Warehouse Management Systems (WMS)
A warehouse management system is a software application designed to support and optimize warehouse functionality and distribution center management.
- A WMS helps to manage a warehouse effectively, including management of inventory.
- Basic warehousing functions, such as receiving, labelling, stocking, locating stock, picking, and shipping, require software that is programmed specifically for these tasks.
Functions of a WMS
- Tracking Stock
- Layout Design
- Picking & Shipping
- Reporting Information to Managers.
Benefits of A Warehouse Management System
- Labour Control
- Improved Customer Relationships
- Better Planning On Demand
- Improves Productivity
- Reduced Admin
- Optimised Processes
- Ensures Transparency and Visibility
- Ensures Safety of Stock
- Enhanced Security
Learning Activities
Activity 1:
- The Africa Trading Company is considering doing an ABC analysis on its entire inventory but has decided to test the technique on a small sample of 15 of its SKU’s. The annual usage and unit cost of each item is shown below.
Required:
- First calculate the annual dollar volume for each item
- List the items in descending order based on annual dollar volume.
- Calculate the cumulative annual dollar volume as a percentage of total dollars.
- Classify the items into groups as per ABC Analysis.
Activity 2:
- A computer company has annual demand of 10,000 units. They want to determine EOQ for circuit boards which have an annual holding cost (H) of $6/unit, and an ordering cost (S) of $75. They want to calculate total cost (TC) and the reorder point (R) if the purchasing lead time is 5 days.
Required:
- EOQ (Q)
- Reorder Point (R)
- Total Inventory Cost (TC)
- Activity 3:
- Victoria Traders has annual cost of goods sold of $10,000,000. The average inventory value at any point in time is $384,615. Calculate:
- Required:
- Inventory turnover
- Weeks/days of supply
Assignment
- Discuss why inventory management is important in today’s supply chains.
- From a manufacturing setting, describe the different types of inventories that could be stored in a warehouse.
- Why should organizations implement inventory control systems? Discuss the various inventory control tools and techniques.
- Highlight the different types of inventory costs.
- Discuss the benefits of a Warehouse Management System (WMS) in inventory management.