WMS on a budget
A number of vendors have begun offering low-cost warehouse management systems. But do they have the right stuff to do the job?
By James Aaron Cooke -- Logistics Management, 6/1/1999
The small in-plant warehouse facilities of Twin Laboratories in American Fork, Utah, seem an unlikely place to see a full-blown warehouse management system (WMS) in action. But Twin Labs, which makes such products as Nature's Herbs and Alvita Teas, installed Sonica Software Corp.'s WMS to oversee the warehouse attached to its plant late last year. That software, which interfaces with Twin Labs' other computer systems, helps the company track its manufacturing processes, says Kollin Holmgren, an information technology specialist in distribution and manufacturing at the facility. "For the price," he says, "we couldn't beat it.''
Not so long ago, Twin Labs and companies like it couldn't find a warehouse management system for under half a million dollars. Although large Fortune 500 companies generally could recoup the software's high cost through improved inventory management and operating efficiencies, the steep price of WMS packages kept them out of the hands of most smaller companies.
But the times, as Bob Dylan might croon, they are a-changing. A dozen or so vendors have brought to the market low-cost packages that offer logistics managers for small companies the same software benefits the big guys enjoy. Today, software suppliers are offering warehouse management solutions in the vicinity of $100,000. "The price performance curve is working in favor of the customer,'' confirms Steve Simmerman, vice president of sales and marketing for Sonica Software Corp.
Strong WMS Demand
WMS software oversees operations in a warehouse or distribution center, including such tasks as receiving, putaway, inventory control, order picking, and shipping. The market for the software has boomed in the past couple of years. Automation Research Corp., a market research firm based in Dedham, Mass., estimates that the global market for WMS software and services reached $600 million last year. If materials-handling and automatic data-capture equipment such as bar-code-scanning terminals were included, that total would soar to $900 million.
Given the size of the market, it's no surprise that vendors are eyeing it with increased interest. Steve Banker, a senior supply chain analyst with Automation Research, says about 100 viable WMS vendors across the globe today are competing to become the shipper's "warehouse solution." About 20 of those providers have begun offering low-cost systems. Banker says these low-priced applications are designed for warehouses of under 100,000 square feet. "They're suited to warehouses that don't do value-added services," he adds, "such as a warehouse attached to a factory, a warehouse that's pallet in and pallet out.''
The emergence of lower-priced software also is connected to the growing adoption of the Windows NT operating system in corporate computing. A decade ago, WMS packages were written for larger mid-range computers that used such operating systems as UNIX and OS-400. Then Microsoft Corp. developed the Windows NT operating system to promote distributed computing applications--programs that can be installed on one computer and accessed by others. Today, Windows NT makes it possible for smaller companies to run personal computers in networks that rival the performance of yesterday's host computer systems at a fraction of the cost.
Because Windows NT is a more affordable operating system for small and mid-sized businesses, it's no surprise that computer programmers have begun writing low-cost software using that platform. "With the advent of the [Windows] NT technology, we have a whole bunch of garage-shop WMS vendors,'' observes Tony Ross, a manager in the Irving, Texas-based office of the consulting firm Ernst & Young.
The Little Guys
Who are these companies that are offering low-cost software solutions for warehouse management? Banker says there are about 20 companies in this category. One of them is a 10-year-old Canadian company, Data Technology Software Integration Ltd. of Toronto, Ontario, which offers a low-cost WMS package called "Radio Beacon Lite.'' The package runs on the Windows NT system and operates with radio frequency to provide a steady stream of real-time data to maintain inventory counts. Carl Marin, a sales manager at Data Technology, says the list price for a system with 12 users runs about $70,000--a sum that includes training, installation, maintenance, and the handheld units. (Data Technology also offers a higher-priced configurable WMS with more features that costs between $100,000 and $120,000 for 12 users.)
Marin reports that the warehouses using his company's "lite" application range between 50,000 and 60,000 square feet in size. "After they hit the 60,000 square- foot [mark],'' he notes, "they are ready to invest more and their logistics needs are more complex.''
Marin freely admits that Radio Beacon Lite has limitations. For instance, it can't do "task interleaving"--a feature found in more expensive WMS packages. Task interleaving is the type of multiple tasking capability that allows software to direct a warehouse worker to remove a pallet for replenishment as he is entering the racks to store a pallet. Still, he says, his company sees itself as being well on the way to becoming the 500-pound gorilla in the Tier 3 market, which is defined as companies with less than $100 million in annual revenue.
Another player in the budget WMS market is Midgard Information Systems of Charlotte, N.C. Its package--Warehouse Compass--was originally developed back in 1989 for another mid-range computing platform--OS/2--by IBM and Applied ID. Midgard's vice president of sales, Jared Faellaci, says IBM pulled out of the venture and Applied ID then adapted the software to the Microsoft platform. Applied ID later sold the WMS product rights to Midgard.
