What requirements you should have for distribution WMS
Distributor margins can range from about 3% to 30%, and we all want to be on that higher end. Getting there, and having a greater share of your margins land in the profits category, takes planning and efficient execution in the warehouse.
A warehouse management system built for distributors and your unique position in a product’s supply chain is a smart place to start thanks to its automation and verification capabilities, plus the help it can provide in controlling expenses around transport, packaging, storage, and more.
In this piece, we’ll review a few critical considerations of these warehouse tools and how you can start thinking about what’s right for you. We’ll cover:
- How a distribution WMS can help you tackle inventory losses
- Why automating paperwork can protect your agreements
- The risks legacy tools pose to customer service
- Why best-of-breed can be worth the extra price
- Dangers of using a siloed warehouse tool
- And where to begin with your WMS wishlist
With that said, let’s dive right into the best reasons for a distributor to adopt a WMS and what requirements those create.
Benefits of WMS for distributors
There is a wide range of benefits that distributors can achieve by adopting a new WMS. It’s a piece of core tech that can ultimately help you run a more efficient business that your staff, partners, and customers enjoy.
For now, we’ll focus on three of the most critical areas for running a successful distribution business: managing your inventory, agreements, and customer relationships. These are the bedrock of your operations and also the most natural place for quality service to become a competitive advantage.
Limit inventory losses
Spoilage is a significant area of focus for distribution WMS packages because it’s among the easiest loss to highlight. When you don’t follow first-in-first-out rules, your raw materials and finished products are going to be wasted at higher levels than necessary.
However, every warehouse faces similar issues when inventory isn’t used correctly. This can be as simple as workers leaving tape or box cutters at random places or moving a bin of parts to an assembly or packing location, making it hard to account for each and usually leading to some getting left at the wrong station.
The more you’re able to automate and track, with things like barcode scanning for each pick, significantly reduce your error rates. WMS also give you better visibility of real-time inventory so that you’re less likely to struggle with fill rates due to misplaced or ruined goods.
Confirming throughout pick and pack also helps you keep your operations running more smoothly and eliminates many fulfillment errors, boosting accuracy and satisfaction rates.
Distributors have a lot of paperwork in their daily lives. You’ve got inventory orders, customer orders, bills of lading, insurance forms, shipping agreements, forms for accepting or rejecting shipments, and many more.
Messing up on any of these can lead to an unfortunately quick reminder that some of your contracts will have a termination for convenience clauses. Convenience clauses are becoming more prevalent, and they get rid of any argument you have about the cause of ending an agreement. Mistakes with orders and shipments, improper hand-offs, or concerns over insurance can lead your partners to execute these and other clauses in your contract to protect their own business.
That’s why you’ll want an extensive automation WMS requirement in your RFP. The more you can automate, the less likely you are to make a mistake. No more game of telephone around orders only to have the wrong things show up.
Best-of-breed solutions take automation a step further by integrating with your partners, so they can create an order that’s instantly generated and live in your system. No human hands touch it, and you can fill it without concern.
Remove legacy and customer service limitations
A special note about a new distribution WMS is that it can help your business grow beyond current limitations, especially if you’re running legacy software. Many companies with older platforms can’t support automation of warehouse features, increasing labor and inventory costs and potentially harming customer service capabilities.
A WMS for distributors that has your overall business in mind will focus on eliminating manual tasks, which frees your team up to get shipments out on time and respond to complaints or unique needs.
In the distribution space, there are plenty of issues outside your control but still require your response. If a grocer’s refrigeration unit goes out and its dairy products spoil, they’re getting to turn to their distributors with an urgent need. Having the ability to say “yes” to this is an instant reputation and relationship boost. New systems that remove the delays caused by legacy software allow you to get to that “yes” faster, reducing the stress of your partner.
Your big takeaway here is that the distribution business is never just about your company. It’s about your place in the bigger supply chain. Software that supports this mindset is the software that’ll save you when you need it.
Benefits of having specialist WMS/best of breed solution
There are a few solutions that bill themselves as specific distribution WMS leaders and reviewing them is worth your time. This software comparison tool can help you find and compare them, and when you do a few trends will start to emerge.
One of our favorites is their approach to streamlining inbound and outbound logistics. Best-of-breed tools tend to have full coverage here — everything from space utilization and workforce tracking to returns management and simplified cross-docking dashboards. Plus, they’ll help you automate as much of that as possible.
These solutions also perform well for large operations, allowing to you track goods at the individual and pallet level, as well as see inventory move across all your different warehouse locations. If you roll your own trucks to end partners and allow them to make orders on the spot, a specialist tool will make it easy to incorporate that data.
We’ve seen some with modules that track these inventory levels and immediately alert you when sending an additional truck to other customers is required either to meet inventory or timeliness demands.
Leading warehouse management system tools make it easier for you to accomplish tasks specific to your industry and company, give you greater inventory control, and make it easy to work with what you already have.
That final component worth noting about best-of-breed solutions is that they all tout the number of systems they integrate with and modules they offer. They’re designed to work with industry-leading CRMs and ERPs as well as structured to make it easy to incorporate your proprietary systems and data.
The chief benefit of this integration is that it saves you time and hassle. It’s easier to use your data and make smarter business decisions. Let’s dive into that.
Potential drawbacks of using a standalone WMS
Integration is a highly-touted feature for a variety of distribution WMS, but sometimes the marketing speak gets in the way of what’s genuinely beneficial about these platforms.
So, let’s start with a little bit of honesty: as a distributor, you can 100% operate your business with a standalone WMS. It’ll track your inventory, help manage the workforce, and give you an idea of the state of your warehouse at any given moment. A standalone WMS providing all of that is useful. It just might be too simplistic to help you grow.
The benefit of an integrated or connected distribution WMS is that you’re no longer just working with what’s inside the warehouse. You can look across your supply chain and share data with all of these partners. Plus, you can get data from a variety of other platforms you’re using to make your best predictions for each endpoint.
Your CRM or ERP that manages customer orders can look back historically to see when your customers have peak demands and how well past products have performed when first introduced. Analytics in this software can help you reorient your warehouse to be ready for demand peaks or even inventory levels to have at each warehouse location to help you better serve new customers.
Field technologies are also becoming easier to integrate thanks to EDIs, giving you a wealth of information to use for business planning. When a warehouse management system’s data can shake hands, and its order processes are intertwined, you can react more quickly and efficiently to each new opportunity.
Start with specific distribution WMS requirements
We’ve talked a lot about the benefits and risks so far because it’s good to know what you face. Understanding potential gains, as well as the harm that can come from not moving forward, will help you put together your WMS requirements list.
There are plenty of “given” functionalities that you’ll need and are familiar to many WMS, such as picking and packing support, putaway, support for barcode scanning via mobile devices, and automatically generating order lists.
The place for you to focus is on the elements specific to your business and to the way distributors operate. That means a system that can receive orders from current customers, and place orders with existing suppliers. Every function you need to bridge those two worlds will have a WMS counterpart.
A review of your planning, operations, forecasts, inbound, and outbound operations are your best way to put together a guide for specific functionality you need from a distributor WMS. The good news is that many providers are already here to help and that you’ll typically see significant savings and efficiency gains in each of those areas after a successful WMS implementation.
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