Warehouse management systems can help control the full inventory flow within a warehouse environment. With some functions including picking, packing, and shipping operations, a WMS can be a robust system that can also handle inventory receiving, demand planning, inventory and labour management, and a range of other warehouse operations.
How crucial is a cost-benefit analysis? For any business project, it is important to outline expectations, including the overall budget, decision-makers, current risk management, and feasible timelines. It is a necessary recommendation for all businesses to have a cost-benefit analysis to help make the transition to a WMS smoother.
Identify the key stakeholders within your business
It’s imperative to identify within your business who the main key stakeholders are. Having a diverse group of stakeholders can help get you a comprehensive understanding of the costs and benefits. Some of the examples include:
- Senior Management
- Warehouse Operations Management
- IT
- Finance
- Logistics
- Procurement
- End Users
Don’t forget to assign all the relevant stakeholders’ roles regarding the WMS implementation by keeping them all involved throughout the process. It’s imperative to gather input during the implementation so the system can provide as much as value within your business.
Compile tangible and intangible costs.
There is a range of expenditures which are associated when purchasing a WMS, which is why it is important to divide them into tangible and intangible costs. Normally with tangible costs, you can track them with receipts, invoices and accounting records. With intangible costs it is more difficult to quantify, however, they are a substantial part of the cost analysis. Below are some of the examples:
Example of tangible costs
- Running costs (Support, training, staff salaries)
- Subscription and WMS licensing
- Hardware (servers, devices and workstations)
- External Supplies
Examples of intangible costs
- Implementation time
- Employee transition costs (e.g. training)
- Opportunity Costs
The analysis for tangible and intangible costs within place gives you the best potential background to plan when it comes to executing a WMS implementation successfully.
Potential cost drivers with a WMS implementation
Some of the most common cost drives with implementing a WMS include:
- Hardware: It’s imperative to invest in the best devices with your new WMS system.
- Implementation Costs: Businesses will know in further detail about the complexity within their warehouse operations, an example could be running a multi-site operation with a common core across multiple sites can be implemented to mitigate potential costs
- SaaS licensing fees: SaaS can help businesses reduce the need for on-premise infrastructure which would include servers.
- Support: Training current staff to handle most of the support independently should decrease potential WMS costs.
The key benefits and ROI
Now the costs have been taken into consideration, the key benefit of a WMS is that it can improve inventory management, order accuracy and much more. It is also worth to keep in consideration that scalability could lessen the costs in the future within the event of sudden growth or business expansion.
Another point for financial projection is to calculate the break-even point to the case when the system benefits the business to the point that the initial investment is repaid.
About ProVision WMS
If you are in the business of running a small to midsize warehouse and don’t need all the bells and whistles right off the bat. Your warehouse is not complex or intricate. You need a simple solution to take your warehouse to the next level without overwhelming your operations and need the core processes such as receiving, putaway, inventory management, and packing & shipping then Provision WMS is the warehouse management system to take you there.