Despite their importance, successful implementation of warehouse management systems (WMS) is seldom fully realized in highly automated distribution centers. This is evident in the many WMS implementations of new and upgraded distribution centers that are not adequately functional or fully utilized by staff—in some cases even years after they were targeted to be completed. It is also evident in the excessive cost overruns caused by WMS projects that were not properly planned or executed.
Today, simply installing material handling equipment is not enough. A more holistic perspective is required for starting up successfully operating distribution centers. Without a fully functional WMS operating at 100 percent at go-live or shortly thereafter, the greenfield or upgraded DC will fail to perform at expected levels of throughput and efficiency, and the anticipated ROI will be unrealized, or delayed at best.
Warehouse Management System Goals
The objective of the WMS is to provide a set of computerized procedures to manage the movement of inventory and orders within the warehouse, and enable a seamless link to order processing, logistics management and material handling equipment (MHE) systems within the facility. These MHE systems handle receiving, put-a-way, storage, picking, packing, labeling, sortation, shipping and returns. External to the warehouse, the WMS links to freight carriers for incoming deliveries and outgoing order delivery confirmation.
Highly automated distribution centers may have many material handling equipment components and sub-systems, each with their own discrete control systems such as warehouse control systems (WCS) and programmable logic controllers (PLCs), which require integration with the warehouse management system into a single-source point of control.
Additionally, WCS, traditionally functioning as middleware real-time interfaces between the WMS and PLCs that control the material handling equipment, are now taking on more functionality and looking more like a WMS, effectively blurring the lines between conventional WCS and WMS applications. Such WMS functions like managing order activity and batching orders for waving can now be accessed through a WCS, allowing distribution executives another option to fine-tune their DCs while optimizing their investment in software.
Depending on the degree of MHE automation in use within the warehouse, an arsenal of automatic identification and data capture (AIDC) technology can be employed, such as barcode scanners, mobile computers, wireless LANs, magnetic stripes, optical character recognition (OCR) and radio-frequency identification (RFID) to efficiently monitor the flow of goods. These units capture and relay data throughout the distribution system in real-time via wireless transmission to the WMS, which then can make available comprehensive and detailed reports about the status of inventory and orders moving through the warehouse.
WMSs process huge volumes of data on a split-second, real-time basis with near flawless accuracy, while integrating with ERP, shippers, hundreds of AIDC units, and dozens of MHE systems operating thousands of I/O.
Clearly, the WMS is the most critical component of a warehouse's operation.
Risks Affecting WMS Implementation
Despite the importance of WMS, approximately 30 percent of installs fall behind schedule and fail to be ready for operation at go-live. When delayed, WMS installs typically hang-up from three to twelve months before becoming fully operational. By any engineering standard, this statistic is unacceptable. The costs in added time, personnel, underutilized facilities and equipment, and loss of throughput can be sizable.
So, what is it that hangs up the WMS from going live on time? Quite often, it is not the WMS itself causing the hold up, but another software system that is in development and needs to integrate with the WMS. This could be a web portal for inventory visibility, which is behind schedule, but is slowing up the whole implementation and testing of the WMS.
Sometimes it is the integration of the WMS with the company's host ERP that is causing the trouble. As there are no standard interfaces to ERP systems, customization needs to be programmed and tested, which can easily be underestimated. It may be that the company's homegrown ERP has been so neglected that the extensive modifications to the ERP system are taking much more time than expected. Or, possibly the company's legacy ERP is so tethered to the prior WMS, which is now being replaced, that a new ERP has been slated for installation, and the full WMS install is waiting on the ERP.
Interfaces with the WCS for the material handling automation, and the transfer of information back and forth between the PLCs in the equipment and the WMS, have to be seamlessly put together before the material handling equipment can be fully operational.
Dashboards need to be built for management team visibility to display KPIs related to productivity. As well, dashboards are needed for customer service that might be integrating with customers to give them updates on their orders, inventory or shipments.
Many factors need to be carefully thought through and seamlessly integrated when building a new WMS platform.
