by This article will be of assistance to those of you who are planning to implement a Warehouse Management System (WMS) for your warehouse.
Whether you are implementing a WMS for the first time or upgrading from an existing system, understanding how a WMS works, what criteria to consider, and how to choose the one that best suits your needs is critical.
As a result, you should read this article all the way to the end for a comprehensive guide on how to select the best WMS for your warehouse.
But, before we get into this important discussion, make sure you’ve also joined the scmguide telegram channel because I’ll be discussing many more articles about supply chain management in this blog. As a result, make certain that you are always receiving updates.
Table of Contents
How does a WMS Work?
Warehouse Management System (WMS), also known as software, is a collection of predefined processes that allow you to authorize and monitor your warehouse operations.
The process itself begins with the arrival of goods or materials to the warehouse and ends when the goods are given permission to be moved.
Inventory management, auditing, and retrieval are all part of the warehouse management process.
So, in order to have the most visibility into your inventory at all times and locations (whether in a facility or on shipment), the Warehouse Management System (WMS) is the primary process you should use.
In terms of warehouse management processes, this will entail managing supply chain operations as well as various types of warehouses, ranging from wholesalers or manufacturers to warehouses. They are then routed to a distribution center or retailer.
WMS categorization in a nutshell
The Warehouse Management System (WMS) can be divided into several variations and implementation methods.
Of course, each type will differ depending on the size and nature of the organization.
This WMS can function as a standalone module or as part of a larger Enterprise Resource Planning (ERP) system.
WMS can also differ from one another in terms of complexity.
Unlike small businesses, which typically use hard copy spreadsheet files or documents, larger businesses typically use more complex WMS software.
Some Warehouse Management Systems (WMS) are even tailored to the organization’s size and status.
Vendors create various versions of WMS products that can be tailored to any size organization.
Some organizations are considering developing their WMS from the ground up.
However, it would be preferable if they implemented a WMS from a reputable vendor.
Why?
Because they can tailor the Warehouse Management System (WMS) to each organization’s specific needs and requirements.
Vendors can effectively add customization to their WMS.
This will undoubtedly save you more time and money than developing everything from scratch.
When compared to retailers who only sell physical stores, the customization added to each WMS will undoubtedly be more varied, especially for eCommerce.
Similarly, depending on the type of item you are selling, the design and configuration of the WMS may differ.
A WMS for a wholesale chain store, for example, would be very different from what a sports equipment retailer would require.
Warehouse Management Systems (WMS) work in a unique and specialized manner that is distinct from traditional warehouse operations.
Here’s a step-by-step explanation of how a Warehouse Management System (WMS) works and what it includes.
Shipping & receiving
When we consider the warehouse’s primary function, we can see that it is, of course, a place to store goods.
As a result, the Warehouse Management System (WMS )’s primary function is to track every item that enters the warehouse.
Every item received by the warehouse must be updated in the system and its arrival time must be tracked.
This includes following the goods as they leave the warehouse for delivery.
The number of items you receive and the number of items you will send must be carefully tracked, measured, and recorded in the system.
Inventory Management System
Inventory Management System is closely related with Warehouse Management System (WMS).
However, this does not imply that the two systems are identical.
An Inventory Management System (IMS) is in charge of controlling inventory from the same warehouse and can use the same functions as before.
IMS, for example, can make use of processes like barcodes and space tracking.
An IMS can be a part of a WMS, but not vice versa.
Kitting and order taking
Warehouse service is sometimes more than just storing goods.
There are numerous other important processes to consider as part of a warehouse work system.
WMS can also be used for order management and fulfillment, which is critical for the creation and tracking of pick-ups, as well as the packing of orders.
Warehouse staff management
Consider warehouse staff management to be one of the primary processes in a Warehouse Management System (WMS).
Why?
Because one of the factors influencing your warehouse management costs is staff management.
If warehouse staff management can be effectively monitored and inspected, it can lead to a better understanding of the performance of the people who work in the warehouse.
As a result, overall warehouse costs can be significantly reduced.
