Making the case for WMS

In the last two years, there has been a lot of buzz around a new generation of warehouse control systems (WCS). These solutions are taking on the order fulfillment tasks once assigned to a warehouse management system (WMS), especially in highly automated facilities with complex order fulfillment strategies serving omni-channel retail sales environments.

Less heralded has been the fact that WMS continues to evolve, add functionality and expand its reach in these same complex fulfillment environments. Just as WCS has moved up from the machine level to manage picking and packing tasks, WMS are more involved in order management, planning, predictive analytics and supply chain management than ever before. Those are areas that were once the province of enterprise resource planning (ERP) and supply chain management systems.

“The WMS market is going through an evolution,” says Dwight Klappich, a vice president with the research firm Gartner. “In the past, they were primarily execution systems. But warehouse systems are getting smarter. They are becoming more predictive; they are adding more analytics; and they can provide more visibility into the extended supply chain.” 

With that in mind, let’s make the case for WMS—where it is today and where it’s going.

Putting the M in WMS
When Klappich looks at the WMS market, he makes a distinction between Core WMS and Extended WMS.

Core WMS executes the basic transactions that warehouse systems have handled since the first commercial WMS: receiving, putaway, pick and pack, shipping, and cycle counting. In fact, Klappich argues that early WMS could rightly have been called warehouse execution systems because their primary role was to make things happen.

Core WMS is a mature technology; any system that calls itself a WMS offers those features. “When you look across the market, we’re seeing parity around Core WMS,” Klappich says. “The capabilities are pervasive, from solutions targeted at small or mid-sized businesses to WMS offerings from ERP vendors and the robust offerings provided by the best-of-breed WMS vendors.”

In this area of the market, ERP vendors like SAP, Oracle and Infor have especially upped their games. “Today’s ERP warehouse management systems are the equivalent of a souped-up Toyota Camry,” he says. “They can satisfy the requirements of most conventional warehouses with some automation.”

Parity, however, doesn’t mean that all WMS are created equal. Best-of-breed players like Manhattan Associates and JDA (formerly RedPrairie) are the BMWs of today’s market, or what Klappich calls Extended WMS. “Most of the market are Camry buyers,” Klappich says. “But there are times when you need a BMW. Best-of-breed is being pushed more toward the higher end of the market because they have experience in the most complex environments.”

While Core WMS is focused on execution, Extended WMS “puts the M in WMS,” Klappich says. Extended WMS brings management functions such as wave planning, multiple picking strategies, labor management, dock scheduling, slotting and other advanced management capabilities to the table. These systems are also adding more analytics and reporting functionalities. The best of these systems are developing capabilities to monitor real-time processes and predict when and where bottlenecks may occur.

“Core WMS has always been reactive,” Klappich says. “It didn’t know there was a problem until you had a problem. A predictive WMS can look at a group of orders and say: You’re going to have a problem in packing. You need to solve that.”

The industry may not be there yet, Klappich adds, but it is moving in that direction.

Workflows and mobility
A WMS is no longer just for the big guys. Increasingly, Tier 2 companies are struggling with the same issues as their larger competitors. That has led to more robust WMS for the secondary market.

“Tier 2 retailers and distributors may only have one DC and a smaller volume of orders than the big guys,” says Chad Collins, chief marketing officer for Accellos. “But they are pursuing the same omni-channel strategy as the big guys.”

Similarly, small manufacturers and distributors are being pushed by their retail customers to participate in custom labeling and shipping initiatives and to drop ship retail orders. They now need the ability to receive an EDI (electronic data interchange) feed to share order information, to pack orders differently for each customer and to generate unique workflows for replenishment and direct-to-consumer orders.

“We used to see one side of the warehouse dedicated to retail replenishment and the other side set up for direct-to-consumer,” says Collins. “Now, they’re picking from the same locations to leverage inventory, but setting up different workflows according to the order.”

The WMS is also extending its reach beyond the four walls. Accellos, for instance, has created a set of quality control applications that allow a retailer to do a quality assurance audit at a supplier’s location using a smart phone and roll that information directly into its WMS. Similarly, a track-and-trace application can be loaded onto an Android-enabled smart phone that extends WMS to the point of delivery. “GPS tracks the truck as it makes a delivery, the driver can capture product as it comes off the truck and capture a signature as it’s received,” says Collins.

