I was talking with a friend the other day and the topic of Facebook came up. This friend had joined Facebook but become disengaged quickly saying he just didn’t “get it.” Rather than embracing the technology, engaging with friends and trying to figure out why millions of people are flocking to social networking, he threw his hands in the error in disgust. It reminded me of my grandmother trying to program the VCR “back in the day.” My friend is inflexible, unable to change, and unable to support the new process of communication.
Many warehouse management systems suffer from these same challenges – inflexible, unable to change and unable to support new communication processes.
Many enterprises implemented WMS Warehouse Management Systems in the late 1990’s and early 2000’s to support their growing operations. While the initial value and return on investment of these systems has been achieved, the current state of these systems is a concern for many IT and supply chain executives.
Changing the system to meet new operational needs.
Your distribution and supply chain operations are probably significantly different than when you initially deployed your WMS warehouse management system. Product mix changes, increases in volumes, changes in material handling equipment and new distribution strategies can have significant impact on warehouse operations. Many warehouse management systems provide you with just two options to address these business changes: pay the software vendor to the customize the software for your new process, or develop a workaround outside of the system. Neither approach is optimal. Obtaining approval for software change orders is increasingly challenging as IT organizations are forced to look at every opportunity for cost reduction. Enabling processes with system workarounds results in quality issues which impact customer satisfaction. Many companies operating aging WMS technologies suffer from these challenges.
Relatively high total cost of ownership.
It is widely known that WMS warehouse management systems are one of the most customized software applications in the enterprise. This is especially true of warehouse management systems implemented five to ten years ago. Not only are many companies dependent on the vendor to make ongoing system changes, the cost of system upgrades is extraordinarily high. Relative to other enterprise applications, aging WMS platforms have high upgrade costs because source code modifications must be reapplied to future versions. This is often a risky process which includes significant consulting hours from the software vendor. Additionally, WMS warehouse management systems purchased five to 10 years ago was significantly more expensive than WMS warehouse management systems purchased today. Because annual maintenance and support fees are typically based on a percentage of the license fees, many enterprises with aging WMS technologies are paying significantly higher fees than enterprises who recently implemented modern technology platforms. It just doesn’t make sense, why should you pay more for an older platform that doesn’t fit your business?
Uncertainty about your vendor’s strategy for the product line.
Many WMS Warehouse Management Systems implemented five to ten years ago were provided by vendors who are no longer market leaders in WMS. Many of these vendors have been acquired by financially focused firms who collect software maintenance and support fees without re-investing in product development and customer service. In many cases, it is unclear how long the vendor will provide software updates and technical support on these product lines. Each time there is an ownership change with these software vendors, the viability of the product line you use is called into question. Can you trust your distribution operations to a software vendor with questionable long term viability?
Do you have these symptoms of an aging WMS?
It is possible to move from aging WMS platforms to modern technology platforms with a simplified upgrade path. In many cases the annual cost of the new software is equal to the current costs of the aging platform.
I will not replace my friend because he is aging, but you might want to consider replacing your aging WMS!
Image via Flickr user kid_entropy
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