13 Keys to Choosing the Right Warehouse Management System
Following these guidelines can boost your chances for a successful WMS implementation.
Supply chain solutions provider MVP uses a warehouse management system (WMS) to “efficiently and accurately” run its 500,000 square feet of warehouse space, which serves about 40 clients, says Dirk Updike, vice president, operations. The WMS controls product receipt, putaway, and storage.
When it’s time to pick items, the system directs warehouse employees, who are using hand-held devices, to take the most efficient routes to the proper locations. The WMS improves warehouse efficiency by about 40% when compared to a standard, non-RFID environment, Updike notes.
As supply chains grow more complex and delivery time frames accelerate, information has become increasingly critical to effective supply chain management. That’s boosting the role of WMS solutions. A robust WMS can help companies leverage data and operate more efficiently.
“In the emerging digital supply chain, a sophisticated warehouse management system is key,” says Thomas Boykin, supply chain specialist leader with Deloitte Consulting.
The WMS market is expected to grow at a compound annual rate of 16% through 2025, Grand View Research reports (see chart). Along with increasingly digital supply chains, the jump in e-commerce, which boosts the criticality of supply chain visibility, is driving growth.
“If your website says you have inventory, you want to make sure you have available the right product at the right time,” says Wanda Riddick Johnson, DC specialist master with Deloitte. WMS solutions can provide this.
The pandemic has accelerated these shifts. “COVID pushed e-commerce ahead five-plus years,” says Ed Troianello, president with Quality Software Systems, a warehouse solutions provider.
While warehouse management systems can provide many benefits, implementing one carries risks.
“A WMS can put a company out of business if it’s the wrong vendor or solution, or it can propel a business
ahead of the competition,” says John Reichert, senior director, SCE solutions with Tecsys, a supply chain technology provider. Follow these steps for successful WMS implementation:
1. Know when you need a WMS.
Size can influence the need for a WMS; larger operations are more likely to benefit from a solution. However, warehouse complexity, which generally results from the types of units handled and the number of processes, more often drives the decision, says Dan Gilmore, chief marketing officer with Softeon, a supply chain solutions provider.
The “eaches” picking, typical with e-commerce sales, tends to be more complex than pallet operations. Similarly, multiple product types—say, a mix of those requiring refrigeration or freezing—also boosts complexity.
If the only way to consistently meet service requirements is by adding warehouse employees, it’s also time to consider a WMS, Boykin says.
When the products are critical to the next link in the supply chain, such as components needed to keep a manufacturing plant operating, a WMS may be needed to drive accuracy and timely fulfillment. The same holds true for essential products, like many medical devices.
Before investing in a WMS, however, assess whether you can more costeffectively address the challenges by leveraging unused features in existing systems or through third-party addons, advises Tom Singer, principal with Tompkins International, a supply chain consulting firm.
2. A WMS can provide a range of capabilities.
“A WMS has the ability to optimize day-to-day warehouse operations and provide more efficiency to maximize customer satisfaction,” says Allyson Griffin, industry principal with Oracle. By providing real-time visibility into inventory, a WMS can reduce stockouts and boost customer service.
It can also create more efficient pick paths, increasing inventory turns and reducing inventory carrying costs. Robust logic within a WMS can streamline inbound, putaway, and picking, among other processes.
A WMS can improve productivity by reducing paper-based operations and implementing system-directed tasking that assigns workers based on the three P’s: permission, priority, and proximity. If a pallet needs to move from storage to picking, the WMS can evaluate the priority of this job, assess which workers have the ability to move it, and identify those closest to the pallet. This intelligence reduces order cycle times and errors.
At the same time, trying to leverage all the benefits a WMS offers can lead to an unwieldy, never-ending project. It’s generally more effective to focus on the functions that will improve specific warehouse operations. “It’s not 100 things; it’s eight to 12,” Gilmore says.
3. Let business lead the project.
Successful WMS implementations tend to be led by the business units, rather than IT. The business units should jointly determine how the system needs to work for them, and the impact on their operations.
4. Assess Your Budget.
“Any organization that intends to wade into the WMS marketplace should know what end of the pool to swim in,” Singer says. Identifying the best WMS vendor and solution requires an investment of time and energy.
