Buying a warehouse management system (WMS) for a large business can be costly and worrisome, not least because the fallout from a disastrous installation could cripple a company and its stock market rating. A recent example was a household name retailer whose new WMS left many of its shops short of stock and a multi-million pound headache.
It could be said that headaches begin over trying to decide the best solution from a bewildering array of WMS suppliers, some of whom are pure software vendors while others are automated hardware and WMS contractors.
The following few points may help ease the selection process. The most single important factor to look for is a track record in your particular areas, advises John Harper, sales applications manager for Dematic. This should ensure that the product will fit the business requirements. Other points to consider are:
Talk to your peers in other companies and attend industry forums and conferences. The feedback could be of inestimable value. Fix the price against headline functional requirements from the outset. Will the supplier fix the price for both licence and deployment costs? The larger players are typically hard to pin down on deployment costs at the outset and cost control can be difficult thereafter. The fact is that cost overruns and busting of time scales are not uncommon.
Look at the ongoing revenue costs. Some suppliers charge annual licence fees for software, but more important is the need for top line operational support, with options based on hours of cover required.
What is the supplier’s approach to upgrades and support? Will they force you to upgrade once their current software version comes out of support? This could be costly.
If you cannot find an exact match to your business needs, don’t be afraid of customisation but look to a supplier with a strong track record in this area.
The choice of suppliers is eased when there is a need to invest in automated hardware as well. Perceived wisdom suggests giving priority to a hardware/software house. At the least you should purchase a ‘WCS’-level system from the automation supplier. This guarantees that the automation will be optimised by the software, which is critical. Other advantages by choosing from the more advanced automation suppliers, says John Harper, is that by offering full WMS-level software as well they bequeath the benefits of a one-stop shop approach. These include initial purchase cost which is almost always cheaper overall, and as regards ongoing revenue cost there is only one support package instead of two.
The single WMS approach is more likely to succeed, or succeed more quickly, as integration complexity is reduced. But if one chooses to go down the separate WMS and WCS route then choose a WMS supplier with experience of integration to an underlying WCS. Many do not understand this sufficiently well or lack experience.
Daunting though implementing a WMS may seem to some it would be dangerous to dismiss the great benefits that can accrue from a well-chosen and implemented WMS. Even parts of them, like a stock forecasting program, can yield stunningly short payback periods, like the Slimstock package which paid for itself in two weeks when used by a fertiliser company.
Cost savings will, of course, depend on many factors, especially the efficiency of the operation before the introduction of the WMS. Dematic says that on average in non-automated scenarios they achieve an ROI of between 20% and 30% per annum. If automation solutions are added this return can be much higher. In a recent example for a large fashion retailer they introduced a major goods-to-man picking solution which paid for itself in 15 months, based on labour savings, despite the relatively high capital cost of such installations.
Nowadays, serious failures are uncommon but to minimise such risks clients should look at their input during the initial workshop phase. If the project scope changes significantly during the implementation phase, it is likely that the phase will need to be extended, a process that must be handled pragmatically by both customer and supplier. After going live, manage the ramp-up phase in a controlled manner. Beware also of outsourcing solutions abroad that have not been developed and tested in the UK.
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