Planning is Key
Some WMS installations have gotten so stalled that they were eventually shelved and abandoned. This, of course, is the worst thing that can happen to an install. For whatever reason—tried to implement too much, or established unrealistic dates, or did not fund an adequate project team—too many things needed to be working right that were just not coming together to make this project go live any time soon.
Not quite so disastrous is the WMS project that goes live, but was not configured correctly, so the repair workload, tracking of problem orders and problem inventory becomes such a burden that the only solution is to add a battery of IT technicians to solve the problems. Of course, this substantially increases the cost of the project.
Then there are the WMS projects that implemented without too much delay or cost overruns, but for some reason are not delivering the expected capability or benefits.
What adversely affects WMS installs more than any other factor, however, is the expectation that an off-the-shelf WMS product can be put in with minimal modifications. In reality, these projects end up with much more modification to the software than anticipated. Usually, inadequate due diligence during the WMS selection process is the culprit here.
Companies often grew up with fixed processes in their legacy WMS that they do not want to give up. The new WMS they selected may not support these processes the way they were being performed. So, they are either forced to change the process or modify the software to allow them to continue functioning as before. The more modifications, the more risk for delay and cost overruns, and the more risk for testing and interface issues. Going this route, well over 1,000 software modifications could be expected on some projects. Once software starts to be modified this heavily there is no path to upgrades, so they get stuck with a heavily customized WMS. Five years down the line, when the company is looking at an upgrade, it is faced with having to get an entirely new WMS.
A tough WMS start-up does not just happen in the two weeks prior to go-live. These scenarios are caused by inadequate pre-planning from the very beginning, and poor project management. Following are several critical requirements for a successful WMS installation:
- Detailed Definition of WMS Operations – A clear identification of the needs and wants from a WMS as determined from senior-level logistics executives in the company. This encompasses MHE selection and integration, ERP suitability, business projections, inventory allocation and flow strategies, system design criteria, and labor management and transportation management systems. A complete ROI analysis is prepared, comparing current operating procedure to the new, proposed WMS operating structure.
- Detailed Understanding of Best Processes – Too many supply chain executives are approaching warehouse management systems the wrong way. They are making the fundamental mistake of selecting a WMS, and expecting to change their processes to fit into it. Identifying a company's best processes, then finding a WMS that will support these processes, with minimal modifications, should be the initial central approach of any WMS solution. Approaching WMS design from a process perspective does not necessitate the implementation of any specific IT solution, but leaves the door open to any options to achieve the objectives of the distribution center's supply chain executives.
- Coordinated WMS Installation Plan – Typically, the WMS is being built while the MHE systems are being installed, and potentially when a new ERP is going in. The precise date coordination of equipment testing, system conversion and equipment start-up with the WMS build is critical to ensure the interlinked material handling systems in the new warehouse, and ERP, come up without interruptions. Any plan must allow for potential MHE and ERP delays, as well as potential time delays for unforeseen WMS modifications.
- WMS Change Management – Inadequate WMS change management can be isolated as a key reason why warehouses with newly implemented WMS are not operating at full capacity. Despite its importance, successful WMS change management strategy is seldom fully embraced by those responsible for the WMS installations. Before the WMS goes live, the coordination of equipment testing, system conversion and equipment start-up is critical to ensure the interlinked material handling systems come up without interruptions. Well before the go-live or switchover takes place, it is vitally important for the DC's staff to be fully trained in the operation of the WMS and the dozens of functions involved with the operation of the facility. This requires considerable coordination between equipment manufacturers and installers, the warehouse executives and operational personnel, and the company's executive management to ensure targeted actions are completed as specified in the WMS installation plan.
Implementing successful WMS strategies can be challenging, even for the most seasoned supply chain executives under the best of conditions. Working with system installers, IT technicians, equipment manufacturers, company executives and project consultants opens up a broad range of perspectives on every aspect of WMS installation. Their depth of experience can make the difference in selecting and managing a WMS that will meet your requirements for throughput and efficiency, minimize capital outlay and deliver the expected return on investment.
Jeffrey Graves is president of Sedlak Management Consultants and has been responsible for the conceptualization and development of more than 80 major projects exceeding 20 million square feet of space.