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Introduction
The primary purpose of the warehouse is to store products in one place and, upon request, transfer them forward to the company’s customers. The process resembles a conjunction of many smaller ones and requires attentive supervision. In this context, warehouse management systems (WMS) were created as a software solution to the supervision issue. Given the proper implementation, WMS can significantly aid in manufacturing and distributing companies’ resource expenditure by enhancing the working process and providing supporting business analysis.
Warehouse Management System vs. Physical Inventory
Customer orders come during the day, each of which implies a number of associated processes. First of all, an order has to be picked from its warehouse shelf – order picking (Žunić et al., 2018). Depending on the order parameters, workers might be required to access picking carts and forklifts. When all order products are finally collected, they will be transferred to the customer, which involves the additional administration of transporting vehicles.
These examples showcase how vital proper organization is in the warehouse workplace. While using a physical inventory system is sufficient for this purpose, WMS software can significantly optimize the process. Specifically, it can improve the inventory count accuracy and increase the reporting timeliness and efficiency in fieldwork (Žunić et al., 2018). Moreover, it will allow decreasing travel demands and disruption to the auditee (Žunić et al., 2018). Lastly, sophisticated software provides more documentation and pieces of audit evidence.
Challenges of Keeping Physical Inventory
In a physical inventory system, managers have to personally record, count, and evaluate each product held in storage. Meanwhile, Eminue et al. (2019) advise that in large retail companies, it is critical to periodically conduct a complete inventory count to reduce control problems, such as shoplifting and theft. The need to constantly conduct a physical count and product evaluation puts substantial pressure on responsible individuals and challenges the company. In the former case, such work is at significant risk of human error due to its routine and repetitive nature. In addition, it implies specific knowledge and experience for an adequate evaluation and assessment. In the latter case, large product quantities and warehouses’ size and number demand a large and educated workforce. To employ it, the company has to invest additional resources into workforce allocation, training, and rewards.
Error Prevention by Warehouse Management System
WMS can prove a valuable asset in user error prevention. The common mistakes in the order section usually include errors, such as incorrect orders or an incorrect order quantity. WMS addresses them by providing visibility of accurate actual inventory levels. In particular, WMS automation with scanning or radio-frequency identification ensures product visibility and reduces non-WMS-enabled situations (Eminue et al., 2019). User errors on an organizational level include inventory overages and inventory shortages.
Conclusion
In conclusion, WMS provides a highly granular inventory view, dividing company facilities into bins and compartments and allowing for tracking of their parameters (Eminue et al., 2019). The combination of historical data and the ability to double-check it leads to more reliable inventory replenishment decisions.
References
Eminue, U. O., Titus, C. U., & Udo, L. O. (2019). Stock management strategies and safeguarding of inventory shrinkage in large-scale retail outlets in akwa ibom state, Nigeria: An empirical review. European Journal of Economic and Financial Research, 3(4), 43-57. Web.
Žunić, E., Delalić, S., Hodžić, K., Beširević, A., & Hindija, H. (2018). Smart warehouse management system concept with implementation. In 2018 14th Symposium on Neural Networks and Applications (NEUREL) (pp. 1-5). IEEE. Web.
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