warehouse. This can result in issues such as stockouts, overstock situations, and fulfilment errors, or delays to production for manufacturing companies.

 

Shipping orders on time and in full (OTIF) – Reliable data is critical in the order fulfilment process. Ensuring that the WMS has accurate information about product availability, location, and quantity helps prevent errors in picking and packing, reducing the likelihood of shipping late, or sending incorrect items to customers.

 

Labour and resource management – A WMS relies on data to optimise the allocation of resources, such as manpower, equipment, and storage space. Trustworthy data ensures that these resources are utilised efficiently, leading to cost savings and improved warehouse productivity.

 

Full visibility in real-time – Managers and staff need accurate information to monitor the status of orders, track inventory movements, and identify any potential issues in the supply chain. Reliable, trustworthy data ensures that stakeholders have confidence in the information presented by the WMS.

 

Customer excellence – Inaccurate data can lead to fulfilment errors and delayed shipments, negatively impacting customer satisfaction. By maintaining data trust in the WMS, businesses can enhance their ability to meet customer expectations and provide a seamless order fulfilment experience.

 

Auditing, compliance and reporting – Many industries including those that are highly regulated like food manufacturing and pharmaceuticals have compliance requirements related to inventory tracking and reporting. A WMS makes it straightforward to meet these compliance standards and facilitate accurate reporting for audits or other regulatory purposes.

 

When your warehouse data can be trusted, you have a solid foundation for continuous improvement initiatives. Using a WMS with real-time integration across the business, warehouse managers can analyse performance metrics, identify areas for improvement, and implement changes to enhance overall efficiency.

 

To learn how you can introduce the highest levels of data trust in your warehouse contact Indigo Software

Research released by the business advisory firm BDO highlights just how attitudes towards minimising waste have changed. Up to £1.3 billion was deployed into circular economy investments in the UK in the 12 months between spring 2022 and 2023, with the industrial and manufacturing sectors being the most prominent. These two sectors accounted for 36% of deal volumes in 2022, topping the circular economy investment league for the second year in a row.

 

What this data highlights, is how a 21st Century more sustainable ‘make do and mend’ mindset is rapidly taking over British industry. It means that many manufacturers are having to adapt their warehousing operations to cope with increasing requirements to store more spare parts for repairs. This certainly increases the complexity of warehousing operations and creates a very strong business case for investing in a Warehouse Management System (WMS) solution.

 

Gone are the days when people would accept throwing away equipment rather than trying to repair it. Now fixing is being legislated. The ‘Right to Repair’ movement has already seen legislation passed in a number of US states requiring manufacturers to offer spares. The UK has introduced similar measures and now requires manufacturers of consumer durables like washing machines, fridges and televisions, to supply consumers with spare parts for ‘simple and safe’ repairs. Other parts for more complex repairs must also be freely available to professional repairers, with this level of expanded support required for up to ten years after the original sale date. Very soon the rules will be expanded to include smartphones and a much wider band of consumer electronics that would otherwise end up as waste electrical and electronic equipment (WEEE).

 

For manufacturers and also service agents, the legal requirement to offer repair services means a sudden need to establish a comprehensive spare parts operation. This will likely involve storing and shipping a huge number of individual SKUs, for current and legacy product lines. It may be the first time some manufacturers will have been required to provide spares and could mean a total overhaul of their warehouse operation. Here’s how a WMS solution can help ease the transition to a new way of working.

 

Space utilisation and location management – Storing and shipping spare parts will require the introduction of many new warehouse locations, at a time when extra space may be at a premium. Having to re-configure a warehouse to store hundreds of small items could be a logistical nightmare, but it becomes very simple when a WMS takes control. The WMS software will identify the best places to put every item based on how often they are needed to achieve the fastest routes around the warehouse. Available space will be flagged for use and up to 30% more items can be stored in a given area, because the system will guide operatives to find the parts they need. A WMS also allows for the creation of dedicated storage locations for spare parts based on their characteristics, such as size, fragility, or storage requirements. This ensures that spare parts are always stored in optimal conditions and are easily accessible when needed.

 

Integration with automated racking and shelving – Creating a spare parts warehouse could mean having to go higher, with taller aisles and racking. Many manufacturing companies have already introduced automated shelving or carousels to bring the items to pickers in the warehouse. These can be integrated with a WMS to make the whole picking operation completely seamless and as fast as possible. Rather than having to go to the stock locations, items are delivered to pickers on a packing desk for maximum speed.

 

Pick multiple orders simultaneously – A spare parts operation will require many small shipments to be created and trying to pick each order individually will be time consuming and inefficient. A WMS allows multiple orders to be handled concurrently. Known as wave picking, this method asks pickers to select the right quantities of the same item needed for different customer orders when they reach a certain location. The part-picked orders are tracked by the WMS and then, once completed, groups of orders can be approved and sent off to shipping.

 

Avoid spiralling labour costs – Picking costs typically represent the bulk of labour overheads in a warehouse and this could significantly increase in a busy spare parts operation. Using a WMS, manufacturers can achieve many efficiency gains and keep a tight control on labour costs. For instance, when migrating from paper to a WMS, most companies see a 30% improvement to warehouse efficiency and productivity. This will be important because spare part services are not necessarily going to be a big profit making activity, just something manufacturers are legally bound to offer to reduce environmental waste.

 

Automate inventory management – Stock counts and replenishment management is another aspect of warehouse management to get right for manufacturers introducing a spare parts operation. Without the right technology in place, it wouldn’t take long for out of stocks to be creating supply problems and damaging customer relationships. When a WMS is controlling key warehouse processes, stock management can be automated, with ongoing replenishment requests triggered as soon as stock levels at a particular location hit a minimum level. Perpetual inventory checks also become part of the day to day routine, meaning the warehouse never needs to close for a stock check. For spare parts with specific batch or lot numbers, a WMS can track the movement and usage of each batch. This capability is essential for industries with strict quality control requirements.

 

Over the coming years we can expect governments to be adding more and more items to the list of consumer products expected to be repairable. Why not take a proactive step towards becoming a more sustainable and environmentally responsible brand before this happens? By adding a WMS to your warehouse, you could be launching your spare parts division in weeks and maybe even create a very important competitive differentiator.

 

To discuss how a Indigo WMS could enhance your manufacturing warehouse, get in touch with Indigo Software.

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