WMS Solutions

Many new phrases have become part of our everyday lingo as a result of the recession. One of my favorites is "Shovel Ready" It’s not nearly as cryptic or technical as "TARP" aka, Toxic Asset Relief Program, but it’s catchy! It’s a term that was used by President Obama in a Dec 7^th airing of Meet the Press when he talked about the kinds of projects that the stimulus bill would help most. It wasn’t long after that when we began to hear every local politician use the term on the nightly news! Congress made the term quasi official when it incorporated the spirit of the phrase in legislation that provided stimulus money to construction projects that could be started within 90 days of receiving the funds. Meaning only those projects that had already completed the necessary preparatory tasks  before the project could actually begin.  Being an system implementation project manager, I’ve developed affection for the term! 

Not all projects require a ‘shovel’ in the toolbox of things needed to get the job done, but all projects do indeed require a period of preparation before executing them.  So, I ask… is your WMS - Warehouse Management System implementation project "shovel ready"? Perhaps you’ve just purchased a new WMS system to replace a technologically outdated one or to replace a paper based system.  Either way, there are many things you can/should do to prepare for this life changing event!  One of the more fruitful yet least desirable tasks in preparing a warehouse for a new system is general housekeeping! 

• Got inventory that is aged or obsolete still gathering dust on your shelves? Write it off, toss it, donate it, recycle it, return it to the vendor, but by all means get rid of it! Got the same item located in seven different locations around the warehouse? Consolidate it to as few locations as practical.  
• How about inventory sitting at the ends of the aisles, or on the  office supply racks, or sitting on the floor of someone’s office? (really, I’ve seen this). Move it to where it should be - even if that means out the back door! 
• How about old torn and faded shelf/bin labels that are now unused residue of a re-slotting project? Get the goof-off out and remove them, as it’s likely you’ll be doing some bin re-labeling as part of your WMS Management System implementation.  
• Got any racking, shelving, material handling equipment like wobbly carts in need of repair? Do yourself a favor and include repairs as part of your ‘shovel ready’ preparations - it’ll be a visible demonstration of management’s commitment to change.
• Then there’s the data scrubbing task.  Everybody has ‘junk’ in their item files – discontinued or obsolete items, duplicate items, and even non-existent items! Have your IT folks clean the data ‘house’ before you convert. 

I could go on, but you get the idea. A ‘shovel ready’ WMS implementation will go a long way in smoothing the often bumpy road to a successful transition.

I spent some time last week with a HighJump Software customer who is considering further expansion of HighJump WMS solutions in their distribution centers. The customer is undertaking a massive ERP program that will allow the ERP system to be the IT backbone of their worldwide operations. They are also evaluating WMS solutions from this ERP provider.

In a meeting with senior IT leaders of this organization, I explained that I was highly confident the outcome of their pending due diligence regarding total cost of ownership (TCO). I contend that a best of breed solution will result in lower long term costs for this IT organization. Here are a few things that make me confident in my position:

Best in Class Functionality

While ERP-based WMS solutions have advanced significantly, they are limited to the “classical” warehouse operations including receiving, put-away, inventory control, picking and loading. Supply chain best practices such a labor management, slotting management, advanced wave planning, and last mile delivery are not traditionally supported with ERP WMS solutions. This means that when supply chain operations teams demand these capabilities, IT organizations are forced to address them with expensive customizations or bolt-on solutions with multiple integration touch points.

Upgrades

A WMS solution typically has a 10 year lifespan. In this lifespan a WMS could be upgraded five times. ERP upgrades are generally more expensive to upgrade because of the interdependencies between modules and re-application of source code customizations. Additionally, corporate IT governance and change management processes often make it difficult to upgrade a single module. Therefore the business users may be forced to wait for new features because of dependencies on modules that have nothing to do with distribution and logistics. View this video to learn more about HighJump’s approach to simplified upgrades.

Adaptability Tools

If your organization views distribution as a source of competitive advantage, then ERP-based WMS could be problematic. By definition, a competitive advantage must be unique to the organization. Business processes available in commercial off-the-shelf software packages (like ERP) therefore cannot contain business processes that are sources of competitive advantage.

To really ensure you have the flexibility to maintain and create further sources of advantage in your distribution operations, your supply chain logistics software must have the ability to create processes that are unique to your business.

