6 Factors That Determine the ROI of Your WMS (2.20.24)

An effective logistics strategy can be helped — or hindered — by your WMS 

For businesses involved in the logistics process, the question is often not, “Should you utilize a WMS?,” but, “Why haven’t you utilized a WMS yet?” 

At its best, a WMS (Warehouse Management System) is the technological glue that holds the entire process together. It keeps a warehouse efficient and accurate, reduces budget and provides customer satisfaction through accurate, on-time order fulfillment. A warehouse without a WMS is like an office without a computer: Outdated and forced to run on analog systems such as pen and paper. This creates more problems as a business grows and the need for automation and efficiency increases.

Many customers might not realize how much organization is at the heart of your logistics process — and that is a good thing! Your customer should feel as if the process of order fulfillment is effortless, even if you know how complex logistics can be. A warehouse is more than just an enormous storage center where products sit on shelves waiting to be picked up. It is the epicenter of e-commerce, and a WMS is the heartbeat that keeps it going.

This is why choosing the right WMS is key. These systems are essential to ensuring that the ROI on this pricey investment is on par with expectations and goals. In this article, we will explore six key factors that determine the ROI of your WMS. We will also delve into what to do if you find that your ROI does not align with your WMS expectations. Factors covered include:

• Labor

• Ability of your WMS to scale

• Fulfillment error

• Customer service

• Inventory accuracy

• Customer satisfaction

• Next steps after assessing WMS

1. Labor

Labor is a key factor in determining the ROI of your WMS. As WMS is intended to drive efficiency, your labor costs are a large part of that. 

Factors to consider here include average number of items picked per employee, volume per employee, how labor costs shift after implementing a WMS and staff turnover. This last factor is especially important, given that it is more efficient to retain than replace employees. 

In a world where even Amazon has the second-highest employee turnover of all Fortune 500 companies, it pays to retain employees.

2. Ability of your WMS to scale

As your business grows, your warehousing needs should adjust accordingly. Your WMS should have the ability to optimize, creating more efficient storage strategies, pathways and solutions to meet your goals without experiencing growing pains.

3. Fulfillment errors

Accuracy is essential when utilizing a WMS. Technology, especially automated technology, is designed to eliminate human error as much as possible. Tracking your rate of fulfillment errors, such as the wrong product being sent to the wrong customer, is an important measure of ROI. Your fulfillment error rate may never get to zero, but the implementation of a WMS should result in a decrease.

4. Customer service

As logistics is increasingly dominated by technology, it is easy to overlook the customer experience. Doing so, however, can handicap even the strongest of strategies. Measurable customer service data,  such as call wait time and email response, can provide key insight into ROI. 

5. Inventory accuracy

A warehouse is not solely a place where products are picked from shelves and shipped out; it is also a hub of receiving inventory. Therefore, your WMS should have an easy-to-use and reliable process in place for receiving, sorting and storing inventory. 

Your WMS must also track inventory in order to keep it accurate. When a customer orders an item online, live inventory updates can ensure the said item is in stock and ready to ship. 

6. Customer satisfaction 

Customer satisfaction is often seen as an immeasurable factor in determining ROI, but it is possible to gain insight into the customer experience. For example, using customer satisfaction surveys on a regular basis can pinpoint key differences in satisfaction before and after WMS implementation. 

Next steps after assessing your WMS

If assessing your WMS has left you with questions, concerns or a feeling that you can improve your logistics budget, contact Resource Logistics Group today. Our team of supply chain experts can help you decipher contract language while finding logistics solutions that fit your budget. 

Resource Logistics Group believes in ensuring that you still control your operation; we are just in your corner to provide insight and to assist with back-office solutions while saving you money and letting you focus on your goals.