A new level of visibility
Supply chain managers have been trying to get visibility into their operations as long as there have been supply chains. In an omni-channel operating environment, visibility is more critical than ever. “When a customer places an order, you need to have some degree of confidence that the inventory is going to be there,” says Scott Fenwick, senior director of product management for Manhattan Associates.

While WMS have been providing visibility into inventory inside the four walls of the DC for years, today’s systems have to provide a comprehensive view of inventory and assets across the supply chain. “The WMS has to provide visibility into a network of DCs, your suppliers’ inventory and inventory that’s in transit,” says Chuck Fuerst, director of product strategy for HighJump Software. To do that, the WMS is taking feeds from point of automatic ship notification (ASN) and the transportation management system (TMS).

The biggest change, however, may be that Extended WMS are now integrated with store point-of-sale systems for those retailers that are also filling orders from their stores. “Years ago, most retailers didn’t have a clue as to how much inventory they had in the store,” says Tom Kozenski, vice president of industry strategy for JDA Software. “We’re now extending the view of inventory right down to the store shelf.” A large retailer filling orders from multiple nodes may be monitoring inventory from 20 DCs and 400 stores, with updates from store point-of-sale systems as often as eight times a day. “The only thing we haven’t figured out is how to track the inventory in the shopping cart before you get to the register,” says Kozenski.

When solutions converge
As Extended WMS takes on a broader management role, they are integrating with other systems to make more intelligent decisions and create more optimized supply chain processes. The market calls this process convergence.

For instance, the WMS BMWs include a decision engine that sits between the order management system and the distribution centers or retail stores to decide the best location to fill an order. “The system can look at factors such as where did the order originate from or how much will it cost to replenish the inventory,” says Fuerst. “For instance, if you received the order late in the day, does it make sense to fill it from a West Coast distribution center that might be working for another three hours rather than rush it through an East Coast location.”

In addition to monitoring inventory, today’s WMS are able to monitor the various functions of the warehouse to better manage work in a facility. “With predictive analytics, we’re looking at the various functions to get more insight earlier into what’s going on rather than waiting for the end of the day,” says Fenwick. “Demand forecasting, for instance, drives replenishment. But it can also be used to make slotting and labor decisions that will smooth out the work.”

Those examples illustrate ways the WMS is optimizing functions within the facility. At the highest level, end users are using supply chain execution systems to optimize an end-to-end process, from source to the final customer. “If your warehousing and transportation are coordinated, there is a link between the TMS, the dock scheduling solutions and the warehouse management system,” says Andres Botero, the global head of marketing for supply chain management at SAP. “When a truck arrives at the gate, a dock is available and the receiving team is waiting to unload the trailer.”

When solutions converge, a change in one system—like an increase for an order from 1,000 to 2,000 cartons—flows through all of the systems associated with that order. “In a conventional supply chain execution system, I have to recreate the new order in the transportation system, the WMS and any other system,” says Botero. “If the systems have converged, a modification in the order management system will update every other system.”

Similarly, retailers are using the expanded functionality of a WMS to optimize their sales across their network. “A retailer that can fill an order from the store and ship it to a home can sell through their in-store merchandise and avoid markdowns or a return to the warehouse,” says JDA’s Kozenski. “At the end of the back-to-school season, it may be profitable to ship from a store at a marked-down price to clear out merchandise. An Extended WMS can make those kinds of decisions and then execute on the plan.”

At the end of the day, Kozenski adds, WMS systems are still doing many of the things they did from the start. “For decades, a WMS has been a real-time application,” he says. “What’s changed is the technology structure. Today’s WMS talks to components, to conveyors and WCS systems, to ERP systems and to store systems. The communication is more real time and easier to manage.”

Companies mentioned in this article
Accellos, accellos.com
Gartner, gartner.com
HighJump Software, highjump.com
JDA Software, jda.com
Manhattan Associates, manh.com
SAP, sap.com