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Expert Insight: The Supply Chain Technologist
By Mark Fralick
Date: Nov. 4, 2008
Logistics News: When it Comes to Warehouse Management Consultants, Rates Do Not Equal Value

Beware the $65 per Hour Resource that Takes 5 Times as Long

Okay, call me a dinosaur. Yes, I’ve been around for a while. But being one of the software developers that arguably defined the some of the best ways to write systems for WMS and automation interface layers, I think there is something I need to say.  (Editor’s note: Fralick was a pioneer in development of a WMS that was based on a Service Oriented Architecture, which is now becoming the industry standard approach.)

There is a lot of Warehouse Management System (WMS) business out there right now, and there have been a number of people breaking off of the WMS companies or partnering with them.  Now, don’t get me wrong – there are plenty of good people out there, but there are also quite a few that are – well, "not so much." 

You know the drill – some people who leave a software company are the very best (there are few of these), but more often they just seen an opportunity (whether their skills warrant it or not). There seems to be such a scramble for bodies that I fear people don’t know what they are getting or what they are paying for.

So, here’s the deal. There is a generally a focus on rates. I even heae people at trade meetings bragging about how “I got this guy for $90/hr and he can do everything”.  

Be careful here: rates are not often a good reflection of actual cost

Say one of these Newbee WMS “experts" sells you some work (even to do just reports or queries) at say $65/hr.  Nice rate, right?  Well. "not so much" if they take 3 times longer than someone charging even $150. Five times longer between the best and the laggards is not uncommon.

Look, you can find guys and gals out there all day for under $50/hr.  But is the effective cost of your job less? Not likely. The only instance where this sort of thing makes sense is when you’d be training them on product data structures, your requirements, etc. 

But, here is the little secret – this is what some of these guys are doing – selling you these cheap resources, and have you train them. They’ll spend 3-5 times longer on the first several jobs than they should and by the time you get them all trained up – whoosh – they are gone on another job. At your expense.

More on this in my next post.

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November 12, 2008

My complementary thoughts on this article are as below

1. Before hiring a consultant the organization must identify the area where improvement is expected,  i.e. goal and scope. Setting of the direction of consultant is important. E.g. if the problem is identified as improving productivity during lean time, the focus for solution is limited to down turn of the business.

2. Many a times, a consultant just facilitate discussion and structured thinking among different stake holders to bring out a solution. No harm in it and do not undervalue it. One should focus on solution and learning.

3. All of us calls for experienced and qualified consultants and make assessment based on our understanding of business and solutions. This has two pitfalls:

-- Not necessarily that all problems need such a qualified and experienced consultants, visiting a renowned and very senior surgeon for a small wound may take a line of treatment like brain surgery and cost you hell. Hence, apply due trade off between complexity of problem and benefit expected vis-a-vis consultant's profile

-- Unless our assessment is on different plain, we happen to bring in a consultant having matching thoughts and experience. We must remember that we couldn't find a solution or need a better solution, thus a consultant must bring in new thoughts, techniques and direction.

Ranjan Prasad Singh
Enterprise System Solutions (P) Ltd.

profile About the Author

Mark Fralick writes about supply chain technology issues, and is a recognized expert in RFID, Service Oriented Architectures (SOA), Warehouse Management, material handling systems integration, and other technologies.He is also president of consulting firm ROI Solutions LLC, and prior to that Vice President of Architecture for RedPrairie. He is co-founder of Software Architects International, a successful Warehouse Management System (WMS) provider subsequently purchased by McHugh Software (RedPairie).


Fralick Says:

Be careful here: rates are not often a good reflection of actual cost.

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