What is Driving the Trend to Purchase New Warehouse Management Systems (WMS)?

Part One: WMS Technical Obsolescence and Inability to Meet E-Commerce & Omnichannel Needs

For years, warehouse and 3PL operators processed goods by the pallet.  With today’s huge push towards e-commerce transactions, third party logistics providers, warehouse and distribution center operators need to be able to pick, process and ship goods individually based on the orders they receive.

More Warehouse Workers Needed for E-Commerce & D2C Operations

According to the annual DC operations survey conducted by Peerless Research, there is a trend towards more employees per warehouse.  This is certainly understandable for warehouse operators that are handling, storing and processing inventory that ends up as direct-to-consumer (D2C) orders.

Today, warehouse operations tend to occur at a much faster rate, involve picking and processing individual items instead of larger amounts of goods on pallets and necessitate more labor to get the job done.

With the shortage in the supply chain logistics labor pool, 3PLs and warehouse operators have turned to warehouse management systems to help improve labor productivity and efficiency.

This can help to reduce overall labor cost and aids in optimizing warehouse worker labor resources.

Aging Legacy WMS Unable to Meet E-Commerce and Omnichannel Fulfillment Needs

Did you know that the typical lifespan of a warehouse management system is 15+ years?   Think of all the ways the world and technology have changed in the past 15 years!  If a WMS software vendor has not continually invested in innovation and in upgrading its technology, infrastructure and functionality, 3PLs and warehouse operators may find their companies hamstrung, unable to meet the needs of today’s customers.

Whether a company has been relying on an older homegrown, proprietary WMS or a warehouse management system that has been heavily customized to meet their needs, the system may suffer from technical obsolescence and not be capable of upgrade.  Sometimes companies elect to customize WMS solutions in a manner that prohibits future upgrades.  This reduces the company to one option:  having to maintain the system on their own, instead of depending upon the software vendor for innovation.

When software vendors develop, maintain and upgrade warehouse management systems, they evaluate and consider not just what companies need today, but also what they will need in the future.  Software developers continually examine industry best practices, trends and the needs of their current and prospective clients.  By doing this, they learn what is needed today and in the future.

If a company has a proprietary WMS or heavily customized system, it probably is not likely that they invest in the research and development needed for the future of their warehouse management system.  This can put their business at a distinct disadvantage when competing for new business and in retaining their customers.

Warehouse management systems that were developed using older technology and programming are costly, labor intensive and time consuming to maintain.  Finding employees and technical assistance for older technologies can also be a problem.  This can end up wasting a great deal of time and money without providing the advantage of new, faster more agile technology.  This also can reduce the responsiveness of the warehouse operation to properly meet their customers’ needs.  Using a WMS that utilizes newer cutting-edge technology including operating systems, databases and mobile apps as well as client and mobile devices usually enables companies to operate in a more fluid, cost effective manner.

Omnichannel & E-Commerce Operations Require Greater Flexibility & Sophisticated Functionality

To meet omnichannel and e-commerce needs, the warehouse management software must be able to handle, store, process and ship individual items, not just goods by the pallet.  Today, even industries prone to handling and storing palletized goods, including pharmaceuticals and refrigerated food products are having to deal with the direct-to-consumer trend.

Here are some of the main issues that are causing companies to select a new WMS:

  • High order volume
  • Proliferation of SKUs
  • Increased order complexity
  • Reduced order cycle times
  • Increased need for more rapid completion of processes and workflows in a WMS
  • Need to be able to dynamically pick each item in an optimized manner
  • Need to continually optimize tasks in order to reduce costs, increase labor productivity and handle the increased velocity
  • Requirement for more flexible, deep replenishment
  • Need to interface with automated picking technologies including pick-to-light, put wall systems and voice picking
  • Ability to handle parcel manifesting and shipping capabilities

Real Time Inventory Visibility and Enhanced Inventory Control/Inventory Management

Nowadays, consumers order online from a variety of channels and need to be able to see if the goods they are trying to purchase are available.  Having the ability to provide inventory visibility in real time by looking across a network of distribution centers, third party logistics provider warehouses and stores is critical to ensuring a satisfying customer experience.

Multi-site inventory visibility and operations enables optimization of inventory, proper purchasing, replenishment and inventory management.

Without real time accurate inventory visibility, retailers miss out on sales and are unable to provide goods to consumers whenever, wherever needed.  Because the buying and delivery process sets the standard against which consumers evaluate and value the brands they purchase, this can have an extremely detrimental impact and have long lasting effects on brands and retailers.

Conclusion:

Although most warehouses today use warehouse management systems, there is a significant difference between using a legacy system with outdated functionality and a WMS that can handle the complexity of high volume, complex orders and reduced cycle times encountered today.  With the increased pace of warehouse operations geared to service the needs of consumers, 3PLs and warehouse operators are increasingly electing to upgrade their technology.

In selecting new warehouse management software, companies are purchasing systems that readily integrate with other technologies, provide real time, accurate inventory visibility and facilitate the fast-paced handling of inventory across networks of distribution centers, warehouses and third party logistics warehouse locations.

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