Let’s say you’ve been in business for nearly 40 years, or maybe you’ve inherited a family-owned business. Things are good, great even. You’re making a healthy profit and take care of your employees, and they’re seemingly happy to work for you. Sure, the latest labor crunch has been a challenge, and supply chain strains over the past year and a half have caused more than a few headaches, but you’ve survived one of the most challenging business climates of the past century, so you have the resolve to maintain a positive outlook for the future of your business!
Conventional wisdom tells us that your customers and workforce expect you to reinvest those profits back into the business to keep pace with the digital transformations sweeping across industries (your own included). Contrary to those beliefs, a surprising number of distributors still rely on paper-based picking methods in their warehouse operations. Maybe you’ve looked at making technological investments in the business, but let’s be honest: it can be exhausting to evaluate the seemingly countless options available. Not only that, but employees will require training on any new systems or technology and – oh yeah – these investments cost money.
There’s a good chance you’ve looked at software like a warehouse execution system (WES), warehouse control system (WCS) or warehouse management system (WMS) to track and control the movement and storage of materials in your warehouse. But inertia is a powerful force, and for all the reasons mentioned above, it’s more comfortable to continue with business as usual. That said, here are three reasons you may want to reconsider investing in your business, and a bonus piece of advice to make the process of selecting the right technology investment smoother.
1. Your workforce and the labor shortage. According to the U.S. Bureau of Labor Statistics, the median age of a warehouse worker today is 36.5 years old. In other words, there is a very good chance that you have a significant number of millennials and younger Generation Z employees working for you today. Given the staffing shortages that many distributors are facing, your old-school business practices may be making it even more challenging to attract and retain workers.
All things being equal, and if the pay is the same, who do you think that prospective new hire would rather work for: your conventional paper-based operation or the technology-driven warehouse down the road? Knowing that a majority of current or prospective employees have grown up using technology for most of their lives, they expect to use it at work as well. Who wants to work for a company where you’re still required to use paper picklists when your competitors are using RF computers, handheld bar code scanners and even voice picking?
2. Public perception of your company (otherwise known as the hidden costs of your customers’ experience). Similar to the competitive disadvantages that a reliance on antiquated business practices can have on recruiting new employees, it’s equally important to consider the message you’re sending to your customers and suppliers. It’s hard to understand why a distributor would continue to put up with manual processes that result in picking errors, shipping delays and customer complaints. If your customers are receiving the wrong product or incorrect quantities, what is the cost – both in overhead and, more importantly, reputation – from the frustration this causes?
Human error is one of those cringe-worthy problems that puts customer loyalty – and a business’s profitability – at risk. For example, human errors like transposed or incorrect numbers on manually entered shipping labels can lead to all sorts of issues with obtaining accurate freight quotes or problems with tracking orders. Our world is becoming increasingly automated, so these types of mistakes leave others questioning your commitment to their business. If I’m a customer encountering recurring issues that are a result of human error, I might question what the future holds for a company that can’t – or won’t – invest in technology to improve operations.
3. Increasing the value of your business. A simple Google search will turn up heaps of surveys and studies by McKinsey, Harvard Business Review and numerous others from the past year about how technology transformations have increased business value and helped companies thrive throughout the pandemic. We recognize the value software and technology can deliver for our office workers (your accountants aren’t still maintaining paper ledgers, are they?), but why not in our warehouses and distribution centers? Technology, such as a great WMS, combined with a strong and committed management team, brings a competitive edge to most any distribution operation.
In thinking about those millennials who make up a significant share of the warehouse workforce, you have a painfully obvious dichotomy when a distributor doesn’t appreciate or see the urgency in investing in software for the people that they say they value the most. It is just as important that your highly motivated warehouse workforce is recognized and appreciated for being the backbone in delivering an outstanding customer experience. Technology not only reduces your reliance on paper-based processes that directly hinder company growth, but I firmly believe it makes your company worth more to any prospective owner or investor.
If you’re now rethinking the decision to hold off on investing in warehouse technology that could help grow the business, here’s a piece of advice. While it sounds simple in theory, it gets more complicated in practice because not every company shopping for automation technology knows what it needs. For example, before researching a new WCS, WES or WMS, you should evaluate current warehouse systems and processes in play. Then identify what’s working well and where improvements are most needed. The better you can define the problems you need to solve the better equipped you’ll be in knowing what software and provider will most likely help you achieve your goals and offer solutions needed to embrace the future of your business operation.