HighJump has a unique approach that allows customers to define unique workflows that does does not involve any source code modifications. I am not aware of any ERP based WMS solutions with a similar architecture.

Without this architecture it can be very expensive for IT organization to deliver these workflow changes.

I recently received a direct mail marketing piece from a HighJump Software competitor. The mailer included a press release announcing that this company had “enhanced direct store delivery integration” and a one page datasheet which described a direct store delivery value chain as manufacturing + regional warehouse + mobile resources + retail shelf.

HighJump Software is the North American market leader for direct store delivery software solutions. If our primary competitor in the warehouse management systems market had encroached on our market position I needed to know. Perhaps they had acquired a route accounting solutions provider or acquired a provider of mobility solutions for mobile selling and delivery at the retail location. I consulted a trusted industry analyst who confirmed my suspicions… this was marketing hype and this company’s approach to direct store delivery still had significant “holes.”

Anyone familiar with the value chain of direct store delivery companies knows there are some specific complexities that must be addressed in order to have “comprehensive coverage across the extended supply chain.” Here are some things companies should consider when search for direct store delivery software solutions:

Certified Route Accounting Systems

Route Account Systems are unique software systems to manage the complexities of route-based sales and delivery. They typically manage the entire order-to-cash cycle and are geared toward the world where sales, inventory, and business metrics are all tied to a “route.” Although traditional ERP systems can be used for route accounting systems, they typically require customization to deal with complex pricing/promotion, cash settlement, truck inventory, and supplier e-commerce integration. To further understand the complexities in the beverage value chain read It is Hard for Anheuser-Busch to be Procter and Gamble.

Mobile Sales and Delivery Applications

Success or failure in a direct store delivery business is determined at the store shelf. Direct store delivery companies have large workforces of mobile sales and delivery professionals who need to be equipped with mobility technology for them to effectively accomplish their objectives. HighJump Software provides a comprehensive suite of mobility products which support industry best practices for order capture, goal-based selling, delivery tracking and cash settlement. For more details on these solutions read about our latest mobility suite product release HighJump Software Enhances Mobility Solutions With New Release of Mobile Route Sales and Delivery Software Suite.

Load Optimization

Optimized loading of side bay beverage trucks can be complex. While there are numerous packages for creating optimized load plans of traditional van trailers or flatbed trailers, optimizing for side bay beverage trucks is another animal. Additionally, this business problem becomes even more complex when you have a “peddle” environment (driver selling off truck without pre-sold orders) and driver preferences must be taken into account at the load and pallet level.

I think the moral of the story is “don’t believe the hype.” Direct store delivery software solutions are specialized for the unique needs of this industry. Direct store delivery software solutions deal with complexities of supplier integration, cash settlement and truck inventory. A WMS, TMS and retail workforce solution will not meet the needs of most food and beverage distributors in their direct store delivery operations.

Since launching our blog earlier this year, it’s been exciting to watch the number of visitors to the blog soar since its inception. As we close out 2009, it’s fitting to take a look back and see which posts were the most popular in terms of page views.

1. What Makes a Good Metric?

2. When Choosing Metrics, Start at the Top

3. Be Careful What You Ask For With ERP Based WMS Warehouse Management Systems

4. What Really is in a WMS to ERP interface?

5. When Metrics Turn Evil

6. My Friends Are Getting Old, Your WMS May Be Getting Old Too!

7. Is RFID Dead? Should it be?

8. Don’t Underestimate the Value of an Integrated Manufacturing and Warehouse Solution

9. Is SKU Reduction Good for Consumer Goods Supply Chains?

10. Another Logistics Service Provider Chooses HighJump

We’ve enjoyed providing insights on supply chain best practices and hearing your thoughts and opinions too. Here’s to more great conversation in 2010! 

When reviewing supply chain best practices, visibility to inventory levels throughout the different nodes in your supply chain should be one of the practices your company has embraced. This allows your company to be more nimble and still meet customer service levels when supply chain disruptions and exceptions occur.  RSM McGladrey recently released their 2009 Manufacturing and Wholesale Distribution Survey (registration required) which interviewed 923 leaders of United Sates manufacturing and wholesale distribution companies. Over 80% of the respondents held a C-Level position at their company. This report uncovered some interesting opportunities for improvement across the different functional areas of the company but I will focus on the supply chain and information technology responses.