Reporting
Reporting is unquestionably an important aspect of any business.
The same is true for warehousing.
Real-time reporting can be a driving factor in your warehouse’s effective performance.
Through digitizing business operations, as well as comprehensive reporting as one of your digital WMS features, you can gain many insights that can help you improve your current warehouse performance.
Warehouse managers will now be able to view and monitor a large amount of data in graphical form.
This insight can have a direct impact on their decision-making based on the information they have about how effectively the warehouse they lead can manage to keep all factors prospective.
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What are the selection criteria for WMS software?
There is clear evidence of poor Warehouse Management System (WMS) implementation.
Forty trucks parked on the side of the road, waiting for their turn to enter the warehouse, is an indication of poor WMS implementation. Do you agree?
When things don’t go as planned or the system fails, the truck must wait. That, of course, comes at a cost.
A warehouse management system (WMS) is a piece of software that allows for the centralized management of a warehouse operation.
WMS tracks inventory in real time and is intended to increase warehouse efficiency and effectiveness while providing managers and others with increased visibility.
WMS can be a valuable (if not essential) tool for many businesses that operate warehouses.
However, it should be noted that attempting to take one step forward can actually result in two steps back if proper due diligence is not performed during WMS implementation.
Warehouse Management Systems (WMS) are frequently used by businesses for 15 years or more.
WMS is a very strategic investment; it is not a solution that can be installed and then changed in a few years.
This is a significant shift. In this regard, you should consider your long-term goals and the big picture.
When comparing WMS to a calculator, if you run a warehouse with inventory, WMS is the most basic tool you’ll need.
WMS will improve material and product movement, accuracy and timeliness, tracking and reporting, flexibility, order fulfillment, and control, among many other advantages.
WMS has too much value for you to pass up.
Companies that refuse to implement WMS will fall behind. They will eventually be unable to meet the expectations of their partners and customers.
And those companies will soon be scrambling to catch up.
As a result, a hasty decision to implement a solution will be made.
And hasty solutions will yield unsatisfactory results. It will be ineffective.
For those of you who are considering implementing a WMS for the first time or changing your current system, here are six key points to consider during the selection and implementation process.
Usability
When considering a system, the usability of a WMS becomes critical. Especially if your company has an aging warehouse workforce that lacks adequate technology skills.
Inquire with the vendor whether the WMS is person-centered or not.
Check that the WMS does not complicate simple tasks, necessitating more training time.
This is true not only for warehouse employees, but also for their managers.
They will not be able to get a good picture of how effective warehouse operations are if the WMS you implement is difficult for them to use.
They will have no idea how your team was deployed or whether the ongoing operation was successful or not.
Even if you choose the most user-friendly WMS system, warehouse workers may not immediately adopt it.
As a result, it is critical that you take the time to teach them how the new system differs from the old one. Demonstrate how the WMS will facilitate their work.
Operation complexity
Warehouse operations can vary greatly between organizations.
It is critical to ensure that the WMS you select is capable of meeting your specific requirements.
A robust WMS is required for high throughput, multichannel operations with multiple fetch modes, variable requests, and hundreds of thousands of SKUs, for example.
You must be aware of every aspect of your business.
It is important to understand that existing WMS vendors may not design their systems with your organization’s specific processes or needs in mind.
Some of the processes in the warehouse are truly unique to each organization.
It is critical that you challenge your internal team to collaborate with the WMS vendor to identify these one-of-a-kind activities.
A “general” WMS should be adequate for roughly 70% of businesses. However, the remaining 30% of operations will necessitate a more powerful system.
For example, some businesses must determine whether their WMS vendor can support high-performance, high-volume transaction processing.
When you start moving more than 50,000 order lines per day, you’re already dealing with high-performance demands.
Once the software has been developed to support the processing of high volume transactions, you will require the underlying technology.
Speed can fail a WMS implementation
Moving too quickly creates more problems with WMS implementation than any other mistake.
It is a big mistake to rush the process.
The company determined that the system had to be installed by a certain date. And the deadlines compel them to act quickly. Do you have any experience with this situation?
