Inventory represents one of the largest costs and least productive holdings of companies. So you’d think that greater financial certainty begins with a move toward more certain warehouse management, supply chain data analytics and reporting.
Analytics and reporting? Yeah, it’s in our WMS – so what’s the problem?
Somehow, operational discipline continues to ignore WMS systems that drive the right supply chain data analytics for a particular business. Notice I said “right”.
I’m not talking about rigid, out-of-the-box reporting dictated by the vendor – but flexible, purpose-built warehouse KPI functionality that’s proactive and truly meaningful to the people using the system.
Naturally, financial uncertainty remains the headline of the day.
Every day it’s another story about tech layoffs, cutbacks in spending, needs to lean out operations and jettison waste. Consumers are pummeled by interest rates, leaving businesses like yours wondering what that means for the forecast.
- What do you change in your environment to survive?
- How can we lower the cost per unit?
- How can you stretch the staff you have when what you have isn’t enough to start with?
Good warehouse management asks good questions
Does your warehouse management system allow your business to pause to ask, “What should we have been doing right the entire time?” You need to ensure your team does the right things when it isn’t an existential threat.
The current macro environment is more common than you think. Everything chugs along, until it doesn’t. The Operations team is generally the first source in the organization for sacrifice when KPIs get tight.
Those first questions assume failure; here are better questions to ask:
- How can I sweat my assets to their fullest, every day?
- How can I make the people I have more efficient and productive?
- What investments can you make to reinforce operational discipline?
Consistent execution won’t eliminate hard decisions. But it greatly decreases drastic swings in strategy and hard cuts by systematically driving core warehouse management and performance.
This is the very reason a strong process-based inventory execution system exists. Deposco’s warehouse management software, for example, provides supply chain data analytics-driven decisions to continuously drive the process you’ve designed – optimizing every order, every pick, consistently.
Supply Chains work best when worked predictably!
Consistency over correction
Everyone loves heroic problem solving. Find the issue, deploy a solution, save the day! It’s a classic.
Correction ignores that the solvers are often the ones who created the problems.
It’s almost never egregiously overt. Discipline slips. Picks per hour decline. Error rates go up, but the trend is not enough to trigger alarms. A tightly run ship shows strain and slows.
Lauding heroics is often dismissive of warehouse management personnel who diligently perform small acts of consistency and maintenance. Fire prevention gets a lot less attention than smoke alarms, and nothing is as under-appreciated as fireproofing.
Your Operations people know how to massage the KPIs when needed. A disconnect between organizational goals and the way individuals are rated can lead to “degenerative gameplay”. In one warehouse, they would set aside high unit count, easy-to-process pallets, and scan one when they needed to bolster the numbers.
Why don’t I want to fix things?
You do! But you should not fix things that are broken due to neglect, indifference, or poor design.
The heroic fix doesn’t consider how many people are taken out of role. How much did you spend fixing what maybe shouldn’t have been broken? Maybe the process was, “Just follow the process as written”?
Heroics sound good, but they cost real money and sap real energy from the organization that should be serving customers. The best process only works when it has worked the same way, every time.
Consistency helps avoid the margin yo-yo
When I worked for a large national food company, it was not glamorous to be in Continuous Improvement. It was very hard to get an organization excited about change with a 50% margin.
“We’re making so much money, what does 5% cost improvement matter?”
This is a common misunderstanding of Gross vs. Net margins. Strong revenue can temporarily mask cost problems. Even if the process was full of waste – in the Lean sense, there was no appetite for doing things differently when times were good.
Margins are like the tides; if revenue drops, dangerous fixed-cost rocks appear. Market issues can depress prices, increase costs, or do both at once.
The safe strategy is to not spend good money after bad. Don’t misspend in the first place.
Problems that can be fixed during prosperity shouldn’t wait for times of frugality. You may lack the resources when you, literally, can’t afford to delay.
Reacting is not discipline
While the markets may shift, good decision policies ensure you respond rather than over-correct. Many decisions in the supply chain don’t require critical thinking. Rules can guide consistent, automated responses to known questions.
In advanced WMS systems, decision trees are deployed and frequently encountered scenarios trigger prompt and efficient execution. As a supply chain matures, this exercise should be reflected in a systematic approach to operating.
There are numerous places where supply chains benefit from well-designed response patterns.
- Continuous Flow aligns resources with demand and delivers consistent and predictable cost per unit
- Just in Time inventory, with reasonable safety stock, reduces working capital
- Demand Planning monitors and responds to market trends, allocating investment to where it is most productive
Deploying warehouse management technology frees up your teams for when a problem demands creativity. If you can’t automate minor questions, the big ones sneak up on you.
Predictable warehouse management wins
World-class WMS warehouse management systems empower supply chains to deliver predictably. Teams can execute in a way that makes the most of business assets.
This requires process design, executional consistency, “early and often” supply chain data analytics, and strong technological support.
In athletics, you play how you practice. Warehouse management operations are no different. Well-run supply chains dominate tough markets by controlling costs when it doesn’t matter, and protecting the bottom line when it does.
Explore Deposco’s warehouse management software, delivering the right supply chain data analytics and reporting functionality driving predictable KPI performance for your supply chain year over year.