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Five Dirty Secrets of Warehouse Management Systems

20 April 2018

Secrets are everywhere…even where you least expect to find them. The warehouse management system (WMS) industry is no exception. As you evaluate warehouse management software to manage your distribution operations, you’ll want to arm yourself with powerful background information and purposeful questions to ensure a solid purchasing decision.

This article will uncover five of the biggest secrets of many warehouse management systems out there - information you should know before you make a purchasing decision. Uncovering these hidden truths will equip you with crucial considerations for your evaluation, such as system personalization, WMS upgrades, total cost of ownership (TCO) and cloud deployment options - enabling you to select a system that will fulfil your requirements today and for years to come… at a low total cost of ownership.

 1.  Many WMS will hinder your ability to personalize the system for your requirements.

You need a warehouse management system (WMS) that will fit not only your current business requirements, but also allow you adjust rapidly and inexpensively to changing customer requirements. Standard WMS functionality incorporating industry best practices may be able to cover up to 80 percent of your requirements, but it’s the other 20 percent that encompasses the unique workflows that can truly differentiate your operations from the competition.

A WMS that enables agile response to change can be a competitive weapon. The problem is that most WMS take a flawed approach to addressing change. These systems feature a wealth of functionality option switches in an effort to keep up with their customers’ changing needs. The problem is, there’s no way to predict at the time of implementation all the features and modifications that will need to be made to the WMS in the future. In these switch-based systems, anything beyond the functionality offered with these switches must be incorporated with the addition of expensive custom coding, most often performed by the vendor. This code is added during the original system implementation to bridge the gap between the standard product and your company’s unique needs.

In an effort to control costs, many companies forego making necessary changes (as well as upgrading, discussed in secret #2), settling for the standard functionality of their WMS. They opt not to incorporate innovative processes that could help them differentiate their business.

Your order profile, business strategy and unplanned events will change, requiring fast action if you are to succeed. When you need to change your WMS, you need a system agile enough to incorporate your new processes—quickly and cost-effectively.

What you can do:

·         Ask your vendor to give detailed demonstrations of how changes are made in the system.

·         Talk to customer references to find out how quickly they can respond to new requirements and how expensive these changes were. Ask how much change orders have added to the price of implementation and how much they cost on a recurring basis.

·         Find a consultant who is experienced in business evaluation and system selection. These firms provide strong guidance when it comes to performing operational assessments and carrying out vendor searches.

Most best-of-breed WMS providers force you to pay for system changes THREE TIMES OVER:

• When existing system options are not enough, an initial change order is issued, at considerable expense, to modify source code.

• Increases are applied to annual maintenance charges based on ‘support’ of change orders.

• Source code modifications must be “reapplied” to the new environment: upgrading requires additional cost  to have configurations brought forward by the vendor.

Over time, this results in unmanageable complexity and substantial on-going expense.

2.  Upgrading some warehouse management systems can be a nightmare.

Many conventional warehouse management systems contain a shortcoming in their design in that many changes can only be accomplished through switches. Change requests that go beyond these switches require custom coding, which doesn’t carry forward with an upgrade. As mentioned in secret #1, this custom code is added during the original system implementation to bridge the gap between the standard product and your company’s unique needs. As further needs develop, more code is added. In some situations, this reaches an extreme where so many changes have been made that any new modifications become a major undertaking, effectively reducing or even paralyzing the system’s ability to be altered at all.

Upgrading this type of warehouse management system with additional code-level changes leads to a potentially disastrous spiral of exorbitant costs, extended timeframes and system and operational risk. All previous code-based modifications have to be re-applied when the system is upgraded. For you this could mean a never-ending process resulting in loss of competitive advantage and possibly irreparable damage to key customer relationships. At some point it could become difficult to recognize any return on investment because the upgrade process contains nothing but negative outcomes.

What you can do:

·         Evaluate the total cost of ownership for the system over several years and track this metric with vendor’s customers. Have users been able to make system changes themselves or was the vendor always involved?

·         Ask vendors for customer references to learn about the time, cost and overall approach to upgrades. Reference site questions should include:

·         How many upgrades of your WMS have you done?

·         How long did the upgrade(s) take?

·         How expensive was the upgrade?

·         Were previous enhancements made specifically for your business brought forward in the upgrade or did they need to be reapplied?

3.  Traditional WMS software is bloated with features you’ll probably never even use… and you’ll have to maintain all of it.

Traditional enterprise software delivery models add new features into ever-growing “master” applications. Most systems have been developed over at least 10 years and nearly every customer requested feature has been added to the product and is enabled by sets of interdependent switches. This causes the code base to grow increasingly bloated and adds risk and additional complexity to software maintenance - like upgrades - and makes it difficult to make even small adjustments to the software to fit your business.