In some cases, organizational leadership has committed to spending a significant amount of money on WMS with the expectation of seeing results soon.
They want to get it done as soon as possible and see the benefits as soon as possible.
As a result, managing expectations is one of the most important aspects of a WMS implementation project.
You should be aware that selecting the system that best meets your needs can take at least four to six months.
And another six to twelve months to put it into action.
Otherwise, you will almost certainly be unprepared for a change in your operations.
Longer delays, disorganization, and dissatisfaction may ensue as a result of the hasty implementation of this WMS.
The problem is that hurried implementation almost always results in a disaster that cannot be avoided.
Even when a WMS is expertly managed, implementing a new WMS does not always yield immediate benefits.
You’ll need to spend some time getting to know the new system and identifying and troubleshooting issues that arose during its initial deployment.
Patience is essential in this situation.
Making the system a highly productive environment takes time.
Don’t ignore the data
You may be satisfied with the addition of WMS to your arsenal.
However, you must keep in mind that no matter how good your WMS is, it will be useless if you have flaws in how you handle the primary data sources that the WMS uses.
In this case, mastering data management is critical.
How is the data’s quality?
Do you have a system in place to ensure that the quality of your data continues to improve?
The quality of your data will be critical to the value you can derive from this WMS solution.
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The role of cost
Working with companies that prioritize price or return on investment as the most important factor in a WMS selection process is reasonable to doubt.
Yes, cost is an issue. The problem, however, is that costs are frequently overemphasized.
Technology is not a driver in this case; rather, it is an enabler.
This enables you to do some things better, which will undoubtedly benefit your bottom line. These advantages, however, are indirect rather than direct.
It’s not a good idea to focus on financial metrics when it comes to WMS.
If you place too much emphasis on cost, it can be disastrous for those of you scouring the WMS market for the best one to implement.
Unfortunately, this is a difficult thing to see.
Cost control and management are important, but focusing on the strategic business case for a WMS is even more critical.
Costs can also be deceiving.
The initial cost of implementing a WMS is a single fee. Subscribing to the system and its services, on the other hand, is an additional cost that you must bear.
As a result, the initial cost of the WMS and the total cost will be significantly different.
Because of the rise of cloud-based platforms, these cost barriers have become less significant for smaller and mid-sized businesses in recent years.
Consider the future
Because WMS is usually a long-term commitment, you must be careful not to choose one based solely on what you need right now, because that moment will pass quickly.
Consider the customers you will serve in the next five to ten years.
The supply chains you are mostly implementing today are the work of those who came before you.
You should look for a solution that not only meets your current needs, but also allows you to grow and meet future ones.
The goal is not to predict where this technology will go, but to consider where your customers’ needs and your company’s demands are likely to go.
Even if you live on the current horizon, you must consider what is beyond it.
You must be prepared for this.
Organizations that plan ahead 10 to 15 years will not be caught off guard by change.
How do I choose the right WMS?
You can improve order fulfillment, increase inventory visibility, and automate data collection with the right solution.
Follow these simple steps to select the best WMS for your needs, and you’ll soon have optimal warehouse operations.
Warehouse Management Systems (WMS) can process data quickly and coordinate warehouse movement.
WMS can also generate reports and handle high volume transactions, such as those found in e-commerce operations.
Other possible advantages of implementing a WMS include:
- Efficient and effective workforce management
- Stock visibility and traceability
- Accurate inventory count
- Fewer pick-up errors
- Fewer returns
- Accurate reporting
- Improved responsiveness
- Remote data visibility
- Automatic replenishment
- Improved customer service
- Minimize physical documents
Before you begin implementing a WMS, you must first believe that you will realize significant business benefits.
Such systems necessitate capital investment and operational costs; however, the real “cost” is the drive, enthusiasm, and commitment required from the entire warehousing team and senior management to ensure that the system is properly set up, used properly, and optimized on a regular basis.
WMS is not a fix-all solution. It’s also more than an inventory control system and data collection tool.
WMS is a system that helps to automate as many of your warehousing operations as possible.
