Module 3 case study analysis and assignment

Warehouse Management Systems:

THE COSTS VS. THE BENEFITS

Warehouse Management Systems enhance all warehouse operations through advanced technology and operating processes ("Warehouse Management Systems (WMS)," 2004). It combines computer hardware, computer software and external equipment with new operating practices in order to manage inventory, space, labor and equipment in warehouses and distribution centers ("Warehouse Management Systems (WMS)," 2004). This paper will take a look at how a WMS works, as well as the challenges and advantages to having one.

A WMS should at least help the warehouse employees perform their daily duties, but they can also be advanced enough to replace the employees all together (Muehlbauer, 2011). Regardless of how advanced it is, every WMS utilizes at least two key elements -- portable computer terminals and barcodes. The portable computer terminals help the warehouse employees track the work that they perform in real time (Muehlbauer, 2011). The use of barcodes reduces the amount of information that the employees need to enter into their portable computer terminals (Muehlbauer, 2011). The system uses a mix of item, location, quantity, units of measure and order information in order to figure out where everything needs to be stocked, where it needs to be picked from and in what order everything should be done in (Piasecki, 2011).

At the most basic level the Warehouse Management Systems are used to keep track of employee activities (Muehlbauer, 2011). It can receive inventory; locate inventory; help with inventory allocation; pick inventory to satisfy sales, transfer, kitting or production orders; replenish inventory; confirm shipping; help with cycle counting and physical inventory; as well as help with moving around inventory and keeping track of inventory gains and losses (Muehlbauer, 2011). One facility that has a more advanced WMS is a spare parts distribution facility for Toyota in the United Kingdom. The WMS there makes a tag label which tells details of the part as well as where it is located (Anonymous, 2002). The program also creates the documents needed for the shipping of every part, which may include notes of advice and dispatch details (Anonymous, 2002).

The programs for the Warehouse Management Systems can do a lot, but that does not mean that they are in any way easy to deal with or easy to pay for. Warehouse Management Systems are also big and complex, not to mention they require a lot of data so the initial set up takes quite a bit of time and it can be very extensive (Piasecki, 2011). The attributes of each product and location must be recorded, as well as where the product may fit and how many of that product will fit in that location -- data which needs to be constantly updated (Piasecki, 2011). The Warehouse Management Systems also needs a lot of resources in order to stay running (Piasecki, 2011). By using a WMS, a warehouse is adding more technology to its operation, which means more overhead and can lead to potential problems (Piasecki, 2011). It would not necessarily be cheap to fix any problems that occurred with these systems.

Despite the cost, having a Warehouse Management System in a warehouse can be beneficial and worth the cost. It will most likely increase accuracy, reduce labor costs and improve customer service (Piasecki, 2011). Accuracy is improved because of the portable computer terminals and use of barcodes, both of which help decrease data transcription errors, and eliminates the picking of wrong orders and the need to have work double-checked by a supervisor or another employee (Muehlbauer, 2011). Since all the data is recorded electronically via the portable computer terminals, paperwork is reduced ("Warehouse Management Systems (WMS)," 2004). The WMS improves the use of current resources by eliminating errors in inventory accuracy, having zero products returned because of warehouse errors, eliminating the need for checking operations, improving order shipments, shortening the order lead time and improving the delivery time of products (Muehlbauer, 2011). With a WMS the space within a warehouse is also used more efficiently. The program works to increase the space that is available with in a warehouse by placing items in better locations in relation to receiving, assembly, packing and shipping points ("Warehouse Management Systems (WMS)," 2004). This improvement not only makes the environment more productive, but it also cuts the cost of holding inventory ("Warehouse Management Systems (WMS)," 2004). Looking at the Toyota parts distribution facility in the United Kingdom, the addition of a WMS to the facility resulted in a 99.9% picking accuracy and the facility there sometimes handles up to 10,000 orders from clients each day (Anonymous, 2002). The WMS allows them to take in higher volumes of orders and has increased the overall efficiency (Anonymous, 2002).