How to Justify a Cable Warehouse Management System - Part III
This is the third and final part of How To Justify a Cable Warehouse Management System. Part I covered how to get your head in the game and make a plan. In Part II, we discussed why you need to identify in detail where your operations are suffering or need improvement. In this final post of the series you will learn the basics of putting together the numbers to make your case for change and better CPE management.
It's All About Cable Warehouse Numbers
In order to make a case by the numbers for your cable warehouse operations you must know your current productivity measurements, CPE loss numbers, the time spent on non-productive tasks such as reconciliations and your current overhead expenses such as forms or HVAC. Lets take a look at obtaining the three basic but major expenses in a cable warehouse operation:
- CPE Loss: CPE losses are simply the costs of the number of units unaccounted for or damaged. This number can be ascertained from the reconciliation results.
- Warehouse supplies and expenses: This is the amount of money spent on forms, clipboards, plastic wrap, etc. as well as the amount of money it costs to operate after regular scheduled hours.
- Labor Costs: Labor costs are slightly more difficult to obtain because they need to be broken down into several key sub-areas. If these numbers are not available then measurements should be made to obtain. For example:
- How many man-hours are required to do CPE reconciliations and what is the frequency (monthly, quarterly, annual) of the tasks?
- How many times is the same piece of CPE serviced (repaired or tested)
- What is the total number of truck rolls per client. Each time the truck rolls out there is a labor and a fuel cost. What is your average trip cost?
- What is the total time required for CPE to go from received at the warehouse to issued status. This includes all the time spent waiting for action at bottlenecks, redundant actions and the time spent on filling out forms or checking paperwork. If the number is unavailable then measurements should be taken using an average worker on an average day. The concept is to approximate the average amount of time for the CPE to be processed.
It should be noted that each warehouse is different with unique managers and issues. Therefore, the preceding list should not be considered as the only numbers to consider. The key is making sure you have identified the weaknesses in your operation so that they may be fixed with a combination of automation and better CPE management tools. In case you are wondering why you would want to expose the faults in your warehouse operations I can say trust me when I say to you it is better to admit weakness and work on solutions than to wait for senior management to ask you why you did nothing to fix the problems. When that conversation starts you have already lost.
Analyze the Impact of a Cable Warehouse Management System
For some cable warehouse managers analyzing the numbers is the fun part. However the key is to make a case for your operations. With this in mind it is good to make a chart of some kind to picture the potential impact of a new cable warehouse system. One method is to make a small table showing the current situation, the costs, the projected savings and the difference.
For example (numbers are fictional examples and not a promise of savings)
Assuming an average rate of $25 per hour (fully loaded), 2080 hour/year
| Expense Item |
Current Annual Costs/time |
Projected Costs with WinTrack® SETS costs/time |
Annual Savings |
| Overtime |
a |
b |
a-b |
| Average Truck Roll |
1.15 x $30 per trip x # of trips = d |
1.05 x $30 per trip x # of trips = e |
d-e |
| Inventory/Reconciliations |
20 ppl x 80 hours x $25/hr = $40,000 |
20 ppl x 4 hours x $25 = $2,000 |
$16,000 if done monthly |
| CPE Loss ratio |
7% overall, 4% warehouse |
6.5% overall, 3.5% warehouse |
.5-1% (whatever number this is) |
| Overall labor Costs |
q |
q x .85 (assuming 15% savings) = r |
q-r |
| Totals |
xxxxx |
yyyyy |
xxxxx-yyyyy |
Once your key savings numbers have been calculated and charted, it is time to create a PowerPoint presentation of 8-12 pages that states your case for purchasing a Cable warehouse management systems such as WinTrack® SETS. Document all your key assumptions and critical risks for backup. When this is done it time to get in front of the big dogs.
Share with us your questions or problems in making a case for purchasing a Cable warehouse management system to help your operations.
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