Cliff Holste, Materials Handling Editor

As the economy begins to heat back up, inevitably many companies will begin to look at Warehouse Management Systems as a place to make investments.

Increasing unit volumes are always a key driver of WMS interest and adoption, as companies find increases in volumes lead at some point to deteriorating customer service and higher distribution costs per unit.

The recovering economy should bring those unit volume levels back for most companies. In addition, many companies used the recession as a time to consolidate distribution operations. A combined operation, which may in some cases even involve different business segments or distribution process models, might have been manageable at recession-level volumes, but may become a bottleneck as the economy and unit volumes recover.

The issue is especially pertinent because here in 2010, there are still hundreds if not thousands of distribution centers running very old Warehouse Management Systems, some dating back well into the 1990s.

This is resulting in some like a “baby boom” of WMS replacements lately, says John Pearce, a consultant at Cornerstone Solutions.

Pearce made his comments during a recent videocast on The Supply Chain Television Channel on this topic. To watch the on-demand version of the videocast, go to: Our WMS: Should it Stay or Go?

“We seeing a lot of replacements, companies looking for a WMS for maybe the second time only in their history,” Pearce said.

Shane Smith, also from Cornerstone, added that signs of trouble with a current WMS usually come from one or more of three basic areas: 

• Functionality: The current WMS simply doesn’t have the capabilities a company needs to manage effectively today.
• Technology: The WMS technology platform is highly dated, meaning its hard to keep it running well, and it is difficult and expensive to maintain the system and/or to integrate it with other applications.
• Support: With aging systems, sometimes a company really loses connections with original provider – often, that company is no longer even in business, making support and enhancements very difficult.

 Pearce said the place to start is to do a cross-functional assessment of the current WMS and its capabilities. He said that should include not only a few members from the distribution team, but also members from any function that has some interest in how a company is “shipping product and getting paid.”

Cornerstone itself has such a diagnostic tool that it uses with clients, but Pearce said companies can develop their own by building a list of key customer and operationally focused factors and grading the current system on each, using a scale of 1-5 or similar.

He said that can be a starting point for understanding how well the current WMS is meeting customer and cost requirements. In Cornerstone’s approach, each individual attribute and the final score end up indicating green (the WMS is working well), yellow (questionable) or red (WMS not getting the job done for the company). That can be at least a reasonable starting point for further analysis.

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Pearce adds that it is very important but difficult to make sure that assessment is being done from a full supply chain perspective. In other words, don’t consider the capabilities and impact of the current WMS only from a four-wall DC perspective, but also across the touch points in supply chain planning, transportation, etc.

If you ultimately decide to replace the current system, for whatever reason, Smith said it is important to understand the advance capabilities of today’s WMS systems, and look to improve current DC processes accordingly.

“The ROI for the replacement is going to come from changing distribution processes,” Smith said. “You need to understand all that today’s WMS software is capable of doing versus what you may have in place.”

Cornerstone Solutions Recommends Using Diagnotic Tool

to Do Initial Assessment of a Company's Current WMS

Enhancing What You Have

An interesting alternative between just keeping what you have and replacing it with a new system is adding capabilities around what you have to make it something better, Pearce said.

First, he noted that in some cases, there might be needed capabilities in the current system that have simply never been turned on and which ultimately became forgotten. Start by taking a look there.

Pearce also says that in some cases you can breathe new life into an existing WMS by adding new “bolt-on” modules (e.g., Labor or Yard Management) or new technologies such as Voice or RFID.

“There are many options between replacing your WMS and just living with what you have,” Pearce said.

Having said that, however, Pearce noted “there are some huge and fundamental differences between today’s WMS and older systems. The good news is that also means implementing a new system won’t be nearly as painful as it was 10 or more years ago.”

How do you think you can best determine if its time for a new WMS? Is building around what you have with new bolt-ons and technologies often a good idea? Let us know your thoughts at the Feedback button below.

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