IT projects, like any other business investment, should be justified on the same basis.
A WMS is primarily a tactical execution system, making it easier to justify than many other IT projects.
It is a critical component of strategic business improvement, but it is still tactical in nature.
When it comes time to invest in a WMS, these seven steps can assist you in selecting the best solution for your warehouse operations.
Calculate return on investment (ROI)
The justification process is critical because it assists you in determining a budget for your project.
When selecting a supplier, it will also assist you in focusing on the functions you must have rather than what you simply want.
The following are the primary areas to consider:
- The ability of WMS to improve stock accuracy by reducing errors, providing real-time data, and enabling continuous inventory counts.
- The potential for increased productivity and cost savings by making better use of labor, equipment, and space.
- The requirement for improved traceability. WMS can provide two-way traceability almost as an afterthought.
- Better customer service as a result of improved overall warehouse control and pick-up and delivery accuracy.
The more daily transactions and warehouse locations there are, such as moving and picking up pallets, the greater the potential ROI and justification.
Furthermore, warehouses use expensive equipment, and optimizing that equipment can result in significant savings—sometimes to the point where less equipment is required to be purchased and less staff is required to be hired.
Vendors’ pricing methods can be divided into four categories:
- License. The user—that is, the user of the PC or radio data terminal—is usually charged for the software license required to run the system. Rather than purchasing the system outright, some vendors now offer alternative payment models, such as paying by transaction and/or paying monthly.
- The cost of professional services includes project management, training, and post-implementation support.
- Development costs include non-package requirements such as interfaces to third-party systems.
- The support fee is typically an annual fee based on licensing and development fees. Service coverage and costs differ significantly from one supplier to the next.
Check that your supplier’s bid price is close to the bid price in each of these categories.
Inquire as to which prices are fixed and which are variable.
Hidden costs, such as travel expenses and project management time, should be considered.
Compile all of these costs into a spreadsheet. Show the initial costs, followed by the costs for years one through five, along with the total accumulated.
The results may surprise you.
Consider hardware and infrastructure costs, which must be considered in terms of project budget and ROI but are frequently managed separately, with interdependence on the main project.
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Define the process
Modern warehouse management systems (WMS) are highly configurable—typically by you, the end user—and should be able to work in almost any type of warehousing environment.
Creating a lengthy and detailed Tender Invitation document (or RFP) used to be an important part of the WMS selection process.
This was due to the limited functionality of most systems at the time.
Tender Invitations have the disadvantage of not taking into account the company’s future needs, and they are frequently overly prescriptive.
Another disadvantage is that many WMS providers rarely respond to tender invitations.
They consume a significant amount of time and resources, which vendors may prefer to devote to other projects under their control.
The ITT (Tender Invitation) template can be downloaded from the Internet; however, many of these documents are or were originally prepared by WMS vendors and will therefore favor their products.
As a result, most WMS vendors will be skeptical of the document.
Understand and analyze your existing system
Analyze your enterprise resource planning or business system’s existing WMS module first.
This selection is subject to the same due diligence as any other system selection. However, minor flaws in functionality can usually be fixed by lowering the risk of systems not interacting with each other reliably and accurately.
Similarly, if your warehouse is highly automated (e.g., with cranes, conveyors, or sorting systems), you may want to focus on the WMS provided by equipment automation systems companies.
This is commonly referred to as a warehouse control system (WCS).
Evaluate each vendor’s in-house development capabilities
Due to the packaged nature of the WMS market, in-house development is uncommon.
A typical WMS provider may amortize its ongoing development costs across more than 100 clients.
These same 100 customers serve as a valuable and thorough testing ground for the product in question.
If your overall warehouse requirements are highly specialized or require special integration with existing in-house systems, in-house development may be appropriate.
Request information
Prepare a brief Request for Information (RFI) document, no more than a few pages in length.
Describe your company, future business direction, warehouse, and warehouse plans in this document.
Then, in general, explain what you hope to accomplish with WMS.
You have completed the warehouse operational specifications for capital approval at this point.
