Contract Packagers: 4 Reasons Your WMS Is Stunting Your Growth
Mike Melito from Nulogy examines potential shortfalls with warehouse management systems in order to suggest how problems can be avoided or solved
Microsoft Excel was your best friend back when your copacking operations were small enough to track on a spreadsheet. Then, as you grew, it became cumbersome and inefficient, and you upgraded to a warehouse management system (WMS). Now, you find yourself struggling with the shortfalls of a WMS for your production processes.
It’s a story we’ve heard, time and time again. Most contract packagers who have upgraded from a paper or spreadsheet system are using a WMS to handle their production. While WMS’s are great at handling the processes they were designed to handle (receiving, shipping, scheduling, etc), trying to use them for production is like trying to wedge a square peg into a round hole.
It just doesn’t fit.
Before you continue to entrust your production management to a system that was designed to do something else entirely, consider these four ways that using a WMS is stunting your business’s growth:
1. Lack of Visibility Into Your Production
Your WMS gives you visibility into the rest of your warehouse operations, but your production remains a black box. A WMS can’t handle the conversion of subcomponents into finished goods without significant modifications. It just simply wasn’t built for it. This means that you’re deprived of real-time feedback on production efficiencies, labor efficiencies, and bottlenecks—the very things you need to be scrutinizing in order to run a tighter ship.
2. Lack of Insight Into Profitability
One of the primary ways to grow your contract packaging business is to pursue projects that are giving you the highest margins. With a single SKU and customer, it’s easy to understand your profitability. But as you grow (or prepare to), and start to handle multiple orders and customers, the ability to discern between profitable and unprofitable business can be difficult.
- Think about these areas and evaluate whether you can…
- Tie labor or material costs to production runs
- Identify the lines that are profitable
- Identify which customers you’re consistently losing money on
- Quote according to anticipated profit margins
If the answers to any of these questions conjure up a blank face, then consider that you may not have the right system for pinpointing your areas of growth.
3. Traceability Issues
To understand your business is to understand your customers. The pressure is on from regulation agencies that are cracking the whip on your brand customers. If they haven’t started yet, they soon will be asking for better traceability from their suppliers—that’s you. A WMS is simply an insufficient tool to manage conversion of subcomponent lots into finished good lots. Since the WMS isn't generally able to handle that conversion, lot traceability is a paper process which makes recalls very time consuming and cumbersome.
In order to perform well on recalls, you need to be able to trace your production process a lot more rigidly than you can with a WMS. The ability to demonstrate that you have a polished recall process is and will be crucial in demonstrating that you are dedicated to maintaining your customers’ brand reputations and are partners in their growth.
4. High Friction, Low ROI
If you're using a WMS for co-pack, you're familiar with its inability to capture production data. You end up having to refer back to your spreadsheets and this manual entry is doubled up, sometimes tripled up, as it has to be manually entered again into the WMS system and sometimes the customer’s ERP systems. These are the very manual processes that are fraught with inefficiencies, prone to human error, and inhibitive to your growth. The friction of having a portion of your business not plugged in with the rest of your business is costly and hitting your ROI hard.
Using a WMS for contract packaging is painstaking: from the manual entries, to the lack of real-time feedback and visibility into your shop floor, to the friction of using a system for something outside its original intent. It feels like a big chunk of your operations is just a black hole. If you’re suffering from these growing pains, perhaps it’s time to invest in a tool that will fuel—and not inhibit—your growth.
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