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Focus: Distribution/Materials Handling

Feature Article from Our Distribution and Materials Handling Subject Area - See All

From SCDigest's On-Target E-Magazine

- April 23, 2013 -

Supply Chain News: Is Cloud-Based WMS Ready for Prime Time?

WMS was Late to the Cloud Game, but that is Changing; Key Considerations for Making the Decision on Cloud or On-Premise


 SCDigest Editorial Staff

Warehouse Management Systems (WMS) have been somewhat late joining the "Cloud" party, but that has certainly started to change. Just how ready is Cloud-based WMS for prime time performance?

Interest and adoption of Cloud-based Warehouse Management has certainly been much slower than in areas such as Transportation Management Systems (TMS), supply chain visibility solutions, global trade management, and some other categories, probably about on par with Cloud-based supply chain planning, which has also been slow to evolve.

SCDigest Says:

Both sides generally claim victory on the total cost of ownership issue, but that is impossible to settle without the specifics of any individual deal.
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This is due to several factors. First, WMS simply is not as "clean" an implementation as many other categories of supply chain software. There are wireless RF devices, bar code printers, perhaps material handling automation, a Warehouse Control System (WCS), etc that have to be installed locally. A TMS user doesn't really need anything more than a PC with internet connectivity to use a Cloud-based TMS. WMS, however, is connected to these various local sub-systems, so to an extent the benefits of Cloud deployment are perhaps muddied a bit - or at minimum users may have thought of it that way.

That leads to the second obstacle of sorts, and that is response time. RF or Voice devices, material handling equipment, etc. generally require sub-second response for operational effectiveness. There were concerns among many that a Cloud-based WMS delivery over the internet would be too slow or variable versus a locally deployed solution.

Finally, similar to TMS, the early Cloud-based WMS solutions simply didn't have the functionality needed for larger, more complex distribution centers. So, Cloud-based solutions were only adopted by smaller, simpler DCs or warehouses A good example of that were the target customers for a company called SmartTurn, whose Cloud-based WMS was focused on smaller distribution centers or "uncontrolled' inventory stocking points. (SmartTurn was later acquired by RedPrairie, which in turn recently merged with JDA Software and is now known by the JDA name).

However, the WMS market is now starting to change, and with it interest in Cloud-based solutions. What's driving the change? First, most of the more recognized WMS solutions now offer Cloud-based deployments - even if they may still favor traditional, on-premise solutions.

Second, a new generation of WMS vendors that built Cloud solutions from the get-go such as Snapfulfill and LogFire, among others, have come to market with more robust Cloud-based solutions suitable for complex distribution centers. Accellos has moved its WMS offering to the Cloud.

Key Considerations

That changing solution landscape doesn't yet mean Cloud-solutions are right for every company by any means.

Below are key things that must be considered when evaluating a Cloud WMS solution.

What are You Really Trying to Achieve? Is a company's potential interest in a Cloud WMS focused on a different pricing model (subscription pricing versus upfront license costs), a different deployment model, some of both, something else? It is surprising how often companies do not have a good handle on the answers to those questions when they begin to consider Cloud WMS.

It is critical to be clear about the objectives a company is trying to achieve. Be aware that most established WMS companies, for example, will license the software on a subscription basis, rather than an upfront payment (though you may have to ask really hard to get that answer). Conversely, most WMS companies will "host" the software for a customer even if the purchase is on a traditional license payment.

What Will be the Deployment Environment? Related to the point above, is the deployment plan or basic need for a new WMS to connect smaller facilities, such as manufacturing warehouses, that are not supported by a real WMS currently? Or is it a plan to take a different approach to traditional, more complex DCs or a new facility? The answer to that question will narrow the WMS candidate pool - big "tier 1" WMS solutions probably aren't right for the smaller facilities, and the more basic Cloud WMS solutions for smaller facilities won't meet the needs of many larger DCs.

