Manufacturers with WMS have more efficient warehouse operations and spend less on logistics despite spending more to operate warehousing.
Logistics Costs
APQC’s data reveals interesting results when comparing the logistics costs of organizations that have implemented WMS to the costs of organizations that have not. Figure 2 lists the costs of the logistics process as a whole and the costs of operating warehousing per $1,000 in revenue for both groups of organizations.
At the median, organizations using WMS spend $3.63 less per $1,000 revenue for the entire logistics process than organizations that do not. For an organization with $5 billion in revenue, this would translate into a difference of over $18 million per year.
Although organizations with WMS spend less on the logistics process as a whole, they spend more to operate warehousing. At the median, the difference in cost for the two groups of organizations is $3.39 per $1,000 revenue. The higher cost for organizations using WMS could be linked to increased systems costs related to implementing and maintaining the system, storing data and training employees to use the system. These additional costs could be offset by a reduction in total logistics cost brought about by greater efficiency.
Tailor the Solution
APQC’s data shows that organizations with WMS have more efficient warehouse operations and spend less on logistics despite spending more to operate warehousing. Several factors can affect the decision to implement and maintain WMS. The number of employees needed to use and maintain the system must be considered, as well as whether such a data-intensive solution would place too many demands on an organization’s infrastructure.
WMS can lead to logistics benefits, but organizations must make sure the adoption and configuration makes sense for their needs.
APQC is a member-based nonprofit and a proponent of benchmarking and best practice business research. Working with more than 500 organizations worldwide in all industries, APQC focuses on providing organizations with the information they need to work smarter, faster and with confidence.