An overall theme of the report is the global structure many of the respondents have established as two thirds of the companies source products internationally and 62% export products to at least one foreign market. However, the study notes:

           “Approximately 25 percent of companies indicate information flow

and inventory management information from their company’s supply chain consistently meets their business needs only some of the time or not at all.”

This is a fairly large percentage of companies that do not have the necessary inventory visibility to run their business. As has been stated many other places the largest cost in virtually every supply chain is the amount of working capital that is tied up in raw materials, work-in-process, and finished goods. If a company does not have good visibility to inventory levels, that generally drives up the amount of inventory required to continue to meet desired customer service levels. This is a clear area where modern supply chain logistics software can add significant value by providing more accurate and real-time visibility to inventory levels throughout the supply chain.

Another area of focus about the study was on the topic of information technology.  Just like in the area specific to supply chain, there are several areas for improvement:

• About one in five companies indicate current systems are not meeting reporting and data analysis needs
• A nearly identical number indicate current systems are not meeting operational and process improvement needs
• One in four companies indicate they do not have effective systems to communicate with customers and vendors

The above statistics show the rigidity of many legacy systems that hinder rather than enable process improvements and do not provide easy and effective ways to make data available for internal or external consumption. If your company is like the companies above, this provides a key list of criteria to evaluate solutions against when you are upgrading your information technology infrastructure to make sure you can meet the needs of today but easily adapt to the new requirements of tomorrow. 

When you hear a news story about a supply chain issue at your favorite retailer, you might think that it is not your problem, but you might want to reconsider.  According to the recent 2009 Global Retail Theft Barometer Report from the Center for Retail Research, United States retailers lost an astounding $42.2 billion last year due to retail crimes such as shoplifting, employee theft and supply chain fraud/errors.  The $42.2 billion breaks out into the following main categories:

• $18.7 billion for employee theft
• $15 billion for shoplifting
• $6.8 billion for supply chain errors or fraud

That $6.8 billion a year translates to over $70/year of additional cost the average family pays because your retailers do not have the appropriate technologies and processes to reduce these errors and catch instances of fraud.  All of the costs above translate into higher prices for consumers since the retailer needs to cover the costs to stay in business.  The report estimated that the cost of store crimes to consumers is over $435 for the past year.  These are meaningful amounts for most families and might warrant the question: what are you (retailer) doing to make your supply chain more secure from source to consumption at the retail shelf?

While I am sure many retailers are painfully aware of the statistics, these numbers should be a wake-up call for many retailers about the need for additional investment in track and trace technologies and supply chain logistics software. An important fact this study highlights is that not only is shoplifting a major issue but having your own employees steal from the company is a problem that needs a better solution than many retailers have today. With improved supply chain visibility and a movement toward real-time inventory availability on the store shelves, retailers will have better information to start uncovering areas that merit additional investigation.  At these levels of loss many companies will have a compelling ROI case.

Next time you speak to a friend who works at one of your favorite retailers, you might want to ask if they are investing enough in supply chain technology and visibility from store shelf to purchase. It could end-up saving you some money.

I know most sequels don’t live up to the original (Lord of the Rings: Return of the King, being a recent exception) but there was a lot of interest from the first post I thought it warranted another chapter.

One question I was asked was: what are the other game changers that Vitasek and Dittmen have identified?  You cannot have a top ten list and only talk about one.  While I encourage you to read the full report, the top ten are (in no particular order):

• Mandate for Measurement
• Supply Chain Collaboration
• Lean/Six Sigma Applied to Supply Chain
• Managing Complexity
• Supply Chain Technology
• Network Optimization
• Global Supply Chain Implications
• Sustainability
• Risk Management
• Managing out Costs and Working Capital

What struck me about several of these game changers is the need to embrace technology permeated throughout many of the themes.  Whether it is a collaborative planning and forecasting (CFPR) systems, interlinked execution software, network optimization tools or risk management models; there is a need to invest in supply chain logistics software.  Companies cannot be best in class and in some industries will not be able to survive without having a strong technology backbone that captures the necessary information and provides the tools to make important strategy decisions.

I encourage every company to take a hard look at their supply chain technology infrastructure and domain knowledge of these solutions so they can identify gaps and the action plan to address.  Then your company won’t get surprised like the orcs did when the king/economy returns… 

HighJump’s new VP of Sales, Jim Bork, was in my office the other day and asked me, “Why don’t more people implement our Yard Management solution?” After hearing a customer case study at Innovation 2009, HighJump’s annual user conference, where the customer claimed benefits from yard management in excess of $1 million, Jim wondered why all of our customers wouldn’t leverage this technology. As I started thinking about this question, I realized that maybe companies are looking at the wrong business case for yard management.