Softeon, a provider of both traditionally deployed WMS solutions and more recently a Cloud version, has taken an interesting approach to this issue by releasing its Cloud product based on the exact same platform and data model as its core WMS product. It starts with a strong but limited set of capabilities in the Cloud product, but at the outset or over time companies can simply add other functionality that they need in pieces, all the way up deploying to the full blown WMS. This approach enables that advancement with no data migration issues or costs. (See Cool New Supply Chain Product of the Month for January, 2013.)

Another issue that may arise for deployments at smaller facilities is the level of IT support they will receive, both initially and over time. If that support is going to be very limited, this puts a premium on systems that are very easy to understand and configure, as managers there may be largely on their own.

(Distribution/Materials Handling Story Continues Below )


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What Will be the Performance and Response Time in the Cloud? What kind of connectivity do target facilities for the WMS have today? Poor, excellent, or somewhere in-between? A facility with no real material handling automation and a small number of RF or voice units probably won't have response time issues with a Cloud WMS solution. Those with those more advance systems need to be more careful. It should be noted, however, that many companies today already physically house the WMS in a corporate data center far removed the DCs using the system, and that high speed, dedicated T1 lines that could connect a Cloud WMS provider to a given DC are really quite inexpensive today versus say 10 years ago. In that scenario, response times would likely be faster in the Cloud than for a system housed somewhere within the corporate firewall.

Some but not all Cloud vendors are also placing a sort of middleware at the DC to manage some of the sub-second requirements locally.

Will You Need Customization? Despite occasional statements to the contrary, most WMS solutions going into complex DCs still require some level of customization, initially and over time, even if the level of such customization is far below levels of a decade ago.

Cloud WMS solutions that operate on the "multi-tenant" hosting model, in which many customers are managed in one version of the software running on a single server or server farm, may not support customizations. Is the "out of the box" functionality plus expected enhancements over time enough to meet your needs? That must be thoroughly reviewed.

What is the Service Level Commitment? When a WMS goes down, it generally means product - and therefore revenue - isn't going out the door. That tends to make the CEO and CFO quite unhappy, and unlike a traditionally deployed WMS, the company itself can do very little to get the Cloud WMS back up and running.

Therefore, companies considering Cloud WMS need to well vet the service level commitments from the vendor, and make sure the vendor can really deliver what is promised. Some will offer different service plans - obviously at different price points - for service level commitments, back-up plans, etc.

How Secure is the Data? While the market really hasn't seen any major hacking type incidents from Cloud-based supply chain software providers, there could be risks. WMS systems usually contain lots of data that is very sensitive from a business perspective - customer names, order quantities, sometimes selling prices and more. While no WMS vendor in today's age is totally immune from hacking, undoubtedly some will offer more security features and architectures than others.

Seek expert help as needed to help sort out these security-related issues.

What are the Real Total Costs of Ownership? Both sides generally claim victory here, and the issue is impossible to settle without the specifics of any individual deal - that is, what is the subscription pricing going to be, what is the license cost, what are the maintenance fees, what are the implementation costs, etc.

So, users should not be swayed by general statements, but the specifics of the deal, and then do the hard but necessary work of working the math to look at TCO and ROI for both type of solutions.

SCDigest continues to believe that over time the Cloud will be the dominant way that all supply chain software is delivered, as a service, but it is likely to continue to take a little more time in WMS than many other areas.

Do you think WMS in the Cloud is ready for prime time? What would you add to our list of considerations? Let us know your thoughts at the Feedback button below.

Recent Feedback

I agree and think the trend of moving to the cloud will eventually sweep through all supply chain software. I'm especially interested in the security risks associated with moving WMS to the cloud. The intellectual property risk that any company would be exposed to if hacked could be extremely costly. I wonder if the security measures taken to protect WMS are the same as for other sensitive data housed on the cloud? And if a security breach did take place, who would be held responsible?

Lorrie Raines
May, 01 2013

I think it is time for the Cloud to take all of us to the next level.  I am investigating a Cloud-based WMS for our company, which has 5 DC's.

Dan Malone
Distribution General Manager
May, 15 2013