Upgrading Your Inventory System for Your Construction Business

Do you know what's in your warehouse or have a clear idea of your inventory levels? If the honest answer is no, then you're not alone.

Does My Business Need an Upgrade?

For the construction industry, materials handling is as important to the bottom line as the actual execution and the ability to track inventory items from receipt to release is a necessity.  In many ways, implementing from scratch with no pre-existing WMS is easier. The majority of warehouse and inventory management systems were put into place back in the mid-1990s and unfortunately, those systems weren't designed to easily be upgraded, or the original vendors no longer support those systems. In other cases, the cost of an upgrade can be just as costly as a new implementation.

Before upgrading, businesses should understand the benefits and limitations of their current platform and should evaluate what makes sense for their specific operations. If you are looking for radio-frequency identification (RFID) and voice controls, chances are that an upgrade is not only necessary, but cost effective in the long term. Companies in the past relied on the more traditional on-premise software that required more customization, but today's systems include on-demand, or web-based systems that are inexpensive and more flexible with a company's existing back-office operations. Also, software vendors are usually more than willing to adjust their offerings to meet the specific demands of customers, but companies should always understand the cost and time limitations.

The Business Case

From a practical perspective, a paper-based inventory system has an average of 90 percent accuracy, while an automated WMS has 99 percent accuracy. Although 90 percent may sound reasonable, this can represent unacceptable loss when you consider the potential losses in revenue. For a typical business, that amounts to thousands of dollars lost in revenue or savings-each month. Improving shipping accuracy can lower labor costs, reduce time spent re-creating shipping documents due to errors, and present consolidation opportunities saving time and fuel. This doesn't even include the ability to secure new business due to ease of use through higher service levels and increased customer satisfaction.

Whether considering an upgrade or a new WMS implementation, having the IT resources to address implementation and any customization is crucial. This is especially true of on-premise enterprise software that not only requires investing in additional IT infrastructure (e.g., servers) but can take several months for implementation, while upgrades require constant maintenance and monitoring.

Using a web-based WMS can cut down significantly on implementation time. Also known as Software-as-a-Service or SaaS, a web-based system is accessible through any browser with a live Internet connection. The cost difference between on-premise licensed software vs. web-based software can be significant, regardless of whether it's an upgrade or a new implementation. While a traditional software approach typically runs into thousands or tens of thousands of dollars, web-based system can be had for a few hundred dollars per month.

Because most construction companies have relatively simple inventory management and order fulfillment requirements, a web-based system is more than enough to meet their needs. Functions including purchasing, receiving and put-away, inventory control, order fulfillment, shipping, integration and mobile computing are more than accessible and can be operational within a few weeks at a fraction of the cost of traditional on-premise software.