This specification’s key elements, such as the number of cargo spaces, backup locations, pick-up locations, and pick-up and packing station details, serve as an excellent foundation for an RFI.
User types such as administrative users, forklift drivers, pickers, and packers are especially important.
Give guidance on the number of transactions per day (including receipts, putaways, picks, and submissions) and highlight any significant peaks throughout the day, week, or month.
Don’t try to explain how the system is supposed to work—in fact, being too specific at this stage can be dangerous, because there may be faster, better, and less expensive ways to do things.
Part of the selection process entails investigating how potential suppliers can assist you in this regard.
You can seek the assistance of a consultant if necessary.
In the RFI, request that the vendor specify the cost budget and timeframe for implementation.
Request information from suppliers, such as:
- Company history
- Financial history and status
- Number of clients using their current WMS product
- Owners of intellectual property and WMS source code
- Client list
- Daily rates and support fees
- Coverage support
- Expansion plan
- Track record
Send this RFI to six to ten suppliers at first.
Concentrate on suppliers with market experience, especially if you are a third-party logistics provider.
WMS vendors with no prior experience in this industry are unlikely to have the functionality and expertise to assist you.
Concentrate on suppliers who have a track record of connecting to whatever business or ERP system you currently use.
At this point, you must decide whether you will purchase the software and hardware outright or rent the software and run it on a third-party server platform.
Software-as-a-Service (SaaS) (SaaS) WMS is an Internet-based application that is developed, hosted, and managed on secure servers by third-party software providers.
Vendors lease systems to a variety of clients.
These clients, in turn, choose the various software modules they require and pay for them as they use them.
The following are the benefits of a SaaS system:
- Lower entrance fee
- Reduce startup costs
- Instant boost
- User-based innovation
- Ability to turn on and off as needed—to run temporary warehouse operations, for example.
A SaaS system will appeal to startups, small and medium-sized businesses, and large corporations looking for a temporary solution.
Potential drawbacks of SaaS WMS include the possibility of poor Internet connections between companies and data security concerns.
Make a short list
Make a list of three to five WMS providers.
Price isn’t the most important criterion at this point, but it can help you rule out suppliers who are out of your price range.
Arrange for an informal meeting with the supplier.
This will help you understand their company—how professional they are, how attentive they are to your needs, and how well they respond to your questions.
Before you begin the detailed demonstration stage, conduct a quick check on each supplier. This will allow you to reject suppliers who are unsuitable at an early stage.
Interviewing at least six reference clients, preferably from a longer list, is a good way to accomplish this.
Unless you already have contact with their clients, all of these calls should be made with the supplier’s knowledge.
Request that the chosen supplier provide you with a customized demonstration.
Encourage them to concentrate on what you believe is critical to your operation, such as recharging a pick face or kitting and assembly.
Request an overview of their company, products, and people at some point during the selection process. In addition, request an overview of their product strategy.
Visit their main office to learn more about their culture, management, and teamwork.
It is critical to find “people” who are a good fit for any organization you choose.
It’s a good idea to ask the supplier why they believe you should select them for your project.
Client referral visits are frequently at the heart of supplier selection.
Make certain that you are given a choice of clients rather than just one.
Also, ensure that their size and process are comparable to yours—or, preferably, slightly larger and more complex.
It’s also a good time to define and price any functional gaps that have been identified.
Request that suppliers provide accurate project costs, identifying any variable costs.
This is where the contacts you’ve made with the supplier’s reference clients will come in handy, as you’ll be able to talk to them about how well the supplier is performing within the budget and time frame you’ve set.
Make your final choice
Choose the best warehouse management system (WMS) provider for your needs.
Make use of a decision matrix that takes into account all of the criteria you’ve considered.
Conclusion
WMS can be extremely beneficial in the management of your warehouse operations. Which, in the end, will assist your company in achieving the profitability you desire.
Understanding how a WMS works, the criteria to consider when selecting a WMS, and the steps for selecting the most appropriate WMS for your warehouse, as outlined above, will make it easier for you to find the WMS that best meets your needs. your specific requirements
I hope you find it useful!
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