Researching warehouse management software can be a rude surprise if you are not prepared for the price points associated with switching to an automated Warehouse Management System (WMS). However, the reality is that such a system will actually save you money in the long run by eliminating all of the expenses related to paper-based warehouse management, many of which are hiding in plain sight. The return on investment for a WMS is usually very compelling for all but the smallest warehouses.

What Does Paper Really Cost?

It is hard to know exactly how much paper-based warehouse management costs you each month. Many companies only bother to calculate the cost of actually purchasing the paper and ink itself. In reality, those supplies are minor when it comes to the entire cost of a paper-based system.

Next, consider the additional costs associated with storing paper, postage, disposal, recycling and maintenance on your printers and copiers. Past studies have shown that some paper-based companies spend in excess of $7,500 per employee on paper management each year. Other studies have also shown that there is a significant amount of labor associated with managing paper, and that for every document that gets accidentally misfiled or lost, your employees will waste nearly $120 of labor searching for it before reprinting the document. Now you have paid for a lot of lost time as well as the additional cost of reprinting another paper.

Still, even those doesn't begin to account for the true expenses of running a paper-based warehouse. The big costs are represented by the excess inventory you maintain "just in case," the unnecessary labor expenses you incur using inefficient processes, the growth opportunities you are missing because you can't keep up, and the lost sales and overtime associated with physical inventory counts.

Warehouse Management Software

If you are looking at warehouse management tools, you are probably aware of the costs of purchasing the software, the ongoing maintenance and support fees, and the associated equipment you will need to buy. However, a closer look at the savings you can realize usually reveals some very interesting facts. For instance, once you have an accurate picture of your inventory in real-time, you will be able to manage the absolute level down. You won't have to carry a buffer anymore.

Further, the cost of software licenses for your organization won't increase very much as your volume grows. With paper-based systems, you usually need to add more labor in direct proportion to the increase in the amount of activity. The productivity gains that usually follow the implementation of a WMS can be dramatic.

Finally, introducing cycle counting of inventory on a regular basis will allow you to eliminate the physical inventory that you probably currently do on a periodic basis. You'll be able to say goodbye to the overtime expenses and lost sales associated with shutting down for days or weeks at a time.

On the surface, the cost of switching to a Warehouse Management System can be daunting. However, when you take a deeper look at what paper is costing you and see the real cost savings of warehouse management software, it quickly becomes apparent that adopting such a system is an affordable way of updating your business and increasing your competitiveness.