10 Signs A Food & Beverage WMS Needs Help

10 Signs A Food & Beverage WMS Needs Help

Bottom Line: Food and beverage supply chains are the fuel that drives the growth of every food & beverage manufacturer today. An integrated, scalable, secure Warehouse Management System (WMS) can assist in transforming supply chain efficiency into internal process performance gains while ensuring accuracy, compliance and cost control.   

Keeping A Food & Beverage WMS Current Is a Continual Challenge

The most common reason a food & beverage WMS will be replaced is that it’s built for a different business model and series of products in the past. A traditional WMS is often highly customized by a 3rd party and is a challenge to keep current. It often requires a programming team just to keep the system operating. When a legacy WMS system is only delivering a fraction of the data it has the potential to, there’s often a parallel dynamic of a food & beverage manufacturer needing richer functionality and better compliance reporting than in the past. There’s also the customer-driven requirement of change including closing the competitive gap of how quickly data can be provided, over which platforms, and using which interface and application technologies. Legacy WMS cannot often provide HTML5 or responsive web interfaces to data as the systems were created well before those recent technologies existing.

Legacy WMS Lack Scale For Today’s Broader Product Lines

The proliferation of new food and beverage products has also created a challenging environment for manufacturing companies relying on legacy WMS applications. The majority of legacy WMS systems were designed for far less complex products and often didn’t require product customization spanning the scope of today’s broader base of food & beverage products.   The proliferation of products also is leading to the need for greater real-time data integration across the entire supply chain. It is very rare to find a legacy WMS system capable of being upgraded to real-time data integration at the API level.  There is a wide variety of integration technologies available for integrating legacy WMS and ERP systems together, yet the foundational data structures of these systems aren’t designed for flexible manufacturing, more often they are created for high volume standardized manufacturing with little variation. 

10 Signs It’s Time To Replace A Food & Beverage Warehouse Management System

The following are the top ten signs to look for regarding when a food & beverage WMS not keeping up with the pace and scale of the broader manufacturing operation. Key problem areas including Order Fulfillment, Inventory Management, Warehouse Productivity, and Transportation Performance. The finance department will most likely have the majority of data required for quantifying just how much gross margin, sales, and yield is being lost due to an ineffective WMS process. Quantifying in financial terms the following ten symptoms are essential for building a strong business case to replace a WMS, or acquire a new one:

  1. Supply chain planning is breaking down leading to more allocations, out-of-stocks, and fluctuations in on-time delivery.
  2. Increasing product quality problems from suppliers that slip through the initial screening systems in the warehouse.
  3. Starting to get into the habit of expediting orders in for production and paying rush charges to get finished products to customers in delivery dates.
  4. Having to resort to more manually-based methods to get warehouse inventory levels to balance and have enough raw materials on hand to complete production runs.
  5. Overtime and high operating costs are starting to increase per distribution location.
  6. Production scheduling is starting to be impacted by the lack of materials in warehouse storage locations.
  7. Taxonomies that worked in the past for managing warehouses are starting to break down and lead to confusing pick instructions and misplaced internal orders.
  8. High per-unit costs dominate the financial statements over the last few months with inventory, warehouse management, and logistics costs being the primary sources of cost overruns.
  9. Production yields are decreasing with more errors and unusable materials, leading to further reductions in gross margin.
  10. Customer delivery dates are slipping and orders are getting canceled because original delivery dates aren’t being met due to out-of-stock materials and backlogs of key ingredients.

Conclusion

The business case for a WMS system needs to balance top-line revenue growth requirements with the need for cost reduction. The best business cases are predicated on a balance of cost avoidance, cost containment, margin, and sales contribution. Aligning the WMS business case with the most urgent strategic priorities a company has increased the probability of success.

How to Build a Business Case for a Warehouse Management System to support your food and beverage manufacturing activities
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This article was written by
Louis Columbus

Louis is currently serving as Principal, IQMS. Previous positions include Director Product Management at Ingram Cloud, Vice President Marketing at iBASEt, Plex Systems, Senior Analyst at AMR Research (now Gartner), marketing and business development at SaaS start-ups. Mr. Columbus’ academic background includes an MBA from Pepperdine University and the Strategic Marketing Management and Digital Marketing Programs at Stanford University Graduate School of Business. Louis also teaches MBA courses in international business, global competitive strategies, international market research, strategic planning and market research. Mr. Columbus currently is a member of the faculty at Webster University and has taught California State University, Fullerton: University of California, Irvine & Marymount University.