After a few years of dwindling sales, warehouse management systems (WMS) appear to be making a healthy comeback. According to results of a survey conducted by ARC Advisory Group, WMS sales in North America grew by nearly 5 percent in 2002 to $737 million, following a 12-percent slump between 2000 and 2001.

The 2000-2001 downturn in sales was expected, coming as it did during a weakened economy and following a buying surge that resulted from the e-fulfillment "boomlet" in 2000. Steve Banker, service director, supply chain management for the Dedham, Mass.-based consulting firm, notes that the resurgence in sales is based both on the need to upgrade equipment and on better pricing that's indicative of a "mature" market that is better able to meet the needs of specific industries. "Some companies are replacing systems that are eight to 10 years old," he explains. "And as the average selling price has continued to drop, we're seeing more first-time buyers. The falling prices are leading to the implementation of WMS across a broader spectrum of warehouses [than ever before]."

Banker notes that the revenue rebound in the past year does not mean that the market will see rapid growth. Between 1998 and 2001—from before the "boomlet" through the slowdown—the cumulative average growth rate of the WMS market was 4.1 percent. "That average is a good indicator of what the growth rate is likely to be," he says. That being the case, he expects to see sustained growth of about 4.5 percent in the next five years. "Slightly faster than what we have seen, but still slow for an enterprise software market," he says.