For Better or Worse: Making WMS Decisions

March 1, 2010
Whether upgrading an existing WMS or starting from scratch, material handling operations should seek technology that supports partner and customer collaboration.

In any relationship, communication is key to success. The same can be said about relationships that move supply chains. Tracking inventory from receipt to release, and making data available to supply chain partners and customers, have become crucial aspects of successful supply chain execution.

A warehouse management system (WMS) can serve as both a foundation and unifying force for critical collaboration. Businesses look for technology that not only drives revenues, but produces immediate results, which impact the customer's experience.

In general, a paper-based inventory system is 90% accurate, on average, while an automated WMS is 99% accurate. Even though 90% sounds good, consider the amount of revenue left on the table from losses that can be prevented with a more accurate system. Losses in revenue or savings can amount to thousands of dollars each month.

Improving shipping accuracy can lower labor costs, reduce time spent recreating shipping documents due to errors and present consolidation opportunities that save time and fuel. In addition, better service levels and customer satisfaction can help a company secure new business opportunities.

But, WMS can bring its own baggage. While companies without a WMS do not have a clear picture of the supply chain, those that do have a WMS face the risk that it's outdated or no longer cost effective for their particular business requirements.

Upgrades Vs. New Installation

In many ways, implementing a WMS from scratch with no pre-existing technology is easier than converting from an outdated system to a new one. Many existing warehouse and inventory management systems were put in place in the mid-1990s and not designed to be upgraded. Often, the original vendors no longer support the software. In some cases, the cost of an upgrade can be just as costly as a new implementation.

Before upgrading, a business should have a firm understanding of the benefits and limitations of its current platform as well as what makes sense for its specific operations. For example, if an operation is looking for RFID and voice controls, chances are good that an upgrade is not only necessary but cost effective in the long term.

Companies have a choice today between traditional, on-premise software or on-demand, Web-based systems. Software vendors are usually willing to adjust their offerings to meet specific demands of customers, but companies need to understand the cost and time limitations associated with these adjustments.

Whether an operation upgrades an existing WMS or implements a new system, IT resources should be available to address issues and customization requirements. Installing new, on-premise enterprise software can require additional IT infrastructure and take months to implement, and upgrades usually require consistent maintenance and monitoring.

Web-Based Vs. On-Premise

A Web-based WMS can cut down on implementation time and generally costs less than traditional software, whether new or upgraded. Also known as software as a service (SaaS), a Web-based system is accessible through any browser with a live Internet connection. Some systems include social networking tools to improve customer and business partner collaboration.

Traditional, on-premise WMS systems tend to offer more robust features and can be appropriate for companies with complex inventory requirements. But for operations with relatively simple inventory management and order fulfillment requirements, SaaS systems offer basic functions, such as purchasing, receiving and put-away, inventory control, order fulfillment, shipping, integration and mobile computing. Because of their simplicity, Web-based systems can be up and running within a few weeks.

When assessing a WMS, an operation should consider the scalability of the system to grow with the business. Integration also needs serious consideration because it usually requires significant time and resource commitments, depending on the complexity of the WMS. With both on-premise and Web-based software, only vendors can make customizations. And, responsive customer support is essential when integrating a WMS with an existing ERP system.

A Case Study

Inventory traceability is the foundation of material handling efficiency for any company. Storing and allocating hundreds of thousands of dollars worth of materials and inventory is a huge responsibility, and improperly handled materials can result in lost, damaged or stolen property and ultimately financial loss and poor reputation.

This was the case for IDC Construction, a hotel renovation and construction firm based in Woodstock, Ga. IDC's clients include InterContinental Hotels, Marriott and Hilton, among others.

The company needed to invest in technology that would minimize the loss of, and damage to, expensive construction materials. To do this, IDC needed to maintain a clear view of exactly which materials were on hand, to which client they were allocated and when they should arrive at their final destination.

Because IDC needed inventory traceability quickly and wanted the basic ability to provide its customers with real-time views of inventory levels, order processes and work procedures, the company decided to take a Web-based approach.

Weighing the Options

Companies considering an inventory software or WMS upgrade have many options available to them, thanks to rapid advancements in technology. They should look for technology that can offer the specific features and functionality they need to improve communication among customers, suppliers and business partners.

These days, WMS technology is about much more than just maximizing storage space. Savvy businesses recognize the value that real-time inventory information can bring to the overall performance of their supply chain execution strategies.

Jim Burleigh is CEO of SmartTurn, a supplier of on-demand inventory and warehouse management software.