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Return on Investment in the Warehouse

Company Improvement

The return on investment from an effectively implemented asset management system extends far beyond the distribution phase of the supply chain, but the time saved solely in the warehouse is monumental to a business. With the vast number of tasks to be performed in the warehouse, asset tracking software provides benefits around every corner. Some of the few values added to the company through asset tracking include but are not limited to:

  • Customer benefit
  • Improved punctuality and order fill rate
  • Improved inventory accuracy
  • Improved inventory turnover
  • Reduced errors to customers
  • Reduced errors from vendors
  • Eliminate non-value added (wasteful) time spent

Savings

Perhaps the greatest savings provided by asset tracking are in cost of labor. The necessity for warehouse personnel drops significantly with the implementation of an asset management system, and statistics show that warehouse personnel drops by about 20%. That’s 20% less people to pay, all the while operating at an even higher level of efficiency than with a full staff of warehouse personnel.

Inventory level drops by about 10% with the implementation of a warehouse management system. Less inventory means less money spent, savings from which are in the hundreds of thousands. A lower inventory means that the company has a strong grasp on what their customers need. The company always has plenty in stock, but avoids buying more than needed and wasting any goods.

Yearly cash savings estimates are nearly $1 million, and cost is at $450,000. This means that within an estimated 5.47 months, the system will have already paid for itself, and from that point on will only be a means of furthering profit for the company. The net present value based on 5 years of use is over $3.6 million, so a few years down the line, a warehouse management system is well worth it.

Dodging Problems

The problems of not using barcode or a more sophisticated asset tracking system far outweigh the costs of using one. With all assets all assets easily manageable and locatable, the job of a stock picker is made significantly easier. There is no such thing as a “lost” item. The number in stock of any particular product is always easily available, and thus there are never any miscommunications to the customer and there is never any time wasted looking for what is not there.

Stock checks become a glance at a computer screen. Stock of inventory is always managed and maintained so that shortages do not exist, and no orders are lost.

Cut out paper forms filled out by hand from your business. Avoid unnecessary lag between when time stamps are filled in to when they are keyed into the system.

Implications

The time saved with asset tracking adds up quickly. Just the amount of time and money saved in the warehouse is enough to make a difference. When factoring in every other phase of the supply chain (manufacturing, distribution, transportation/logistics, delivery), an asset tracking system pays for itself in a matter of months. After it’s all paid for, the company is left with a faster, more accurate, efficient, and cost-effective business to run with ease.

For a glimpse at our Warehouse Management Systems, go to https://www.abr.com/Company-Information/Content#rid=61.

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