If you notice any problems with the WMS, it may be an indicator that you may need to replace your WMS system – if you cannot keep up with the pace and scale of the broader manufacturing operation.
Some of the problems listed are inventory management, overall warehouse productivity, order fulfillment and performance.
Your finance staff can assess how much sales, gross margin and yield was gone due to an inadequate WMS process.
The following reasons are crucial to build a strong business case and replace your existing system.
REASONS TO REPLACE WMS
- Planning within your supply chain gets interrupted or breaks down with the result of more allocations, changes in on-time delivery and more.
- Product quality issues from suppliers that were not detected within the preliminary warehouse assessment.
- Speeding up the production orders or payment of rush charges to deliver the final products as per agreed delivery dates.
- Yard Management fails while inventory is assembling
- Applying and using the manual-based methods to get your warehouse levels balanced to have enough raw materials to complete the production gaps
- The operational costs increase per distribution location
- Affected schedules due to lack of materials in the storages
- Previous taxonomies/classifications/nomenclatures start to fail leading to misplaced orders
- Warehouse management becomes the primary source of cost overruns (higher costs per unit etc.)
- Production outturns decrease with more flaws and rejects leading to gross margin reductions
STEPS TO BUILD A CASE FOR WMS
The following steps are important in order to build a business case for a Warehouse Management System (WMS):
Create a change management plan including C-level partners to support WMS implementation
The high-cost part of any WMS case is to change management and get staff onboard for the WMS system. It will be challenging to have supervisors or managers in production as well as every warehouse location to use it once it comes online. For each dollar you invest in software, have in mind that you will spend even to five times more on change management, training and reinforcing the value of the new WMS.
Build a Multi-functional Team to Help
When defining a multi functional team, you should include all relevant roles such as finance, legal, IT, logistics, sales, procurement and HR.
These departments are important to create a strong business case. Finance team will be invaluable when designing financial statements, modeling different scenarios and coordinating operations to gain deeper insights into costs.
Define the scope and scale of your business case
Before you arrange for a cross functional meeting, you should define the scale and scope of the case – rely on the first meetings to gather the feedback and calibrate the structure.
It is important to understand the structure of your business case before the cross-department meeting to start building a roadmap.
The structure of your business case should include:
Goals and Objectives
Firstly, you should define the most urgent issues that you can measure financially. Try to benchmark the losses from the issue sector and the financial performance based on the above listed signs.
Define the scope and scale of the proposed WMS
What business needs the suggested WMS focuses on and check if there are any cross-functional aspects of WMS that should be improved.
Summarize the requirements and define costs
Cooperate tightly with your financial department and catch the predicted costs for the new WMS based on the quotes. Additionally, calculate all the benefits and cost reduction of implementing a new WMS system.
Finance team along with cross-functional teams will need to define the constraints and potential risks affecting the entire WMS business case.
Define a proposed Project Plan
Make a Gannt chart along with all the necessary details included (resources, potential conflicts etc.) and meet with your C-level management – ask them for assistance in obtaining resources and engagement from other teams to get the WMS project implemented and finalized.
Summarize the Investment Benefits for WMS promotion
You should summarize the benefits via creating additional documentation for a new WMS. These documents can help you to support the proposed plan and to show potential outlines on how a new WMS can reduce costs and improve the total revenue growth and sales.
Additionally, create a financial analysis outlining cost reduction, net gross margin and next sales over the past several quarters. Such data insights are helpful for building the business case while heading towards the new WMS.
A good way to facilitate the implementation of a new WMS is to create a cost model which can quickly get updated on project management costs, redesign costs and costs of disrupting production. It indicates overtime labor, data cleaning and customizing WMS development.
Make sure you invest in User Acceptance Testing within all locations where the WMS will be used.
Make WMS business case the most urgent initiative
If you make the WMS business case support the most urgent initiative it will definitely increase the probability of success. Cost reduction is one of the most urgent priorities for many manufacturers.
Try to outline the WMS business case from a cost reduction aspect and to forecast an increase in order performance in percentages, adding it to new revenues. A properly deployed WMS can greatly reduce overall costs (operating or not) and drive up turnout rates.
Recap the key benefits of the new WMS from a cost and revenue aspect and show the effects of improving supply chain and warehouse once the new WMS is implemented.
Gather C-level leaders and the Board to get approval
If you have an allied group of C-level executives or stakeholders you need to present the WMS business case to, it can be a valuable asset.
Delegating such a task to the team builds up the probability by over 60% within previous experiences.
If you show them the impact of WMS on top-line revenue growth, it will significantly increase the probability of success.
Gain the Funds and start with Implementation
You should assign the Project Manager leader to be in charge of the new WMS implementation.
Make sure that the designated Project Manager has a valid PM certification and experience in leading enterprise software implementations.
Conclusion
When implementing a new WMS, align it with the most urgent business priorities to increase the chance of success.
You should balance top-line revenue growth requirements with the need for cost reduction.
Keep in mind that having a scalable WMS is crucial to drive new revenue growth.