Landau Says:

What we’re starting to see are investments in all sorts of infrastructure, whether it’s planning, or order management, or down at the warehouse, we’re seeing these retailers invest heavily in e-commerce facilities to really meet the needs of their customers and business. What do you say? Send us your comments here

Supply Chain Digest’s Dan Gilmore recently spoke with David Landau of Manhattan Associates on several themes related to Warehouse Management Systems.

Landau: The challenge in the labor situation is pretty remarkable, and it’s only going to get worse.  Most of the world and most of the media talk about going green with the supply chain, but most of these warehouses are really going gray. The work force is aging, and if you look at some of the trends, it’s going to get tougher and tougher to hire people into the workforce. The labor pool for distribution may actually shrink in the next few years. The nature of low skill labor has also changed dramatically.  People have more choices and they have more opportunities, and the mobility is even greater than it has ever been before. 

With that in mind, getting the right employees and keeping them is very important, especially in a warehouse.  But, even more so the nature of low skill labor has changed dramatically. So companies are really trying reduce the impact labor has on their warehouses.  We see many new buildings that are coming on-line that are far more automated than they were before. Miles of conveyer, more sorters, more automation – we’re seeing this across the board.  So for a WMS to have real-time, pre-built integration out of the box to different material handling vendors is more critical than ever to improve integration and reduce risk.

Beyond automation we’re seeing huge interest labor management systems tied to WMS. Besides the core benefits of LMS in terms of general productivity gains, we also see companies interested in things like “How can I build my load optimally to minimize the amount of staging work required?” or “How can I intelligently distribute the tasks to the workers in my warehouse to minimize the amount of time they spend driving an empty forklift?”  These are all things I can do to contribute to the overall productivity in the warehouse and drive down the requirement of my labor.

Gilmore: I think you are right on, and I think that automation trend is particularly interesting as well because also really increases the functionality needed in a WMS.

Landau: That’s absolutely right.

Gilmore: Rapid company growth has always been a driver of WMS adoption – assume you are still seeing that.

Landau: I like to use the term “hyper-growth.” Companies that rapidly grow revenue, go from private to public, from NASDAQ to New York stock exchange – moving very quickly.  One example is a sports apparel company called Under Armour. It actually started with as one employee only 10 years ago, and went public in 2005. They’ve now got facilities all over the world.  Two years ago, they chose SAP to be their enterprise backbone, and last year the implemented Manhattan Associates for their WMS.  They went up and running in 16 weeks in a brand new building and are blowing out their numbers by building out this infrastructure. 

We’ve got other customers like Crocs which is also is growing very rapidly with sites all over the world, both large and small.  Also they selected Manhattan Associates integrated with a big name ERP backbone to run their facilities across the globe.

Gilmore: That’s some of the things I’m seeing as well.  At the end of the day, WMS is going to drive out a lot of the cost for you, but if you’re a high growth company one thing that can kill you is not being able to get the product out the door and to service those customers.  That winds up often being the key driver of WMS adoption.

Landau: It really makes a difference.  Not only in terms of getting the product out the door, but how can I maximize those perfect orders? How can I make sure if I’m shipping to retailers, that I not only ship to them when they want it, how much they want it, but with all their requirements – with compliant labeling, compliant EDI, and so forth.

Gilmore: The other thing I’m seeing is that it’s like the “revenge of the dot com.” After the internet bubble burst earlier this decade, slowly but surely internet retailers and the dot com channels are coming back, and I think that’s also fueling a lot of the growth in WMS.

Landau: Yes, they are coming back with a vengeance. In the first wave, If I think about what started the com boom and how the retailers focused on the dot com side of the business 7 or 8 years ago, it was get a website up as quickly as possible and ship out my orders as quickly as possible. So many dot coms outsourced and went to third parties like Amazon or UPS.  

The dot com companies, in particular the multi-channel retailers, are recognizing that doesn’t cut it. The everyday consumers like you and I expect to be the same customer to a retailer whether I’m buying online, returning at the store, researching online, or buying at the store, and if you treat these customers as separate customers across different channels, they are not going to be happy. 

So what we’re starting to see are investments in all sorts of infrastructure, whether it’s planning, or order management, or down at the warehouse, we’re seeing these retailers invest heavily in e-commerce facilities to really meet the needs of their customers and business. These distribution facilities tend to be very automated, designed to crank out a lot of volume with very little downtime.  And we’re very excited about seeing what’s happening because the market is really taking these operations to a whole other level. They are also combining traditional distribution and dot com fulfillment in a single facility.

Gilmore: I saw a very interesting presentation at your user conference from Cabela’s, the outdoor retailer, that I think illustrates that.  People in the past often thought that you couldn’t mix those different types of fulfillment operations in a single facility, but you are seeing the move towards serving different types of channels within the same building.

Landau: I think that’s also another key trend. You’re seeing the lines blur between who is a wholesaler, who is a retailer, and who is a supplier.  A few examples – on the retail side you’ve got Kohl’s, and 35% of their sales are private or exclusive brands.  Macy’s is 18% private labels.  On the wholesale side, a company like Guest, 47% of their business was wholesale in 2000, and today it’s only 17%.  Many traditional manufacturers and wholesalers are going on-line, and developing their own retail channels.

Gilmore: Dave, just to cap it off, for people that maybe looked at WMS a few years ago, and haven’t been back since or are now starting to pick up interest again, what are some of the newer types of capabilities leaders in the market are bringing in terms of new benefits to users of WMS?

Landau: There’s a lot more intelligence and optimization going into these systems than ever before. Things like constraint-based optimization, so that when I am releasing work to the floor, the WMS is considering the constraints in picking and replenishment and material handling. We’re also seeing a lot of interest in newer technologies - voice technology in particular, but also RFID. Lastly, I would say that companies are recognizing that WMS doesn’t exist in isolation.  It has to work in cooperation with the transportation and inventory and replenishment processes.  Having tight integration across these functional boundaries is a more important part of the distribution operations than ever before.

Gilmore: I think you are exactly right on all of those points, and kind of just going back to one of the things you said early on, obviously in these increasingly automated facilities the need for that kind of optimized balance of work flow out to the floor is even more important than it is in a traditional warehouse.

Landau: Absolutely. I think the need to be able to work in synchronization across the different functions and across the different systems – the material handling system, the warehouse system, and the order management system - is greater than ever before.

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