Many manufacturers and distributors utilize multiple warehouses and distribution centers. Most often viewed as cost center, rather than a profit center, these facilities can offer more than just extra storage or a faster way to drop-ship products to customers. A change in perspective, as well as a change in business management tools, may just turn a traditional burden into a profit-generating operation.
As discussed in “Is Your Warehouse a Cost Center or Profit Center?,” posted by Howard Coleman on MDM.com, each part of your distribution operations can be a boost or a drain on your profit margins. You are not alone if you think that your warehouses seem more like a cost of doing business rather than a profit or value that you offer customers. In order to determine the value of your warehouses, you need to measure movement in and out and determine whether they contribute or take away from your bottom line.
A robust enterprise resource planning (ERP) solution can provide a strong foundation; however, you also need the support of powerful inventory and warehouse management control to measure and improve the profitability of your distribution operations. Here’s what you need to know when choosing the right management solutions to turn your warehouse from a cost center to a profit center:
- Inventory management: You need insight into inventory operations in order to reduce the volume of inventory that you have on-hand, which can protect cash flow and provide greater working capital. Demand Manager can provide time-saving automation and insight to manage on-hand inventory.
- Forecasting and planning: Turn inventory and distribution into a strategic, profit-generating portion of your operations. Requirements Planner can provide insight on replenishing commonly purchased items and works with Demand Manager for accurate forecasting. Reducing last minute purchases can save money in inventory costs as well as the cost to ship it to you, your warehouses, or your customers.
- Customer service: Delivering items on time, in the right quantities, and at the right costs can lead to improved customer satisfaction. Maintaining strong customer relationships will be more profitable in the long run.
With the right business management solutions, you can monitor the efficiency and profitability of your warehouse centers. Contact RockySoft for more information about the technology that can streamline distribution operations and turn costs into profits.
By Jeffrey Porter with RockySoft, Microsoft Dynamics software provider for demand planning