What is Yard Management?

Yard management is a kind of supply chain logistics software solution that tracks trailers and containers in a yard outside of a manufacturing facility, warehouse or distribution center. Using workflows, the software can support the following activities:

·         Driver check-in or check-out including collecting all relevant data from the driver and tying the arrival to a specific dock appointment

·         Optimized storage of trailers or container within the yard. Trailers with “hot” product can be moved directly to dock door locations. Other trailers can be dropped in the yard for unloading in the future.

·         Visibility to trailer aging is provided so companies do not incur demurrage charges for holding a trailer in the yard for excessive time periods. (Trailers and containers are typically owned by a 3^rd party and holding them for too long can trigger a charge called demurrage).

·         Optimized work instruction is provided to yard drivers for moving trailers to and from dock door locations.

Work Optimization – The Old Thinking

Yard management provides benefits on multiple levels, however, most supply chain management professionals first think of the work optimization as the primary benefit. Work can be optimized creating labor savings and more efficient flow of inventory. However, if you “run the numbers” on a typical yard, labor savings alone will not drive a strong ROI on a labor management system.

The Safe Thinking

Safety and security has become a primary concern for many businesses in light of focus on national security in many countries.  A yard management solution will also provide benefits in the area of safety and security. Yard management systems help facilitate a single point of entry and exit from the yard. Additionally, a yard management system will systematically collect information about specific loads that could be used to comply with internal or homeland security requirements. While safety and security are important it is difficult to build a hard business case around these factors.

Inventory Optimization – The New Thinking

Companies with the most successful yard management initiatives find ways to optimize inventory across the yard, manufacturing facility, and distribution center. As companies in the US and Western Europe are transitioning from manufacturing-centric to distribution-centric, inventory in the yard has become a serious issue. Import-centric supply chains leverage low cost of materials and product, but suffer from long lead times and product obsolescence. Often this results in large amount of inventory being held in containers in the yard.

The best way to build a business case for a yard management system is treat your yard like an inventory buffer. An inventory buffer in the yard will allow many companies to carry additional inventory without facility expansion in their distribution center.
An additional inventory buffer provides significant benefits in terms of supply demand matching and perfect order performance.

HighJump has one yard management customer who drops orders to the warehouse for fulfillment even when the expected inventory only exists in the yard. This means they must coordinate a trailer move of inventory to the dock door, cross dock the needed product, and marry it with the other product required for the customer’s order. Clearly, this logistics capability is something to build a business case around!

So before taking your yard management system business case to the corner office, ensure you have considered all aspects of intelligent inventory positioning and supply chain management best practices that can be gained from a yard management system.

Since wine and spirits distributor Empire Merchants implemented HighJump Warehouse Advantage, HighJump's WMS warehouse management system, in its distribution center, the company has seen improvements across its operations. The HighJump solution has enabled Empire to implement just-in-time (JIT) replenishment, ousting its previous paper-based replenishment process and virtually eliminating wait times in its pick lines.

“We couldn’t have picked a better software package and implementation partner than HighJump Warehouse Advantage and CIBER.” says Tony Magliocco, COO, Empire Merchants. “The software is working as the project team designed it. As a result, our fill rates have increased and our distribution costs have decreased dramatically.”

Read the full story here.

Built with supply chain management best practices in mind, HighJump's supply chain logistics software helps companies optimize complicated distribution operations.
 

This year’s conference features nine customer case study presentations, giving customers an opportunity to share the cool things they’re doing with their HighJump solutions.  John B. Sanfilippo and Sons (JBSS), the makers of Fisher Nuts, presented this afternoon on how they use the HighJump WMS warehouse management system to manage its manufacturing operations and allergen and contamination prevention.

Keeping the nuts from comingling is serious business, and the HighJump WMS enables JBSS to enforce a strict allergen control program, including put away logic by nut type.  For example, the system doesn’t allow a worker to put away any nut that isn’t an almond on top of an almond.  These specific rules prevent contamination of allergens.

