July 2006 | Commentary | IT Matters

Choosing a WMS That Won't Get You Fired

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Many companies—Nike, Hewlett-Packard, Sainsbury's, MFI Furniture Group, Molnlycke Health Care, and Heinz's Portion Pac division, among others—have suffered well-publicized Warehouse Management System (WMS) failures in recent years.

When Nike's $400-million WMS project went awry, the company lost $100 million in one quarter and its stock plunged 20 percent. MFI Furniture's WMS bugs forced it to make three deliveries per order. Sales dropped, transportation costs increased, and MFI's CFO and supply chain management team were shown the door. When British grocery retailer Sainsbury's $700-million automation project flopped, its WMS team also joined the ranks of the unemployed.

Not all managers involved in poor WMS implementations are fired. But the alternative isn't always much better.

"Many executives end up chained to their desks because their system's extensive customization requires constant attention," says Dennis Waliczek, vice president of logistics information technology for USF Logistics.

Warehouse systems that require significant modifications are costly to maintain and difficult to upgrade. Because of this, many companies refuse to install highly customized systems. In response, software vendors that once sang the praises of customization tool sets are changing their tune.

Despite reported catastrophes, the WMS market is expanding. The WMS sector brings in $1 billion annually and will grow 8.5 percent per year for the next several years, according to Venture Development Corp., Natick, Mass.

Why such growth? Because when they are developed and implemented correctly, warehouse systems yield great gains.

Although a bad WMS implementation can be career threatening, a properly installed WMS can boost the careers of the implementation team.

Employees involved in a WMS project at Four Seasons Produce in Ephrata, Penn., for example, jumped up the corporate ladder. Greg Smith, IT manager at Atlanta-based public utility Southern Company, was promoted after he spearheaded a successful WMS project at an Alabama facility.

Similarly, Jan Gage's decision to automate distribution earned her a board seat at Australian paper company Sunclipse.

Although all WMS vendors claim their systems help improve productivity and accuracy, supply chain executives must know the difference between systems that will propel your company forward and systems that can get you fired.

Product, Process and Depth

When selecting a WMS, it is a good idea to inquire about the fate of others who have selected and implemented that system. Ask vendors to provide references from executives promoted because of a WMS implementation.

The best way to prevent a botched WMS installation is to scrutinize product, process, and depth.

Product. Begin by choosing a product that can be configured but does not require customization. Such quality products have a base of customers using the current version—ask for three references who use the same release and run the same code you're interested in to ensure you're buying a superior product.

By focusing on product, Southern Company narrowed the field from many WMS options to one.

"Our objective was to find an off-the-shelf product closely aligned with our business needs," says Smith. "Our selection team's main goal was to avoid customization. We were afraid a customized system would require a lot of maintenance and make it hard to implement future releases."

Process. Implementation processes reveal more about a WMS than product demos. Failure to scrutinize process is fatal.

The WMS implementation process should be fairly straightforward. You should not need a vendor on site for more than a few visits.

Systems requiring extensive on-site implementation assistance typically fail. If a vendor needs a lot of time at your facility to install and customize your system, you will also be at its mercy when you need upgrades or additional installs.

Again, look for references from companies that installed subsequent sites, upgrades, or system changes without vendor help.

Four Seasons Produce, for example, worked closely with its vendor to automate one warehouse. "After that, we configured, tested, and went live in our remaining facilities without any on-site vendor help," says Nelson Longenecker, Four Seasons vice president of business innovation.

Depth. The most successful WMS products have deep functionality. Avoid systems that try to solve all problems in one package. You wouldn't buy a TV with a built-in CD player, so why purchase a transportation system that includes an order entry system and a WMS?

Attempts to deploy all-encompassing supply chain execution systems invariably net shallow results. Many vendors sell the dream that one company can solve all warehouse and distribution problems, but behind the scenes they merely cobble together software from different sources.

The incompatibilities of these different sources inevitably require additional support dollars. Shippers ultimately pay the price, as their technology solutions providers struggle with different code bases, conflicting data designs, and opposing corporate cultures from acquisitions.

Similarly, vendors with legacy systems divert new dollars to old problems, leaving shippers to pay for their inability to create long-lasting, easy-to-upgrade software.

Instead, look for deep systems from focused vendors. They should offer one product written by the original team in the same programming language, and critical WMS features such as voice picking and real-time labor standards should come "in the box."

These WMS systems deliver immediate tactical and strategic results, which don't include the implementation team getting fired.

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