What Makes Supply Chain Companies Start Looking for a New WMS?

Q&A with Datex Blog

From time to time, we will post a blog that provides answers to some of the questions Datex team members are most frequently asked.  Feel free to email us, call us or send us suggestions for our blog via web chat.  We would love to hear from you!

Most 3PLs who contact Datex are replacing a current inventory management system or warehouse management system.  Sometimes it is software applications that they have had for many years.  

3PLs frequently act as experts and advisors on transportation insight, logistic solutions and technology to their customers in order to produce cost savings so having top notch technology is of vital importance.

Here are some of the reasons why 3PLs begin the search for a new WMS:

1. 3PLs Using Legacy Warehouse Management Systems that are Outdated for Today’s Needs

My how things have changed!  You may be tired of hearing this, but there has been more change to the supply chain in the past 3-5 years than in the previous 20 years.  Because consumers buy goods online and have so many ways to retrieve their purchases, the supply chain has had to change.

Now 3PLs and supply chain businesses have to process exponentially larger numbers of transactions if they deal with the consumer end of the supply chain.  Think of it this way, let’s say there are 200 items on one pallet. Before “the Amazon effect”, the goods would be kept together so there would be one transaction for the whole pallet of goods.  Now, there may be 200 separate and unique transactions, many happening at the same time or within minutes of each other. Traditionally, legacy WMS systems were designed to handle fewer transactions that were pallet or case based-not thousands of individual transactions that require goods to be picked, handled and shipped on an “each” basis.

Today, 3PLs need to have software that is highly flexible, customizable, feature-rich and easy to use to meet the needs of all of their customers.  Many companies buy new WMS in order to handle fulfillment customers or meet other specific client needs.

2. 3PLs are Tired of Leaving Money on the Table

Here are some of the challenges 3PLs tell us waste time, labor and money:

• Labor management: poor labor practices and tracking results in inefficient operations and a less productive workforce
• Inability to track and trace inventory to process product recalls efficiently wastes valuable time and labor dollars
• Lack of real time business intelligence, reporting and dashboard tools-critical for timely, effective decision making
• Inability to schedule dock door appointments increases wasted time and frustration

Not all 3PL WMS software makes billing easy or enables 3PLs to bill according to the contract terms they set up for their customers.  This not only wastes valuable time and causes a lot of stress but also results in errors, lost revenue and other issues.

Some 3PL WMS systems do not even handle anniversary billing, a basic need of third party logistics providers.  Having the ability to customize billing to meet the requirements of EVERY CUSTOMER is a business essential for every 3PL.

4. Reduced Ability to Win and Retain 3PL Customers

Many times we have been told by 3PLs who are searching for new WMS that they were doing so to win an important new client.   In the course of courting new business, prospective clients told the 3PL that they were not interested in dealing with a provider that did not keep pace with information technology and considered this one of their foremost criteria in selecting a vendor.

5. Costly Upgrades, Development and Maintenance Costs for Existing 3PL WMS Software

6. Lack of Information Visibility for 3PL Customers

Today, nearly all the 3PL prospective and existing clients with which we interact use web portals in order to provide a higher level and accessibility of information for better decision making.

7. Current 3PL WMS Systems Cannot be Integrated to Other Technology

As a technology vendor, we have seen a noticeable increase in the number of integrations required for even smaller 3PL businesses.  Today, supply chain businesses are more interconnected.  They are better able to “talk to each other”, to process vital information quickly across the world and in real time.

A 3PL company that relies on a WMS system that is not integration-friendly or challenged puts its operations at a disadvantage.

Conclusion:

According to the April 2017  “Annual Warehouse and Distribution Center (DC) Equipment Survey” by Peerless Research Group, the increase in spending on material handling systems and software such as WMS and ERP is likely related to “the unrelenting growth in e-commerce and the fulfillment pressures that exerts on operations”.

In 2017, 30% of the MMH survey respondents reported their intention to invest in software such as WMS, WCS and ERP over the next 18 months, up 5% from 2016.  Issues such as cost containment, trading partner collaboration, smaller, more frequent orders (omnichannel fulfillment), cycle times, and labor pressures were some of the reasons related to the purchases.

Today, 3PLs and other supply chain businesses rely on WMS to connect with other mission critical systems and provide real time, accurate information about operations.

Although the technology vendor does not necessary have to have received awards and recognition, the WMS must use cutting edge  information technology tools that are adaptable and which can be updated and enable 3PL provider users to meet customer requirements, especially for fast-paced omnichannel fulfillment and shopping cart operations.