The least expensive Tier 3 solutions mostly track and confirm what was received, picked, and shipped. One rung up, many Tier 2 solutions can provide directed work for receiving, putaway, and restocking, as well as some work optimization. Many offer reporting capabilities and customer portals. However, some functions may be limited.
Tier 1 solutions stand out for “their depth and quality,” Troianello says. They provide more sophisticated controls over order flows, labor allocations, and forecasting capabilities, while offering strong response times at all transaction volumes. On the flip side, they’re usually expensive to license and implement.
5. Evaluate the reporting capabilities.
“The real value from reporting is the ability to see what is happening on the warehouse floor as it unfolds,” Singer says. To that end, best-in-class reporting should provide a command and control view of warehouse activities, so problems can be identified and addressed quickly. The solution should provide the ability to drill into details and identify actions to address challenges.
6. Ask about “time to value.”
Once companies install a WMS, they typically need some time to ramp up and capture productivity gains before they see a return on investment. This can range from one month to one year—or more. “When checking references, ask how fast the time to value was,” Gilmore adds.
7. Check business intelligence solutions.
Business intelligence (BI) can help an operation look both forward and back. “BI continues to be important for looking in your rearview mirror to improve tomorrow,” says Jon Kuerschner, vice president of supply chain consulting with Körber Supply Chain. Management can use the data to identify trends, conduct period-over-period analyses, and identify action steps.
Business intelligence is also key for forecasting future shifts, such as seasonal stock fluctuations. “It is becoming more important as the amount of data from an operation increases,” says Jarrett Leesch, senior vice president, international business development and sales with Körber.
8. Confirm connections beyond the warehouse walls.
Because a warehouse increasingly needs to connect to the other links in the supply chain, so does a WMS. For instance, can a WMS incorporate customer feedback on sales, so the warehouse can adjust its shipment schedule? “We’re headed to connecting warehouses and distribution centers across the supply chain,” Boykin says.
9. Consider the vendor’s experience in your industry.
While lack of industry experience may not be a deal breaker, having experience can provide an edge. “Proven vendor industry experience helps ensure that the functionality needed is available without custom modifications,” Singer says. In addition, a vendor’s success in an industry usually leads it to develop more functionality for that vertical.
10. Evaluate the upgrade path.
While a WMS can improve warehouse operations almost from the start, the real value tends to accrue over time, as organizations continually revise their processes. That requires a solid upgrade path. “Every WMS has an upgrade path, but they’re sometimes so onerous that companies don’t bother doing it,” Troianello says. Before choosing a solution, review the upgrade path.
11. Assess the provider’s commitment.
Along with robust, reliable technology, a successful implementation often hinges on the relationship with the provider. Reichert suggests assessing several attributes, including how responsive and engaged the company is, and whether it’s interested in finding the optimal solution, even if that means selling fewer of its own products.
12. Train and adjust the deadline.
Thorough training is key. If users don’t fully understand how the WMS works, they’re more likely to revert to their old ways of processing when a problem arises. Also, don’t be afraid to push back an implementation deadline in order to get it right.
13. Continuously improve.
To gain the most benefit from a WMS, establish a continuous improvement team who can identify and deploy ways to further leverage the system’s features. After all, once you make the investment in a WMS, it makes sense to obtain as much as possible from it.
A Spirited Solution
Given the expertise, time, and other resources required, few companies build their own WMS. One that has, however, is Chicago-based Spirit Hub, which currently delivers craft spirits to consumers in Illinois, Nebraska, North Dakota, and New Hampshire, and will add about 10 more states during the next 18 months.
“It was a difficult decision,” says Michael Weiss, founder and chief executive officer. However, after researching available WMS solutions, he and his colleagues decided to build their own. They hired four senior developers with experience building e-commerce and WMS solutions.
By building its own WMS, Spirit Hub could customize the solution, including incorporating the threetier distribution system—manufacturers sell to distributors, who sell to retailers, who sell to consumers—with which purveyors of liquor must comply. “We pride ourselves on being three-tier compliant,” Weiss says.
The WMS also provides real-time verification of stock levels, integrates with merchant payment solutions, and enables Spirit Hub to “own the customer experience,” he adds.
As the company grows, its WMS will scale with it.