Distribution managers would be wise to focus on cost-per-unit measurements to maximize the value of their warehouse management system (WMS) and improve their job security, according to a recent post on Logistics Viewpoint.
There are differing costs associated with picking pallets, mixed-case pallets, cartons and individual units, but these differences aren't always accounted for in a logistics department's budget, Steven Banker wrote in LV. Because of this, if a warehouse operation has to accommodate costlier operations over the course of a year - for example, if it has to handle a higher than anticipated number of mixed-case pallets - it can result in a distribution manager going over budget. Without having the proper data collected to run cost-per-unit measurements to show that budget overruns were due to changes in order profiles, the manager can be hard-pressed to explain the numbers.
"Having such metrics in place, and actively monitoring them, helps companies ensure that the productivity benefits associated with their warehouse management system (WMS) implementation do not begin to slip," Banker wrote. "These metrics also allow a WMS to serve as a platform that can help companies measure the effectiveness of continuous improvement programs."
Having the proper data collection tools that integrate with a WMS could be especially important as distribution companies seek to maximize performance as global economic trends - such as austerity programs in Europe - constrict the flow of goods. As reported by The Wall Street Journal, the World Trade Organization recently revised down its number for anticipated growth in world trade from 3.7 percent to 2.5 percent. In addition, the Netherlands Bureau for Economic Policy Analysis issued a report showing exports from the United States, Japan and Latin America declined for three consecutive months between June and August.