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What Nobody Tells You About Low-Cost Warehouse Automation

March 6, 2024

Are you growing?

Are warehouses part of that growth?

Why can choosing a low-cost warehouse automation solution cost you more in the long run? Read on.

Investing in a WMS is a big deal.

Today’s businesses are under pressure from consumer and market demand for competitive pricing, shorter lead times, and products delivered anywhere in full, on time, and – in the case of retail consumers, more frequently – all in a store-friendly format.

For online orders, customers want up-to-date information on stock availability and access to the real-time status of their orders. On top of it all, businesses continue to contend with increasing labour costs (let alone finding and keeping workers), rising land costs, and pressures from increased regulation and safety requirements. The growth of e-commerce, the pandemic, and other recent developments have only amplified these challenges.

This is where Warehouse Management Systems (WMS) shine.

Like synapses in the brain transmitting signals, a customised WMS efficiently transfers data throughout your operations, acting as the neural hub for intelligent automation and data-driven optimisation.

Made4net, for instance, a highly configurable on-premise or cloud solution, is used by organisations of all sizes across the globe. The software streamlines work through system-directed task allocation and real-time performance metrics. After it’s been configured to fit hand in glove with a company’s back-end systems, it can increase productivity by at least 20%.

But, having accumulated over fifteen years providing top-of-the-range warehousing solutions for leading national distribution chains in South Africa, we’ve observed unfortunate situations where organisations ended up dealing with elevated ongoing support and maintenance costs exceeding their initial purchase price.

This article aims to address and prevent such occurrences.

The WMS your organisation needs may not be the most affordable (but only at first.)

It’s important to remember that the cost of a WMS system is just one factor to consider when making a decision. It is also important to consider the long-term benefits of the system, such as improved efficiency, productivity, and profitability.

How can choosing the right WMS save you money in the long term?

  • Reduced labour costs: By automating and streamlining tasks such as picking, packing, and shipping
  • Reduced inventory costs: By enabling real-time inventory visibility, helping to optimise inventory levels
  • Reduced shipping costs: By optimising your shipping routes and by negotiating better rates with carriers
  • Improved customer satisfaction: By helping to fulfil orders accurately and on time
  • Increased sales: By getting products to market faster and improving customer service

TCO vs. initial cost: calculating the actual price of a WMS solution

The initial cost of the WMS is just a small part of the overall Total Cost of Ownership (TCO).

Why is that?

Total Cost of Ownership is the sum of all costs associated with owning and operating a WMS system, including the initial purchase price, implementation costs, and ongoing support and maintenance costs.

Therefore, it’s essential to look beyond the initial price tag and evaluate the broader implications for your warehouse operations. Consider factors such as how the system will enhance performance, drive cost reductions, and contribute to revenue growth throughout its usage.

This holistic view ensures you invest in a solution that delivers value and supports your business objectives over the long term.

The hidden costs of low-cost WMS solutions

Lower-priced solutions are initially attractive, but they may be because they don’t provide the full range of features and functionality your business may need when you need to expand a year from now.

Then there’s the cost of customisation,  integration, training, maintenance, and support. Not to mention hardware and infrastructure costs. And the price of success if you need to scale.

WMS options that seem economical at first may require further investment in add-ons for full functionality, leading to escalating costs. Over time, they might also fail to meet your evolving business needs or simply not be capable of performing the tasks you require.

Also, they may need help scaling to meet the needs of a growing, evolving business, meaning having to upgrade to a more expensive system in the future.

Bottom line: If you’ve chosen the right WMS, your warehouse distribution systems shouldn’t be made to pay a success tax when you need to scale.

But remember, no WMS is perfect

It is also important to be realistic about what a WMS can and cannot do.

A WMS is a powerful tool that can help improve your warehousing operations and ensure continuous ROI over the medium to long term. However, it is not a magic pill that will make all the pain points in your distribution system disappear.

For example, if your warehouse has underlying process problems. You’ll need to fix your underlying process problems before or during the WMS implementation to see the system’s full benefits.

De-risk warehouse modernisation initiatives through clear expectations

What do you hope to achieve with the WMS? What are your specific needs and requirements?

Firstly, what are the specific features and functionalities that your Warehouse Management System (WMS) absolutely must have?

  • Inventory Control: This gives businesses a 360-degree view of inventory levels and locations, enabling greater efficiency throughout the supply chain – making it the most critical component of your WMS solution.
  • Robust Functionality: A WMS should encompass various warehouse functions, from adaptable wave management to sophisticated real-time stock management, integral for driving precise labour standards.
  • Growth-Ready: The best WMS grow with your business, handling increasing transaction volumes seamlessly. For instance, Matflo offers a versatile and efficient warehouse management solution for larger operations. It’s customisable for various distribution needs and supports eCommerce, omnichannel, and retail across different sectors.
  • Integration: Look for a WMS that integrates effortlessly with critical supply chain processes, enhancing overall efficiency and fulfilment accuracy.
  • Budget-Friendly: Seek WMS options with flexible, scalable payment models that align with your financial planning, like Made4net’s WarehouseExpert™, which offers adaptable subscriptions to assist SMEs in conserving capital and controlling ongoing costs.

Once you’ve identified the specific features and functionality you need from a WMS, it’s crucial to ensure that the chosen system can integrate with your existing systems and adapt to evolving business requirements. (Some companies call this “future-proofing.”) Remember, a well-selected WMS isn’t just about solving your warehouse management today; it’s an investment in your business’s future efficiency and growth.

Secondly, setting clear expectations helps you to communicate your needs to potential vendors. This ensures that you are getting the best possible solution for your money.

Lastly, be realistic about the time and resources required to implement a WMS. A WMS implementation can be a complex and time-consuming project. It is essential to have a clear project plan and budget. Be prepared for unexpected challenges. And before you jump in, make sure you can trust your vendor.

Choosing the right WMS Partner

The right partner can help you achieve your goals and avoid costly mistakes. When choosing a WMS partner, consider the following factors:

  • Experience: Choose a partner with a consistent track record of implementing and supporting WMS systems in your industry. But one that’s not resting on its laurels and is committed to working with you long-term to maximise your return on investment.
  • Support: Make sure that the partner offers the level of support that you’ll need, including training, troubleshooting, and upgrades. Do a mini-disaster recovery test and ask them how they’ll fix your worst-case scenario – in detail.
  • Pricing: Compare the pricing of different partners to find the best deal. Be aware of lower-priced WMSs that sacrifice long-term ROI for lower initial costs.
  • Total cost of operation: Have them map out the incremental milestones they’ve hit on your journey towards ROI.

Apex is a leading provider of WMS solutions. We offer a full range of WMS solutions to meet the needs of businesses of all sizes and industries at fixed-price contracts.

Check us out if you have any questions: https://apex-rts.co.za/


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