Integrated Systems, Open Source Code, Strong ROIThe question that has plagued vendors since they marketed the first warehouse management system (WMS): What do users want? Integrated systems, for starters.
“I think companies have been caught by having 50 disparate systems that don't talk to one another,” said Susan Rider, consultant of Rider & Associates. “I think you are seeing a reinvention of the WMS software company. They're no longer focusing on just WMS; they are becoming much broader, with visibility, shipping, track and trace, labor management tools, etc.”
Chris Barnes, partner of MercerBarnes Associates, a supply chain counseling firm, agreed that vendors are trying to become more of a one-stop shop, either through software development or through acquisitions. For example, some vendors are getting involved in voice technology, which has been a separate application in the past. He says that users are asking: What else am I going to get besides a WMS? Do they have a labor system, parcel shipping, in-line scales, etc.? “I see that as a big driver, especially if you are planning to replace your WMS,” said Barnes. As software companies develop these additional capabilities, he predicted “a lot of people will be buying those systems.”
John Hill, principal of supply chain consulting firm ESYNC, said that the Material Handling Industry of America (MHIA) is changing the name of its WMS-oriented group, the Logistics Execution Systems Association (LESA), to the Supply Chain Execution Systems and Technology Group.
He said this change is noteworthy because it illustrates that anyone who wants to be in the WMS business a few years down the road has got to have more than WMS. They have to bring labor management, transportation management, and some type of visibility product that enables both local and remote access to what's going on in the warehouse.
Jeff Mueller, vice president and IT practice leader of Sedlak, said, “I do not believe that people should be intimidated by trying to interface two packages from two different vendors. Even with all the systems from the same vendor, there are issues to resolve and things that you need to work through to get these systems to interface properly.”
Mueller sees growing interest in return on investment during WMS evaluations. He said that in the late 1990s and early 2000s, companies were more likely to take the approach that they had to have a WMS, and establishing an ROI up front wasn't as important.
“Companies aren't leaving ROI up for chance anymore,” he said, noting that some companies he works with decide not to implement a new system after the ROI analysis.
Something else users are looking for is open source code, said Rider. “I think they're getting tired of depending on a vendor, and they want to be self-sufficient if they have to.”
Rider also notes that users are getting smarter regarding modifications. A growing number are making sure that vendors agree to maintain modifications and make them upgradable in future releases.
Potential Feature UpgradesThere are few new functions or features on the horizon. Mueller said the recent enhancements that vendors have released are primarily client-specific features that have been added to the main package.
That doesn't mean there aren't several potential areas for improvement, however. Vendors need to focus on problem management, said Rider. If a personal computer has a problem, an alert pops up and explains the error. “That's what the WMS companies have to focus on,” she said. “When a system goes down or there's a problem, companies can't afford two to three hours of downtime. They have to have the smarts behind the software that says, 'Here's what the problem is, and here's what you need to do to fix it.'”
Barnes said that improved reporting features are needed. “All of the information and data is there, the question is just how do I present it to my operations management group to better manage my warehouse.”
Mueller said he expected Web-based capabilities to have taken off a little more than they have at this point, but he still sees the trend continuing in that direction.
“The ASP [application service provider] model went away for a while, but I anticipate that model coming back eventually,” he added.
Looking a little further in the future, Rider mentioned one manager she met who was able to use his PDA to actually view the conveyor system in his facility via cameras along the line and access the real-time data on the conveyor throughput from the control system. She suggests that warehouse management systems may eventually offer similar capabilities.
Capturing New MarketsThe WMS market has been flat recently, with much of the activity coming in upgrades and replacement of older systems with new applications from the same vendor. Hill said that while he has been doing some preliminary WMS requirement specifications for clients, companies have been far more active on the transportation management side and radio frequency identification (RFID) readiness assessment. WMS is in the background, which Hill describes as a disappointment.
By his calculation, only about 20% of the potential market has been tapped. “Everything I read says the market's flat, it's dying, it's matured,” he said. “And yet I'm constantly amazed when I go to companies that are not $100 million [in revenue a year] but $1 billion who aren't doing anything. I think the challenge for the industry is image and visibility and a restatement of the value proposition. The message is not getting to those people who need it the most.”
One reason for this is that in the past, WMS salespeople really knew warehousing, were technically oriented, and were application savvy, Hill said. Now, some “don't know a warehouse from an outhouse,” he said.
That could account for much of the current activity focusing on upgrades rather than first-time buyers. “It's a lot easier for the less sophisticated and less experienced salesperson to get a few more bucks out of existing clients than to plow new ground,” Hill said.
Where do ERP vendors fit in?For the past several years, enterprise resource planning (ERP) vendors have been trying to make inroads into the WMS arena. So far, they haven't been extremely successful in that venture.
Mueller simply doesn't believe that ERP vendors are “there” yet. “We think that if your distribution center is more than pallet-in/pallet-out, you clearly are a candidate for a full WMS,” he said.
In order to really get market share, ERP vendors need to hire people that know distribution, said Rider. “I think that's their biggest fault. They don't have people that know the industry, so [the software] isn't written and adapted for the warehouse and it's not efficient [nor] effective,” she said.
Echoing Barnes' prediction from last year, Hill said he still expects to see Microsoft enter the WMS arena. He notes that Microsoft has installed its small business package (for companies under $100 million annually) and is “attempting to do some WMS-like things.”
“It's very primitive, but oftentimes primitive is enough for someone that doesn't have anything,” said Hill.
Hill said that a company like Microsoft would have a great advantage in the “soft underbelly of the market, which is largely untapped.” Smaller companies have the same kinds of problems as their larger peers but can't afford to spend a million dollars on a WMS.
This article originally appeared in the Jan. 1, 2005, issue of “ What's Working in WMS,” the monthly newsletter for warehouse management systems users. Additional information on the newsletter, the companion reference binder and WMS buyers' guide is available at the publication Web site, www.DistributionGroup.com, or by phoning the publisher at 212-228-0246.
Additional contacts for this article are: Chris Barnes of MercerBarnes Associates, 770-331-3908; John Hill, principal at ESYNC, 831-722-9806; Jeff Mueller, vice president and IT practice leader of Sedlak, 330-908-2227; and Susan Rider of Rider & Associates, 270-324-4762.
SidebarThere are a few WMS-related items to keep in mind when considering adding radio frequency identification (RFID) to your IT mix:
- Information flow. One of the benefits of RFID is the amount of information that it can carry. It's possible to “insulate” the WMS from RFID by filtering the data and providing the WMS with the same information it's currently receiving from bar code scanning, voice entry, or whatever you are using in your warehouse, said John Hill of ESYNC. On the other hand, if you can take advantage of that additional data, you may be able to achieve additional improvements and efficiencies.
- Investment in RFID. Many vendors are claiming that they offer or plan to offer RFID capabilities in their WMS package, but not all these claims can be believed. Chris Barnes, of MercerBarnes Associates, advises looking at the research and development dollars being spent. “It's one thing to have a PowerPoint presentation where the vendor's CEO talks about RFID, but it's another thing to see the company actually spending money in the area.”
- Changing standards. If you are buying a WMS with RFID features, make sure you are getting free upgrades, says Susan Rider, of Rider & Associates. “The technology is changing so rapidly, there's going to be a lot of upgrades and enhancements.” In fact, ABI Research predicts that Wal-Mart and the Department of Defense have underestimated the standstill in creating RFID standards caused by Intermec's copyright claims, which could drag out the final standard even further.