Lengthy functionality delivery timeframes and protracted, expensive upgrades aren’t the richest soil in which to grow supply chain innovation. Make sure you ask each WMS vendor about their method of delivering new functionality and workflows to customers.

An “app store”-like delivery model for supply chain management software is now available which allows you to select and add only the new functionality your business needs, which reduces complexity and risk and streamlines system support.

4.  Some warehouse management software vendors’ idea of “cloud WMS” may not match yours.

Cloud computing for WMS means that your WMS vendor will host the software application and hardware infrastructure for you as an on-demand, scalable and elastic service. There is no hardware to purchase or maintain, patches and upgrades are done automatically, implementation is dramatically simplified, no capital expenditure is required and there is less risk for you. You access the WMS via a Web browser and gain the functional benefits of a new WMS without the up-front costs and IT drain. A vendor with a cloud deployment alternative gives you more options with which to build the most effective, low-cost-of-ownership WMS for your needs.

If you’re interested in cloud-based deployment, it is important to understand how vendor offerings for cloud WMS differ, as well as how the technology choices cloud WMS vendors themselves have made could potentially impact both the short and long-term success of your WMS project.

Some WMS vendors that tout a cloud-based WMS may not actually have a full-featured cloud WMS. In many situations what they are offering is “WMS-lite.” Many vendors have built “low-end” systems as a way to enter the cloud market quickly without spending a lot of time designing a fully functional WMS. These systems usually lack advanced features that are required for more complex facilities. Even a less complex or smaller distribution centre will require capabilities that are normally part of a full-featured WMS, and at the very least will want to partner with a WMS vendor that can supply more complex warehouse management capabilities as your business grows and changes.

What you can do:

·         Ask vendors how their cloud WMS functionality compares to on-premise solutions

·         Will you be able to take advantage of new functionality or add-on modules that could enhance the value you receive from your WMS?

·         Ask to see performance data on communications between the user interface and/or RF devices and back-end servers to find out if the system has been optimized for the cloud

·         Make sure you will be able to personalize the WMS to meet the needs of your specific distribution centre(s) as well as how the cloud solution can scale with your business

5.  Some supply chain software vendors are dividing their time and resources among multiple WMS.

Has the vendor been demonstrating a single WMS product as part of the solution? Many companies evaluating systems go through the exercise of documenting their functional requirements across the business, gain budget approval and support from key decision-makers in their organization and send a request for proposal (RFP) to several vendors, most of whom have been in the industry for more than 10 years. Almost all vendors answer that their systems are capable of providing all the functionality requested. And yet...there are still horror stories of cost overruns and failed projects. Why?

Many companies wind up in this situation because they do not require vendors to give responses based on a single, deliverable WMS. The vendor might indicate that it meets all requirements, yet its response mixes functionality from several WMS—which doesn’t paint an accurate picture of what can actually be implemented. Many vendors have multiple warehouse management software solutions due to acquisition/consolidation.

What you can do:

·         Ask how many WMS platforms are being supported and maintained, and how the vendor’s R&D dollars are invested and divided among their products. You will want to make sure your selected WMS is a primary beneficiary of company investment and is a living, breathing product with consistent development.

·         Demand the vendor stick with one specific WMS throughout the evaluation cycle—for RFP responses, demonstrations and customer references given. Vendors with multiple systems may respond positively for RFP questions and give demonstrations based on functionality contained in different systems. You don’t want to receive an RFP response that looks favourable given your requirements only to discover later you’d need to buy three separate WMS to actually have the right breadth.

·         Ask about the vendor’s license-to-services ratio to see if you’re buying a solid software product or simply services to tweak your system continually over the long term.

·         It is also important to consider the cost-to-benefit ratio: buying a WMS is not about gaining ROI over 18 months. It is about total cost of ownership over a multi-year period. The biggest cost of a system is likely not purchasing the software or even the services to initially implement it. It is usually forced upgrades and making ongoing changes, which can often surpass the cost of license fees.

Conclusion

Purchasing a WMS is an important decision for your business, and WMS software vendors are able to demonstrate and drive ROI more effectively than many other software solutions. But be conscious of these five secrets harboured by many warehouse management systems as you go through your evaluation, and demand clarity and detail from the vendors you evaluate. Only then can you be confident you have selected a system that will fulfill your requirements today and for years to come…at a low total cost of ownership.


Contributed by: HighJump Software Inc & iWMS Supply Chain Software (the SA channel partner for HighJump).