In Part I, The Basics of Persuasion, we took a look at 6 areas that cable warehouse managers should address in order to justify the cable Warehouse Management System (WMS) they want. Part II looks at one of those areas in greater detail. More specifically, this post examines how to identify and describe the reasons you are seeking help.
You’re a good manager, you know you need help, but when you approach the big dogs, they tell you budgets are tight, sales are not as good as they had hoped and software to help you run the warehouse just isn’t on the radar. Sound familiar? The good news is top management just opened up a huge door for you.
The reason is they just told you it is all about money. What they are really telling you is show me the money. This is not as difficult as it may seem but it does require some planning and analysis on your part. All good managers will listen if approached with a proposal that may save thousands if not millions of dollars, all of which can flow directly to the bottom line making them a hero.
Where is your pain
To understand your pain (areas where a system can make a financial impact), you need to understand the workflow as well as the issues in the warehouse in great detail. Productivity consultants would call this a brown paper which a visual map on your wall or conference room with all the steps of the warehouse displayed with step detail on each item. A complete brown paper identifies all the tasks in the warehouse good, fair and those that need improvement but more importantly it answers why there is a problem. The issues uncovered may include items such as:
- Work bottlenecks (including manual processes that should be automated): Eliminating bottlenecks will allow for more work to be done in the same amount of time as well as reduce the waiting time for actionable items dependent on getting through the bottleneck.
- CPE Loss: CPE loss from theft, misplacement or damage is an automatic cash drain on the Cable operator. Know what your loss numbers are. In many cases reducing this loss alone will justify the costs of a WMS.
- Time consuming and/or inaccurate reconciliations: How long and often are warehouse operations put on hold to perform reconciliations. Are the reconciliations count based, what would be the impact of a serialized reconciliation? What are the man-hours to be saved? Chances are your accounting department would like some input here.
- Poor inventory control: Do you track CPE inventory from the moment of arrival through customer or contractor assignment? How do you keep track of CPE in for repairs? Calculate the amount of CPE that is lost because the current system allows for too much to slip through the cracks.
- Useless or inefficient paper flow: Non-computerized work flow systems are inherently inefficient and wasteful. Know how all the paper flows and identify what should be eliminated. Calculate the savings.
- Overtime as well as other labor costs: The first question is to ask “Why is there overtime?” Is overtime a result of inefficiency, poor scheduling, training, uneven workloads etc.? The best place for answers on this is with the actual warehouse staff. Involve them with the issues and solutions. How much overtime can be reduced? You will need this support later on.
- Antiquated or non-automated billing interfaces: How much time and money could be saved if the CPE movements were automatically integrated into the billing system?
- Redundancy in operations: Workflow analysis may indicate that many of the same tasks are being performed at various locations either within the warehouse, with contractors or at multiple locations. How much work can be consolidated using a hub and spoke model (centralization of specified tasks)?
Although this is not a listing of every opportunity for improvement it is a start for manual or problem operations. But this step does not end here. Even if you are to identify the most significant problems, one needs to be able to describe them for your presentation/report.
The Art of Description
Imagine you are an executive talking to several of your top managers. You ask how things are going and what you can do to help. One manager tells you that everything is great and not to worry, the second starts telling you all the problems he has and that he needs a cable WMS to get better control. The third manager says to you that she has found a great opportunity to save the company money both in labor and capital purchasing expenses, get more done with less and make accounting smile. Which manager do you want to hear? Most executives would want to fire the first person, make an excuse to walk away from the second manager and invite the third manager into the office to hear more.
The art of description is to transform negatives into a positive. Henceforth and for the remaining pieces of this article, there are no problems to be fixed only opportunities to be captured. The key in describing an opportunity is to be able to present your case by the numbers and be able to back the numbers up. For example, using the list above derive or calculate:
- Using a system specifically designed for cable warehouses, we will be able to track CPE inventory using barcodes to know where all of our CPE is. This action will reduce CPE losses by at least 75% saving over $ XXXX.
- We can reduce the time to perform reconciliations by 50%, reducing labor costs by XXXX man-hours and also increasing accuracy of inventory which will enable us to budget capital purchases better lowering cash flow reserves needed for promotions.
- By switching to an automated system, labor efficiencies will increase 20-30% and paper costs will be reduced significantly. This will help the companies Green objectives.
By the time you are finished with this part of the justification preparation, you should have identified all the areas that can be improved by implementing computerized systems to help with warehouse management as well as know the expense reduction potential. The next post will talk about how to obtain more specific expense reduction numbers by understanding productivity measurements.
If you need assistance in identifying opportunities in your warehouse, contact us or leave a comment. We will be happy to assist you.