The system also enables work order processing and picking in the company’s manufacturing operations.  The system tracks the nuts all the way from the supplier through the manufacturing and distribution process.

Thomas Kirkham, Director of Systems Implementations, John B. Sanfilippo & Sons, Inc, highlighted the following benefits from implementing HighJump Warehouse Advantage.

·         Reduced physical inventories from quarterly to annually

·         Inventory accuracy over 99% - up from 80%

·         Service levels up from 90% to 99.5%

·         Picking efficiency increased 50% and rising

·         Inventory levels at record lows

·         Audit scores have increased

·         Food safety has become a selling point

 Watch this video to see the HighJump WMS in action at JBSS.

As the war rages between best-of-breed ISVs such as ourselves and the ERP companies, a key battle is always how the two systems communicate?  I have heard many corporate CIOs dictate to their team that they will deploy the ERP’s WMS because it is “pre-integrated.”  While this is more or less true depending on the ERP company, it is also true for companies such as ourselves that also have pre-built integration to many of the leading ERP solutions. In addition you don’t run the risk of ending up in ‘vendor hell’ (a topic for another day).

The question that one of our readers asked (we do listen and appreciate the feedback) was:  how do you typically interface to various ERP systems?  I don’t have the space to dive deep into the technical minutia, but let’s cover the basics.  While there is other optional information the ERP generally must pass down to a WMS solutions:  item master information, inbound ASNs, sale orders, kits, etc.  The WMS in turn passes up:  receipt information, shipped orders, inventory adjustments and inventory snapshots. 

This information can be passed any number of ways.  In the past flat-file interfaces and table based interfaces were common.  While these are still the right choices depending on the system requirements we are seeing more and more XML interfaces and companies leveraging our SOA architecture for web-services communications.  There is no wrong answer if you can move the information back-and-forth but for our pre-built integration we build according to the ERP preferred transport protocol.  Rather than relying on a 3^rd party EAI solution, we build the interfaces directly to ensure optimal performance for high through-put facilities.

The next time your CIO pushes a unilateral strategy take the time to explore if there are any real differences in the integrations and speak to Ray Wang at Forrester Research about getting trapped in ‘vendor hell’.

There are hundreds of metrics that you could use to manage your supply chain, but what are the right ones for your company?  When deciding what metrics to use, it is important that you take a step back and look at your corporate strategy and corresponding corporate metrics.  To select metrics for your WMS solutions or supplier enablement in a vacuum would be a common mistake.  While it is quite likely the metrics you select will be valid, it is also likely they won’t help the company advance its corporate strategy.

The need for company specific metrics is apparent after looking at two different retailers.   As we all know Wal-Mart has invested heavily to develop a world class supply chain.  They attempt to optimize every facet of the supply chain in attempt to bring the lowest price to the consumer.  They have been pioneers in supply chain innovation as evidenced by their previous RFID project and now their product sustainability initiative.  The majority of Wal-Mart’s supply chain metrics should measure cost reduction/cost containment.  Successful results in these metrics reinforce Wal-Mart’s corporate goal of providing the lowest competitive pricing to their customers. 

In sharp contrast to this is Zara, a European fashion retailer.  Zara strives to have their fingers on the pulse of what trends/fashion are selling well in a given locale and then design, manufacture, and deliver to the stores in time to take advantage of the current market trends.  For Zara’s supply chain, speed and time-to-market are paramount.  In many instances they might be willing to go with a higher cost option if it means they can capitalize on a current market trend.  The supply chain best practices that Zara uses are likely to be very different than Wal-Mart’s and the corresponding metrics should be different as well.

When deploying new metrics, significant time and investment are potentially needed to capture the data, develop effective dashboards, and communicate metric goals to the team.  Hopefully the above illustrates the importance of taking time to analyze your corporate strategy and validating that your supply chain metrics and incentives positively reinforce the company goals.

At HighJump Software we are working on a new performance dashboard for our WMS Warehouse Management System.  This is a very exciting project which will allow customers to view key metrics throughout their distribution center operations.  While ensuring the dashboards are esthetically pleasing is a key element of the process, the more important part is determining what are the right metrics to include in each dashboard.  In addition to relying on industry associations such as the Supply Chain Council and the Warehousing Education and Research Council, we evaluate potential metrics according to the “SMART” criteria:

S – Specific

Is the metric detailed enough to be meaningful?  A metric like ‘Outbound Order Progress’ sounds interesting, but probably lacks the specificity to be useful.  Metrics like order pick accuracy or number of cases shipped are more specific and tangible.

