Issue Date: 19 March 2014
THE FUTURE OF WAREHOUSE MANAGEMENT
By Alex Mills, Sales & Marketing Director, Chess Logistics Technology
The warehouse management system (WMS) has been around for a long time and some businesses are using fourth or fifth generation applications. These systems have come a long way in the last 25 years and the latest versions far surpass their predecessors in terms of performance, sophistication and the value they can deliver to a business. And yet the market is slowing down.
Despite the widespread use of WMS there are still some fairly large, or fast growing, businesses out there that have not taken the plunge. Perhaps they have not been able to justify the investment or perhaps they are wary of the changes that might be required to their operations and the potential disruption that might ensue. But suppliers have become a lot more experienced in demonstrating the value of their offer and the performance improvements that can be made in terms of stock accuracy, labour performance, customer service and a whole host of other metrics.
Nor should the perceived disruption to ongoing operations be a barrier because the best WMS are designed to be implemented more easily and integrated with other applications more readily with nothing more than some straightforward configuration. Nevertheless, the full benefits of new systems are most readily realised when the business also seeks to introduce new ways of working with simplified (and hence more efficient and less expensive) processes. These additional benefits would actually accelerate the payback and return on investment.
But for many smaller businesses, including start-ups, there is a bigger barrier to adopting WMS: cost. The investment required for even a basic or entry level WMS is likely to be tens of thousands of pounds. This puts it beyond the reach of many small and medium sized businesses who instead struggle on with tried and tested but ultimately old-fashioned, inefficient and expensive manual warehouse processes managed at best with office applications such as spreadsheets.
Pretty much all businesses that sell or make something need to manage stock, whether this means simply knowing what is in the store room at the back of the shop or factory, or managing sales (including e-commerce) to customers. Across the board there is immense pressure to shorten lead times and reduce inventories to take cost out of the supply chain. Of course this can be achieved using manual processes but using a WMS makes it so much simpler with the prospect of improved accuracy, efficiency, automation and other benefits that add value and drive enhanced customer service.
Most of these businesses don’t have the technical infrastructure or the expertise to implement and operate WMS systems which no matter how well they are designed, configured and deployed require a degree of hands-on management.
So is there a solution? One possibility could be an online service that provides all of the core functions and features of a dedicated WMS but without the upfront costs and ongoing management burden. Instead the service would be provided online, hosted remotely and accessed by web browsers. There would be no upfront installation costs and the service would be paid for by monthly subscription, helping with cashflow and perhaps moving the investment from the balance sheet to the revenue account. The vendors would host the service and ensure its availability while any upgrades would be introduced seamlessly in the background so that users are always working with the latest version of the application. Some of the mainstream WMS suppliers have introduced such services, delivered as software as a service (SAAS) in “the cloud”, but their offerings tend to be aimed at replacing existing systems for their larger customers. Smaller businesses are still excluded by the perceived cost and complexity.
Although many conventional businesses could see the benefits of such cloud-based services it is likely that the biggest potential market will be among the growing number of businesses with an e-commerce presence. By their nature these businesses already operate online and would easily see the benefits of managing stock and fulfilment processes with a complementary facility that could be integrated with their existing operations. Access would be through normal desktop browsers and mobile devices such as smart phones so there would be little or no need to purchase additional hardware.
Such systems would ideally be designed to support some degree of bespoke configuration but on the basis that most warehouses generally operate using a core of relatively standardised processes this would not be the main selling point. Instead the accessibility to data, accuracy of stock control, and interfaces with e-commerce and other business systems would be the drivers for their adoption.