How to save money with a Warehouse Management System

As your business grows, so too will the strains and stresses on fulfilment. Workarounds, paper based systems and so on become part of the norm, to ensure deliveries happen.

Most people understand why they should get a Warehouse Management System (WMS), but it’s something that’s easy to put off. Peak gets in the way or a new product line takes precedent. But, if you stop and take a step back to look at your set up as a whole, it can be a massive eye opener to see just what value a WMS can offer.

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Let’s take a look at just a couple of ways a WMS can make a big difference to your efficiency and, more importantly, your bottom line.

Note: We’ve based the figures here on a fictional standard retail business with £4/£5 million turnover per annum, fulfilling around 1,000 orders a day. A fairly typical situation.

Saving money by going paperless

Many warehouses operate on reams of paper. It works. But, it’s inefficient and prone to error. Let’s say you have two staff working on admin of that paperwork and they’re paid £10 an hour - that’s £700 a week if they both work 35 hours.

That administrative work can be completely eradicated with a WMS, but of course there is other administrative work required outside of pick lists etc. Let’s say you reduce that admin by only 50%. That’s a saving of £18,200 in one year.

Saving money by reducing mispicks

Let’s say our company make five mis-shipments a day and that the cost of each of those mis-shipments to the business is £25. A quick bit of maths shows you that those errors are costing the business £125 a day and, if they operate seven days a week, a staggering £45,625 a year.

Implemented and used correctly, a WMS can give you a 100% accuracy of picks and despatches. That means you’ll save that £45,625 straight away. And, bear in mind that we have not even considered the impact of loyalty and additional lifetime spend of happy customers due to the lack of shipping errors.

So, in just five minutes we’ve found well over £60,000 of savings for our retailer. And this is only taking two areas of warehouse work into consideration.

Obviously, warehouse operations and requirements vary from one to the next, but this is a very quick example of just how much value a WMS can offer, and how quickly it can bring a return on investment.