DST Asks: What Factors Do You Look at When Measuring the Cost of Managing Inventory?

Manufacturers and very large distributors have benefited from the productivity- and efficiency-enhancing features of automated warehouses for years. That technology is now available to virtually any size business. What factors do you take into account in measuring the cost of managing your inventory and do you have the data available to make those measurements?

MISSION VIEJO, CA — Thanks to the space program and monumental investments of money, time and brainpower to launch satellites and make them orbit the planet successfully, just about anybody can now easily afford to log on to the Internet. The expense, frustration, mistakes and catastrophes along the way were shouldered by others until systems were created that work for everyone. The same can be said about the creation and implementation of technology for the cellular phone in your hand or the cable television in your living room or the vehicle that you drive. The daunting challenges, huge investments, frustrating setbacks and black eyes along the way ultimately paid off to turn visions into reality.

Small and medium sized that businesses operate warehouses now have the same golden opportunities to leverage the benefits of technological innovation that once only major manufacturers or very large distributors could afford to implement. Thanks to the energy, time and financial investments made by the big guys over the years to automate their facilities and reap the resultant benefits, system providers such as DST have been able to apply the same ingenuity to just about any size warehouse operation at a price affordable to all.

When it comes to the scalability we’ve applied to technology, we aren’t just talking about “nice to have” bells and whistles that might boost your bottom line a bit or make your life a little less stressful. We’re talking about comprehensive, affordable systems scaled to the size of your operation with the power to secure your competitive advantage and perhaps make the difference between your ultimate success or demise in a very challenging industry.

How can you know what to charge for your products and services if you don’t know what they really cost? A few respondents to last week’s poll were already able to track the carrying and holding costs of their inventory by one method or another. With accurate and accessible data being the lifeblood of any computerized business management system, a warehouse management system should at least be able to provide that information.

The real beauty of state-of-the-art systems is their modularity, giving you the ability to grow your system at a pace within your comfort level. By partnering with an experienced system provider, you don’t have to gear up in an Evel Knievel outfit and try to leap the Grand Canyon on a motorcycle through flaming hoops. Business disruptions, unforeseen expenses and general chaos are things of the past because you can now automate your facility comfortably and expediently in phases without the need for being a daredevil.

Once your system is in place and operating smoothly within the parameters of your current business processes, technology will provide you with the ability to start adding features that provide data for getting your arms around the real costs of your inventory. Wireless devices used by all your warehouse and delivery personnel will provide data on the costs of moving parts, the hours spent pulling them, the time and expense of speeding their delivery to your customers and even the time it takes to train new personnel to be fully productive. All those elements factored into the inventory cost equation will provide managers with powerful information for meeting the challenges of doing business.

It doesn’t stop there. The technology employed by best-of-breed systems today doesn’t just collect data; the improvements to productivity and resulting decreases in costs actually improve the data. This phenomenon regularly and predictably occurs whenever a warehouse operation becomes automated. In fact, it has become such an expected characteristic of the business model once it becomes automated that internally we have given it a name – the “Stover Syndrome” – named after our founder Ray Stover. The Stover Syndrome occurs at the point in time where the initial objective to gather data for running the business metamorphosizes itself into a secondary, much more powerful objective – capitalizing on that very same technology usage to dramatically enhance productivity and boost bottom-line performance.

An example of that transformation occurred at Denver-based Drive Train Industries, where Operations and General Manager Bruce Sommerville said, “Thanks to DSTWare, 11 people now accomplish the jobs in the warehouse formerly done by 17 people – that is an outstanding productivity improvement by any measure and certainly an integral factor in our 10 percent increase in bottom-line.”

You can use that affordable Internet connection at your fingertips or that affordable cell phone in your hand right now to contact us because we’d love to hear your thoughts on the topics that we post, suggestions for additional questions, and anything you’d like to share. Send us an email at: [email protected] or give us a shout at 1.800.700.4DST.

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“DST Asks” is written and sponsored by DST Inc. The opinions expressed in “DST Asks” articles appearing on aftermarketNews.com do not necessarily reflect the opinions of AMN or Babcox Publications.