The Costs Of Not Having A Modern WMS

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Many businesses today still rely on old warehouse management systems (WMS) developed in the last century. Others make do with none at all and rely instead on paper, spreadsheets, and manual entering of data into various unintegrated software applications. These companies aren't limited to small operations but include a number of multi-million dollar businesses.

Some of these businesses will slowly get weeded out in the face of increasing competition while others will get by but fail to realise their full potential. This is due in part to the costs of not having a modern WMS.

Customer Service Suffers

When an outdated WMS doesn't have an accurate count of what is in the warehouse, customer service people no longer trust the numbers shown on their computers. They then rely on physical verification of inventory numbers in the warehouse every time a customer calls to place an order. This reduces order taking response time which creates frustration among those trying to place their orders.

This inefficiency also frustrates people making inquiries about the status of past orders. It isn't just the customers who suffer from this inefficiency. The business itself loses money because the manual checks increase the operating costs of customer service.

Incorrect And Delayed Shipments

The lack of an integrated and modern warehouse management system means that a great deal of information transfer is done manually. This increases mistakes with customer order processing and fulfillment. Incorrect or delayed shipments may be returned by a disgruntled customer. If inventory is replenished after the items were shipped to the customer, then when the items are returned, they become excess inventory. In addition to the expense of unnecessary inventory, there is the added expense of double shipping caused by the returned order as well as the shipping cost of the unneeded inventory replenishment.

Artificial Inventory Shortages

An inaccurate count of warehouse items that is treated as though it is accurate can result in false inventory shortages. This means that customers are told that they can't order what they want because it's "not in stock." Meanwhile, new inventory is ordered from suppliers to correct the artificial shortage which creates excess inventory. The unaccounted excess inventory sits unused until it is "discovered" during the next inventory count.

These are just three of the many inefficiencies that occur in businesses without a modern warehouse management system. These inefficiencies make a company less profitable and act as a brake to further business growth and may even bring the company down.

For more information on how your business can benefit from the right warehouse management system, contact us today.


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