M – Measurable

There are a lot of interesting metrics, especially in supply chain, but many companies do not have the data to actually measure the metric.  Total landed cost is one that comes to mind as challenging for many companies.  Before selecting a set of metrics, make sure you validate your supply chain management software solutions have the data needed to calculate the metric. 

A – Actionable

If the user looks at a metric and finds it interesting but is unable to take action to improve the metric, then it will not be very useful.  When a metric falls below a goal or a certain tolerance, the user of the metric should be able to determine the root cause and take corrective action to improve the metric.

R- Relevant

The metric has to be relevant to the user.  It would not be relevant to display outbound order metrics to the inbound receiving manager.  This is why it is important to have multiple dashboards so that only relevant metrics are presented to the user.  While there will be some overlapping metrics between the DC manager dashboard and the customer dashboard, it is important that only metrics that are relevant are displayed to the targeted user. 

T – Time Based

The metric perfect order fulfillment sounds like a good metric, but if I just said the value was 98% that would prompt a series of questions:  for what time period, is it trending up or down, how it compares to last year at this time, etc.  Metrics need to have a specific timeframe associated with them and depending on the metric that timeframe could be hours, days, weeks, months, etc. 

Hopefully this is helpful when you evaluate what metrics to use in your supply chain operations.  More to come as our dashboard product nears completion.

A company that is a manufacturer and distributor of baked goods recently put out an RFP for WMS Warehouse Management System.  During the process HighJump Software and a few other best of breed WMS providers were considered.  What became apparent during the sales process was the company needed more than just a WMS system.  Expiration date and batch tracking are critical with bakery products and having their manufacturing process inter-linked with the distribution processes was vital to prevent inventory waste.

Many other systems would optimize the processes and inventory within the warehouse but this could result in an overall sub-optimal result by not taking into account raw material inventory and finished goods at the manufacturing sites.  They needed a solution that could optimize their manufacturing processes while providing inventory visibility from raw materials to finished goods.  HighJump Software is one of the few software providers that can provide a Manufacturing Execution System Software and WMS Management built on the same platform.  This allows companies to have inventory visibility throughout their supply chain.

In the end, I am happy to say the company saw the value of an integrated solution and selected HighJump Software.

Image via Flickr user loop_oh

• Improve throughput
• Reduce new employee training time
• Improve safety with hands-free and eyes-free picking
• Leverage configurable, voice-enabled picking options

Voice for Direct Store Delivery Software
You can use voice recognition software in conjunction with HighJump Load Management to manage picking of pallets. Here’s how it works:

• HighJump Load Management optimizes the load for the vehicle and creates the pick instructions. It passes the pick instructions to the handheld device which converts it to voice commands.
• The picker interacts with the software to record any changes to the picks.
• The completed transactions flow back to HighJump Load Management for completion.

As an avid Minnesota Timberwolves fan I was very excited when we exercised the demon of Kevin McHale from the organization.  While I know he had his heart in the right place, the organization could not move forward as long as he had some connection with the team.  This change is complemented by the Timberwolves adding Ricky Rubio and Jonny Flynn in last night’s draft.  These new players should provide a solid core along with Big Al and Kevin Love to hopefully challenge the Western super powers in the years to come.

The past several years there has been little to cheer about, but that did not mean we should completely start over.  We had some good pieces to the puzzle and needed to complement them rather than completely start from scratch. 

This is an approach more companies should consider with their supply chain logistics software.  Too often companies go with a big-bang approach that completely rips out existing WMS Solutions and discards several processes that were of strategic importance.  This causes them to spend more money to duplicate what they already had to take advantage of new capabilities in the latest release.  A well architected software product should allow for step-wise changes that allow you to keep the key pieces of functionality you have configured but augment them with the latest R&D efforts from your supply chain vendor.  HighJump Software merge tools allows customer to take new workflows from the latest release and deploy to a customer environment with little or no impact on the other existing workflows.  In addition to a quick time to value, the risk of these step-wise changes is substantially easier to manage.

If you don’t know which processes are your Al Jefferson or Kevin Love, I suggest you take the time to understand what is really strategic and leads to differentiation within your current application stack. Then look to add other processes in a step-wise fashion to build a championship supply chain.

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