Midgard's WMS package contains eight modules for functions such as receiving, stock management, and directed putaway. Faellaci says Midgard recently closed a deal for $92,000 that covered six of the eight modules, two radio-frequency terminals, plus the installation. "We are able to keep our costs down because we never modify the baseline code,'' says Faellaci. "On the workstation, we use rule settings and Active X [programming language] to tailor it to the [customer's needs].''
Malvern Systems Inc. of Malvern, Pa., is another low-cost WMS vendor. Founded back in 1980 to market a line of scales, the company developed a PC-based manifest shipping system for use with its scale. The shipping system paved the way for the company's warehouse management system.
Malvern's WMS, which runs on the Windows NT operating system, is targeted to the small to medium-sized warehouse, says Don Tokash, Malvern's manager of national accounts. Although the system could be installed for under $100,000 for 10 to 12 users, Tokash says, the average price for installation and a license is around $150,000 without hardware. "The two things that [affect the price] are the cost of RF [radio-frequency equipment] and the services you require,'' he says.
Another market player is Motek Information Systems Inc. of Beverly Hills, Calif. Motek makes a client-server warehousing application that runs on Windows NT and costs about $130,000 for installation and a license.
As noted earlier, Sonica Software Corp. of Orange, Calif., also makes a low-cost WMS that can handle inventory management, putaway, and cycle counting and support radio frequency. The software takes advantage of the Windows NT platform with an Oracle database. Although Twin Labs installed the application for under $100,000, Sonica's Simmerman says the average cost for license and implementation services runs closer to $150,000. "The warehouse management system is just a module in the supply chain,'' he says. "I need to get in at $150,000 as a module in a supply chain solution these days." The market dynamics have changed dramatically, Simmerman adds. "The traditional WMS providers are scrambling.''
Price Breaks
It's no wonder, then, that several of the more established companies have come down in price or have begun offering low-cost versions of their WMS packages. Ann Arbor Computer, for instance, now offers a version of its software--without RF--that goes for $50,000 for 10 users in a 50,000 square-foot warehouse. Ron Reimink, a general manager at Ann Arbor, says such a solution would be a paper-based system and an out-of-the-box configuration with no customization.
Another WMS vendor, Majure Data, has introduced a low-cost package called AccessWMS. Majure Data says the total cost of implementation including software and services would run under $100,000 for 10 users. (That sum does not include hardware.) The company says that AccessWMS is designed both for mid-sized companies and for larger companies interested in installing a "pilot" system before committing to a multiple-site installation.
The MK Group in Islandia, N.Y., also has entered the low-cost WMS market with an application called "Warehouse Optimizer." A ballpark price for Warehouse Optimizer is between $150,000 and $160,000 for license, implementation, and interface construction, says Jim Coker, vice president of MK Logistics.
Buyer Beware
Despite the proliferation of low-cost WMS, many consultants caution prospective buyers to be wary. They note that these low-cost WMS packages don't provide the full range of features found in higher-priced programs. "You get what you pay for,'' says Donna Potter, a regional vice president with the distribution consulting firm Gross and Associates in its Texas office. "If you have a $100,000 budget, you have to limit your expectations.''
Ross of Ernst & Young concurs with Potter's warning about the limited capabilities of low-cost WMS packages. "If all I want to do is track inventory, one of these small packages may work,'' he says. "But when we talk about warehouse management, we talk about labor, task management, metrics, real-time RF, and interconnectivity.'' He questions the capability of the lower-priced applications to handle such tasks.
Managers mulling the pros and cons of WMS installation shouldn't overlook hardware costs. Potter says that companies must keep in mind that they'll need computers and bar-code-scanning equipment in addition to software for their WMS solution. She adds that radio-frequency terminals themselves tend to be expensive, costing around $3,000 per unit.
Despite their limitations, low-cost WMS packages do offer a way for small companies to bring their distribution centers into the information age. As smaller companies become more integrated into supply chains, their large trading partners will expect them to share inventory data.
To meet these demands, small companies will be driven to take advantage of computer intelligence to run their warehouses and keep up-to-the-minute tabs on the whereabouts of their stock and materials. "You've got a half million warehouses out there,'' says John Hill, a partner in the consulting firm Cypress Associates in Watsonville, Calif., "and only 20,000 or 30,000 are candidates for medium- or higher-cost WMS systems. There's a host of people with smaller warehouses who could use some help.''
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This information was useful in giving me a overview of PC based WMS packages.
Carlos Barron - 2009-21-8 08:58:00 EDT
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