Top Ten Tips on choosing the right WMS
Just because you are building a warehouse does not necessarily mean that you will need a Warehouse Management System. To embark on a WMS project you need to be certain that you are going to achieve significant business benefits. Of course such systems need capital investment, plus there are some running costs involved. However, the main 'cost' is the drive, enthusiasm, and commitment needed from the entire warehousing team and senior management to ensure the system is set up correctly, used properly and regularly optimised.
Have a clear long term vision of what your warehouse could look like in the future, this will help you ensure you choose a solution that is sufficiently scale-able, flexible and functional.
If your ERP / business system already has a WMS then you should have a close look at that WMS first. Similarly if your warehouse is highly automated, with cranes, conveyors or sortation systems then you may wish to focus on the WMS provided by the automation systems company. In-house WMS development is sometimes viable if the overall requirements are particularly specialised or require very specialised integration with existing in-house systems. However, unless your needs are very special and specific (and most times they are not), go for a packaged, configurable solution - you will not know what your future needs are likely to be so there is little point in writing long and complex tender documents.
IT projects arguably should be justified on the same basis as any other business investment. A WMS is very much a tactical 'execution' system and is therefore a lot easier to justify than many IT projects. The key areas to consider are: the potential for a WMS to give you improved stock accuracy, the potential for increased productivity and cost savings, the need for improved traceability, improved customer and client service. Only you can work out the return on investment in these areas. By all means get consultants and system suppliers to help you, but at the end of the day only you know how much room there is for improvement using the business 'tool' that a WMS provides.
The costs of a WMS can be broken up into four main components:
a. Licences - the software licence needed to run the system. Typically this is charged by 'user' - i.e. PC user or radio data terminal user although different models are now being offered, including paying by transaction and /or paying monthly rather than outright.
b. Professional services, the costs for project management, training and go live support.
c. Development costs - software development costs for requirements not catered for in the package, including interfaces to third party systems.
d. Support costs - this is typically an annual cost based on licence costs and often development costs; look at this cost carefully, the scope of service and cost varies significantly from supplier to supplier.
Ensure that the suppliers you approach give you costs for the all the above. Ask them to indicate which prices are firm and which variable. Watch out for hidden costs such as travel costs, travel time and project management time. Take hardware and infrastructure costs into account. Summarise all the costs in a spreadsheet, showing the initial cost and then costs for years 1 to 5 with accumulated totals. You might be surprised by the results!
A 3PL is looking after other people's stock and therefore he MUST know accurately how much he has in stock and where it is. If he does not he will lose the customer and may be financially liable for the lost stock. For this reason a good WMS, well implemented and well supported (both internally and externally) is normally essential. In turn labour productivity, warehouse utilisation and efficient equipment performance is of great interest - all benefits go straight to the bottom line. These factors are of course important for an in-house manufacturing or distribution operation but are often lower on the list of business priorities. The 3PL will normally be working to a Service Level Agreement (SLA) with his client. Again a WMS is normally an essential tool in monitoring performance against this SLA.
A recommended way of proceeding is as follows:
a. Firstly prepare a short RFI document (request for information); this should typically be no more than a few pages long.
b. Your next stage is to produce a short list of 3 to 5 suppliers. It is then worth getting the suppliers to visit you for an informal meeting - it will help you get a feel of their company - how professional are their people, how carefully do they listen to your needs and respond to your needs, how well do they answer your questions?
c. Before you get into the detailed demonstration stage do a little more checking on each of the suppliers by telephone interview at least six reference sites provided by the supplier.
d. Get the short listed suppliers to provide you with a tailored demonstration.
e. Get the supplier(s) to take you to a reference site, if possible.
f. You should now be in a good position to shorten the list to 2- 3 suppliers and often have a preferred supplier.
g. If you have identified any gaps in functionality then get these specified and costed. The suppliers should then be asked to provide an accurate project cost, clearly identifying any variable costs.
It is relatively easy to identify potential suppliers, word of mouth and industry contacts are a good source, as are trade exhibitions. Search engine searches will also give you some names. Choose a WMS supplier who can demonstrate significant track record in your type of warehousing operation.
During the selection process, ask them how many sites they have using their current WMS product and get them to take you to customer sites to see the WMS in action, make sure you talk to the users and the management team at each site.
At some time during the selection process you should also get potential suppliers to give you an overview of their company, products and people and also an overview of their strategy - both in terms of company and product. Also visit their head office to get a better understanding of their culture, management and team working. It is very important to get a good 'people' fit with any organisation you select. It is always worth asking the suppliers why they think they should be selected for your project.
Look at the size of the supplier and the size of their customers to ensure that you are dealing with a company that is used to dealing with companies of your size. Look at support cover, development plans, and track record.
Make sure you identify a project champion in your organisation, build a team around them and get them to own the WMS.
Make sure you involve your IT team in ensuring the WMS vendor can work with you to provide solid interfaces with your other business systems - but do not let them dominate the project - a WMS is a tactical operational solution and as such in most cases the project should be run by logistics people.