Occupying a rather mature corner of the supply chain software market, warehouse management systems (WMS) vendors simply can’t afford to languish or rest on their laurels in today’s dynamic business environment.
Well aware of this situation, vendors are working to stay ahead of the curve by integrating new functionalities and capabilities that were probably unheard of just 10 years ago. Two challenges that are garnering attention this year are the need for better support for omni-channel distribution operations as well as improved integration of WMS with warehouse control systems (WCS), the software traditionally used to manage automated materials handling equipment.
Over the next few pages we’ll explore how WMS is evolving to support these two trends and then take a closer look at how retailers, manufacturers, and distributors continue to drive the evolution of the software.
1. Driven largely by the boom in e-commerce, today’s shippers are focused on delivering a seamless customer experience across numerous channels. Whether they’re picking out goods on a mobile device, sitting down at a computer, standing in a brick-and-
mortar store, or reading a paper catalogue, today’s consumers want to be able to buy, exchange, return, and get support for a retailer’s products across all channels and without a single hassle.
Adding to the overall omni-channel fulfillment challenge is the fact that it isn’t limited to just the retail environment. Indeed, manufacturers and distributors are also using multiple channels to sell and deliver their wares to business partners and suppliers. And because shipping, return, and exchange activity on all of those fronts are taking place in the warehouse and distribution center (DC), the WMS is playing a vital role in ensuring a smooth omni-channel experience.
“At this point, everyone has latched onto the idea of omni-channel commerce,” says Dwight Klappich, research vice president for research giant Gartner. “However, not everyone is equipped to handle it.”
According to Klappich, that’s because omni-channel goes beyond just managing inventory within the four walls of a distribution center and incorporates a broader picture of inventory at rest, in transit, in stores, and throughout the supply chain.
“With omni-channel, stores ultimately become a fulfillment point,” says Klappich, “which means companies have to be able to accommodate a higher volume of returns that may have originated online, in the store, or from any other channel.”
Klappich points to Manhattan as one vendor that has incorporated e-commerce, retail, distributed order management (DOM), supplier enablement, and warehouse management to help shippers handle the omni-channel environment. HighJump Software has also made some interesting inroads in the WMS space, says Klappich, particularly when it comes to the store fulfillment side of the grocery business.
Using HighJump’s WMS, for example, shippers can set up their stores as “mini warehouses,” where workers walk around picking and packing orders for home delivery. “Those are just two best-of-breed WMS vendors that are doing well in the omni-
channel space,” says Klappich.
Simon Ellis, practice director at IDC Manufacturing Insights, says that for WMS providers to completely service the omni-channel shipper, the former will have to add more piece-picking functionality to their menus. Right now, most manufacturers ship via truckload or LTL shipments—not parcel—by choice.
“Most manufacturers would prefer to sell cases or even pallets over individual units,” says Ellis, who expects software providers like JDA, Oracle, and SAP to continue broadening their features and functionalities to accommodate the challenges of omni-channel warehousing and distribution. “At this point, some WMS vendors allow for the management of individual products while others don’t,” he adds. “That will likely evolve over the next few years as omni-channel continues to grow.”
More automation, please
2. The WMS evolution goes beyond omni-channel to include supporting a higher degree of automation and complex fulfillment strategies that, incidentally, also do their part in supporting the omni-channel environment.
Klappich says that there has been a slow progression of WMS vendors moving into the WCS space over the last few years, with vendors like Oracle and SAP both integrating materials handling interfaces into their solutions.
The WCS/WMS connection is fairly new, says Klappich, and a far cry from the days when WMS as a business process application relied heavily on human involvement. “The mass majority of WMS solutions were designed for people-driven processes—from driving forklifts around to moving pallets to picking orders,” he notes. “As WMS and WCS functionality has improved, companies have started looking harder at how to better manage their workforces and run more effective, more automated warehouses.”
The fact that materials handling automation has become more affordable is also pushing more companies to integrate the technology into their warehouses and DCs. In the past, Klappich says building out a highly-automated facility could run upwards of $20 million and require at least a five year commitment to run “as-is” on the company’s part.
“The setup was extremely rigid, with any notable changes to the automated facility being very expensive and time consuming,” says Klappich. Today, he says materials handling automation vendors are creating more flexible environments and developing systems that can be more easily adapted and reconfigured.
Interest in WCS is also being driven by the current crop of what Klappich refers to as “Frankenwarehouses,” huge, older facilities filled with expensive equipment born from mergers and acquisitions that companies suddenly found themselves owning.
“As more automation was added to these facilities, they became hodgepodges of fragmented systems,” says Klappich. “Now, their owners are looking to create more streamlined environments and are showing an increasing interest in WCS to help them attain those goals.”
With SAP and Oracle driving the charge on the large vendor side, and Ehrhardt + Partner on the best-of-breed side, the blending of WMS with warehouse automation and WCS is expected to gain steam in 2014. “We’ve been joking about the use of robotics and other innovations in the warehouse, but now we’re there, it’s happening,” says Klappich. “In fact, we’re already seeing some companies replacing tasks that warehouse workers handled manually with highly automated systems.”
Because U.S. companies tend to use fairly unsophisticated materials handling systems, Ellis is bearish on just how far the WCS/WMS alliance will grow. In Europe, on the other hand, he says the potential for such integration is much higher.
“The levels of automation that you see in European DCs are typically much higher than they are here in the U.S., although there are always exceptions to the rule,” Ellis says, noting that international overnight package and mail service providers work in a decidedly different environment. “UPS and FedEx run massively complex sortation systems in their warehouses and distributions centers, so WCS would be a crucial part of their operations.”
Other key WMS drivers
As WMS vendors continue to hone their offerings to meet the growing omni-channel and WCS trends, most are also keeping a close eye on several other changes taking place within the warehousing arena.
For starters, Bob Hood, senior manager of supply chain for consulting firm Capgemini, says that the number of shippers that are upgrading their WMS (versus installing new or continuing to use aging systems) is on the rise. “There are a lot of firms out there sitting on WMS platforms whose support costs have become extraordinarily high—from both the physical hardware architecture and the maintenance perspectives,” says Hood.
“Over the last few years, an increasing number of companies have made the strategic decision to move away from those tailored applications and over to new releases,” says Hood, who sees most operations selecting upgrades from existing providers. “If a company is already a Manhattan shop, then it will likely upgrade Manhattan.”
Hood says that he’s also seeing more shippers take an interest in WCS, but adds that simply layering such solutions on top of existing warehouse systems typically results in a “hybrid facility” that can be difficult to optimize across multiple channels. He expects WMS vendors to continue honing in on organization’s needs and coming up with solutions that help solve key pain points.
“Warehouse and distribution managers want to be able to leverage common assets,” says Hood, “and encounter fewer barriers when it comes to supplying multiple channels using the same workforce and IT assets.”
In assessing the future of WMS, Klappich sees one more trend in the cards: a growing use of cloud computing as the delivery mechanism for these solutions.
And while cloud adoption in the WMS space remains fairly low, Klappich says that more managers are getting interested in the lower cost of ownership (at least at the outset), faster implementation times (a benefit that’s “often overstated by the vendors themselves,” Klappich notes), and 24/7 web-based platforms served up in the cloud.
“For now, it’s still a fairly small percentage of companies that are moving in that direction within the WMS space as compared to other applications,” Klappich says. “However, there’s definitely a growing interest from warehouse and DC managers who want to be able to invest less and ramp up somewhat faster than they would with more traditional WMS options.”