The suggestion to invest in new warehouse applications now may not, at first glance, seem the wisest counsel. But there are a number of good reasons why improving warehouse systems and technology during a downturn could be a good idea. Taking such a measure might not only help a business in the short and medium term, it could also leave it more efficient and better organised to cope with economic recovery later.
Obviously a business needs financial reserves to consider such a move, but even if it is not cash rich, there are - credit crunch notwithstanding - attractive tax-efficient leasing options available that allow such projects to proceed if the business is stable with a reasonable cash flow. The key message is that improving warehouse efficiency by advancing the solutions used is going to save money. The questions that need to be answered are: how much and how soon?
It is generally accepted that successfully implementing WMS delivers the improved accuracy, productivity and efficiency that have a positive impact on physical operations as well as having a significant effect on cost reduction. High error rates alone can represent a large element of cost, and eliminating these can contribute substantially to WMS payback.
Labour costs, when compared with rent, rates and utilities, are one element of warehouse operations over which some control can be exercised. Much is written about improving labour management for the simple reason that in the warehousing context, manpower is one thing that simply cannot be outsourced. Systems designed to promote efficient processes and improve productivity can therefore have only positive effects on cost reduction and bottom line profitability.
It is true, of course, that not all these benefits and savings can be delivered overnight and that some of the rationale for any WMS project is based on an eye to future cost reduction and efficiency. But it is possible to focus the impact of warehouse technology and systems on areas where they can deliver maximum punch. WMS and technology implementation often take a phased approach, and a good warehouse systems company will be able to help a company decide where key benefits can be realised faster within its operation. These might be in obvious areas, like pick performance, or in fringe areas, such as introducing EDI with customers or suppliers to help reduce manual data input and paperwork.
less disruption
Another good reason for considering the implementation of WMS systems in quieter times is the lessening of the negative, though short term, impact of the change. There is inevitably some disruption and a learning curve involved in implementing new solutions of this kind. Going ahead while lower volumes are being processed means that people can become practised in the use of new systems and technology and can, in effect, "cut their teeth" under less pressure. This is not to suggest that companies can offer lower service levels while installing WMS, just that any pain that must be endured can be done so while volumes are lower. As any company that has tried to implement WMS in a time of high growth knows, it can be a challenging, if not to say hazardous, exercise. For that reason, people are often reluctant to change at such times; although understandable, bottlenecks and reduced performance can result when systems do not keep pace with expanded operations.
Timescale is an important factor with any implementation. But if a WMS is expected to provide tangible benefits within the timeframe of a potential recession then an expeditious implementation is paramount. Typically, Chess Logistics claims that an implementation can be achieved within 3-6 months, depending on the nature of the operation. But this is dependent on choosing the right supplier as well as having a full awareness within the organisation of the work involved in hitting the timescale. But, broadly speaking, potential benefits can be realised within months rather than years, so this is more than a "jam tomorrow" promise.
Those who have been in business for some years have probably experienced some ups and downs and know that business is cyclical. But, without wishing to challenge any political theories, that does not mean if it is not boom, it is bust. Periods of economic slowdown can often be used positively for consolidation and improvement as a means to develop and perform better during stronger growth periods.
This is true for warehousing and logistics operations where taking a cold, hard look at practices and processes, and improving systems and technology can be invaluable to regeneration. Those who grasp the opportunity may find it easier to withstand a period of recession and emerge stronger than their competitors when the economy recovers.
